CIBC Roadshow December 2012 - Amazon S3 · CIBC Roadshow December 2012 Ian Atkinson, President and...
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CIBC RoadshowDecember 2012Ian Atkinson,President and CEO
Centerra Gold Inc.
2December 2012
● 2012 production update– consolidated production 415,000 to 425,000 ounces
● New Kumtor KS-13 life-of-mine plan– significant reserve increase– extended mine life
● Oksut exploration update– continued drilling success
Caution Regarding Forward-Looking InformationThis presentation and the documents incorporated by reference herein, contain statements which are not current statements or historical facts and may be “forward-looking information” for the purposes of Canadiansecurities 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 orimplied by such forward looking information. The words “believe”, “expect”, “anticipate”, “contemplate”, “target”, “plan”, “intends”, “continue”, “budget”, “estimate”, “may”, “will”, “schedule” and similar expressionsidentify forward-looking information.
These forward-looking statements relate to, among other things, the statements made under the heading, “Outlook for 2012”; the Company’s expectations regarding future production, cash cost per ounce produced,including expected recoveries; 2012 exploration expenditures; 2012 capital expenditures; Centerra’s statements regarding future growth, results of operations, future production and sales, operating capitalexpenditures, and performance; the Company’s ability to successfully manage the ice and waste movement at Kumtor; the outcome of the review by the State Commission and interagency commissions on Kumtor’scompliance with Kyrgyz operational and environmental laws and regulations and community standards, and other matters raised by the Parliamentary Commission Report, including without limitation, the resolution oftemporary land-use matters affecting the Kumtor project; the resolution of the claim commenced by the Kyrgyz Republic Social Fund regarding re-opening completed assessments for the years 2004-2009; expectedtrends in the gold market, including with respect to costs of gold production; exploration plans for 2012 and the success thereof; the receipt of permitting and regulatory approvals at the Company’s Gatsuurtdevelopment property; the impact of the Water and Forest Law on the Company’s Mongolian activities; anticipated delays and approvals and regulatory commissioning of the Company’s Gatsuurt developmentproperty as a result of the Water and Forest Law; the Company’s business and political environment and business prospects; and the timing and development of new deposits.
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 andcompetitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward looking information. Material assumptions used to forecastproduction and costs include those described under the heading “Outlook for 2012”. Factors that could cause actual results or events to differ materially from current expectations include, among other things: thesensitivity of the Company’s business to the volatility of gold prices; the political risks associated with the Company’s principal operations in the Kyrgyz Republic and Mongolia; the impact of changes in, or to the moreaggressive enforcement of, laws, regulations and government practices in the jurisdictions in which the Company operates; the effect of the Water and Forest Law on the Company’s operations in Mongolia; groundmovements at the Kumtor project; waste and ice movement at the Kumtor project; the success of the Company’s future exploration and development activities, including the financial and political risks inherent incarrying out exploration activities; competition for mineral acquisition opportunities; the adequacy of the Company’s insurance to mitigate operational risks; the effect of the 2006 Mongolian Minerals Law on theCompany’s Mongolian operations; the effect of the November 2010 amendments to the 2006 Mongolian Minerals Law on the royalties payable in connection with the Company’s Mongolian operations; the impact ofcontinued scrutiny from Mongolian regulatory authorities on the Company’s Boroo project; the impact of changes to, or the increased enforcement of, environmental laws and regulations relating to the Company’soperations; the Company’s ability to replace its mineral reserves; the occurrence of any labour unrest or disturbance and the ability of the Company to successfully re-negotiate collective agreements when required,including specifically the Kumtor collective agreement that expires at the end of 2012; litigation; the imprecision of the Company’s mineral reserves and resources estimates and the assumptions they rely on; theaccuracy of the Company’s production and cost estimates; environmental, health and safety risks; defects in title in connection with the Company’s properties; the impact of restrictive covenants in the Company’srevolving credit facility; the Company’s ability to successfully negotiate an investment agreement for the Gatsuurt project to complete the development of the mine and the Company’s ability to obtain all necessarypermits and regulatory commissions needed to commence mining activity at the Gatsuurt project; seismic activity in the vicinity of the Company’s operations in the Kyrgyz Republic and Mongolia; long lead timesrequired for equipment and supplies given the remote location of the Company’s properties; illegal mining on the Company’s Mongolian properties; the Company’s ability to enforce its legal rights; the Company’sability to accurately predict decommissioning and reclamation costs; the Company’s ability to obtain future financing; the impact of global financial conditions; the impact of currency fluctuations; the effect of marketconditions on the Company’s short-term investments; the Company’s ability to attract and retain qualified personnel; the Company’s ability to make payments including any payments of principal and interest on theCompany’s debt facilities depends on the cash flow of its subsidiaries; risks associated with the conduct of joint ventures; risks associated with having a significant shareholder; and possible director conflicts ofinterest. 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” inthe Company’s 2011 Annual Information Form 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 mayultimately 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. Economicand 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.
