Greetings and welcome to the Centerra Gold 2019 Fourth Quarter and Year End Results Conference Call and Webcast. [Operator Instructions] This conference is being recorded Thursday, March 26, 2020. And now, I would like to turn the conference over to John Pearson, Vice President, Investor Relations. Please go ahead.

Thank you operator. I would like to welcome everyone to Centerra Gold’s 2019 fourth quarter and 2019 year end conference call. Our 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 the formal remarks, the operator will give the instructions for asking a question and then we will then open the phone lines to those questions. Please note that all figures are in U.S. dollars unless otherwise noted. So today, all of us are dialing in remotely to this call. And joining me on the call is Scott Perry, President and Chief Executive Officer; Darren Millman, Chief Financial Officer; Dan Desjardins, Chief Operating Officer; and Yousef Rehman, our General Counsel. 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 of the measures we will discuss today are non-GAAP measures and I refer you to our description of non-GAAP measures in our combined news release and MD&A. For a more detailed discussion of these material assumptions, risks, and uncertainties, please refer to our news release and the MD&A issued this morning, along with our audited financial statements and notes and to our other filings, which can all be found on SEDAR and the company’s website. And with that, I will turn the call over to Scott Perry.

Thanks, John and good morning everyone and thanks for joining our call. I am just going to start off by referencing Slide #5 of the accompanying earnings conference call presentation that John mentioned is available on our website. So here on Slide 5 just starting off with safety as we usually do. Unfortunately, our performance in 2019 was overshadowed by two troubling safety incidents that we experienced at Kumtor in December 2019 and February of this year. This resulted in a loss of three of our employees. We, Centerra, sincerely apologize to the families, friends and colleagues in these tragic incidents and we are fully committed to understanding and learning from the contributing circumstances so that we can take all necessary steps to prevent such tragic accidents from happening in the future. Myself and the senior leadership team, we remain absolutely steadfast in our resolve to ensure that everyone who works at operations can do so safely and will return home safely each and everyday. There is nothing more important. Moving on to the second bullet point here, one of the key milestones during the year was closing the strategic agreement with the Government of Kyrgyzstan. That was closed in the month of August of 2019 and we think that’s going to result and really underpin a much improved business environment for Kumtor moving forward. On the back of this agreement closing, shareholders would note that we have been increasingly investing in exploration at Kumtor. We believe those exploration investments are paying dividends and we believe we are seeing the success of that in terms of some of the recent resource increases that we have announced at Kumtor. Third bullet point here, just on Öksüt, which is transitioning into being our third operating asset, very important for us strategically. Obviously,…

Thank you, Scott. Good morning, everyone. Before I refer to the slides, I would like to talk about safety. We continue to focus on our operational safety with work safe home safe, visible felt leadership, critical controls. And we had some successes in terms of substantially reducing our lost time incidents. But our safety performance was really hurt by the tragic events at Kumtor in December and then mid-February. We are working hard to understand where we are failing on this area and so everyone can go home safe everyday. In terms of safety milestones in 2019, even Kumtor last summer celebrated one year without a lost time incident. They approach 8 million man hours. At Mount Milligan, they had a similar achievement in October. Turkey, we were under construction for the whole year and they are now approaching 2.2 million man hours without a lost time accident and approaching 1 year LTI free. Moving to Slide 7, at Kumtor, in Q4, we produced 148,000 ounces at $657 an ounce and in the full year, we exceeded 600,000 ounces with [indiscernible] ounces at an all-in sustaining cost of $598 which bettered guidance. Notably, we moved forward a 2-week mill shutdown for maintenance from January 2020 into December of 2019. And we brought the plant backup fully online at December 30. Due to the tragic waste dump failure on December 1, we did no mining in December and not much in January, but we did receive all our necessary permits for 2020 operations and we did receive a restart order on January 22. For the year, Kumtor mined 13% less tons, but it still achieved an impressive dollar per ton cost of $1.26. In the plant, the recovery was also very good at 83.5% with a feed grade of 3.69, which…

