Centerra Gold Inc. Common Shares

Greetings and welcome to the Sentara Gold 2020 Third Quarter Results Conference Call and Webcast. During the presentation, all participants will be in a listen-only mode. Afterwards, we'll conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star 0. As a reminder, this conference is being recorded Wednesday, November 4, 2020. I would now like to turn the conference over to John Pearson, Vice President, Investor Relations. Please go ahead.

Thank you, Operator. Welcome, everyone, to Sentara Gold's third quarter results conference call. Summary slides are available on Sentara Gold's website to accompany each of the speakers' remarks. Today's call is open to all members of the investment community and media in listen-only mode. Following the formal remarks, the operator will give the instruction for asking a question, and then we will open the phone line to questions. Please note that all figures are in U.S. dollars unless otherwise noted. As we continue to work remotely, joining me on the call today is Scott Perry, President and Chief Executive Officer, Darren Millman, Chief Financial Officer, Dan Desjardins, Chief Operating Officer, and Yusuf Raymond, our General Counsel. I would also like to caution everyone that certain statements made today may be forward-looking statements and, as such, are subject to known and unknown risks, which may cause our actual results to differ from those expressed or implied. Also, certain of these measures we will discuss today are non-GAAP measures. Please refer to the description of non-GAAP measures in our news release in MD&A issued this morning. For a more detailed discussion of the material assumptions, risks, and uncertainties, please refer to our news release and MD&A, along with the financial statements and notes, and our other filings, all of which can be found on CDAR and the company's website at venteragold.com. And now I'll turn the call over to Scott.

