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Kumtor Gold Company sums up operating results in the first quarter of 2018

Centerra Gold Inc. (Centerra) and Kumtor Gold Company (KGC) have summed up their operating results in the first quarter of 2018. The Media Relations Department of the company reported.

Gold production and sales

Kumtor produced 100,220 ounces of gold in the first quarter of 2018 compared to 127,400 ounces of gold in the same period of 2017. The decrease in ounces poured in the first quarter of 2018 is a result of processing the stockpiled ore from the Sarytor pit which is lower grade and more metallurgically complex, as compared to the stockpiled ore processed from cut-back 17 in the comparative period of 2017.
Gold sales in the first quarter of 2018 were 116,919 ounces, or 3.64 tonnes. Total revenues from gold sales in the first quarter of 2018 were $153.0 million.

Operating costs and all-in measures:

Operating costs (on a sales basis), including capitalized stripping, decreased in the first quarter of 2018 by $10.6 million to $ 71.3 million compared to $81.9 million in the same period of 2017. The movements in the major components of operating costs (mining, milling and site support), including capitalized stripping but before changes in inventory, is explained below:

Mining costs, including capitalized stripping:

Mining costs, including capitalized stripping, totaled $51.1 million in the first quarter of 2018, which was $3.4 million higher than the comparative quarter in 2017. Increased costs for first quarter of 2018 includes higher diesel costs ($5.3 million), which was due to higher consumption resulting from an increase in tonnes mined and higher fuel prices, as well as higher labour costs ($0.8 million) mainly due to unfavorable exchange rate fluctuation.

Milling сosts:

Milling costs amounted to $15.5 million in the first quarter of 2018 compared to $15.4 million in the comparative quarter of 2017. Higher mill reagent costs ($0.7 million) were mainly due to increased processed tonnes in the mill.

Site support costs:

Site support costs in the first quarter of 2018 totalled $12.9 million compared to $10.7 million in 2017. The increase is attributable primarily to higher costs for food supplies and other miscellaneous costs.

Operating results

Unaudited ($ millions, except as noted)*

 

Three months ended March 31

 

 

 

2018

 

2017

% Change

Financial Highlights:

 

 

 

 

 

 

Revenue - $ millions

 

153.0

 

164.1

 

(7%)

Cost of sales (cash)

 

42.6

 

35.2

 

21%

Cost of sales (non-cash)

 

35.6

 

37.2

 

(4%)

Cost of sales (total)

 

78.2

 

72.4

 

8%

Cost of sales - $/oz sold

 

669

 

537

 

24%

Cash provided by operations

 

43.1

 

91.6

 

(53%)

Cash provided by operations before changes in working capital

 

84.6

 

102.4

 

(17%)

Operating Highlights:

 

 

 

 

 

 

Tonnes mined - 000s

 

47,314

 

39,003

 

21%

Tonnes ore mined – 000s

 

1,405

 

-

 

0%

Average mining grade - g/t

 

2.02

 

-

 

0%

Tonnes milled - 000s

 

1,668

 

1,536

 

9%

Average mill head grade - g/t

 

2.58

 

3.53

 

(27%)

Mill Recovery - %

 

72.2%

 

76.0%

 

(5%)

Mining costs - total ($/t mined material)

 

1.08

 

1.23

 

(12%)

Milling costs ($/t milled material)

 

9.26

 

10.05

 

(8%)

 

 

 

 

 

 

 

Gold  produced – ounces

 

100,220

 

127,400

 

(21%)

Gold  produced –  kg

 

3117.19

 

3962.59

 

(21%)

Gold  sold – ounces

 

116,919

 

134,682

 

(13%)

Gold  sold – kg

 

3636.59

 

4189.08

 

(13%)

Average realized gold price - $/oz sold

 

$1,309

 

$1,219

 

7%

 

 

 

 

 

 

 

Capital Expenditures (sustaining) - cash

 

11.3

 

15.2

 

(26%)

Capital Expenditures (growth)  - cash

 

3.4

 

0.9

 

281%

Capital Expenditures (stripping) - cash

 

28.7

 

46.7

 

(39%)

Capital Expenditures (stripping) – non-cash

 

9.7

 

15.8

 

(38%)

Capital expenditures (total)

 

53.2

 

78.7

 

(32%)

Operating Costs (on a sales basis)

 

42.6

 

35.2

 

21%

All-in sustaining costs (including taxes)

 

88.6

 

102.7

 

(14%)

Adjusted operating costs- $/oz sold

 

$412

 

$300

 

37%

Operating Costs (on a sales basis)- $/oz sold

 

$365

 

$261

 

40%

Gold - All-in sustaining costs on a by-product basis - $/oz sold

 

$758

 

$763

 

(1%)

Gold - All-in sustaining costs on a by-product basis (including taxes) - $/oz sold

 

$942

 

$935

 

1%

                 

 

* Numbers may not add up due to rounding

Payments to the Kyrgyz national budget and mandatory contributions

During the first three months of 2018, contributions to the national budget in taxes, deductions to the Social Fund and other mandatory payments have totaled 1.97 billion soms.

As of March 31, 2018.

USD

Gross Proceeds Tax

                      21,991,326

Contribution to  Issyk-Kul Development Fund

                        2,458,948

Pollution Charge

                           310,000

Personal Income tax

                        1,370,596

State Social Insurance Contribution

                        2,259,310

Customs Fees

                           109,840

Tax on nonresident companies

                           119,640

Other taxes and mandatory payments

                           106,011

Total

                      28,725,670

US$ official exchange rate to the Kyrgyz Soms as of March 31, 2018

                           68.4325

Equivalent of payments effected in thousands Kyrgyz Soms

1,965,769

Outlook for 2018

 Kumtor’s 2018 gold production forecast is expected to be in the range of 450,000 to 500,000 ounces with about 45% of the gold production expected in the fourth quarter.  In 2018, Kumtor’s all-in sustaining cost on a by-product basis is expected to be in the range of $733 to $815 per ounce sold.  At Kumtor, 2018 total capital expenditures, excluding capitalized stripping, are forecast to be $63 million. Spending on sustaining capitalof $49 million relates primarily to major overhauls and replacements of the heavy duty mine equipment ($42 million). Growth capital investment at Kumtor for 2018 is forecast at $14 million primarily related to tailings dam construction ($9 million).

The cash component of capitalized stripping costs related to the development of the open pit is expected to be $122 million of the $168 million total capitalized stripping estimated for 2018.

CEO Commentary

Scott Perry, President and Chief Executive Officer of Centerra stated, “I am pleased to report that the roll-out of our Work Safe – Home Safe program has been fully embraced across the organization and we are now embarking on our drive to zero harm within the work place. We are seeing the early benefits of this safety program where on April 11th, 2018, our Kumtor operation achieved a significant milestone of one full year and 6 million man-hours without incurring a lost time injury.”

 Additional information on Centerra and the full text of the news release on the first quarter 2018 are available on SEDAR at www.sedar.com and the corporate websites at www.centerragold.com and www.kumtor.kg.

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