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Centerra Gold Records Third Quarter Net Earnings of $27.6 million ($0.09 per common share), Adjusted Net EarningsNG of $35.7 million ($0.12 per common share), Cash Provided by Operating Activities of $62.4 million and Free Cash FlowNG of $41.0 million

Mount Milligan Q3 cash provided by mine operations ($ millions)

Mount Milligan Q3 cash provided by mine operations ($ millions)
Mount Milligan Q3 cash provided by mine operations ($ millions)
Mount Milligan Q3 cash provided by mine operations ($ millions)

Mount Milligan Q3 All-in sustaining costs on a by-product basis per ounce(NG)

Mount Milligan Q3 All-in sustaining costs on a by-product basis per ounce(NG)
Mount Milligan Q3 All-in sustaining costs on a by-product basis per ounce(NG)
Mount Milligan Q3 All-in sustaining costs on a by-product basis per ounce(NG)

Mount Milligan YTD cash provided by mine operations ($ millions)

Mount Milligan YTD cash provided by mine operations ($ millions)
Mount Milligan YTD cash provided by mine operations ($ millions)
Mount Milligan YTD cash provided by mine operations ($ millions)

Mount Milligan YTD All-in sustaining costs on a by-product basis per ounce(NG)

Mount Milligan YTD All-in sustaining costs on a by-product basis per ounce(NG)
Mount Milligan YTD All-in sustaining costs on a by-product basis per ounce(NG)
Mount Milligan YTD All-in sustaining costs on a by-product basis per ounce(NG)

Öksüt Mine Q3 cash provided by mine operations ($ millions)

Öksüt Mine Q3 cash provided by mine operations ($ millions)
Öksüt Mine Q3 cash provided by mine operations ($ millions)
Öksüt Mine Q3 cash provided by mine operations ($ millions)

Öksüt Mine Q3 All-in sustaining costs on a by-product basis per ounce(NG)

Öksüt Mine Q3 All-in sustaining costs on a by-product basis per ounce(NG)
Öksüt Mine Q3 All-in sustaining costs on a by-product basis per ounce(NG)
Öksüt Mine Q3 All-in sustaining costs on a by-product basis per ounce(NG)

Moly Oxide Pricing $USD/lb (Jan 2020 - Sept 2021)

Moly Oxide Pricing $USD/lb (Jan 2020 - Sept 2021)
Moly Oxide Pricing $USD/lb (Jan 2020 - Sept 2021)
Moly Oxide Pricing $USD/lb (Jan 2020 - Sept 2021)

All figures are in United States dollars and all production figures are on a 100% basis and continuing operations basis, unless otherwise stated. This news release contains forward-looking information regarding Centerra Gold’s business and operations. See “Caution Regarding Forward-Looking Information”. All references in this document denoted with “NG indicate a non-GAAP term which is discussed under “Non-GAAP Measures” and reconciled to the most directly comparable GAAP measure.

TORONTO, Nov. 05, 2021 (GLOBE NEWSWIRE) -- Centerra Gold Inc. (“Centerra” or the “Company”) (TSX: CG and NYSE: CGAU) today reported its third quarter 2021 results.

Significant financial and operating highlights of the third quarter include:

  • Net earnings and adjusted net earningsNG of $27.6 million or $0.09 per common share (basic), and $35.7 million or $0.12 per common share (basic), respectively.

  • Cash flow provided by operating activities and free cash flowNG of $62.4 million and $41.0 million, respectively.

  • Mount Milligan Mine and Öksüt Mine recognized free cash flow from mine operations of $25.9 million and $48.9 million, respectively.

  • Cash position at quarter-end of $911.7 million with total liquidity of $1,311.7 million.

  • Consolidated production of 76,913 ounces of gold and 17.9 million pounds of copper.

  • Consolidated gold production costs and copper production costs were $630 per ounce and $1.50 per pound, respectively.

  • Consolidated all-in sustaining costs on a by-product basisNG and consolidated all-in costs on a by-product basisNG were $781 per ounce and $932 per ounce, respectively.

  • Full-year 2021 cost guidance lowered for the Öksüt Mine. The Öksüt Mine’s gold production costs and all-in sustaining costs on a by-product basisNG are now expected to be in the range of $450 to $500 per ounce and $680 to $730 per ounce, respectively. The Company’s consolidated gold production costs and all-in sustaining costs on a by-product basisNG are now expected to be in the range of $600 to $650 per ounce and $700 to $750 per ounce, respectively.

  • Legal proceedings relating to the Kumtor Mine continue. During the third quarter of 2021, an arbitrator was appointed in the arbitration proceedings against the Kyrgyz Republic and Kyrgyzaltyn JSC and the Company filed an application seeking interim measures in the Kumtor arbitration proceedings to prevent, among other things, the Kyrgyz Republic and Kyrgyzaltyn JSC from causing irreparable damage to the mine. On October 27, 2021, the appointed arbitrator resigned, citing the refusal by the Kyrgyz Republic and Kyrgyzaltyn JSC to agree to protections he had requested against personal claims being brought against him by the parties or to pay his requested fees. The Company has requested that the Permanent Court of Arbitration and its designated appointing authority promptly appoint a replacement arbitrator.

  • Quarterly dividend declared of CAD$0.07 per common share.

Commentary

Scott Perry, President and Chief Executive Officer of Centerra stated, “During the third quarter we continued to demonstrate positive safety performance as the Öksüt mine achieved two million work hours without a lost-time injury. At the same time, Thompson Creek Mine, Langeloth Facility and Kemess UG Project each achieved one year without a lost-time injury and our 75%-owned Endako Mine achieved eight years without a lost-time injury.”

“Across the organization we continue to stay vigilant with respect to the COVID-19 virus. At both our Mount Milligan and Öksüt Mines, vaccination clinics have been set up for employees and contractors, with second vaccination doses having been provided to the majority of site employees. We are proactively maintaining our rigorous safety protocols across the organization to prevent any outbreaks and reduce the spread of COVID-19 for the health and safety of our employees, contractors, communities and other stakeholders.”

“Our operations performed well in the third quarter and we achieved Company-wide gold production from continuing operations of 76,913 ounces at all-in sustaining costs on a by-product basis of $781 per ounce. With this performance, and what we are expecting in the fourth quarter, we are on track to achieve the upper-end of our gold production guidance and the lower-end of the all-in sustaining costs on a by-product basis guidance. During the third quarter, the Mount Milligan Mine produced 39,658 ounces of gold and 17.9 million pounds of copper at all-in sustaining costs on a by-product basis of $727 per ounce. In the same period, the Öksüt Mine produced 37,255 ounces of gold at all-in sustaining costs on a by-product basis of $603 per ounce during the third quarter as we started mining and stacking higher grade material, making it our lowest cost producer in the quarter.”

“Financially, the Company continues to generate significant free cash flow, even without the contribution from the Kumtor Mine. During the third quarter, we generated $62.4 million in cash provided by operating activities, including $43.3 million from the Mount Milligan Mine and $52.1 million from the Öksüt Mine. Company-wide free cash flow from continuing operations in the third quarter of 2021 totalled $41.0 million, including $25.9 million from the Mount Milligan Mine and $48.9 million from the Öksüt Mine. Both mines are on track to achieve record free cash flow for the full year. We finished the quarter with a debt-free balance sheet and a cash position of $911.7 million.”

“Based on the Company’s financial position, strong operating results and cash flows, the Board approved on November 4, 2021, a quarterly dividend of CAD$0.07 per share.”

“While we continue to seek resolution to the Kumtor Mine dispute, the Company continues to be financially and operationally strong. At the Öksüt Mine, mining activities will continue in the high-grade zones in the fourth quarter of 2021 and in 2022. Based on the consolidated results for the first nine months of the year, including consolidated free cash flowNG from continuing operations of $139.7 million, the Company remains on track to achieve our revised 2021 consolidated production and cost guidance and potentially exceed the upper-end of our consolidated free cash flowNG from continuing operations guidance of $125 to $175 million in 2021.”

“Lastly, I would like to recognize that after more than 15 years with Centerra, John Pearson, Vice-President, Investor Relations will be retiring at the end of this year. I want to congratulate John on his upcoming retirement and thank him for his continuous commitment and dedicated service. During his long tenure, with Centerra, John has been the backbone of our investor relations efforts, consistently communicating with the marketplace. Over this time, the Company transformed from having a Central Asia focus into a multi-mine diverse business. On behalf of myself, the Company, and the Board, I would like to wish John a happy retirement. Upon John’s retirement, all investor relations responsibilities will be assumed by Toby Caron, Treasurer and Director, Investor Relations.”

Exploration Update

Exploration activities in the third quarter of 2021 included drilling, surface sampling, geological mapping and geophysical surveying at the Company’s various projects and earn-in properties, targeting gold and copper mineralization in Canada, Turkey, Finland and the United States of America.

Exploration expenditures at the Company’s operations were $7.2 million in the third quarter of 2021 The activities were focused on expanded drilling programs at the Mount Milligan Mine and the Öksüt Mine, as well as at the Sivritepe Project in Turkey.

A resource expansion drilling program commenced in August 2021 at the Mount Milligan Mine. The drilling is designed to develop and upgrade resources and reserves in the MBX, WBX and DWBX zones below and to the west of the current ultimate open-pit boundary. There is the potential for significant resources to exist in these areas and assays returned throughout the third quarter of 2021 show wide intercepts of potentially significant mineralization outside the ultimate open-pit boundary. The resource expansion drilling program will continue into the fourth quarter of 2021 and additional drilling will be completed in advance of an updated resource model to support a new life-of-mine plan.

