Centerra Gold Inc.

Greetings and welcome to the Centera Gold 2020 fourth quarter and year end results conference call and webcast. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. 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 call has been recorded Wednesday, February 24, 2021. I would now like to turn the conference over to John Pearson, Vice President, Investor Relations. Please go ahead, sir.

Thank you, Carlos. Welcome, everyone, to Sentera Gold's 2020 Fourth Quarter and Year-End Results Conference Call. And today, we will also present an update on the extended mine life at Coomptor, as detailed in the new Coomptor 43-101 Technical Report filed on CDAR today. Summary slides are available on Sentara Gold's website to accompany each speaker's 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 instructions 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, Malcolm Stallman, our Vice President, Exploration, 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 risk which may cause our actual results to differ from those expressed or implied. Also, certain of the measures we will discuss today are non-GAAP measures. Please refer to the description of non-GAAP measures in our news release and 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 audited financial statements and notes, and our other filings, all of which can be found on CDAR and the company's website at centeragold.com. And now I'll turn the call over to Scott.

Thanks, John, and good day, everyone. Thank you for joining us for our call. I'm just going to be referencing our accompanying presentation slide deck, and I'm just starting off on slide number four. But just in the top left here on slide number four, a number of sort of key highlights that I'd just like to expand on. Just starting with the first bullet point, you can see 2020, it was a very strong year for the company. In terms of our gold output profile, we finished with 824,000 ounces of gold, which was above the upper end of our guidance. Mount Milligan Mine produced 82.8 million pounds of copper. And our corresponding oil and sustaining costs was a very low competitive $729 per ounce, which was below, favorably below our guidance. So an excellent operating result for the company. Subsequent to year end, we announced that we had divested our 50% share in the Greenstone Gold Mines Partnership for some $200 million in cash consideration, plus additional contingent payments of up to $75 million. Just looking at the third and fourth bullet points, you can see that the strong level of production and the corresponding low unit costs really resulted in some significant profitability. In terms of operating cash flow during the calendar year, we generated $930 million. And then if you look at the fourth bullet point, in terms of the free cash flow metric, company-wide, our portfolio generated $604 million of positive free cash flow. As you can see in parentheses, each of our individual operations contributed very meaningfully Comtour generating $438 million, Mount Milligan generating $150 million, and then OXSERP, which is our newest operation in our portfolio, in its inaugural year of operations, it contributed $105 million of positive free cash flow. The next bullet point below, obviously, the strong level of free cash flow. You can see that we're quickly establishing a peer-leading balance sheet. It's a debt-free balance sheet, and we finished the year with some $545 million US of cash reserves. One of the other key highlights in today's announcements is we've also released our new technical report, our new 43-101 life mine plan for Kumtor. It features a five-year extension to the mine life. The new delineated mineral reserves are some 6 million ounces of gold, which is an increase of some 3.1 million ounces. And also in terms of the grade, the in situ reserve grade, it's increased by approximately 15%. So this is a fantastic development. And Dan, our chief operating officer, will expand on this shortly. You can see the chart down the bottom here on slide four. You can see all of our operations were generating meaningful levels of free cash flow throughout the year. I think what really strikes me is the third chart just on OPSERT. This is pretty exciting. This is our newest operating mine. We brought this mine into operations in January of last year where we poured first gold. At the end of May, we declared commercial production. And then you can see in Q3, Q4, just the very meaningful levels of free cash flow and profitability that the mine is already demonstrating. So it's exciting as we make our way into this year and beyond just in terms of having a third source of high-quality, low-cost production and just what that means for our fundamentals moving forward. Just moving on to slide five, just in terms of Sinterra's ESG profile, just a few bullet points here I'll reference. The first bullet point, you know, obviously our focus is on zero harm operations. We have a number of leading, sort of safety leading initiatives underway as we speak. We are seeing some benefits of our WorkSafe, HomeSafe program. I think two notable milestones during the year, Oxsert, our mine in Turkey, celebrated 4 million hours of lost time incident-free operations. And at Kumto, as we speak, we're getting relatively close to being one year of last-time incident-free operations, where as of today, we're now at 331 consecutive days. Second bullet point is in terms of our social license to operate. We've now extended this record to 90 consecutive months. without having any interruptions at any of our operations globally. So that's in good stead. And the third bullet point, just in terms of environmental incidents, we had no reportable environmental incidents in the quarter, as it should be. So that was great to see. And I'll just touch on the last bullet point. We, Sinterra, are a member of the World Gold Council. And the World Gold Council recently rolled out their responsible gold mining principles. We are a signatory to these principles. There's 51 key sort of ESG principles, and we're looking to roll all of these out and obtain compliance over the