Thanks, John, and good day, everyone, and I trust everyone is safe and well. As John mentioned, I'm just going to be referencing our accompanying summary slides, which are available on our website. And I'm just starting off on slide number five. Just in regards to each of these bullet points, first bullet point here, throughout the quarter, throughout the year-to-date period, obviously our primary focus has been on our WorkSafe, HomeSafe, Safety Leadership Program. One of the key highlights during the quarter, which Dan will mention, is at Oxford, our newest operating mine, we actually achieved a key milestone, whereby we've now achieved 3 million hours of consecutive lost time incident free operations. It was a fantastic milestone, so I just want to commend the management operating team there. Likewise, with regards to the COVID-19 pandemic, this is a primary focus as well, just in terms of the well-being of all of our employees. We've put in place a number of preventative measures and protocols as well as following the various public health measures. And to the best of our knowledge, each of our properties continues to be virus-free, and we haven't seen any meaningful impact in terms of our production or productivity levels. In terms of the second bullet point here, a key focus for us is our social license. We can see we've now achieved a consecutive period of 87 months without interruption. In terms of environmental, there was no environmental incidents during the quarter, but we did have a biodiversity incident at our Comest property in British Columbia. which was associated with the mortality of some migratory birds. The Canadian Wildlife Service's investigation concluded that our team took all the appropriate actions, including immediately notifying the authorities and implementing a corrective action policy. Fourth bullet point there, diversity and inclusion is a big focus throughout the company. Here at Sentero, we've got a number of initiatives underway, a number of goals and objectives, and we're continuing to advance on those. The next bullet point here, likewise, just in terms of our climate change initiatives, we've submitted our latest climate change reporting, and you'll see that being disclosed publicly shortly. Likewise, during the quarter, we published our 2020 tallying storage facility disclosure as well. And just lastly, the last bullet point there in the bottom left, you know, Conterra Gold, we are a signatory to the World Gold Council's responsible gold mining principles. There's actually 51 of these principles that we're rolling out at all of our operations. We're making really good progress. And as we continue to advance on these, we'll increasingly be looking to attest to compliance with each of these principles using a third-party service provider. Just moving on to the next slide, on slide six, just to sort of delve into the quarterly operational and financial highlights. Again, you can see the first bullet point just in terms of the COVID-19 pandemic. As I mentioned, we didn't see any meaningful impact at either of our operations. And again, to the best of our knowledge, we think our properties are virus-free. I spoke to the key safety milestone at OXA. Again, that was a very commendable achievement. So fourth bullet point, very strong quarter in terms of gold output. We produced just over 240,000 ounces of gold and just over 23 million pounds of copper across the company. When you look at the second last bullet point, just that high level of gold output, Correspondingly, you're seeing a very low competitive oil and sustaining cost. On a company-wide basis, we achieved an oil and sustaining cost of $528 per ounce, which was a fantastic result. I think notably, if you look in parentheses there, you can see the individual oil and sustaining cost results at each of the operations. And I think the key takeaway there is all of our mines are clearly operating within the lower cost quartile. This obviously positions us really well. when it comes to profitability. So if we transition to the next slide on slide seven, you can see just that strong level of metal production with a very low cost. In terms of our earnings result here, the first bullet point, we actually recorded net earnings of some $205.7 million or correspondingly 70 cents per share. The third bullet point, obviously the strong earnings, the strong profitability, that's also resonating in terms of our company-wide pre-cash flow generation. During the quarter, we generated $281 million of positive free cash flow. And you can see in parentheses, each of our operations on a standalone basis are generating very meaningful positive free cash flows. Fourth bullet point, given that strong free cash flow, our balance sheet continues to grow. We finished the quarter with a cash balance of $484 million. We do not have any corporate debt outstanding on the balance sheet, so that is our net cash balance. You can see together with our revolving line of credit facility, we have a total treasury liquidity profile of some $984 million. Fifth bullet point, just with regards to our guidance, we haven't made any change to our production outlook for the year. We continue to maintain our originally guided levels at the beginning of this year. I think that's a conservatively sort of balanced approach that we're taking, just given some of the uncertainty with regards to the global pandemic. Having said that, we're very well positioned and we're certainly targeting the upper end of that production guidance at each of the individual operations. Where we did make a change was on our oil and sustaining cost profile. We've favorably reduced our guidance there to a new targeted range of $740 to $790 per ounce. And then last bullet point, again, for the quarter, the board did declare a quarterly dividend of Canadian 5 cents per share. I just want to talk to each of the charts at the bottom here on slide seven. I think it really does illustrate a fantastic profile. You can see at each of our operations, generally speaking, quarter over quarter, this is the year-to-date period, we have been demonstrating growing levels of profitability and growing levels of public free cash flow. But I think what's really impressive is the third chart, which is our Oxford mine in Turkey. So again, this is our newest chart. operating mine in our portfolio. Last year, we were exclusively focused on construction here. We poured first gold in January, declared commercial production in Q2. And you can see here in Q3, you know, generating $74 million of positive free cash flow. The mine is ramping up very, very well. And, you know, we're very pleased, obviously, to see this level of performance. And I think it's exciting. It just, you know, it bodes really well for Sinterra's go-forward fundamentals, you know, our ability to showcase a portfolio of three low-cost profitable operations, I think, positions the company really well. And you can obviously see that in the chart in the bottom right-hand corner where, again, just the level of company-wide pre-cash flow has been growing quarter over quarter. You know, we have been increasing our level of metal production, but all of this is obviously favorably coinciding with a growing gold price environment as well. Just the next slide on slide eight, you can see the chart here in the top left. As you'd probably expect, we're in quite a strong gold price environment and correspondingly, our all-in-sustaining cost profile has been managing our business really well. During Q3, it was our lowest all-in-sustaining cost of the year today period. So as you'd expect, in terms of our margin over and above our all-in-sustaining cost profile, we're seeing a record margin at the moment. So benefiting from higher gold prices, but also we do have favorable tailwinds. We have been benefiting from currency devaluation in each of the jurisdictions where we operate to be the Canadian dollar, the Turkish Lira, the Kyrgyz Dom, but also a favorable diesel fuel price environment. And again, just reminding everyone, all of our operations are open pit mining operations and diesel fuel tends to be one of the larger commodity cost inputs. The chart in the bottom left, I spoke to that earlier, just growing levels of positive free cash flow. And you can see as per the red line chart, the prevailing gold price. You know, these elevated gold prices are certainly resulting in growing levels of profitability and free cash flow generation. And then the last chart just in the bottom right there is our balance sheet profile. So you can see in terms of our treasury position, it continues to strengthen, you know, finishing the quarter with $484 million in cash, zero corporate debt outstanding. So I think in terms of our business model, it has been going from strength to strength and Obviously, when you look at our total liquidity position, I think in terms of Sinterra moving forward, we're certainly well positioned to be an internally funded business model. With that, I'd now like to pass the call over to Dan Desjardins, who is our Chief Operating Officer. Dan, please.

