Greetings and welcome to the Centerra Gold 2019 Second Quarter Results Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded Wednesday July 31, 2019. I would now like to turn the conference over to Mr. John Pearson, Vice President of Investor Relations. Please go ahead.

Thank you, Mary. I’d like to welcome everyone to Centerra Gold's 2019 second quarter conference call. Summary slides that are available on our website to accompany each of the speakers’ remarks. Today's call is open to all members of the investment community and media. Following our formal remarks, the operator will give the instructions for asking a question and then we will then open the phone line to questions. Please note that all figures are in U.S. dollars unless otherwise noted. Joining me on the call today is Scott Perry, President and Chief Executive Officer, who is joining us remotely; and in the room here is Gordon Reid, our Chief Operating Officer; as other members of our management team who are usually on the call are traveling and are unable to join us today. I would like to caution everyone that certain statements made on this call 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 and definition 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 and MD&A issued yesterday after the market close, along with the unaudited financial statements and notes and to our other filings, which can all be found on SEDAR and the company's website. And now I will turn the call over to Scott Perry.

Okay. Thank you, John, and good morning, everyone. Thanks for dialing into our Q2 earnings conference call. As John mentioned, I'm actually in Kyrgyzstan right now. I've just been with out board of directors in Turkey where we were visiting our Öksüt operation. As most of you will know this is going to be our next operating gold mine, commencing production in January of next year in 2020. We had a great tour at the operation. Very pleased with what we saw and I'll talk about this in more detail coming up, but now visiting our Kumtor operation here in Kyrgyzstan. So I'm very pleased to be with you on this call. I think our Q2 results were a strong set of results. As John mentioned, I'm just referencing the accompanying slide deck that's on our website and I'm just starting off on Slide number 5. So firstly in terms of safety, we had two lost time incidents during the quarter and Gord Reid will touch on these in more detail, but we also had some significant milestones during the quarter and subsequent to the quarter. During the quarter at our Kumtor operation, contractor workforce achieved one year with lost time incident free of operations, which is a fantastic milestone. And then in terms of the entire property in approximately 15 days from today, they'll be celebrating one year of lost time incident free operations across the entire property, across all classes of manpower. Just another sort of milestone that really demonstrate to the whole company that we can conduct our business in a zero harm environment. The second bullet point there just at Mount Milligan following the commencement of the freshet season on spring melt, our milling operations returned to full capacity. You can see during the quarter, we…

Thanks, Scott. Good morning, everyone. On the safety front, we experienced two last time injuries in the quarter. I discussed the first lost time injury on last quarter's call in which a contractor employee at Öksüt experienced significant internal and external injuries when he fell approximately six meters to the ground while working at the primary crusher construction site. The worker is currently recovering at home. The second lost time injury in the quarter occurred at Kemess, when a worker was struck on the back of his head by a frozen piece of dirt that had fallen from a backhoe bucket. He was treated offsite and recovered at home. He is currently back to work with no follow on effects. Our total recordable injury frequency rate for the quarter is 0.43, and year-to-date is 0.311, which compares to 0.49 for the corresponding year-to-date period in 2018. On a positive note and as Scott mentioned earlier on June 20, 2019, the Kumtor contractor workforce achieved one full-year without a lost time injury. Well done. I'd like to draw your attention to Slide 12. Our operations had a solid quarter with Kumtor producing 151,000 ounces of gold at an all-in sustaining cost of $562 per ounce sold, ending the first half of the year with production of 301,000 ounces of gold at an all-in sustaining cost of $557 per ounce sold. We have increased our production guidance to Kumtor to 550,000 to 575,000 ounces of gold produced and lowered the guided all-in sustaining costs to $635 to $685 per ounce of gold sold. There has been no significant ground movement near or under the mill building since the grounding stability experienced in Q1, which resulted in a change in the mine plan for cut-back 19. We will continue implementation of active measures…

Okay, thanks Gord. Just referencing Slide 14, we just have a couple of slides on our revised guidance. You can see the slide here on Slide 14, the column on the left, we're just illustrating where we stand here today. The column in the middle just illustrates our new revised guidance and the column on the far right was our prior guidance as at the beginning of this year. I think the key highlights here, obviously in terms of gold production, you can see, we're increasing the guidance at Kumtor, which reflects the very strong start in the first half of this year. Likewise, in terms of our all-in sustaining cost, which is in the middle section of this slide, you can see given the strong start in the first half of this year. Kumtor has being operating at $557 per ounce on all-in sustaining cost basis. So likewise, just given the increased gold output and the strong start to the year, we have favorably decreased Kumtor’s all-in sustaining cost guidance. As Gordon mentioned in his remarks, Mount Milligan up in the top section there, you see on a year-over-year today basis. It's been a strong start to the year relative to the midpoint of guidance. And so again, we’re turning out our full year guidance at Mount Milligan, but in terms of gold output, copper output and all-in sustaining costs. I just move onto the next slide on Slide 15, still on guidance and still the same sort of illustration in terms of the other columns being year-to-date actuals in the left, in the middle column being on new guidance and the column on the far right being our prior guidance. Our total sustaining and growth capital overall remains at $275 million, the change is noted on the slide…

Thank you. [Operator Instructions] The first question comes from the line of Fahad Tariq [Credit Suisse]. Please go ahead. Go ahead please.

