Greetings, and welcome to the Centerra Gold 2019 Third Quarter Results Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded Wednesday October 30, 2019. I would now like to turn the conference over to John Pearson, Vice President, Investor Relations. Please go ahead.

Thank you, Kelly. I’d like to welcome everyone to Centerra Gold's 2019 third quarter conference call. Summary slides are available on Centerra Gold’s website, which will accompany each speaker’s remarks. Today's call is open to all members of the investment community and media, and 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; Darren Millman, Chief Financial Officer; and Yousef Rehman, our General Counsel. Gordon Reid, our Chief Operating Officer, is unable to join us today, but Scott will address any operational questions. I would like to caution everyone that certain statements made on this call today maybe 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 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 on the material assumptions, risks, and uncertainties, please refer to our news release and MD&A issued this morning before the market open, along with our unaudited financial statements and notes, and our other filings, which all can be found on SEDAR, and the company's website. So now I will turn the call over to Scott.

Thank you, John, and good morning, everyone, and thank you for joining our call. I’m just referencing Slide 5 of the accompanying presentation deck that John mentioned is available on our website. So some of the key highlights during the quarter, and as always, we’d like to start off with safety. During the Q3 period, we had a number of safety milestones in Centerra. You can see some of those listed here at the Öksüt property and the Mount Milligan property, we achieved one million hours of loss time incident free operations. At Kumtor, a very significant milestone was we achieved one year of loss time incident free operations, but that includes all of our employees and contractors. And then lastly, at Endako, we’ve now achieved six years without a loss time injury. These are significant milestones I want to commend or our employees and management -- all of our employees and management, and we continue to demonstrate with milestones like these that we can operate in an environment of zero home. One of the key catalysts during the quarter was that we closed the strategic agreement with the Government of Kyrgyzstan. This is of a all encompassing dispute resolution agreement that really pays the way for a much improved operating environment moving forward. This is a significant catalyst, and we’re pleased to have closed this, and you would have seen that we have now -- with the settling payments somewhat have you, that’s been reflected in our financial statements as well as our accounting. With regards to Oksut, Oksut continues to advance very well. You can see here in the third bullet point, we’re now at 79% completion. We estimate that we need to be at 85% completions of first gold pour, and we continue to reaffirm guidance that…

Thanks, Scott, and good morning, everyone. For those on the call, I'll be speaking to Slide 10. During the quarter, Centerra recorded $388 million in revenue. This consisted of $297 millions in gold sales, $41 million from copper concentrate sales, and $15 million from Molybdenum Business Unit. The 50% consolidated revenue increase compared to the prior year period, we driven by 34% more ounces sold. 160,000 ounces were sold at Kumtor, a 34% increase, and at Mount Milligan, there were 55,935 ounces of gold sold, a 19% increase, and 21.9 million pounds of copper sold, representing a 61% increase compared to the prior period. These increases driven by 34% in more tonnes processed during the quarter with 19% higher copper head growth processed offset by 35% decrease in gold head growth process. The key to these strong financial numbers with a consistent operational performance at Mount Milligan during the quarter with mill throughput averaging in excess of 55,000 tonnes per calendar day and in excess of 60,000 tonnes per operating day. The Milligan business unit also had a 12% increase in Molybdenum sales. This whole day cash provided by operations was $31.9 million; adjusted consolidated cash provided by operating cash flow was $95 million, a 152% increase comparison to the prior year, after adjusting for the Kyrgyz Republic settlement payment. During the quarter, Kumtor generated $74 million in adjusted cash flow from operations, with Mount Milligan generating $37 million cash. A net loss of $165 million was reported in the quarter. This includes the $231 million payment recorded, and an additional $10 million cost recorded associated with the Kyrgyz Republic settlement. Adjusting for repayment and the addition of Kyrgyz Republic settlement, the adjusted earnings for the period was $75 million or $0.26 per share. It’s a little bit more detail…

