Q3 2017 Centerra Gold Inc Earnings Call

Nov 01, 2017 AM EDT
CG.TO - Centerra Gold Inc
Q3 2017 Centerra Gold Inc Earnings Call
Nov 01, 2017 / 03:00PM GMT 

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Corporate Participants
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   *  Darren J. Millman
      Centerra Gold Inc. - CFO & VP
   *  Gordon Dunlop Reid
      Centerra Gold Inc. - COO & VP
   *  John W. Pearson
      Centerra Gold Inc. - VP  of IR
   *  Scott Graeme Perry
      Centerra Gold Inc. - CEO & Non-Independent Director

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Conference Call Participants
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   *  Andrew Breichmanas
      BMO Capital Markets Equity Research - Analyst
   *  David Haughton
      CIBC Capital Markets, Research Division - MD & Head of Mining Research
   *  Greg Barnes
      TD Securities Equity Research - MD and Head of Mining Research
   *  Michael Siperco
      Macquarie Research - Gold Analyst
   *  Rahul Paul
      Canaccord Genuity Limited, Research Division - Director
   *  Robert Bonte-Friedheim
   *  Robert Reynolds
      Crédit Suisse AG, Research Division - Research Analyst
   *  Stephen David Walker
      RBC Capital Markets, LLC, Research Division - Head of Global Mining Research and Analyst
   *  Trevor Turnbull
      Scotiabank Global Banking and Markets, Research Division - Analyst

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Presentation
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Operator   [1]
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 Ladies and gentlemen, thank you for standing by. Welcome to the Centerra Gold 2017 Third Quarter Results Conference Call and Webcast. During the presentation all participants will be in a listen-only mode. (Operator Instructions) As a reminder, this conference is being recorded, Wednesday, November 1, 2017.

 I would now like to turn the conference over to John Pearson, Vice President, Investor Relations. Please go ahead, sir.

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 John W. Pearson,  Centerra Gold Inc. - VP  of IR   [2]
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 Thank you, Denise. I'd like to welcome everyone to Centerra Gold third quarter conference call. Today's call is open to all members of the investment community and to media. We have summary slides available on Centerra's website, which will supplement each of the speakers' remarks. So following the formal remarks, the operator will give the instructions for asking a question and then we will open the phone line to questions. Please note that all figures are in U.S. dollars, unless otherwise noted.

 Joining me on the call today is Scott Perry, Chief Executive Officer; Darren Millman, our Chief Financial Officer and Gordon Reid, Chief Operating Officer. I would like to caution everyone that certain statements made on this call may be forward-looking statements. And as such are subject to known and unknown risks, which may cause actual results to differ from those expressed or implied. Also certain of the measures we will discuss today are non-GAAP measures and I refer you to our description of non-GAAP measures in the combined news release and MD&A. For more detailed discussion of the material assumptions, risks and uncertainties, please refer to our news release and MD&A issued last night, along with the unaudited financial statements and notes and to our other filings, which can all be found on SEDAR or the company's website

 And now I'll turn it over to Scott.

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 Scott Graeme Perry,  Centerra Gold Inc. - CEO & Non-Independent Director   [3]
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 Thank you, John and good morning everyone. Thank you for joining our Q3 Earnings conference call. As John mentioned, we have a slide deck prepared to accompany this call and is located in our website. And I'm just starting off on Slide # 5. Just in terms of some of the key highlights during the quarter, and as always starting off with safety. We continue to roll out our Work Safe, Home Safe safety program across all business units within the company. One of the key milestones during the quarter is we've now put every single employee, all of our operating assets for this program.

 As we've discussed in the past, this is a program focused on leadership and at essence it's really looking at great leaders and safety at all levels in the organization. So we're very pleased to see the level of progress we've been making there.

 Just in terms of the headline earnings results for the quarter, we reported a net loss of $0.8 million but there was a couple of key adjustments in there. So I think in terms of looking to put forward our normalized earnings with this press release, we are reporting adjusted earnings of some $52 million or $0.18 per share. The two key items that we're adjusting for was the one-time $60 million settlement charge associated with the comprehensive all encompassing dispute resolution agreement that was put in place in Kyrgyzstan. And we've also backed out the $6.9 million gain on the sale of the ATO project.

 Looking at the earnings itself, it still maybe on the life side, given that we did have a significant buildup in terms of finished goods inventory comprising just in excess of 48,000 ounces of gold. So obviously we've also got the potential profit margin on those ounces, which will be -- actually looking to realize now in Q4. In terms of metal output, it was a strong quarter. In terms of gold production, we exceeded our internal plans, finishing the quarter, we've got output of some 200,000 ounces and associated copper production of some 13.7 million pounds. Where it really resonates in terms of our unit operating costs, for the quarter company-wide all-in sustaining costs was $722 per ounce. Again this outperformed our internal targets and is really benefiting from the low-cost gold production that we're realizing from the Mount Milligan operation.

 It's an impressive number from my perspective, when we look at our level of operating cost versus our comparative peer group and it is coming in at the very low $700 per ounce. We think that really does favorably distinguish us and position our business model well, just in terms of ongoing profitability and free cash flow generation in the current gold price environment.

 I mentioned this earlier, just in terms of Mount Milligan all-in sustaining costs, it was very impressive for the quarter, it's the lowest that we've seen since the assets been under our ownership. In Q3 the all-in sustaining cost in Mount Milligan was $437 per ounce, again an excellent result. And that's what really underpinned the $59 million of free cash flow generation that we saw from Mount Milligan in the quarter, which in of itself is an excellent result as well.

 In terms of the company-wide metrics, I mean when you look at the cash flow statement and Darren will discuss this positive cash flow from operations was some $120 million and year-to-date the first 9 months, we've generated approximately $330 million of positive operating cash flow. The key metric that I myself really look at is that free cash flow generation and you are really seeing this on the face of the balance sheet, just in terms of build out of cash, the reduction in debt and our net cash position during -- for the year-to-date period. This is the first 9 months of this year. Mount Milligan has generated some $105 million of positive free cash flow and Kumtor has also favorably complemented that having generated some $88 million of positive free cash flow.

 The other thing I'd highlight at Kumtor, as I mentioned earlier, as we did have that buildup up in finished gold inventory. It comprised some 48,000 ounces of gold. If you look at the sort of current gold -- spot price environment, that 483,000 ounces is worth some $53 million of incremental cash flow that will be looking to realize and monetize here in Q4. And when I quote $53 million that is the after-tax, positive net cash flow benefit.

