Centerra Gold Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 1, 2023

There are 11 speakers on the call.

Operator

You for standing by. This is the conference operator. Welcome to the Centerra Gold Second Quarter 2023 Conference Call. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.

Operator

I would now like to turn the conference over to Lisa Wilkinson, Vice President, Investor Relations and communications with Centerra Gold. Please go ahead.

Speaker 1

Thank you, operator, and good morning, everyone. Welcome to Centerra Gold's 2nd quarter 2023 results conference call. Joining me on the call today Are Paul Tomory, President and Chief Executive Officer Paul Charron, Chief Operating Officer and Darren Millman, Chief Financial Officer. Our release yesterday details our Q2 2023 results. This should be read in conjunction with our MD and A and financial statements, both of which can be found on SEDAR, EDGAR and our website.

Speaker 1

Presentation slides are available on Centerra Gold's website to accompany this webcast. Following the prepared remarks, we will open the call for questions. All figures are in U. S. Dollars unless otherwise noted.

Speaker 1

Before we begin, I would like to caution everyone that certain statements made today may be forward looking and are subject to risks, which may cause our actual results to differ from those expressed or implied. Please refer to the cautionary statements included in the presentation as well as the risk factors set out in our annual information form. Also, certain of the measures we will discuss are non GAAP measures. Please refer to the description of non GAAP measures in our news release and MD and A issued yesterday. I will now turn the call over to Paul Tomory.

Speaker 2

Thank you, Lisa, and good morning, everyone. After 3 months at Centerra, I've now had the opportunity to visit our operations and projects and engage with employees, Investment community and other stakeholders, and I'm optimistic for the opportunities that lie ahead. In the Q2, we've already achieved several milestones that are setting Centerra for Strong performance in the second half of the year. Most notably, at the end of May, we received approval of an EIA for the Uksut mine from the Turkish Ministry of the Environment. We continue to enjoy strong local community support for the project and with all the necessary regulatory approvals in hand, we restarted full operations on June 5 and produced over 20,000 ounces of gold in a month.

Speaker 2

Looking ahead, we expect Oksut to produce between 180,000 and 190,000 ounces of Gold in 2023, which will make it a significant contributor to our expected stronger second half performance. Turning to Mount Milligan, we remain on track with our plan to have stronger production in the second half of the year. Our full year production guidance for both gold and copper are unchanged. Including Oksut, our full year consolidated gold production guidance is between 340,000,360,000 ounces. Paul Shawarm will speak to our operations in more detail later in the call.

Speaker 2

One of my top priorities has been to evaluate all of Centerra's assets With an ultimate goal of developing a comprehensive value maximizing strategic plan, key aspects of this will include a view on the Melendin Business Unit With an assessment of the potential for a restart of operations at the Thompson Creek Mine, continuing to drive operational and technical improvements at Mount Milligan, Repositioning our approach at the Goldfield Project to target higher returns. And lastly, assessing opportunities for growth in gold production. In conjunction with our asset level strategy, we're also developing a capital allocation framework focused on optimizing shareholder value. By taking a systematic and diligent approach, our goal is to direct our capital in 3 ways return to shareholders, invest in internal projects and for external M and A opportunities.

Speaker 3

Stay tuned as we expect to

Speaker 2

roll out this new strategic vision for the company in the coming months, which will serve as a crucial step in our journey to maximizing value to our shareholders and other stakeholders. Shifting to Nevada, I'd like to provide an update on the Goldfield project. Paul Chiron and I had the opportunity to visit the project in June And we think it presents a great opportunity in a top mining jurisdiction. Based on my experience building projects and operating mines in Nevada And with what we see at Goldfield, we will be pivoting our approach. Most importantly, we'll focus for now only on the oxide and transition material, principally in the Gemfield and Nearby Deposits.