Okay. Thank you, Darren. Just going to move onto Slide 13, just wanted to touch on our guidance for the full year. This slide, on Slide 13, largely speaking to production and all-in sustaining costs, one of the favorable highlight that I mentioned was the increase in production guidance for Kumtor. You can see that illustrated in the second row in this table. As we mentioned, we now increased our guidance at Kumtor by approximately 3% on the midpoint, are now guiding to production as high as 590,000 ounces during calendar year 2019. So obviously, it reflects that the very strong operating momentum we’ve seen at Komtur, and we obviously expecting that to continue. In terms of all-in sustaining cost guidance, which is in the middle section of the table, which is reaffirming that, the companywide guidance of $713 to $743 per ounce, continues to be expected outlook for the full year. Just move on to Slide 14, just in terms of our capital expenditure guidance. You can see here on the companywide basis, we’ve reduced our growth capital guidance by $15 million that is illustrated in the middle section of the table, we’re now guiding to growth capital of $160 million. This primarily attributable to lower capital expenditures offset. What that tells was identified seven construction activity that won’t be required this year in terms of positioning the operation for first gold process, some of those capital items are going to carry over into 2020. Another key item that highlight is the capital scripting guidance at Kumtor. You see it reduced that by $15 million. And this is – this decrease is associated with just recent increase and restating in terms of the mine operations. Just moving onto my last slide, on Slide 15, just kind of wrap-up our presentation and prepared remarks, if you will. What we’re illustrating here is that gold industry cost curve in terms of all-in sustaining cost metric. And I think this is something that does differentiate Centerra – the Centerra gold on a companywide basis. I think it shows we are a lower cost producer; we do have a high margin. And as illustrated on this chart, the company’s portfolio is the lower cost quartile portfolio. I think this is what gold is going to position the company well in terms of ongoing profitability and positive free cash flow generation. And as I’ve mentioned a number of times, what we’re really excited about is Öksüt, which is our project in Turkey down there far left, we’re getting ready to pour our first gold production here in January. This has positioned to potentially be our lowest cost producing asset. It’s going to very favorably underpin a growing diversifying portfolio as we make outline in 2020, or expecting in a meaningful cash flow generation from Centerra’s asset base moving forward. With that, operator, I’ll just pass the call over to you, and we can move into the question-and-answer session please.

[Operator instructions] Our first question comes from Fahad Tariq with Credit Suisse. You may proceed with your question.

Hi, good morning. Thanks for taking my question. On the Mount Milligan impairment, can you talk a bit about -- maybe just put unit costs aside for a second, can you talk about the throughput, and why there's expectations for lower on mill throughput because it sounds like at least for the past few quarters water availability was getting better, throughput was trending higher Q3, about 55,000 tonnes per day. Just trying to get a sense of what is different between the trend we're seeing now in throughput versus what's being described in the short to medium term as maybe lower or challenge throughput? Thanks.

Okay. Thank you for your question. For the last six months, I think, we've been -- we've demonstrated -- we've been operating at Mount Milligan mill facility at approximately 55,000 tonnes per day, or better. And if you go back to last year, that's kind of what we were guiding that we would like the investment community and analysts committee to be assuming for Mount Milligan on a go forward basis. And our rationale for that was in the past, we have not been able to demonstrate that we can operate the mill consistently at 60,000 tonnes per calendar day. And so what we've always been putting forward is the guidance is the 55,000 tonnes per calendar day, and with continuous improvement in the passing of time, we will look to rest it up, but that's not a focus or an objective for 2019. So if you look at Q2 or Q3, Q3 is a very good quarter in terms of mill throughput productivity. We averaged just under 66,000 tonnes per calendar day. On an operating day basis, we were operating at 60,000 tonnes per day. The reality is that we looked at our budgeting process and what we're expecting for next year, we're expecting a similar level of mill productivity in terms of what we saw here in the Q3 periods. And the reality is, when you look at our costs, life of mine expectations. That level of mill productivity is lower than what we have been expecting previously. And you can imagine that together with the higher unitary costs that we're seeing here, and on a short to medium term basis, that's what really resulted in us, conducting that impairment assessment.

Our next question comes from Dalton Baretto with Canaccord Genuity. You may proceed with your question.

Hey, good morning, guys. So, back on Milligan here, no surprise. It sounds like you were expecting unit costs to come down, and recoveries to go up. So what's changed going forward?

