Centerra Gold Inc. [CG-TSX, CAGDF-OTC] says it remains financially and operationally strong as it continues to seek a resolution to a dispute that followed the expropriation of its Kumtor gold mine in the Kyrgyz Republic.
“Financially, the company continues to generate significant free cash flow, even without the contribution of the Kumtor mine,” said Centerra in a press release containing its third quarter 2021 results.
During the third quarter, Centerra generated US$62.4 million in cash provided by operating activities, including US$43.3 million from the Mount Milligan mine in British Columbia and US$52.1 million from the Oksut mine in in Turkey.
Both mines are on track to achieve record free cash flow for the full year.
During the third quarter, the Mount Milligan mine produced 39,658 ounces of gold and 17.9 million pounds of copper at an all-in sustaining cost on a by-product basis of US$727 per once. In the same period, the Oksut mine produced 37,255 ounces of gold at all-in sustaining costs on a by-product basis of US$603 per ounce.
Centerra said a resource expansion drilling program has commenced in August, 2021, at the Mount Milligan mine. 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.
The company says 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.
While the company still owns the Kumtor mine, it is currently no longer under the company’s control. Kumtor ranked as the largest gold mine operated in Central Asia by a Western-based company.
In an update, Centerra said legal proceedings related to the Kumtor mine continue. During the third quarter an arbitrator was appointed in the arbitration proceedings against the Kyrgyzstani Republic and state-owned gold refiner Kyrgyzaltyn JSC. The company also filed an application seeking interim measures in the Kumtor arbitration proceedings to prevent, among other things, the Kyrgyzstani Republic and Kyrgyzaltyn JSC from causing irreparable damage to the mine.
On October 27, 2021, the appointed arbitrator resigned, citing the refusal by the Kyrgyzstani 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.
On November 4, 2021, Centerra shares closed at $9.71 and currently trade in a 52-week range of $16 and $8.21.