Ladies and gentlemen, thank you for standing by. And welcome to the Centerra Gold 2017 Second 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 [Operator Instructions]. As a reminder, this call is being recorded Tuesday, August, 1st, 2017. I would now like to turn the conference over to Mr. John Pearson, Vice President Investor Relations. Please go ahead, sir.

Thank you, Carlos. I would like to welcome everyone to Centerra Gold’s second quarter conference call. Today’s conference call is open to all members of the investment community and media, first in listen-only mode and then we will open it up to questions after the formal remarks. Also, slides are available on Centerra’s Web site to supplement each speaker's remarks. Following the formal remarks, as I've mentioned, 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 we're using on this call are in U.S. dollars unless otherwise noted. Joining me on the call today from Mount Milligan actually is Scott Perry, Chief Executive Officer; Frank Herbert, President; Darren Millman, Chief Financial Officer, and Gordon Reid, Chief Operating 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, 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 combined news release and MD&A. For a more detailed discussion of the material assumptions, risks, and uncertainties, please refer to our news release, the MD&A, which were 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. At this time, I will turn the call over to Scott.

Okay. Hi John, and good morning, everyone and thank you dialing into our earnings conference call. As John mentioned, the management team and the Board of Directors are actually up Mount Milligan today. We’ve been up here for our routine Board meeting, and then we’re spending a day after just showcasing the assets to our Board of Directors, pretty excited as we’re doing so, particularly so given we think it's an asset that’s going to be underpinning a very strong future to Centerra. I'm going to be referencing our presentation from the Web site, as John mentioned, and I'm just starting off on slide number five, which is entitled 2017 corporate update for second quarter. First and foremost, just in terms of safety as we’ve spoken about in previous calls, we continue to focus on rolling out our Work Safe Home Safe program, and we’ve had great penetration during the quarter, particularly at Kumtor. And including context, with Kumtor, we had some 2, 600 employees and as of couple of weeks ago, we’ve now cycled every single employee for this training program. So kudos and it's commendable to the management team. At Kumtor just in terms of solid progress we’re making there. In terms of financial results, Darren will speak to these in more detail. But in terms of headline net earnings results, it was $0.08 per share, which was inclusive of $41 million carrying value adjustment on our Gatsuurt project. But I think all-in-all, demonstrated the significant profitability, especially relative to the prior year corresponding period. In terms of metal output, we had very strong gold production of some just under 196,000 ounces likewise in terms of copper production, which is approximately 15 million pound. The strong level of production certainly resonates in terms of our unit cost profit…

Thanks, Scott. Good morning, everyone. As Scott mentioned, Work Safe Home Safe continues to be rolled out across the organization. A 100% of our employees at Kumtor have completed the initial training; Mount Milligan's employees will be 100% complete in September. We have begun the training in our molybdenum division down at Langeloth outside Pittsburgh, and Turkey and Mongolia will follow soon afterwards. In the quarter, there were three reportable injuries. On 11th April, at Kumtor, we've already reported to you about the fatal injury to Mr. [Latico], that official investigation was completed and closed out. The results of two medical aids, one is our TC mine Idaho and one at our Mount Milligan mine. At the TC mine, a medical aid occurred when a maintenance worker was splashed near his eyes by caustic solution during the repairable leak and our medical aid at Mount Milligan occurred when an environmental technician slipped on a wind falling tree, which resulted in stitches. Both employees are expected to recover fully. The total reportable injury frequency rate was 0.29 per quarter and 0.20 for the year. Moving to operations. For the quarter, on a consolidated basis, we produced 195,719 ounces of gold at an all-in sustaining cost of $742 per ounce. Copper is treated as a byproduct, and the revenue from the 15.1 million pounds produced at Mount Milligan in the quarter is included as an offset to the all-in sustaining cost. Kumtor produced 138,623 ounces at an all-in sustaining cost of $780 per ounce and Mount Milligan produced 57,096 ounces at an all-in sustaining cost of $473 per ounce. Consolidated production guidance for 2017 has been revised upwards to 785,000 to 845,000 ounces of gold produced at an all-in sustaining cost of $693 per ounce to $747 per ounce on a byproduct…