At the Öksüt Mine, a resource expansion drilling which commenced earlier in the year was completed early in the third quarter of 2021. Drilling activities were performed to provide greater confidence to the resources and reserves within the Keltepe and Güneytepe deposits in support of an updated resource model and new life-of-mine plan. Exploration drilling activities completed late in the third quarter of 2021 expanded oxide gold mineralization at the Keltepe North and Keltepe Northwest deposits and provided encouragement that it may be possible to join these two deposits in the future.

Selected drill program results and intercepts are highlighted in the supplementary data at the end of this news release. The drill collar locations and associated graphics are available at the following link:

http://ml.globenewswire.com/Resource/Download/7c29d6c2-5f7e-4117-9e23-a12eae1bccab

About Centerra Gold

Centerra Gold Inc. is a Canadian-based gold mining company focused on operating, developing, exploring and acquiring gold properties in North America, Turkey, and other markets worldwide. Centerra operates two mines: the Mount Milligan Mine in British Columbia, Canada, and the Öksüt Mine in Turkey. While the Company still owns the Kumtor Mine in the Kyrgyz Republic, it is currently no longer under the Company’s control. The Company also owns the pre-development stage Kemess Underground Project in British Columbia, Canada and owns and operates the Molybdenum Business Unit in the United States. Centerra's shares trade on the Toronto Stock Exchange (“TSX”) under the symbol CG and on the New York Stock Exchange (“NYSE”) under the symbol CGAU. The Company is based in Toronto, Ontario, Canada.

Conference Call

Centerra invites you to join its 2021 third quarter conference call on Friday, November 5, 2021 at 9:00 AM Eastern Time. The call is open to all investors and the media. To join the call, please dial toll-free in North America: +1 (800) 759-0876. International participants may access the call at: +1 (416) 981-0157. Results summary presentation slides are available on Centerra Gold’s website at www.centerragold.com. Alternatively, an audio feed webcast will be broadcast live by Intrado and can be accessed live on Centerra Gold’s website at www.centerragold.com. A recording of the call will also be available on Centerra Gold’s website at www.centerragold.com shortly after the call and via telephone until midnight Eastern Standard Time on November 12, 2021 by calling: +1 (416) 626-4100 or 1 (800) 558-5253 and using passcode 21998229.

For more information:

John W. Pearson
Vice President, Investor Relations
Centerra Gold Inc.
(416) 204-1953
john.pearson@centerragold.com

Toby Caron
Treasurer and Director, Investor Relations
Centerra Gold Inc.
(416) 204-1153
toby.caron@centerragold.com

Additional information on Centerra Gold is available on the Company’s website at www.centerragold.com and on SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.

Management’s Discussion and Analysis
For the Period Ended September 30, 2021

This Management Discussion and Analysis (“MD&A”) has been prepared as of November 4, 2021 and is intended to provide a review of the financial position and results of operations of Centerra Gold Inc. (“Centerra” or the “Company”) for the three and nine months ended September 30, 2021 in comparison with the corresponding period ended September 30, 2020. This discussion should be read in conjunction with the Company’s unaudited condensed consolidated interim financial statements (the “interim financial statements”) and the notes thereto, for the three and nine months ended September 30, 2021 prepared in accordance with International Financial Reporting Standards (“IFRS”). This MD&A should also be read in conjunction with the Company’s audited annual consolidated financial statements for the years ended December 31, 2020 and 2019, the related MD&A and the Annual Information Form for the year ended December 31, 2020 (the “2020 AIF”). The Company’s unaudited condensed consolidated interim financial statements and the notes thereto for the three and nine months ended September 30, 2021, the 2020 Annual Report and the 2020 AIF are available at www.centerragold.com, on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and on the Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”) at www.sec.gov/edgar. In addition, this MD&A contains forward-looking information regarding Centerra’s business and operations. Such forward-looking statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. See “Caution Regarding Forward-Looking Information” in this MD&A. All dollar amounts are expressed in United States dollars (“USD”), except as otherwise indicated. All references in this document denoted with “NG indicate a non-GAAP term which is discussed under “Non-GAAP Measures” and reconciled to the most directly comparable GAAP measure.

Caution Regarding Forward-Looking Information

Information contained in this MD&A which is not a statement of historical fact, and the documents incorporated by reference herein, may be “forward-looking information” for the purposes of Canadian securities laws and within the meaning of the United States Private Securities Litigation Reform Act of 1995. 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 or implied by such forward-looking information. The words “believe”, “expect”, “anticipate”, “contemplate”, “plan”, “intends”, “continue”, “budget”, “estimate”, “may”, “will”, “schedule”, “understand” and similar expressions identify forward-looking information. These forward-looking statements relate to, among other things: statements regarding 2021 Guidance, including outlook on production (including the timing thereof), cost, free cash flow and capital spend in 2021, and the assumptions used in preparing such guidance and outlook, including those discussed under “2021 Material Assumptions”; the impact of the seizure of the Kumtor Mine on the Company’s other operations and businesses; the outcome of arbitration and other proceedings initiated by the Company regarding the unlawful seizure by the Kyrgyz Government of the Kumtor Mine in May, 2021, or the outcome or effect of the legacy environmental and tax disputes and criminal investigations relating to the Kumtor Mine, or the outcome of any future discussions or negotiations to resolve any or all of the disputes relating to the Kumtor Mine; possible impacts to operations relating to COVID-19; the Company’s expectation regarding having sufficient water at the Mount Milligan Mine in the medium-term for its targeted throughput and its plans for a long-term water solution; the Company’s continued evaluation of potential activity at the Kemess East Project; expectations regarding the resources and reserves within the Keltepe and Güneytepe deposits in support of an updated resource model and new life-of-mine plan; expectations regarding the future joining of the Keltepe North and Keltepe Northwest deposits; the Company’s expectations regarding exploration results in connection with the Sivritepe Project and 2XFred Project; the Company’s expectations of adequate liquidity and capital resources for 2021; and, expectations regarding contingent payments to be received from the sale of Greenstone Partnership.

Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable by Centerra, are inherently subject to significant technical, political, business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking information. Factors and assumptions that could cause actual results or events to differ materially from current expectations include, among other things: (A) strategic, legal, planning and other risks, including: political risks associated with the Company’s operations in Turkey and Canada; resource nationalism including the management of external stakeholder expectations; the impact of changes in, or to the more aggressive enforcement of, laws, regulations and government practices, including unjustified civil or criminal action against the Company, its affiliates, or its current or former employees; risks that community activism may result in increased contributory demands or business interruptions; the risks related to outstanding litigation affecting the Company, including the potential failure to negotiate a mutually acceptable outcome of disputes relating to the Kumtor Mine; risks that an arbitrator will reject the Company’s claims against the Kyrgyz Republic and/or Kyrgyzaltyn JSC (“Kyrgyzaltyn”) or that such claims may not be practically enforceable against the Kyrgyz Republic and/or Kyrgyzaltyn; risks related to the continued imposition by the Kyrgyz Government of external management on the Company’s wholly-owned subsidiary, Kumtor Gold Company (“KGC”) or the prolongation of such external management, including risks that the external manager materially damages the Kumtor Mine’s operations; the ongoing failure of the Kyrgyz Republic Government to comply with its continuing obligations under the investment agreements governing the Kumtor Mine and not take any expropriation action against the Kumtor Mine; risks that the Kyrgyz Government undertake further unjustified civil or criminal action against the Company, its affiliates, or its current or former employees; the impact of constitutional changes in Turkey; the impact of any sanctions imposed by Canada, the United States or other jurisdictions against various Russian and Turkish individuals and entities; potential defects of title in the Company’s properties that are not known as of the date hereof; the inability of the Company and its subsidiaries to enforce their legal rights in certain circumstances; the presence of a significant shareholder that is a state-owned company of the Kyrgyz Republic; risks related to anti-corruption legislation; risks related to the concentration of assets in Central Asia; Centerra not being able to replace mineral reserves; Indigenous claims and consultative issues relating to the Company’s properties which are in proximity to Indigenous communities; and, potential risks related to kidnapping or acts of terrorism; (B) risks relating to financial matters, including: sensitivity of the Company’s business to the volatility of gold, copper and other mineral prices; the use of provisionally-priced sales contracts for production at the Mount Milligan Mine; reliance on a few key customers for the gold-copper concentrate at the Mount Milligan Mine; use of commodity derivatives; the imprecision of the Company’s mineral reserves and resources estimates and the assumptions they rely on; the accuracy of the Company’s production and cost estimates; the impact of restrictive covenants in the Company’s credit facilities which may, among other things, restrict the Company from pursuing certain business activities or making distributions from its subsidiaries; the Company’s ability to obtain future financing; the impact of global financial conditions; the impact of currency fluctuations; the effect of market conditions on the Company’s short-term investments; and, the fact that the Company’s ability to make payments, including any payments of principal and interest on the Company’s debt facilities, depends on the cash flow of its subsidiaries; and, (C) risks related to operational matters and geotechnical issues and the Company’s continued ability to successfully manage such matters, including the stability of the pit walls at the Company’s operations; the risk of having sufficient water to continue operations at the Mount Milligan Mine and achieve expected mill throughput; the success of the Company’s future exploration and development activities, including the financial and political risks inherent in carrying out exploration activities; inherent risks associated with the use of sodium cyanide in mining operations; the adequacy of the Company’s insurance to mitigate operational risks; mechanical breakdowns; the occurrence of any labour unrest or disturbance and the ability of the Company to successfully renegotiate collective agreements when required; the risk that Centerra’s workforce and operations may be exposed to widespread epidemic including, but not limited to, the COVID-19 pandemic; seismic activity; long lead-times required for equipment and supplies given the remote location of some of the Company’s operating properties; reliance on a limited number of suppliers for certain consumables, equipment and components; the ability of the Company to address physical and transition risks from climate change and sufficiently manage stakeholder expectations on climate-related issues; the Company’s ability to accurately predict decommissioning and reclamation costs; the Company’s ability to attract and retain qualified personnel; competition for mineral acquisition opportunities; risks associated with the conduct of joint ventures/partnerships; and the Company’s ability to manage its projects effectively and to mitigate the potential lack of availability of contractors, budget and timing overruns and project resources. For additional risk factors, please see section titled “Risk Factors” in the Company’s most recently filed 2020 AIF available on SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.