Thanks, Dan and good morning everyone. For those following on our investor deck, I am going to be speaking to initially Slide 19. Centerra recorded $312 million in revenue during the quarter. This consisted of $238 million in gold sales, $32 million in copper sales and $42 million from the molybdenum business unit. For the full year, Centerra recorded $1.4 billion in revenue. This consisted of $1 billion in gold sales, $141 million in copper sales and $213 million from the molybdenum business unit. In 2019, we sold in excess of 780,000 ounces of gold, a 10% increase year-on-year. We also sold 67.4 million pounds of copper, a 52% increase as the Mount Milligan team were able to increase mill availability with 21% more tons processed during the year. This increase is attributable to preventative maintenance together with the increased water levels. The mill head grade was also 25% higher year-on-year at 0.26% copper grade. As Scott mentioned earlier, the company exceeded 2019 gold production and met copper production for the year. And net loss of $93 million was recorded for the year. This included three components the $231 million non-cash impairment recorded in Q3 on the Mount Milligan asset, noting no further adjustments required with the delivery of the Mount Milligan technical report. It also included the additional $10 million charge associated with the Kyrgyz Republic settlement also recorded in Q3. The final significant adjustment was the $34 million non-cash ARO adjustment at the Thompson Creek mine. The expenses associated with the movement in the underlying discount rate with reference to U.S. Treasury bond rates. There is no change to the underlying activities required to mediate this property. Just moving on to Slide 20, our adjusted net earnings after factoring in these three items resulted in a profit of…

Okay. Thanks, Darren. I am just on Slide 22. Just again, just reflecting on our full year guidance for calendar year 2020, you can see the column on the far right. We are guiding for what should be another strong year just given the prevailing macro environment. So in terms of company-wide gold outlook, we are guiding for as high as 820,000 ounces of gold. And in terms of our all-in sustaining costs, we are looking to produce that gold as low as $820 per ounce. With regard to the current gold price environment, this is an indicative all-in sustaining cost margin of more than $700 per ounce. This, together with some of the exchange rate devaluations we’ve seen, the lower diesel fuel pricing environment should make for a good year in terms of strong profitability and ongoing strong financial performance. I think it’s important to note though, due to the rapidly evolving risks relating to COVID-19, this guidance will not reflect the company’s estimates of its performance, if there are any further significant disruptions to any of our operations. Just moving to the next slide, on Slide 23, with our financials today, we also filed our year-end reserves and resources as well as the comprehensive 43-101 technical life-of-mine plants in Mount Milligan. Just referencing the table here at the top of this slide, you can see we are reporting a year-end inventory of some 11 million ounces of gold reserves across the company. And the table at the bottom, which is our copper reserve inventory, finishing the year at 1.6 billion pounds of copper. Just my final slide, on Slide 24, again, just looking to use the world industry all-in sustaining costs as a backdrop. And therein, we are just illustrating where each of our assets are located on the world cost curves. I think we, as a company, with our business plan, our strategy, what we are targeting for is to be showcasing or demonstrating that this is a portfolio that can – hopefully, we can get this down into lower cost quartile. I think that’s what’s always served Centerra very well, just the high margins in our business. And that way, in regards where we are in this prevailing gold price environment, we are always going to be in the best position for maximum profitability and maximum free cash flow. With that, operator, I would now like to pass the call back to you just to see if we have any questions on the line.

[Operator Instructions] We have a question from Trevor Turnbull with Scotiabank. Please go ahead.

Yes, excuse me. I was just wondering about the new mine plan that you are working on with respect to Kumtor and the resource increases you have had there. And as you work through that this year, I was just wondering, can you give us a little bit of color on what you’re thinking with respect to the waste dumps? Is it likely you’re going to end up reusing some of the existing dumps or are you looking at having to put in a new location for the new mine plant?

Thanks, Trevor. It’s Scott. Dan, are you happy to take that question?

Yes, I can take that, Scott. Thanks, Trevor. Currently, we have 3 waste dumps. We have the Central Valley, which we are presently doing the stripping for cut-back 20 and replacing on the material in Central Valley. Further along, we have the Sarytor Valley, which is right below the Sarytor and Southwest Pit. Where we had the waste dump failure was the Lysii Valley. We are not dumping in there right now. We are currently working with the Kyrgyz engineering firm and as well as the Kyrgyz government on how to safely rebuild the waste dump in that valley. Our intention is to go back in that valley by – in the second half of the year as that is the most appropriate place to place the cutback 20 and cutback 21 waste.

Okay, great. Thank you. And I guess just the other question with respect to those resource increases. You’ve mentioned that those were from 2018 and 2019 drilling. Does drilling – and maybe this was in the press release, I just didn’t get a chance to get through it that closely, but is drilling continuing this year? Are you still looking to – is there still opportunity for further resource growth from programs this year and going forward at the main pits there?

Dan, do you want to?

Scott, I can – yes, I can take that, Scott. Where we’re now focusing our drilling is the area between the Hockey Stick Zone and our Southwest Pit. There – that’s where we were focusing, and that’s in 2019, slowly in the Hockey Stick Zone, and it’s a continuation of the trend towards the Sarytor and Southwest Pit.

Okay, yes and I think maybe you did – yes, go ahead.

Sorry, Trevor, it’s Scott. So the actual budget this year is approximately $20 million, so it’s a significant budget, and that budget was underpinned on success of the prior 2 years.

