Centerra Gold Inc Annual Shareholders Meeting

May 02, 2017 AM EDT
CG.TO - Centerra Gold Inc
Centerra Gold Inc Annual Shareholders Meeting
May 02, 2017 / 03:00PM GMT 

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Corporate Participants
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   *  Scott Graeme Perry
      Centerra Gold Inc. - CEO and Non-Independent Director
   *  Stephen A. Lang
      Centerra Gold Inc. - Chairman

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Conference Call Participants
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   *  Karen William-Loiseau
   *  Wendy Yu
      Centerra Gold Inc. - Assistant Corporate Secretary

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Presentation
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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [1]
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 Good morning, ladies and gentlemen. I am Stephen Lang, the Chairman of Centerra's Board of Directors. And on behalf of the board, I'd like to welcome you for the Annual and Special Meeting of the Shareholders at Centerra Gold Inc.

 I'd like to introduce the other members of the board who are here today, and I ask each of them to stand as their name is read. Raphael Girard, Eduard Kubatov, Nurlan Kyshtobaev, Michael Parrett, Jack Perron, Scott Perry, Sheryl Pressler, Terry Rogers, Bektur Sagynov and Bruce Walter. Richard Connor is not able to join us today. And as you know, one of our -- the members of our board, Raphael Girard, is retiring and will not stand for reelection as a director this year. He has been a director since 2010. We've greatly benefited from his expertise and government relations and corporate social responsibility. Ralph, we'll miss your contributions at the board. And on behalf of the management, the board and the shareholders, we thank you for your service.

 On the stage with me is Scott Perry, Chief Executive Officer; and Frank Herbert, President of Centerra. KPMG, Centerra's auditors, are also in attendance.

 We will now proceed with the formal part of the meeting to conduct the business that is set forth in the notice dated March 29, 2017, and sent to shareholders. The meeting will please come to order.

 On April 10, 2017, notice of the meeting, the information -- and the management information circular form of proxy, annual report containing the financial statements and auditor's report thereon were mailed to all shareholders entitled to receive notice. Secretary has an affidavit from CST Trust Company, Centerra's registrar and transfer agent, attesting to the mailing of the notice of this meeting. Unless there are any objections, I propose that we take the notice of the meeting as having been read.

 In accordance with the bylaws of the company, I will act as the chair of this meeting, Frank Herbert will act as the secretary. And with the consent of the meeting, CST Trust Company, via its representatives, will act as the scrutineer. I have been advised by the secretary that based on the scrutineer's report, on attendance, we have a quorum for the meeting. The scrutineer's report will be available at the close of the proceedings to anybody who wishes to inspect it.

 I now declare this annual and special meeting of the shareholders is duly constituted for the transaction of business. Before proceeding with the business of the meeting, I would like to take -- make a few comments respecting the procedures to be followed. Only registered shareholders of the company's common shares who are here in person or holders of valid proxies may vote. Other persons present today are here with the consent of the meeting to observe the proceedings only.

 There are 4 matters to be dealt with as a formal part of the business meeting: one, the election of directors; two, the appointment of auditors; three, the company's amended and restated restricted share unit plan; and four, the company's employee share purchase plan. We will conduct the voting on these items of business by ballot. Ballots will be distributed to the shareholders and proxy holders when they registered with the scrutineers. Shareholders and proxy holders who did not receive a formal ballot and who wish to receive one should raise their hands so that the scrutineers can distribute them to those entitled to vote.

 For convenience, Karen William-Loiseau and Wendy Yu, our shareholders and proxy holders have been asked to move and second the resolutions. Following the formal part of the meeting, Scott Perry will provide an update on the Centerra's activities, after which we will be happy to respond to any questions. I now request the secretary to table the minutes of the last meeting of shareholders held on May 17, 2016. Unless there are any objections, I propose that we dispense with the reading of the minutes.

 May I have a motion that the minutes of the Annual Meeting of the Shareholders held on May 17, 2016, be taken as read and verify and approve them?

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 Karen William-Loiseau,    [2]
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 I move.

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [3]
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 Thank you. Is there a second?

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 Wendy Yu,  Centerra Gold Inc. - Assistant Corporate Secretary   [4]
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 I second the motion.

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [5]
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 Thank you. For those in favor of the motion, please signify by raising their hands?

 (Voting)

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [6]
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 Those opposed, if any?

 (Voting)

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [7]
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 I declare the motion has carried.