Thanks, Gord. Good morning, everyone. For those following on the slide deck, I'm on slide 13. Total revenue from operations during the quarter was $275 million. Gold revenue increasing 37% to $220 million and Kumtor's revenue increasing to $169 million with an additional 7,000 ounces sold compared to the comparative period. Mount Milligan operations contributed $51 million and $27 million in gold and copper sales respectively from three concentrate shipments made during the quarter. A total of 188,225 ounces of gold was sold during the quarter and 14.4 million pounds of copper sold. The average realized cost per ounce was 1,165 for the quarter. This accounts for both third-party gold sales and gold streams from the Mount Milligan mine. Operating cash flow before changes in working capital increased to $122 million from $60 million in the prior year comparative period. $23 million, or $0.08 per share were earned during the quarter, and this also includes the Gatsuurt payment noted by gold. On July 31, we agreed terms with Centerra BC Holdings facility to increase the revolver credit facility by $50 million to $125 million. The amendment to the facility was put in place to provide greater financial flexibility in the short-term. The other key change is we are now committed to make distributions up to Centerra without a matching prepayment requirement on the term debt. One condition for the executions under the amended revolver is to enter into a two year hedging program inclusive of existing copper and gold hedges with a target of minimum average cost of gold at 1,200 per ounce and copper having minimum average of $2.50 per ounce. The new program will be heavily weighted towards both copper and gold hedges. As highlighted by Gordon, we have positively revised production and cost guidance at Kumtor and reaffirmed our Mount Milligan guidance. You will note in tables below on slide 14, the year-to-date and for the second quarter, the consolidated all-in sustaining cost achieved were under 750 per ounce, positioning Centerra well in the lower cost quartile compared to our peers. Given our low cost operation both at Kumtor and Mount Milligan mines generated significant cash flow with $76 million and $51 million respectively generated both from operations. You will note in the table below the overall cash balances have increased to $401 million at the end of the second quarter with our debt levels reducing today by $60 million to $447 million. Based on forecast, we continue to expect both mines to generate significant cash flow for the remainder of 2017 with Q4 of 2017 still planned to see the highest level of production at both mines. I'll now turn it back to Scott to wrap up.

Okay, thanks Darren. Just referencing slide 17 in terms of wrapping up, I think really the key bullet point to reference here is the third bullet point on the left of the slide here. As Darren mentions, I guess with the overnight results presenting reporting very strong production, strong cost performance and strong earnings performance. That momentum we expect to carry over into the second half this year. As per our original guidance for the beginning of this year, we expect it to a backend weighted production profile this year. But in terms of that all-in sustaining cost profile year-to-date we’re sitting at $746 per ounce. I think you’re going to see that continue to trend lower. And obviously that puts this revised guidance in favorable context. In terms of the revised guidance on the all-in sustaining cost, $693 to $747 per ounce, if you take that midpoint, I think that does really position Centerra as one of the lowest cost producers in terms of our comparative peer group. As we continue to showcase well on a go forward basis, obviously, and we look forward to reporting that as we make our way through the year. With that, operator, if I can pass the call over to you just to open it up to any Q&A please.

[Operator Instructions] Our first question comes from the line of Rahul Paul with Canaccord Genuity. Please go ahead.

So at Mount Milligan, it looks like you did see a reasonable improvement in throughput in the month of June. I'm just wondering if you're able to comment on the trend that you've seen in Q3 so far, specifically in the month of July, and have you seen that June performance continue?

Yes, Mount Milligan continues to improve on throughput. One of our main issues is the reliability of certain pieces of equipment and that total shutdown we had in June to upgrade the ball mills, but not in June, earlier in the third quarter -- in the second quarter. To upgrade the ball mills, we've seen positive effects of that. We've also seen positive effects of the model and other incremental improvements we're making to the common issues circuit. So yes, our production in June, we're seeing it carry forward.