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, or achievements 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-looking information is as of November 4, 2021. Centerra assumes no obligation to update or revise forward-looking information to reflect changes in assumptions, changes in circumstances, or any other events affecting such forward-looking information, except as required by applicable law.

TABLE OF CONTENTS

Overview
Overview of Consolidated Financial and Operating Results
Overview of Consolidated Results
Outlook
Recent Events and Developments
Financial Performance
Balance Sheet Review
Financial Instruments
Operating Mines and Facilities
Discontinued Operations
Quarterly Results – Previous Eight Quarters
Related party transactions
Contingencies
Accounting Estimates, Policies and Changes
Disclosure Controls and Procedures and Internal Controls Over Financial Reporting
Non-GAAP Measures
Qualified Person & QA/QC – Non-Exploration (including Production information)

9
10
11
14
19
23
25
28
29
40
41
41
41
43
43
44
50

Overview

Centerra is a Canadian-based gold mining company focused on operating, developing, exploring and acquiring gold properties in North America, Turkey and other markets worldwide. Centerra’s principal continuing operations are the Mount Milligan gold-copper mine located in British Columbia, Canada (the “Mount Milligan Mine”), and the Öksüt gold mine located in Turkey (the “Öksüt Mine”). The Company also owns the pre-development stage Kemess underground project (the “Kemess UG Project”) in British Columbia, Canada as well as exploration properties in Canada, the United States of America and Turkey and has options to acquire exploration joint venture properties in Canada, Finland, Turkey, and the United States of America. The Company owns and operates a Molybdenum Business Unit, particularly the Langeloth metallurgical processing facility, operating in Pennsylvania, United States of America, and two primary molybdenum mines in care and maintenance: the Thompson Creek Mine in Idaho, United States of America and the Endako Mine (75% ownership) in British Columbia, Canada.

Prior to May 15, 2021, the Company also consolidated the results of the Kumtor Mine, located in the Kyrgyz Republic, through its wholly-owned subsidiary, KGC. Although the Company remains the rightful owner of KGC, the illegal seizure of the Kumtor Mine and the continuing actions by the Kyrgyz Republic and Kyrgyzaltyn have resulted in the following: (i) the carrying value of the net assets of the mine were derecognized from the Company’s balance sheet, (ii) no value was ascribed to the Company’s interest in KGC, (iii) the Company recognized a loss on the change of control in the second quarter of 2021 and (iv) results of the Kumtor Mine’s operations are now presented as a discontinued operation in the Company’s financial statements.

As of September 30, 2021, Centerra’s significant subsidiaries are as follows:

Current

Property

Entity

Property - Location

Status

Ownership

Thompson Creek Metals Company Inc.

Mount Milligan Mine - Canada

Operation

100%

Öksüt Madencilik A.S.

Öksüt Mine - Turkey

Operation

100%

Langeloth Metallurgical Company LLC

Langeloth - USA

Operation

100%

AuRico Metals Inc.

Kemess UG Project - Canada

Pre-development

100%

Thompson Creek Mining Co.

Thompson Creek Mine - USA

Care and maintenance

100%

Thompson Creek Metals Company Inc.

Endako Mine - Canada

Care and maintenance

75%

Kumtor Gold Company (“KGC”)

Kumtor Mine - Kyrgyz Republic

Discontinued operation

100%

The Company’s common shares are listed on the Toronto Stock Exchange and the New York Stock Exchange and trade under the symbols “CG” and “CGAU”, respectively.

As of November 4, 2021, there are 296,920,978 common shares issued and outstanding, options to acquire 3,273,950 common shares outstanding under the Company’s stock option plan and 1,034,794 restricted share units outstanding under the Company’s restricted share unit plan (exercisable on a 1:1 basis for common shares).

Overview of Consolidated Financial and Operating Results

Unaudited ($ thousands, except as noted)

Three months ended September 30,

Nine months ended September 30,

Financial Highlights (Continuing operations basis, except as noted)

2021

2020

% Change

2021

2020

% Change

Revenue

$

220.6

$

251.3

(12

%)

$

649.1

$

509.3

27

%

Production costs

121.6

103.8

17

%

355.7

310.8

14

%

Depreciation, depletion, and amortization

30.4

30.8

(1

%)

89.5

70.8

26

%

Earnings from mine operations

$

68.6

$

116.7

(41

%)

$

203.9

$

127.7

60

%

Net earnings (loss) from continuing operations

27.6

82.4

(67

%)

172.1

(15.4

)

(1218

%)

Adjusted net earnings from continuing operations(1)

35.7

82.4

(57

%)

113.9

28.1

305

%

Net earnings (loss) from discontinued operations

-

123.3

(100

%)

(828.7

)

328.8

(352

%)

Net earnings (loss) (2)

$

27.6

$

205.7

(87

%)

$

(656.6

)

$

313.3

310

%

Adjusted net earnings(1)(2)

$

35.7

$

205.7

(83

%)

$

198.3

$

356.8

(44

%)

Cash provided by operating activities from continuing operations

62.4

151.7

(59

%)

209.1

188.0

11

%

Free cash flow from continuing operations(1)

41.0

124.9

(67

%)

139.7

120.1

16

%

Adjusted free cash flow from continuing operations(1)

45.3

124.9

(64

%)

148.6

120.1

24

%

Cash provided by operating activities from discontinued operations

-

207.1

(100

%)

143.9

560.0

(74

%)

Net cash flow from discontinued operations(8)

-

156.1

(100

%)

47.8

400.8

(88

%)

Capital expenditures - total(3)

20.1

25.7

(22

%)

65.2

63.8

2

%

Sustaining capital expenditures

18.7

13.2

42

%

62.3

28.9

116

%

Non-sustaining capital expenditures

1.4

12.5

(89

%)

2.9

34.9

(92

%)

Net earnings (loss) from continuing operations per common share - basic(4)

0.09

0.28

(68

%)

0.58

(0.05

)

(1260

%)

Net earnings (loss) per common share - $/share basic(2)(4)

0.09

0.70

(87

%)

(2.21

)

1.06

(308

%)

Adjusted net earnings from continuing operations per common share - basic(1)(4)

0.12

0.28

(57

%)

0.38

0.10

280

%

Adjusted net earnings per common share - $/share basic(1)(2)(4)

0.12

0.70

(83

%)

0.67

1.21

(45

%)

Operating Highlights (Continuing operations basis)

Gold produced (oz)

76,913

101,266

(24

%)

216,944

185,880

17

%

Gold sold (oz)(7)

75,721

95,937

(21

%)

224,445

186,294

20

%

Average market gold price ($/oz)(5)

1,790

1,911

(6

%)

1,800

1,737

4

%

Average realized gold price ($/oz )(1)(6)

1,542

1,685

(8

%)

1,477

1,506

(2

%)

Copper produced (000s lbs)

17,861

23,305

(23

%)

56,282

62,441

(10

%)

Copper sold (000s lbs)

18,512

21,726

(15

%)

60,833

61,502

(1

%)

Average market copper price ($/lb)(5)

4.26

2.93

45

%

4.17

2.64

58

%

Average realized copper price ($/lb)(1)(6)

2.55

2.43

5

%

2.73

2.04

34

%

Molybdenum sold (000s lbs)

2,615

3,599

(27

%)

9,100

10,056

(10

%)

Average market molybdenum price ($/lb)

19.06

7.71

147

%

15.02

8.57

75

%

Unit Costs (Continuing operations basis)

Gold production costs ($/oz)

630

495

27

%

625

649

(4

%)

All-in sustaining costs on a by-product basis ($/oz)(1)(6)

781

367

113

%

672

679

(1

%)

All-in costs on a by-product basis ($/oz)(1)(6)

932

689

35

%

806

1,104

(27

%)

Gold - All-in sustaining costs on a co-product basis($/oz)(1)

928

648

43

%

916

906

1

%

Copper production costs ($/lb)

1.50

1.02

47

%

1.44

1.21

19

%

Copper - All-in sustaining costs on a co-product basis – ($/lb)(1)

1.95

1.19

64

%

1.21

1.38

(12

%)

(1)

Non-GAAP measure. See discussion under “Non-GAAP Measures”.

(2)

Inclusive of the results from the Kumtor Mine prior to the loss of control on May 15, 2021.

(3)

Capital expenditures are presented as incurred and accrued.

(4)

At September 30, 2021, the Company had 296,777,174 common shares issued and outstanding.

(5)

Average for the period as reported by the London Bullion Market Association (LBMA US-dollar Gold P.M. Fix Rate) and, for Copper, the London Metal Exchange (LME).

(6)

Includes the impact of reduced metal prices resulting from the Mount Milligan Streaming Arrangement, and the impact of copper hedges.