 The annual report and consolidated financial statements of the company as at and for the year ended December 31, 2016, and the auditor's report thereon have been mailed to all shareholders entitled to receive them and are available here today. Questions concerning the annual report, financial statements, management's discussion and analysis will be entertained in the general question period following management's presentation.

 We would now proceed with the election of directors. The Board of Directors has determined that the number of directors to be elected at the meeting is 11. All of the directors proposed for nomination in the management information circular mailed to the shareholders in connection with this meeting have agreed to stand for election.

 The management nominees are: Richard Connor, Eduard Kubatov, Nurlan Kyshtobaev, Stephen Lang, Michael Parrett, Jack Perron, Scott Perry, Sheryl Pressler, Terry Rogers, Bektur Sagynov and Bruce Walter. May I have a motion to nominate these individuals for election?

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 Karen William-Loiseau,    [8]
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 I move motion.

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [9]
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 Thank you. Is there a second?

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 Wendy Yu,  Centerra Gold Inc. - Assistant Corporate Secretary   [10]
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 I second the motion.

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [11]
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 Thank you. The Centerra has adopted an advanced notice bylaw, which requires any director nominations be received by the company in advance of the meeting. As no such nominations have been received, I declare the nominations closed.

 May I have a motion to elect each of the persons nominated to be elected as directors of Centerra and to hold office until the next annual meeting of the shareholders and -- or until their respective successors are duly elected or appointed pursuant to the provisions of the Canada Business Corporations Act and the bylaws of the Corporation.

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 Karen William-Loiseau,    [12]
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 I move.

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [13]
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 Thank you. Is there a second?

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 Wendy Yu,  Centerra Gold Inc. - Assistant Corporate Secretary   [14]
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 I second the motion.

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [15]
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 Thank you. Each shareholder should record their vote on this motion on their ballot. When you have finished voting, please sign and print your name on your ballot. Please keep your ballots for voting on other items of the business. Ballots will be collected at the end of the formal business of today's meeting. We will now proceed with the appointment of auditors and the authorization of the directors to fix their remuneration.

 May I have a motion to appoint -- to approve the appointment of KPMG LLP as auditors of the company for the ensuing year and to authorize the directors of the company to fix the remuneration paid to the auditors?

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 Karen William-Loiseau,    [16]
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 I move.

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [17]
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 Thank you. Is there a second?

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 Wendy Yu,  Centerra Gold Inc. - Assistant Corporate Secretary   [18]
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 I second the motion.

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [19]
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 Thank you. Each shareholder or proxy holder should record their votes on this motion on their ballot.

 We will now proceed with the consideration of the company's amended and restated restricted share unit plan. The amended and restricted share unit plan is intended to encourage directors, officers and other eligible employees to participate in the long-term interest of the company and to align their interests with the interest of shareholders. Details of the plan are contained in the Management Information Circular that was mailed to shareholders in connection with this meeting.

 May I have a motion to approve, ratify and confirm the amended and restated restricted share unit plan, including any grants of restricted share units pursuant to the plan using the form of the resolution, which is set out on Page 18 of the information -- Management Information Circular?

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 Karen William-Loiseau,    [20]
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 I move that.

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [21]
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 Thank you. Is there a second?

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 Wendy Yu,  Centerra Gold Inc. - Assistant Corporate Secretary   [22]
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 I second the motion.

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [23]
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 Thank you. Each shareholder and proxy holder should record their vote on this motion on their ballot. We will now proceed with consideration of the company's employee share purchase plan. The employee share purchase plan is intended to motivate eligible employees to acquire Centerra shares in a convenient manner, to encourage employee share ownership and to all employees interest with the interest of shareholders. Details of the plan are contained in the Management Information Circular that was mailed to shareholders in connection with this meeting.

 May I have a motion to approve the employee share purchase plan using the formal resolution, which is set out in Page 21 of the Management Information Circular?

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 Karen William-Loiseau,    [24]
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 I move that.

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [25]
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 Thank you. Is there a second?

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 Wendy Yu,  Centerra Gold Inc. - Assistant Corporate Secretary   [26]
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 I second the motion.

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [27]
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 Thank you. Each shareholder and proxy holder should record their vote on this motion on their ballot. When you have finished voting, if you have not already done so, please sign and print your name on the ballot. When you have completed your ballot, please raise your hand so that a scrutineer can collect your ballot.