Speaker 2

This will allow us to reevaluate the project scope of work to achieve a lower CapEx flow sheet and to maximize returns. 2nd, we believe the project has upside potential from its large underexplored land position. As a result of this change in focus, we will take more time to further explore the property Our full year exploration guidance at Goldfield has been increased to between $16,000,000 $20,000,000 up from $10,000,000 previously. This strategic pivot is aligned with our disciplined approach to capital allocation and will allow us more time to target a higher return project. We continue to have a positive outlook, but we want to achieve a higher return profile before we proceed with development.

Speaker 2

Turning now to the Melinda business unit, as mentioned earlier, we're developing a strategic plan, which is expected to incorporate a number of aspects For value maximization, first, we continue to progress our PFS study on the restart of the Thompson Creek mine And we remain on track to release highlights later in the Q3. And second, we're assessing the strong operating synergies that will exist between the Thompson Creek mine and the Langelof Metallurgical Plant. Moving on to Slide 5, Centerra is committed to sustainable and responsible mining practices And this is demonstrated through our ESG commitments and accomplishments. Today, I'd like to highlight that we've achieved full conformance with the World Gold Council's responsible gold mining During our year 3 assessment, this accomplishment reflects our commitment to responsible mining practices, proactive risk management continuous improvement in our relationships with stakeholders and local communities. We understand that ESG is an ongoing journey And we'll continue to work diligently towards our goals and initiatives in the coming year.

Speaker 2

I look forward to updating the market on our commitments and achievements going forward. And with that, I'll pass the call over to Paul Chiron to walk through our operational performance in the quarter.

Speaker 4

Thank you, Paul. On Slide 7, we show the operating highlights at Mount Milligan for the quarter. The Mount Milligan mine produced over 40,000 ounces of gold In the Q2, a 24% increase from last quarter and produced £13,800,000 of copper. As we mentioned in the previous releases, We always expected the production at Mount Milligan in 2023 to be weighted towards the second half of the year. However, Production in the quarter was impacted by lower than planned recoveries due to mine sequencing, which resulted in more oxide ore than planned We are now deeper in Phase 9 and have mostly mined through the ore waste transition zone.

Speaker 4

Copper grades are expected to improve in the second half of the year as the mine progresses deeper, which is expected to improve metal recoveries compared to the first half of the year. Mill throughput in the second quarter was 5,600,000 tonnes With the site achieving record tonnes processed in both May June. Gold and copper sales at Mount Milligan were lower in the Q2 mainly due to timing of bulk shipments. In July, concentrate shipments from Mount Milligan were not materially impacted by the union strike At the Port of Vancouver, we expect to have 4 concentrate shipments in the 3rd quarter and are targeting another 4 shipments in the 4th quarter. The timing of shipments and associated sales between quarters may be affected by logistical delays from union strikes at the port.

Speaker 4

Our Mount Milligan production guidance is unchanged for gold and copper and is back half weighted for the year. We expect 2023 gold production to be near the low end of guidance of 160,000 to 170,000 ounces, While copper production is tracking towards the midpoint of guidance of between £60,000,000 to £70,000,000 Gold production costs were $12.55 per ounce in the 2nd quarter and all in sustaining costs on a byproduct basis were $15.99 per ounce. All in sustaining costs were impacted by higher mining costs, Including general inflation on labor and consumable costs, lower gold ounces sold, partially offset by lower sustaining CapEx. We have increased our Mount Milligan full year 2023 all in sustaining cost guidance to $11.25 to $11.75 per ounce as we are seeing lower amounts capitalized to the TSF, higher maintenance costs, Higher rehandling costs and consumables. This year, the wildfires have been quite severe across Canada and continue to be active in British Columbia.

Speaker 4

We have been fortunate at Mount Milligan and have not been impacted by the wildfires so far this year. And finally, we congratulate our Mount Milligan Mine Rescue team for placing 1st in the extrication event at the BC Provincial Mine Rescue Competition. On Slide 8 is an operations update for Oksut. Following the receipt of the updated EIA at the end of May, crushing, stacking and ADR activities resumed in early June. 2nd quarter production was just over 20,000 ounces.