(7)

Includes 6,654 ounces of gold in the first nine months of 2020, which were sold prior to achieving commercial production at the Öksüt Mine on May 31, 2020.

(8)

Calculated as the sum of cash flow provided by operating activities from discontinued operations, cash flow used in investing activities from discontinued operations and cash flow used in financing activities from discontinued operations.

Overview of Consolidated Results

Although the Company remains the rightful legal owner of KGC, due to the seizure of the Kumtor Mine and the continuing actions by the Kyrgyz Republic, the Company derecognized the assets and liabilities of the Kumtor Mine in the statement of financial position and presented its financial and operating results prior to the loss of control as discontinued operations for the three and nine months ended September 30, 2021 and 2020. As a result, the Company’s consolidated results from continuing operations discussed in this MD&A (including prior periods) exclude the Kumtor Mine’s operations, unless otherwise noted.

Third Quarter 2021 compared to Third Quarter 2020

Net earnings and earnings from continuing operations of $27.6 million were recognized in the third quarter of 2021, compared to net earnings of $205.7 million in the third quarter of 2020. In 2020, net earnings figures include the results from the Kumtor Mine which is accounted for as a discontinued operation. Net earnings from continuing operations were $82.4 million in the third quarter of 2020. The decrease in net earnings from continuing operations was primarily due to a decrease in the gold ounces sold at the Mount Milligan Mine and at the Öksüt Mine, a decrease in the copper pounds sold at the Mount Milligan Mine and lower average realized gold prices, partially offset by the higher average copper and molybdenum prices.

Adjusted net earningsNG and adjusted net earnings from continuing operationsNG in the third quarter of 2021 were $35.7 million, compared to adjusted net earningsNG in the third quarter of 2020 of $205.7 million and adjusted net earnings from continuing operationsNG of $82.4 million in the third quarter of 2020.

The most significant adjusting item to net earnings in the third quarter of 2021 was:

  • $8.1 million in legal and other costs directly related to the seizure of the Kumtor Mine.

Cash provided by operating activities from continuing operations was $62.4 million in the third quarter of 2021, compared to $151.7 million in the third quarter of 2020. The decrease in cash provided by operating activities from continuing operations was primarily due to a decrease in the gold ounces sold at the Mount Milligan Mine and the Öksüt Mine, a decrease in the copper pounds sold at the Mount Milligan Mine due to mine sequencing, and lower average realized gold prices. In addition, there was an unfavourable working capital change at the Molybdenum Business Unit with a significant increase in molybdenum concentrate inventory held at quarter-end at a higher average molybdenum price as well as the effect of an $11.4 million tax refund received in the third quarter of 2020.

Free cash flow from continuing operationsNG of $41.0 million was recognized in the third quarter of 2021, compared to $124.9 million in the third quarter of 2020. The decrease in free cash flow from continuing operationsNG was primarily due to lower cash provided by operating activities from continuing operations and higher sustaining capital expenditures at the Mount Milligan Mine. Sustaining capital expenditures were higher primarily due to development costs associated with the tailing storage facility (“TSF”), and capital expenditures related to mill equipment and capital components.

Adjusted free cash flow from continuing operationsNG of $45.3 million was recognized in the third quarter of 2021, compared to $124.9 million in the third quarter of 2020.

The most significant adjusting item to free cash flow in the third quarter of 2021 was:

  • $4.3 million of legal and other related costs directly related to the seizure of the Kumtor Mine.

Gold production costs from continuing operations were $630 per ounce in the third quarter of 2021 compared to $495 per ounce in the third quarter of 2020. The increase in production costs from continuing operations was primarily due to a decrease in gold ounces sold at the Mount Milligan and Öksüt Mines, a decrease in pounds of copper sold at the Mount Milligan Mine due to mine sequencing, and an increase in production costs at the Mount Milligan Mine.

All-in sustaining costs on a by-product basisNG from continuing operations were $781 per ounce in the third quarter of 2021 compared to $367 per ounce in the third quarter of 2020. The increase in all-in sustaining costs on a by-product basis was primarily due to a decrease in ounces of gold sold at the Mount Milligan and Öksüt Mines, a decrease in pounds of copper sold, and higher sustaining capital expenditures at the Mount Milligan Mine.

All-in costs on a by-product basisNG from continuing operations were $932 per ounce in the third quarter of 2021 compared to $689 per ounce in the third quarter of 2020. The increase was primarily due to higher all-in sustaining costs on a by-product basisNG, partially offset by lower non-sustaining capital expenditures at the Kemess UG Project and lower non-sustaining capital expenditures at the Öksüt Mine as mine construction was completed in 2020.

First Nine Months 2021 compared to First Nine Months 2020

A net loss of $656.6 million was recognized in the first nine months of 2021, compared to net earnings of $313.3 million in the first nine months of 2020. Net loss and net earnings figures include the results from the Kumtor Mine which is accounted for as a discontinued operation. The change was primarily due to the loss on the change of control of the Kumtor Mine of $926.4 million, partially offset by a gain of $72.3 million on the disposition of the Company’s interest in the Greenstone Partnership and an increase in net earnings from continuing operations between periods.

Adjusted net earningsNG in the first nine months of 2021 were $198.3 million, compared to adjusted net earningsNG in the first nine months of 2020 of $356.8 million.

Significant adjusting items to net loss in the first nine months of 2021 include:

  • $926.4 million non-cash loss on the change of control of the Kumtor Mine;

  • $72.3 million gain on the sale of the Greenstone Partnership;

  • $15.3 million gain from the discontinuance of the Kumtor Mine’s fuel hedge instruments; and,

  • $16.2 million of legal and other related costs directly related to the seizure of the Kumtor Mine.

The most significant adjusting items to net earnings in the first nine months of 2020 was:

  • $43.5 million non-cash reclamation provision revaluation expense at sites on care and maintenance related to the Molybdenum Business Unit, resulting solely from the movement in the discount rates being applied to the underlying reclamation cash flows.

Net earnings from continuing operations of $172.1 million were recognized in the first nine months of 2021, compared to net loss from continuing operations of $15.4 million in the first nine months of 2020. The change was primarily due to an increase in gold ounces sold at the Mount Milligan Mine and the Öksüt Mine, higher average realized copper prices, an increase in net earnings from the Molybdenum Business Unit due to higher average molybdenum prices, a gain on the disposition of the Company’s interest in the Greenstone Partnership, lower corporate administration costs as a result of a decrease in the Company’s share-based compensation costs and a decrease in reclamation expense at sites placed on care and maintenance related to the Molybdenum Business Unit. This was partially offset by higher tax expense resulting from both the gain on the sale of the Company’s interest in the Greenstone Partnership and higher net earnings from the Mount Milligan Mine.

Adjusted net earnings from continuing operationsNG in the first nine months of 2021 were $113.9 million compared to adjusted net earnings from continuing operationsNG in the first nine months of 2020 of $28.1 million.

Significant adjusting items to net earnings from continuing operations in the first nine months of 2021 include:

  • $14.2 million of legal and other related costs directly related to the seizure of the Kumtor Mine; and,

  • $72.3 million gain on the sale of the Company’s interest in the Greenstone Partnership.

The most significant adjusting items to net loss from continuing operations in the first nine months of 2020 was:

  • $43.5 million non-cash reclamation provision revaluation expense at sites on care and maintenance related to the Molybdenum Business Unit, resulting solely from the movement in the discount rates being applied to the underlying reclamation cash flows.

Cash provided by operating activities from continuing operations was $209.1 million in the first nine months of 2021, compared to $188.0 million in the first nine months of 2020. The increase in cash provided by operating activities from continuing operations was primarily due to an increase in ounces of gold sold at the Mount Milligan and the Öksüt Mines, higher average realized copper prices and a more favourable change in working capital at the Mount Milligan Mine from the timing of vendor payments between periods. Partially offsetting the increase was an unfavourable working capital change at the Molybdenum Business Unit from an increase in product inventory held at a higher average molybdenum price as well as the effect of a $22.8 million tax refund received in the first nine months of 2020.

Free cash flow from continuing operationsNG of $139.7 million was recognized in the first nine months of 2021, compared to free cash flow NG from continuing operations of $120.1 million in the first nine months of 2020. The increase in free cash flow from continuing operationsNG was due to higher cash provided by operating activities from continuing operations, lower non-sustaining capital expenditures as the construction of the Öksüt Mine was completed in 2020 and lower non-sustaining capital expenditures at the Kemess UG Project. Partially offsetting the increase in free cash flow from continuing operationsNG between the periods were higher sustaining capital expenditures at the Mount Milligan Mine primarily due to higher expenditures related to the purchase of new mining equipment, TSF development costs and major planned equipment rebuilds as well as higher sustaining capital expenditures at the Öksüt Mine primarily due to higher deferred stripping following the commencement of commercial production.

Adjusted free cash flow from continuing operationsNG of $148.6 million was recognized in the first nine months of 2021, compared to adjusted free cash flow from continuing operationsNG of $120.1 million in the first nine months of 2020.

The most significant adjusting item to free cash flow in the first nine months of 2021 was:

  • $8.9 million of legal and other related costs directly related to the seizure of the Kumtor Mine.

Gold production costs from continuing operations were $625 per ounce in the first nine months of 2021 compared to $649 per ounce in the first nine months of 2020. The decrease in gold production costs from continuing operations was primarily due to an increase in ounces of gold sold at the Mount Milligan and Öksüt Mines, partially offset by higher mining costs at the Mount Milligan Mine as a result of higher maintenance costs and diesel prices as well as higher processing costs due to higher throughput.