 I'd ask the scrutineers now to collect the ballots and after counting them report back to me at the appropriate time. I'll take a brief recess to allow the scrutineers to tabulate the ballots.

 (Break)

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [28]
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 The meeting will now reconvene. I have received the scrutineer's report. The motions -- the results of the motion are as follows: the scrutineer has indicated that each of the persons nominated to be elected as directors of Centerra have been appointed to hold office until the next Annual Meeting of Shareholders or until their respective successors are duly elected or appointed. Each Director has received at least 90% of the votes in favor of their appointment. I declare that the motion is carried and hereby approved. The scrutineer has indicated that approximately 99% of the votes were voted in favor of the motion to appoint KPMG LLP as the auditor of the company for the ensuing year and to authorize the directors of the company to fix the remuneration to be paid to the auditors. I declare that the motion is carried and hereby approved. The scrutineer has indicated that approximately 65% of the shares voted were voted in favor of the motion to approve the amended and restated restricted share unit plan. I declare that the motion is carried and hereby approved. Finally, the scrutineer has indicated that approximately 97% of the shares voted were voted in favor of the motion to approve the employee share purchase plan. I declare the motion as carried and hereby approved.

 As there is no further formal business come before this meeting, I'll entertain a motion to terminate. May I have a motion to terminate the meeting?

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 Karen William-Loiseau,    [29]
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 Yes, I move that.

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [30]
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 Thank you. Is there a second?

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 Wendy Yu,  Centerra Gold Inc. - Assistant Corporate Secretary   [31]
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 I second the motion.

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [32]
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 Thank you. Would all those in favor, please signify by raising their hands?

 (Voting)

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [33]
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 Contrary, if any?

 (Voting)

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 Stephen A. Lang,  Centerra Gold Inc. - Chairman   [34]
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 I declare that the motion is carried and the meeting is concluded. So that concludes the formal part of the business of the meeting.

 Now I'll turn to Scott Perry for a presentation to address our 2016 performance.

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 Scott Graeme Perry,  Centerra Gold Inc. - CEO and Non-Independent Director   [35]
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 Okay. Good morning, ladies and gentleman, and thank you for attending our Annual Special Shareholders Meeting. It's great to have you here. I've got a short presentation deck, and I'll walk you through a number of slides just giving you a bit of an update on the company, how we performed this year and where we see our business plan going in terms of moving forward. First, I'm going to start you off here on this slide here, it's just a typical sort of introductory slide. You can see on the left here we've got a number of attributes that we think favorably distinguish Centerra relative to our comparative peer group. I will let you peruse that at your leisure.

 Usually, I would like to start off by saying -- kind of just sharing an observation from my perspective. I have been with the company for about 18 months, but I've always followed Centerra since way back in 2004 when the company was first spun out of Cameco. And I've watched the company's flagship asset, Kumtor, with a lot of interest. This literally is one of the best, most profitable gold mining operation in our industry. I think Centerra has always been incredibly fortunate to have such a world-class asset in its portfolio. By way of reference, if you look at last year, Kumtor made around $237 million in positive free cash flow. Not many gold mines in our industry that are making that level of cash flow. So it's very impressive. And again, Centerra is very fortunate to have always had that asset to build a company around. What has always been challenging though is the -- from the perspective of a capital market from the investment community, Kyrgyzstan is not deemed to be a top-tier jurisdiction. And so you see that reflected in terms of Centerra's valuation. And I have a chart coming up on this shortly when you look at our share price in the net asset value -- valuation multiple.

 We do trade at quite a punitive discount relative to our comparative peer group. So we as a board, we as management, what we're very focused on is trading diversity. And we made a big strategic move last year, whereby we added the world-class Mount Milligan asset to our portfolio and we did that through the Thompson Creek acquisition that was consummated back in October of last year. You can see the pie chart there on the top right of the slide. It really illustrates what a transformative impact that transaction has had on Centerra's overall geopolitical risk profile. You can see that nearly up to half of our net asset value is now domiciled in North America and correspondingly, Kumtor, which is domiciled in Kyrgyzstan now represents up to 1/3 of our value. So it's really changed the complexion of the company, which, I think, is favorably resonating with our shareholders in the investment community. But then when you look at that waterfall chart in the bottom right-hand corner, that's now our go-forward business plan. We're still looking to create and incorporate more diversity in terms of the different production sources that we have within Centerra moving forward.

