Scott Perry - President, Chief Executive Officer Darren Millman - Chief Financial Officer Dan Desjardins - Chief Operating Officer Malcolm Stallman - Vice President Exploration Yousef Rehman - General Counsel John Pearson - Vice President, Investor Relations

Greetings! And welcome to the Centerra Gold, 2020 Fourth Quarter and Year End 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 Wednesday, February 24, 2021. I would now like to turn the conference over to John Pearson, Vice President, Investor Relations. Please go ahead, sir.

Thank you, Carlos. Welcome everyone to Centerra Gold’s 2020 fourth quarter and year end results conference call. And today we will also present an update on the extended mine life at Kumtor, as detailed in the new Kumtor 43-101 technical report filed on SEDAR today. Summary slides are available on Centerra Gold’s website to accompany each speakers remarks. Today’s call is open to all members of the investment community and media in listen-only mode. 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. As we continue to work remotely, joining me on the call today is Scott Perry, President and Chief Executive Officer; Darren Millman, Chief Financial Officer; Dan Desjardins, Chief Operating Officer; Malcolm Stallman, our Vice President Exploration, and Yousef Rehman, our General Counsel. I would also like to caution everyone that certain statements made today may be 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 the description of non-GAAP measures in our news release and MD&A issued this morning. For a more detailed discussion of the material assumptions, risks and uncertainties, please refer to our news release and MD&A, along with the audited financial statements and notes and our other filings, all of which can be found on SEDAR and the company’s website at centerragold.com. Now, I’ll turn the call over to Scott.

Thanks, John, and good day everyone. Thank you for joining us for a call. I'm just going to be referencing or accompanying the presentation slides deck and I’m just starting off on slide number four. Just on the top left here on slide number four, a number of sort of key highlights that I just like to expand on. Just starting with the first bullet point, and you can see 2020, it was a very strong year for the company. In terms of our gold output profile, we finished with 824,000 ounces of gold, which was above the upper-end of our guidance. Mount Milligan mine produced 82.8 million pounds of copper and our corresponding all-in sustaining cost was a very low competitive $729 per ounce, which was below, favorably below our guidance, so an excellent operating result to the company. Substituent to year-end, we announced that we had divested our 50% share in the Greenstone Gold Mines Partnership to some $200 million in cash consideration, plus additional contingent payments of up to $75 million. Just looking at the third and fourth bullet points, you can see that the strong level of production and the corresponding lower unit cost really resulted in some significant profitability. In terms of operating cash flow during the calendar year, we generated $930 million and then if you look at the fourth bullet point, in terms of the free cash flow metric, companywide our portfolio generated $604 million of positive free cash flow. As you can see in parenthesis, each of that individual operations contributed very meaningfully, Kumtor generating $438 million, Mount Milligan generating $159 million and then Öksüt, which is our newest operation in our portfolio, in its inaugural year of operations it contributed $105 million of positive free cash flow. The next bullet point…

Thanks Scott. Good morning everyone. Before I get started, I'd like to recognize the efforts of the many employees, the contractors, consultants who worked tirelessly over the past year to bring forward this new technical report and extend the life of mine for Kumtor. I’d especially like to thank the Kumtor employees for the results that they put forward in 2020 under such challenging circumstances during COVID and after our tragic accident that we had in 2019 and early 2020. Since then, as Scott has indicated, we've had an excellent safety record at Kumtor where today we are at 331 consecutive days, with little lost time incidence. I’ll take you to the next slide of the agenda. This is the agenda we’ll be going through. I will take you through the technical highlights which Malcolm Stallman after us, he is our VP of Exploration, he’ll discuss the Kumtor exploration potential. As an introduction, we've been operating the Kumtor Mine now for some 24 years and have been operating since 2009 under the concession agreement which was a comprehensive rights agreement that runs until 2042. During this time we have not had a meaningful operational interruption and we anticipate to be able to continue under the terms of this agreement going forward. If you go to slide 13, this is the layout of the concession. The grey area in the center is the footprint of the ultimate pits and you can see that our Central Pit and Sarytor Southwest are now coming together along straight lines, which extends both to the southwest and the northeast. If you go to slide 14, Kumtor is certainly a world class assets. There have been many years with production in excess of 500,000 ounces and we anticipate this level going forward with this new life…