I think the big focus at Mount Milligan this year has been on throughput. We've added a lot of resources in terms of addressing that, particularly in terms of human resources. In terms of the mill itself, in terms of maintenance, there’s been a big focus on mechanical reliability, and in terms of an objective, it's been successful. Now we have now demonstrated that we’re largely achieving the mechanical availability that we were hoping to achieve. And obviously, you see that in terms of the throughput productivity results that we've been operating at the end of the last two quarters. Now we are consistently demonstrating that we can operate the mill now in excess of 65,000 tonnes per calendar day. So in terms of adding those resources is being successful. But obviously, when you add those resources, that comes with higher costs. And focus for us moving forward now and looking to optimize the unitary costs, at Mount Milligan, as Darren and I mentioned in our opening remarks, we are in that budget planning process right now. And when we look at what the indicated budget is for next year, we're not expecting to see a reduction in those current unitary costs moving forward here on a short to medium term basis. And again, that being the case, that causes to reflect on what is the last month profile versus our previous last month expectations. And I spoken about human resources here, there's also ancillary increases in costs in terms of our water sourcing costs, but that would be two of the key items that we are seeing that driving those high unitary costs. Again, I want to just reiterate, as Darren mentioned, we're not expecting an escalation in the current cost structure, but the current cost structure moving forward that is higher than what we were previously expecting in terms of -- like my expectations, maybe continue to be profitable. I think we demonstrated that here in Q3 the level of sustaining cost of $557 per ounce; the mine did generate $31.3 million of positive free cash flow. But in reality, that level of profitability and sort of cash flow generation that is lower than what we were expecting on a life-of-mine basis.

Understood. And then if I can just touch on something Darren mentioned in his prepared remarks, so this statement you've made around a material decrease in reserves and resources that's based on the impairment test that you did, as you guys actually reengineer the life of mines plan and optimize, could we see a reasonable probability that the actual reduction could be far better than what the impairment has suggested?

I think, maybe I should take that question, Dalton.

Sure.

Darren did reiterate a number of times that this is -- we have not prepared a comprehensive technical life of mine assessment as in 43-101 that is something that is currently underway. And one of the key things to know that Darren mentioned is that as part of doing that comprehensive technical study, we will be looking to incorporate a lot of the drilling program that's being carried out in terms of the investment that we've been making here this year at Mount Milligan. So we will be looking to incorporate that. Also, we will also be looking to incorporate a number of opportunities in terms of value-add opportunities, looking at optimizing the mine plan the best possible. None of those items that I just mentioned have actually been reflected in the accounting impairment evaluation that speeched in the financial statements.

Right. So it could actually come in a bit better.

I can't answer that. All I can say is that there is a number of value-add opportunities that we’ll be looking to incorporate, as well as we’re looking to incorporate this year’s drilling program?

Okay, great. And maybe if I can just drill on that on Kumtor there, your mill head grades year-to-date, are conservatively above what you're planned so far. How long do you expect that to continue? Can you talk a little bit about the stockpiles that are making a bit difference, and when should expect that to reverse?

Yes, that's definitely been a contributing factor to the strong production that you've seen at Kumtor this year. And we saw that last year as well whereby the head grades were the grades representing to the mill and has been reconciling favorably to the underlying block models into the center, obviously, the reserve. We've seen that takes place for the last nine months, but it's hard for me to represent to you that that's indicative of the go forward. I can't make that representation. But there has been a lot of positive grade reconciliation. And where we see that is typically on the higher grade or the medium grade ore classifications that representing to the mill. As I mentioned now, in the MD&A, we’re into the higher grade ore associated with cut back 2019, essentially one month earlier than what we’re originally projecting, and that’s obviously what’s underpinning the strong production that you’re seeing at Kumtor.

Our next question comes from Bryce Adams with CIBC. You may proceed with your question.

Hi, good morning Scott and Darren. Just on the water update from Mount Milligan, if we go back to Q2, the water was flagged as a potential risk for one mill coming offline in Q1. It looks like it’s corrected here with the Q3 reporting. What’s changed relative to Q2? Is that just simply the raining appeared in July and August? And if so, can you talk to how much rain was received compared to the usual run rate?

Yeah. Thanks for the question, Bryce. Yeah, so as we mentioned now and MD&A disclosure, the month of July and August have been, like it’s been very wet and rainy months. And we’ve actually received a lot more precipitation on rainfall than what we were originally expecting in our water projection model from some three months ago. Ironically, it’s actually continuing here in the month of October, month-to-date, the guys are estimating that we’ve received three times as much rainfall as what we would historically expect from the seasonality perspective. So that’s been a very welcome boon for us. That’s really helped us out. Right now we’re carrying around 1.2 million, 1.3 million – sorry, let me rephrase that. We’re carrying up to 1.3 cubic, sorry, 1.3 million cubic meters of water in terms of water that’s on surface. And the significance is that this time last year we had less than half of that amount of water inventory. So just better loan puts us in a quite a robust position moving forward, but I think the other thing we spoke about, as we’ve had a lot of success to that groundwater drilling program. That program has been successful and we’ve identified a number of sort of groundwater sources or underground water aquifers that we’re going to look to, tap into and commission, but have very good slow rates. And we’re actually in sort of very advanced stages right now of permitting those groundwater sources and then looking to making sure that the infrastructure in place and looking to commission those and we’re hopeful that we’ll have those commissioned here in Q4. So the heavier rainfall together with the success of groundwater sources, it’s, obviously, puts us in a much better position in terms of our water inventory that will be carrying into Q1 of 2020. And I think in terms of management’s best estimates, we think now that our previous disclosure where we were flagging that it could be a production risk in Q1, we’re not seeing that anymore. And that’s reflected as well in terms of our budget and planning process that’s underway right now. Mount Milligan, obviously, we spoke that earlier, that comparing the budgets for next year. And there is only one budget scenario that we’re currently working on, and that is Mount Milligan operating at full capacity, which again we targeted 55,000 tonnes per calendar day for the entire calendar year.

