Centerra Gold Inc. (CGAU) Q1 2017 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by and welcome to the Centerra Gold 2017 First Quarter 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. [Operator Instructions] As a reminder, this conference is being recorded Tuesday, May, 2, 2017. I'd now like to turn the conference over to John Pearson, Vice President, Investor Relations. Please go ahead, sir.

Thank you, Jennifer. I'd like to welcome everyone to Centerra Gold’s first quarter conference call. Today’s conference call is open to all members of the investment community and the media in listen-only mode at first, then we’ll turn it over for questions and answers after our presentation. There are slides available on Centerra’s Web site, under the upcoming events Webcast tab to supplement the speakers remarks. So after the formal remarks, the operator will give the instructions for asking a question and then we will open the phone line up to questions. Please note that all figures are in U.S. dollars unless otherwise noted. Joining me on the call today is Scott Perry, Chief Executive Officer; Frank Herbert, President; Gordon Reid, Chief Operating Officer; and Darren Millman, Chief Financial Officer. I'd like to caution everyone that certain statements made on this call maybe forward-looking statements and as such are subject to known and unknown risks and uncertainties. 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 both the news release and the MD&A. For a more detailed discussion of the material assumptions, risks and uncertainties, please refer to our news release and MD&A issued last night along with the unaudited financial statements and notes and to our other filings, all of which can be found on SEDAR and the Company’s Web site. And now, I will turn the call over to Scott.

Okay. Thank you, John, and good morning, everyone and thank you dialing into our first quarter earnings conference call. As John mentioned, we have a accompanying presentation that’s on our Web site, and I’m just starting off with Slide #5 of that presentation deck. As always, we'd like to start off with safety, but unfortunately this time we’re going to be starting off in a bit of a down beat, sort of beat if you will, outside of the quarter on April 11, the most unfortunate work accident took place at our Kumtor operation that tragically resulted in the loss of life of one of employees that being a key member of our Kumtor mechanical team for the last eight years. We at Centerra are deeply saddened by this event and we extend our deepest condolences to the individual's family, friends, and colleagues. our sites. So it goes without saying: Again, we are deeply saddened by this event and we extend our deepest condolences to the individual's family, friends, and work colleagues. Moving into some of the operating results for the first quarter. Q1 really represented the first quarter where Centerra could showcase two world-class lower cost quartile assets. We are very excited, very pleased to now have Mount Milligan in the portfolio. When you look at the Q1 results that we posted in some of the gold output, copper production unit costs indicative sort of profitability, we think it's an asset which is going to very favorably complement our existing world-class asset Kumtor. Looking at some of the highlights here, you can see during Q1 we generated net earnings of $57 million or $0.20 per share and that -- what was really underpinning that strong level of profitability was the gold output and the copper output on a companywide basis. So with strong gold production of 172,000 ounces and again strong copper production of 12.6 million pounds, I think what really distinguishes our portfolio and our asset base is that our companywide owned sustaining costs. Looking in the fourth bullet point here, you can see on a companywide basis our cost of gold production all-in sustaining costs of around $756 per ounce. That’s very competitive. That definitely positions our portfolio in the lower cost quartile. And I think importantly it's showcasing a portfolio that should be profitable at all phases of the metal price cycle moving forward. What’s really driving these lower costs is Mount Milligan. In Q1, our all-in sustaining costs per gold ounce came in at $530 for the quarter. Again, that’s world-class, that’s very competitive. And one of the things I want to highlight, if you reference our guidance for the full-year, we’re expecting consecutive quarter-over-quarter increases in our gold output. Again, in the back half of this year it's a back ended gold production profile. Sometimes with that all-in sustaining unit costs we'd expect it to continue to benefit from the growing gold production denominator. The next bullet point there just in terms of operational cash flow generation. Strong quarter both at Kumtor and Mount Milligan. Kumtor generated around $102 million of positive operating cash flow before working capital. Likewise Mount Milligan generated $32 million of positive operating cash flow before working capital. Again, referencing our guidance as we grow our metal output over the course of this year, we expect that level of cash flow generation and indicative profitability to grow as well. Just last point here on Slide 5. Obviously, we’ve our news release today. We are reconfirming our outlook to 2017 both in terms of production and cost guidance. If I can just transition to the next slide of the presentation deck, just on Slide #6, is a waterfall chart here in the top left of Slide 6 that just looks to graphically illustrate our cash flow statement for the quarter. You can see we commenced the quarter with $409 million in aggregate cash. , : And the one thing I’d note, which Darren will talk to, is you can see during the quarter we paid down $25 million of our EBRD revolving line of credit facility and then we also have the $12.5 million principal amortization payment on our Thompson Creek facility. Three months in aggregate, if you would add back these two debt facility principal repayments, the closing cash balance of $358 million to be very consistent with the opening cash balance in terms of where we started the year. The pie chart here in the top right, just again sort of summarizes the treasury position for the Company. You can see our debt $438 million. This is down from $475 million at year end. And you can see our aggregate cash position, we have restricted cash of $277 million and unrestricted cash of $81 million. that was being -- that’s being: We continue to engage on a very constructive basis with the leadership of Kyrgyzstan. The spirit of this engagement is we’re trying to work towards putting in place an all-in encompassing dispute resolution agreement that would see all of these restrictions released and would see this cash becoming fully unencumbered. I think there are some things that both ourselves and the leadership of Kyrgyzstan would point to symbolically that the level of engagement is constructive and proceeding well. What I would point to is particularly our mine permits as you may know we’ve got all of our permits in place for the full calendar year. Part of this year's mine plan, we’re now developing the Sarytor open pit deposit, which is adjacent to our existing open pit operation that’s fully permitted. We recently just received our permit to expand our tailing storage facility as well. So in terms of the dynamic, symbolically good things are taking place. This level of dialogue continues and cautiously optimistic that we should be seeing some positive news flow here at some point this year shortly. The chart in the bottom right, this is our retained earnings profile. As at the end of Q1, you may note in the balance sheet that we finished with positive retained earnings in excess of $900 million. Obviously, that speaks to the strong profitability at Kumtor, but again something that’s going to be favorably complimented by the high-quality low-cost production from Mount Milligan. With that, I will pause and I’m going to pass it over to Gordon Reid, our Chief Operating Officer and walk us through some of the production highlights.