Thank you, Dan, and good morning to everyone. I’ll now briefly discuss the exploration completed at Kumtor in the recent past and we’ll then outline the planned exploration for 2021 and beyond. The first slide will be slide 55. As mentioned, exploration drilling resumed at Kumtor in mid-2018 after a five year hiatus. In 2018 and 2019, drilling was mainly focused on the development of resources in the hockey stick and stop work zones and this work to find mineralization outside of the ultimate open pits in these areas. The photo on this slide is looking towards the southwest, which shows the Hockey Stick zone and you can see it, the substantial size of the Central pit. In 2020, drilling focused on extending sulphide mineralization at the southwest and Sarytor Deposits resources, evaluating oxide gold mineralization potential along the Kumtor Lower Thrust at Sarytor, Hope, Triangle, Muzdusuu and Northeast, and also we began testing the potential of peripheral targets in the Bordoo, Akbel, Lysii Gap and Petrov areas. Slide 56 – sorry, back on slide 55, the map on the left, you can see the Kumtor concession area in red and the location of the main prospects. The Kumtor gold trend runs through the concession in a northeasterly direction for a distance of over 15 kilometers. It should be noted that only around 6 kilometers or so of the trend has been subjected to substantial exploration. Slide 56, this slide shows the extended mine life out to 2031 based on the updated reserves. There was significant potential progressive exploration in the coming years to extend the mine life even further and in particular to fill in the drop in ounces that occurs after 2027. Slide 57, Kumtor is a world class orogenic gold deposit located on the Tien-Shan, Suture Zone…

Thanks Malcolm and look, congratulations to yourself and Dan and your respective teams. This is a very meaningful development and you know still a lot of excitement. There’s still some significant exploration potential here for the success moving forward, so again congratulations. Just on slide 70, just to wrap things up, just in terms of our three year outlook again, you know really on the back of Kumtor’s optimized and expanded life of mine plan, you can see it's really going to underpin significant increase in our companywide gold output levels. You can see that in the fourth row here, in this table. Likewise, just in terms of the corresponding unit costs, if I look at the all-in sustaining cost metric, for example on the seventh row, you can see we’re kind of a you know peer-leading cost structure here in the medium term whose obviously going to make for in a very robust margin and that’s going to really benefit the organization when it comes to our sort of go-forward profitability and free cash flow, and I think that's going to see us you know continuing to strengthen our peer-leading financial profile. So pretty exciting developments, you know particularly so as we look to you know continue delivering sustainable value and growth for the organization and our shareholders. So look, with that, Carlos, our operator, if I can pass it back to you and we can open up the call for the Q&A session please.

Thank you very much sir. [Operator Instructions] Our first question comes from the line of Fahad Tariq, Credit Suisse. Please go ahead.

Hi, good morning. Thanks for taking my two questions. Maybe first on oxide and the difference between 2020 production and 2021 production. Can you just provide more commentary on, I know you’ve given more guidance on grades and things like that, but just, is that what was expected previously? Were our grades expected to be lower than before? Any color around kind of the cadence of the production and the grade specifically would be helpful.

Yeah, it's Scott here. I’ll go first and Dan, you can chime in with any additional commentary, but it’s really just a function of grade. If you look at last year, 2020 calendar year, our stat grade was 1.4 grams per tonne. This year in 2021 we’re budgeting for a stat grade of approximately 1.27 grams per tonne, so that's really what's driving the year-over-year profile. But then in terms of our sort of mine sequencing, mine phasing, as you would depict from our three year outlook. We're going to be moving into a very high grade sequence in calendar year 2022, 2023 and we’re going to see very significant increases in oxide going up in profile. So the short answer is really just a function of the mine grade and you know how that’s disseminated for the ore body and where we’re currently sequencing in terms of our mine plans. Dan, is there anything I missed there or anything you want to add to that?