 The second last bullet point, just in terms of the balance sheet, I think we're presenting a very strong financial foundation here. We finished the quarter with some $352 million of cash, which reflects over a $172 million of year-to-date debt repayments. And if you look at the results in sort of net cash position, we've now transitioned into a positive net cash position for the first time this year. With that finish gold inventory balances we realized that in Q4 and just given the level of production that we are forecasting for the remainder of this year, we would expect that net cash position to continue to grow. So very well positioned.

 And then just the last bullet point there, just in terms of cash reserves and available credit lines and Darren will discuss this, we've got some $677 million in available liquidity. One of the things we always advocate is, the entire business model is a fully funded business model. And I think when you look at the level of cash flow that we are realizing from the operations as well as the strong balance sheet position, I think we're in great stead.

 Just moving on to the next slide, on Slide 6. The waterfall chart there in the top left, it really does graphically illustrate a lot of the commentary that I've made on the preceding slide. What we're illustrating here is that year-to-date cash flow performance on a company wide basis, there you can see in terms of two operation they are significantly cash flowing. Mount Milligan against the first 9 months $105 million in positive cash flow, Kumtor for the first 9 months has contributed $88 million in positive cash flow. Again, keeping in mind, my remarks regarding the finished goods inventory build up there, that's going to position us well as we've quoted that for the rest of this year.

 You can see on the operations that provided just under $200 million of positive free cash flow in the red decrements there really illustrate how we've appropriated those funds. I think the key thing here today has been the significant paydown or amortization on our debt facilities. If you see for the first 9 months of this year, we made debt repayments of some $172 million. And you can see as you follow the map through, we finished the quarter with $352 million.

 That kind of resonates in the chart there in the bottom left, which is just on our net cash position as I mentioned for the first time this year, now transitioned into a positive net cash position and we will be looking to grow this as we move forward. You can see the red column there, we commenced the year with a net debt position of some $96 million. But again given the positive cash flows from the operations and the continued debt repayments, we now presenting a net cash position. So, again, very favorable performance, that can all be attributed to the operations.

 Liquidity profile there in the top right, strong liquidity in terms of the treasury position, the blue segment is our cash reserves and then the remaining segments is just the available credit capacity on our existing credit lines. So obviously a $150 million associated with the Oksut credit facility. We've got $125 million undrawn on our revolving line of credit facility and then we've got $50 million undrawn on our EBRD Revolver Credit Facility.

 Just in terms of accounting, just the retained earnings chart there in the bottom right hand corner. I think year-to-date, we've continued to demonstrate strong profitability in terms of year-to-date after-tax earnings and you can see where that really resonate, it is in the blue segment here on this column chart. Generally speaking, year-over-year, Centerra has been building out positive retained earnings balance regardless of where we are in the prevailing gold price environment. Obviously, that just speaks to the high margin at our existing operations and the additional amount in Milligan. We would expect a continuation of that same just given Mount Milligan's very low operating costs.

 Going on to the next slide on Slide 7, with the press release we released last night, we tightened up the ranges on our guidance on a company wide basis, couple of bullet points there on the top left which really illustrates the key highlights. And really, I'm just speaking to the midpoint of that gold production guidance. So in terms of company wide gold outlook, we revised it down by some 3% on the midpoint in terms all-in sustaining cost, it really was a negligible revision.

 You can perhaps see that in the chart there on the right on Slide 7, we're just illustrating the original guidance in the gold column. This is the original guidance in the beginning of this year. And the blue column is our guidance that we put out in Q2 and the green column is just our most recent guidance. So really what featured here is at Kumtor, just given the strong operating performance that we've seen year-to-date have actually increased the guidance at Kumtor. And likewise, we've reduced Kumtor's all-in sustaining cost just given the favorable benefit that we're seeing there in terms of the rising or the growing denominator.

 And then in terms of Mount Milligan, we actually reduced the gold production guidance, which is just reflecting some of the throughput challenges that we've faced this year. Gordon will discuss this. During the quarter at Mount Milligan, we had some unforeseen challenges just in terms of mechanical availability that restricted our ability to get the targeted throughput levels at the operation. This has been offset by a significant improvement in terms of our recovery efficiency rate, both on gold and copper. We are pleased with this because this has been a dedicated program, focusing on improving the recoveries as of what was being achieved in the prior year corresponding period. And we think there are further benefits that will be pursuing at Mount Milligan as a reminder this year and into next year.

 If you look at the results in all-in sustaining cost guidance, in the bottom right, mid point company wide basis is around $723 per ounce. And then if you just look at that in the chart there in the bottom left, I think again, it really does demonstrate that we are one of the lower-cost producers of gold and again back to my opening remarks, I think it positions us very well just in terms of ongoing profitability, ongoing free cash flow generation in this current gold price environment.

 Just transition to the next slide on Slide 8. Slide 8, again, just want to reinforce that low-cost quartile and what -- how I was looking to do that is just illustrating where each of our assets fit on the -- is positioned on the gold industry, gold cost curve. You can see in terms of our operating asset in Mount Milligan is one of the lower cost gold mining operation within the industry. So again, a very complimented addition just in terms of portfolio and you can see Kumtor, the midpoint there of guidance, definitely in the lower-cost-quartile asset and then resultant in Centerra in terms of midpoint around $723 per ounce. Centerra is definitely positioned within the lower cost quartile, so very advantageous.

 In terms of what's next on the Centerra key development project, we're focused on is, Oksut, which is illustrated here in blue. Again, this is going to be another complementary source of low cost, high quality production. You can see the all-in sustaining cost target here for Oksut is around $490, that's going to be an important third source of low-cost production. An important example of Centerra continuing to redeploy the positive free cash flow is that realizing both assets and using those to build out the rest of that sort of project pipeline. So again as I said in the start, we do view this as a fully funded sort of internal business plan and the strength of those cash flow is realizing from our operating asset base that allow us to advocate that.

 With that, I'm now going to pass the call over to Gordon Reid, our Chief Operating Officer, Gord.

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 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [4]
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 Thanks, Scott. First, I'll speak to our safety performance. There were 6 reportable injuries in quarter and total of 11 year-to-date. The injuries in the quarter are considered low in severity, and included 3 lost time injuries, 2 medical aids and 1 restricted work injury. Our total reportable injury frequency rate is 0.54 as of the end of the quarter and is 0.35% for the year.

 There was also a reportable spill in the quarter. It's the first reportable spill we've had in almost 4 years. The spill occurred when approximately 10,000 liters of diesel fuel was released from a fuel tanker that overturned on the technical road between Barskoon and Kumtor. The spill was immediately contained and the contaminated soil removed to a hazardous waste facility within the same day. The driver of the fuel truck received minor conclusions and a mild concussion.