Thanks, Scott. In the quarter there was one reportable injury in the process of welding two pieces of HDPE dewatering together, a contract worker at Kumtor broke his collarbone. And he fell to the ground after being struck by a section of dewatering pipe being slung under an excavator. The total reportable injury frequency rate for the quarter and year-to-date is 0.1. On April 24, Mount Milligan achieved 1 million man-hours work with total loss time incident. This is a significant achievement and is a testament to the dedication to safety of the Mount Milligan workforce and leadership. Work safe, home safe continues to be rolled out across the organization. It is our expectation that all Centerra employees will receive the work safe, home safe training by the end of the year. Moving to operating results/ For the quarter, on a consolidated basis, we produced 172,644 ounces of gold at an all-in sustaining cost of $756 per ounce. Copper is treated as a byproduct and the revenue from the 12.6 million pounds produced at Mount Milligan in the quarter is included as an offset to the all-in sustaining cost. Kumtor produced 127,400 ounces at an all-in sustaining cost of $762 an ounce and Mount Milligan produced 45,244 ounces at an all-in sustaining cost of $530 per ounce. Consolidated production guidance for 2017 is unchanged at 715,000 to 795,000 ounces of gold produced at an all-in sustaining cost of $743 per ounce to $824 per ounce on a byproduct basis. Kumtor will produce 455,000 to 505,000 ounces of gold and Mount Milligan will produce 260,000 to 280,000 ounces of gold. Copper production will be 55 million to 65 million pounds of copper. Unit mining cost at Kumtor in the first quarter was a $1.22 per ton mined. Mining costs were favorably impacted by improved haul roads that have resulted in improved tire life and higher average haulage deeds by the addition of greedy boards, which has increased payload by as much as 10 tons per load by a favorable [indiscernible] haulage profile resulting at lower fuel consumption and by other business improvement initiatives. Kumtor continues to benefit from the low diesel fuel prices. Mine production at Kumtor remains on track to access the Sarytor ore in the second half of the year, which is scheduled to provide mill feed in the fourth quarter. Milling cost at Kumtor was $10.05 per ton for the quarter. At Mount Milligan, average unit mining costs for the quarter was $1.60 per ton. Mine production is ahead of target as mining has been decoupled from processing, allowing for the buildup of ore stockpiles that will allow us the flexibility to blend ore feed to the mill to provide a consistent feed, thereby improving metallurgical recovery and to pull grade forward. Milling cost of Mount Milligan was $4.35 per ton for the quarter. At mount Milligan in the first quarter, we undertook an operational review with subject matter experts from across the organization that identified several value adding projects that when implemented we anticipate will result in improved recovery, throughput, and unit cost performance by year end. The molybdenum business had a solid quarter selling 4 million pounds of molybdenum products into the market at an average sales price of $8.52 per pound, resulting in 1.7 million in positive operating cash flow before accounting for working capital changes. The business model of [indiscernible] processing and the purchase and upgrade of substandard molybdenum concentrate for further processing and resale to offset the cost of care and maintenance of the Endarko and Thompson Creek mines is demonstrated to be successful. We are encouraged by the strengthening of the molybdenum market since our acquisition of Thompson Creek mines in our [technical difficulty]. I will draw your attention to Slide #10. In Turkey, the powerline being constructed by TEIAŞ, who is the state power authority to our Oksut Project, is approximately 75% complete and the picture, the photos on slide 10 show the polls and the substation that’s being dedicated to our OMAS Project. We have the necessary permits in hand to continue exploration drilling on our Oksut land package. This drilling is expected to commence in the second quarter. We remain confident that the final permit required to begin construction in Oksut is forthcoming. I will now turn the meeting to Darren.