No, you hit it spot on. It is the sequencing and there is just differences a little bit between the original technical reports and what we're executing now, but certainly you know we're seeing a pretty good positive reconciliation against our resource models, so that all bodes well, but it's simply the release of the different grades ore as we’ve blended, put it on heat.

Okay, great, that’s helpful. And then my only other question on capital allocation, maybe provide your most recent thoughts on how are you thinking about it? I know previously you had indicated that you've done an exercise comparing distribution as a percentage of free cash flow and you know there's an opportunity to maybe raise the dividend, maybe talk about how you’re thinking about capital allocation now knowing the revised concurrent life of mine plan. Thanks.

Yeah look, it’s an ongoing discussion with our Board Of Directors, it's pretty much a standing agenda item at each board meeting and you know as you'd expect, it’s obviously a board decision. You know we have been consulting or liaising with all of our key shareholders and taking their views as well in terms of what they think would be you know the best measure or the best step in terms of go forward capital return initiatives. Likewise now that we publish this new life of mine study for Kumtor, we are also looking to reach out to the political leadership in Kyrgyzstan. Obviously Kyrgyzaltyn is our largest shareholder, so looking to get their views as well. But really everything’s on the table. You know we've been having discussions around potential share buyback initiatives all the way through to our sort of regular quarterly dividend program. You know unfortunate I can't provide any additional sort of color other than it’s under evaluation and we continue to revisit that with the border at each of our board meetings.

Okay, great, that’s it from me. Thanks.

Our next question comes from a line of Brian MacArthur, Raymond James. Please go ahead.

Good morning. I just wanted to follow-up on the Öksü permit, because obviously there is a fair bit of growth going in there. What actually has to be done there to get that permit to get to the higher grade in 2022?

Dan, do you want to take that question, please?

Certainly. The effect on the grade in both 2021 and 2022, there is no effect by the permitting rate now. What we have is, we have an updated in our environmental permit, but we're looking for a final forestry footprint permit in our Güneytepe pit. So as if we were to get that earlier, we could access more or from Güneytepe earlier, but right now there is no effect against our three year guidance that we just put out in terms of the timing of receiving that permit.

Okay. So just so I'm clear, that permit for that other pit is post – I thought when I read it, that other pit you’re saying could be accelerated even faster into it if you get that forestry permit, so that it would be even better in 2022 and 2023, that’s just what I’m trying to figure out.

We have not scheduled the ore form Güneytepe in 2021, ‘22, that’s correct. Yeah, so because of needing that forestry permit.

Great, thank you. So I just was making sure if I got that right. And the second question, sorry to back to this Scott. I know your somewhat constrained, but on the dividend for our capital return, you know some of your competitors, obviously you sold Hardrock, which is even more money, and with your cash flow you have a $1 billion potential at the end of next year. Is there any thought given to, I mean some of the other companies have dividended out the – what I would call excess proceeds from sale. Is that even being considered, and I realized that’s a board decision.

Yeah, I mean look Brian, we had our board meeting yesterday and we actually, we spoke about that in terms of what [inaudible] for example, in terms of what they're doing with their – I'm going to designate it as a special dividend, the way they are doing it. But in terms of what they're doing we discussed that. I think it’s just difficult right now. We’ve got a new political leadership in Kyrgyzstan and they are our largest shareholder and there are some you know preliminary discussions under way with regards to you know what we could be doing, regards to the capital return initiatives, but we have not concluded those discussions. So that's a key data point that I would like to have in hand and I think the board would like to have in hand, but until we have that, it's just difficult to talk about it any further.