 So what's going to underpin our business plan is those 2 blue increments. That's the gold production profile from Mount Milligan and Kumtor, it's very high-quality, low-cost production. And we're going to use that profitable production and the cash flows we're realizing from that production to build out the rest of our development project pipeline. The pipeline is illustrated by the gold increments. We've got Öksüt in Turkey. We've got Gatsuurt in Mongolia. And then we've our Greenstone joint venture project in Canada. And I have a slide coming up on each of these assets.

 Just quickly, just recapping on the last -- the prior corresponding financial year. You can see the waterfall chart there on the top left of this slide. Again, it was a showcase year for Kumtor. You can see the first green increment there. That was that positive level of cash flow that the mine generated that I was referencing earlier, $237 million of positive free cash flow. That's an outstanding result. And again, you don't see many gold mines demonstrating that level of profitability within our industry. You can see the other green increments, but keeping the focus on the large red decrement there, is the cash funding component that was required to facilitate the Thompson Creek transaction on a net basis. This was a $1 billion acquisition. 75% of the consideration going to Thompson Creek shareholders was in the form of cash and the other 25% was in the form of Centerra equity. You see that in the chart there in the bottom left, this is Centerra's share count.

 And you can see, generally speaking, for the longest time, it's quite a stable share count, which always reflects that the company is being very focused on maximizing intrinsic value behind each and every share outstanding. And then obviously, in 2016, we made a big strategic move with the Thompson Creek transaction, and we issued approximately 50 million new shares. And so you can see, we now have a new share count of around 290 million shares outstanding. The transaction itself though, obviously, given so much and the consideration was in cash. It was a very accretive transaction in terms of production per share, reserves per share, net asset value per share, cash flow per share. The pie chart there on the top right. I always use this pie chart to kind of discuss the current situation in terms of where we stand on the various disputes that we've just had recently with our host country, Kyrgyzstan, in terms of our flagship asset, Kumtor.

 So this is as of the end of Q1, and it's really the summary of our treasury position. You can see we finished Q1 with a total debt position of $438 million, which is down from $475 million at year-end. And then you can see there in the blue segments is our aggregate cash position. The thing that really stands out is the restricted cash component. As at the end of Q1, it was approximately $277 million. Again, those of you who are familiar with Centerra will know that there's been a number of disputes that were brought forward last year, and as part of those disputes, the lower judiciary court in Kyrgyzstan put in place an interim court ruling that restricts our ability to repatriate cash from our subsidiary to our parent. As a result, this cash we're currently categorizing as restricted cash. This cash is actually domiciled in the U.S., in our U.S. bank accounts in New York, but the legal owner of these bank accounts is our subsidiary, Kumtor Gold Company.

 Now in terms of addressing this situation, we've been -- as a company, we've been heavily engaged with the government of Kyrgyzstan, with the leadership of Kyrgyzstan. There's been a number of interactions in terms of difficult face-to-face meetings, and I think the spirit of those meetings is we're looking to put in place an all-encompassing dispute resolution agreement that will see all the disputes that have been brought forward against Centerra over the last 4 to 5 years being completely resolved. Again, the spirit is we want a clean slate. We're turning a new page. We want a new relationship moving forward. Symbolically, I think there is some things that I can point to that demonstrate we are making progress in that regard.

 And you may have noticed that it is third time this year we have received all of our operating payment for Kumtor, and we have received them on a full calendar year basis. In the past, we were receiving our permit on a quarter-over-quarter basis. We received our development permit to the Sarytor open pit deposit, which is a new adjacent open pit mine to Kumtor, that's been fully permitted, and the other key thing I'd reference is our tailings storage facility expansion. We've received the full permit for that expansion. The results in height of the tailings storage facility once we've expanded it is actually going to be 2 to 3 meters higher than what Kyrgyz's statutory code permits. However, the authorities and the ministries that fully permitted this as an exception, which again just symbolically speaks to the improved engagement, that's obviously taking place in the background behind these disputes. I will leave it at that, but just to say, I'm cautiously optimistic that we're getting closer and closer to resolving these differences, and I truly hope there's going to be some short-term news flow that we should be able to report shortly.

