Greetings, and welcome to the Centerra Gold 2020 Second Quarter Results Conference Call and Webcast. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded Friday, July 31, 2020. I would now like to turn it to John Pearson, Vice President, Investor Relations. Please go ahead sir.

Thank you, operator. I would like to welcome everyone to Centerra Gold's second quarter results conference call. We have summary slides which are available on Centerra Gold website to 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 open the phone line to questions. Please note that all figures are in U.S. dollars unless otherwise noted. Joining me today remotely 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 today maybe forward-looking statements and as such are subject to known and unknown risks which may cause our actual results to differ from those expressed or implied. Also certain of the measures we will discuss today are non-GAAP measures. Please refer to our description of non-GAAP measures in the news release and MD&A. For a more detailed discussion of the material risks, assumptions and uncertainties please refer to our news release and MD&A issued this morning along with the unaudited financial statements and notes and our other filings all of which can be found on SEDAR and the company's website at CenterraGold.com. And now I'll turn the call over to Scott Perry.

Thanks John and good morning everyone and thanks for dialing into our Q2 earnings conference call. I hope and wish that everyone is safe and well during these extraordinary times of the COVID-19 pandemic. In terms of my remark I'm just referencing slide 5 of our accompanying earnings conference call presentation deck. Just looking at each of these bullet points, first bullet point here just regards the COVID-19 pandemic obviously extraordinary times. I think we as a team, as a company we've been very diligent in terms of the preventative measures and the protocols we've put in place and I think it's been serving us well to the best of our knowledge. All three of our operations are currently virus free and so you see that in terms of our operating results, our levels of productivity etc. Generally speaking we've been unaffected by the COVID-19 pandemic. In terms of safety, continues to be a primary focus for us as well as the COVID-19 pandemic. The well-being the health and the safety of our employees is our number one focus. In terms of safety, we had a number of milestones in the quarter but really one of the key notable ones Oksut our new operation in Turkey just recently achieved three million man hours of lost time incident free operations which is a fantastic milestone for the property and full credit very commendable to our leadership team in Turkey. Likewise you can see here in the third bullet point one of the key milestones during the quarter was Oksut which is our new gold mining operation, our third operation we actually declared and achieved commercial production during the quarter. This has been again a fantastic milestone. We poured first gold in January and to be so quickly declaring commercial production thereafter…

Thanks Scott. Good morning everyone. Please move to slide 9. Our Q2 operational highlights start with safety and we have a number of highlights. In April both Kemess and Oksut both achieved a one year lost time injury free. At Kumtor where you have 900 contractors they've just achieved two years without a lost time incident and then in July at Oksut the 1100 strong workforce there hit 3 million man-hours without an LTI. This is a majority of these hours were during the very difficult winter we had through construction and with all majority of new employees. So we feel very proud of that operation. On the production front we had a very strong quarter. We produced 219,692 ounces of gold and 19.1 million pounds of copper at an all-in-sustaining cost of $804 per ounce sold. In terms of the Q2 results by operation Kumtor continues to produce at a steady rate. We're blending the cutback 19 ore feed from the stockpile and in the quarter we had a recovery rate of 84% which was very strong. On the COVID front in Kyrgyzstan it was substantially under control in April and May in the country due to strong measures taken by the government. Although recently there has been a large increase in cases in Kyrgyzstan. Due to the remoteness of our operation the company is able to test and quarantine employees and contractors at our off-site quarantine facility before going to the mine site. This has allowed us to the best of our knowledge keep the property virus free. On the operating supplies we've built up in case of interruptions and we do have strong support from government to continue operations. Kumtor in the second quarter produced 173,245 ounces that's what they poured at an all-in sustaining cost of…

Thanks Dan and good morning everyone. For those following on our investor deck on slide 14 Centerra recorded $412 million in revenue during the quarter. This consisted of $346 million in gold sales, $40 million in copper sales and $26 million from a molybdenum business unit. During the quarter the company's average gold price realized was $1,620 per ounce and $2.06 per pound of copper. In the quarter, we sold 217,000 ounces of gold, 170,000 ounces attributable to Kumtor, 35,000 ounces from Mount Milligan and 12,000 gold ounces being sold at Oksut. As proof of mentioned by Scott and Dan Oksut achieved commercial production on May 31. In comparison to prior year quarter gold ounces sold had an increased by 10% and 7.7% increase in comparison to the first quarter of 2020. We sold 19.3 million pounds of copper a slight increase in comparison to the prior year quarter. I'll just move over to slide 15. Net earnings of 80.7 million was recorded in the first quarter. This included a $17.1 million non-cash adjustment to our closed site asset retirement obligation. The expenses associated with the movement in the underlying discount rates with reference to U.S. and Canadian treasury bond rates. There was no change to the underlying activities required to remediate the properties. The adjusted earnings after excluding the non-cash IRR expense was $97.8 million. The adjusted earnings per share for the quarter was $0.33. From a consolidated cost perspective Centerra in the quarter production costs were $410 per ounce and all-in sustaining cost of $804 per ounce. At an asset level Kumtor recorded all in sustaining costs of $696 per ounce while Mount Milligan recorded an all-in-suspending cost of $679 per ounce for the quarter. For the month of June Oksut recorded an all in sustaining cost of…