Thanks, Scott. Good morning, everybody. Please move to slide 10. In Q3, we had good safety and operational performance. Of note, our new Operation Oxsuit hit one and a half years or 3 million man-hours LTI-free, and NDACO had a milestone of seven years LTI-free. Sentara continues to prioritize the health, safety, and well-being of our employees, contractors, communities, and other stakeholders during this current outbreak of COVID-19, and to take steps to minimize the effect of the pandemic on our business. We have established strict COVID-19 protocols at our mine sites to help prevent infection and reduce the potential transmission of the virus. In addition, the operating mine sites continue to assess our resilience of our supply chain. We increase our inventories of our key materials and develop and implement contingency plans to allow for continued operations. On the production front, we had another strong quarter producing the 241,448 Ounces of gold and 23.3 million pounds of copper at an all-in sustaining cost of $528 per ounce sold. Coomptor and Milligan are running steadily, but notable was the 51,412 ounces produced at Oxsut in the quarter. At a world-class operation in Coomptor, the plant operated uninterrupted for the quarter and continues to produce with or feed from the stockpile. Q3 production was 140,000 ounces poured at an all in sustaining cost of $639 an ounce. Mine operations was affected by community spread COVID and there was a significant shortage of operators for our mobile equipment in the quarter. Mine waste tonnage was also lower due to the longer falls to Central Valley waste dump and of course the driver availability. But the Lisey waste dump permit was approved and received in late July, and construction and preparation of the haul roads was completed in the quarter. We started dumping waste rock at the bottom of the Lisey Valley, so tonnage has improved. By the end of the quarter, the mining activities were back to full planned levels. We continue to advance the Kumtor technical report, which is taking slightly longer than we expected to finalize. Additional technical work is being incorporated into the new life of mine plan with respect to the mining costs, our recoveries, and the waste rock dump stability assessments. Coomptor generated 157 million free cash flow in the quarter, bringing year-to-date cash flow to 410 million. At Mt. Milligan, there was little effect of COVID in the quarter as we continue our hygiene, distancing, and camp protocols. We had a large build of storage process water to run at full capacity and our water level inventory is peaked going into the winter. Mine activities were in phase four, five and eight of the open pit. Total tons mined were 11.3 million tons and a mining cost was a respectable $1.65 as compared to $2.03 per ton in the third quarter of last year. The decrease was due to the reduction in contract service costs associated with open pit drilling, lower diesel fuel costs, lower labor costs, and higher tonnage due to the improved mining efficiencies. Total mill throughput at Milligan was a record of 5.3 million tons in the quarter, averaging 57,800 tons per calendar day. The processing costs were $5.11 as compared to $5.68 the year before. The decrease in this cost was due to water sourcing, lower electrical prices, decreased labor costs, and higher throughput. In the quarter, we did produce 49,854 ounces of gold at an all-in sustaining cost of $165 per ounce. The copper production was 23.3 million pounds. All-in sustaining cost was very low, preliminary due to low mining and plant costs, DECREASED WATER SOURCING COSTS, THE INCREASED COPPER CREDIT, AND A FAVORABLE FOREIGN EXCHANGE RATE. MILLIGAN GENERATED 63 MILLION FREE CASH FLOW IN A QUARTER AND HAS GENERATED 119 MILLION SO FAR THIS YEAR. AT OXFORD MINE, CONSTRUCTION WAS SUBSTANTIALLY COMPLETE. THE REMAINING ITEM TO COMPLETE IS THE HEAT LEACH PHASE 1C, WHICH IS EXPECTED TO BE COMPLETED BY THE END OF THE YEAR. An expected additional $5 million is to be spent in the fourth quarter to complete construction, which will bring the total spend to approximately 17% lower than the $220 million construction cost that was disclosed in the technical report. During the third quarter, the Oxford Mine obtained an amendment to the Environmental Impact Assessment Certificate from the Ministry of Environment and Urbanization. The amendment is to accommodate changes TO THE OXFORD MINE OPEN PIT DESIGN AND PIT OPTIMIZATION. BECAUSE OF THE DELAY IN RECEIVING THE AMENDMENT OF THE EIA AND FURTHER EXPECTED DELAYS TO OBTAIN OUR RELATED FORESTRY PERMIT, THE OXFORD MINE AND DESIGN IS CURRENTLY BEING REVISED WITH THE EXCEPTION THAT THE HIGH-GRADE ORE OF GUNANTEPI DEPOSIT WILL NOT BE ACCESSED UNTIL LATER 2021. THE NEW CONSTRUCTION HAS COMMENCED, WHICH INCLUDES AN OVERFLOW POND CRUSHER MODIFICATIONS WORK ARE ANTICIPATED TO BE DONE BY THE END OF THE YEAR AND THE HEAT LEACH PHASE TWO EXTENSION HAS STARTED AND WE'RE EXPECTED TO HAVE THAT BY THE END OF 2021. DURING THE THIRD QUARTER OF 2020 OXFOOD OPERATION CONTINUED NORMALLY WHILE MAINTAINING ACTIVE MEASURES TO PREVENT COVID OUTBREAK AT SITE. GOAL PRODUCTION WAS THE 51,000 We'd spoken about an all in sustaining cost of $416 an ounce for the full quarter of commercial production. Q4 is expected to place lower grade material on the heat pad and slower level production. Overall, OXU generated 74 million of free cash flow in the quarter. Please go to slide 11 for overall operational key focuses. For 2020, we continue to focus on improving our safety performance. with a large focus on critical risks and fatal mitigation management, as well as VFL and overriding WorkSafe HomeSafe program. At Oxsuit, we continue to ramp up and are continuing to phase, as we indicated, 1C heat leach pad, and it's well ahead of time where we need it by May of 2021 and finish the modifications and overflow pond before the end of the year. By the end of Q3, we had 2.8 million tons stacked in our heat leach irrigation. We have 300,000 tons crushed inventory, and we have over 1 million tons stockpile waiting for crushing and placement at Oxford. At Melton Milligan, with a robust spring melt, we have accumulated 7.5 million cubes of water in our TSF. For 2020, Melton Milligan's team is focusing on achieving consistent improved mill throughput recovery and getting a strong handle on our mechanical availability the operational team has been successful improving our cost performance throughout the company we are taking advantage of the lower commodity prices to build inventories at mount milligan specifically we have flattened the organizational structure scrutinized rentals and all contracts as well as improving our mine productivity kumtar is continuing to advance as 43 101 as we were indicated and is carrying our of further technical work on the Coomptor life of mine plan, including with respect to the mining cost recoveries and waste dump stability in view of the fatal incident that had occurred in the Lisi waste dump in December of 2019. Finally, we continue our brownfield exploration plan of $32 million company-wide and specifically at Coomptor $20 million for 2020, which is slightly delayed due to COVID causing manpower shortages. Move over to slide 12. That's a simple graph of the melt Milligan water inventories. And with the robust spring melt we had, we pumped over 7 million cubic meters of water into the TSF. Finally, on our last slide, 13, these are photos of the mine, heat bleach facilities in the summer. Now I'll turn the call over to Darren. Thank you.