 I'll refer you to Slide 10. For the quarter on a consolidated basis, we produced 200,201 ounces of gold and sold 174,099 ounces of gold at an all-in sustaining cost of $722 per ounce. Kumtor produced a 138,561 ounces of gold in the quarter and sold 99,514 ounces at an all-in sustaining cost of $807 per ounce. Cash flow generated from Kumtor in the quarter after capital was $31 million and for the year is $88 million.

 Cash flow on all-in sustaining cost per ounce sold were negatively impacted by the partial deferral of gold sale to Kyrgyzaltyn due to the uncertain financial viability of the off-take bank. And I think Darren speaks to that more a little later. It is anticipated a new off-take bank will be appointed by Kyrgyzaltyn in November. After which regular gold shipments can be resumed. Mount Milligan produced 61,640 ounces and sold 74,585 ounces of gold at all-in sustaining cost of $437 per ounce.

 Mount Milligan also produced 13.7 million pounds of copper and sold 18.6 million pounds of copper. Cash flow generated from Mount Milligan in the quarter after capital was $59 million and for the year is $105 million. As Scott noted, corporate guidance for the year has been revised to 775,000 ounces to 815,000 ounces of gold produced at an all-in sustaining cost of $705 to $741 per ounce sold.

 Guidance of Kumtor has been increased to 540,000 to 560,000 ounces of goal produced at an all-in sustaining cost of $737 to $ 764 per ounce sold.

 Guidance of Mount Milligan has been reduced to 235,000 ounces to 255,000 ounces of gold at an all-in sustaining cost of $483 to $523 per ounce sold. Copper production guidance at Mount Milligan remains unchanged at 55 million pounds to 65 million pounds, primarily due to the improvement in copper recovery, partially mitigating the shortfall in mill throughput.

 I'll refer you to Slide 11. The increase in production guidance at Kumtor is primarily due to the positive grade variance and a high grade stockpile generated from mining the high grade portion of the SB Zone in 2017. The high-grade stockpile will be fully depleted by year-end. The reduced production guidance of Mount Milligan is due to the lower than anticipated mill throughput experienced year-to-date, which is primarily a result of unplanned maintenance downtime.

 We believe the changes implemented to-date in mill maintenance will result in improvements going forward. These changes include the hiring of experienced mill maintenance leadership and line staff and high performance planner and schedule training for mill planning and reliability staff. Our goal is to achieve less than 20% breakdown maintenance by the end of Q1 2018.

 Mount Milligan experienced another drier than normal spring and summer. This has resulted in lower than expected reclaim water volumes in the tailing storage facility, which is used for mill operations. There is a risk of minor non-significant disruptions to mill throughput as water is eroded to the water intake pipe.

 The water shortage is being mitigated in the short term by the development of water wells adjacent to the tailing storage facility and in the longer term by drawing water from a nearby lake, after approval of an amendment to the environmental assessment. The local First Nations and BC regulatory agencies have committed to an expedited EA amendment process.

 In the quarter, we completed our update to the Gatsuurt feasibility study. The study supports reserves of 1.3 million ounces of gold at a grade of 2.7 grams per tonne, using a gold price of $1,250 per ounce. And NI 43-101 compliant technical report will be published before year end. No construction decision has as yet been made on Gatsuurt development. There has been no change in status or application for a pastureland land use permit at our Oksut project in Turkey.

 At Greenstone, the environmental assessment application was submitted to the regulatory agencies in July. Greenstone is targeting Q4 2018 for EA approval. Discussions related to developing long-term relationship agreements continue with the impacted First Nations communities.

 Unit mining cost at Kumtor in Q3 was $1 per tonne mined. Mining costs were favorably impacted by fuel prices, in-house, component rebuilds and by greater utilization of the truck haulage fleet resulting in higher volume moved. Milling cost at Kumtor was $12.97 per tonne for the quarter.

 At Mount Milligan, average unit mining cost for the quarter was at $1.93 per tonne. Milling cost at Mount Milligan was $6.48 per tonne for the quarter.

 I'll refer you to Slide 12. A drill program to expand and improve the resource at Mount Milligan was initiated in Q3. The initial holes were drilled within the existing pit limits to upgrade the resource and improve the accuracy of the resource model. The results from three of the holes are shown on this slide and whereas expected. We are in the process of designing the 2018 exploration drill program with the intent to test the possibility of deepening the pit and extending it to the west.

 I'll refer you to Slide 13. This slide shows the outline of the final limit for Mount Milligan in relation to other potential 4 free targets that have been identified by previous geophysics. These targets will be prioritized and tested as we ramp up our exploration function in the Mount Milligan region.

 I'll now turn this over to Darren.

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 Darren J. Millman,  Centerra Gold Inc. - CFO & VP   [5]
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 Thanks Gord. Good morning, everyone. And for those following the slide deck, I'm on Slide 15. Total revenue from operations during the quarter was $276 million. Total gold revenue decreased during the quarter to $199 million, representing a 9% decrease to the comparative prior-year quarter. Mount Milligan contributes $75 million of gold revenue. On a consolidated level, Centerra realized a gold price during the quarter at $1,142 per ounce, compared to $1,327 per ounce in the comparative period.

 At quarter end, the Kumtor operations had approximately 49,000 ounces of dore on hand. These unrealized sales during the quarter expected to occur in Q4. We understand the Kyrgyzaltyn, the refinery used by Kumtor, [to purchase it's dore], is in final negotiations with the North American based off-take purchaser to replace it's existing Russian off-take bank.

 Centerra has been assisting Kyrgyzaltyn with the change in the off-take bank.

 During the quarter, the Mount Milligan operations also recognized 4 copper concentrate shipments during the quarter with 18.6 million pounds of copper sold.

 There was a decrease in operating cash flow before changes in working capital to $108 million from $119 million in the prior quarter comparative. This decreased is a result of the additional [and some dore] held at the Kumtor operations as mentioned earlier. $52 million in adjusted earnings, so $0.18 per adjusted shares was -- per share was earned during the third quarter. The earnings adjustment reflecting one-time charge of the $60 million settlement reached with the government of Kyrgyz Republic and again from the proceeds of $9.8 million or $6.9 million after tax on the sale of the ATO property in Mongolia.

 Now move to Slide 16. Some other financial highlights to note. On July 31, we agreed terms with Centerra B.C. Holdings Facility Syndicate to increase our revolver from above $50 million to $125 million. One condition for the execution under the amended revolver was to put in place to 2-year hedging program, existing of copper and gold hedgings within minimum average floor price of gold at $1,200 and copper at a minimum average of $2.50 per pound.

