Centerra Gold reports Q3 ret earnings of $18 million or $0.07 per share
This news release contains forward-looking information that is subject to the risk factors and assumptions set out on page 15 and in our Cautionary Note Regarding Forward-looking Information on page 17. All figures are in United States dollars).
Toronto, ON -
Centerra Gold Inc. (TSX: CG) today reported third quarter net earnings of $17.7 million or $0.07 per common share based on revenues of $115.5 million compared to net earnings of $20.2 million or $0.09 per common share on revenues of $158.8 million in the same quarter of 2009. As a result of the completion of the sale of the REN property early in the third quarter, the third quarter results include a gain of $34.9 million.
Consolidated gold production for the third quarter of 2010 was in line with the Company's guidance and totalled 96,308 ounces at a total cash cost of $798 per ounce produced compared to 165,883 ounces at a total cash cost of $424 per ounce produced in the corresponding quarter of 2009. (Total cash cost per ounce produced is a non-GAAP measure and is discussed under "Non-GAAP Measures" in the Company's Management's Discussion and Analysis issued in conjunction with this news release.) During the third quarter of 2010, cash used by operations, net of working capital changes, was $24.5 million compared to cash provided by operations of $63.4 million in the third quarter of 2009.
Third Quarter Highlights
Maintain 2010 gold production and cost guidance
The Company completed the sale of the REN property resulting in a gain of $34.9 million
Appointed Mr. Raphael Girard, Mr. Karybek Ibraev and Mr. Amandgeldy Muraliev to the Board of Directors August 19, 2010
Drilling has extended Kumtor's SB Zone, 120 metres along strike to the northeast
Strong cash balances and no debt while continuing to fund capital programs
Subsequent to end of third quarter settled Kumtor strike
Commentary
Steve Lang, President and CEO of Centerra stated, "The quarterly gold production at both sites was right in line with our expectations. The fourth quarter will see a significant increase in the gold production at Kumtor as we get back into mining the high-grade SB Zone. While the 10-day strike at Kumtor did not have any impact on annual guidance, we are pleased that we could settle it quickly and get the operation back to normal."
"At the Boroo operation, the mining phase is coming to an end and mining activities will cease at the end of November this year. We had planned to redeploy workers from Boroo to Gatsuurt, but due to the delay in commissioning the Gatsuurt project due to the uncertain impact of the water basin and forests law, we will layoff approximately 250 workers at Boroo on December 1, 2010. We continue to work closely with the Mongolian Government regarding the commissioning of Gatsuurt."
Financial and Operating Summary
Revenue for the third quarter of 2010 was $115.5 million compared to $158.8 million during the same period in 2009.
Third quarter 2010 revenue reflects a 29% increase in realized gold price ($1,234 per ounce in the third quarter of 2009 versus $959 per ounce in the third quarter of 2009) offset by a 44% decrease in ounces sold in the period.
The Company produced a total of 96,308 ounces of gold in the third quarter of 2010, compared to 165,883 ounces of gold produced in the third quarter of 2009. Gold production at both operations was lower than the comparative period. Kumtor's decrease mainly reflects lower ore grades and higher waste volumes moved, while Boroo's comparative results reflect lower grades and recoveries as well as lower contribution from the heap leach operation which remained idle pending issuance of a final operating permit by the government authorities. See "Operations Update - Kumtor and Boroo/Gatsuurt".
Centerra's total cash cost per ounce produced was $798 in the third quarter of 2010, up from $424 in the third quarter of 2009 due primarily to lower gold production at both Kumtor and Boroo. The increase in unit cash cost per ounce produced was due to a 42% reduction in gold production ($306 per ounce), combined with a 9% increase in operating costs ($68 per ounce) primarily related to the increase in volumes of waste moved at Kumtor and higher fuel and labour costs at both sites. See "Operations Update". (Total cash cost per ounce produced is a non-GAAP measure and is discussed under "Non-GAAP Measures" in the Company's Management's Discussion and Analysis, issued in conjunction with this news release.)