Morning, all. Thanks, Dan. For those following on the slide deck on slide 15, Sentera recorded $515 million in revenue during the quarter. This consisted of $430 million in gold sales, $53 million in copper sales, and $32 million from the Molybdenum business unit. During the quarter, the company's average gold price realized was $1,806 per ounce and $2.43 per pound of copper. In the quarter, we sold 238,000 ounces of gold, 142,000 ounces attributed to Coomptor, 45,000 ounces from Mount Milligan, and 51,000 gold from the new Oxford mine. We sold 21.7 million pounds of copper, a slight decrease compared to the prior year quarter. This is now in slide 16. Net earnings of 205.7 million was recorded in this quarter. This included 169 million contributed from the Kumta operations, a 41% increase compared to the prior year quarter. $48.2 million contributed from the Mount Milligan operations, an 83% increase compared to the prior year quarter, and importantly, $71.2 million contributed from Oxsut, our new operations. The earnings per share for the quarter was 70 cents. From a consolidated cost perspective, Sentera in the quarter recorded production costs of $386 per ounce and an all-in sustaining cost of $528 per ounce, At an asset level, Coomptor recorded an all-in sustaining cost of $639 per ounce, whilst at Mount Milligan, recording an all-in sustaining cost of $165 per ounce for the quarter. I would highlight at Mount Milligan, mining and milling costs decreased by 19% and 10%, respectively, compared to the prior year quarter. For its first full quarter of commercial production, Oxit recorded an all-in sustaining cost of $416 per ounce. At all operations, we have recorded a significant betterment in cash provided by operations. Coomptor recorded $208 million in cash from operations, a $194 million increase. Mount Milligan recorded $70 million, an 82% increase from cash from operations. With Oxsuit now demonstrating our key third source of cash flow generation, contributing $85 million a quarter. This translated to $281 million in consolidated free cash flow for the quarter. As highlighted by Scott, $150 million free cash flow from Coomptor, $63 million from Mount Milligan, and with Oxsut delivering its first full quarter of commercial production, generating $74 million in free cash flow. As noted, year to date, the company has generated $527 million in free cash flow. As you will note in the bottom left-hand table on this slide, Centera finished with $484 million in cash with no debt. Also on slide 16, I will also refer you to the bottom right-hand chart. Year-to-date, the company has produced 651,000 ounces of gold, tracking to the higher end of guidance. Costs year-to-date have recorded all in sustaining costs of $665 per ounce. In our MD&A, you will note that we have reduced our oil and sustaining cost per ounce guidance at both Mount Milligan and OXU. At Mount Milligan, we set a new range of $750 to $800 per ounce, previously guiding to $885 to $935 per ounce from an oil and sustaining cost perspective. The decrease attributable to both mining and milling costs. At Oxsuit, we are now targeting a new range of $500 to $550 per ounce, previously guiding to $650 to $700 per ounce from an oil and sustaining cost perspective. The decrease coming from a combination of both positive grade and tons reconciliation and effective cost control during this initial year of production. The full year gold production guidance for 2020 is being maintained at between 740 to 820,000 ounces of gold. In the fourth quarter of 2020, the company expects higher oil interest spending costs per ounce as a result of lower production levels at both Coomptor and our Oxford mine. At Coomptor, the company is planning to process lower-grade stockpiles and has a scheduled five-day mill maintenance plan in December 2020. The Oxford mine is expecting to have lower levels production in the fourth quarter of 2020, as mentioned by Dan, compared to the third quarter due to placement of lower grade of ore on the heap leach. We have also reduced our capital spending guidance, reducing Kung Tor capital stripping to 193 million, previously guiding to 223 million, a combination of longer waste haulage distances and temporary reduction in workforce due to the COVID-19 pandemic. Finally, the Sentara Board declared a quarterly dividend of Canadian five cent per share for the quarter. With that, I'll now pass back to Scott.