Got it. It sounds like a bit of good news that’s unfortunately overshadowed by the impairment?

Correct.

On the impairment as well as an expected gold recover that’s being mentioned a couple of times, the 67% for the quarter, 66% due to 70% in Q1. Can I ask, what was the expectation? How much lower is this and what’s your expectation was?

I don't have those numbers in front of me. But from memory, I think, it's approximately 200 basis points, so 2%, but I'd like to validate as we do after the call. But again, as part of this assessment that we're doing on the carrying value of Mount Milligan, one of the things we did do is we looked at a -- sort of a recovery regression analysis. And as you can appreciate as different ore classifications or different mythologies in terms of the reserve and the results of that Mount Milligan, and each different mythology has different metallurgical characteristics. And together with that recovery regression analysis, we have to make projections moving forward at the last mine period. And I think, as myself and Darren spoken to, buy in large, and we're doing that carrying value assessment, we pretty much took our current unitary cost structure as well as our current experience with the gold recovery efficiency rate, and that's largely what we've modeled moving forward.

But as Darren mentioned the 2020 to 2022 period, modeling lower recoveries in that period was one of the drivers for the impairment. So the expected recoveries for those three years would be in line with the current result 66%, 67% you would carry out that for the next three years?

I can’t -- we can’t get that specific price because, again, it depends on what is the composition of the mill fee in terms of the different mythologies, but generally speaking, we’ve run a recovery regression analysis curve looking at our past experience, we have recovery efficiency rate. And that’s what remodeling on a go forward basis. But obviously, what I noting here is that overall level of gold recovery is lower than our previous expectations.

Okay. And so the recoveries will vary with the ore types, and would it be linked to the head grade as well? How those two move together?

There’s a correlation there as well. Yes.

All right. There is a chapter impairment section called beyond life of mine where you have included value for ounces that are not currently resources, outside of plan. How much ferial those ounces to the overall test in the evaluation?

Just trying to – I’m trying to think about the definition of material, but I would say, they definitely play a role in terms of contributions, the underlying carrying value that we've assessed, but I would put forward that the predominant or the inordinate amount of the $530 million carrying value is associated with the reserves that we are modeling in our life of mine program moving forward. So that play a contributing role, but not a role of significant, if you will.

Okay. So just on -- off the top of my head here, they could contribute to 10% to 15% of evaluation. Would that be fair?

I can’t answer that. Sorry.

For those answers, would they be subject to the NAV multiplier as well, or would they go through at a one-time as multiple?

No, they’re subject to the NAV multiplier as well.

[Operator instructions] Our next question comes from John Tumazos with John Tumazos Very Independent Research. You may proceed with your question.

Thank you for taking my question. If you preceded with either the Kemess Underground mine or the Hardrock Project in Ontario, how much would your portions of the CapEx be and what years would the spending like we start? That’s the first question. Second question is a conceptual one. I don't care when I look at your company so much about Kyrgyzstan or Mount Milligan, as I do the Turkish mine, the Kemess Project, the possibility of restarting the moly division one year when the moly price goes up big like it happened sometimes, or the Hardrock Project. Do you think that perhaps the market is dwelling too much on the current and not our future?