Speaker 4

At the end of June, there was approximately 80,000 recoverable ounces In the stored gold and carbon inventory and approximately 200,000 recoverable ounces of gold in the ore stockpiles and on the heap leach pad. Full year 2023 production guidance at Oksut Is 180,000 to 190,000 ounces of gold as production levels are expected to continue to ramp up in the second half of the year. With gold production approximately split 45% 55% in the 3rd 4th quarters, respectively. Gold production costs were $404 per ounce in the 2nd quarter and all in sustaining costs on a byproduct basis were $11.43 per ounce. The all in sustaining costs in the 2nd quarter reflects only a partial month of production, Lower sales ounces, standby costs and a full quarter of sustaining capital expenditures.

Speaker 4

As we ramp up production and achieve a more uniform spend on sustaining capital expenditures, we expect costs at Oksut to decrease in the second half of the year. As a result, our full year 2023 all in sustaining cost guidance at Oksut is $6.50 to $700 per ounce. To wrap up, I'd like to commend the Oksut team for achieving 1,000,000 work hours without a lost time injury. This is a true testament to the safety leadership and culture at our operations in Turkey. And now I'll pass on to Darren to walk through our financial highlights for the quarter.

Speaker 3

Thanks, Paul. Slide 10 details our 2nd quarter financial results. Net loss from continuing operations was $40,000,000 or a loss of $0.18 per share. There were 2 adjusting items in the 2nd quarter. First, dollars 8,000,000 of reclamation provision revaluation recovery at sites on care and maintenance, primarily attributable to a decrease in the risk free interest rate applied to discounts, The estimated future reclamation cash flows and second, dollars 6,000,000 of deferred income tax resulting from the effects of foreign exchange rates on monetary assets And liabilities in the determination of taxable income related to the Oksut and Mount Milligan mines.

Speaker 3

As a result of these two items, adjusting net loss from continuing operations was $42,000,000 or a loss of $0.20 per share. Centerra recorded $185,000,000 in net revenue during this quarter with contributions from our 2 operating mines, Matt Milligan and Oksut as well as our molybdenum business unit. In the 2nd quarter, sales were 48,155 ounces of gold £12,800,000 of copper. Gold sales were lower than production in the quarter by 22%, mainly due to Turkish National Holidays that delayed gold sales at the end of June. The average realized price $15.32 per ounce of gold and $2.56 per pound of copper, which incorporates The existing streaming arrangements at the Mount Milligan Mine.

Speaker 3

At the molybdenum business unit, in the second quarter approximately £3,000,000 of moly was sold, Generating revenue of $76,000,000 with an average market price of $21.23 per pound. Consolidated all in sustaining cost on a byproduct basis for the quarter were $17.11 per ounce. Consolidated all in sustaining guidance for the full year is expected to be in the range of $1,000 to $10.50 per ounce. As noted by Paul Chowern earlier, our gold inventory levels remain elevated at Oksut with processing of gold in carbon currently underway. I would like to highlight that while our full year all in sustaining cost guidance at Oksut is between $6.50 to $700 per ounce, The remaining cash processing cost associated with the gold in carbon is expected to be less than $50 per ounce And the remaining cash processing costs associated with the 200,000 ounce of gold in ore stockpiles and on the heap leach pad are expected to be less than $2.25 $100 per ounce respectively.

Speaker 3

Capital expenditure in the second Quarter were $23,000,000 up from $5,000,000 in the 1st quarter, mainly driven by timing of the spend. We are lowering our Mount Milligan capital guidance to be $50,000,000 to $60,000,000 due to lower capital cost at the TSF And deferring some of our projects to next year. Consolidated capital guidance for the full year is Expected to be between $90,000,000 $115,000,000 which includes $35,000,000 to $45,000,000 at Oksut. On July 15, the Turkish government increased the corporate income tax rate from 20% to 25%. This is a retroactive earnings start starting at January 1, 2023 and subsequent tax periods.