Thanks, Darren. Just to wrap up our prepared sort of remarks, just on slide 19, just in terms of the top left section here, just some of the key bullet points I just want to reiterate. So, again, you can see in terms of our gold production guidance, we continue to guide up to 820,000 ounces of gold this year. As I mentioned earlier, I think this is conservatively balanced level of guidance. We haven't made any change to our guidance since we first put it out at the beginning of this year. Again, just being cognizant of the heightened uncertainty from a global perspective with regards to the COVID-19 pandemic. And as we've spoken to, we have reduced our own sustaining costs, just reflecting the strong year-to-date position. And just in terms of our production levels, I think we're certainly targeting the upper level of that guidance at each of our operations as well. Second bullet point, you've seen a continued run of strong operating momentum has just carried over from quarter to quarter and it continued in Q3, you know, with our company wide gold output being in excess of 240,000 ounces of gold. And again, that high level of gold output in terms of the corresponding oil and sustaining cost result, the quarterly result of $528 per ounce was our lowest of the year today period. Obviously that makes for significant margins, just given the elevated gold price that we're in. And you can see that in the fourth bullet point again, a record quarter in terms of our company-wide free cash flow of $281 million. The balance sheet is growing and is strong, again, finishing the quarter with $484 million. And that's a net cash position, just given that we don't have any corporate debt outstanding. And again, just in terms of shareholder-friendly initiatives, as I and Darren spoke to, the board did again declare a quarterly dividend of Canadian five cents per share. And then just lastly, you look at the chart down the bottom, I spoke to these in our opening remarks, but I look at Sinterra's business and our fundamentals. I think they're very well positioned, growing, as you can see here, over the year-to-date period. At all of our operations, we continue to generate meaningful levels of positive free cash flow. But hopefully the key takeaway here, what certainly excites myself, is Hoxha, the third chart here. Our newest mine, I think, is certainly positioned to be an important third source of high-quality, low-cost production, and that's going to bode really well in terms of some of Terra's go-forward fundamentals. So with that, I thank everyone for joining us and their attention. And I'd now like to pass the call over to Dina, our operator, and Dina will move us into a Q&A session. So, Dina, please.

Of course. If you would like to register a question, please press the 1 followed by the 4 on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the 1 followed by the 3. Once again, to register for a question over the phone lines, please press the 1 followed by the 4. And it's just going to be a moment for the first question. And our first question comes from the line of Mark Mihaljevic with RBC. Please go ahead.

Hey, thanks. Good morning, guys. Excellent quarter of cash flow here. I guess to start off with Kuntur, I guess you mentioned, you know, mining rates have been impacted by the longer hauls and workforce availability. Can you just give us a sense of how we should be, A, thinking about that in the medium term, And then two, kind of at what point do you need to, you know, would that start impacting the production outlook? Obviously, you've got pretty big stock files there for now, and, you know, the 2020 output's pretty locked in. But kind of when you think into 21, kind of at what point do you really need to start getting direct or out of the pit to keep the production profile up?