Okay, great. That’s all I had. Thank you.

We have a question from Daniel McConvey with Rossport Investments. Please go ahead.

Yes, good morning Scott, Dan and everyone. A question on Mount Milligan, just looking at the costs and the disclosure you did just on what happened from 2018 to 2019, just it’s – I realize it’s a water issue, there is a throughput issue, everything else. But how much of a concern is that cost escalation to you and do you think – how much of that can be undone as you get throughput going this year? And that’s my first question. I’ll let you go ahead.

Yes, thanks for the question, Dan. I would categorize it as a significant concern. It’s something that myself and the leadership team are quite focused on right now. We’ve spoken about this previously in terms – the shortfalls in mill productivity, the challenges we’ve had there, the lower productivity has resulted in higher unitary costs. Originally, we are having challenges in terms of mechanical availability. So we added a lot of resources in that regard. And I think we’ve been successful in terms of establishing more of a consistent run rate in the mill facility there in terms of sort of averaging around 55,000 tons per day. So in terms of all the additional costs and the resourcing that we added, it’s achieved its objective. But what we as a management team now need to work on is how do we get more leaner, how do we optimize our cost structure there, pullback some of these costs that we’ve added into the business model as such that we can get down the result in unitary cost in terms of the all-in sustaining costs. So that’s going to be a key objective for this year and moving forward. And I think we are also seeing some opportunity just in terms of the pit optimization itself, the mine plan, everything that went into that 43-101 study, it was comprehensive, but it was a short time line there in terms of what we could incorporate into that study. But I think with the passing of time here, as there is some action items for us in terms of where we see some further value enhancing opportunities, we will be working on that throughout the course of this year.

Okay, great. Thanks. Second question is kind of related. You have two projects, Kemess and Hardrock and I know you are taking action with Hard Rock. And I just – maybe this – if you could elaborate on your position with both of those somewhat because I knew you were looking at studies due around now for each one. And I just wonder, given the escalation at Kemess, if there’s cost escalations in Canada that we don’t fully appreciate are taking place right now, despite the dollar?

Yes. So right now what we are seeing in our – for the Canadian business which is predominantly Western Canada, we are seeing a favorable macro environment in terms of the exchange rate devaluation, which I know you mentioned, but also world oil prices have gone through a significant devaluation. And we see that translating into lower diesel fuel prices in terms of what we are paying out in our mine site locations, including Mount Milligan. In terms of our sort of organic growth pipeline, as you know, we’ve got two Canadian domiciled, organic growth opportunities. Obviously, the Kemess project in British Columbia, and then we’ve got the Greenstone joint venture here in Ontario. Right now, when we’ve been discussing our opportunity as we move forward with the business, I think this year, in terms of having those discussions with the Board, and this is constant, we’re always strategizing on this, but quite consistently, what we’ve been really focusing in on is let’s just make sure we are maximizing the value of our existing operating assets. And with regards to Öksüt, our new project in Turkey, we have only just kind of finished construction of that asset. We’re just, as we speak, really transitioning more and more into operations mode, and the big focus right now is to achieve commercial production in Q2 of this year. But even thereafter, I’d be comfortable saying that from the Board’s perspective, they’re still going to want to see at least three to six months of consistent sustained operations where we’re operating a design achieving our targets, etcetera, in the forward months, you’ll see us delivering those sort of catalysts, if you will, just in terms of demonstrating proof-of-concept on the asset. And I think it’s only as and when we’ve achieved that, that the board management will start shifting into a different gear and start strategizing around, okay, what are we going to do next in terms of growing the company? So it – coming back to your question in terms of that organic growth pipeline, which one represents the more stronger risk reward sort of value proposition for Centerra in terms of Kemess versus Greenstone? Each asset has different attributes, so it’s really going to depend on the underlying sort of business environment or macro environment. It will depend on the value proposition, is it compelling? I’m giving you a long answer here, Dan, but right now, it’s not – there’s no decision that is imminent. I think right now, we are still quite focused on executing in Turkey on Öksüt.

Okay. Appreciate the answer. Like the dividend, like the free cash flow and investors are after that. It’s just on the flip side, the coin is probably, if you believe, if cost escalation isn’t going to be a huge concern right now. And of course, with the dearth of new produce going ahead and what’s taking place in the macro level, like we’ve just seen – if you believe these gold prices can stay anywhere near where they are, it’s a great time to develop produce in Canada. Thank you.

Yes, thanks.

We have a question from Adam Graf with B. Riley. Please go ahead.

Thanks. Scott, I skimmed through the 268 page technical report and the releases you put out today, and maybe I missed it, but how did the current cut-off grade that you guys determined in Canadian dollars compare with the 2017 cut-off grade?