Thanks, Darren. And look, obviously look to wrap up the presentation here on Slide number 17. Just representing the top left quadrant here, just a couple of PowerPoints on your reference. Obviously the first PowerPoint that Darren just spoke to, this is our guidance and this gives you a bit of an appreciation for us though in terms of I'll go now put them in top of the sheet and we're targeting up to 820,000 ounces of gold and then on sustaining copper rose $820 per ounce. Obviously in the prevailing gold price environment, this is going to present very well and sometimes of our profitability and ongoing free cash flow generation potential. As a reference here throughout the deck, the second bullet point here, we had a very strong competitive quarter, good level gold output and again at a very competitive own sustaining cost. That obviously really resonated here in the third bullet point you see that flowing through in terms of our profitability and our free cash flow generation. I think was a peer leading result in terms of the quarterly free cash flow generation of a $169 million. Fourth bullet point, you can see that in terms of how it have been deploying that cash and very focused on presenting a debt free balance sheet. We've now achieved that here in Q2 finishing the quarter the net cash position of $212 million. And you can take in account all valuable credit facility capacity. As Darren mentioned, we have over $700 million of total treasury liquidity and certainly an internally funded business model moving forward. The fifth bullet point here just in terms of the dividend as Darren just mentioned here on the board declared a 25% increase. And our quarterly dividends have increased to $0.05 per share.…

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

Hi, good morning Scott and Dan. Thanks for taking my questions. I have two operational questions. Firstly, the big drive at Kumtor coming from the stockpiled ore will tick under 4 grams per ton. And the stockpiled ore grade is 1.8 grams to my understanding. In that context, our question is for how long is that elevated grade profile sustainable and what's your grade outlook for the second half?

Okay, thanks Bryce. I'll give that call to Dan. I'm sorry, I'll give your question to Dan, actually for hurrying up the -- Dan, do you want to touch on that just in terms of the different category the stockpiles we have in the sense in the 1.8 grams that Bryce touched on. But also maybe just state just some of the positive grade reconciliations that we're seeing on the high grade and the medium grade.

Absolutely. Okay, thanks Bryce. It's a good question. Bryce, we have a large stockpile actually in our life of mine plan. You always see that we end up milling for a couple of years after the end of the mine life. So, we have do have a very large low grade stockpile set aside. Our cut-off grade is 0.8 of a gram. So, when you see the average of the 1.8, that's the averaging of the whole thing. So, our second half as Darren indicated, we will be lowering the grade slightly. But we're blending both our high grade, medium grade and whatever amount of our low grade that we want to put in in order to maximize our recoveries and make our plans through to the end of feeding the stockpile. So, to answer your question, we will, we'll still be we'll be lower than the second quarter, that's our current plan right now. But we have a lot of flexibility depending on how much of are very high grade. As Scott alluded too also, we've been seeing some very good positive grade reconciliations in our high grade stockpile. And that we anticipate that probably to go forward but we don’t budget for that. So, those are additional allowances we end up getting on a regular basis.

I think I got it. So, for the second half, do you think it would normalize back to sort of Q1 levels that a good draw to use?

We were we're targeting guidance. We'll still believe we're going to be within guidance. So yes, it's certainly back also to the quarter one, yes.

My second question rise to Mount Milligan unit cost. So, 2020 cost per ton for mining and milling continue to demonstrate significant improvement over the 2019 levels. Could you touch on and remind me what the key drivers are for that cost improvement?

Well, one of our -- that's a good question, Scott, I got you I can take that, that's fine.

Yes, go ahead.

First of all, our new general manager from here, he's been there a year and a half ago who's being doing an excellent job just looking for efficiencies and we brought it different experts to do that. So, it's on but they've also benefitted from the lower diesel fuel price which is one of our major cost drivers. And he's flattened his organizational structure. So, some of the labor costs are down. So, and overall he's found some efficiencies in mining. So, we are anticipating a continued benefit on the mining side.

And how significant is the Canadian dollar for those unit costs.

