Centerra Gold Inc. - Special Call

Dec 02, 2019 PM UTC 查看原文
CG.TO - Centerra Gold Inc
Centerra Gold Inc. - Special Call
Dec 02, 2019 / 09:30PM GMT 

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Corporate Participants
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   *  John W. Pearson
      Centerra Gold Inc. - VP  of IR
   *  Scott Graeme Perry
      Centerra Gold Inc. - President, CEO & Director

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Conference Call Participants
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   *  Brian MacArthur
      Raymond James Ltd., Research Division - MD & Head of Mining Research
   *  John Charles Tumazos
      John Tumazos Very Independent Research, LLC - President and CEO
   *  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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 Greetings and welcome to the Centerra management conference call. (Operator Instructions) As a reminder, this conference is being recorded Monday, December 2, 2019.

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

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 John W. Pearson,  Centerra Gold Inc. - VP  of IR   [2]
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 Thank you, Ash. Thanks for joining our conference call this afternoon. Joining me today is Scott Perry, President and Chief Executive Officer; and other members of senior management.

 I just wanted to caution everyone that we may be -- certain statements may be made on this call today that will 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.

 And with that, I'll turn the call over to Scott.

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 Scott Graeme Perry,  Centerra Gold Inc. - President, CEO & Director   [3]
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 Okay. Thank you, John, and thank you, everyone, for dialing in for this sort of mid-quarter update, if you will. Obviously, the purpose of today's updated press release and conference call is to provide an update on the search and rescue activities and to clarify the facts of this incident and then to also clearly articulate any impact on Kumtor's operations.

 For those of you who do regularly dial into our calls, you will note that we always start with safety and discuss our safety performance and our various milestones during any particular reporting period. Safety is absolutely paramount in terms of our objectives, our priorities and strategically how we govern and manage the business. We've had a number of safety accolades this year, but you can probably appreciate this most recent incident, it's really knocked us off-balance and generated a lot of concern.

 I suspect that this call is going to turn quite operational, and I personally accept that. But before I sort of get into the call, I just want to once again reiterate that our primary focus right now remains on the safe return of our 2 missing employees and the safety of our search and rescue teams who are working in challenging circumstances. While the search continues, we are coordinating closely with the family members of the [missing] employees, and our thoughts and support are with the families, the search and rescue teams as well as with the entire Kumtor team.

 Kumtor's emergency response personnel are coordinating with search and rescue teams from the Kyrgyz government Ministry of Emergency in the search for our missing employees. The Lysii Waste Rock Dump has now stabilized sufficiently. And light equipment is being employed in the search effort. Again, Centerra's first priority remains the safe return of our 2 missing employees.

 Open pit operations remain temporarily halted because of the need to focus on the search and rescue efforts but also because 100% of the waste rock being mined was scheduled to be placed on the Lysii Waste Rock Dump located in the Lysii valley. Kumtor's mining areas, including the central pit, have not been physically impacted by the Lysii Waste Rock Dump movement since the Lysii valley is in an isolated valley over a ridge to the north of the open pit. The company is presently assessing alternative waste rock dumping plans which could include utilizing the existing capacity in the Central Valley Waste Dump or the Sarytor Waste Dump and/or including in-pit waste dumping. A restart of open pit mining operations won't occur until the company is certain that the search and rescue efforts will not be affected and a revised waste dumping plan has been completed.

 In today's press release, we want to reiterate that Kumtor's mill infrastructure has also not been impacted from the Lysii Waste Rock Dump movement since the Lysii valley is isolated over a ridge to the north and at a lower elevation than that of the mill facility. While mining has been suspended in the open pit, I want to reiterate that the company has sufficient ore stockpile inventory on surface for normal production levels through to the end of calendar year 2020. As we previously disclosed, there is no change to the company's production outlook for 2019.

 Infrastructure at the bottom of the Lysii valley, such as surface access roads, a reclaimed water pipeline and power -- certain power line infrastructure remain unaffected by the Lysii Waste Rock Dump movement. But as a precaution, the company is building a bypass water pipeline to ensure an uninterrupted supply of water to the mill.

 With those prepared opening remarks, operator, I'd now like to open up the call for Q&A -- question and answer, please.

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Questions and Answers
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Operator   [1]
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 (Operator Instructions) And we have a question from the line of Trevor Turnbull with Scotiabank.

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 Trevor Turnbull,  Scotiabank Global Banking and Markets, Research Division - Analyst   [2]
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 Scott. I apologize, I actually was just a little late to the call and missed your opening comments. So hopefully, this isn't just a direct repetition of something you may have just said. I understood that for 2020, you've got plenty of material available already mined that you can use to feed the mill. And I was just wondering if you could describe a little bit about that. Is that normal course kind of stockpiles? Or does that include lower-grade material that may -- would have been sequenced later in the mine life. Can you just give us a bit of a sense? Because we certainly know that you tend to stack up a lot of extra material this time of year that carries you into the early portions of next year. But I just wanted to get a sense of how different next year might be if all you had to rely on were the on-surface access piles.