Great, thanks. And that’s very helpful color Scott. Thanks very much.

Next question comes from the line of Trevor Turnbull at Scotiabank. Please go ahead.

Yes, thank you. I had a question, maybe on the Kumtor mine plan. Just specifically on mining costs. I know that you've talked a little bit about longer haulage distances with the with the waste dump configurations and we can see the overall costs and they look very good. But I was just curious, have unit costs gone up given the longer haulage? Can you just kind of give us a sense of kind of where they are today and what they are kind of assuming in the new mine plan?

I'll let you take that Dan, please.

Sure. Actually, we're doing very well today. The – as an example, the last month of the year and in January we are well below the life of mine estimate. We have done some sensitivities on the life of mine, but because it's a large open pit in terms of hauling an extra kilometer, 1.5 kilometers each way is not putting much additional cost. And we are actually operating now substantially below the estimate in the new technical report.

Okay. And I just haven't had a chance – I know you've posted it, which is great, so we will have a chance to go through it. But can you give us a sense of what is that unit cost in the new report? I haven't had a chance to see it yet.

I'm going to – I believe it's $1.35 per tonne.

Yes, okay, that's close enough. I was just curious. I did have a question also just with respect to the new reserves you guys have put out. I know you're using $1,250 for Mount Milligan and Öksüt. And I'm trying to remember if that's also what you've told us in the past, Scott, that you've used to look at project evaluation, things like Hardrock. But I was wondering why the difference at Kumtor, why that one is slightly different at $1,350 versus the $1,250 in the other parts of the company?

Yes Trevor, just to your previous question, I've got it in front of me, it's $1.39. So Dan was essentially correct, he quoted $1.35. It's $1.39, when you get a chance to review the report. Trevor, when we were looking at the economic analysis for Greenstone and Kemess, the long-term gold price assumption that we've always used is $1,350. So you and I may just not be recollecting correctly, but in past conversations, it has always been $1,350 and then yes, you're correct, as you noted that's the same gold price assumption that we've used in Kumtor's 43-101, so I don't think there's been any change.

Sorry, yes, I couldn't remember. And that's partly what I was asking. So why still stick with $1,250 on Mount Milligan and Öksüt? Is that just for historic reasons rather than kind of true it all up to the same level?

Primary reason being that with this year's – with the reserve compilation that we did, it's just a depletion of the existing 2019 year-end reserve, and so given that we're just depleting a – we just left all the assumptions the same.

Okay, yeah, that makes sense. And maybe just a quick question with respect to project evaluation, you know Brian was mentioning you've certainly got a lot of cash. You're on track to have more cash and you've divested up some non-core projects. Going forward, when you do look at things and opportunities, is one of the things you factor into the economics, when you say look at a project at $1,350, do you also factor in any acquisition costs that go with that? Does that have to get factored into the – to the economics at $1,350 to make that decision or is the project kind of ex the acquisition cost?

Yeah. No, if we were to be looking at an acquisition opportunity, absolutely our Board would insist that the acquisition cost is included. So what we'd be looking at is the all-in acquisition cost rate of return. The answer is yes, absolutely. The acquisition costs would have to be included in the economic analysis.

Right, okay. And then I guess my final question, just going back to Kumtor and the government. It doesn't sound like from some of your answers that you've had a chance to really sit down and go through the new mine plan with the government yet. Can you remind us kind of what the next step from the government is with respect to the new mine plan? Do they have to issue approvals, still give you annual approvals? Do they need to look at this new mine plan and then get back to you on anything going forward?

No, in terms of approvals and our permits and what have you, it's just that's issued annually and we received all of those approvals back in December of last year, so we're fully permitted for calendar year 2021. Yes, in terms of this new life of mine plan, yes we welcome the opportunity to sit down with the government and discuss this because I think it's a fantastic development for Kyrgyzstan, just in terms of ongoing contributions, as Dan spoke to, in those various stewardship slide. But Dan, do you want to chime in? I can't think of anything else that we'd need in terms of sitting down with the government, in terms of approvals and what have you?