Hi. Good morning. Sorry about that. Thanks for taking my questions. For Kumtor, you've seen good grades in the first half of the year. How should we be thinking about grades in the back half of the year? And how much of the higher production guidance is really the result of the revise mine plan for cut-back 19?

Gord, do you want to take that question?

Yes, thank you. The impact of the grade, the process grade really is not driven by the change in cut-back 19 that the, what we – most of the processing has come out of stockpiles at the beginning of the year. So what we saw in the first half of the year was a slightly higher grade. And those grades came out of the stockpile slightly higher. It's a bit of a science trying to blend the grade for the high grade, medium grade, low grade and they air on the high side. So we put in a little bit higher grade than anticipated. And we did also get that positive reconciliation in the high grade stockpile, which is now depleted. So for Q3, we will be processing lower grade material out of the stockpiles until we get into the ore and cut-back 19 West. We planned to get into that material, the higher grade material in Q3 – later in Q three, which will then feed the mill for the rest of the year. And then you could look at our guidance and that's what we anticipate to get in the second half of the year.

Just from my perspective, it’s Scott. Another part of your question is with regards to the gold output production on the second half of this year. The other thing, I’ve highlighted in Q3, we have our annual scheduled mill liner shutdown. That'll be a 60-day shutdown. So you may appreciate that our throughput levels be probably lower in Q3 and tends to be a modeling. I'll be expecting gold output in Q4 to be larger than Q3.

Okay, that's helpful. So is it fair to say that cut-back 19 East versus the West, the East being deferred to next year, that there isn't much of a grade difference between those two parts of the ore?

Yes, I think in terms of when we recalibrated the mine plans, the cut-back 19 East and West where we divided that cut-back into two phases. We're not seeing any material impact in terms of a scheduled gold production levels for this year or even next year and beyond.

Okay. That's helpful. And just one more from me on Öksüt, in the release, you mentioned deferrals certain non-essential construction activities to after commissioning. Just curious what kinds of costs are included in this? It looks like it's about $13 million, lower CapEx as a result of this deferral?

Gord, will you able to touch on that?

Yes, it's basically the extension of the heap leach pad. Yes, 1C is deferred to later. We don't need that to later in the mine life. So that's been deferred.

Great. Thanks. That's all for me.

The next question comes from the line of Dalton Baretto from Canaccord Genuity. Please go ahead.

Good morning guys, and congrats on a great quarter there. I hate to touch on the one negative here, but I'm a little bit concerned about these recurring water issues at Milligan. None of your peers that operate open pit copper mines in DC seem to be experiencing these issues. So I guess, I just have two questions on this. Number one, what's different about Milligan that's causing these recurring issues? And number two, what options do you have over the rest of the year to kind of prevent curtailment in Q1? Thanks.

Yes. Hi, Dalton, it's Scott Perry. I'll respond to your question. Since we've taken ownership of the asset, I think very shortly after ownership, we established that we weren't comfortable with the overall water balance inventory that we had at Mount Milligan. We've been working with the regulators over the last two years on this looking to establish access to additional bodies of water, which I think we've been successful in terms of establishing such access. The problem which has being challenged as for the last two years as we've gone through the freshet out of the spring melt season, the amount of water that we've been expecting to realize has been a lot less robust than what we were originally projecting. And so it puts us in a bit of a handicap situation, if you will. And that we had not been able to totally replenish water balance inventory to a level where we can say, okay, we've now got more than sufficient water moving forward such that we don't have to rely on water sources in terms of precipitation or other additional sources. So that's kind of the dynamic and the challenge that we've been dealing with. As we highlight in our disclosure today with the MD&A, this season spring melt was again, a lot less robust than what we're expecting. In terms of the region in DC, where we're operating, the regulators, the authorities, they had classified it or categorize it that we are officially in drought conditions. If I look at our water balance inventory at the end of July and the mine site is finalizing this survey right now. And we have slightly more water than what we had last year at this exact point in time. But nonetheless with our press release, we just…

Okay, great. So just maybe as a follow up then, are you – based on what you know right now, are you, what sort of probability what you put on a curtailment and Q1?