And then also on the gold recoveries, we saw an improvement there as well in Q2 versus Q1. And do you see that -- I know there's quite a bit of a gap that you need to close that being what you're seeing now in the life of mine. But this seems to be a little bit above what you may have budgeted for the year. Are those improvements -- do you see those improvements as being sustainable on the gold recovery side at Mount Milligan?

I do, Rahul. We've seen improvements in both gold and copper recovery, although the more significant recovery improvements have been on copper. We've still seen improvements in gold and we anticipate been on or better than our budgeted recovery for the year.

I mean no doubt about it, copper is doing better. I mean that's why I asked you, but overall just to see the improvement. If I could just move onto the Mongolian assets and the write down that you just said. You mentioned it has to do with preliminary results, some technical studies and the current factories within the gold price. Could you give us a bit more color? Are the economics still marginal at this point that you would not go ahead with that that you’re going to see investment agreements are signed, or is it not as bad? Just trying to understand a little bit further…

We haven't completed -- we are working on an update to the feasibility study. And that is not yet completed that we don't anticipate completing that till some time in Q3. The economics suggests that we do have a reserve depending on the gold price we use and it is economic. But it also suggests that it would be hard for us to support the carrying value we had at the time. As you know, they use different discount rates, et cetera in terms of the financial justification preparing that value. So we took these positions that we should rate it down now. But now the economics, the feasibility study will be done in Q3, but the economics to-date supports the reserves at Gatsuurt.

And how much of the write down was driven by decrease in the gold price assumption and a change in the discount rates?

Rahul, the discount right has grown from Mongolia with the movements in interest rate. So that is a large impact. I kind of recall we’ll use the feasibility 10 years ago, but I think it was a lower gold price environment that we're including at the feasibility in Q3, and all will be revealed.

And just moving on to Kyrgyzstan. Has the Kyrgyzstan government provided a response to the recent arbitration ruling? Have they commented about it in the parliament, or have there been any discussions? Have you spoken to them since then?

Rahul, it's Scott. I mean there is really two questions you're asking there. In terms of the first question and any governmental reaction to the interim measures application and ruling, no I'm not aware of any government comment or what have you been in public, within the parliament speeches, et cetera. I haven't seen anything and I haven’t seen anything picked up in press looking for what have you. So it's been relatively silent. And I would like to think that the reason for that is over the last three months, we've been very active in terms of discussions and ongoing negotiations. And I think the momentum there is very positive. It's hard for me to say much more than that, but no. We’re in very active discussions with the government recently, but not a lot of discussion around that interim measures application ruling.

Our next question comes from the line of Robert Reynolds with Credit Suisse. Please go ahead.

Just on the Kumtor guidance raise on production. What exactly, I guess, happened there this year that result in the improved outlook? Did you have positive grade reconciliation or better than expected mill throughput? A little bit more color would be helpful. Thanks.

As you know, 100% of our feed for this year, other than a little bit in the fourth quarter, will come from existing stockpiles. What we found is that the capping that we used in the blasthole model as we built those stockpiles, particularly in the high grade fraction, was overly conservative. So in our high grade stockpile, we're getting more gold than anticipated. So that is certainly a contributing factor and that will continue until that high grade stock pile is used up, which will happen later this year. So that is a contributing factor to the improved performance. In addition, we've done many things at Kumtor to improve throughput to the mill and recoveries and productivity, in general, to reduce our overall unit costs. We added, I mentioned, I think we added these greedy boards, which adds 10 tons per load which over a 100 units, significantly adds to our production coming out of the mine. We've done the improvements on our load, which has increased the haul speed which again improves our production out of the mine. There is a number of things we've done that improve our productivity reduce our cost, as well as the positive grade variance from the stockpiles.

So just to follow up on the capping in the blasthole model. Is that something that you will be reviewing for the overall reserve model as well, or is that more just related to this year’s or the stockpiles that were built up over the last year?

It's only related to last year's production. We had in that involved in this evaluation, because of the -- we didn’t quite understand why we’re getting such a positive variance. And we confirmed that it does not impact the resource model. The resource model is performing as planned. But last year when we mined through the SB zone, we mined quite a bit more than we typically do and this capping, conservative capping, wasn’t picked up previously because it's only a small fraction of the total feed. This year, it’s a much larger fraction of total feed, and it was identified as anomaly. We’ve investigated it -- we’ve adjusted the capping going forward in the blasthole model. But it’s a one year phenomenon and it will not impact the resource model.

