TORONTO (miningweekly.com) – Toronto-based Centerra Gold is actively looking for potential acquisitions, and would like to acquire a development project to increase production beyond the existing expansion plans at the company's two mines, CEO Stephen Lang said on Thursday.

Centerra, which produces gold from the Kumtor mine in Kyrgyzstan and the Boroo operation in Mongolia, wants to boost output of the precious metal from the current 680 000 oz/y or so, to some 1,5-million ounces.

“I don't think that with the projects we have in front of us that acquiring a third one is a necessity. However, we see value in getting up to a critical size of a million-and-a-half, two-million ounces a year,” Lang said in an interview.

That kind of output growth will not be coming from any of the company's early-stage greenfield exploration in the next three or four years.

And so Lang is looking at taking on a later-stage exploration project or early stage development project, where Centerra can put its strong balance sheet to work to build another mine and fill the gap between the brownfield expansion projects already under way and longer-term exploration prospects.

The company plans to keep its focus in Asia, and central Asia in particular, he said.

The firm has no debt, and is pulling in increasing amounts of cash flow thanks to strong gold prices – the firm ended the first quarter with cash and short-term investments of $384,2-million.

This means it can move as fast as it wants on internal growth opportunities, while still keeping its options open when it comes to corporate activity.

STILL BUSINESS AS USUAL

Earlier, Lang told a group of investors that business continues “as usual” at the company's Kyrgyz operations, despite civil unrest in the capital in April, which ended in the ousting of President Kurmanbek Bakiyev and the formation of an interim government by opposition groups.

Production was not affected, taxes are being paid and initial restrictions on gold shipments were lifted, Lang reported.

In fact, he suggested there may be some positive ramifications for foreign companies doing business in the country.

“I think what we've seen is a very pragmatic approach by the new government in ensuring stability in the country, to ensure that people continue to work, continue to get paid, and that foreign investors feel comfortable there,” he told Mining Weekly Online.

At Kumtor, Centerra is moving ahead with preparations for underground mining.

The underground resource is still entirely in the inferred category, so there is some drilling and test work to be done, but work has begun on two portals in the underground area and Lang said he expects test mining could be under way in 2011, with underground production beginning in 2012.

In Mongolia, the Boroo mine is nearing the end of its life, but Centerra plans to extend the operation by hauling initial oxide ore from a new openpit mine, Gatsuurt, 55 km away, for processing through the Boroo mill.

The access road to Gatsuurt is around 95% completed, and will be finished by midyear, Lang said.

Ore haulage could begin in the fourth quarter, which would mean production from Gatsuurt before the end of this year.

Once the oxide cap is removed at Gatsuurt and an investment agreement is concluded with the government, the company will develop the project as a primarily sulphide mine, adding a flotation circuit and a bioleaching circuit .

Centerra was spun out to hold the gold assets of Canadian uranium giant Cameco in 2004.

Cameco remained a big shareholder until last year, when it transferred part of its holding to the government of Kyrgyzstan, as part of an investment agreement for the Kumtor mine, and then sold the rest in December in a public offering.

The 2009 investment agreement gave the Kyrgyz government an increased share in Centerra, in exchange for security of tenure, a bigger concession area and a simplified, fixed tax regime of 14% of the gross revenue for the Kumtor mine.

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