Centerra Gold, Inc. Q3 FY2026 earnings call

Strategic Priorities and Growth Pipeline

• Capital Allocation: Focus on driving NAV per share growth through project development while reducing the share count via buybacks. The company aims to fund its entire North American organic growth pipeline internally using balance sheet strength.
• Shareholder Returns: Completed a record $53 million in share buybacks in Q3, bringing YTD repurchases to $125 million. Maintained a quarterly dividend of $0.07/share.
• Growth Projects Status:
  • Goldfield: Achieved major permitting milestones for the Gemfield deposit (80% of life-of-mine production). First production expected late 2028.
  • Thompson Creek (TCM): On track for first molybdenum production mid-2027. Infrastructure refurbishment is ~75% complete as of late October.
  • Kemess: PFS expected mid-2027; represents potential second long-life gold-copper cornerstone asset.
  • Oksut: Life-of-mine optimization study results expected early 2027, potentially extending mine life by 1–3 years.

Operational Execution

• Mount Milligan: Delivered four consecutive quarters of consistent execution. Improved forecasting confidence due to better ore body modeling, infill drilling, and grade control programs. Strong copper and silver byproduct credits have significantly lowered unit costs.
• Oksut: Production tracked in line with increased full-year guidance. Driven by higher grades and enhanced operating practices.
• Sustainability & Community: Held annual Sustainability Summit to standardize initiatives. Active community engagement at Goldfield (town events) and Langeloth (donation of fire department equipment).

Financial Position

• Liquidity: Total liquidity stood at $998 million ($398 million cash + $600 million credit facility).
• Cost Management: Despite industry-wide cost pressures (labor, freight, diesel), strong production volumes and byproduct credits have offset inflationary trends at Mount Milligan. Turkish operations face 5-10% net USD inflation, partially offset by Lira devaluation.

Financial performance is reported on a consolidated basis rather than by discrete product segments. However, operational highlights provide specific metrics for key assets:

• Mount Milligan (Gold/Copper): Produced 44,000 ounces of gold (+15% QoQ) and 12.8 million pounds of copper. All-in Sustaining Costs (AISC) on a byproduct basis were $985/oz (-22% QoQ). Full-year AISC guidance lowered to $1,100–$1,200/oz from $1,200–$1,300/oz due to strong copper credits.
• Oksut (Gold): Produced 31,000 ounces of gold. AISC on a byproduct basis was $1,090/oz, driven by lower royalty expenses. Full-year production guidance remains at 120,000–135,000 ounces with AISC guidance of $18.50–$19.50/oz.
• US Moly / Langeloth (Molybdenum): Sold 4.6 million pounds of molybdenum at an average price of $33.43/lb. Generated $2.9 million in operating cash flow but had a free cash flow deficit of $54 million due to capital expenditures for the Thompson Creek restart.
• Consolidated Financials: Adjusted net earnings were $72 million ($0.37/share). Sales included >74,000 oz gold and 13.2M lbs copper. Consolidated AISC was $1,770/oz. Free cash flow was $17 million.

• Mount Milligan Full-Year Guidance:
  • Gold Production: Unchanged at 140,000–155,000 ounces.
  • Copper Production: Unchanged at 50–60 million pounds.
  • AISC (Byproduct Basis): Lowered to $1,100–$1,200/oz from previous $1,200–$1,300/oz.
  • AISC (All-in Basis): Reaffirmed at $14.50–$15.50/oz.
• Oksut Full-Year Guidance:
  • Gold Production: Unchanged at 120,000–135,000 ounces.
  • AISC (Byproduct Basis): Unchanged at $18.50–$19.50/oz.
• Consolidated Full-Year Guidance:
  • AISC (Byproduct Basis): Reaffirmed at $16.50–$17.50/oz.
• Thompson Creek: First production targeted for mid-2027. Total CapEx estimated at $425–$450 million. No specific production/cost guidance provided for 2027 yet, pending year-end release.

• Hedging Limitations: Molybdenum lacks a forward or hedging market; US Moly is fully exposed to spot price volatility.
• Regulatory/Tax Changes: While the new Turkish tax cut (25% to 12.5%) is viewed positively, management notes that political conditions in Turkey can change, posing a risk to future tax stability.
• Construction Execution Risk: Thompson Creek restart involves significant refurbishment. While currently on track, delays in final mechanical/electrical installations or commissioning could impact the mid-2027 production target.
• Inflationary Pressures: Persistent cost inflation in British Columbia (labor, energy) and Turkey (net USD inflation) requires continuous operational efficiency to maintain margin targets.
• Exploration Uncertainty: The value of the Oksut extension and Goldfield’s long-term viability depends on successful exploration drilling and optimization studies, which are subject to geological uncertainties.

Q: Analyst asked about Thompson Creek's critical path and whether Centerra could hedge initial molybdenum production given strong prices. Kelly Strong confirmed infrastructure is 75% complete, with final electrical connections underway, targeting early commissioning in Q1 2027. Paul Tomory clarified that no hedging is possible as the molybdenum market relies entirely on spot contracts, leaving the company fully exposed to price fluctuations.

Q: Analyst questioned if the decline in cash balances signals a need for a minimum cash buffer during construction. Paul Tomory stated the strategy focuses on increasing NAV per share by investing in projects and buying back shares. Ryan Snyder added that they aim to hold only $100–$200 million for operational movements, preferring to deploy excess cash into growth or buybacks, supported by their $600 million credit facility for flexibility.

Q: Analyst asked about structural improvements ensuring Mount Milligan's consistency. Paul Tomory attributed the reliability to a detailed Pre-Feasibility Study that extended mine life to 2045, supplemented by extensive infill drilling and a robust grade-control RC program. He also highlighted significant investments in human capital, including hiring a world-class general manager and appointing COO Kelly Strong to strengthen site leadership.

Q: Analyst inquired about strategic options for US Moly, such as an IPO or sale, given high molybdenum prices. Paul Tomory emphasized that while they are preparing for a potential separation event like an IPO, they are not rushing because they see further upside in molybdenum prices and believe the current valuation does not yet reflect the full potential of these assets. The focus remains on delivering the Thompson Creek mine first.

Q: Analyst asked about utilization rates and operational interplay between Langeloth and Thompson Creek. Helene Timpano explained that Langeloth will continue processing third-party concentrate while gradually 'feathering in' TCM concentrate in 2027. She noted that a planned maintenance outage in early 2027 will refresh the facility, allowing it to ramp up efficiently without needing a shutdown specifically for vertical integration.