Centerra Gold’s Earnings Call: Balancing Growth and Challenges

Centerra Gold Inc. ((TSE:CG)) has held its Q1 earnings call. Read on for the main highlights of the call.

Centerra Gold Inc.’s recent earnings call conveyed a mixed sentiment, balancing positive developments with notable challenges. The company celebrated achievements like free cash flow generation and a robust share buyback program, but also faced hurdles such as lower-than-expected production at key sites and increased operational costs.

Positive Free Cash Flow Generation

Centerra Gold reported positive free cash flow from its gold and copper operations in the first quarter of 2025, maintaining a strong cash position of $608 million. This financial strength underscores the company’s ability to sustain operations and invest in future growth.

Share Buyback Program

The Board of Centerra Gold approved a significant share buyback program, authorizing the repurchase of up to $75 million in shares for 2025. This move highlights the company’s commitment to returning capital to its shareholders and enhancing shareholder value.

Updated Resource at Kemess

An updated resource estimate at the Kemess project was published, revealing substantial gold and copper mineral resources. The project boasts 2.7 million ounces of indicated and 2.2 million ounces of inferred gold, alongside 971 million pounds of indicated and 821 million pounds of inferred copper.

Molybdenum Business Unit Performance

Despite selling approximately 4.2 million pounds of molybdenum at an average price of $21.59 per pound, the molybdenum unit faced a free cash flow deficit of $34 million. This was primarily due to operational expenditures related to the Thompson Creek restart.

Strong Liquidity and Strategic Plan Execution

Centerra Gold ended Q1 2025 with a cash balance of $608 million, providing total liquidity of $1 billion. This financial position supports the company’s strategic plans and its ability to deliver value to shareholders.

Lower Production at Mount Milligan

Production at Mount Milligan fell short of expectations, with 35,800 ounces of payable gold and 11.6 million pounds of payable copper produced. The shortfall was attributed to encountering lower grades than planned.

Production Shortfall at Öksüt

Öksüt’s production was 23,500 ounces below plan due to lower grades from mine sequencing and adverse weather conditions, impacting overall output.

Increased All-In Sustaining Costs

The company reported higher all-in sustaining costs of $1,491 per ounce in Q1 2025, with increased costs at both Mount Milligan and Öksüt compared to the previous quarter.

Molybdenum Free Cash Flow Deficit

The molybdenum business unit experienced a free cash flow deficit of $34 million, largely due to spending on the Thompson Creek restart, highlighting the financial pressures within this segment.

Forward-Looking Guidance

Centerra Gold provided stable guidance for the fiscal year, with expectations of a strong second half driven by higher grades. The company anticipates significant production from the Kemess project, with exploration investment set to double. The strategic focus remains on maintaining robust cash reserves and executing a $75 million share repurchase program.

In summary, Centerra Gold’s earnings call reflected a balanced outlook, with positive cash flow and strategic initiatives countered by production challenges and cost pressures. The company’s strong liquidity and commitment to shareholder returns remain key highlights, as it navigates the complexities of the current market environment.