Thanks, Mark. Dan, would you like to respond to that, please?

Thanks, Mark. Very good question. Obviously, we've reset ourselves to make sure that we have the proper ore feed to the mill. We've been working on our Life of Mine update, which is not quite ready to release. So what we're looking at for next year is production numbers very similar to our previous Life of Mine update. What we've done is obviously we've reset. We are now mining at or above updated forecasts, internal forecasts, but I don't think we're prepared to put out guidance for next year yet, but we are looking at similar to the old 43-101. I think with the longer hauls that we will have, our mining costs would have been a little bit higher than historic, but with the lower fuel cost countering that and the favorable exchange rate, we are seeing costs approximately about the same per ton going forward.

Mark, just from my perspective, I just want to add, as you probably know, and I think it was implied in your question, all of this year's gold production is already sitting on surface in stockpile. as well as the first nine months of next year, it's pretty much all stock parliamentary. So as Dan already mentioned, when we look at next year's gold production profile and we're in our budget cycle as we speak, we're seeing a level of gold production that's very similar to what was in the 2021 year in the old 43-101, which from memory was around 517,000 ounces. So it's not going to be too dissimilar to what we were previously forecasting for the 2021 year.

Okay, perfect. Yeah, that's helpful there. And I guess continuing with Qumtar, obviously a lot of changes in the country over the past, I guess, three months. Can you kind of give us an update on how you're thinking about, you know, investments in the country during the uncertain transition period that we're kind of in right now? And also, can you just quickly give us the cash balance in-country in Kyrgyzstan?

Yeah, so in terms of the situation in Kyrgyzstan right now, I think in all honesty, Mark, we're just doing what we do best, which is just putting our heads down and just focusing on, you know, optimizing the operations at the mine, focusing on maximizing production. You've probably heard me speak to this before. We just want to make sure that we're always being a good steward of the asset. You know, we don't pay an income tax in the country. We pay gross revenue tax. So if we're maximizing our production levels, that means we're maximizing our tax contributions to the government. And I think more than ever, that's a sensitivity within the country because not too dissimilar to other jurisdictions around the world, they have taken an economic hit in terms of their economy contracting. So we're just putting our heads down and just staying below the radar screen and not looking to be a part of the political narrative. If anything, I think in terms of the country's leadership, one big sensitivity is obviously the continued operations at Comptor, just given that we are the largest tax contributor in country. With regards to investments in country, I mentioned earlier on your previous question, we're in our budget cycle right now. We've had a lot of success with our exploration program. We've reported on that previously. In terms of our go-forward exploration budgets, they're always success-driven, and so we were actually discussing with the board yesterday. We're contemplating a similar-sized exploration program next year in country. And I think that's likely to be approved when we go through our budget cycle in December. So I'm giving you a long answer, Mark, but in terms of the business environment, we're very comfortable investing in the assets and obviously continuing to enjoy the economic benefits.

Mark, sorry, it's Darren here. Just on the final point you had on the cash balance in country. So The setup we have is that all cash receipts from our gold sales are deposited into a New York bank account. So it actually doesn't flow into country. And we then simply disperse our local requirement needs locally. So that range is 15 to 20 million at any one time. So minimal cash is in the subsidiary.

Okay, perfect. Yeah, that's a helpful clarification. And then I guess finally for me, obviously, you know, kind of huge free cash flow in the quarter. You did kind of sound a little more cautious in the dividend press release, just given obviously COVID uncertainties and kind of dialing in your life of mine updates and budgeting. So should we kind of expect an update on, you know, additional cap allocation update or potential more capital returns with full year results, or do you think it'll take you a little longer just to get that confidence and clarity before you'd make another decision?

I think first and foremost, I have to say it's a board decision when it comes to our level of dividend distribution. We had a lot of discussion around that yesterday at our board meeting, and I think we'll be discussing it again at our next board meeting, which is in December, which is, again, to approve our budget for next year. So, I think it's just going to be a standing agenda item at each of our upcoming board meetings here in the short term. Probably as much as I can say, Mark, is I just don't want to get ahead of the board. But as you saw in our press release, there has been heightened uncertainty this year with regards to the pandemic and then more recently with regards to the political sort of changeover in leadership in the country in Kyrgyzstan. But I think as soon as we have good visibility and a good line of sight, on these items, and I think that'll be an ongoing discussion with the board.

Okay, perfect. That's it for me. I'll come back in a few. Thanks, Ed.