Thanks, Gord. Good morning, everyone. For those following on the slide deck, I’m on Slide 12. Total revenue from operations during the quarter was $285 million. Gold revenue increased 200% to $222 million with Kumtor's revenue increasing $264 million or a 124% increase from the prior year quarter. This was largely attributable to this additional 73,000 ounces sold during the quarter -- quarter was a $11.72. This accounts for both third-party gold sales and the gold stream. As mentioned by Gord, the molybdenum business unit had a solid quarter, selling 4 million pounds of molybdenum products with total sales of $34 million. Operating cash flow before changes in working capital increased to $118 million. While Kumtor operating cash flow contributed a significant share of this cash flow, I would highlight the addition of the Mount Milligan operations with 32 -- with a $32 million contribution is meaningful when you also consider that only $26 million total capital expenditure is planned for the Mount Milligan operations in 2017. Our net earnings was $57 million or $0.20 per share. I will just move to Slide 13 for those following. During the quarter, we repaid $25 million of the EBRD facility and $12 million of the term facility. In January, we also commenced the copper hedging program. The objectives were set -- were to set levels of minimum cash flow generation from the copper production, while still providing potential exposure to copper price movements. The two forms of copper hedges into for 2017, a forward contracts with contract process outstanding ranging from $2.68 to $2 70 per pound and zero cost collars process ranging from minimum $2.25, up to $3.21 per pound. More details are provided on Page 11 of the news release. In April, we also entered into a zero cost collar hedge for gold production at the Mount Milligan mine for 2017, with a minimum process at a $12.25 per ounce and an average up to $13.71 per ounce. These represents approximately 10% of the midpoint of the on stream gold production. You would note that the cash balance reduced to $358 million at the end of the first quarter. This was expected. Based on forecast, we expect both mine sides, the cash flow to considerably grow throughout the year with Q4 2017 playing through the highest level production at both mines. With that, I will hand it to Scott.