All-in sustaining costs on a by-product basisNG from continuing operations were $672 per ounce in the first nine months of 2021 compared to $679 per ounce in the first nine months of 2020. The decrease was primarily due to an increase in ounces of gold sold at the Mount Milligan and Öksüt Mines, higher average realized copper prices and lower corporate administration expenses as a result of a decrease in the share price used to calculate the Company’s share-based compensation liability. Partially offsetting this decrease were higher mining and administrative costs at the Öksüt Mine, including higher social contributions, and higher sustaining capital expenditures at the Mount Milligan and Öksüt Mines.

All-in costs on a by-product basisNG from continuing operations were $806 per ounce in the first nine months of 2021 compared to $1,104 per ounce in the first nine months of 2020. The decrease was due to lower all-in sustaining costs on a by-product basisNG and lower non-sustaining capital expenditures at the Kemess UG Project and at the Öksüt Mine as the mine construction was completed in 2020.

Outlook

2021 Guidance

Centerra has revised its 2021 cost guidance for the Öksüt Mine and on a consolidated basis, including gold production costs, all-in sustaining costs on a by-product basisNG, all-in sustaining costs on a co-product basisNG and all-in costs on a by-product basisNG to reflect updated unit costs at the Öksüt Mine. More detailed discussion on changes to the Company’s 2021 guidance is provided below.

2021 Production Guidance

The Company’s consolidated gold production in the first nine months of 2021 was 216,944 ounces of gold and Centerra’s 2021 full year production guidance remains unchanged, with both the Mount Milligan and the Öksüt Mines trending towards the top end of guidance. The Company continues to monitor the impact of global supply chain disruption on shipping logistics and does not currently expect it to materially affect the performance of the Mount Milligan Mine other than timing of concentrate sales.

2021 production guidance is currently forecast as follows:

Units

Kumtor(1)

Mount
Milligan
(2)

Öksüt

Centerra
Consolidated

Actual gold production September 30 YTD

(Koz)

-

137

80

217

Gold: full-year production forecast

Unstreamed gold production

(Koz)

-

117 - 130

90 - 110

207 - 240

Streamed gold production(2)

(Koz)

-

63 - 70

-

63 - 70

Consolidated gold production

(Koz)

-

180 - 200

90 - 110

270 - 310

Actual copper production September 30 YTD

-

56

-

56

Copper: full-year production forecast

Unstreamed copper production

(Mlbs)

-

57 - 65

-

57 - 65

Streamed copper production(2)

(Mlbs)

-

13 - 15

-

13 - 15

Consolidated copper production

(Mlbs)

-

70 - 80

-

70 - 80

(1)

Centerra has suspended providing any forward-looking information on the Kumtor Mine’s operations including the mine’s production and costs until the Kumtor situation is resolved.

(2)

The Mount Milligan Streaming Arrangement entitles Royal Gold to 35% and 18.75% of gold and copper sales, respectively, from the Mount Milligan mine. Under the Mount Milligan Streaming Arrangement, Royal Gold will pay $435 per ounce of gold delivered and 15% of the spot price per metric tonne of copper delivered.

2021 Sales, All-in Sustaining and All-in Unit Costs GuidanceNG

Centerra’s 2021 sales, all-in sustaining costs per ounceNG calculated on a by-product and co-product basis, and all-in costs per ounceNG calculated on a by-product basis are forecasted as follows:

Units

Kumtor(1)

Mount
Milligan

Öksüt

Centerra
Consolidated
(2)

Gold sold

(Koz)

-

180 - 200

90 - 110

270 - 310

Gold production costs

($/oz)

-

650 - 700

450 - 500

600 - 650

All-in sustaining costs on a by-product basis(2)

($/oz)

-

530 - 580

680 - 730

700 - 750

All-in costs on a by-product basis(2)(3)

($/oz)

-

590 - 640

740 - 790

850 - 900

Gold - All-in sustaining costs on a co-product basis(2)(3)

($/oz)

-

850 - 900

680 - 730

900 - 950

Copper production costs

($/lb)

-

1.45 - 1.60

-

1.45 - 1.60

Copper - All-in sustaining costs on a co-product basis(2)(3)

($/lb)

-

2.10 - 2.25

-

2.10 - 2.25

(1)

Centerra has suspended providing any forward-looking information on the Kumtor Mine’s operations including the mine’s production and costs until the situation at the Kumtor Mine is resolved.

(2)

All-in sustaining costs and all-in costs on a by-product and co-product basis are non-GAAP measures and are discussed under “Non-GAAP Measures”. Gold production cost per ounce is different from the all-in sustaining costs on a by-product basis measure and is considered the nearest GAAP measure.

(3)

Mount Milligan production and ounces sold are on a 100% basis (the Mount Milligan Streaming Arrangement entitles Royal Gold to 35% and 18.75% of gold and copper sales, respectively). Unit costs and consolidated unit costs include a credit for forecasted copper sales treated as by-product for all-in sustaining costs and all-in sustaining costs including revenue-based taxes. Production for copper and gold reflects estimated metallurgical losses resulting from handling of the concentrate and metal deductions, subject to metal content, levied by smelters.

The Company’s consolidated gold production costs were $625 per ounce in the first nine months of 2021 and the full year gold production costs are expected to be in $600 to $650 per ounce range compared to the previously issued guidance of $625 to $675 per ounce, reflecting lower unit costs at the Öksüt Mine. The Öksüt Mine’s gold production costs are expected to be in the range of $450 to $500 per ounce compared to the previous guidance range of $500 to $550 per ounce.

The Company’s consolidated all-in sustaining costs on a by-product basisNG were $672 per ounce in the first nine months of 2021 and the full year all-in sustaining costs on a by-product basisNG are expected to be in the range of $700 to $750 per ounce compared to the previous guidance range of $750 to $800 per ounce, reflecting lower unit costs at the Öksüt Mine. All-in sustaining costs on a by-product basisNG at the Öksüt Mine are expected to be in the range of $680 to $730 per ounce compared to the previous guidance range of $730 to $780 per ounce as the mining activities are expected to continue in the higher grade zones in the fourth quarter of 2021. Mount Milligan’s all-in sustaining costs on a by-product basisNG is expected to be in the range of $530 to $580 per ounce, which is unchanged from the previous guidance range.

Consolidated all-in costs on a by-product basisNG are expected to be in the range of $850 to $900 per ounce compared to the previous guidance range of $900 to $950 per ounce. Öksüt Mine’s all-in costs on a by-product basisNG are expected to be between $740 to $790 per ounce, compared to the previous guidance range of $790 to $840 per ounce. Mount Milligan Mine’s all-in costs on a by-product basisNG are expected to be in the range of $590 to $640 per ounce, which is unchanged from the previous guidance range.

2021 Capital Expenditures Guidance

Centerra’s 2021 guidance for capital spending, excluding capitalized stripping, remains unchanged at $95 to $115 million. Projected capital expenditures are currently forecast as follows:

Sustaining

Non-sustaining

Projects ($ millions)

Capital(1)

Capital(2)

Total

Mount Milligan Mine

65 - 70

5 - 10

70 - 80

Öksüt Mine

15 - 25

-

15 - 25

Other

~5

~5

~10

Consolidated Total

85 - 100

10 – 15

95 – 115

1)

Sustaining capital includes capitalized stripping costs of $10 million to $15 million at the Öksüt Mine.

2)

Non-sustaining capital expenditures are distinct projects designed to increase the net present value of the mine. The 2021 guidance includes the stage floatation reactor at the Mount Milligan Mine.

Molybdenum Business Unit 2021 Guidance

The Molybdenum Business Unit in 2021 is expected to incur net cash expenditures including cash outflows for changes in working capital of $30 to $35 million, which is unchanged from the previous guidance. The Molybdenum Business Unit’s cash outflows before changes in working capital are estimated to be $3 million to $5 million for 2021. The Company is currently assuming a molybdenum price of $18.00 per pound for the fourth quarter of 2021, which is unchanged from the previous estimate.

Kemess Underground Project 2021 Guidance

Total expenditures at the Kemess UG Project for 2021 are estimated to be $13 million to $15 million, including $11 million for care and maintenance activities, which is unchanged from previous guidance.

2021 Exploration Expenditures

Exploration expenditures for 2021 are expected to be approximately $30 million, which is unchanged from the previous guidance.

2021 Corporate Administration

Cash expenditures for corporate and administration costs for 2021 are forecasted to be between $45 million and $55 million, which is unchanged from the previous guidance. Corporate and administration expenses for 2021 on an accrual basis are expected to be between $30 million and $35 million, of which approximately $20 million was incurred in the first nine months of 2021. Main differences in corporate administration costs on a cash and an accrual basis are related to share-based compensation plan and short-term inventive plan payments. In the first nine months of 2021, the Company made cash payments of approximately $11 million related to share-based compensation plans which were accrued in prior years and are not included in the 2021 expense.

2021 Depreciation, Depletion and Amortization

Consolidated depreciation, depletion, and amortization expense included in costs of sales expense for 2021 is forecasted to be in the range of $110 to $125 million, which is unchanged from the previous guidance.

2021 Taxes

The Mount Milligan operations are subject to corporate income tax and British Columbia mineral tax. The British Columbia mineral tax is forecast to be between $7 and $9 million, which is unchanged from the previous guidance. At the Öksüt Mine, income tax expense is expected to be between $7 to $9 million compared to $1 to $2 million in the previous guidance. The higher tax expense at the Öksüt Mine reflects higher taxable earnings generated by the Öksüt Mine, partially offset by benefits from the eligible expenditures under the Investment Incentive Certificate which are now expected to be fully utilized by the end of 2021.