 The gold hedging program is more heavily weighted to zero-cost collars in 2018 and 2019 representing 55% and 100% respectively. This hedging strategy was also been adopted for copper hedges with 85% zero-cost collars in 2018 and 100% in 2019. The company does not plan to extend this program beyond this part of these hedges occurring in June 2019.

 You will note on Slide 16, about year-to-date and for the third quarter, the consolidated all-in sustaining cost achieved were under $750 per ounce positioning Centerra well in a lower cost quartile compared to our peers. Centerra will benefit from the cash flow and the all-in sustaining costs per ounce perspective in the fourth quarter with the 49,000 gold dore ounces on hand currently in inventory at a cost of $635 per ounce. Given our low cost operations both at Kumtor and Mount Milligan, we have generated $195 million to-date in free cash flow from mining operations.

 As you're all aware our cash movement restriction was lifted during the quarter with the announcement of the settlement reached with the government of Kyrgyz Republic. The lifting of the cash restriction combined with the significant cash flow generation for our operations has enabled the company to pay down our debt level to $334 million with a healthy cash position of $352 million at the end of the quarter. Our focus on debt reduction and the appropriate capital structure is currently under review.

 I'll now turn it back to Scott to wrap up.

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 Scott Graeme Perry,  Centerra Gold Inc. - CEO & Non-Independent Director   [6]
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 Okay, thanks Darren. Just on Slide 19 of the deck. I think when you look at the results and some of the key highlights that I've spoken to as well as the rest of the executive management team, it really does reflect the highlights on the left of this slide. Really what we're putting forward and what we've been presenting is now I've got two Cornerstone, lower-cost quartile assets and we've seen that in the quarter.

 In terms of production level this year, we're guiding up to 815,000 ounces of gold at low all-in sustaining costs of mid point $723 per ounce, which really does position us at lower cost quartile. Just given this low cost nature in the current metal price environment, we would expect to continue building out that net cash position over the remainder of this year and as we referenced on Slide 20, which is the slide I spoke to earlier. Again, just given the low-cost quartile, I think we're well positioned in terms of building out the rest of the business plan and the development project pipeline and continuing to utilize the positive free cash flows from both our operating assets deploying those assets into sort of development projects which we're looking ahead at the next generation gold mine.

 With that I'm going to pass the call back to Denise, the operator if I can, just to move into Q&A.

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Questions and Answers
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Operator   [1]
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 Thank you. (Operator Instructions) Our first question comes from the line of Rahul Paul with Canaccord Genuity. Please proceed.

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 Rahul Paul,  Canaccord Genuity Limited, Research Division - Director   [2]
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 Earlier this year, it looked like the throughput and the recovery issues at Mount Milligan were a combination of issues of the plant and the lack of a good GeoMet model. How it bonds to the geometallurgical model today after the work done so far? Is it behaving satisfactorily and are you able to plan ahead and distend a consistent feed to the plant? Particularly, since I assume you're now building a stockpile as well.

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 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [3]
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 The GeoMet model is actually being -- it's still a work in progress, but it is very much advanced at this point. We do use it for our short-term planning to forecasts re-recoveries and throughput in the mill. We have not -- we did not use it for budget purposes, but we used it to stress test our budget for 2018. It is near completion, but it is a very powerful tool and we do use it, yes.

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 Rahul Paul,  Canaccord Genuity Limited, Research Division - Director   [4]
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 I guess, what I'm trying to get out, in the near term, the lower throughput in Q3 was that, then entirely due to issues at the plant, rather than something wrong with the feed?

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 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [5]
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 Yes, we had significant unplanned maintenance downtime in Q3 that were unexpected on plant and that is the reason for the -- and I think we identified the specific reasons in the MD&A. We had a pebble crusher failure, we had premature failure of its liners on this, sort of discharge and some other issues that were unexpected.

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 Rahul Paul,  Canaccord Genuity Limited, Research Division - Director   [6]
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 Thanks. And then in light of what we've seen so far, when do you expect to be able to complete that ramp up, the 62,500 tonnes a day mill feed?

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 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [7]
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 We're still evaluating that, certainly for the fourth quarter of this year, we don't expect to achieve 62,500 tonnes a day as the run rate. We're actually targeting an average annual daily throughput of 56,500 to end the quarter. That is our target for the fourth quarter. We are still evaluating what the potential upside is, in terms -- and with or without capital investments and that -- we'll be doing that throughout 2018.

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Operator   [8]
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 Our next question comes from the line of David Haughton with CIBC.

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 David Haughton,  CIBC Capital Markets, Research Division - MD & Head of Mining Research   [9]
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 Thank you for the update. We saw the Gatsuurt Feasibility Study coming out, fairly weak IRR. What's the next step here, using this feasibility study as the basis for negotiation with the government? And would you expect to get any concessions on the royalty and tax regime?

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 Darren J. Millman,  Centerra Gold Inc. - CFO & VP   [10]
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 The next step now, now that we've finalized that feasibility study, the next step obviously is to publish the accompanying technical report, so that document. That's what you're seeing next. But yes, in terms of how we're going to utilize that feasibility study absolutely, that will form the basis of negotiations and discussions with the Mongolian Government. Obviously, we're looking to do everything we can to enhance the underlying economics, underlying value proposition. That's all going to come down to negotiations with the Government of Mongolia. I'm very comfortable saying that management or the board is not going to commit to this project unless the economics and again the value proposition is satisfactory.

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 David Haughton,  CIBC Capital Markets, Research Division - MD & Head of Mining Research   [11]
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 Could the project been reworked to be a heap leach on the oxide only and then not worry about the BIOX?

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 Darren J. Millman,  Centerra Gold Inc. - CFO & VP   [12]
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 I will speak on behalf of Gordon chime in. But yes, we look at all those scenarios Dave and the ultimate scenario that we went with, was the highest rate of return one and it also happen to be the highest sort of net present value opportunity.

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 David Haughton,  CIBC Capital Markets, Research Division - MD & Head of Mining Research   [13]
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 Okay. Changing topics. We've heard a few times about that build up of inventory at Kumtor, would you expect for the entire inventory to be sold in the fourth quarter, say, whatever the shortfall was in the third quarter or would they also be a catch-up of previous inventory as well?

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 Darren J. Millman,  Centerra Gold Inc. - CFO & VP   [14]
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 It is our expectation that we'll be catching up all of that. We will be monetizing all of that 49,000 ounces of gold in fourth quarter.