And just a finance question. In terms of the hedging that’s required if you decide to draw the additional $15 million on the BC facility. You provided numbers on how many ounces and pounds would be require to hedge, if you drew the full $50 million. But how does that relationship work if you draw less than the full $50 million, should we think of it as linear versus not drawing anything?

No, so condition for the full $50 million is to put in place that entire hedge book as now we did in that financial statement. So now you presented there, reduction of say by $25 million which require that hedge book, no.

[Operator Instructions] Our next question comes from the line of David Haughton with CIBC. Please go ahead.

Just looking at Mount Milligan, you’d mentioned that the throughput had improved in June and the trend continues into this quarter. Have you seen any trade-off with the highest throughput versus the recovery? The recovery reported in the last quarter had exceeded expectations. Have you seen any trade off there?

David, that’s a good point. Typically, if you increase the throughput, you don’t get the grind size that you need and it impacts recovery. In this case, though, we’re making improvements on both sides. We’re seeing an improvement in recovery over our forecast and budget, and we’re also seeing incrementally better throughput week-on-week month-by-month. So we’re making gains on both ends.

And also I'm presuming that the better throughput is more a function of greater availability post the sag rather than necessarily pushing more material through, it's just more uptime. Is that right?

That’s right. Our main issue right now is reliability of the equipment. The sag is performing well and now after these -- while the sag mill is working fine. Whenever we lose a piece of it, so equipment, such as a pebble, crusher or a ball mill, that impacts throughput incrementally instead of 2,700 tons per hour if it knock us down to 1,800 tons per hour, which isn’t captured in the availability numbers, but does impact our average throughput. So it's working on the reliability of the ancillary equipment, which is our key focus right now.

And you’ve still got expectation of getting to 62,500 tons through 2018?

Yes that's correct. We want to be achieving 60,000 tons per day on a sustained basis by the end of this year, and targeting the incremental more to 62,500 by the end of 2018.

Just over to Turkey, it's good to see that that power line is in place and encouraging, but perhaps the government is moving in the right direction for you. What's your engagement being like with the regulators and what sense do you get about the consideration of this final permit?

Gordon and myself and the management, were just over in Turkey recently. And I think in terms of the level of engagement, I think the industry itself has been very engaged with the regulators and what have you. I think we’re hearing a lot of positive things in terms of progress on these remaining permits that ourselves and some of our peers are looking for. We're relatively optimistic that we should be in receipt of our permit before the year-end, but let's wait and see if that's what eventuates. But based on what we're hearing, it seems pretty positive. The other thing that you may have seen in gold slides is just recently the National Power Utility Company has fully constructed 26 kilometers of power line infrastructure out to our project and that power line has been fully energized and connected. So we're ready to go there. And again, we are the sole customer on that power line. So really the one thing awaited for is this one outstanding permit that we have that we need to break ground. I think everything that points to our optimism or our confidence is on the credit side. You may have seen the financial statements. Darren has also extended that credit facility just in terms of the availability and the commitment timeline there. So we're making sure we're ready to go, but that’s as much as I can say.

Now, for those of us that would like to show an adjusted earnings number for you. Clearly, we've got that impairment of $41.3 million to make the adjustment for, but that's on a pretax basis. Is there a tax implication there as well, what would the tax number be?

Yes, under $2 million.

So it's relatively material?

That’s correct.

And we have no further questions on the phone line. I'll turn it over back to you, sir.

John, do you want to wrap up, do you want to close?

Yes, that's perfect. Thanks Scott. And I want to thank the management team for calling in from Mount Milligan, and want to thank everyone for joining us on this call. I'm here in Toronto. If people have further questions, give me a call. So thank you very much and we're going to wrap up now. Bye.

Ladies and gentlemen, that concludes today's call. We thank you for your participation and ask you to please disconnect your lines.