Centerra Gold Inc.

Greetings and welcome to the Sentara Gold second quarter 2022 results conference call. At the start of the presentation, all lines 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, today's call has been recorded Wednesday, August 10, 2022. I would now like to turn the conference over to Toby Caron, Treasurer and Director of Investor Relations. Please go ahead.

Thank you, Carlos. Welcome to Sentera Gold's second quarter 2022 results conference call. Please note that presentation slides are available on Sentera 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 instructions for each asking a question, and then we will open the phone lines to questions. Please note that all figures are in U.S. dollars unless otherwise noted. Joining me on the call today are Scott Perry, President and Chief Executive Officer, and Darren Millman, Chief Financial Officer. I would 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 the measures we will discuss today are non-GAAP measures. please refer to the description of non-GAAP measures in our news release and MG&A issued this morning. For more detailed discussion of the material assumptions, risks, and uncertainties, please refer to our news release and MG&A, along with the unaudited financial statements and notes in all of our other filings, which can be found on CDAR, EDGAR, and the company's website at centeragold.com. And now I'll turn the call over to Scott.

Thanks, Toby, and good day to everyone. As Toby mentioned, I'm just referencing the accompanying webcast presentation deck, and I'm just starting off on slide number four. So first of all, I'd like to start by highlighting our announcement on July 29th that we have officially closed the global arrangement agreement with Kyrgyz Altan and the government of the Kyrgyz Republic. This is a clean separation, and it has allowed us to significantly reduce our share count by approximately 77 million shares, or 26%. With this closing, the company is positioned to move forward with a renewed focus on our core operations, the Mount Milligan mine, the Oxet mine, our core Goldfields development project, in addition to our exploration and drilling investment programs at our Greenfield and Brownfield exploration projects. In the second quarter, the company continues to demonstrate that safety remains one of Sentera's top priorities. Notable milestones during the quarter was with Comess achieving three years without a lost time injury. Subsequent to quarter end, our Oxert mine surpassed one million hours without a lost time injury. Moving over to Oxert, Gold Room operations at the Oxert mine's ADR plant remained suspended due to mercury that was detected. Retrofit in the Gold Room is expected to be complete in late 2022 with operations recommencing as soon as regulatory approvals are obtained. The company has completed engineering work and has ordered equipment to retrofit the ADR plant to safe operations within the Gold Room. The capital cost of this mercury abatement retrofit is expected to be approximately US$5 million. You will note in today's release that at the Oxford mine we have initiated suspension of stacking and leaching activities as of August 10th. This is due to the company's inability to obtain approval from the regulators to use more activated carbon than what is currently allowed in the mine's environmental impact assessment permit. This change in operating practices means that the company has had to revise its consolidated 2022 outlook to reflect the the suspension of stacking and leaching activities at Oxford, the continued suspension of Gold Room operations in the ADR plant, as well as the impact of an assumed decline in copper prices and the impact that has on our Mount Milligan operation. We will speak to each of these in more detail later on in this webcast. In terms of our development projects, the advancement of the Goldfields development project continued in the second quarter. we have initiated a resource expansion and infill drilling program that targets some 65,000 meters of diamond drilling and reverse circulation drilling. Our plan here is to issue an updated resource estimate for the project in 2023, with a feasibility study shortly thereafter. With regards to the senior leadership, we are now in the final stages of recruiting a new chief operating officer, and we plan to provide the market with an announcement on that shortly. From a liquidity perspective, reflecting the strength of our balance sheet, the board again approved a consecutive quarterly dividend of Canadian seven cents per share. Lastly, in respect to our molybdenum business unit, evaluations for surfacing value, sorry, evaluations for surfacing value opportunities remain an ongoing work in progress item. Just moving to slide five, just in terms of our environmental social governance highlights. There's a lot of exciting environmental social governance updates on this slide, and I won't go through them all, but I do want to note that on August 4th, Sentera published its 2021 ESG report. This report demonstrates the great strides that we are taking to continue to strengthen our environmental social governance performance, and I feel it is reflected in several achievements noted throughout that report. Lastly, I just want to highlight the successful completion of our year two responsible gold mining principles assurance work. but the organization is on track to achieve conformance with the responsible gold mining principles before the end of 2022. Just moving to slide six, touching on Mount Milligan operating highlights now, I think it is important to note that our 2022 gold and copper production outlook for the mine has not changed. We are still on track to meet our gold production guidance of 190 to 210,000 ounces for the year and to meet our copper production guidance of 70 to 80 million pounds for the year. During the second quarter, Mount Milligan continued to deliver strong results, producing some 42,728 ounces of gold and some 17.4 million