 Next slide here, just -- again just on financial margins, you can see the pie chart there on the right, just talk about the positive free cash flow margin within the business. Again, this is on a company-wide basis. The blue segment is our positive cash flow from operations and then the gold segment is our company-wide capital investment requirements. So the net of these 2 numbers is our resultant positive free cash flow. 2015 company-wide is around $100 million of positive free cash flow. Gold prices were around $1,150. Last year 2016, positive free cash flow of -- I think it's around just under $150 million, realized gold price was around $1,250. So a very profitable business. You really see that reflected in the chart there on the left, the cash reserve chart year-over-year on the bottom left retained earnings profile. I think what's really unique about Centerra's business model and what supports my earlier statement regarding Kumtor being one of the more profitable operations is you can see year-over-year, the cash reserves will be retained earnings. There's generally always been a trend of year-over-year growth.

 So in terms of cash, we've been building out that balance sheet year-over-year. In terms of retained earnings, we currently boast retained earnings balance as $900 million plus. It definitely distinguishes us relatively to the comparative peer group and obviously indicates a very high-quality, high-margin operating asset base. The theme of profitability is continuing here in 2017.

 This morning we reported our Q1 financial results. I think this is now the first quarter where Centerra has been able to showcase 2 world-class lower cost operations. This is the first quarter where we had an entire quarterly contribution from Mount Milligan. You can see some of the key highlights here. Our after-tax earnings result was $57 million that was underpinned by some very strong gold output and some very strong copper production levels. What particularly impresses me is the fourth bullet point. This is our company-wide all-in sustaining cost profile.

 In Q1, we were around $756 per ounce and that's the company-wide result, inclusive of all corporate sort of G&A and ancillary costs. That is lower cost quarter. We think with the acquisition of Thompson Creek and the addition of Mount Milligan, we've put together a business and an asset base that should be able to demonstrate profitability for all phases of the metal price stock moving forward. This is likely to continue. In terms of these costs, they're likely to decrease moving forward because in terms of our outlook for this year, in terms of our guidance, we are guiding for consecutive quarter-over-quarter increases in gold output profile, both from Mount Milligan and Kumtor.

 So that growing denominator should continue to drive down these unit costs. The last point I'd note, just on the very bottom with today's earnings release, we did, again, reconfirm our production outlook and our cost outlook for the full year. So we think operation is performing well, and we're in great shape.

 This slide on Slide 7. This chart here is just a chart of the world gold mining industry in terms of the industry's all-in sustaining cost profile. And what we've done with this chart is just illustrate where our assets are currently -- where they sit relative to the world industry cost curve. So you can see on the slide left, Mount Milligan, we always put forward as going to be one of the lowest-cost producers of gold in North America, and you can see on the worldwide basis that is also the case. Öksüt, which is going to be our next development project, most likely coming online chronologically, and I'll talk about that. That also has a very low-cost of production around just under $500 per ounce.

 You can see Kumtor, in terms of our guidance there, it's positioned first to the right and then you look at Centerra on a company-wide basis, in bold, you can see in terms of our guidance, we're guiding this year, it's about -- on the midpoint, just under $800 per ounce in terms of all-in sustaining cost. Again, this is going to protect our business very well in terms of best positioning us for profitable production, profitable cash flows regardless of where we stand in terms of prevailing gold price. This next slide here, just in terms of operational execution. 2016 was another outstanding year for Centerra, and I think that's the third year in a row where the company and our operations and our operating team has outperformed guidance, be it on gold production or all-in sustaining cost.

 So the chart at the bottom left on the slide left column in gold is our original guidance. At midyear, we favorably revised that, and then you can see at year-end, we favorably outperformed both sets of guidance. Similar theme in terms of all-in sustaining cost there, the chart on the bottom right, our original guidance on the midpoint was around $860 per ounce. At midyear, we're recognizing that gold output was growing. We're having a lot of wins in terms of our productivity improvements and our unit cost efficiency improvements.

 We favorably revised that guidance down to $692, and then at year-end, you can see we came in at $640, favorably outperforming both sets of guidance. In terms of the macro environment, some of this was favorably supported by lower oil prices, particularly at Kumtor around 18% of our expenditures is denominated in -- sorry, represent diesel fuel, and also we saw a favorable devaluation in the local currency in Kyrgyzstan. The Kyrgyz som obviously benefits a lot of our local labor cost. And interestingly, they have themes that continue today in 2017, so we should continue to benefit from them.

 Just here on Slide 9, just in terms of our valuation multiple. This is the chart that Scotia put together for us. And again, I just want to tieback into that opening remark that I made at the start. We've always had an amazing world-class asset that's always demonstrated strong levels of profitability, but unfortunately from the investment community's perspective, they haven't always given us full value because of the jurisdiction where that asset is located. To put that remark in perspective, it shows our share price and net asset value multiple. You can see Centerra is currently trading at a valuation multiple of 0.7 and when you look at our relative to comparative peer group, you can see the peer group is trading at a multiple of 1.1.

