Centerra Gold Inc. ((TSE:CG)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Centerra Gold Inc.’s recent earnings call painted a picture of robust financial performance driven by favorable commodity prices and strategic advancements, though tempered by operational challenges. The company reported strong earnings, underscored by significant progress in sustainability and strategic projects. However, issues with mineralization at Mount Milligan and rising costs at Oksut contributed to a balanced outlook for the future.
Strong Earnings from Mount Milligan and Oksut
Gold and copper production from Mount Milligan and Oksut reached impressive levels in the second quarter, with over 63,000 ounces of gold and 12.4 million pounds of copper produced. This performance was largely attributed to high commodity prices, which bolstered the company’s earnings significantly.
Advancement of Goldfield Project
Centerra Gold marked a strategic milestone with the advancement of the Goldfield Project, which is expected to enhance the company’s near-term gold production profile. The project boasts an after-tax net present value (NPV) of $245 million and an internal rate of return (IRR) of 30%, based on a long-term gold price of $2,500 per ounce.
Sustainability Achievements
The company achieved full compliance with the International Cyanide Management Code, reflecting its commitment to sustainability. Additionally, local procurement spending increased by 26% year-over-year to $134 million, and the company surpassed its gender diversity goals, with women now representing 38% of the Board and 33% of executive officers.
Cash Flow and Liquidity
Centerra reported a 22% increase in cash flow from operations before working capital and income taxes, generating $98 million. The company’s total liquidity stands at over $920 million, providing a solid foundation for future growth and operational stability.
Share Buybacks and Dividends
The company significantly increased its share buybacks by 80% compared to the previous quarter, repurchasing 3.9 million shares for $27 million. In the first half of 2025, Centerra returned $63 million to shareholders, underscoring its commitment to delivering shareholder value.
Lower-than-anticipated Gold Grades at Mount Milligan
Mining operations at Mount Milligan encountered zones with more challenging mineralization, leading to lower-than-anticipated gold grades. This has prompted a revision of the 2025 gold production guidance, reflecting the operational challenges faced.
Higher Costs at Oksut
Oksut’s all-in sustaining costs rose to $1,755 per ounce, driven by higher royalty expenses due to elevated gold prices and a new royalty structure approved by the Turkish government. These increased costs have impacted the overall financial performance of the site.
Free Cash Flow Deficit
The company reported a free cash flow deficit of $25 million for the quarter, primarily due to Oksut’s cash flow being impacted by $84 million in tax and royalty payments to the Turkish government. This deficit highlights the financial pressures faced by the company despite strong operational performance.
Forward-Looking Guidance
Centerra Gold provided several key guidance updates during the earnings call. The company plans to expand tailings capacity at Mount Milligan to extend the mine’s life beyond 2036, with potential annual throughput increases of 10% through ball mill upgrades. For the Goldfield project, production is expected to average 100,000 ounces of gold annually over its seven-year mine life, with an all-in sustaining cost of $1,392 per ounce. Revised cost guidance for 2025 projects Mount Milligan’s all-in sustaining costs at $1,350 to $1,450 per ounce and Oksut’s at $1,675 to $1,775 per ounce. Centerra’s strong liquidity position supports its organic growth strategy, alongside continued share buybacks and dividends.
In conclusion, Centerra Gold Inc.’s earnings call highlighted a strong financial performance driven by high commodity prices and strategic project advancements. While the company faces challenges with mineralization and rising costs, its commitment to sustainability, shareholder returns, and strategic growth positions it well for future success. Investors and stakeholders can look forward to Centerra’s continued focus on enhancing its production capabilities and maintaining financial stability.