Cash used in operations was $24.5 million for the third quarter of 2010 compared to a source of cash of $63.4 million for the prior year third quarter. The decrease reflects the lower earnings as a result of reduced gold sales volumes and higher operating costs, as well as the impact of increased working capital.
Capital expenditures spent and accrued in the third quarter of 2010 amounted to $72.8 million of which $14.8 million was spent on sustaining capital projects. Growth capital totaled $58.0 million which related mainly to the purchase of new CAT 789 haul trucks at Kumtor ($32.2 million), the underground development at Kumtor ($9.7 million), raising the tailings dam at Boroo ($2.5 million) and spending on site development for the Gatsuurt project ($1.3 million). Capital expenditures in the comparative quarter of 2009 totalled $21.0 million, consisting of $6.1 million of sustaining capital and $14.9 million of growth capital.
Exploration expenditures for the third quarter were $8.0 million compared to $6.8 million in the third quarter of 2009 reflecting increased activity in Mongolia at Gatsuurt, Ulaan Bulag and on other exploration and J.V. projects.
Centerra's cash and cash equivalents and short-term investments at the end of September 2010 were $334.7 million, compared to cash and short-term investments of $322.9 million at December 31, 2009.
THIS PRESS RELEASE CONTAINS TABLES AND FINANCIAL STATEMENTS, CLICK HERE TO VIEW THE ENTIRE DOCUMENT IN PDF FORMAT.
Qualified Person
The new drilling results in this news release and on Centerra's website and the 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 Vice-President, Exploration, who is the qualified person for the purpose of NI 43-101.
The Kumtor deposit is described in Centerra's most recently filed Annual Information Form (the "AIF") and a technical report dated December 16, 2009 prepared in accordance with NI 43-101. The AIF and technical report have 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 Gatsuurt deposit is described in the Company's most recently filed AIF and in a technical report dated May 9, 2006 prepared in accordance with NI 43-101. The AIF and technical report have been filed on SEDAR at www.sedar.com. The technical report describes the exploration history, geology and style of gold mineralization at the Gatsuurt deposit. Sample preparation, analytical techniques, laboratories used and quality assurance-quality control protocols used during the drilling programs at the Gatsuurt project are the same as, or similar to, those described in the technical report.
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
Toronto, ON -
Centerra Gold Inc. (TSX: CG) today reported third quarter net earnings of $17.7 million or $0.07 per common share based on revenues of $115.5 million compared to net earnings of $20.2 million or $0.09 per common share on revenues of $158.8 million in the same quarter of 2009. As a result of the completion of the sale of the REN property early in the third quarter, the third quarter results include a gain of $34.9 million.
Consolidated gold production for the third quarter of 2010 was in line with the Company's guidance and totalled 96,308 ounces at a total cash cost of $798 per ounce produced compared to 165,883 ounces at a total cash cost of $424 per ounce produced in the corresponding quarter of 2009. (Total cash cost per ounce produced is a non-GAAP measure and is discussed under "Non-GAAP Measures" in the Company's Management's Discussion and Analysis issued in conjunction with this news release.) During the third quarter of 2010, cash used by operations, net of working capital changes, was $24.5 million compared to cash provided by operations of $63.4 million in the third quarter of 2009.
Third Quarter Highlights
Maintain 2010 gold production and cost guidance
The Company completed the sale of the REN property resulting in a gain of $34.9 million
Appointed Mr. Raphael Girard, Mr. Karybek Ibraev and Mr. Amandgeldy Muraliev to the Board of Directors August 19, 2010
Drilling has extended Kumtor's SB Zone, 120 metres along strike to the northeast
Strong cash balances and no debt while continuing to fund capital programs
Subsequent to end of third quarter settled Kumtor strike
Commentary
Steve Lang, President and CEO of Centerra stated, "The quarterly gold production at both sites was right in line with our expectations. The fourth quarter will see a significant increase in the gold production at Kumtor as we get back into mining the high-grade SB Zone. While the 10-day strike at Kumtor did not have any impact on annual guidance, we are pleased that we could settle it quickly and get the operation back to normal."