three-year period. We're in good stead at all of our operations. And, in fact, at Oxford, we're actually well ahead of schedule, whereby we've already established assurance in 2020, albeit that's not required until 2022. So it's progressing very well. Just moving on to slide six, just a number of key corporate highlights here. I'll just reference three or four. But just the fourth bullet point, I think one of the things that really differentiates Interra is our low unit operating cost profile. You can see here on a company-wide basis, our oil sustaining cost was $729 per ounce. It was very competitive. As I mentioned, that was favorably leveled in guidance. You can see in parenthesis there, just each of the individual mines, they really are operating at that sort of first quartile relative to the world industry cost. The Kumtor at $741, Mount Milligan at $541, and Oxford at $494. That obviously always positions us really well just in terms of our margins, regardless of what prevailing gold price environment we're in. The sixth bullet point, I mentioned this at the outset, a key update today is our new life mine plan for Kumtor. It's a five-year extension in the reserve mine life, and that's going to extend operations to 2031, which equates an 11-year delineated mine life moving forward. With today's release, the next bullet point, we're providing our guidance for 2021, which is a component of our new multi-year, three-year guidance. But in terms of the 2021 guidance, you can see, you know, we're guiding for a midpoint of 780,000 ounces of gold and some 75 million pounds of copper. Last bullet point, at this level of sort of metal output, as well as the associated oil and sustaining cost guidance, we think the business will be generating cash flow from operations of 750 to 800 million dollars. and corresponding free cash flow of $350 to $400 million. This is assuming a gold price of $1,750 per ounce. Just on the next slide, on slide seven, just some of the key financial highlights. You know, the first bullet point, you know, it was a good year financially for the company. We finished the year of calendar earnings of, sorry, we finished the calendar year of net earnings of $408.5 million, which equates to $1.39 per share. The third bullet point, as I mentioned earlier, very strong year in terms of free cash flow, $604 million was generated during the calendar year. Fourth bullet point, that allowed us to finish the year with a very strong treasury position. We've got a debt-free balance sheet and finishing the year with cash reserves of some $545 million. And just the fifth bullet point there, yesterday the board again declared and approved a quarterly dividend of Canadian 5 cents per share. Just moving on to slide 8. So slide 8 just gives you a little bit more detail just on our guidance for 2021. You can see just in terms of the first row here is our gold production guidance. So at Coombe Toll we're guiding up to 510,000 ounces of gold, Mount Milligan up to 200,000 ounces of gold and Oxford up to 110,000 ounces of gold production. Just wanted to provide a bit of additional sort of commentary just on the quarterly profile within the calendar year. So just in terms of Kumtor, gold production is expected to rise steadily throughout the year, with the first quarter contributing approximately 15% of the annual gold production target. And that will then be rising to approximately 35% of the annual target in the fourth quarter of 2021. In terms of Mount Milligan, both gold and copper production are expected to be slightly back-end weighted in 2021, with the first half of the year representing 45% or more of the annual target, whilst the second half of the year will represent up to 55% of the annual target. And then just lastly at Oxford, gold production is expected to be back-end weighted in the calendar year, with the first half of this year representing 35% or more of the annual target, while the second half of this year will represent up to 65% of the annual target. But again, as I said earlier, when I look at this sort of metal output profile that we're guiding to, as well as the sort of corresponding operating cost structure. Again, assuming a gold price of $1,750, we're expecting this year to be another meaningful year and guiding to free cash flow of $350 to $400 million U.S. Just moving on to slide nine, this is our new multi-year guidance. So we're now providing a three-year outlook for the business, and I think it really does illustrate the medium-term strength of our business You can see the fourth row here, we're expecting a growing level of gold production here over the three-year period. And that's being underpinned really by each of the operations. If you look at the first, second and third rows, each of the mines are generally increasing their levels of gold output moving forward, which is a nice profile. Because then when you look down at the seventh row, just in terms of the oil and sustaining costs, That is kind of having a favorable economies of scale deflationary impact in terms of our cost profile decreasing over that period of time. So again, relative to the sort of current gold price environment, I think this is going to position us well just in terms of the margins within our business. And as we demonstrated in 2020, I think over this three-year period, we're very well positioned for growing growth. growing levels of profitability and positive free cash flow. So that really concludes the first part of our call. And as John mentioned in his introduction, I'd like to move into the second part of our call, and I'm going to look to past proceedings over to Dan Desjardins and Malcolm Storm. And obviously one of the key highlights today was the release of our new life and mind plan for Kumtor. As I mentioned, it's a five-year extension. It's the addition of some 3.1 million ounces. of new gold reserves, and more importantly, the in-situ reserve rate has increased by some 15%. So it's a fantastic development, and what I'll do now is I'll pass it over to Dan, our Chief Operating Officer, and he can provide a lot more color on that. So Dan, over to you, please.