Dalton, it's not possible for me to answer that question, because there is so many different assumptions that you'd have to take into account when you think about our water projection moving forward. We've got to make an assumption with regards to precipitation moving forward – an assumption with regards about the water that we're going to realize from our base and under drain towers, from upstream sources, from groundwater sources. There's a lot of variables that go into this. But I think the one risk that we really wanted to flag with this disclosure is that it's been a very dry from a seasonality perspective. If that should continue in the second half of this year, if we should get a lot less precipitation than what would be typically expecting as post seasonal averages. It does create a risk in terms of the Q1 production profile, but I cannot give you a likelihood assessment.

Okay, no problem. And then just maybe one more on Kumtor. We talked about a recovery improvement project with tower mills. Has that been sanctioned yet?

No, I think, when you say, we talked about that, you referring about disclosure or…

Just in the past it's been mentioned that we were talking about maybe putting a tower mills and some more leeching capacity to improve recoveries.

Right. Yes, so I think earlier in the year, there was a sell-side analyst and investor that took place at Kumtor. I think when the guys were talking about continuous improvement opportunities in terms of the mill facility, one of the ideas – one of the studies and the guys were looking into is, in terms of potentially increasing no recovery efficiencies, they're doing an evaluation as to whether or not additional leach tankage and the installation of a tower mill could – would that positively improve our gold recovery efficiency rights. What's the trade off there in terms of the capital investment versus the overall economics? That is a study that's underway as we speak at Kumtor. But that study has not been finalized, we had a chance to share that with the board. I would be hopeful that the guys will have that study finalized in time for our budget cycle, which is typically in November and December. And that's when we may have the opportunity to discuss that with the board. So giving you a long answer, but it has not been sanctioned.

Okay. That's great. Thanks very much.

[Operator Instructions] And the next question comes from the line of Bryce Adams from CIBC. Please go ahead.

Good morning. Thanks for taking my questions. I just want to follow-on quickly from where Dalton left on Mount Milligan. So in the month of June, Scott, you mentioned throughput was above 60,000 tonnes a day. I was just wondering how you balance that with the ongoing drought conditions and your outlook for the long-term throughput in Mount Milligan.

Yes. Thanks for the question Bryce. I understand the context of your question. What I would highlight is, here we are in the month of July and we're operating at full capacity. In terms of our internal projections and forecasting, we expect we'll be operating at full capacity for the remainder of this year. You see that reflected in terms of our guidance, where we’re reaffirming, guidance for Mount Milligan. But again, I'm going to be repetitive. I have to highlight that if the current very dry seasonality conditions should continue, if we should see a very – just a lack of water inflow from precipitation, we can see that it creates a risk throughout 2020, Q1 production profile. Obviously what we're very cognizant of is that we want to make sure that we're caring more than a sufficient water balance into our Q1 period, which is the winter season. We want to make sure we've got more than sufficient water to always keeping the mill operating. So that's really the risk of a flag – it’s a risk to our potential production levels in Q1 of 2020.

When you talk about full capacity that is referring to 55,000?

Yes. That’s our targeted guidance for this calendar year. We always guided that, as when the spring mill season commences, we'd very quickly see ourselves ramping up to 55,000 tonnes per calendar day. And that's what I would put forward or categorize as our full capacity run rate.

And is there a thought to maintain 55,000 without going over that throughput level in order to maintain water for next year?

Sorry, Bryce, can you repeat the question?

I think you said in June you are above the 55,000 tonnes a day. So I was just asking is there a thought to not go over 55,000 just run the two mils at 55,000 and would that help maintain water levels going into Q1 next year? Or is it unrelated to that?

No. I'd say, our current operating strategy at Mount Milligan is we want to see the team operating the mills at the highest productivity rate that they can achieve. So by way of example, if they could repeat the performance of June in the month of July here as well as in August, would certainly be encouraging them.

Okay. That's all for me. Thanks for taking the questions and congrats on the good quarter.

Thanks.

The next question comes from the line of Robert Remsik, Private Investor. Please go ahead.

Thank you for taking my question. Congratulations on a strong quarter. I am slightly ignorant, but I'll ask the question anyway. Is there an obvious reason why $7 million in higher sales in the second quarter generated approximately $17 million less net income than the first quarter?

So Robert, look, I have to apologize. I'm actually in Kyrgyzstan, I don't know if you've heard that in my opening remarks. And I don't have everything in front of me that I should, what would normally have. So I can't respond to you right now, but if you would not mind calling us after the call, if you could call John Pearson, we'd probably be in a position to answer that question. But I apologize Robert.

Okay. Thank you for the response. And good luck in Kyrgyzstan.

Thank you.

There are no further questions on the phone lines.

With that, I’d like to thank everyone for joining us today on the call and thank you, Scott, for dialing in. So we'll end the call now. Thanks.

That does conclude the conference call for today. We thank you for your participation. Please disconnect your lines.