And our next question comes from the line of Mike Tarkin with National Bank. Please go ahead.

Thanks, guys. Congrats on a really strong quarter. A few questions here. One, you mentioned the life of mine update on Coombe Torr. distracting a little bit behind what you're originally planning. Should we still expect that to come out in the fourth quarter, or will that maybe roll into 2021?

Yeah, Mike, it's hard for me to gauge that. There is some follow-up technical work that Dan and his engineering team are working on. And in terms of timeline, I would say at the latest, I would expect that we'd be in a position to hopefully publish it before the end of February. The reason being that's when we typically always report our year-end reserves and resources for all of our operations. So I think in terms of at the latest, that would be our targeted publishing date.

Okay. It doesn't seem like it's the case, but has there been any discussion with the interim Kyrgyz PM since him taking power?

No, as of today, there has not been any direct discussion with the interim prime minister or the interim president. They haven't reached out to us, and likewise, we haven't reached out to them. As I mentioned when I was responding to Mark's question, we're just focusing on what we do best.

Okay. What about some of your ESG initiatives in terms of support with local peoples with respect to COVID-19? Is there Any heightened increase to communicate that work that you've been doing in country as a good steward? Yeah, I mean, Dan, do you want to speak to that?

Just because I know you're personally leading some of those initiatives, a good thing.

Well, certainly, I think it's very telling to, you know, the proof of the pudding is in the eating. And there was a lot of upheaval in the country. Obviously, yet our local region and our local people that we deal with certainly did not take any aggressive stance against Coomptor. We have a lot of programs, especially lately, we modified them because of COVID. So we've done some very local donations and contributing to the medical sector. supplies in the immediate region and we also contributed a large fund to the central government so that they could be more prepared. But we've had robust community initiatives and we've really focused on our environmental stewardship and transparency for years and it really came to rest. during this upheaval because we were seen really almost as the only mining company that was not affected by the political turmoil.

Great. Okay. I'm just switching over to Oxut. It's obviously had a brilliant ramp up. The mining costs are looking quite impressive there relative to what was the technical study. Should we read into that, that that's sustainable? possibly on lower fuel and favorable FX rates there as well? Or is it more just you're in the upper portions of the mine and maybe it's a little easier mining to start with? How should we kind of think about the performance?

Ben, do you want to respond to that?

Yeah, again, we have a long-term contract with our mining contractor, as indicated in our lack of mine plans. There's no reason to think, no, this isn't typical like a Coombe Tour, a deep open pit. We're more on the edge of a valley. So our rates should stay similar and you hit the two key things, fuel and FX. And, you know, just depending on what happens with those. But at this time, it is reflecting on very real slump to mining.

Okay. On that, is it, you purchase and supply the fuel, or is that through the contractor as well, and is that where the benefit kind of flows from?

Yeah, it's contractual. He manages his own fuel, but we have benefit within the pricing of the contract depending on his pricing.

All right, that's great. And then with Oxfam, great expectations for Q4. Should we expect something similar to Q3, or... starting to move into lower grade as early as this quarter.

I think what I'd guide you towards, Mike, is we're targeting the top end of gardens at Oxfam, and you obviously saw what we've done year-to-date, 67,000 ounces, so kind of back-calculate from there in terms of your modeling.

Okay. And then with Mount Milligan, too, you've got impressive costs. you're benefiting from ample water supply, turning off some of the pumping requirements. Can we read into any reserve upside there by potentially lowering cutoff grade and bringing in some lower grade tons? Dan, do you want to respond to that?

Certainly. As you know, we did update our life of mine plan only a year ago. We're obviously looking at that carefully, and any time you have robust costs or get a more consistent higher throughput in the mill, it will have a positive effect. We are studying that along with a few other initiatives that we have. At this time, we're not prepared to go forward with a longer pipeline, but certainly that is one of our key goals is to run as efficiently as possible on the cost side and on the production side with the goal that... You know, it's a large resource there, and also Dennis and his team continue to explore in the area to get better definition and understanding of what really is available. But at this time, we're not updating our life of mine.

Okay. Maybe another way also to look at it, too, is as you come across lower-grade material that, you know, in that life of mine plan is modeled as a waste block But given superior metal prices, you know, beneficial cost structure, does that get brought into the mill plan on a whatever week-by-week, month-by-month basis, you know, given that it's there and you can take advantage of it? Or do you stick to, you know, a more conservative budget scenario and put it to a waste pile?