Did not. Not highly unless it's affected by the oil price. All our labor cost there and we buy a pretty much 100% locally, so.

Got it. Okay, that's it from me. Thanks for taking the questions. I'll talk to you all again soon, cheers.

Thanks.

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

Thank you. Good morning, everybody. I like to talk a little bit about this COVID situation that seems to be escalating in Kyrgyzstan at potentially around Kumtor. And more specifically, I'm trying to understand the implications on your 2021 production profile. So, in an year-to-date, we've only mined 585,000 tons of ore and that's been a function of the whole destined and so on. But if you're going to be curtailing rates going forward to keep the headcount down, what are the implications with 2021. I mean, what's the plan to keep the mills out there?

Thanks, Dalton. And Dan, do you want to -- Dan, how about you address that but then just also touch in the fact that we never scheduling to mine any ore this year and [indiscernible] but then I'll pass it over to you.

Yes, thanks. Thanks Dalton, a very good question and yes we have been affected on our total mine tons. But mostly due to our terrible incident in Lysii which caused us to have to hold from cut-back 20 which is our we're very high up in in one ridge down to our central valley which has greatly extended our whole distances. Another complication that we've been having that we're getting through now is much of that whole distance is at the maximum of 10% grade. And during the past few months, this is our snowy season in the spring. And so, we've lost some time just from weather conditions, slippery conditions. So, we believe we're coming around the corner now, now that we've got our permits to go back into Lysii and we've also come down kind of ways on that cut-back or more than a 100 meters down. So, we're looking much better. The implications are right now we were not going to be mining any ore in the remainder this year and very little in the first two quarters of next year. So, it's all about the release of ore. What we've done is we've looked at our mine plans and with the drilling results we have adjusted our mine plans. So, we're really seeing substantially similar ounce production for 2020 with our actuals that we know up to today as was in the original 43-101 life of mine plans that is public.

Okay. So, the finest -- sorry go ahead.

Sorry, Dan. Dan, misspoke a little bit when he said we're seeing a consistent level of production in 2020. I think Dan's referring to 2021. So, the success we had a number and we had to re go somewhat heavy.

Yes it's right, yes.

It's seems of our mine plan which is draft right now, we'll be releasing that in the fall of this year. But in terms of how we're recalibrating that, we are seeing a similar level of gold production in 2021 which is similar or consistent with what was in the original 43-101. So, that expiration success has alleviated any challenges that we may be facing right now in terms of mining productivity level.

Okay, great. So, 2021 production is not rest despite but you may be mining last or now or this year.

Correct. And okay, that's something with. And I'm being repetitive, I apologize but in our regional plans this year, we'll never we won't even schedule re-mining any ore. The plan always for this year even pre-pandemic, is we're going to be exclusively treating ore from our stockpile inventory. And in terms of that mining activity, we'd be exclusively focused on raised mining.

Right. No, I understand that but I'm just wondering where the ore from 2021 will come from. So, that's our stockpile ore as well?

So, the first half of 2021 is from stockpile ore and then was we sort of increasingly move into later Q3, Q4, then it's the release of ore from cut-back 21.

Understood, okay. And then just maybe one more question on the COVID issues and the impact on your workforce. Is that a function of you actually catching it before the mine gate and quarantining people or are you actually saying absentees and office while just given increasing rates.

And Dan, you want to take that, please?

Yes, I'd be happy to. Well, there is a little bit of absentees and due to all the family stresses when obviously when family members are affected either moderately or severely. We can have people calling in and being sick. But a majority is that on our screening process where we're very stripped. We for most of up until now we and we still do now, we test people twice. And so, that's picked up a lot of positive cases and because of that if they were quarantined with other people, those other people even will go off for two weeks longer because they had exposure to someone who's tested positive. So, we've been very strict which did then effect in some of our crew changes because we anticipated certain 30, 40 people coming up and if one or two, if one was positive then all 45 for example. So, we've adjusted our strategies since February to account for the different changes. But we're feeling positive. We continue to feel positive that we can operate through this time and we're getting great cooperation from government when we've had different challenges.

Okay, great. Just maybe one last ones made and I'd jump back in queue. So at Oksut, I understand the leach pad kinetics. But year-to-date you're just 19% of the low end of guidance from a production perspective. Is that in-line with your plans and now you were thinking?

Well no, good news Dalton, I think what I've been representing to the investment you need is that what you know the fact when we were sort of speaking in the capital market investment during Q1, Q2 as I said you're going to see the Q2 production will be doubled what we achieved in Q1. And then here in Q3, again I'm expecting that we'll be producing more than double what we produced in Q2. So, for example if you look at our guidance, you'd be expecting us to be producing for the in excess with the 10,000 ounces per month year. And the back half of this year. And I can confirm that we already achieved that level of run rate here in the month of July at Oxford. Going to be a very meaningful progressive ramp up in gold production and it's progressing well.