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 Scott Graeme Perry,  Centerra Gold Inc. - President, CEO & Director   [3]
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 Trevor, and thank you for your question. Trevor, I'll touch on sequencing because you used that word in your question. And one of the key benefits of this year is we've been very focused on business process improvement. And in terms of the productivities that we have been achieving at Kumtor over the last 2 to 3 years, it's really allowed us to get ahead of our mine plan. As a result, that's where you've been seeing all the strong operating momentum. But likewise, when you try and envision the original 43-101, or the original technical report, we've been bringing forward a lot of that future-year production. And you really saw the benefits of that here in 2019 where quarter-over-quarter, it's been a consistent uniform production profile in terms of our gold production levels. Again, we're expecting that to continue here in Q4. And again, that's why we are still reiterating our guidance despite this incident.

 But also because we've been so advanced on our life-of-mine mine plan, we've been able to stockpile all of the inventory that's required for processing in calendar year 2020 such that if you looked at our initial sort of draft budgets for next year, there was no ore being mined from the open pit that was scheduled to be processed in the mill facility next year in 2020. We always knew that we're going to have that all on surface at the end of this quarter here in Q4. So again, when I look forward to next year in our gold sort of production profile, which we haven't released to the market yet, in some respects, I feel like I can advocate that, that gold production profile next year is derisked because there's no need to mine it from the pit. It's already sitting in stockpile inventory.

 I understand your question, Trevor. One of the challenges we have is we have not -- the Board of Directors, we have not had a chance to approve our budget for next year. Accordingly, we haven't released our guidance for next year, 2020. If you look at our press release, what we say here is that we're expecting normal course production levels through to the end of calendar year 2020. I think the only other additional guidance that I could kind of cite is to look at that 43-101, that life-of-mine technical report. And if you look at the year 2020, that could be indicative of normal course production levels. But again, that's all subject to our final budget being approved by the Board. But hopefully, that gives you some additional color and guidance in terms of the amount of tonnage and the in-situ grades that we currently have within the stockpiles on surface.

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 Trevor Turnbull,  Scotiabank Global Banking and Markets, Research Division - Analyst   [4]
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 Yes. No, that sounds perfect. I wasn't expecting you to be able to give any sort of specificity with respect to next year's guidance. The other quick question I had, we know that you've had the 3 dumps that you use for Kumtor. And kind of looking at the numbers roughly from the technical report, it appeared that the Lysii dump would have accommodated on the order of about 1/3 of what you were budgeting, again, just going back to the 2015 report. I'm just wondering if it turns out you're not going to be using the rest of the capacity you had planned on, is there -- obviously, you have to go back to the other dumps, the Central Valley Davidov dump and the Sarytor dump. I was just wondering how much capacity they have in relation to your life-of-mine plan? And if you have to add to those, is there a bit of permitting? Like, can they handle 80% of what's left of the mine life? Or is -- can you give us a little color on that?

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 Scott Graeme Perry,  Centerra Gold Inc. - President, CEO & Director   [5]
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 Yes. So Trevor, again, thank you for that question. We have 3 alternative sources for future waste dumping outside of the Lysii waste dump facility. You mentioned 2 of them, which is the Central Valley Waste Dump as well as the Sarytor Valley Waste Dump. And another option we're looking at is actually in-pit dumping, which would be in an area of the pit that has been fully mined out. So we have 3 sources that are available to us. And then again, we also have Lysii dump -- the Lysii waste dump facility itself. Obviously, we're very focused on the search and rescue efforts. But also as part of our go-forward engineering and evaluations and working with the authorities and the government, Lysii waste dump may be -- that could be an opportunity in terms of mitigating this incident and using that facility on a go-forward basis.

 From a -- so in terms of capacity, I don't see any constraints, but I don't have any numbers in front of me, Trevor, in terms of that aspect of your question. But I think we do have more than adequate capacity throughout those 3 or 4 waste dump facilities.

 From a permitting perspective, yes, we have an annual mine plan that is approved prior to the commencement of any given calendar year. And this year's mine plan, it was the Lysii waste dump that had been approved as the waste dump facility for all waste mining activity taking place in cut-back 20.

 Obviously, when we think it's the right time and that's as and when we feel that we're not going to do any harm to the search and rescue efforts, we will look to commence open pit mining again. And we'll be working closely with the authorities, and that will require the government approving a revised annual mine plan through 2019, albeit there's only 3 to 4 weeks left in 2019.

 I don't want to get ahead of myself, we have to work with the authorities, et cetera. But I think what I would note is Kumtor is a very important strategic enterprise in country. And when I think about all the stakeholders in terms of our in-country business model, I think everyone has a highly vested interest and seeing, a, the search and rescue effort being brought to fruition and being successful; then secondly, seeing -- and seeing the ongoing business continuity of Kumtor from an open pit mining perspective. Again, just to reiterate, we are not seeing any impact in terms of mill processing activities here in Q4 and calendar year 2020.