Okay. Thank you, Darren. Just referencing Slide 15, which is the last slide in our deck. You can see the pie chart there in the top right, just really illustrate the transformative impact with the addition of Mount Milligan following the Thompson Creek acquisition into our portfolio and our operating asset base. Very transformative in terms of recalibrating our geopolitical risk profile in terms of where that asset value -- as we’ve been demonstrating with these sort of a [indiscernible] rule Q1 results where we’ve got a full quarter contribution from Mount Milligan, we’re also seeing the transformative impact that’s having on our profitability, our level of cash flow generation, all-in sustaining unit cost as well as our overall gold production profile, we think it's a pretty set -- pretty competitive set of results. In terms of the business plan moving forward, that's really illustrated by the waterfall chart in the bottom right, as you can see with these two blue increments being Kumtor and Mount Milligan, this is now our asset base moving forward. We think both assets are pretty close to world-class, just given the level of gold production, the low cost significant asset life moving forward and particularly at Mount Milligan, kind of we’ve a delineated reserve asset life of some 21 years. We think that’s going to be a good asset to really build the Company around. In that regard we will be looking to increasingly deploy the cash flows from the profitable production at Kumtor and Mount Milligan and we will be looking to build out our project pipeline, which is illustrated by the gold increments here being Oksut in Turkey, Gatsuurt in Mongolia and then our Greenstone joint venture project here in Canada. So with that, I think we’ve made sense now. Just pass the call back over to Jennifer and we management will be more than happy to take any Q&A.

Thank you. [Operator Instructions] And our first question comes from the line of Rahul Paul with Canaccord Genuity. Please proceed with your question.

Hi, everyone. At Kumtor that was a really strong quarter. Do you have any more with the high grade stockpiles from cut back in '17 that could go through the middle in Q2?

Yes. We actually break our stockpiles down into five or six stockpiles that vary based on grade and metallurgical characteristics like high carbonaceous material or not. In terms of our highest grade stockpile, we still have about 300,000 tons of averaging 20 grams per ton that we blend into the feed at about 1,500 tons a day. We bring up the total tonnage to the 17,000 by adding lower grade material from the lower grade stockpiles. But in the terms of the highest grade stockpile, yes, we sold out 300,000 tons of 20 gram material.

Okay, thanks. And then just moving on to Mount Milligan, it looks like you’re expecting much improved results by Q4, specificity on the throughput when would you expect the plant to ramp-up to [indiscernible] capacity you’ve delivered 60 to 1,000 tons a day and have you seen any specific issues given commissioning of the secondary crusher?

With respect to the secondary crushers, they’re fully operational and they’re part of our comminution circuit. Now we continue to evaluate the comminution circuit to try to optimize proceed to get the most throughput and not reduced recovery. We did have some slight maintenance issues in the first quarter, just nagging issues, nothing major including the freezing of the fine of the screens at the secondary crusher. But that’s been resolved [indiscernible] and because its warm now, but also for next winter we put our system in place, so that those mines don’t freeze. We continue to see incremental improvements in the processing plant and we anticipate achieving guidance by the end of the year.

Fair enough. So, but specifically on a -- from a throughput standpoint, I guess, should I expect the plant to be operating at an increased capacity towards at the end of the year?

We expect it to be operating at an increased capacity at the end of the year.

Okay. And then just maybe a question for Scott. On the disputes at the Kyrgyz government, you mentioned in the press release that you expect the arbitrator to enter a decision mid 2017. Is that based on typical timeline, something like this, or is that these done any other specific developments or other indications?

I don’t know if I [indiscernible] your question, but I think if your question was with regards to the interim measures of applications as part of the international arbitration …

Yes.

… yes I think as part of our disclosure we’ve -- we and the other party have made all filings and it's now essentially with the arbitrator. And in terms of an indicative timeline you could be looking at anything from six to eight weeks before she may be in a position to opine. So all sort of filings have been made and we really just in a holding pattern right now.

So I guess the timeline that you indicated sort of mid 2017, it looks like that’s being done, the typical timeline for rulings of this nature? Is that correct.