Speaker 3

We estimate this change will result in incremental $900,000 in cash taxes to be paid with respect to the income earned in the first half of twenty twenty three at Oksut. Slide 11 lists our financial results for the quarter. Cash provided by operating activities was $33,000,000 in the 2nd quarter and free cash flow was $11,000,000 At the Moliftona business unit, approximately $35,000,000 of the investment in working capital from the Q1 was released during the Q2. It is expected the additional releases from working capital will occur during the remaining 6 months of 2023, Providing molybdenum prices and inventory levels remain at their current levels. The molybdenum business unit generated $31,000,000 in cash in the 2nd quarter.

Speaker 3

At Mount Milligan, cash provided by mine operations and free cash flow were $22,000,000 $9,000,000 respectively in the second quarter. At Oksut with the partial month of operation in the 2nd quarter, the mine generated $8,000,000 in cash from operations and $400,000 in free cash flow. In the second quarter to manage gold price risk Associated with the expected high sales at Oksut in the short term, we entered into gold hedges. We purchased gold Put option contracts for 75,000 ounces at an average strike price of $19.42 per ounce. The options allow full participation to the upside gold price movements, while protecting against for a selection of gold sales in the period from July to October 20 23.

Speaker 3

We don't plan on increasing this gold hedging position in the near term. Under Centerra's Normal cost issuers bid in the 2nd quarter, the company purchased and canceled 1,270,000 common shares for a total consideration of 7,300,000. We continue to make purchases via an automatic share purchase plan in July. Centerra ended the 2nd quarter with cash balance of $402,000,000 $398,000,000 available under a corporate credit facility. This provides us with total liquidity of $800,000,000 Given our strong financial position, the Board declared a quarterly dividend of $0.07 per share.

Speaker 3

I'll now pass it back to Paul for closing remarks.

Speaker 2

Thank you, Darren. After achieving several milestones in the second quarter, we're well positioned for strong In the meantime, we continue to work diligently on delivering safe and sustainable production and developing Centerra's strategic vision, which will clearly articulate our path to value realization for each asset in the portfolio. We look forward to updating the market in the coming months. And with that, operator, I'll stop and open the call for questions.

Operator

Thank you. We will now begin the question and answer session. We will pause for a moment as callers join the queue. Our first question comes from Fahad Tariq of Credit Suisse. Please go ahead.

Speaker 5

Hi, good morning. Thanks for taking my question. In the press release, you mentioned in the paragraph talking about evaluating all the assets that You're assessing opportunities for growth in gold production. Can you talk a little bit about how you're thinking about organic versus inorganic growth? And If it's organic growth, specifically what type of opportunities may exist at Oksut, Mount Milligan, Goldfield?

Speaker 5

Thanks.

Speaker 2

Yes. Thanks, Fahad. Our overall strategy right now is focused on looking at our current assets. What It's the value that we think is in those assets. And as you've seen, we're repositioning the way we look at Goldfield as an example.

Speaker 2

At Milligan, we continue to drive the technical and operating improvements. And most importantly, we think that there's value in the molybdenum business, which will be daylighting over the course of the coming months. But in terms of your specific question on growth in gold production, we will From time to time, as opportunities become available, assess potential bolt on type acquisitions, things that make sense given Our skill set and where we think we can add value. And that's something we do as a normal part of business is assessing Given that it's an M and A point, I won't speculate much further on it, but it's just a general statement that we are open to M and A word makes sense.

Speaker 5

Okay. That makes sense. And then just switching gears to Mount Milligan on the cost side. It sounds like the majority of the cost increase in the quarter was really the sequencing and the transition kind of material. Can you talk a little bit about the inflationary pressures?

Speaker 5

Are they as expected? And am I understanding that correctly that it's really the grade in the quarter that drove the cost higher?

