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Centerra Gold reports 2013 fourth quarter and year-end results

By B.KHASH-ERDENE

Canadian gold miner, Centerra Gold, which mines Mongolia’s Boroo mine, reported net earnings of 106.6 million USD, or 0.45 USD per common share, in the fourth quarter of 2013 on Wednesday. This compares to a net loss of 70.7 million USD, or 0.30 USD per common share, for the same period in 2012 after a charge of 180.7 million USD in the fourth quarter of 2012 for the de-recognition of the underground assets at the Kumtor mine.
Ian Atkinson, president and CEO of Centerra stated, “Operations exceeded their production guidance in 2013, mainly as a result of a strong fourth quarter at Kumtor and better than expected annual production from the heap leach operation at Boroo. Centerra’s performance in 2013 was well within its third quarter operating cash costs guidance, and performed better than its prior all-in cash costs per ounce produced guidance partly due to Boroo, which exceeded expectations, and to Kumtor’s strong production in the fourth quarter of 2013, which enabled it to exceed its guidance. From a financial standpoint, in the fourth quarter of 2013, the company had strong net earnings. Cash provided by operations was approximately 360 million USD during the fourth quarter and our cash and short-term investments grew to over 425 million USD net of our debt at year-end.”
For the full year, the company recorded net earnings of 157.7 million, compared to a net loss of 143.7 million USD in 2012. The increase in earnings in 2013 reflects significantly more ounces produced and sold, ounces sold increased 78 percent over 2012, a 4.8 million USD write-down of the exploration inventory at Kumtor mine in Kyrgyzstan following the closure of the exploration program and the adoption, in the first quarter of 2013, of a new accounting policy, IFRIC 20.
Adoption of IFRIC 20 resulted in retroactively capitalizing approximately 40 million USD of previously expensed stripping costs in 2012 thereby reducing the loss in 2012. The company’s 2012 results have been restated. The additional capitalized stripping costs in 2012 was fully amortized in 2013, resulting in the company’s actual depreciation, depletion and amortization (DD&A) exceeding the prior DD&A guidance of February 20, 2013.
Centerra said that production increases in 2013 were reported at both of the company’s operations, but these increases were partially offset by 20 percent lower realized gold prices in 2013. The 2012 results reflected a charge for the de-recognition of the underground assets at Kumtor of 180.7 million USD and the negative impact on production of the acceleration of ice and waste in the high movement area above the SB Zone which delayed the release of ore and required a re-design of the production plan in early 2012.
According to the company, consolidated gold production in 2013 totaled 690,720 ounces compared to 387,076 ounces in the prior year. Production increases in 2013 were reported at both operations; Kumtor recorded a 90 percent increase in ounces poured, while Boroo poured 26 percent more ounces in 2013. During the year, Kumtor processed higher grades and achieved higher recoveries and Boroo benefited from a full year of heap leach production (which resumed operation in October 2012). In 2012 the lower gold production was primarily due to the revised mine plan at Kumtor, which resulted from the accelerated ice and waste movements in the pit wall above the SB Zone.
“In 2014, we are expecting consolidated gold production to be in the 595,000 to 645,000 ounce range and our expected consolidated all-in sustaining costs per ounce sold for 2014 to be within a range of 875 USD to 950 USD and our expected consolidated all-in costs to be 989 USD to 1,074 USD per ounce sold,” said Atkinson.
As of December 31, 2013, the company had 76 million USD outstanding debt under its 150 million USD revolving credit facility with the European Bank for Reconstruction and Development (EBRD) leaving a balance of 74 million USD undrawn at December 31, 2013. Repayment of the outstanding debt was subsequently extended to August 11, 2014 or, at the company’s discretion, repayment of the loan may be further extended until February 2015.
Cash, cash equivalents and short-term investments at the end of 2013 increased to 501.5 million USD from 382.1 million USD at December 31, 2012, reported Centerra.

Boroo

At the Boroo mine in the fourth quarter of 2013, gold production was 14,104 ounces, compared to 29,877 ounces in the same period of 2012. The lower production was mainly due processing ore with a lower average mill head grade, 0.80 g/t in the fourth of 2013 compared to processing higher grade ore from Pit 6 with an average mill head grade of 2.07 g/t in the fourth quarter of 2012. In addition lower ounces were poured from the heap leach operation (5,786 ounces vs. 7,486 ounces) as a result of maintenance performed on the heap leach pond in the fourth quarter of 2013.
During the fourth quarter of 2013 exploration expenditures in Mongolia decreased to 1.9 million USD from three million USD in the same period in 2012. The majority of the exploration work in the fourth quarter 2013 was conducted at the ATO property in eastern Mongolia.
Capital expenditures spent and accrued at Boroo and Gatsuurt in the fourth quarter of 2013 were 0.5 million USD compared to 0.8 million USD in the same period of 2012. Capital expenditures in 2013 relate to 0.4 million USD of sustaining capital at Boroo and 0.1 million USD at Gatsuurt.

Quarterly dividend set at 0.04 CAD per share

Centerra Gold announced that its board has authorized a dividend of 0.04 CAD per common share (approximately 8.6 million USD at the current exchange rate). The dividend is payable on March 20, 2014 to shareholders of record on March 6, 2014. The ex-dividend date will be March 4, 2014.

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