"At the Boroo operation, the mining phase is coming to an end and mining activities will cease at the end of November this year. We had planned to redeploy workers from Boroo to Gatsuurt, but due to the delay in commissioning the Gatsuurt project due to the uncertain impact of the water basin and forests law, we will layoff approximately 250 workers at Boroo on December 1, 2010. We continue to work closely with the Mongolian Government regarding the commissioning of Gatsuurt."
Financial and Operating Summary
Revenue for the third quarter of 2010 was $115.5 million compared to $158.8 million during the same period in 2009.
Third quarter 2010 revenue reflects a 29% increase in realized gold price ($1,234 per ounce in the third quarter of 2009 versus $959 per ounce in the third quarter of 2009) offset by a 44% decrease in ounces sold in the period.
The Company produced a total of 96,308 ounces of gold in the third quarter of 2010, compared to 165,883 ounces of gold produced in the third quarter of 2009. Gold production at both operations was lower than the comparative period. Kumtor's decrease mainly reflects lower ore grades and higher waste volumes moved, while Boroo's comparative results reflect lower grades and recoveries as well as lower contribution from the heap leach operation which remained idle pending issuance of a final operating permit by the government authorities. See "Operations Update - Kumtor and Boroo/Gatsuurt".
Centerra's total cash cost per ounce produced was $798 in the third quarter of 2010, up from $424 in the third quarter of 2009 due primarily to lower gold production at both Kumtor and Boroo. The increase in unit cash cost per ounce produced was due to a 42% reduction in gold production ($306 per ounce), combined with a 9% increase in operating costs ($68 per ounce) primarily related to the increase in volumes of waste moved at Kumtor and higher fuel and labour costs at both sites. See "Operations Update". (Total cash cost per ounce produced is a non-GAAP measure and is discussed under "Non-GAAP Measures" in the Company's Management's Discussion and Analysis, issued in conjunction with this news release.)
Cash used in operations was $24.5 million for the third quarter of 2010 compared to a source of cash of $63.4 million for the prior year third quarter. The decrease reflects the lower earnings as a result of reduced gold sales volumes and higher operating costs, as well as the impact of increased working capital.
Capital expenditures spent and accrued in the third quarter of 2010 amounted to $72.8 million of which $14.8 million was spent on sustaining capital projects. Growth capital totaled $58.0 million which related mainly to the purchase of new CAT 789 haul trucks at Kumtor ($32.2 million), the underground development at Kumtor ($9.7 million), raising the tailings dam at Boroo ($2.5 million) and spending on site development for the Gatsuurt project ($1.3 million). Capital expenditures in the comparative quarter of 2009 totalled $21.0 million, consisting of $6.1 million of sustaining capital and $14.9 million of growth capital.
Exploration expenditures for the third quarter were $8.0 million compared to $6.8 million in the third quarter of 2009 reflecting increased activity in Mongolia at Gatsuurt, Ulaan Bulag and on other exploration and J.V. projects.
Centerra's cash and cash equivalents and short-term investments at the end of September 2010 were $334.7 million, compared to cash and short-term investments of $322.9 million at December 31, 2009.
THIS PRESS RELEASE CONTAINS TABLES AND FINANCIAL STATEMENTS, CLICK HERE TO VIEW THE ENTIRE DOCUMENT IN PDF FORMAT.
Qualified Person
The new drilling results in this news release and on Centerra's website and the 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 Vice-President, Exploration, who is the qualified person for the purpose of NI 43-101.
The Kumtor deposit is described in Centerra's most recently filed Annual Information Form (the "AIF") and a technical report dated December 16, 2009 prepared in accordance with NI 43-101. The AIF and technical report have 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 Gatsuurt deposit is described in the Company's most recently filed AIF and in a technical report dated May 9, 2006 prepared in accordance with NI 43-101. The AIF and technical report have been filed on SEDAR at www.sedar.com. The technical report describes the exploration history, geology and style of gold mineralization at the Gatsuurt deposit. Sample preparation, analytical techniques, laboratories used and quality assurance-quality control protocols used during the drilling programs at the Gatsuurt project are the same as, or similar to, those described in the technical report.
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
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