With regards to the capital expenditure estimates, you get a chance to pull down our Investor Relations presentation deck that we usually use on our sort of ordinary routine marketing. But in terms of Kemess, as per the most recent [indiscernible] ability study, the capital construction costs for that project was approximately $450 million or CAD600 million. With regards to Greenstone, the total capital construction cost is $968 million. But it's important to note that that is an equal joint venture between ourselves and Premier Gold. So generally speaking, our share of that $968 million would be half of that. In terms of when we as a company, we as a management together that Board of Directors, that's something was still strategizing and deliberating on the number of optimization opportunities at both of these respective assets. So I don't see us making a construction decision in the imminent short term, if you will, but obviously, there are clear opportunities in terms of our ongoing sort of organic growth considerations, as well as ongoing sort of diversification opportunities for the company. Right now where we're really focused on is executing on Turkey, we've been laser-focused on that for the last 18 months. And as you’ve heard of my representations, we think that project is proceeding and advancing very well. We expect that project to be under budget and delivered on time in terms of we're expecting first gold production here in a little less than three months. So it's going to make for a fantastic 2020 in terms of showcasing a more diversified growing portfolio. In terms of the markets focus on current versus future designs, I'm not in a position to answer that. Obviously, with today's results, I think, it's a great set of results operationally. You can see both mines performing very strong in terms of generating more production, what I did in the prior quarter, and I did it at a lower cost, both mines are profitable. Again, we generated positive free cash flow on an adjusted basis. I think operationally is a very good quarter. But obviously, this reduction in the carrying value at Mount Milligan, that was something that was not expected. And I think you can see the imagination that's having in terms of today's results.

Our next question comes from Brian MacArthur with Raymond James.

So I want to go back to Bryce's point again just. So if I understand this correctly, you've got 1.13 multiplier on your NAV, so really the NAV half of the assets now is like whatever $462 million, not $523 million, is that correct?

That’s -- your math would be correct. Yes.

So was there a multiplier on the value before you wrote this down as well. And I’m getting – I’m kind of more interest, I’m not to interest the multiples. I’m trying to figure out the actual real delta and value that you’re implying. Was there 1.13 in that previous value as well? Or was there one and there is like a bigger delta at here?

No, the previous valuation, which was underpinned by our purchase price accounting when we did the Thompson Creek acquisition back in October 2016. We were utilizing a multiple of one. And I’m just looking at Darren now I see above. I believe that we’re going to disclosure on that back in mostly likely the Q4, 2016 financial statement.

And would there have been a like -- as price brought up the extra ounces that aren’t in the NAV, was there another value there for ounces that work NAV in that 752, or is that over and above as well?

No, I think, there was some additional value for resources that were not being modeled in the life of mine plan back then, but Brian, please pull-up those financial statements and just have a look at disclosure. I don’t have that in front of me right now. So largely going from memory, but there should be some good disclosure on that.

Yeah. No, I’m not trying crest, and I totally understand this is not a technical study. I’m just really trying to figure what the real delta is from where we were -- where we are now from where we were before. Maybe I ask another question too. Could you talk about one of the reasons costs have changed the water costs? So going forward we have water for the next three years, I assume, we assume in the forecast going forward we have similar water costs going post 2021 now, and we’re making all of these new financial forecasts.

Yeah. Once we move past, what we’ve been see the medium term, we do see a decrease in water sourcing costs.

And maybe just a final question on this and it’s all kind of trying to just get -- and I realize it’s still preliminary. You talked about the timing on Kemess and Greenstone, John’s question, maybe being pushed back a little bit. Is that just -- is any of that related to the fact to maybe less free, I mean, you’re obviously, going to have very good cash flow in the next two years, but obviously, its maybe less from what you thought before. Is that commune you’re thinking on the delays of that, or has there anything changed in the development of those projects?

No, absolutely not. That’s not what is influencing the timing, if you will, about when you may look to make a construction decision on either of those organic growth opportunities. I’m glad that you highlighted that, Brian. Mount Milligan continues to generate over the free cash flow. I think in the year-to-date period, we’ve generated $50 million of positive free cash flow. Combined the Kumtor, we’ve generated around $249 million of positive free cash flow. So from a liquidity perspective, we think we’re on a very strong position. The reality, when it comes to potential timing of Greenstone and Kemess being conceded for moving those projects forward, what we as a management team and our Board of Director, we’ve been just lay the right focus on 30. We think it’s incredibly important that we deliver that project on time, on budget, as it is now – we’re guiding that we’re going to deliver under budget. We want to ensure that we established that credibility that broader Centerra management team can deliver these projects on time, on budget. That is important to establish that credibility in that confidence, if you will, which should hopefully translate into the evolution around Kemess or Greenstone or any other organic growth opportunities within Centerra. So that really is the underlying rationale.

Mr. Pearson, I will now turn the call back over to you. Please continue with your presentation or your closing remarks.

Thank you, Kelly. Thank you for your attendance today and the questions. At this point in time, we'll just conclude the conference call. Thank you.

That does conclude the conference call for today. We thank you for your participation. And we ask that you please disconnect your lines.