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Centerra trims production expectations on Mt Milligan water risks

1st August 2018

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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Continued water supply issues at the Mount Milligan mine, in British Columbia, have forced gold and copper producer Centerra Gold to trim its gold production guidance by 20 000 oz and its copper forecast by about five-million pounds.

The Mount Milligan mine continues to suffer from limited water supply, a situation which was exacerbated by minimal inflow from snow melt and dry conditions this year. Centerra has applied for regulatory approval to access water sources, but the company warned on Wednesday that should it not receive these approvals on time, the mine would have to operate on only one ball mill to conserve water, reducing throughput to 30 000 t/d in the fourth quarter.

At that rate, the production outlook for 2018 at Mount Milligan would be reduced to 175 000 oz to 195 000 oz and 40-million to 47-million pounds of copper. This compares with a previous guidance range of 195 000 oz to 215 000 oz and a copper range of 47-million pounds to 52-million pounds.

The company’s other mine, Kumtor in Kyrgyzstan, is forecast to produce between 450 000 oz and 500 000 oz.

Centerra president and CEO Scott Perry said that the Mt Milligan mine achieved better-than-expected mill throughput in the second quarter, which led to higher-than-planned gold and copper production.

“The additional volumes of water from the spring melt allowed us to ramp up mill throughput quicker, enabling the mill to achieve an average of 52 081 tonnes per operating day during the quarter. The mill performed very well during the quarter with little to no unplanned downtime and achieved an average throughput of greater than 60 000 t/d over a 30 consecutive day period. As a matter of fact, it achieved a record daily throughput in excess of 75 000 t/d for two days in a row,” he reported in a media statement.

Centerra’s total production was 130 183 oz of gold and 16.5-million pounds of copper in the second quarter. Kumtor’s gold production was 40% lower at 83 803 oz in the second quarter, which is as a result of milling lower grade and lower recovery ore from stockpiles. Mount Milligan produced 46 380 oz of gold and 16.4-million pounds of copper, compared with 57 096 oz of gold and 15.1-million pounds of copper in the prior-year quarter.

The company’s all-in sustaining costs, before taxes, were $996/oz for the quarter, bringing year-to-date to $963/oz. The costs were higher than planned, owing to the processing of lower grade material at Kumtor. The mine will access higher grade material in the fourth quarter.

In terms of development projects, construction continued at the Öksüt project, in Turkey, and the company has received an amended Mines Act permit for the Kemess underground mine, in Canada. The company is awaiting the receipt of other permits for Kemess and was developing potential financing alternatives.

Centerra reported net earnings of $43.5-million on revenues of $243.3-million in the second quarter. The results include a pretax gain of $28.0-million on the sale of the company’s royalty portfolio and $9.4-million on the recognition of the final instalments from the sale of the Altan Tsagaan Ovoo property. Excluding these items, adjusted earnings in the second quarter of 2018 were $1.0-million.

During the same period in 2017, the company reported net earnings of $23.4-million on revenues of $279.2-million. Excluding the write-down of the company’s Mongolian assets of $41.3-million, adjusted earnings in the second quarter of 2017 were $63.1-million.

Edited by Creamer Media Reporter

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