Speaker 2

Yes, I'll make a general comment on inflation and then hand it over to Paul on the specifics. Mount Milligan saw significant inflation through 2021 and the first, call it, 3, 4 sorry, 2, 3 quarters of 2022, That inflation has abated and it is now more of what I would call normal inflation, but it experienced significant inflation in 2021 2022. And to comment specifically on this year, this quarter, Paul will talk about that.

Speaker 4

Yes. On the costs, we're I mean, we are seeing some increases pretty much comparable in benchmarking with the other Operator in the industry, we do have a little bit of pressure with the competitive labor market in BC. But as you mentioned, the main reason for the increase in guidance on The all in sustaining cost is the denominator. We are guiding towards the low end of guidance on our gold production and that's really what is affecting The increase in AISC. And the main reason for that is the recovery.

Speaker 4

And so we did intercept some so a little bit more oxide than we had And then the replacement for that was the stockpile. And then as a result, we did get an impact on our gold recovery and that's the main reason.

Speaker 5

Okay, great. Thank you.

Operator

Our next question comes from Dalton Barreto of Canaccord, please go ahead.

Speaker 6

Yes, thank you. I want to start by wishing you, Paul, all the best in this new role. I also want to continue in this kind of vein of strategy, but I want to ask you at a higher level than some of the tactical things From what I said, I mean, arguably your portfolio has too many non producing assets. It's 2 base metals heavy. You've got this ill and reduced stream at Milligan.

Speaker 6

Your cash balance is down 58% since the end of 2021. So I guess three questions from me. Number 1, do you still want to be a gold company? And if so, how much At a base metal value, are you willing to tolerate in the portfolio? And secondly, how are you thinking about And then 3rd, what are some of the more immediate strategic milestones we can look forward to?

Speaker 6

Thank you.

Speaker 2

Yes, there's a lot in there and I think you've identified some of the attributes that we're dealing with here at Centerra. Your first question on gold, yes, we are Centerra Gold, And we intend to remain primarily a gold producer. We do like the angle on base metals, the strong copper Production and reserve at Mount Milligan and even an openness to molybdenum here, but we will we are and will remain principally a gold mining company. My first three months, as I said in my prepared remarks, I've been out to all the sites and there's really no substitute for seeing And meeting and getting a sense for the attributes of each asset in the portfolio. And Centerra will look at each asset and that's the focus right now is as you said more tactical.

Speaker 2

And one the most concrete example I can refer to right now I think previously there was a plan to develop Goldfield sooner rather than later. But we think that there's an opportunity for a For a higher return project here taking more time on exploration and looking at a different potential flow sheet. In the case of Chemist is another potential example. There is the resource in the ground there, but we also acknowledge we have A strategic location in that part of British Columbia and perhaps that lends itself to opportunities. And of course molybdenum is the biggest one where We think that there's a lot of unrealized potential in the molybdenum business.

Speaker 2

We have to walk that forward carefully given that we are Centerra Gold, But we do believe that there is value to be realized in the molybdenum business and we will be advancing the thinking on restarting Thompson Creek And we'll be providing more detail in the Q3 on that. I've tried to touch on all your questions. I've been somewhat general, but if you want to go more specific on any of them, let me know.

Speaker 6

I think that's helpful. And then just immediately speaking outside from The potential restart of Thompson Creek, are you planning to update us with an overall strategic Plan or is it going to continue to be more tactical at each of the assets until you can execute on some of these higher level things?

Speaker 2

Yes, I think that in the Q3, we'll paint a broader picture on strategy, meaning What do we want to be? Where do we see value? What are our strengths? How do we look at capital allocation? But of course, the main components of that will be tactical plans At each of the assets, principally, like I said, molybdenum and Goldfield and to a lesser extent the other ones.

Speaker 2

But it will be A more overarching view on what we want to be as we look forward 2, 3, 4 years.

Speaker 6

That's helpful. Thank you, Paul.

Speaker 7

Thank you.