2021 Material Assumptions

Material assumptions or factors used to forecast production and costs for the fourth quarter of 2021, after giving effect to the hedges in place as at September 30, 2021, include the following:

  • a market gold price of $1,750 per ounce (unchanged from the previous guidance) and an average realized gold price at Mount Milligan Mine of $1,290 per ounce after reflecting the streaming arrangement with Royal Gold (35% of the Mount Milligan Mine’s gold at $435 per ounce).

  • a market copper price of $3.45 per pound reflects an average swap price of $3.40 per pound on 90% of the Company’s unstreamed copper (previously assumed at $3.48 per pound); an average realized copper price at the Mount Milligan Mine of $2.88 per pound after reflecting the streaming arrangement with Royal Gold (18.75% of the Mount Milligan Mine’s copper at 15% of the spot price per metric tonne).

  • a molybdenum price of $18.00 per pound (unchanged from the previous guidance).

  • exchange rates:

    • $1USD:$1.30 Canadian dollar (previously assumed at $1USD:$1.27 Canadian dollar),

    • $1USD:8.50 Turkish lira (previously assumed at $1USD:8.00 Turkish lira).

  • diesel fuel price assumption:

    • $0.67/litre (CAD$0.87/litre) at Mount Milligan Mine (previously assumed at $0.71/litre (CAD$0.90/litre)).

Mount Milligan Streaming Arrangement

The Mount Milligan Mine is an open-pit mine located in north central British Columbia, Canada producing a gold and copper concentrate. Production at the Mount Milligan Mine is subject to an arrangement with RGLD Gold AG and Royal Gold, Inc. (together, “Royal Gold”) pursuant to which Royal Gold is entitled to purchase 35% of the gold produced and 18.75% of the copper produced at the Mount Milligan Mine for $435 per ounce of gold delivered and 15% of the spot price per metric tonne of copper delivered (the “Mount Milligan Streaming Arrangement”). To satisfy its obligations under the Mount Milligan Streaming Arrangement, the Company purchases refined gold and copper warrants and arranges for delivery to Royal Gold. The difference between the cost of the purchases of refined gold and copper warrants and the corresponding amounts payable to the Company under the Mount Milligan Mine Streaming Arrangement is recorded as a reduction of revenue and not a cost of operating the mine.

Other Material Assumptions

Other material assumptions used in forecasting production and costs for 2021 can be found under the heading “Caution Regarding Forward-Looking Information” in this document. Production, cost, and capital forecasts for 2021 are forward-looking information and are based on key assumptions and subject to material risk factors that could cause actual results to differ materially, and which are discussed under the heading “Risks Factors” in the Company’s most recent 2020 AIF.

2021 Sensitivities

Centerra’s revenues, net earnings, and cash flows for the remaining three months of 2021 are sensitive to changes in certain key inputs or currencies. The Company has estimated the impact of any such changes on revenues, net earnings, and cash flows for the fourth quarter of 2021.

Impact on
($millions)

Impact on
($ per ounce sold)

Production
Costs & Taxes

Capital
Costs

Revenues

Cash flows

Net Earnings
(after-tax)

AISC(2)(3) on by-
product basis

Gold price

$50/oz

0.1 - 0.5

-

5.0 - 6.5

5.0 - 6.0

5.0 - 6.0

2.0 - 3.0

Copper price(4)

10

%

0.1 - 0.2

-

0.1 - 1.0

0.1 - 0.8

0.1 - 0.8

5.0 - 6.5

Diesel fuel(3)

10

%

1.0 - 1.5

0.1 - 0.5

-

1.5 - 2.0

1.0 - 1.5

11.0 - 14.5

Canadian dollar(1)(3)

10 cents

5.0 - 5.5

0.9 - 1.0

-

6.0 - 6.5

5.0 - 5.5

20.0 - 27.0

Turkish lira(1)

1 lira

1.5 - 2.0

0.1 - 0.5

-

2.0 - 3.0

1.5 - 2.0

15.5 - 21.0

(1)

Appreciation of currency against the U.S. dollar will result in higher costs and lower cash flow and earnings, depreciation of currency against the U.S. dollar results in decreased costs and increased cash flow and earnings.

(2)

Non-GAAP measure. See discussion under “Non-GAAP Measures”.

(3)

Includes the effect of hedging programs.

(4)

2021 fourth quarter copper sales are hedged up to 90%.

Production, cost and capital forecasts for 2021 are forward-looking information and are based on key assumptions and subject to material risk factors that could cause actual results to differ materially. These are discussed herein under the headings “2021 Material Assumptions” and “Caution Regarding Forward-Looking Information” as well as under the heading “Risk Factors” in the Company’s most recently filed 2020 AIF.

Recent Events and Developments

Kumtor Mine

As previously disclosed, since the beginning of 2021, the Kyrgyz Republic and Kyrgyzaltyn have taken a number of coordinated actions that resulted in the seizure of the Kumtor Mine by the Kyrgyz Republic and a loss of control of the mine by Centerra. In particular:

  • The Kyrgyz Republic Parliament established a State Commission in February 2021 to, among other things, review the performance of the Kumtor Mine and to review the results of a previous Kyrgyz Republic state commission established in 2012;

  • The Kyrgyz Government resurrected a number of historical tax claims and environmental claims relating to Kumtor, each of which was resolved years ago either through previous settlements or Kyrgyz court decisions. When the Company disclosed the tax claims in March 2021, the amounts claimed by the Kyrgyz Republic were estimated to be approximately $352 million, including taxes, interest and penalties. However, the Company now understands that Kyrgyz officials may have subsequently increased the amounts claimed to over $1 billion;

  • A Kyrgyz court rendered a decision awarding damages against KGC of approximately $3.1 billion payable to the Kyrgyz Republic in respect of alleged damages caused by KGC’s past practice of placing waste rock on glaciers;

  • During the spring of 2021, the Kyrgyz Republic Parliament began to consider a number of laws and legislative amendments that, among other things, would fundamentally alter and breach the 2009 restated Kumtor project agreements, including the 2009 Kyrgyz law that ratified the Kumtor Project Agreements. Such amendments would not only delete provisions that ensure the primacy of the Kumtor Project Agreements over other Kyrgyz legislation but also subject Kumtor to certain Kyrgyz laws of general application, including tax laws;

  • The Kyrgyz Republic seized control of the Kumtor Mine on May 15, 2021 through a coordinated effort to take control of the Kumtor Mine site, KGC’s offices, personnel, computers and documents. The Kyrgyz Republic acted following a preliminary report of the State Commission which made a number of groundless claims against Centerra, KGC and the Kumtor Mine and under the purported authority of a new Temporary Management Law hastily passed by the Kyrgyz Republic Parliament only a few days prior to such seizure; and

  • According to statements made by Kyrgyz Republic authorities during and after the events described above, the Company understands that the Kyrgyz Republic has opened a series of criminal investigations relating to the Kumtor Mine and, in particular, alleged corruption of previous agreements entered into between Centerra, its predecessor, and the Kyrgyz Republic Government. The Company further understands that the Kyrgyz Republic has arrested or detained a significant number of former Kyrgyz politicians and government officials, including several former prime ministers, in connection with such investigations. More recently, there have been reports that the Kyrgyz Republic has reopened a series of criminal investigations in connection with the Kyrgyz Republic General Prosecutor Office’s attempt to unwind an ordinary course $200 million dividend declared and paid by KGC to its sole shareholder, Centerra, in December 2013. Such reports identify certain members of former Centerra and KGC management teams and state that those individuals were prosecuted in absentia and put on wanted lists by the State Committee for National Security of the Kyrgyz Republic. The use of the Kyrgyz criminal law and investigations as a pressure tactic in aid of economic or commercial goals is not new for the Kyrgyz Republic. The Company strenuously denies any such allegations which should be viewed in the broader context, including the Kyrgyz Republic Government’s goal of seizing the Kumtor Mine and intimidating its political opponents.

As a result of this loss of control, the Company has been unable to ensure the safety of the mine’s employees or operations and is unable to maintain insurance over the Kumtor Mine.

Centerra, KGC and Kumtor Operating Company (“KOC”) have taken a number of measures in response to the Kyrgyz Republic’s unjustified and illegal seizure of the Kumtor Mine, including but not limited the following:

  • The Company has initiated binding arbitration (the “Kumtor Arbitration Proceedings”) against the Kyrgyz Republic and Kyrgyzaltyn to enforce its rights under longstanding agreements governing the Kumtor Mine and to, among other things, hold the Kyrgyz Republic and Kyrgyzaltyn accountable in the arbitration for any and all losses and damages that result from its actions against KGC and the Kumtor Mine. On September 27, 2021, the Company announced that it was seeking urgent interim measures in the Kumtor Arbitration Proceedings to address certain critical operational and safety problems at the Kumtor Mine, principally seeking to prevent the Kyrgyz Republic and Kyrgyzaltyn from causing irreparable damage to the Kumtor Mine, to preserve the status quo at the mine and not to deviate from the approved mine plan, and obtain transparency and regular reporting as to the mine’s operations;

  • In accordance with long-standing shareholder and investment agreements, the Company has taken steps to restrict Kyrgyzaltyn from transferring or encumbering any common shares of the Company or exercising any voting rights or dissent rights attached to Centerra common shares. In addition, dividends or distributions on Centerra common shares that would otherwise be payable to Kyrgyzaltyn or its affiliates are waived and will be donated to the Company to the extent such dividends or distributions can be attributed reasonably to KGC (or the Kumtor Mine’s assets or operations) or distributions from KGC;

  • KGC and KOC filed for protection under Chapter 11 of the federal U.S. Bankruptcy Code in the Southern District of New York. The court-supervised process provides for, among other things, a worldwide automatic stay of all claims against KGC and KOC which the Company hopes will deter the Kyrgyz Republic from taking further precipitous action against KGC and the Kumtor Mine, including actions to enforce the meritless environmental and tax claims noted above; and

  • The Company has initiated proceedings in the Ontario Superior Court of Justice against Tengiz Bolturuk, a former director of the Company who resigned from the Company’s board of directors to assume control of the Kumtor Mine on behalf of the Kyrgyz Republic as external manager, for breaches of his fiduciary duties to the Company.