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Operator   [15]
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 Our next question comes from the line of Greg Barnes with TD Securities.

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 Greg Barnes,  TD Securities Equity Research - MD and Head of Mining Research   [16]
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 Just on Kumtor, I wanted to get a sense of what the mill head grade will be going forward? Now you've got the high grade stockpile was down a little by the end of the year?

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 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [17]
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 We've provided our guidance and I think you see our guidance and you see what we produced till the end of the quarter and you know our throughput, I think you can work out the grade from that.

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 Greg Barnes,  TD Securities Equity Research - MD and Head of Mining Research   [18]
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 And it's gotten beyond 2017?

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 Scott Graeme Perry,  Centerra Gold Inc. - CEO & Non-Independent Director   [19]
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 Yes, it's Scott. Here I'm going to chime in up for your question. You've caught us off guard a little bit. We don't have the technical report with us here, but that is public technical report, which has got the year-over-year profile just in terms of the mine grade and head grade profile. So we can give it to you after the call, if you get a chance to reference that technical report.

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 Greg Barnes,  TD Securities Equity Research - MD and Head of Mining Research   [20]
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 Yes, no, I just wonder is there a change? That still technical report is still in line of what you expect?

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 Darren J. Millman,  Centerra Gold Inc. - CFO & VP   [21]
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 It's still the best reference document for you at this time.

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 Greg Barnes,  TD Securities Equity Research - MD and Head of Mining Research   [22]
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 And secondly, can we get a little more color around the Kyrgyzaltyn situation? And what the steps are going forward, timing-wise and other issues?

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 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [23]
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 In terms of the gold sales or ?

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 Greg Barnes,  TD Securities Equity Research - MD and Head of Mining Research   [24]
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 Yes, the refinery of the bank that was buying it and what happened there and obviously the changes?

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 Darren J. Millman,  Centerra Gold Inc. - CFO & VP   [25]
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 Sure. It's Darren here. So Greg, we basically -- obviously since we found out about the Otkritie, the Russian off-take bank that Kyrgyzaltyn use, we first put a stop to shipments. We then did an assessment of the Otkritie Bank ourselves, referenced out networking connections with the all banking industry and there are other partners. The end result was to continue shipping go to Otkritie with a limited value up to 75% of the Centerra shares. So, we are continuing to shift -- just to be clear. So, Kyrgyzaltyn in the event of default, we can use the pledged shares in which Kyrgyzaltyn put forward to recoup unpaid sales.

 So that sort of the basis why we limited our sales currently to the Otkritie Bank indirectly to Kyrgyzaltyn. So we continue to shift to -- Kyrgyzaltyn continues to shift to Otkritie. We have been in negotiations/discussions with Kyrgyzaltyn and with a North American off-take bank. We are very, very close to finalizing those negotiations and with shipments to commence, our off-take purchases to commence with that group. So, we thought it was the most prudent exercise to put that sort of risk management strategy in place and we -- given our comments, we're comfortable and we've put our guidance expecting that, that matters to be resolved in Q4 and very sure of [that].

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Operator   [26]
------------------------------
 Our next question comes from the line of Stephen Walker with RBC Capital Markets.

------------------------------
 Stephen David Walker,  RBC Capital Markets, LLC, Research Division - Head of Global Mining Research and Analyst   [27]
------------------------------
 Just a follow-up on Greg's question. My understanding of Kyrgyzaltyn (inaudible) treaty relationship is the fuel that shipped from Russia to the mine has to be paid for upfront before it actually leaves the refinery with the diesel. What if anything changes with structuring an off-take or structuring a relationship between Kyrgyzaltyn in a North American bank as far as guaranteeing payment and shipping the fuel or is that not an issue?

------------------------------
 Scott Graeme Perry,  Centerra Gold Inc. - CEO & Non-Independent Director   [28]
------------------------------
 Hi Steve, it's Scott. And I apologize, it may have confused you. The previous discussion was with regards to gold sales in terms of the off-take relationship that Kyrgyzaltyn finds our gold and the off-take relationship that they have with the Russian counter-party and that whole discussion was with regard to gold sales. There has been no change, there's no impact whatsoever in terms about diesel fuel purchases.

------------------------------
 Stephen David Walker,  RBC Capital Markets, LLC, Research Division - Head of Global Mining Research and Analyst   [29]
------------------------------
 So, the diesel fuel, the lines of credit that are in place in Russia to purchase the diesel fuel and are not impacted by anything that changes between the gold sales and what is refined in Russia?

------------------------------
 Scott Graeme Perry,  Centerra Gold Inc. - CEO & Non-Independent Director   [30]
------------------------------
 Correct. There's no impact whatsoever and also I should mention that Kyrgyzaltyn plays no role in any of our procurement or supply chain management when it comes to diesel fuel. So, you definitely confused the dialog here.

------------------------------
 Stephen David Walker,  RBC Capital Markets, LLC, Research Division - Head of Global Mining Research and Analyst   [31]
------------------------------
 But those lines of credit have to be in place in Russia for Centerra before that fuel get shipped?

------------------------------
 Scott Graeme Perry,  Centerra Gold Inc. - CEO & Non-Independent Director   [32]
------------------------------
 Yes, to be honest, we purchase all of that fuel in advance. We pay for with our own cash, we're not reliant on credit lines or anything like that.

------------------------------
 Stephen David Walker,  RBC Capital Markets, LLC, Research Division - Head of Global Mining Research and Analyst   [33]
------------------------------
 Okay. And just Gordon, if I can come back to Mount Milligan. How much of the issue is sort of an in-pit issue with respect to the blasting patterns and various ore types and what's going into the front end of the plant versus the ability of the front end of the plant, the primary and secondary crushing to handle changes in hardness, changes in rock type; how much flexibility did you have at front end of the plant? And I guess what I'm asking fundamentally is, is this a Canadian Malartic problem where the design for the front end of the plant is fine for the initial several years of ore, but as the ore gets more complicated and there is more ore types then suddenly it becomes a problem and you have to -- as you suggested, look at capital alternatives to get production higher, i.e., adding another pebble crusher or adding something to the front end of the plant that release some of the -- the complications that are now starting to show up in the ore type?

------------------------------
 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [34]
------------------------------
 That's a valid question. As Rahul mentioned earlier about the GeoMet model, that's helping us to project the ore characteristics, that come to the front end of the system to the primary crusher. And we estimate our throughput on the short-term planning based on that. We do a very good job of blending in the pit. We have very tight parameters in terms of hardness, in terms of [cap of pilot, the pilot ratio] in trying to provide us consistent of feed as possible to the primary crusher. And that has helped us both in throughput and recovery by doing that. And the GeoMet model is a model we use to help us with that. So, I understand your question, but we're managing it and it's not what I would consider the primary driver for the throughput issues, it's the maintenance is the primary driver right now.