 So there is a lot of headroom there for us to grow into as we move forward. We obviously think with the addition of Mount Milligan and the favorable recalibration of our sort of political risk profile that I showed you earlier, that's going to provide one catalyst to continue expanding our valuation multiple. We think the addition of Öksüt, our Turkish project, that will be a third source of high-quality, low-cost production. And we think these various catalysts are going to help us to expand our multiples moving forward. Just in terms of our development projects, I'll speak in a little bit of detail to Öksüt because chronologically this is probably most likely to be the first candidate being brought forward to the board to make the proceed -- joint proceed decision on. This is located in central Turkey.

 You can see the highlights there on the top left of the slide, just speaks to the feasibility that was published in 2015. This is a conventional open pit heap leach project. I personally think the most distinguishing thing about this asset is the very low operating cost, which is in the third row of this table. We're expecting to produce gold here at a very low all-in sustaining cost of $490 per ounce.

 Again, it's going to favorably complement our existing asset base, and it is again being another asset that should be best positioned for being profitable no matter where we stand in the metal price cycle. Down the bottom of the table is some of the economics, NPV of $240 million, high rate of return of 43% and the cash flow payback period of around 2.5 years.

 If you look at some of the bullet points in the bottom left, one of the very last bullet points, we already have our construction finance facility put in place by EBRD and UniCredit. So we think we're very well positioned in terms of financing the construction. In terms of permitting, the first couple of bullet points, our Environmental Impact Assessment was approved last year. We received our forestry permit last year, and we also received our GSM business operating license permit last year. The one permit that we're still waiting on is our pastoral land use permit. That is literally our last red rubberstamp that we need. And then we have everything in place to make up a construction decision. We're quite confident that we stand in great stead in that regard. And what really reassures myself or our team on the ground, if you will, is just these simple images.

 These images that were taken 3 to 4 weeks ago, when we were in Turkey, visiting with the team. And what you're looking at here is 26 kilometers of infrastructure that's being currently -- that's currently being constructed and stored by the National Power Utility Provider. So this is the government building it after our project. You can see some of the images there on the left is the power poles. You're looking at substations on the right. Currently, the power utility provider is getting ready to string all the cable, the 26 kilometers, and we are the sole customer on the end of this power line. Really like to give me confidence that the left hand of the government is talking to the right hand of the government and gives me the confidence to sort of message that it's not a matter of if we're going to get permit, more a matter of when we're going to get the permit. This is very important to Centerra.

 If you think about the geopolitical risk profile of the company, this would be a third source of high-quality, low-cost production and the third leg to the school -- it's third leg to the stool, there will be more diversity, and this is something that we're very excited about in terms of bringing this forward as a catalyst moving forward.

 Just on Gatsuurt. This is in Mongolia now. Those of you who have been familiar with Centerra for some time know that Centerra has got quite a history of profitable production in Mongolia. The image in the bottom right-hand corner, Centerra used to operate the Boroo's gold mining operation. You can see the chart on the bottom left, the mine was commissioned in sort of 2004, 2005. That chart, which is a cumulative cash flow chart, you can see Boroo generated just under $500 million of positive cash flow in Centerra that was actually repatriated from Mongolia back to Centerra's treasury here in Canada. The most important aspect of this slide though is the image in the bottom right-hand corner. This Boroo wins the care and maintenance in 2015, but in terms of the processing facility, the tailings storage facility, all the infrastructure which is fully permitted, it's up on surface, ready to go. We've been keeping it on care and maintenance. And the significance of that is we have the Gatsuurt deposit, which is located some 55 kilometers from this infrastructure. We've already built the haulage road from Gatsuurt to the processing facility. We already have the haulage equipment fleet currently warehoused in Ulaanbaatar in Mongolia. So we literally have all the pieces of the puzzle other than an approved investment agreement.

 Now where we stand on that is currently we, Centerra, are finalizing our internal feasibility study. We want to make sure that we've got refreshed economics to present to the board for evaluation in terms of making it a potential proceed decision. Once we have that in place, that's when we will look to finalize our negotiations on the investment agreement, the deposit development agreement, the community agreement. Just lastly, in terms of Greenstone, this is our joint venture project with another Canadian gold mining company, Premier Gold.