Operator

Our next question comes from Ovais Habib of Scotiabank. Please go ahead.

Speaker 8

Hi, Paul and Suraj team. Just a couple of questions have already been answered. So just two questions from me. Starting off with the gold fields, in regards to the resource estimate or update, I'm guessing you're seeing a lot more potential to add additional And that's why you've kind of increased exploration budget. Can you kind of just walk us through where you see upside?

Speaker 8

And you talked a little bit about the flow sheet as well, so maybe a little bit

Speaker 2

Just a quick highlight on what Goldfield is. It's principally 2 deposits. There are other smaller ones, but it's principally got 2 deposits. 1, which is a got 2 deposits, 1 which is a sulfide potential sulfide resource and the other one is a potential oxide resource. At this stage, we don't think that the sulfide resource is of sufficient scale to pursue and that has The beneficial corollary of greatly simplifying the flow sheet.

Speaker 2

So rather than requiring a much finer grind to achieve the recoveries, We're going to look at whether we can tackle the oxide material through a run of mine or a simplified crushing That was great. As I said, that would greatly simplify the flow sheet, reduce the capital and target higher returns. To your question, are we seeing exploration potential? The answer is yes. We've ramped up our spending, our planned spending in exploration and we are focused on oxide targets.

Speaker 2

So we are delaying what had previously been communicated the timing for a resource estimate, but that's principally associated with our shift in Strategy to focus on oxides and transitional material that will be associated with a much leaner capital profile. So what we're going to be doing in the near term is more focused metallurgical test work on oxides only and transition material And specifically targeting oxide material to add to the potential resource.

Speaker 8

Okay. Thanks for the color on that. And just switching gears to the Moly business, I think Dalton touched upon it a little bit with you as well. I mean, with the study in progress expected in Q3, are you kind of how are you leaning like, I mean, are you leaning more toward Selling the Moly business or how should we look at the restart of Thompson Creek Mine?

Speaker 2

Yes, that's a great question and it will under And the way we talk about this in the coming quarters, but let me give you a high level view on it. Right now, the fundamentals for molybdenum are very strong. The market is very Both on the supply and the demand side. Part of what's driving strong demand in molybdenum is In part, energy transition, molybdenum is used for stainless steel production and its applications are significant in things like offshore wind, the retooling of Europe's Gas Infrastructure, but also things like hydrogen. It has very strong properties in alloying steel Corrosion resistance in hydrogen applications.

Speaker 2

So that's a note on what we believe to be very strong fundamentals in the market. And we're confident in those fundamentals to be advancing this. Our principal initial phase of Work on molybdenum is to demonstrate value, to show the market to our shareholders and other participants that there is significant value in this business. And that's what we intend to do as a first phase of activity is to demonstrate value. There will be some early work spending as we advance This project over the coming months quarters, but that will be relatively modest in advance of what would be a more a bigger notice to proceed on the asset.

Speaker 2

Are we open to M and A on this front? The answer is yes. I mean, we always have to look at what surfaces the greatest amount of value for our shareholders. But a first step prior to that is demonstration of value And a well articulated and thoughtful strategy and execution plan for that molybdenum business.

Speaker 8

Okay. Thanks for the color, Paul, and that's it from me. Thanks for taking my questions.

Speaker 3

Thank you.

Operator

Our next question

Speaker 9

Flipping back to Oksut, if we could for a second. I know you've provided some measures of cash costs Already incurred to produce the ounces in inventory and the remaining cash operating costs. But is there a reconciliation And that you can provide to the forward AISC guidance that reflects the actual cash outflow associated with the gold you expect to produce over the balance of the year?

Speaker 3

Yes. It's Darren Michael. So yes, we did we can provide that. We were referred to what it's going to cost from a cash perspective on processing The gold in carbon, which will be under $50 an ounce cash cost and similarly for The gold on the heap and in stockpiles ranging between $100 to $250 So we've historically guided that what was on the And what was on stockpile is approximately $100 an ounce each side. So that's the ballpark, but if you need more color or some more details, we can Keep that offline.

