Centerra Gold Inc.

Greetings and welcome to the first quarter results conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will 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 Friday, May 1, 2020. I would now like to turn the conference over to Mr. John Pearson, Vice President, Investor Relations. Please go ahead.

Thank you, operator. I would like to welcome everyone to Sentara Gold's 2020 first quarter conference call. We have summary slides available on our website to accompany each speaker's remarks. Today's call is open to all members of the investment community and media. Following the formal remarks, the operator will give the instructions for asking a question, and then we'll open the phone line to questions. Please note that all figures are in U.S. dollars unless otherwise noted. Today, joining me remotely on the call is Scott Perry, President and Chief Executive Officer, Darren Millman, Chief Financial Officer, Dan Desjardins, Chief Operating Officer, and Yusuf Raymond, General Counsel. I would like to caution everyone that certain statements made on this call today may be forward-looking statements, and as such, are subject to known and unknown risks which may cause actual results to differ from those expressed or implied. Also, certain of the measures we will discuss today are non-GAAP measures, and I refer you to our description of non-GAAP measures in the news release in MDNA. For a more detailed discussion of the material assumptions, risks, and uncertainties, please refer to our news release and MD&A issued this morning, along with the unaudited financial statements and notes, and to our other filings, which can all be found on CDAR and the company's website. And now I'll turn the call over to Scott.

Thanks, John, and good morning, everyone. Thanks for dialing into our call. I'm just on slide five of our accompanying earnings call presentation deck. Just firstly, in terms of safety, you would have noted that one of the key highlights this year, sorry, recent key highlights this quarter was our Oxford mine, which just recently transitioned operations. We actually just recently celebrated one year of operations without a single lost time incident. This is fantastic. It's commendable. I just want to recognize that in terms of our management team at Oxford. We believe, from a safety perspective, our continued commitment to work safe, home safe is a driving force behind achieving such milestones. Our focus moving forward has to be absolutely relentless in terms of us achieving our goals of zero harm and eliminating fatalities from within the business. The second bullet point, just on COVID-19, in terms of the coronavirus, Sentera continues to prioritize the health, safety, and well-being of our employees, contractors, communities, and other stakeholders during the current outbreak of COVID-19. We're taking steps to minimize the effect of the pandemic on our business. To date, the COVID-19 pandemic has not resulted in any material impact on Sentera's operations, and the company currently does not expect it will impact 2020 production. However, the potential effects of COVID-19 are unpredictable, and the company continues to monitor the situation at each of its sites, and we continue to take the steps, necessary steps, to prevent or minimize any effects the pandemic may have. As you would have noted, there's no change to our 2020 guidance. Just on the third bullet point here, just in terms of OPSA, this is quickly transitioning to operations, and this is going to be our third operating goldmine within our portfolio. On January 31st, we achieved first gold pour at Offsert, and at the end of the quarter, in terms of the construction of this project, we are now approximately 95% complete. During the quarter, Offsert contributed 4,486,000 ounces of gold production. It's going to be an important third asset within our portfolio and it's going to make for increased diversity moving forward. As we move forward here over the course of the calendar year in terms of 2020, we're We're expecting progressive increases in terms of Oxsert's gold output profile. Just in terms of some of the key quarterly highlights, you've seen a six bullet point there. Another robust quarter in terms of our production levels, particularly good operating momentum at Kumtor, facilitated a company-wide gold production result of 190,000 ounces of gold. This high level of gold output in terms of the corresponding oil and sustaining costs, you can see we achieved a very low, very competitive $712 per ounce sold. Given the prevailing gold price environment and that strong level of gold output and obviously the competitive sort of oil and sustaining cost, you can see that really, you can see that generated meaningful free cash flow on a company-wide basis. Sinterra during the quarter generated free cash flow company-wide of $77 million, which includes $96 million of positive free cash flow from Comtor and $22 million of positive free cash flow from Mount Milligan. The strong level of free cash flow saw the balance sheet transition into a positive net cash position at the end of the quarter. As we move forward here over the course of 2020, we are no longer... Oxford is no longer in construction mode, so I would expect if we continue to deliver, if we continue to execute, we should see the balance sheet continuing to grow over the course of this year. As I mentioned earlier, under COVID-19, with today's release, we are maintaining our guidance for 2020. The second last bullet point here, just based on the company's financial position, our recent strong operating results and cash flows, The board yesterday approved a dividend of Canadian $0.04 per share. Just lastly, I just want to note in terms of the prevailing macro environment or in terms of the current economic conditions, gold prices are strong right now. But also what we're noting is in terms of our exchange rate environment, in terms of the jurisdictions where we operate, in terms of the oil environment and its impact on diesel fuel pricing, We're seeing particularly robust margins across all of our operating assets. So if this is to sustain, it does bode well for Sentera's profitability and cash flow generation moving forward. Just on slide six of the presentation, the chart here in the top left, we're just looking to graphically illustrate the quarterly cash flow during the quarter. You can see the green column here. The first green column is just the aggregate of the positive free cash flow that was generated by Comtor and Mount Milligan during the quarter, so $118 million. There was a drawdown on our revolving line of credit facility of $82 million US. And then the red columns just illustrate how and where the cash was deployed during the quarter. As you can see, as the chart illustrates, it was a meaningful quarter in terms of positive free cash flow generation. Just reference the chart in the bottom right-hand corner on slide six. What we're illustrating here is our consolidated adjusted free cash flow. And so what we've removed from these columns back in 2019 was the settlement expense associated with the strategic agreement that we entered into with the government of Kyrgyzstan. But I think what the chart illustrates is if you look at Q1, our realized gold price was $1,487. But also now that Oxford is transitioning into operations, Now that we're not funding significant construction expenditures, you can see just the level of free cash flow that the business is generating within the quarter. As I mentioned, gold prices here today are stronger than what we're realizing in Q1. We're seeing a very favorable diesel fuel price environment, a very favorable exchange rate environment. So again, I think that just bodes well when you think about our future profitability and free cash flow generation potential. Just lastly on this slide, the chart on the bottom left is just a continuum of our net debt to net cash profile, and you can see the columns on the right of that chart. Just given the strong profitability, the strong cash flow generation during the quarter, you can see the balance sheet has now transitioned into a positive net cash position. Just on slide seven, just in terms of our environmental social governance profile, Just in terms of these bullet points, obviously our continued focus on safety is absolutely paramount, and I spoke to that earlier. The second bullet point here, just in terms of our license to operate, we've now achieved 81 consecutive months of no business interruptions, so a fantastic achievement. Third bullet point, as it should be, there's been no reportable environmental incidents during the quarter. In terms of The fourth bullet point here, we're continuing to work and focus on our commitment for Sentera to be a diverse and inclusive organization. We have a number of initiatives here that are underway. Second last bullet point, we are now working on a corporate-wide climate change strategy, hoping to have that finalized by the end of this year. And then just the last bullet point here, We are in the process of implementing the World Gold Council's Responsible Gold Mining Principles. Sinterra is a member of the World Gold Council and we are signatory to these principles. We're now looking to establish conformity and compliance with all these principles and that's another key initiative that's being rolled out across our operations this year. With that, I'm now going to turn the presentation over to our Chief Operating Officer, Mr. Dan Desjardins. So, Dan, please.