In terms of this specific interim method of application that timeline that we put forward remain valid.

Okay. Thanks, Scott. That’s all that I had.

Our next question comes from the line of David Haughton with CIBC. Please proceed with your question.

Good morning, Scott and team. Thank you for taking the question. Just looking at the Kumtor sequencing through 2017, you’re running on the stockpiles in the first quarter, you got a little bit of stockpile [indiscernible] into the second quarter. And then you get into the Sarytor pit at the back end of the year. So would we see a bit of a dip in production in the second quarter, a bit lower in the third quarter and then a very big step up in the fourth quarter, is that kind of profile we should be thinking about?

Yes, well maybe I didn't explain myself well on the earlier question. We have about 11 -- 10 million to 11 million tons of material in the stockpiles that is broken into various grades. The highest grade stockpile is the 20 gram per ton stockpile. And we’ve only see that in a 1,500 tons a day. So that's going to last through the year. So we don't expect a significant dip in grade during the year. There will be a slight gradual decline in grade. We anticipate feeding Sarytor ore in the fourth quarter where we will see a bump up in grade because of that ore.

All right. So the fourth quarter would be expected as the best quarter for the year then most likely?

It will be the best quarter for the year.

Okay. That’s good.

30% of our gold will come in the fourth quarter.

Got you. And as far as that strip ratio for the year goes, I suppose that -- would it then start to decline as we move into the back half of the year?

It's hard to talk about a strip ratio, because we’re not mining ore in the central zone. And the -- so there is no ore to be mined, so if you don’t have the ratio in the Sarytor deposit the ore is near surface and I don’t remember the strip ratio at the top of my head, but it's not a large strip ratio.

Okay. So, yes, probably the more accurate description is that waste movement then?

Yes, we will be moving waste all year in the Central pit.

Okay. You had mentioned also some cost-saving initiatives and also a rethinking at Mount Milligan, potential for improvement in recovery. Do you have a target for where that recovery could go to?

I don't want to speculate on that. I mean, the improvements we've made -- we're seeing some improvements over the grade recovery curve, and we hope to continue that. But I don't want to speculate where that might go at this time.

Okay. We’re kind of in the -- for the couple we’re in the high 70s, is it possible to go into the 80s?

Again, I’d rather not speculate at this time.

Okay. Over to Turkey, what’s the holdup with the pastureland approval?

David, its Scott. I mean, why you’re referring the question that’s difficult to answer. What I can say is that in terms of our social license and what have you, we’ve very good support. I think you’ve seen that in terms of our track record today be it our environmental impact assessment approval, forestry permit approval, GSN business license approval, most of these things are being delivered in record time. We believe we were in very good stead midyear last year to receive the last remaining permit, which is the pastureland use permit. And then as we all know, the attended military coup took place. Since that event there has been a lot of uncertainty in terms of permitting timelines and what have you, all I can say is there is nothing deficient without permit application or what have you. We know it's with the minister for consideration along with a number of other permits from other business entities in Turkey. It's really just a matter of sort of being patient right now. The one thing we'd point to Dave, as Gord mentioned in his remarks is, the National Power Utility Company in Turkey is currently constructing the powerline Oksut Project, and I don’t know if you look to the presentation deck. But pretty impressive is that 26 kilometers of powerline infrastructure being put in place. Powerline substation getting ready to string the cable as we speak. We have a sole customer on that line [indiscernible] power consumer. So again that gives us a lot of confidence or reassurance that this is not a matter of if we’re going to receive the permit, it's more a matter of when we’re going to receive the permit.

Okay. So it looks like [indiscernible] got the area of pastoral permit, so I guess things are starting to move along from the bureaucratic point of view. Is that a reasonable way to think about it?

Yes, I think we as an industry certainly would -- normally take confidence from that. It's obviously [indiscernible] to see that.

And see that it gets -- so it's getting an update on its study numbers, do you plan any such thing for Oksut? A refresh on some of the numbers there?

