CG Centerra Gold's Q3 income soars to $28.7-million (U.S.)
2004-10-26 11:45 ET - News Release
Ms. Sharon Loung reports
CENTERRA GOLD'S EARNINGS AND CASH FLOW RISE SHARPLY
Centerra Gold Inc. has recorded earnings of $28.7-million or 40 cents per share for the three months ended Sept. 30, 2004. Cash from operations amounted to $29.2-million. In the comparable quarter of 2003, earnings and cash flow were $2.8-million or seven cents per share and $15.4-million respectively. (All figures are in United States dollars unless otherwise specified.)
For the first nine months of 2004, earnings were $40.5-million or 81 cents per share and cash from operations totalled $63.5-million. These compare with earnings of $2.3-million or six cents per share and cash from operations of $25.3-million in the same period of 2003.
Third quarter highlights:
-increased ownership, production and realized prices drove significant increases in revenue, earnings and cash from operations;
-operations at both Kumtor and Boroo mines exceeded expectations;
-hedge book was completely eliminated during the quarter;
cash totalled $130.9-million at Sept. 30, no long-term debt;
-exploration programs for 2004 were expanded based on encouraging results: at Kumtor, drill program increased by $2.1-million; at Gatsuurt, drill program increased by $2.0-million;
-at REN, a $2.5-million phase 2 program approved and launched;
-surpassed significant safety milestones at the Kumtor and Boroo mines;
-Ularbek Mateyev, president of Kyrgyzaltyn JSC, was appointed to the board of directors.
"We are very pleased with the strong results of the quarter," said Len Homeniuk, president and chief executive officer. "Operations at both mines continue to exceed expectations and our exploration program is yielding encouraging results. As well, we had another solid safety performance, surpassing significant milestones at both mines without lost-time accidents."
"We welcome Mr. Ularbek Mateyev, Kyrgyzaltyn's nominee to the board of Centerra, and we look forward to working with him as the company pursues its growth strategy focused on Central Asia, the former Soviet Union and other emerging markets," concluded Mr. Homeniuk.
Summary of the quarter
Centerra Gold became a public company on June 30, 2004. Its predecessor company, Cameco Gold Inc., was a division of Cameco Corp., which held a one-third interest in Kumtor and a 53-per-cent interest in Boroo. Since June 30, 2004, Centerra's main operating and exploration ownership interests consist of a 100-per-cent interest in Kumtor mine, a 95-per-cent interest in Boroo mine and in exploration properties, a 62-per-cent interest in REN, and a 100-per-cent interest in Gatsuurt. For accounting purposes, Centerra's consolidated third quarter results reflect fully consolidated interests in the Kumtor and Boroo mines, a 62-per-cent interest in REN, and a fully consolidated interest in Gatsuurt.
Net earnings for the third quarter of 2004 were $28.7-million or 40 cents per share compared with $2.8-million or seven cents per share for the same period in 2003. The year-over-year improvement is primarily due to the increased ownership of the Kumtor mine, the start of commercial operations at the Boroo mine on March 1, 2004, and higher realized prices due to a reduced hedge position.
During the quarter, Centerra's share of production at the Kumtor and Boroo mines rose to 235,579 ounces from 69,043 ounces in the same prior year period. Total cash cost per ounce of gold was $178 compared with $160 in the third quarter of 2003.
For the three months ended Sept. 30, 2004, Centerra revenues rose to $86.7-million from $20.6-million in the corresponding period of 2003. This was due to the start-up of operations at the Boroo mine, which was under construction during 2003, an increased ownership interest in the Kumtor mine and a 28-per-cent increase in average realized prices to $398 per ounce.
Gross profit was $31.2-million in the quarter compared with $5.1-million a year ago.
For the three months ended Sept. 30, 2004, cash flow from operations was $29.2-million, almost double the $15.4-million reported in the same period a year ago.
As of the end of September, all forward sales agreements have been closed and all credit support, previously provided by Cameco, has been removed. During the quarter, the company closed forward contracts for 155,000 ounces, including 125,000 ounces in July, which were noted in Centerra's second quarter report. Currently, Centerra does not intend to hedge any of its future production.
Exploration
Exploration at Kumtor has been accelerated with three additional drill rigs added in mid-October bringing the total on site to eight. At Boroo, the phase 2 drilling program is in progress to further delineate the mineralization.
At Gatsuurt, 32 drill holes totalling 3,822 metres were drilled at the Central zone. Metallurgical testwork suggests that high recoveries may be achievable for the deeper transition and fresh sulphide material using the bio-oxidation technology and further testwork has been initiated. Based on the preliminary results to date, management is planning to complete a prefeasibility study during 2005 on the potential development of the property as a stand-alone operation.
At the REN project in Nevada, the $2.5-million phase 2 program was approved by the joint venture partners and drilling was initiated in August.
Based on the encouraging results from the drilling programs, particularly at the Kumtor and Gatsuurt properties, the company has increased its exploration program for 2004 by almost $4.1-million to roughly $14.5-million.
Outlook
Fourth quarter 2004
Revenues in the fourth quarter are expected to be lower than the third quarter. Production at Kumtor is expected to decline to about 136,000 ounces in the fourth quarter due to a lower average grade of mill feed. Accordingly, the total cash cost is expected to increase to about $252 per ounce. At Boroo, production is expected to be about 66,000 ounces for the quarter with a total cash cost of about $150 per ounce.
For the fourth quarter, a $10 per ounce change in the gold spot price would change revenue by about $2.0-million, net earnings by about $1.8-million and cash from operations by about $1.9-million.
Full year 2004 -- production -- 100-per-cent basis
For the full year, production is forecast at 900,000 ounces, an increase of 33 per cent over 2003. Considering the Kumtor mine restructuring, Centerra's share of production for the year is expected to be about 607,000 ounces.
Production at Kumtor is expected to amount to 655,000 ounces in 2004 using a milling plan that calls for a mix of lower grade stockpiled ore and higher grade mine ore. Forecast average grade and total cash cost for 2004 are 4.4 grams per tonne and $200 per ounce respectively.
Production at Boroo is expected to be 245,000 ounces of gold in 2004 (including 27,703 ounces produced prior to the start of commercial production on March 1, 2004). Forecast average grade and total cash cost for 2004 are 4.60 grams per tonne and $143 per ounce respectively.
Qualified person
The technical data under the heading "Exploration" has been prepared under the supervision of and verified by Robert S. Chapman, PEng, vice-president of exploration of Centerra, a qualified person for the purpose of National Instrument 43-101.
Conference call
Centerra invites you to join its third quarter conference call on Tuesday, Oct. 26, 2004, at 2 p.m. ET. The call is open to all investors and the media. To join the call, please dial 416-695-5259 or 1-877-888-3855 (Canada and United States). Alternatively, an audio feed will be available on www.centerragold.com. A recorded version of the call will be available on www.centerragold.com shortly after the call, and via telephone until midnight on Tuesday, Nov. 9, by calling 416-695-5275 or 1-888-509-0081.
Additional information on Centerra is available on the company's website at www.centerragold.com and on Stockwatch SEDAR files.
News 
Market Data 
Discover 