------------------------------
 Stephen David Walker,  RBC Capital Markets, LLC, Research Division - Head of Global Mining Research and Analyst   [35]
------------------------------
 And is it a function of hardness of the rock or is it just one of those things where the liners gave and had to -- problems at once?

------------------------------
 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [36]
------------------------------
 No, no -- I don't know -- the maintenance issue is not related to the ore characteristics, hardness or whatever.

------------------------------
 Stephen David Walker,  RBC Capital Markets, LLC, Research Division - Head of Global Mining Research and Analyst   [37]
------------------------------
 In the better gold grades in the quarter, were nice to see as well as the higher gold and copper recoveries. It was not part of the plan, is that -- was it a reconciliation or was it just a pocket that showed up, that wasn't in the GeoMet model?

------------------------------
 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [38]
------------------------------
 No. We were pretty much mind to plan this quarter. And the resource model is performing very well, it is performing very accurately. Recoveries were doing very well on copper, on the grade recovery curve. We're doing well on gold as well, but just the copper is outperforming the gold. The only issue we have is the throughput and where we have systems in place and people in place to deal with that. And we expect we'll get through this in the next period of time, and not too distant future.

------------------------------
 Stephen David Walker,  RBC Capital Markets, LLC, Research Division - Head of Global Mining Research and Analyst   [39]
------------------------------
 Thanks, Gordon, that's helpful.

------------------------------
Operator   [40]
------------------------------
 (Operator Instructions) Our next question comes from the line of Robert Reynolds with Credit Suisse. Please proceed.

------------------------------
 Robert Reynolds,  Crédit Suisse AG, Research Division - Research Analyst   [41]
------------------------------
 Going back to Mount Milligan again. I was hoping just for a little more color around the water shortfall and how much impact you mean by, I guess, minor disruption to mill production in Q4? And then I just have a follow-up in terms of when you would expect to be submitting that permit amendment for the EA and what an expedited timeline means just in terms of months?

------------------------------
 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [42]
------------------------------
 So, we identified that water is an issue very early in the year and we started the process then to move forward on identifying and accessing additional sources of water. We did a bathymetric survey in the summer, we identified we were about a million cubic meters less than we had anticipated, which doesn't really impact Q4, it's more an impact later in the year, if spring comes late or something like that, that's when we will feel any shortage without mitigation.

 In Q4, we noted minor disruptions in Q4, because the water levels are lower, we are doing things to move water to the water intake pipe. And there maybe some minor disruptions. Worst case, we would have to move the barge which is a 48-hour downtime, we don't want to do that, we don't expect having to do that, but that's the very worst case. What we're doing is moving water toward the water intake pipe. We are currently drilling water wells around the tailings storage facility and pump tests are ongoing to see how much water we can get out of that.

 We are currently putting in an application to do a pump test from a local lake that we are allowed to do so, we just haven't done that yet. That will add 300,000 cubic meters to the storage. And the EA amendment is related more to the long-term solution to the water shortage problem. Because this will allow us to pump from this other water source on a continuous basis year-round and ensure we have enough water in the future. We do expect we will have that available by spring. But even so, that's meant to be the longer-term solution, not the shorter-term solution. The schedule we have is a much time-frame to have the EA amendment approved and be in a position to start pumping from that water source then.

------------------------------
 Robert Reynolds,  Crédit Suisse AG, Research Division - Research Analyst   [43]
------------------------------
 So, just a follow-up. You would have the permit submitted by March 2018 and then the approval within -- spring?

------------------------------
 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [44]
------------------------------
 No. I misspoke. We expect to receive the approval in March 2018. That is the schedule that we developed with the regulatory agencies and the local First Nations groups. We 're hoping to improve on that schedule, but that's the schedule we've developed in conjunction with them, to have the approval in place in March 2018.

------------------------------
 Robert Reynolds,  Crédit Suisse AG, Research Division - Research Analyst   [45]
------------------------------
 So that means the EA, I guess, would get submitted in the next couple of weeks?

------------------------------
 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [46]
------------------------------
 That's correct. I don't have the date at the top of my mind, but it is in the next short period that we will submit the application.

------------------------------
 Robert Reynolds,  Crédit Suisse AG, Research Division - Research Analyst   [47]
------------------------------
 Okay, that's all from my questions.

------------------------------
Operator   [48]
------------------------------
 Our next question comes from the line of Trevor Turnbull with Scotia Bank. Please proceed.

------------------------------
 Trevor Turnbull,  Scotiabank Global Banking and Markets, Research Division - Analyst   [49]
------------------------------
 I had a question, I guess for you Gord with respect to Mount Milligan. I know that you guys were looking at upgrading the back into the plant a bit, making some enhancements to flotation and so forth. And I just wondered what kind of throughput we should kind of assume pending those upgrades to flotation circuits and things at the back end. In other words, kind of the run rates you've been having at Mount Milligan, is that appropriate ahead of any further upgrades to the back end?

------------------------------
 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [50]
------------------------------
 No. The upgrade to the flotation have a dual-purpose. You're right, it will -- it can be a bottleneck, when we're processing the [TachoPilot] or we produce too much concentrate and we loose retention times, so it can be a bottleneck to throughput in that regards. But this additional flotation retention could improve the recoveries, particularly of copper as we go forward. And we're still evaluating that and we haven't made a decision on that and it is a capital investment and so we have to go through our internal processes before we conclude that analysis.

------------------------------
 Trevor Turnbull,  Scotiabank Global Banking and Markets, Research Division - Analyst   [51]
------------------------------
 So in the meantime as you kind of weigh that decision, does that mean that if the front end can deliver the 62,500 or so forth you would go ahead and push that kind of tonnage. Because my thought was that you did -- you were enjoying better copper recoveries as it was now and that you wouldn't want to necessarily back off on that, just for the sake of throughput.

------------------------------
 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [52]
------------------------------
 Yes, let's say, it's a balance. We have to see what adds the most value. It's only during certain periods of time that we have or into the period where we're producing at the high end of the concentrate curve. And you're right, by pushing that, we lose incrementally on copper recovery, but it's a trade-off, it's a balance on what has the most value.