Dan Redmond is the Qualified Person for production and reserve information and David Groves is the Qualified Person for exploration information for purposes of NI 43-101, please see Centerra’s AIF and technicalreports filed on SEDAR.
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 orachievements 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 herein or incorporated by reference.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 lookinginformation is as of November 7, 2012. Centerra assumes no obligation to update or revise forward-looking information to reflect changes in assumptions, changes in circumstances or any other events affecting suchforward looking information, except as required by applicable law.
All figures are in United States dollars unless otherwise stated.3December 2012
Two Solid Operating Platforms
4December 2012
Turkey
Mongolia
Kyrgyzstan
Laogouxi JV
Dvoinoy JV
Kara Beldyr
JV
Oksut JVAltunhisar JV
Kumtor Mine
Boroo Mine
GatsuurtDeposit
ATO Deposit
Why Centerra Gold
● Canadian-based gold producer with 20 years experience in one of the world's most promising and underdeveloped gold regions– Proven and probable reserves of 11.5 million contained ounces
● Largest Western-based gold producer in Central Asia– World-scale Kumtor Mine, 14 year mine life– Operated Kumtor since 1997, no work stoppages from political events– Kumtor proven and probable reserves of 9.7 million contained ounces, does not include
1.9 million contained ounces of high-grade underground inferred resources
● Solid financial position with operating mines that produce solid cash flows and earnings– Cash balance of $260 million at September 30, 2012– Quarterly dividend payment
● Promising exploration properties and joint ventures in Turkey, Russia, China, Mongolia and the Kyrgyz Republic
● Seasoned management team with proven operating, development and exploration experience
5December 2012
18.8%
6.7%
Centerra Peers
17.5%
8.9%
Centerra Peers
5 Year Return on Equity (2009A to 2013E) 5 Year Return on Invested Capital (2009A to 2013E)
Centerra vs. Peers - Return on Equity and Return on Invested Capital Analysis
1 Centerra 2012E net income reflects Q4 charge relating to the underground development at Kumtor. 2 Peers include: Agnico-Eagle, Alacer, Alamos, AuRico, Eldorado, IAMGOLD, Osisko, Petropavlovsk and Yamana.
Alacer excluded prior to Anatolia merger with Avoca and Osisko excluded prior to commencement of production 2011.
∆8.6%
∆12.1%
2 21 1
Centerra – Superior Returns
December 2012 6
Source: Factset, Bloomberg Finanical Markets and Company reports.