While Centerra will continue to pursue all measures necessary to protect its rights in arbitration and in other legal proceedings, the Company remains willing and available to engage with the Kyrgyz Republic and Kyrgyzaltyn in a constructive dialogue on the matters it considers to be the subject of dispute. No assurances can be given that Centerra will be successful in any of the foregoing legal proceedings or that the Company will be able to negotiate a solution that will not have a material impact on Centerra. There remains the further risk that additional regulatory, tax, or civil claims will be commenced against KGC or the Company. See “Caution Regarding Forward-Looking Information” and the section titled “Risk Factors” in the Company’s 2020 AIF.

The figures related to the Kumtor Mine presented in this document and Centerra’s interim financial statements are accounting figures and do not represent the potentially recoverable damages based on legal claims asserted by the Company and certain subsidiaries arising from the loss of control of the Kumtor Mine. Nothing in this MD&A or the interim financial statements shall act as a waiver of any rights or claims the Company and its subsidiaries may have in connection with the Kumtor Mine.

For more information regarding the events surrounding the seizure of the Kumtor Mine, please refer to the Company’s 2020 AIF dated March 15, 2021 and Management’s Discussion and Analysis for the periods ended March 31, 2021 and June 30, 2021.

COVID-19 Update

Centerra continues to take steps to minimize the effect of the COVID-19 on its business. The Company has established strict protocols at its mine sites to help prevent infection and reduce the potential transmission of COVID-19. A testing facility, funded by the Company, has been recently established at the Mount Milligan Mine to perform rapid testing of all employees, contractors, and other visitors to the site. Vaccination clinics have been set up for employees and contractors at the Mount Milligan Mine and the Öksüt Mine. More than 95% of site employees at the Öksüt Mine have received two doses of vaccination. A vaccination program was also conducted at the Mount Milligan Mine with two vaccination doses provided to over 64% of site employees, a figure that does not include site employees that may have been inoculated offsite. Overall, more than 70% of eligible population in northern British Colombia, where the Mount Milligan Mine is located, received two vaccination doses. While COVID-19 vaccination rates continue to rise in the communities and countries in which the Company operates its mine sites and offices, the Company continues to maintain its COVID-19 protocols.

Neither the Mount Milligan Mine nor the Öksüt Mine have been adversely impacted by COVID-19 in any significant way as employee absences due to COVID-19, or any other illnesses, have so far been successfully managed. However, the Company notes that the effects of COVID-19 on its business continue to change rapidly. Centerra continues to assess the resiliency of its supply chains, maintaining increased mine site inventories of key materials. Additionally, the Company is pursuing an active sourcing strategy to identify alternatives for its critical supplies that can be purchased locally to reduce the risk of extended lead-times. All measures enacted to date reflect the Company’s best assessment at this time but will remain flexible and will be revised as necessary or advisable and/or as recommended by public health and governmental authorities.

Safety and Environment

The Company recognized the following notable developments in the course of the third quarter of 2021:

  • The Öksüt Mine achieved two million work hours without a lost-time injury.

  • The Thomson Creek Mine, Langeloth Facility and Kemess UG Project each achieved one full year without a lost-time injury.

  • The Endako Mine achieved eight years without a lost-time injury.

  • There were eight reportable injuries company-wide, including four lost-time injuries, two medical aid injuries, and two restricted work injuries.

  • There were no reportable releases to the environment.

Financial Performance

As previously disclosed, the Company lost control of the Kumtor Mine in May 2021 and, accordingly, the Kumtor Mine has been classified as a discontinued operation. The financial and operating data below is presented on a continuing operations basis and thus excludes the Kumtor Mine for all periods discussed, unless otherwise noted.

Third Quarter 2021 compared to Third Quarter 2020

Revenue of $220.6 million was recognized in the third quarter of 2021 compared to $251.3 million in the third quarter of 2020. The decrease in revenue was primarily due to a decrease in ounces of gold sold at both the Mount Milligan Mine and the Öksüt Mine, lower average realized gold prices, and a decrease in pounds of copper sold at the Mount Milligan Mine, partially offset by higher average realized copper and molybdenum prices.

Gold production was 76,913 ounces in the third quarter of 2021 compared to 101,266 ounces in the third quarter of 2020. Gold production in the third quarter of 2021 included 39,658 and 37,255 ounces of gold from the Mount Milligan Mine and the Öksüt Mine, respectively, a decrease compared to the third quarter of 2020, primarily due to lower gold grades.

Copper production at the Mount Milligan Mine was 17.9 million pounds in the third quarter of 2021 compared to 23.3 million pounds in the third quarter of 2020. The decrease was primarily due to lower copper grades and total throughput.

The Langeloth Facility roasted 2.5 million pounds of molybdenum in the third quarter of 2021 compared to 3.1 million pounds in the third quarter of 2020. This decrease was primarily due to a decline in molybdenum concentrate available for roasting, resulting from a decrease in concentrate supply and increased competition for concentrate.

Cost of sales of $152.0 million was recognized in the third quarter of 2021 compared to $134.6 million in the third quarter of 2020. The increase was primarily due to higher production costs at the Molybdenum Business Unit from higher average molybdenum prices paid to obtain product inventory to be processed.

Income tax expense of $8.4 million was recognized in the third quarter of 2021 compared to an income tax expense of $3.5 million in the third quarter of 2020. Income tax expense in the third quarter of 2021 comprised current income tax expense of $2.7 million and deferred income tax expense of $5.7 million. In comparison, income tax expense in the third quarter of 2020 comprised current income tax expense of $2.6 million and deferred income tax expense of $0.9 million. The increase in income tax expense was primarily due to differences in the level of taxable income in the Company’s operating jurisdictions between periods.

First Nine Months 2021 compared to First Nine Months 2020

Revenue of $649.1 million was recognized in the first nine months of 2021 compared to $509.3 million in the first nine months of 2020. The increase in revenue was primarily due to higher ounces of gold sold at the Mount Milligan Mine and the Öksüt Mine and higher average realized copper and molybdenum prices.

Gold production was 216,944 ounces in the first nine months of 2021 compared to 185,880 ounces in the first nine months of 2020. Gold production in the first nine months of 2021 included 136,909 ounces of gold from the Mount Milligan Mine, an increase compared to the first nine months of 2020, primarily due to higher throughput and higher gold grades and recoveries. The Öksüt Mine, which commenced commercial production May 31, 2020, produced 80,035 ounces of gold in the first nine months of 2021 compared to 66,689 ounces of gold in first nine months of 2020, primarily due to a higher number of ore tonnes stacked on the heap leach and higher heap leach recoveries, partially offset by lower gold grades due to mine sequencing.

Copper production at the Mount Milligan Mine was 56.3 million pounds in the first nine months of 2021 compared to 62.4 million pounds in the first nine months of 2020. The decrease was primarily due to lower copper grades, partially offset by higher throughput.

The Langeloth Facility roasted 7.8 million pounds of molybdenum in the first nine months of 2021 compared to 11.0 million pounds in the first nine months of 2020. The decrease in pounds roasted was primarily due to a decline in molybdenum concentrate available for roasting, resulting from a decrease in concentrate supply and increased competition for concentrate.

Cost of sales of $445.2 million was recognized in the first nine months of 2021 compared to $381.6 million in the first nine months of 2020. The increase was primarily due to higher mining and milling costs and timing of concentrate sales at the Mount Milligan Mine and higher mining and processing costs from a longer operating period at the Öksüt Mine. Additionally, there was higher depreciation, depletion and amortization expense at the Öksüt Mine primarily due to a higher number of tonnes stacked on the heap leach pad.

Corporate administration expenses of $19.7 million were recognized in the first nine months of 2021 compared to $28.3 million in the first nine months of 2020. The decrease was primarily due to the effect of the decline in the Company’s share price on the provision for share-based compensation.

Reclamation recovery of $0.1 million was recognized in the first nine months of 2021 compared to an expense of $44.0 million in the first nine months of 2020. The decrease in expense was primarily due to a decline in discount rates which occurred in the first nine months of 2020 that are applied to the underlying future reclamation costs at the Molybdenum sites currently on care and maintenance.

A gain on sale of $72.3 million (excluding contingent receivable consideration) was recognized in the first quarter of 2021 on the disposal of the Company’s 50% interest in the Greenstone Partnership.

Other non-operating expenses of $14.1 million were recognized in the first nine months of 2021 compared to $4.4 million in the first nine months of 2020. The increase in other non-operating expenses was primarily due to corporate legal costs incurred in connection with the seizure and the loss of control of the Kumtor Mine.

Income tax expense of $17.6 million was recognized in the first nine months of 2021 compared to an income tax expense of $4.8 million in the first nine months of 2020. Income tax expense in the first nine months of 2021 comprised current income tax expense of $8.1 million and deferred income tax expense of $9.5 million. In comparison, income tax expense in the first nine months of 2020 comprised current income tax expense of $4.7 million and deferred income tax expense of $0.1 million. The increase in income tax expense was primarily due to deferred tax expense recorded on the sale of the Company’s interest in the Greenstone Partnership and higher current tax recorded on net earnings from the Mount Milligan Mine.