No, I don’t think. They’re not with Oksut, because the feasibility was published in February 2015. Generally speaking, it's still pretty current other than obviously the Turkish lira exchange rate devaluation. But in itself we don’t see that as a requirement for publishing or refreshed version.

Right. Okay. That’s it from me. Thank you.

[Operator Instructions] Our next question comes from the line of Robert Reynolds with Credit Suisse. Please proceed with your question.

Good morning, guys. Just on the operational review team that you have mobilized at both of your operating sites. I was hoping for a little more color on what you might be looking to get out of that program. I understand that Mount Milligan focused on recoveries and throughput, but just in terms is there anything over and above what would already be included in guidance? As well from a shorter-term perspective, are there any restructuring costs that we should be looking for?

The work from the operational review team was meant to leverage their knowledge and experience to try to identify additional value. Most of this additional value is operational short-term gains. Some of them have our longer term gains that we will have to build and will require capital, those would have to be built into budgets going forward. But certainly the majority of the gains we saw are low-cost, short-term implementation that we hope we would implement by the end of the year.

And just from my perspective, Rob, in terms of the benefits that we’re going to be pursuing, it's part of the operations review team exercise. None of it is reflected in our guidance. As Gord mentioned in his presentation remarks, we really didn’t marshaled this team and the associated resources in Q1 of this year. But without a doubt they’re looking at Kumtor as an operating business unit, they’re looking at Mount Milligan, and they’re looking at all the different unit operations, all the systems, all the processes, what’s best practice, what’s good, what are things that Kumtor upgrade that we can roll out of Mount Milligan and vice versa. And they’re looking at everything. The productivities in the mine operation, productivities in the mill, unit cost efficiencies, supply-chain management, you name it, just a whole number of things, that’s all part of Centerra's business process improvement system. It's still early stages. Really identified a large number of initiatives and each initiative have a certain incremental benefit that we will be pursuing. But also each initiative have a certain ease of capture as well and so we have to prioritize these two really determine which ones we’re going to go after in the short-term versus the medium-term. And that's why it makes it difficult to answer your question, but because we’re still going for that evaluation. But it's definitely upside or above what reflected in our guidance moving forward so.

So are these external consultants you brought in or is it an internal team?

No, it's an internal team. The team is self comprises what we -- the terminology we use as the subject matter experts from every discipline within the Company. So we’ve got representatives from Kumtor, from Mount Milligan, from Toronto head office as well as molybdenum business unit. And we put together this team and this team -- the first operation they went and reviewed was Kumtor and the exact same team, same composition went to Mount Milligan. We have had third-party for a facilitation guidance in terms of administering this programming and getting it kick started. But it is definitely a internal exercise.

Okay. And then just on the Kumtor mill throughput, still above 17,000 tons per day quite a bit above your technical report from a few years ago, but sort of [technical difficulty] able to achieve over the last year and a bit. Is 17,000 plus what we should be looking for the remainder of the year? Are there any extended shutdowns to consider? And, I guess, going forward longer term is 17,000 tons per day really the standard mill throughput to look for out of Kumtor?

The production that we experienced last year and so far this year we believe is sustainable. There are just normal routine shutdowns, so we budgeted 96% availability at Kumtor.

Okay. And then, maybe a clarification question on the mining costs per ton at Mount Milligan. I think in the opening remarks it was mentioned to be a $1.60, but the press release shows a $1.38, so I just wanted to clarify which is the correct number? And then, in either case quite a bit lower than I believe, maybe what had been previously mentioned as a mining cost there. So if you could talk about what's driving those better mining costs at Mount Milligan, and if that is sustainable?

Yes, the -- with $1.60 the …

$US1 versus Canadian dollar.

Perhaps. Anyway, perhaps the variance is U.S dollars versus Canadian dollars. I am not exactly sure, but our mining costs at Mount Milligan have improved because we decoupled the mine from the mill. But what we've done is we're mining to capacity, we're stockpiling the ore, so that we can blend a better feed to the mill and we're mining to the plan and actually we are ahead of target in the mineable 5%, ahead of target. In the past, the strategy was to mine the amount needed to put the tons through the mill and that with didn’t have substantial stockpile, so we’ve changed that strategy. So that that's tended to reduce the unit operating cost, because the denominator went up.