That's fine. Thank you, guys I'll jump back in queue.

The next question's from the line of Mike Jalonen from Bank of America. Please go ahead.

Good morning, Scott and everyone. Just had a question, Greenstone, Scott, I'm sure you've noticed Iamgold moving ahead with Cote gold. It is a $1900 gold price for the IRR which was interesting but high price. So, just wondering what gold or it is, what the status is, project is? Okay, thanks.

Another same lines of questions. No change in status, both of our organic growth projects where obviously have the Kemess project in British Columbia and then we have the Greenstone joint venture project in on Ontario. In terms of the economics that we've been looking at in terms of our prior economic assessments from office back to everything you know in our boardroom setting. We're not seeing a value proposition or a rate of return that would compel the board to make a per say decision or construction decision. And that continued to be the case. So, if I look at the course of this year and moving on to the next year and that consisting our guidance, I presently don’t see as making a constructive decision on either of our project.

Okay, thank you.

The next questions from the line of Mike Parkin from National Bank. Please go ahead.

Hi guys, congrats on a really solid quarter. I just wondering for you know you mentioned you're continuing to progress on the long-term water solution from Mount Milligan. So, any major milestone that should be watching for in the back half of the year?

Dan, do you want to address that?

Sure, Scott. In terms of milestone, that I wouldn’t say there's a milestone. We are having a formal application and we expect to file more detailed materials and analysis to support all the water sources that we're looking for. But in terms of milestone, that I don’t see anything on the long-term. It's ticking along and as you can appreciate it's a work everyone process in terms of consultation with regulators and first nation. So, that's that all I can say on the long-term. We are looking at potentially expanding the current medium term water sources that we have. But again that's all part of the process.

Okay. And then, just one other follow-up to Bryce's question on the grade performance at tune during the second quarter. Can you tell us what your internal budget was just to have a sense of like what that positive reconciliation factor was?

I don’t think I can, Mike. As a matter of fact, a I tried in another court what our internal budget when it's there because you can imagine our budgetary is more of a stress target relative to get in which is somewhat discounted. So now, I don’t think I'm in a position to describe that, Mike.

Alright, just happy to see that it continues. Alright, well thanks very much and congrats on the quarter.

Thanks, Mike.

The next questions from the line of Trevor Turnbull with Scotiabank. Please go ahead.

Yes, thanks. Maybe just a quick kind of housekeeping question on the coronavirus related questions you addressed a minute ago. I was just wondering, does the Kyrgyz Republic have any sort of travel restrictions that makes it hard to either bring in people that you need as consultants for whom to or even people on rotation that are trying to come in from other countries. And just how are you addressing that?

Dan, do you want to take that, please?

Yes, very happy to. Just certainly since the beginning, the Kyrgyz government had greatly restricted regular flights. They did repatriate a lot of their nationals from around the world and that's really what brought the virus in. And in terms of the government made it clear more than two months ago that any mining company or business that required their expats to come in, they approved that. But we have not taken advantage of that. We did not want to be contributing to any increase. So, we've dramatically decreased the number of expats that we have in country. But we've learnt very well to manage from a distance and just as we have been doing here in Canada and Toronto. So, we don’t see any effect rate now on that. In terms of consultancy, we've had some small delays and a few of our capital projects but we've been now been able to bring in the consultants required for both the different construction capital projects that we have. And we'd have to find different ways to be able to complete our 43-101 and have all the consultants' sign-off supports. So, we're looking okay. In terms of our shift changes etcetera, we've extended our stay at the mine site which just makes it easier to do the screening. But we've been able to shift in and out people as we require.

Okay. You just mentioned the 43-101. And you've said that's coming out this fall. Any tighter tie, I mean, can you tell us that's going to be Q3, Q4, any sense of better timing on that?

Dan, why don’t I take that? Trevor, I don’t think we can give you any specific firmer timing on that. We've set up board meeting yesterday obviously in terms of discussion on the board. The board wants to make sure that we produce a very high quality products giving what we've been referencing. And we stood and have a fixed time on in terms of when we're going to and then [indiscernible] the board and had a board meeting etcetera. So, I don’t think we can address that question.

Then the other thing I wanted to ask about Kumtor and with respect to the new trucks and the increase to the fleet. I think you said there was a 11 trucks getting added. What does that kind of work out to in terms of increased haulage capacity that you've got compared to the existing fleet?