------------------------------
 Trevor Turnbull,  Scotiabank Global Banking and Markets, Research Division - Analyst   [53]
------------------------------
 And then I guess kind of sticking with this a little bit. In the tech report, it showed next year that throughput would be up around a little over 60,000 tonnes a day and I assume, you kind of, you thought you would probably be a little closer to that level already. What needs to happen essentially to get there or now that you've got some of these maintenance issues behind you, do you expect that the 2018 can still achieve over 60,000 tonnes a day?

------------------------------
 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [54]
------------------------------
 No, it is our expectation that once we achieve our goals in terms of unplanned maintenance, keeping it below 20% that, that we will be able to achieve those run rates, 60,000 tonnes a day.

------------------------------
 Trevor Turnbull,  Scotiabank Global Banking and Markets, Research Division - Analyst   [55]
------------------------------
 And so in terms of not knowing what we don't know. In terms of -- obviously if there is further unplanned maintenance, we don't know if that's going to happen or not, but have you repaired all the issues now, such that in the absence of further unplanned maintenance, do you have any catch-up maintenance left to do or you kind of back on your feet with respect to the pebble crusher and so forth?

------------------------------
 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [56]
------------------------------
 Your first comment is, you're right. You don't know what you don't know, but we do have the systems in place, we do have the people in place, so we anticipate that a good robust proactive predictive maintenance program should be able to maintain unplanned maintenance below that 20% mark. With respect to the pebble crusher, we do have the pebble crusher operating, but it's operating on a repaired basis. We did the best repair we could and it is operating. We have new parts coming in, they will be arriving in December for that pebble crusher. And we'll be replacing those parts, add another scheduled downtime in the first quarter of 2018. It won't take it's own downtime to do that.

------------------------------
 Trevor Turnbull,  Scotiabank Global Banking and Markets, Research Division - Analyst   [57]
------------------------------
 And then just switching gears, had one question with respect to Kumtor. Obviously, given the way guidance has been modified for Kumtor, it's getting stronger and stronger. I just wondered if you could explain exactly what's kind of driving that the expectations for Kumtor to keep doing better and better. Is this grade related or you looking for just squeeze a bit more throughput from it as well.

------------------------------
 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [58]
------------------------------
 Well, the mill is performing very well at Kumtor. We're processing about 18,000 tonnes a day, which is far above its rated capacity. Our team there is doing very well. Recoveries are, as per the grade recovery terms, slightly better and the resource model is performing as expected. What happened this year is that in our blast hole model, and I think I spoke to this last quarter that the capping we did in our blast hole model was overly conservative, and it's only in the very high-grade portion of the SB zone that was mined in 2017. As we've said before, we have separate stockpiles at Kumtor, high grade, medium grade, low grade. And we also stockpile for characteristics such as preg-robbing characteristics in that very high grade stockpile which is a 20 gram per tonne stockpile.

 We were overly conservative with the capping estimate we used in the blast hole model. So that the average grade may have been 20 on paper, but we were actually getting 22 grams, not 20 grams, if you know what I mean. We believe that a little bit every day to maintain a steady grade profile through the mill. That particular stockpile will be depleted by year-end. We won't have that anymore. The other stockpiles are performing as expected within the grades we have recorded for those stockpiles. So this anomaly, this 10% higher grade in the high grade stockpile is going to [be covered] by year end.

------------------------------
 Trevor Turnbull,  Scotiabank Global Banking and Markets, Research Division - Analyst   [59]
------------------------------
 And was that mean, used to bid in Q3 as well?

------------------------------
 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [60]
------------------------------
 Yes. We've been bleeding that stockpile in all year, it will be gone by the end of -- before the end of the fourth quarter.

------------------------------
 Trevor Turnbull,  Scotiabank Global Banking and Markets, Research Division - Analyst   [61]
------------------------------
 And so is 18,000 a reasonable number to use as a throughput for Q4.

------------------------------
 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [62]
------------------------------
 That's what we've been operating at pretty much year-to-date. So, there is no suggestive --

------------------------------
 Trevor Turnbull,  Scotiabank Global Banking and Markets, Research Division - Analyst   [63]
------------------------------
 Yes, just it looks like year-to-date throughputs little under 17,000, maybe that's ...

------------------------------
 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [64]
------------------------------
 Sorry, I'm talking about the daily run rate. So, there is downtime ...

------------------------------
 Trevor Turnbull,  Scotiabank Global Banking and Markets, Research Division - Analyst   [65]
------------------------------
 I was just trying to understand why the second bump to guidance after the one in the summer given that the Q3 was very similar to Q2 and actually lower than Q3 last year. It just seem like there wasn't enough kind of a bump in Q3 to really warrant. It seems like it comes out a bit out of [last] field to see a second upgrade to the guidance at Kumtor when Q3 was pretty much on line and as expected.

------------------------------
 Scott Graeme Perry,  Centerra Gold Inc. - CEO & Non-Independent Director   [66]
------------------------------
 Trevor, it's Scott. We discussed this with the board back in Q3 and what have you and if anything the board said let's wait and make sure you get Q3 in the bank. And then we know that if that much more risk adjusted.

------------------------------
Operator   [67]
------------------------------
 Our next question comes from the line of Michael Siperco with Macquarie.

------------------------------
 Michael Siperco,  Macquarie Research - Gold Analyst   [68]
------------------------------
 You mentioned I think earlier in the preamble that you are having a discussion and you're reviewing the capital structure I assume in the light of the debt repayment that you made in the coming schedule. Can you give any more color around how you're thinking about the balance sheet now that you're in a much better position without unrestricted cash coming off, what some of those discussions might entail? And then further to that, I know it is a board decision, but how you might be thinking about dividend within that capital structure?

------------------------------
 Scott Graeme Perry,  Centerra Gold Inc. - CEO & Non-Independent Director   [69]
------------------------------
 Hi, Mike, it's Scott. Darren will chime in if I miss anything. But when we are talking about the capital structure, I think one of the things we're saying this year has been two significant positives. Number one, we put in place all encompassing dispute resolution agreement, which on incumbent the $300 million worth of cash. And on top of that, we've seen very strong free cash flow from both operations this year, just under $200 million. Darren, our CFO. Darren and his team, they have been using lot of that cash to quite aggressively pay down a lot of the credit facilities and it really accelerating a lot of the principal amortization.

 When you look at the Thompson Creek facility, which was put in place to facilitate the acquisition, it's actually securitized at the subsidiary level down at Thompson Creek. And one of the things that we're thinking about is, how can we come up with a new sort of structure whereby the facility sit to the parent level, and maybe encompasses more of a revolving line of credit facility. So, it wouldn't have an embedded term loan aspects whereby you've got systematic principle amortization payment, we can just converted into a revolving line of credit facility, provide a lot more flexibility as well as the ability to utilize 100% of the cash flows as and when you see fit versus having a portion of those cash flows being earmarked for principal amortization payments.