Net loss from discontinued operations of $828.7 million was recognized in the first nine months of 2021 compared to net earnings from discontinued operations of $328.8 million in the first nine months of 2020. The decrease in net earnings was primarily due to the loss on the change of control of $926.4 million recognized in the second quarter of 2021 and a shorter operating period as a result of the seizure of the Kumtor Mine. Partially offsetting the decrease in net earnings was a gain recognized on the discontinuance of the Kumtor Mine’s fuel hedging program.

Balance Sheet Review

As a result of the loss of control of the Kumtor Mine in the second quarter of 2021, the Company deconsolidated the assets and liabilities of KGC, a 100%-owned subsidiary that holds the Kumtor Mine, in the Company’s statement of financial position for the period ended September 30, 2021. The assets and liabilities presented as at December 31, 2020 are inclusive of the Kumtor Mine.

Cash at September 30, 2021 was $911.7 million compared to $545.2 million at December 31, 2020. The increase was due to the receipt of $210.0 million as consideration for the sale of the Company’s 50% interest in the Greenstone Partnership, free cash flow from continuing operationsNG of $139.7 million and net cash flow from discontinued operations of $49.7 million. The increase in cash was partially offset by dividends paid of $33.0 million in the first nine months of 2021.

Total inventories at September 30, 2021 were $214.5 million compared to $580.6 million at December 31, 2020. The decrease in inventories was primarily due to the processing of a large portion of ore stockpiles at the Kumtor Mine prior to the loss of control as well as derecognition of associated inventory balances of $333.6 million from the Company’s consolidated financial position upon the loss of control. The decrease was partially offset by an increase in inventories at the Langeloth Facility primarily due to higher working capital needs as result of higher molybdenum prices.

At September 30, 2021, the product inventory balance consisted of 82,700 contained gold ounces and 20.6 million contained pounds of copper in surface stockpiles at the Mount Milligan Mine (6.1 million tonnes of ore at a grade of 0.42 g/t gold and 0.14% copper), of which roughly 16% is expected to be processed in 2021. Additionally, the product inventory balance at the Öksüt Mine consisted of 16,239 contained gold ounces in solution at the absorption, desorption, and recovery plant and 28,297 contained gold ounces on surface and stacked (0.1 million tonnes of ore at a grade of 0.80 g/t gold in surface stockpiles and 1.21 g/t gold stacked on the heap leach pad).

Other current assets at September 30, 2021 was $25.8 million compared to $41.0 million at December 31, 2020. The decrease was primarily due to the loss of control of the Kumtor Mine and derecognition of the associated other current assets from the Company’s consolidated financial position.

The carrying value of property, plant and equipment at September 30, 2021 was $1.11 billion compared to $1.69 billion at December 31, 2020. The decrease was primarily due to the derecognition of property, plant and equipment of $629.4 million associated with the loss of control of the Kumtor Mine and the derecognition of property, plant and equipment of $139.6 million associated with the sale of the Company’s 50% interest in the Greenstone Partnership. Partially offsetting the overall decrease were $72.0 million of additions capitalized to the property, plant and equipment related to the Company’s continuing operations and $95.7 million of additions capitalized to the property, plant and equipment related to the Kumtor Mine, which was subsequently derecognized.

Other non-current assets at September 30, 2021 was $10.6 million compared to $77.1 million at December 31, 2020. The decrease was primarily due to the loss of control of the Kumtor Mine and derecognition of the associated reclamation deposits balance of $52.9 million from the Company’s consolidated financial position.

Accounts payable and accrued liabilities at September 30, 2021 was $174.6 million compared to $232.7 million at December 31, 2020. The decrease was primarily due to the loss of control of the Kumtor Mine and derecognition of the associated accounts payable and accrued liabilities balances of $63.3 million from the Company’s consolidated financial position.

The provision for reclamation at September 30, 2021 was $295.5 million compared to $352.2 million at December 31, 2020. The decrease was primarily due to the loss of control of the Kumtor Mine and derecognition of the associated reclamation provision balance of $56.5 million from the Company’s consolidated financial position.

Liquidity and Capital Resources

The Company’s total liquidity position is $1,311.7 million, representing a cash balance of $911.7 million and $400.0 million available under the corporate credit facility. The Company believes that the current liquidity position and forecasted free cash flows from the Company’s Mount Milligan and Öksüt Mines are expected to be sufficient to satisfy working capital needs, contractual obligations and planned capital expenditure and exploration and meet other liquidity requirements through at least the end of 2021 (see “Caution Regarding Forward-Looking Information”).

Due to the seizure of the Kumtor Mine and the continuing actions by the Kyrgyz Republic, the Company derecognized the assets and liabilities of the Kumtor Mine in the statement of financial position and presented its financial and operating results prior to the loss of control as discontinued operations for the three and nine months ended September 30, 2021 and 2020. As a result, the Company’s consolidated cash flow results from continuing operations discussed in this MD&A (including prior periods) exclude the Kumtor Mine’s operations, unless otherwise noted.

Third Quarter 2021 compared to Third Quarter 2020

Cash provided by operating activities from continuing operations was $62.4 million in the third quarter of 2021, compared to $151.7 million in the third quarter of 2020. The decrease in cash provided by operating activities from continuing operations was primarily due to a decrease in the gold ounces sold at the Mount Milligan Mine and the Öksüt Mine, a decrease in the copper pounds sold at the Mount Milligan Mine and lower average realized gold prices. Additionally, there was an unfavourable working capital change at the Molybdenum Business Unit from an increase in product inventory held at a higher average molybdenum price as well as the effect of an $11.4 million tax refund received during the three months ended September 30, 2020.

Cash used in investing activities from continuing operations of $20.3 million was recognized in the third quarter of 2021 compared to $25.1 million in the third quarter of 2020. The decrease was primarily due to lower non-sustaining capital expenditures at the Kemess UG Project, partially offset by higher sustaining capital expenditures at the Mount Milligan Mine primarily related to TSF development costs, mill equipment and capital components.

Cash used in financing activities during the third quarter of 2021 was $13.3 million compared to $10.8 million in the third quarter of 2020. The increase was primarily due to higher dividends paid and lower proceeds received from the issuance of common shares.

First Nine Months 2021 compared to First Nine Months 2020

Cash provided by operating activities from continuing operations was $209.1 million in the first nine months of 2021, compared to $188.0 million in the first nine months of 2020. The increase in cash provided by operating activities from continuing operations was primarily due to an increase in ounces of gold sold at the Mount Milligan Mine and the Öksüt Mines, higher average realized gold and copper prices, a more favourable change in working capital at the Mount Milligan Mine. Partially offsetting the increase was an unfavourable working capital change at the Molybdenum Business Unit from an increase in product inventory held in 2021 at a higher average molybdenum price as well as the effect of a $22.8 million tax refund received during the nine months ended September 30, 2020.

Cash provided by investing activities from continuing operations of $145.6 million was recognized in the first nine months of 2021 compared to cash used in investing activities from continuing operations of $38.8 million in the first nine months of 2020. The cash provided by investing activities from continuing operations was primarily due to the proceeds received from the sale of the Company’s 50% interest in the Greenstone Partnership, lower non-sustaining capital expenditures as the construction of the Öksüt Mine was completed in 2020 and lower non-sustaining capital expenditures at the Kemess UG Project. The increase was partially offset by higher sustaining capital expenditures at the Mount Milligan Mine primarily due to the expenditures related to the purchase of new mining equipment, TSF development costs and major planned equipment rebuilds and higher sustaining capital expenditures at the Öksüt Mine primarily due to higher deferred stripping following the commencement of commercial production.

Cash used in financing activities of $36.0 million was recognized in the first nine months of 2021 compared to $108.6 million in the first nine months of 2020. The decrease was primarily due to the net repayment of the corporate revolving credit facility in first nine months of 2020.

Financial Instruments

The Company seeks to manage its exposure to fluctuations in diesel fuel prices, commodity prices and foreign exchange rates by entering into derivative financial instruments from time-to-time.

The outstanding hedge positions for each of these programs as at September 30, 2021 are summarized as follows:

Average Strike Price

Settlements (% of exposure hedged)

As of September 30, 2021

Instrument

Unit

Type

Q4 2021

2022

2023

2021

2022

2023

Total
position
(2)

Fair value
($000s)

FX hedges

USD/CAD zero-cost collars

CAD

Fixed

$1.33/$1.39

$1.30/$1.37

$1.23/$1.29

$55.4 M (41%)

$180.0 M (34%)

$70.0 M (18%)

$305.4 M

6,288

USD/CAD forward contracts

CAD

Fixed

$1.35

$1.29

$1.27

$32.0 M (23%)

$94.0 M (18%)

$70.0 M (18%)

$196.0 M

2,531

Total

$1.34

$1.30

$1.25

$87.4 M (64%)

$274.0 M (52%)

$140.0 M (36%)

$501.4 M

8,819

Fuel hedges

ULSD zero-cost collars

Barrels

Fixed

$54/$60

$62/$68

$73/$78

18,152 (42%)

45,100 (30%)

13,500 (12%)

76,752

2,257

ULSD swap contracts

Barrels

Fixed

$65

$61

$75

12,504 (38%)

61,500 (42%)

30,000 (27%)

2,925

Total

30,656 (80%)

106,600 (72%)

43,500 (39%)

180,756

5,182