Centerra extends B.C. copper-gold mine life, shares rally

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Centerra Gold Inc. [CG-TSX, CAGDF-OTC] on Tuesday released details of an updated life of mine (LOM) plan for its Mount Milligan mine in British Columbia.

Centerra says it has extended the life of the open pit mining and milling operation by over four years to 2033. The announcement follows an increase in the mine’s proven and probable gold reserves to 2.9 million ounces from the previous 1.8 million ounce estimate. Copper reserves have also increased to 996 million pounds from 736 million.

The Mount Milligan Mine deposit now contains estimates reserves of 246.2 million tonnes at 0.37 g/t gold and 0.18% copper.

Net cash flow over the life of the mine is estimated at $640 million using a gold price of US$1,500 per ounce and a copper price of US$3.25 per pound, and over $1.0 billion at prices of over US$1,700 an ounce for gold and US$3.50 a pound for copper.

Centerra gold shares advanced on the news, rising 12% or 73 cents to $6.98 on volume of 769,210. The shares are currently trading in a 52-week range of $13.52 and $5.18.

Centerra operates two mines including Mount Milligan and the Oksut Mine in Turkey. It also owns the Goldfield District Project in Nevada, the Kemess Underground Project in B.C. and the Molybdenum Business Unit in the U.S. and Canada.

As a result of the suspension of certain activities at the Oksut Mine together with the continuing impact of declining copper prices at Mount Milligan, the company recently revised its consolidated 2022 gold production guidance to be between 245,000 and 265,000 gold ounces.

That compares to the previous target of between 400,000 to 450,000 ounces.

The latest production guidance reflects the recent decline in copper prices and assumes production of between 190,000 to 210,000 ounces from Mount Milligan and 55,000 ounces from Oksut.

Centerra has said it expects to produce 70-80 million pounds of copper this year

On Tuesday, the company said it is on trach to meet those targets.

Meanwhile the company said recent inflationary cost pressure will be taken into account when it updates and discloses the Mount Milligan mine’s 2023-2025 production and cost guidance in early 2023.

The company also said significant exploration potential exists at the Mount Milligan Mine peripheral to the current open pit and within the wider tenement holdings. For example, it said ongoing resource expansion drilling on the west wall of the pit and below the current ultimate open pit boundary continues to be successful with assays returned to date being similar to or higher grade to the current block model.

Outside the immediate Mount Milligan deposit, greenfield exploration to identify new porphyry copper-gold deposits and low sulphidation epithermal gold-silver deposits within the Mount Milligan tenement package continues.

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