Centerra – Reserves and Ounces MinedA
u O
un
ces
( ‘0
00
’s ) Reserves
7.3 million Cumulative
Ounces Mined Since
2004
11.5 millionounces
7December 2012
Kumtor Reserves
Boroo Reserves*
Gatsuurt Reserves*
Kumtor Ounces Mined
Boroo Ounces Mined* Reserves to End of 2011
Operating Performance
660
600
415
642
679676
Kumtor
Boroo
2011 Production:– Kumtor – 583,156 oz– Boroo – 59,224 oz
2012 Estimated Production:– Kumtor 350,000 – 360,000 oz– Boroo 65,000 oz
Gold Production(‘000 oz)
8December 2012
Corporate Responsibility
9
● 2011 initial corporate responsibility report– EITI, supporting company– World Gold Council, member
● Construction of maternity hospital in UB, Mongolia– 2012 expected completion ($6.4 million)
● Infrastructure and school construction in Kyrgyz Republic– Contributed in 2011 ($10 million)
● National micro-credit finance program in Kyrgyz Republic– 2012 funding ($21 million)
December 2012
Kyrgyz Operating Platform
10
Kumtor Reserves and ResourcesSept. 30, 2012
● P & P – open pit 9.7 m oz● M & I – open pit 2.7 m oz● Inferred – open pit 0.7 m oz
● Inferred – underground 1.9 m oz
December 2012
● World scale operation● Operating since 1997 with no
political interruptions● Produced 8.6 million ounces● Mining concession valid to 2042● Large land package, 26,300 ha● Competitive tax rate, 14% gross
revenue-based tax
Kumtor New LOM KS-13
11
● Increase reserves 58% to 9.7 million contained ounces– Extend mine life 5 years to 2026
● 650,000 ounces average annual gold production, first 10 years– LOM 7.9 million ounces of gold recovered
● Expand mill throughput 18% to 18,400 tonnes per day in 2016
● Total capital $726 million, excluding pre-strip capital– $169 million of expansion capital– $557 million of sustaining capital
● LOM operating cost plus pre-stripping and capital costs $728 per oz– $917 per oz including 14% revenue based-tax
● NPV at 8% discount rate, $1.9 billion at $1,350 per ounce gold price, $3.4 billion at $1,700 gold price
December 2012
12
Kumtor KS-13 LOM Free Cash Flow (undiscounted)
Gross revenue1 $10,682 $1,356
Operating costs $3,325 $422Pre-stripping capital $1,684 $214
Operating cost and pre-stripping $5,009 $636Sustaining capital $557 $71Expansion capital $169 $21
Total Capital $726 $92
Operating cost, pre-strip and capital $5,735 $728
Net cash before revenue-based tax $4,947 $628Revenue-based tax $1,489 $189
Free Cash Flow2 $3,458 $439
$ millions $ per ounce
1 Assumes $1,350 per ounce gold price including silver credits 2 Free cash flow is cash flow after all operating costs, capital and taxes
December 2012
Kumtor Open Pit Production Next 10 Years
3.73.73.73.73.83.73.7
4.24.23.8
2.9
0
100
200
300
400
500
600
700
2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Gold Production Tonnes Processed Grade g/t
ounc
es 0
00’s
December 2012 13
tonnes 000’s
1 Assumes $1,700 per ounce gold price including silver credits 2 Free cash flow is cash flow after all operating costs, capital and taxes
Gross revenue1 $1,025 $1,128 $1,129
Operating costs $215 $207 $329Pre-stripping capital $213 $248 $120
Operating cost and pre-stripping $428 $455 $449Sustaining capital $49 $50 $41Expansion capital $26 $94 $43
Total Capital $75 $144 $84
Operating cost, pre-strip and capital $503 $599 $533
Net cash before revenue-based tax $522 $528 $596Revenue-based tax $143 $157 $157
Free Cash Flow2 (millions) $379 $372 $439
14
Kumtor KS-13 Annual Free Cash Flow (undiscounted)
2013 2014
December 2012
2015($ millions)
SB Extension
StockworkZone
15December 2012
K U M T O R