No, you hit it exactly right. We get an annual approval of subsoil and safety and environment and you can only apply for them two months ahead of time, so we do that at near the end of the year. And we've had a really excellent relationship with the state agencies in the last few years, so we're always working closely with them, so...

Since the elections and the new government, have you had them reaching out or Kyrgyzaltyn, they are kind of reaching out to you at all with a respect to Kumtor? I know there's been a few headlines out of the country with respect to mining in general, but has Kumtor come up at all or have they initiated any discussion on their end?

No, not really Trevor. I mean obviously we've got three directors on our Board who are representatives of the Kyrgyz government, so we've had a lot of discussion with those three Directors. But in terms of liaising with Kyrgyzaltyn, the most recent correspondence was really with regards to this new life of mine plan that we issued today, where they were looking to understand what is kind of our go-forward development plan for the next five years, plus for Kumtor. And so now that we've got this in the public forum, it's going to really facilitate good and healthy discussions.

And just with respect to the directors, there's been a little bit of a change I think in the exact people from the Kyrgyzaltyn side. Is that fairly typical that as governments change, that the directors representing the Kyrgyzaltyn interest tend to change as well?

I would say in the time that I've been with the company Trevor, which is 5.5 years, yes it has been typical. When you've seen a change in leadership, we have often seen some changes in terms of their representatives, in terms of their appointee to the Board. As you noted, I think it was back in December of last year, one of the directors, that there was a change. But to the best of my knowledge, and I've got an annual general meeting coming up, to the best of my knowledge, the current three appointees are likely to be continuing, moving forward over the next 12 months.

Okay, that’s all I had. Thanks Scott.

Our next question comes from the line of Mike Parkin, National Bank. Please go ahead.

Thanks guys for taking my questions. With respect to – like if you go back into the early slides of 61, 62, this oxide zone that you're drilling, you've got really big widths, very decent grades. What's the thought on that? Is it something that you would approach through an open pit or is it something given that kind of width, a potentially implied strip, you'd prefer to go at it as an underground?

Dan, do you want to take that, please?

No, certainly – obviously, we’re still in the exploration phase, but I believe right now all of the plans we'd be starting to look at would be open pit. The ground material in the whole concession is very, very weak, and they would be very tricky to do anything like that underground, but right now our whole focus and our whole set up is open pit, so – but we still have to bring it to much further study. These are exploration results. We don't have a resource pit yet or you know bring it to that stage, but right now I would be thinking that we'd be at a large open pit.

Okay. And on that, you mentioned plans to have some maiden resources. Will you have maiden resources on the oxides or just are you focused more on getting that maiden resource focused on the additional sulfides in that region or a combination thereof?

Malcolm, do you want to respond to that one, please?

Yes, it’ll be a combination. Some of the shallow oxide material, we hope to have maiden resources on that and also some of the extensions to the sulphides like the Koshuluu Zone instance, where you have to – have resources announced on that towards the end of the year or early next year.

Alright, super. That’s it from me guys. Thanks very much and congrats on that Kumtor. I like the mine, very impressive.

Thanks Mike.

Next question from the line of Dalton Baretto, Canaccord. Please go ahead.

Thank you, operator. Scott and team, congrats on what looks like a very robust medium-term outlook here. Just a couple of quick questions from me. First of all, just on what Brian and Trevor were asking with regards to the new Kyrgyz leadership. I know you've just engaged them post this mine plant, but do you have a sense for what stream the new leadership prefers in terms of capital return to them? Are they happy with receiving dividends at the corporate level to Kyrgyzaltyn? Are they looking at the revenue based tax number at all? Just anything around that?