Yes. So the…

I’m sorry I’m asking like that.

Yes, sorry. The NSR sort of cut-off grade, what we were using was CAD9.55 or $7.64. I just – I don’t have it in front of me right now what we were using previously. I don’t know if you have it Dan, in front of you?

Yes, it was CAD8.12.

Canadian?

Canadian.

CAD8.12, yes.

And then maybe it – I’m assuming you guys floated a bunch of cones at different gold prices. Do you have a feel for – obviously, there’s a large component of marginal ore. Do you have a feel for what the Mount Milligan reserves and resources would do at $1,600 gold?

I don’t, Adam. We used the commodity price assumptions of $12.50 gold and $3 for copper. And in terms of what we published in that 43-101, we did not provide any sensitivity in terms of gold or pip.

Yes, I noticed that.

And they’re having the – most of the price.

And then one last question. What was the diesel price assumption that you guys used?

I don’t have any currently. Dan or Darren, do you have that reference?

I don’t, sorry.

No problem. Maybe you will follow-up offline then?

Yes.

Yes, yes. Sorry about that, Adam.

We have a question from Terence Ortslan from TSO Mining Analyst. Please go ahead.

Thanks, thanks. Good morning. Just a question on the – I thank you for the model on the Mount Milligan, by the way, for the next many years. Can you just tell me in 2020 have you finished or completed your TC/RC discussions on the copper and what they are?

Darren, do you want to take that?

Yes. We have – we set those in basically November every year. I don’t think we have given public disclosure on that. So I’m not comfortable just given that it is confidential, but it is basically the market rate, sort of set every, virtually, November and then March. So it is just basically the industry’s – the industry levels.

But a lot of the contracts are not completed in the industry, and you’re making assumptions in the model. What are your assumptions in the model that you have in 2020 on TC/RC? You gave a million dollar number. What’s the TC/RC in the model? For [indiscernible] price of copper, but you got $23 million, I think, for the year?

Yes. So what we’ll do is, John Pearson, our Vice President of Investor Relations, he’ll get back to you after this call with some of those more granular details.

Okay. Second question is that with on your treasury functions with the financial stress in many locations that you operate and also international banking system. Turkey and Kyrgyzstan, how are you moving the cash around? Where is the cash? And are you controlling the flow and where are you keeping the cash at the end of the day in terms of your treasury functions?

Darren?

Yes, sure. All of our cash or any excess cash is basically retained in North America. At Kumtor, for example, every shipment, for every two weeks at the moment, we are paid directly into a New York bank account. So it doesn’t actually touch Kyrgyzstan. In Turkey, there – when a sale occurs we are paid in Turkish lira, we can convert that, that same-day or within 24 hours and then once again, any excess cash is distributed back to North America. So we are not seeing any constraints being put in place by the government. And as I said, our main asset in Kumtor, it doesn’t even touch the local country bank accounts.

Okay, alright. Thanks very much for that. Thank you. Looking forward from John to get the answer on TC/RC. Thank you.

[Operator Instructions] We have a question from Bryce Adams with CIBC. Please go ahead.

Hi, good morning. Thanks for taking my questions. Just one question from me actually and it’s on Mount Milligan and on the throughput rate, the 60,000 tons per day. I was just wondering if you could discuss what the optimizations or initiatives are that you expect that will enable you to hit that 60,000 ton a day rate?

Okay. Dan, do you want to take that?

I certainly can. The number one thing that we are working on is the plant mechanical availability. We regularly have days in the high 60,000. And what we are working on is trying to make sure that we can consistently operate up in that area. So there is a number of initiatives on the maintenance side and de-bottlenecking both the primary, secondary crushing before the SAG. So that’s certainly one main one that we are working on. It’s difficult there for blending, so we can get a consistent type of feed because of the strip ratio being slow, but mostly, yes, mechanical availability and then seeing where we can find ways to debottleneck the upper end of the plant.

Got it. Thanks. So is there a portion of the CapEx spend that’s allocated towards that availability work?

In terms of the life-of-mine capital, this is in the 43-101.

Yes. That’s right. I was just wondering if – what the costs associated with that with improving the availability, have been factored out?

We’ve incorporated – any sustaining capital requirement in the process is [indiscernible] There’s a line item processing client sustaining capital.

I see that one. So that is directly related to availability?

Not directly, but a portion of that would be.

Thanks for answering the question.

Thanks Bryce.

And there are no further questions at this time.

Okay. Thank you all for joining the call today. And with that, I think we will end the call.

That does conclude the call for today. We thank you for your participation and ask that you please disconnect your line.