Yeah, the setup at Mount Milligan is – is much of our waste goes to building the tailings dam. If it is mineralized waste, potential acid generating, then it has to go within the tailings pond. We only have limited ability to stockpile, but right now we're just working on the best way to look at it is a smaller footprint. So our strip ratio is still about the same. There wouldn't be that much or potential subgrade or at this time, but as we see our efficiencies and our cost structure change, you would have a bigger footprint, and that's where you would come across greater or.

Okay, great. That's it for me, guys. Thanks so much.

Our next question comes from the line of Fahad Tariq with Credit Suisse. Please go ahead.

Hi, good morning. Thanks for taking my two questions. First, on the production guidance, so you maintained it for the year, which suggests lower production in Q4, but just following up on Mike's question on grades, maybe talk a little bit about what grades you're seeing at PUMTOR and AUX in October. I'm just trying to get a sense of how to bridge it because even the high end of the full year guidance was suggested quite a substantial drop quarter over quarter on production. Thanks.

Dan, how should we respond to that? I mean, we're targeting the upper end of the gold production guidance at Comtor. And, you know, Dan, in terms of throughput rates, et cetera, I think we're seeing, you know, a continued level quarter over quarter. I think what really Fahad was just guiding you to kind of back calculate from there what the grade would be. I mean, Dan, anything that you want to add to that?

Right. We're feeding from the stockpile, so we do have some flexibility, but I don't think we can look that specific on board guidance.

Okay, no problem. My only other question was on the balance sheet, obviously very strong. You're almost at $500 million of cash now. Is there a minimum cash balance that you're targeting before you would feel more comfortable on the dividend or anything else in terms of capital allocation?

Darren, I don't think there really is. When we look at our profile moving forward, we had our strategy session with the board back in September, and we just see year over year we're going to be generating meaningful free cash flows. So it's not like there's a minimum cash balance that we require. We're not building anything. There's no growth projects moving ahead. We're really just focusing on maximizing existing operations. Darren, is there anything that you want to add to that?

No, I think, as I said, we're going to this budgeting cycle. I think that'll, you know, give us that medium-term picture that, once again, we'll have a lot more thinking and thought around that to your question. But, yeah, right now the board hasn't got a limit or a number in mind.

Okay. Thank you. That's it for me. Thanks.

Our next question comes from the line of Anita Stoney with the IBC World Market. Please go ahead.

Hi, good morning, Scott, Dan, and Darren. Just a question with regards to the capital that was not spent at Coontour this quarter. Is it safe to assume that it will get pushed into next year?

Dan, do you want to take that?

Yeah, again, the majority of that is deferred mining tons. We have a limit on how much we can mine in terms of shovel equipment. We have 13 shovels. So those tons will be into next year, but we only have the ability to move between about 180 and 200 million tons per year. So there won't be an excess more next year. It's more a shifting of the access to the ore, and we're updating all our plans to reflect that going into stockpile.

Okay. And then in terms of the actual stockpile level at offsuit, can you tell me how many tons and what grade it sits on right now?

Yeah, we have that in one of our write-ups, but I don't know how specific. In terms of ore stockpile, we have approximately a million tons in stockpile, and we have about 300,000 tons crushed. Okay. You know, it's all in that average, you know, PID grade, but we don't really give that specific guidance in terms of the exact grading of that and when we would place.

Okay. And then just looking at the capital expenditures for next year, so far you're tracking pretty well on the Suntour technical report that you had put out previously for 2020. You mentioned that the production would be similar. than the old technical report for 2021. Would the capital similarly also have a drop-off that's from the prior technical report or would that be revised with any technical report that's coming out?

Sorry, go ahead, Dan.

No, I was going to say that there would be some changes versus that technical report is quite old. Go ahead, Scott.

I was just going to say, Dan, I think the need for In the 2021 year, in the draft technical report, we're most likely envisioning some addition to our mining equipment fleet, just given that the mine life is expanding meaningfully. When you think about the useful life of the composition of our existing fleet, the current trucks, et cetera, they won't last the entire mine life, just given the meaningful increase. So we're probably going to be taking advantage of that. upgrading some of those trucks, so there will be a capital item. But the quantum of that capital item, I think, is insignificant relative to the level of cash flow that the mine does produce on a per-yearly basis.

Okay. Thank you. That's it for my questions.

Okay. And we have no further questions at this time.

Over to you, John.

Very good. I just dropped myself off the mute. Thank you, everyone, for joining our call today. And if there are further questions, please reach out to us. At that point in time, we'll end the call. Thank you.

That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.