Central Pit – Plan Map
16December 2012
K U M T O R
Central Pit – Longitudinal Section
No Data
No DataNo Data
K U M T O R
Central Pit - SB Zone
B
A
17December 2012
December 2012 18
Current Surface
Current Decline 2
KS-12 Pit Limit
KS-12 Unloading Zone
200 metres
> 6.00
6.00 – 2.50
2.50 – 1.00
1.00 – 0.85
0.85 – 0.01
Block Model Au g/t
Till Layer
A B
Proposed KS-13 Pit Limit
Potential Future Underground Opportunity
K U M T O R
Central Pit – Section AB Through Unload Area
Mongolian Operating Platforms
19
Mongolian Reserves and ResourcesDec.31, 2011
● Proven & Probable Reserves (gold)
– Boroo 0.3 m oz– Gatsuurt 1.5 m oz
● Measured & Indicated Resources (gold)
– Boroo 0.24 m oz– Gatsuurt 0.43 m oz– ATO 0.82 m oz
● Inferred Resources (gold)
– Boroo 0.23 m oz– Gatsuurt 0.49 m oz– ATO 0.03 m oz
December 2012
Mongolia Update
● Boroo Heap Leach – Restarted in October– Potential to add about 2,000 oz per month
● Gatsuurt road construction and site prep complete
● Gatsuurt approvals pending resolution of Water and Forest Law
● Expand processing options, add bio-oxidation facility
● ATO Project– Reserve/Resource approved– EIA approved– Received mining license
20December 2012
Expand Our Exploration
$25
$31
$40
$45
2009 2010 2011 2012E
● 50% of 2012 exploration budget on our land holdings
– Kumtor: $13M– Mongolia: $11M– JV’s in Russia and China: $7M– Project generation: $3M
● Kumtor focus– SB and Stockwork Zones
● Mongolia focus– ATO and other land holdings
● Turkey focus: $8M– Oksut Joint Venture
ExplorationExpenditures
$M
21December 2012
Prov ince boundary
Mining license
Exploration license
Railway
Main road
LEGEND
20 0 20 40
Kilometers
ULAANBULAG PROJECT
DARKHAN PROJECT
BOROO PROJECT
GATSUURT PROJECT
YALBAG PROJECT
KHUDER PROJECT
TOLGOIT PROJECT
MUNKH KHAAN PROJECT
UUL BAYAN PROJECT
46.5
°
106 °
48 °
49.5
°
109 °107.5 °
106 ° 107.5 ° 109 °
110.5 ° 112 ° 113.5 °
113.5 °110.5 ° 112 °
48 °49.5 °
46.5 °
0 50kilometres
100
Darkhan-Uul
Selenge
Sukhbaatar
Tuv
Khentii
Dornod
Darkhan-Uul
Selenge
Sukhbaatar
Tuv
Khentii
Dornod
Microsoft Bing © 2010 Microsoft CorporationMicrosoft Bing © 2010 Microsoft CorporationMicrosoft Bing © 2010 Microsoft CorporationMicrosoft Bing © 2010 Microsoft CorporationMicrosoft Bing © 2010 Microsoft CorporationMicrosoft Bing © 2010 Microsoft CorporationMicrosoft Bing © 2010 Microsoft CorporationMicrosoft Bing © 2010 Microsoft CorporationMicrosoft Bing © 2010 Microsoft Corporation
Province boundary
Mining license
Exploration license
Railway
Main road
LEGEND
YeroogolAu Trend
Onon Au–AgBase metal Trend
UlaanbaatarChoibalsan
Russia
ATO Project
100 kilometres
22December 2012
M O N G O L I A
License Holdings in Mongolia, January 2012
Pipe 4
Pipe 1
Pipe 2Pipe 3
M O N G O L I A
Altan Tsagaan Ovoo (ATO)
23December 2012
M O N G O L I A
ATO Deposit, Drillhole Location Plan Map
24December 2012
ATO
Davkhar Tolgoi
Bayan MunkhHigh Land
Bayan Gol
Duut Nuur
M O N G O L I A
ATO District Targets
ATO - M & I ResourcesDecember 31, 2011
Gold – 824,000 oz. @ 1.2 g/t
Silver – 5.6 M oz. @ 7.9 g/t
Lead – 270 M lbs @ 0.8%
Zinc – 489 M lbs @ 1.4%
25December 2012
Mining LicenseExploration License
T U R K E Y
Stratex JV – Oksut Project Location
December 2012 26
Georgia
Armenia
Iran
Bulgaria
T U R K E Y
ISTANBUL
Ankara
Black Sea
Mediterranean Sea
Stratex JVOksut Project
IraqSyria
● Joint Venture with Stratex International formed Aug. 2009
● Earned 50% interest in Joint Venture Oct. 2011
● Exercised option and earned 70% interest in Joint Venture Oct. 2012 by investing $3M
Kizilagil Zone Ortacam North Zone
