Centerra Gold, which operates Mongolia’s Boroo gold mine, on Tuesday reported net earnings for the first quarter of 2014 of 2.1 million USD, or 0.01 USD per common share, compared to 51.4 million USD in the comparative quarter of 2013. The decrease in earnings reflects a lower average realized gold price, increased depreciation, depletion and amortization at Kumtor and lower ounces sold in 2014, Centerra said.
Ian Atkinson, president and CEO of Centerra Gold commented, “Operationally we are on track to achieve our gold production guidance for the year. Both operations performed well during the quarter with Kumtor producing almost 103,000 ounces of gold and Boroo nearly 14,000 ounces. Financially, cash provided by operations was 101.6 million USD for the first quarter and our cash, cash equivalents and short-term investments grew to over 436 million USD net of debt at March 31.”
Quarterly dividend set at 0.04 CAD Per Share
Centerra Gold also announced that its board has authorized a dividend of 0.04 CAD per common share (approximately 8.7 million USD at the current exchange rate). The dividend of 0.04 CAD per common share is payable on June 5, 2014 to shareholders of record on May 22, 2014. The ex-dividend date will be May 20, 2014.
During the first quarter of 2014 exploration expenditures in Mongolia decreased to 0.4 million USD from one million USD in the same period in 2013. At the ATO property in Mongolia the drilling program is expected to start in the second quarter of 2014.
Centerra said that at the Boroo mine in the first quarter of 2014, gold production was 13,736 ounces, compared to 25,602 ounces in the same period of 2013. The lower gold production results mainly from processing lower grade ore through the mill and having lower tonnage of ore under leach in the first quarter of 2014, the company added.
All-in sustaining costs per ounce sold were 1,001 USD in the first quarter of 2014 compared to 665 USD in the comparative quarter of 2013. The increase in all-in sustaining costs is primarily due to the 54 percent decrease in ounces sold at Boroo year-over-year, partially offset by lower adjusted operating costs and lower sustaining capital expenditures, the company explained.
“The Gatsuurt project remained under care and maintenance in the first quarter of 2014 due to continued delays in permitting resulting from the Water and Forest Law which prohibits mining and exploration activities in water basin and forested areas. The company continued discussions with the Mongolian government regarding the Gatsuurt project during the first quarter. The company expects that the Mongolian Parliament will consider the designation of Gatsuurt as a strategic deposit in the first half of 2014. If Parliament ultimately approves this designation, it would have the effect of excluding Gatsuurt from the application of the Mongolian Water and Forest Law and would allow Mongolia to acquire up to a 34 percent interest in Gatsuurt. The terms of such participation would be subject to further negotiations with the Government,” said Centerra.
During meetings with representatives of the Mongolian Government, Centerra was advised that the Mongolian Government is currently developing a list of deposits, which will include Gatsuurt, to be submitted to the Mongolian Parliament for consideration as “strategic deposits”. Centerra expects that Parliament and/or any relevant committees of Parliament will consider this matter further in the first half of 2014. If the Mongolian Parliament ultimately approves this designation, it would have the effect of excluding the Gatsuurt deposit from the application of the Mongolian Water and Forest Law and would allow the Government of Mongolia to acquire up to a 34 percent interest in Gatsuurt.
“There can be no assurance, however, that the Water and Forest Law will not have a material impact on Centerra’s Mongolian operations. Unless the Water and Forest Law is repealed or amended, mineral reserves at Gatsuurt may have to be reclassified as mineral resources or eliminated entirely and the company may be required to write-off approximately 37 million USD related to the investment in Gatsuurt and approximately 39 million USD of costs that remain capitalized for the Boroo mill facility and other surface structures.”
Centerra’s 2014 consolidated gold production is expected to be 595,000 to 645,000 ounces, which is unchanged from the previous guidance disclosed in the company’s press release on February 19, 2014. Over 50 percent of gold production at Kumtor is expected during the fourth quarter, when mining will reach the high-grade section of the SB Zone.
The 2014 forecast assumes no mining activities at Boroo or Gatsuurt, and no gold production from Gatsuurt.
SOURCE: Ub Post