 Trevor, I know it's a long answer but I just wanted to make sure I hit a number of points there.

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 Trevor Turnbull,  Scotiabank Global Banking and Markets, Research Division - Analyst   [6]
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 No, that's fair enough. And that's all the questions I had. Good luck with the search and rescue, Scott.

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Operator   [7]
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 Our next question comes from the line of Brian MacArthur with Raymond James.

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 Brian MacArthur,  Raymond James Ltd., Research Division - MD & Head of Mining Research   [8]
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 Sorry, my question, sort of following on Trevor's, is just about the waste dumps and the alternatives. So just to be clear, when you talk about having enough capacity through the mine life, is that all permitted right now? Or do you have to go back and get permits every year to do that? Or how does that actually work?

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 Scott Graeme Perry,  Centerra Gold Inc. - President, CEO & Director   [9]
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 Bruce -- sorry, Brian, apologies, Brian. In terms of some of the key permits, I'll get some of the terminology wrong right now in terms of the Russian to English translation. But every calendar year, we submit sort of an annual mine plan, operating permit request. And this is usually a subset of our life-of-mine plan permit. That's the process that we work by. Again, you may appreciate in terms of how I was answering Trevor what was always envisioned -- what was envisioned for our waste dump storage facility for this year, 2019, was the Lysii waste dump facility which is where we've experienced this failure.

 When I look ahead to next year's plan, again, it hasn't been approved yet by the Board or what have you. Again, we were envisioning that it would be the Lysii waste dump facility that would be used for calendar year 2020. Obviously, with this incident, we now need to recalibrate and look at the next best course of action. And again, I spoke to that when I was answering Trevor's question.

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 Brian MacArthur,  Raymond James Ltd., Research Division - MD & Head of Mining Research   [10]
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 Great. Sorry, my real question was what Trevor was asking about, the whole flexibility of whole thing. So just -- and what would you have done, 2021, would it have been the Lysii dumps as well? Or are we back splitting it between Central Valley and Sarytor then?

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 Scott Graeme Perry,  Centerra Gold Inc. - President, CEO & Director   [11]
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 I don't have that information in front of me, but I would hazard to say that it most likely was the Lysii waste dump because in 2021, that's when you'll be seeing a lot of ore production from cut-back 20. Waste mining would have been minimized by 2021, but you still will be mining waste as part of normal course operations. And I think Lysii waste dump facility would have been the designated facility.

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 Brian MacArthur,  Raymond James Ltd., Research Division - MD & Head of Mining Research   [12]
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 Great. And good luck with the search and rescue.

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 Scott Graeme Perry,  Centerra Gold Inc. - President, CEO & Director   [13]
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 Okay. Thank you, Brian.

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Operator   [14]
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 (Operator Instructions) Our next question comes from the line of John Tumazos with John Tumazos Very Independent Research.

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 John Charles Tumazos,  John Tumazos Very Independent Research, LLC - President and CEO   [15]
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 So sorry to hear of your incident. Do you know what precipitated the slippage of the waste dump? Was there unusual large precipitation, seismic activity or anything that is unusual that happened?

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 Scott Graeme Perry,  Centerra Gold Inc. - President, CEO & Director   [16]
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 John, thanks for your sympathy for our situation. John, that's a question I've been asking myself because the short answer is we don't know as of this moment right now. The -- right now, the primary focus is the search and rescue effort. As and when that search and rescue effort is resolved, I think one of the immediate next steps will be an exhaustive investigative effort or review on what was the attributable cause, et cetera. So I can't get ahead of that. I can't speculate. Short answer is we do not know right now.

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 John Charles Tumazos,  John Tumazos Very Independent Research, LLC - President and CEO   [17]
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 Good luck with the search and rescue.

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 Scott Graeme Perry,  Centerra Gold Inc. - President, CEO & Director   [18]
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 Thank you.

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Operator   [19]
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 (Operator Instructions) And we appear to have no further questions coupled with the phone lines at this time.

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 Scott Graeme Perry,  Centerra Gold Inc. - President, CEO & Director   [20]
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 Okay. Well, thank you, operator. I'll just say a few closing words, and then we'll end the call. So again, thank you for joining the call. I just want to reiterate: our primary focus right now remains in the safe return of our 2 missing employees and the safety of our search and rescue teams. While the search continues, again, we are closely coordinating with the family members of the missing employees and our thoughts and support are with the families, the search and rescue teams as well as the entire Kumtor team.

 With that, I look to end the call. And thank you, everyone, for participating.

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Operator   [21]
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 And that does conclude the conference call for today. We thank you all for your participation and ask that you please disconnect your lines.




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