TORONTO (miningweekly.com) – Canadian gold miner Centerra Gold this week reported strong first-quarter results as gold production surged, despite an onslaught of regulatory wrangling and physical challenges at its flagship Kumtor mine, in Kyrgyzstan.
Centerra late on Wednesday reported net earnings for the quarter ended March 31 of $51.4-million or $0.22 a common share, which reflected higher gold sales as a result of higher gold production at Kumtor and its other operating mine, Boroo, in Mongolia. Compared with the same period in 2012, it was a 434% increase over the $9.6-million or $0.04 a common share the company recorded in the same period of 2012.
Centerra noted the 2012 results were impacted by a ten-day work stoppage at Kumtor in February 2012 and the acceleration of ice and waste material at Kumtor, which is bisected by a glacier and required a change in the mine plan.
Revenue for the quarter increased by 44% to $192.3-million from $133.8-million in the comparative quarter of 2012, mainly as a result of 53% higher sales volumes at 118 745 oz, when compared with 77 720 oz sold in the first quarter of 2012. This was partially offset by a decrease in average realised gold prices at $1 619/oz, compared with $1 721/oz in the same quarter of 2012. The higher sales volumes reflect the increase in gold production at both operations.
Centerra lifted its gold production by 59% year-over-year to 115 220 oz, compared with 72 555 oz reported in the first quarter of 2012. The increased gold production was mainly the result of the processing of higher-grade ore at both Kumtor and at Boroo and the resumption of heap-leach operations at Boroo, which began in the fourth quarter of 2012. During the comparative period of 2012, Kumtor processed fewer tonnes, owing to the ten-day labour dispute.
As a result of the higher grades and improved production, operating cash cost declined by 31% to $471/oz, when compared with the $685/oz in the same period in 2012. The reported all-in cash cost for the quarter, including taxes, was $1 552/oz, 50% lower when compared with $3 130/oz for the 2012 first quarter.
Meanwhile, Centerra was in the throes of adjusting its waste management plans at Kumtor mine, following the faster-than-expected waste movement in a large section of Kumtor's main waste-rock dump, the Davidov Valley waste-rock dump.
Centerra said that beginning in mid-March, the rate of movement of the waste-rock dump increased by more than the company had expected, and required an accelerated effort to relocate certain mine infrastructure. Employees in the affected buildings had to be moved to temporary work locations, until new facilities were constructed.
Further, Kyrgyzstan in February had given Centerra three months to redraw terms before ripping up an agreement to run its flagship mine, accusing the Canadian miner of "colossal" environmental damage and underpaying the State.
Centerra, whose shares have halved since the Kyrgyz government, said it would review the mine deal, noting the 2009 agreement was "solid and transparent" and it had already started talking to the government.
Centerra was facing numerous claims by the State Agency for Environmental Protection and Forestry (SAEF) relating to alleged environmental damages at the Kumtor mine. The latest claim for $315-million lodged in February, was in addition to the five environmental claims that Kumtor received in December for a total amount of $152-million.
The Kumtor mine, bisected by a glacier 4 000 m above sea level, is the largest gold mine in Central Asia operated by a Western company. It is the industrial centrepiece of the fragile Kyrgyz economy, contributing 5.5% of Kyrgyz gross domestic product and 18.9% of industrial output in 2012.
On Wednesday, the company’s stock traded 4.5% higher at C$3.95 a share on the TSX.