Centerra lowers 2022 gold production target

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Centerra Gold Inc. [CG-TSX, CAGDF-OTC] on Wednesday reported a second quarter net loss of US$2.6 million ($0.01 per share) and sharply reduced gold production guidance for 2022.

As a result of the suspension of certain activities at the Oksut Mine (Turkey) together with the continuing impact of declining copper prices at the Mount Milligan mine (British Columbia), the company has 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 the Oksut mine.

Centerra expects to produce 70-80 million pounds of copper this year. That target is unchanged from an earlier estimate. Mount Milligan remains on track to achieve production guidance for both gold ounces and copper pounds.

“Updated copper price assumption and reduced production resulted in an increase to gold production costs per ounce sold to US$675 to US$725 and all-in sustaining costs on a by-product basis (NG) per ounce sold to US$1,000 to US$1,050,’’ the company said.

Centerra shares declined on the news, falling 18.5% or $1.48 to $6.52 on volume of 718,600. The shares are currently trading in a 52-week range of $13.52 and $7.33.

Back in March 2022, Centerra said it had temporarily suspended gold dore bar production at its Oksut mine after detecting the presence of mercury contamination in the final stages of processing.

The company said its 2022 production guidance has been updated to reflect the suspension of stacking and leaching activities and the continued suspension of gold room operations at the at the ADR plant at the Oksut mine until after year-end.

However, the company said it expects to complete a mercury abatement retrofit (costing about US$5 million) in the gold room by late 2022 and has assumed that Oksut’s gold room operations will re-commence as soon as regulatory approvals are obtained.

Additionally, the company expects that ounces inventoried in gold-in-carbon form during 2022 will be processed into gold dore in 2023, assuming the ADR plant resumes full operations as planned.

Gold production in the second quarter was 42,728 ounces, solely from the Mount Milligan Mine. At Oksut, mining and leaching activities during the quarter resulted in 58,469 recoverable ounces stored as gold-in-carbon inventory at the end of June 2022. Centerra reported copper production of 17.4 million pounds in the quarter.

The company continues to progress its life of mine planning work for the Mount Milligan mine with a focus on assessing the impact of an extended mine life on capital equipment costs and tailings storage expansion requirements.

Meanwhile, Centerra said the second quarter loss included a US$40.9 million reclamation provision revaluation recovery at the Endako and Thompson Creek mines. Thompson Creek is a surface molybdenum mine and mill located in Idaho. Endako is a also a molybdenum mine located northeast of Prince George, B.C.

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