Yes Dalton, they've always been – they've always had a high affinity to our dividend distribution, so that is certainly on strategy from that perspective and I think I'm comfortable saying that if we were to increase the level of our dividend distribution, that would be received well. But just in terms of some of our thinking, our evaluation, just some recent conversations, they are our largest shareholder. They own 26% of our -- at the parent entity level and so as you know we've got pretty much a peer-leading balance sheet that's continuing to grow. So in terms of our valuations, we're also looking at would there ever be merit in like doing a substantial issuer bid? Is that something that Kyrgyz would want to participate in? That could benefit both sides in terms of the Kyrgyz taking some money off the table, but likewise we're compressing our overall share count. They maintain the same equity ownership, you know that's one scenario. You know we need to have further discussions on that and do further evaluation. But you can imagine there's a whole kind of hodgepodge of different capital return initiatives that we could be pursuing, and so these are the things that we're kind of deliberating on, discussing with our Board as well. Does this make sense, is it on strategy and these kind of conversations will continue.

Okay, great. And then a somewhat related question. Now that you've sold Hardrock, is M&A on the table at all and do these discussions have to be a precursor of any M&A or can that happen separately?

If you look at the current sort of gold price environment that we're in, and valuations are kind of prohibitive in terms of finding compelling sort of acquisition opportunities. Right now I feel that what we've been doing at Centerra is just trying to put our heads down and just really focus on execution and I think that served us well, particularly so at Öksüt, just in terms of the very smooth ramp up, etc. But I find by and large, we've been pretty focused on just execution. But look, if an opportunity was to present itself that had a compelling all-in acquisition rate of return, then it's something we'd have to consider and evaluate, but right now it's not something that we're going to be – right now we're not spending an inordinate amount of activity on that. We're still pretty internally focused and as you get a chance to digest the new 43-101 for Kumtor as well as the exploration upside that we're seeing there, I actually think that's our most compelling short-term opportunity for the organization in terms of creating ongoing additional value. So that's where I would see us spending a significant amount of our time.

Okay, great. And then o I have had a chance to actually take a brief look at the tech report and a couple of questions for me. Number one, the tech report, and I don't know how much of a risk it is and I'm hoping you can tell me, but the tech report flags the possibility that you may not get permitted to raise the Tailings Dam anymore, in which case you would need to build a new dam. Can you just give us a sense of how much of a possibility or probability that is and what the associated costs would be if you did have to build a new tailings dam?

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

Yes, certainly. It's an outstanding item, and that's why we included it on the risk. In terms of conversations we're having, we don't believe that it would be rejected. Our engineering information is such that it well supports the raising and the stability of the dam. That being said, we do have areas where we currently excavate for material for the dam. We haven't costed it all out, but those are starting to be studied, not only for a tailings capacity, but also for potential reprocessing, because we would need a second Tailings Dam anyway. But right now we don't have final engineering cost on that, but I would have thought it would be that much different than the raising of the current dam.

Okay, and then just maybe one last one for me. These Golden Sunrise projects look fairly compelling. What stage are some of these? I mean, can we expect to see feasibility level studies on some of these in the near to medium term or are these still at very early stage?

Dan, do you want to take that, please?

Certainly. Obviously, there's – they're all in different stages. We've already started. For example, we continue to look at our recoveries, but in terms of tailings reprocessing, we have taken a number of samples. We are working with different consulting companies to study those, to see what type of methodology we could use to recover. So that is certainly in this – certainly early studying. In terms of understanding the ore zone underneath the current plant, you know it's part of our infill drilling and also some of the exploration drilling. So as we understand that better, but it's still certainly early days. We haven't cost it up. We have a large range of what it would cost to build a new plant, but as we understand, the oxide opportunity that would substantially affect our approach to the size of plants and its ability to process different types of ores. In terms of conveyor belting, we have – a couple of our engineers are taking a look at that, looking at different activities around the world to see how other people are approaching it, as well as other new methodologies for moving waste rock. Our strip ratio was quite high, and we've moved the rock a long way. So certainly it’s part of our – embracing climate change activities and utilizing green power, we will continue to study that, but I wouldn't – we're not at a point where we're getting engineering to a stage of pre-feasibility or anything of that on any of these opportunities.