 Last year, in November of last year, we published our feasibility study for this project. Some of the highlights are there in the bottom left in this table. We stand by the title of the slide. The Greenstone deposit is literally is one of the largest undeveloped open pit gold mine deposits in Canada, especially in terms of gold mining deposits that have delineated reserves on them. As a significant endowment here in terms of cost production, in terms of current reserves and in terms of current open pit and underground resources, you see some of the highlights there in terms of the economics in the bottom left, it's 100% basis, NPV in excess of $500 million, internal rate of return of around 14.4% and in terms of the capital construction cost, this is under USD 1 billion.

 Both partners where we stand right now in terms of go-forward development plan is we're more focused on let's preserve the value here, let's enhance the value as well. And how we're looking to do that is derisk this asset just through First Nation negotiations in terms of looking to put in place impact benefit agreements with the local First Nations and concurrently also working on our environmental permitting. Both of these simultaneously is sort of the 2-year time frame and that's really the key sort of business plan for our Greenstone here in the short-term. And second last slide, we are a gold mining company, but we are now also in the molybdenum business with the acquisition of Thompson Creek where the key addition was Mount Milligan. We've also taken our initiative of Thompson Creek's molybdenum business unit. We're very comfortable doing that from a strategic perspective because we think there is a lot of deep value within this business unit. The assets are highlighted on the right. The primary Thompson Creek moly mine in Idaho. We have got the Endako moly mine in B.C.

 Both of these mines are currently on care and maintenance, they're not operating. On the bottom right is the Langeloth metallurgical facility down in Pennsylvania. This is operating. This facility, this year, as per our budgets and guidance, we expect to generate around $10 million in positive free cash flow. We use that cash flow to fund all of the holding and the care and maintenance costs of the 2 primary moly mines that are currently on care and maintenance. So the business unit is fully funded, but we see a lot of deep value here, a lot of optionality that we're going to look to daylight and surface in the future. In terms of that value optionality, you can see the slide there -- the chart on the bottom left. 2013 and 2014, this is the business unit generating in excess of $100 million of EBITDA and that's when moly prices were trading in the mid-teens. Today, moly is trading just under $9. It was as low as $5 back in July of 2016. So it's up a good 60%. And I think taking that for as background in terms of context, there's a lot of optionality here that we're going to look to capture and bring to fruition as and when we finance those in the right phase of the go-forward moly price cycle.

 And just a final slide, again, just illustrating where Centerra stands relative to our comparative peer group. 3 key lenses that we're looking at here. The top left is our gold output profile and the top right is all-in sustaining cost profile and down the very bottom is in terms of overall delineated gold reserves. So you can see, Centerra, again -- you've heard me say this a number of times, what I think really positions Centerra very favorably is our cost profile. You can see that in the chart there on the top right. In terms of all-in sustaining costs, we are going to be one of the lower producers -- lower cost producers of gold in our comparative peer groups. And I think that's something that's always going to distinguish Centerra very well in terms of making sure we're always profitable no matter where we sit in the prevailing gold price environment, and then that's obviously further underpinned by the chart in the bottom of the slide just in terms of our overall gold endowment. You are looking at a lot of mine longevity in terms of Centerra's portfolio. So we've got great optionality to future metal price cycles moving forward. I'm going to sort of wrap it up there and happy to open it right now to any questions that we may have on the floor. In the event, if there aren't any questions, we have a number of members of management that are here, a number of members of board -- from the Board of Directors that are here.

 So why don't I start with the floor, just see if we do have any questions or anything that we didn't address.

==============================
Questions and Answers
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 Unidentified Participant,    [1]
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 Roughly you got price to bring back the molybdenum operation?

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 Scott Graeme Perry,  Centerra Gold Inc. - CEO and Non-Independent Director   [2]
------------------------------
 So the -- in terms of the (inaudible) reversing back to the moly business. In terms of the 2 primary moly mines that we have on care and maintenance?

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 Unidentified Participant,    [3]
------------------------------
 Right.

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 Scott Graeme Perry,  Centerra Gold Inc. - CEO and Non-Independent Director   [4]
------------------------------
 Generally speaking, on a blended basis, if you want to see a moly price around $14 to $15 and again moly is currently trading at $9. But moly has risen very quickly on the back of the whole, everyone calls it, the reflation trades, since President Trump came into power. And we are making sure that we're smart in that regard. We're making sure we've got up-to-date technical reports, startup plans, et cetera because it has come up. It has revalued pretty quickly, so.