 So, that's really what we're doing. Just looking to boost our overall liquidity and make sure that such liquidity is flexible and low cost as possible and we're in a great position to do that now just given the credit profile of the company is improving significantly quarter over quarter. The second part of your question was regards to dividend, that was discussed in most recent board meeting and will be on the agenda again for our last board meeting this year, which coincidentally should also coincide, but when the strategic agreement -- on encompassing dispute resolution agreement, it will coincide with the closing date. And I think that's one of the key ingredients, one of the key prerequisite that's required for the board to conclude on that topic.

------------------------------
 Darren J. Millman,  Centerra Gold Inc. - CFO & VP   [70]
------------------------------
 Just adding to Scott's comment. On a regular daily basis, I get knocks on the door, quite so to speak from several banks even outside the existing syndicate. So we need to review that. Secondly, I think the banking industry is starting to recognize the significant cash flow that Kumtor generates. And as you know over the last 3 years, we generated approximately $125 million per annum. So given the fact that syndicate has been formed at the Centerra B.C. level, in fact, they want to work with us on a more corporate level. So that's sort of driving this thinking for Q4 assessment.

------------------------------
Operator   [71]
------------------------------
 Our next question comes from the line of Robert Bonte-Friedheim with BlueCrest Capital Management.

------------------------------
 Robert Bonte-Friedheim,    [72]
------------------------------
 Just a quick follow-up, just want to know what kind of IRR -- what's the IRR range that would be appropriate for Gatsuurt?

------------------------------
 Scott Graeme Perry,  Centerra Gold Inc. - CEO & Non-Independent Director   [73]
------------------------------
 It's Scott here. Rate of return is just one metric that we look at. We also have to sensitize it for the jurisdiction and our risk assessment on that jurisdiction. But also one of the other key metrics we look at is, what is the capital efficiency ratio? So, how many dollars of capital you're putting into the project versus NTV, being getting out of the projects and then I think other key metric we always look at is the payback period on your at risk capital, what's the cash flow pay back period. It's a number of metrics. In terms of the IRR, we don't have a specific hurdle rate, if you look, that's is really an assessment on all those four metrics that I discussed. I myself personally, I'm comfortable to answer the question from my perspective, I definitely want it to be something in the high teens.

------------------------------
 Robert Bonte-Friedheim,    [74]
------------------------------
 Good. And you think that's possible to get it there with negotiations with the government?

------------------------------
 Scott Graeme Perry,  Centerra Gold Inc. - CEO & Non-Independent Director   [75]
------------------------------
 You are really forcing me to speculate, [in fact] I can't answer that question, but without a doubt, I mean to sit down with the government and just look at the economics, the value proposition and talk about the fiscal regime. And if we are looking to promote the industry and promote these projects and move them forward, it's obvious that something needs to change to move the economy into a more sort of constructive arena.

------------------------------
 Robert Bonte-Friedheim,    [76]
------------------------------
 And on Oksut, any sign of progress on that last remaining, I guess, the past year permit that we're waiting for, any optimism there?

------------------------------
 Scott Graeme Perry,  Centerra Gold Inc. - CEO & Non-Independent Director   [77]
------------------------------
 There is cautious optimism. There has been dialogue recently with the Government of Turkey and with representation from the Prime Minister's office. But I really shouldn't say any more than that, so I'm just going to be at risk of shooting myself in the foot. We need to wait and see. But we are cautiously optimistic.

------------------------------
Operator   [78]
------------------------------
 And our last question comes from the line of Andrew Breichmanas with BMO Capital Markets. Please proceed.

------------------------------
 Andrew Breichmanas,  BMO Capital Markets Equity Research - Analyst   [79]
------------------------------
 Just following up on that last question about Oksut. I was just wondering if it's possible to get a little bit of an update on the current state of things that are following completion of power line. Is there any work currently being done on site? And pending the timeline for the pastureland permit. Is there any potential for further delays to sort of energy seasonal issues into the construction schedule that could extend that 18-month construction schedule?

------------------------------
 Scott Graeme Perry,  Centerra Gold Inc. - CEO & Non-Independent Director   [80]
------------------------------
 Hi, Andrew, it's Scott. In terms of pastureland use permit, it's being all the way through the ministry. So, the Ministry of Food, Agricultural and Land, I mean just at the final step. We're just waiting on the Prime Minister's signature. As I mentioned in my previous response, we're cautiously optimistic. There has been a dialog and we, Centerra, we believe this project is going to be moving forward. Andrew, I can't say any more than that, because all this ends up on a transcript et cetera and I don't want to be representing the Turkish Government, but we're cautiously optimistic. On the power line project that you mentioned, it's being fully constructed, fully tied in, it's being energized, it's being certified, it's ready for use.

 So we've got everything in place. In terms of our internal engineering, this is one of the things that I'm particularly pleased with, is that the level of engineering right now, is that 94%, which is pretty incredible on my opinion. I've never seen a development project at such a high level of engineering, that's the one positive to the delays that we've had in receiving the permits, allowed us to really refine and fine-tune our engineering.

 I'm going to leave that last part of your question for Gordon. Gord, you can't give a timeline of when we are going to get the final permits, but some seasonal aspects?

------------------------------
 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [81]
------------------------------
 So, if we receive the permit anywhere from today over the next winter period, we would not break ground until spring, which we're assuming to be April 1, it could be a bit earlier, it could be a bit later depending on the year, but we would -- if we got the permit today, we would do all the preparatory work and get ready, but we wouldn't do any significant on the ground activities until the winter is effectively finished, at the end of March.

------------------------------
 Andrew Breichmanas,  BMO Capital Markets Equity Research - Analyst   [82]
------------------------------
 Okay, but then does that still fits within that 18 months timeline that you've been talking about?

------------------------------
 Gordon Dunlop Reid,  Centerra Gold Inc. - COO & VP   [83]
------------------------------
 The 18 months would start on April 1.

------------------------------
 Andrew Breichmanas,  BMO Capital Markets Equity Research - Analyst   [84]
------------------------------
 Got it. Okay, perfect. Thank you.

------------------------------
Operator   [85]
------------------------------
 And there are no further questions at this time, sir.

------------------------------
 John W. Pearson,  Centerra Gold Inc. - VP  of IR   [86]
------------------------------
 With that I'd like to thank everyone for participating on the call and we will answer any further questions if people have them, thanks.

------------------------------
Operator   [87]
------------------------------
 Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.




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