So as we go forward, should we see, I guess, stockpiles continuing to build at Mount Milligan and perhaps that part of the inventory buildup in the working capital is lower, is that an optimal stockpile level you're trying to get to you there?

We are limited by the amount of space we have for stockpiles, but that’s the limiting factor and we don't expect to hit that limiting factor for a few years. But otherwise we will continue to mine the rate we need to get that to be able to supply enough stockpiles that we can blend to the strategy we want to blend.

And then just not to monopolize the time, but one final question. It was mentioned that you plan on starting dividends from Centerra BC Holdings, I guess, the Mount Milligan subsidiary in the second quarter, which I understand would require an equal early repayment on the term facility. How should we think about the amount you plan to dividend? Will it essentially be all access cash that would be held in the Centerra BC sub will be dividend to the ultimate parent company or what's your strategy around that fund flow?

Yes, we will -- its Darren here. We will continue to monitor on a quarterly basis. At this stage we are looking to ensure obviously the required working capital stage in the Mount Milligan operations and that whole business units. So at this stage we’re looking to maximize the cash generated [indiscernible] parent.

Okay. That's all for me. Thanks.

Our next question comes from the line of Michael Siperco with Macquarie. Please proceed with your question.

Thanks everyone. Could you just talk a little bit more about the potential outcomes from the arbiters decision midyear as you stated? What remedy powers that they have? Could we see all that cash get unrestricted? And then following from that, do you or the Kyrgyz government have any recourse or means to appeal following that decision when it comes?

This is Frank Herbert. I think the best response to your question really is to point out that the inter-measures application is an application to the arbitrator to ask her to set aside or to stay, that is to suspend the relevant Kyrgyz Republic Court decisions. It's again an interim step. It's not a final decision on the arbitration. Of course as Scott has said, we don’t yet have a decision from the arbitrator on that matter. And it really wouldn't be appropriate for me to speculate about that until we have the decision of the arbitrator. Obviously, I think when that is forthcoming and we hope middle of this year we'd be speaking to that publicly and really I think it -- until we have that order and have read it and understood it and spoken about publicly, I don't think it would be helpful for me to speculate. Broadly speaking that is a final decision of the arbitrator. There is no court of appeal or a similar appeal from the decision of the arbitrator to her decision.

Okay. Fair enough. Just a follow-up. Would it be fair to say if those -- if the Kyrgyz claims are stayed, however, that following from that at least some of the cash that's restricted would become unrestricted or is that not something you want to comment on at this point?

That is part of the relief that we have -- Centerra have requested from the arbitrator. And again the answer to your question depends entirely on what order or award she chooses to make in the circumstances. So again, it is possible that is the outcome, but until we have her decision I don't think I can speculate further about that.

Understood. Thanks. Maybe one follow-up from there. I guess we're making assumptions on assumptions now, but assuming that for one reason or another the cash from Kumtor is still restricted into the second half of the year following the award. Can you talk a little bit about your corporate liquidity going forward, any flexibility that you may have on debt repayment, especially as I understand the capital leases that mature within the next 12 months, any flexibility from that perspective net of course of the dividend that you'll be receiving from Mount Milligan?

It's Darren again. There is some flexibility there. I’m not going into the details, but we do have strong relationship with allowed providers cap included as well, which you’re referring to there, which is during February of next year. So we do have some flexibility. We are working on those plans, but at this stage, we’re comfortable with liquidity in the near future.

Okay. Thanks very much. That’s it from me.

And we’re showing no further questions at this time.

With that, if there is no further questions, we will thank everyone for being on the call. Management will be around today. We do have our annual meeting at 11 o'clock. So if you’re trying to get a hold of us, we won't be in the office. But thank you for your attendance on the call.

Ladies and gentlemen, this does conclude the conference call for today. We thank you for your participation. And as such, you please disconnect your lines.