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 Unidentified Participant,    [5]
------------------------------
 That's U.S. right? $14 to $15.

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 Scott Graeme Perry,  Centerra Gold Inc. - CEO and Non-Independent Director   [6]
------------------------------
 Yes, U.S. dollars per pound.

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 Unidentified Participant,    [7]
------------------------------
 Why are you taking challenges from the sustainability point of view in your operations?

------------------------------
 Scott Graeme Perry,  Centerra Gold Inc. - CEO and Non-Independent Director   [8]
------------------------------
 Well, when you look at -- when you look at Kumtor, Jenny just added Mount Milligan to our portfolio. But in terms of Kumtor, looking more of where Kevin is, we've got 4 years plus where we haven't had -- 4 years plus of an absolutely clean record in terms of license to do business, continuous operations, et cetera. No disruptions or what have you. That obviously speaks to our social license and what we put in place with our local communities and stakeholders in Kyrgyzstan. The next asset that's most likely to come online is Öksüt in Turkey. And that's something we've been very focused on from the very start. Öksüt was a project that came through our exploration pipeline. It's now currently been moving to our development project pipeline, and we are quite optimistic shortly of being part of our operating asset base. It will be our third producing gold mine. We've got tremendous social license at Öksüt because we've always focused on it from the very beginning. In terms of the government stakeholders, the mayor, the deputy mayor, the governor are very supportive of the project. In terms of the community, very supportive of the project. We're very focused on recruiting locally. We're very focused on procuring locally. We're now there 3 weeks ago. One of the initiatives that was currently underway is we're currently educating a lot of the local micro businesses and sort of provincial area where we are. We are educating them on what are going to be our future needs in terms of key inputs, materials and services and try to help them now to get ready for when we might be in production. So again that's all part of earning that social license. So I wouldn't say it's a challenge for us, which is kind of how your question was framed and that's to the credit of Kevin D'Souza as well as our general managers and management teams company wide. I think that's one of the things that distinguishes us well.

------------------------------
 Unidentified Participant,    [9]
------------------------------
 Do you have any (inaudible) of those, feel free to state here what the impact on the share price is on the restricted cash in the Kyrgyz sector? Where you'd get the cash (inaudible) share price or would you rather not say? I understand that.

------------------------------
 Scott Graeme Perry,  Centerra Gold Inc. - CEO and Non-Independent Director   [10]
------------------------------
 I'll quote someone. Just this morning, Trevor Turnbull from Scotia, he is the sales side research analyst that covers Centerra. When we published our results. In his research report at the very end, he said: the share price target of this valuation and he ascribes 0 value to Kumtor and 0 value to the restricted cash. He said, as and when Centerra resolves the situation, then he will bring value back into his targets.

------------------------------
 Unidentified Participant,    [11]
------------------------------
 So there's nothing in there now.

------------------------------
 Scott Graeme Perry,  Centerra Gold Inc. - CEO and Non-Independent Director   [12]
------------------------------
 Yes, that's an extreme view of my opinion. I think, generally speaking, the market describes some...

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 Unidentified Participant,    [13]
------------------------------
 (inaudible) bring back.

------------------------------
 Scott Graeme Perry,  Centerra Gold Inc. - CEO and Non-Independent Director   [14]
------------------------------
 He doesn't know. Everyone here will have a different opinion. I feel like that the market value is Kumtor at $0.25 to $0.30 on the $1, which is incredibly punitive, but that -- therein is the opportunity moving forward.

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 Unidentified Participant,    [15]
------------------------------
 And were there any questions we should have asked but didn't ask?

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 Scott Graeme Perry,  Centerra Gold Inc. - CEO and Non-Independent Director   [16]
------------------------------
 That is a very loaded question that one of my favorite directors loves to ask me in a board room setting. No, there wasn't. So with that, why don't we -- do you want me to?

------------------------------
 Unidentified Participant,    [17]
------------------------------
 Go ahead.

------------------------------
 Scott Graeme Perry,  Centerra Gold Inc. - CEO and Non-Independent Director   [18]
------------------------------
 So with that, we will again just bring the formalities to a close. But there is a lot of coffee and refreshments, a lot of treats and savories, et cetera. We've got members of the Board of Directors here available, members of management. Please come forward and ask me questions. And obviously, thank you very much for attending our meeting. So thank you.




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