pounds of copper. In terms of the corresponding oil and sustaining costs on a byproduct basis at Mount Milligan, the result came in at $1,245 per ounce for the quarter, but was $641 per ounce for the first half of this year. The company's second quarter oil and sustaining cost result was impacted by the meaningful decline in copper prices, again remembering that copper is recognized as a byproduct credit. Second quarter copper credits were effectively reduced by some $560 per ounce in relation to a negative mark-to-market adjustment on our provisionally priced copper contracts that were open as at the end of the quarter. Darren, our Chief Financial Officer, will speak to this in more depth in the financial highlights section of this presentation. The Mount Milligan mine posted a solid cash flow result in the second quarter. We generated, in terms of cash provided by mine operations, we generated some $81 million, and in terms of free cash flow, the mine generated $58 million for the quarter. Mount Milligan's stage flotation reactors were commissioned in early May, during the second quarter, and we're expecting to see improved future gold and copper recoveries at the mine as a result. By way of example, the month of June actually had the highest monthly copper recovery that was seen in the mine's history. Lastly, Mount Milligan's life of mine planning work continues to progress with a focus on optimizing some meaningful life of mine extension opportunities relative to our go-forward equipment fleet capacity requirements, our tiling storage facility requirements, as well as some other identified opportunities and trade-offs. Just moving to slide seven. At Oxsert, as already mentioned, as of March 2022, our Gold Room operations remain suspended, and the company has initiated suspension of stacking and leaching operations as of August 10th, as a result of a lack of access to activated carbon. Mining and crushing are currently ongoing and the company is evaluating whether these activities should continue while we pursue an amendment to our environmental impact assessment permit to align permitted limits with current operational plans. As at June 30th, Oxfurt had stored golden carbon inventory totaling some 58,469 ounces. The weighted average cost of this inventory on a per recoverable ounce basis was approximately $444 per ounce. The ADR mercury abatement retrofit is expected to be complete by the end of this calendar year, and we do assume that current inventoried golden carbon will be processed in 2023, assuming the ADR plant resumes full operations with regulatory approvals in place. Meanwhile, we do continue to consider other alternatives to monetize the golden carbon. Oxfam is currently in the process of preparing a new environmental impact assessment application which will clarify the heat lead stacking capacity of the mine and the actual amount of activated carbon required for usage in our operations. We expect to be submitting this new EIA application by the end of this month, and we'll be pursuing its approval as quickly as possible. Just moving on to slide eight, just in terms of our guidance and our revised outlook, As I mentioned earlier, the company has revised its outlook for 2022 as a result of initiating the suspension of stacking and leaching activities at the Oxford mine, in addition to the continued suspension of Gold Room operations. This is also in addition to the changes that we've made to our assumed spot copper price moving forward. With regards to copper prices, we have conservatively reduced the second half forecast assumption from $4 per pound to $3.25 per pound. I would note that should copper prices stay at the current spot levels for the remainder of the year, the company's oil and sustaining costs as well as its cash flow outlook would see a positive impact versus this revised guidance. You will see we have offset production at 55,000 ounces for the year, and this really represents the actual Q1 production result. This is revised down from our original guidance of 210 to 240,000 ounces for 2022. In terms of the company's consolidated oil and sustaining costs on a by-product basis, our guidance has increased to $1,000 to $1,050 per ounce, which is an increase from previous guidance of $600 to $650 per ounce. And this primarily reflects the lower gold output contributions from OXA, as well as the reduced copper price assumptions at Mount Milligan. As already mentioned, guidance for gold and copper production at the Mount Milligan mine remain unchanged from the previous guidance. Likewise, consolidated capital expenditures, costs relating to the Melidibum business unit, and corporate administration costs also remain unchanged from previous guidance. Expiration guidance has been updated to $50 to $65 million, and this reflects the addition of $15 to $20 million in spending and investments for the Goldfields Development Project following the addition of this project to our portfolio in Q1 of this year. Just moving on to slide 9. Here on slide 9, this reflects the revised 2022 gold production guidance graphically on a quarter-by-quarter basis. The guidance is updated to include only year-to-date gold production at the Oxford mine of 55,000 ounces, in addition to Mount Milligan's full-year gold production outlook. As noted previously, Mount Milligan gold production guidance remains unchanged from the original outlook of 190,000 to 210,000 ounces. The company assumes completion of the mercury abatement retrofit at the Oxford Mine in late 2022, and this will then allow the restart of the Gold Room in 2023, subject to the relevant regulatory approvals being in hand. Just lastly on slide 10, just in terms of copper production, as previously noted, the company's copper production guidance is unchanged from the original outlook of 70 to 80 million pounds for the full year. With that, I'm going to pass the presentation over to Darren Millman, our Chief Financial Officer, and Darren will walk through some of the key financial highlights.