Speaker 9

Well, yes, I mean, I guess I'm asking at a high level, even if you don't want to provide the number, it's fair to say that if Your ASIC guidance for Oksut over the rest or over 2023 is 650 to 700. Only a subset of that will actually be incurred in cost whether that's $500,000 $5.50 whatever the number is. That's the right way to look at it, correct?

Speaker 3

That's right. And we historically also referenced that the 100,000 ounces that was on our inventory was Recorded all interest in at approximately between $450,000,000 to $500,000,000 So that was what was already incurred, but put in on our balance sheet.

Speaker 9

Right. Okay. Okay. Thank you. And then maybe on the sequencing into 2024 as you work through the inventory, Can you give some high level guidance on how long we should be expecting elevated levels of production Beyond the inventory ounces you currently have out of the pit, as you presumably continue to mine and stack new ounces, is there some idea of When the volume starts to slow down as you catch up with that backlog?

Speaker 4

Yes. We expect to have elevated levels well into the first half. And then as we move towards midpoint of next year, it will start to transition into normal state.

Speaker 9

So you're expecting normal state in the 2nd half or is that a transition down to more?

Speaker 4

That'll be a transition down starting approximately mid year.

Speaker 9

Great. So then I guess safe to assume you would reach normal state by 2025. Is that the way to think about it?

Speaker 4

Yes, I would say that's a reasonable estimate.

Speaker 9

Okay. And then last one, maybe Maybe on strategy, realizing you're doing this portfolio review, looking forward to that, But can you talk in particular about how you view the buyback as a use of cash and Maybe how aggressive you think you'll be over the rest of the year and what your thinking is around that?

Speaker 2

Well, we certainly believe that buying our shares is good value and has been over the last couple of months. And shareholder returns, whether dividends or buybacks remains a cornerstone of our capital allocation framework. Darren, you can provide some more detail on what we've been doing. Yes. Approximately just under $8,000,000 has

Speaker 3

been returned or repurchased to date. Our Board continues to support The program, as recent as yesterday, we had the Board meeting. We were very we continue to be active in July. So I don't see it abating in the short term.

Speaker 9

Can you maybe talk Is there a trigger you're looking at as to when you'd be active? Is it a function of your NAV versus the share price or anything along those lines?

Speaker 3

We're not going to

Speaker 2

put a number out there, but we see good value in our shares.

Speaker 9

Okay. Copy. Thanks very much.

Speaker 2

Thank you.

Operator

Our next question comes from Anita Soni of CIBC World Markets. Please go ahead.

Speaker 10

Hi. Just to follow-up with Mike's question there about Oksut. So I guess when we're talking about elevated levels, basically the Q4 run rate is kind of what we should be thinking about going into Q1 and Q2 of next year and then it starts to taper down?

Speaker 4

Yes, that's a reasonable estimate. I mean, we'll issue our guidance and outline what we expect to do for production because some of that's depending on how much success we have now and how much The inventory we can run through and we're still ramping up right now. But I think a reasonable estimate is elevated levels through the mid year. It will start to taper down and then by 2025 It'll be normal state.

Speaker 10

Non assets that are not operating right now, I think one of the forgotten ones, which I guess I don't forget about because I actually covered Northgate about 20 years ago now, is commenced. And given all the activity up in that region, could you talk about how you're thinking about that asset?

Speaker 2

Yes. Thanks, Anita. It's a very prospective region of BC. There are

Speaker 3

a lot of Deposits that

Speaker 2

are in that area, including ours, at this stage, we're not advancing our Kemest project, but we are looking at opportunities Which might leverage our infrastructure. We have an asset up there and the asset is as much in the ground as it is in the property, plant and the equipment, the access, Power in the Water. And we're looking at whether there are creative opportunities for some sort of value realization plan. It's early stage right now, but Conceptually, you can use your imagination. There might be some interesting ideas there, but it we're early in the game on that.