Dan, will you attend it, please.

Yes, no problem. So, our existing fleet is just was just shy of a 100 trucks, 2/3rds being 789s. However, we're adding will look to be we've adding an 11 here, so that would be adding about 10% to our capabilities. And then, we'll be adding additional equipment most likely as we move forward with the 43-101.

And with respect to those trucks, obviously it increases your ability to move everything. But you're also facing some of these issues as you alluded to earlier with the relocation of the waste dump. Is some of the new fleets excess capacity, is that actually getting is that a way of mitigating some of the longer haulage distances or is that truly or say 10% increase in capacity or is some of that eroded by the longer haulage distances?

Yes, certainly you're correct. Some as we are planning to move more tons per year but not 10% more tons. So, it is because of the additional yes hauling distance.

Alright, I appreciate that. And then finally, just one last kind of strategic question for your guys. Scott, you went through a number of kind of bullet points with respect to the debt to balance sheet liquidity. And not only where you stand in terms of a very comfortable liquidity position but also you're adding to that with free cash flow and Oksut continuing to ramp up. I'm sure you're starting to get capital allocation priority questions from investors. We're getting them with respect to all of our companies and especially those that are building up more and more cash. You raised your dividend, so there is a little bit there but then you also I think just mentioned that neither of you two kind of pipeline projects are quite ready to make decisions on. So, what are you telling investors with respect to capital allocation, what happens to all these cash?

Trevor, your question is very appropriate and very valid. As I mentioned we've had a board meeting yesterday and we spent a lot of time talking about this in terms of capital allocation. We management having a strategy session with our board in September and as you can imagine that's one of the key agenda items is capital allocation. And what we're going to do with this growing profitability, the strong free cash flow especially if the strong gold price environment continues. So, we recognize that. As I mentioned earlier we don't see ourselves making a construction decision that to our organic growth opportunities. So, capital locations going to be paramount. But Trevor, I can't honestly I can't answer your question because we're going to be strategizing on that with the board in the month of September. But obviously if you're kind of referencing shareholder friendly initiatives I would acknowledge that there is certainly potential there for us to be considering that. That's about as much as I can say Trevor. I'm sorry.

No problem. I think we'll be anxious to see what you guys come up with. That's all I had, thanks.

The next questions is a follow-up from Brian MacArthur from Raymond James. Please go ahead.

Hi, good day. Most of my questions been answered but just want to clarify a couple things. First of all in the 43-101, are we going to have the benefit of the permits that you've just got from the Lysii waste dump i.e. the benefits of the shorter hauls than you maybe would have had if you hadn't been able to use that going forward? Is that all going to be incorporated into this study? I mean I think it originally was but I wasn't sure what you were doing given that was a uncertain situation.

Yes. Dan, you want to take that, please?

Yes, absolutely. Yes, where we've definitely incorporated that. We never really thought it was uncertain the government would approve us going back but we had to go through the steps to get to actually get the adjusted permits from a safety angle, from an environmental angle. So, all those have been received. We're going to we're building off of our end of June possibly even the end of July actuals for the 43-101. So, it'll reflect everything that as we understand it going forward.

Great, thanks. And I apologize to go back to the grades that Kumtor because obviously a flexibility with all the stockpiles there. But I just want to make sure some of the benefits positive reconciliation but are you actually and you mentioned you had to blend it to keep everything to get recoveries. But you actually trying to manage obviously you got a stockpile there, gold prices are higher, are you actually trying to manage to the gold price here with therefore taking a little higher grade in near term or is it purely just balancing the blending to get the recoveries of what you're doing?

Dan, you or I can take that but I just want to reiterate we are not managing to the gold price more than anything, Brian. We have been seeing positive grade reconciliations. And I recognize when you look at our guidance for Kumtor and look at where we stand and it's the first half of this year that we're very well positioned in terms of what that could mean moving forward. But in terms of our guidance we continue to maintain it. We continue, we haven't made any changes because I think we just want to be very measured and how we're guiding the market because there is uncertainty regarding the COVID-19 pandemic. But we're definitely not managing to the gold price. It's just been a positive stockpile to mill reconciliation. But Dan, is there anything you want to add to that?

Scott, that's right. Because we're feeding off stockpile over starting six months ago and going for another almost year, yes we're trying to have a steady state maximizing our recovery really is the greater focus.

Great, thanks. That's what I thought but I just wanted to make sure. Thank you.

And there are no other questions. I'll turn it back over for closing remarks.

John, do you want to close the call?

Yes, that's great Scott. Thank you all for joining us on the call today. And I look forward to answering any further questions. So with that, we'll wrap up the call. Thank you.

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