Ortacam Zone
Kucukmese Zone
Buyukmese Zone
OksutProperty Boundary
Ortacam North
Ortacam
Kucukmese
Buyukmese
Kizilagil
Devetasi
DevetasiZone
27December 2012
T U R K E Y
Stratex JV - Ortacam North Geology and Drillhole Locations
28December 2012
T U R K E Y
Stratex JV - Ortacam North Geology and Drillhole Locations
●●
● ●●
ODD580.39 / 56.6m
ODD580.38 / 21.1m
SW NE
Bulk (0.2g/t Au cut-off)
Sulphide Only (0.2g/t Au cut-off)
ODD500.43 / 7.0m
ODD500.23 / 9.9m
ODD500.43 / 7.0m
ODD500.28 / 5.4m
ODD500.33 / 13.7m
ODD500.29 / 5.3m
ODD491.10 / 116.0m
Incl. 1.31 / 32.6mand
Incl. 2.16 / 13.0mand
Incl. 1.27 / 23.6m
ODD230.65 / 42.9m
Incl. 1.40 / 10.0m
ODD490.37/ 6.0m
ODD553.20 / 185.5m
Incl. 3.63 / 160.1m
ODD550.55 / 50.1m
Incl. 1.32 / 8.0m
Hole NameAu g/t / Interval Length
Mineralized Intervals > 0.20 g/t AuMineralized Intervals > 1.00 g/t Au
Maximum 5.0m Internal Dilution
ODD581.57 / 144.1m
Incl. 0.81 / 61.4mand 2.13 / 82.7m
ODD581.09 / 12.8m
●ODD24
0.21 / 18.7m
29December 2012
T U R K E Y – Q3 2012
Stratex JV - Ortacam North Section ODD58
Summary
30
● Working with State Commission in the KR
● On track with the mitigation plan, accessed ore mid-September at Kumtor
● New KS-13 expanded pit at Kumtor, adds significantly to reserves
● Continuing exploration– ATO– Stratex JV– Kara Beldyr JV– Kumtor
December 2012
TSX: CGTotal shares issued and outstanding: 236.4 million
Investor Relations: John W. Pearson (416) 204-1241 – [email protected]
Appendix
Share and Ownership Profile
● Symbol CG on the TSX, 236,376,011 common shares issued
● Market capitalization approximately CDN$2.3 Billion
● Strong financial position
● Quarterly dividend CDN$0.04
Share Ownership
Kyrgyzaltyn JSC
33%
Retail shareholders
15%
Institutional shareholders
52%
33December 2012
K U M T O R
Concession and Exploration Targets
34December 2012
December 2012 35
K U M T O R
Central Pit – Plan Map
Tyva Republic
Kara Beldyr Project
Camp Zone
Baran Zone
Gord Zone
Ezen Zone
Kara Beldyr License Area 34 sq. km
December 2012 36
Russia
Kara Beldyr Joint Venture, Tyva Republic
Russia
Kara Beldyr Joint Venture – Geology and Drillhole Locations
37
Gord Zone ResourcesDecember 31, 2011
(100% basis)
Indicated Resource3,790,000 tonnes @ 2.4 g/t Au 289,000 ounces gold
Inferred Resource3,354,000 tonnes @ 2.0 g/t Au 211,000 ounces gold
December 2012
December 2012 38
Kara Beldyr – Q3 2012
Camp Zone Section 2150NW
39
Financial Performance First Nine Months 2012
Gold production (‘000 oz) 168 491Total cash cost ($/oz) $1,060 $474Average realized gold price ($/oz) $1,669 $1,534
Revenues $292M $772MNet Earnings (loss) ($116M) $292MNet Earnings (loss) per share ($0.49) $1.23
Cash from operations ($73M) $375M
Cash and Short-term investments $260M $568M*
Sept. 30
2012
Sept. 30
2011
Please refer to November 7, 2012 news release, MD&A and unaudited Financial Statements and Notes for the three and nine-months ended September 30, 2012 and 2011 and Caution Regarding Forward-Looking Information
* December 31, 2011
December 2012
40
Strong Financial Performance in 2011
Gold production (‘000 oz) 642 679Total cash cost ($/oz) $502 $440Average realized gold price ($/oz) $1,569 $1,236
Revenues $1,020M $850MNet Earnings $371M $322MNet Earnings per share $1.57 $1.37
Cash from operations $435M $281M
Cash and Short-term investments $568M $413M
Dec. 31
2011
Dec. 31
2010
Please refer to February 23, 2012 news release, MD&A and audited Financial Statements and Notes for the year-ended December 31, 2011 and 2010 and Caution Regarding Forward-Looking Information
December 2012