Speaker 10

Would you consider opening it up until now or would it be more like an outright sale?

Speaker 2

Anything is on the table. Any of those could be options.

Speaker 10

Okay. I'll leave it there. Thank you.

Speaker 2

Thanks.

Operator

Our next question comes from Mike Parkin of National Bank. Please go ahead.

Speaker 7

Hi, guys. Thanks for taking my questions. A couple of follow ups. With Oksut, are you stacking All on the same pad or at any point over the course of the next year, would you be transitioning to a new pad?

Speaker 4

We're stacking on a new pad right now. And then as time moves on, we'll be going on to new pads. We have Approximately 50 meters and it goes downhill. So as we start to fill up that space, we stack on new pads.

Speaker 7

Okay. So that certainly supports the stronger production too with kind of elevated beach kinetics with the new patch.

Speaker 4

I would say similar to each kinetics as before on the new pad. And then what we're doing is we have an elevated Great on the PLS. Right now we're processing the loaded carbon and then once we've completed that it will be the elevated PLS and then Slowly taper down into a normal state on the PLS grade. And that will be on the existing pads and we're stacking on new pads now.

Speaker 7

We heard from one of your peers in Turkey about significant rain And it specifically impacted the pond concentration at their heap leach. Did you have a similar Impact at Oksut or did those rains kind of miss you in terms of given maybe you're not close to where the rains came through?

Speaker 4

We did have an elevated wet spring. The PLS grade wasn't impacted Materially, but what we were concerned about for a period of time was that we would start to run out of pond space. We certainly had plenty of mitigation, but at some point that could have been an impact, but it's starting to dry up and our overall Water inventory on-site is declining and we're going to be creating additional pond space going forward as is normal course. Okay.

Speaker 7

With respect to your cost assumptions, can

Speaker 3

you just give us an idea, I may have missed it

Speaker 7

in the release, but did what's your assumption for the Turkish lira For the second

Speaker 3

half? You got me there, Mike.

Speaker 4

It's about 28 right now.

Speaker 3

28?

Speaker 4

I think it's something around 20

Speaker 7

We can

Speaker 2

get back to you.

Speaker 4

Yes, we'll have to get back to

Speaker 6

you on that.

Speaker 8

Okay.

Speaker 7

Thanks. And then switching gears over to Gold Fields. Just give me a recap on how big the land package is there and with respect to For more oxides, where are you in that kind of process? Is it you have good target identified And it's just mobilization of rigs or you're needing to do more earlier stage Studies to identify those targets.

Speaker 2

I can't tell you exactly how big the land package is, but I can tell you it's big. In other words, there are enough targets on the land package to justify elevated spending. I'll just reiterate what I said to Ovais' question is that We're going to focus on oxides here. It's just a leaner CapEx flow sheet, higher returns. And on the land package, we do have a number of oxide targets that we are currently drilling And where we are encountering gold.

Speaker 2

So the strategy is, I'll just reiterate, focus on oxide material only, which lends itself to a much lower CapEx, much More simple, simplified flow sheet and we do see targets on that land package. And so we have a combination of both established targets, ones that we are drilling, As well as targets at earlier stage based on surface expressions or geochem, which we're going to work through the system as the months go by. The main reason to delay the resource estimate is twofold. We're not going to focus on the sulfides and to allow more time for oxides Come into that estimate so that we can come up with a tighter scope of potential works.

Speaker 3

And Mike, just going back to your earlier question, we're using a US1.20 dollars Turkish lira, so we're a bit conservative in our numbers.

Speaker 7

Sorry, I didn't catch that.

Speaker 3

Well, for the Turkish lira exchange revenues for our going forward guidance, It's US1 dollars.20 dollars So we're being a bit conservative.

Speaker 2

Thanks, Mike.

Operator

This concludes the question and answer session as well as today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

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Earnings Conference Call
Centerra Gold Q2 2023
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