Okay, thanks for that. And just maybe one last one for me, Scott. You know Kemess, given what copper prices have done, are you thinking any differently about that now?

We're not. Dalton, as you I’ve discussed in the past, and that hopefully I've discussed this in past earnings conference calls, but you know we had our strategy session back in September with the Board and we looked at both of our sort of development projects being Greenstone and Kemess. And based on our long term assumptions, which was $1,350 gold and kind of $2.50 copper, we're not seeing a compelling rate of return or a compelling value proposition on either project. So we've actually deprioritized both of those projects. As you've now seen, we've actually divested of the Greenstone project. In terms of Kemess, where I think the current copper price environment comes into play is that if we have to deprioritize it, is there an opportunity for us to surface value here for our shareholders in terms of, is there some kind of earn-out structure that we could do by combining with a more strategic partner or someone who's got more of that skill set when it comes to underground block caving or even as part of those sort of discussions you could end up seeing us doing an outright trade sale, similar to Greenstone. So that's how I'd kind of characterize Kemess at the moment. So just to make sure I answer your question, the current copper price environment, having no influence on us in terms of changing our mind on that project, having been deprioritized.

Makes sense to me. There’s a lot of app [ph] to track your Copper out there right now. Congrats guys!

Thank you.

Next question comes from the line of Anita Soni, CIBC World Markets. Please go ahead.

So most of my questions have been answered, but one thing that I just wanted to clarify is when you do your ASIC, you're not including the stripping costs, are you?

When we – in our quarterly results or in the new 43-101, capitalized stripping is included in our all-in sustaining cost metric. It is included.

It is included. So then what's the difference between the all-in sustaining costs and the all-in cost?

It is the gross revenue based taxes that we pay, and if you're referring to the 43-101, it's also the additional growth capital, a large portion of which is associated with the mining equipment fleet expansion. Darren, I know you're on the line, have I missed anything there?

Well done. You get 10 points for your accounting there, Scott.

Thanks. And then in terms of the resources on the Kumtor that are not included in reserves, what -- I mean first question is, what is your dilution rate as it goes from resources to reserves? And secondly, what would it take to get those – that mineralization into the mine plan?

Dan, do you want to take that if you have that on hand?

I don't, but we do potentially -- Bob could potentially speak to that. Bob, please?

Yes, sure, thank you. Yes, we have a dilution estimated between 8% to 10% in conversion from the resources to reserves, and the majority of the resources that hasn't been included currently are outside of the current ultimate pit design, based on the current economical parameters.

Okay. So it might just be the gold price or is there a significant – is it the stripping ratio as well that might be impacting that or...

It will be a combination. Of course, stripping ratio would be correlated with the gold price and which would give us overall the profitability and potential conversion for the remaining resources to reserves.

Right. And what -- I mean, can I just ask are – I admit, this is getting a little too fine tuned. But when we're looking at where you are in proximity to the pit or like what – are they evenly distributed around the pit wall and below the pit or is it just predominantly maybe where the glaciers are?

No, it's not reflected by the glaciers. This particular organization we are talking about, that's a strictly sulphide one that is on the main Northeast, Southwest trend of the Kumtor deposit and it's included in the bolt in the Central Pit than the smaller one to the Southwest, Sarytor and Southwest, and they are below the current pit design, simple like it's not currently economical to go deeper with the pit and get up – and pick up those because it would require a pretty big pushback as well. And also keep in mind that we have a buffer zone due to the mill, as Dan noticed that we have Golden Sunrise, and we have to evaluate all resources together, including oxide and potential additional sulphides and how that new pit design will look in the future.

Okay, and then just moving back to Öksüt for a minute, I know the old technical report had a different number. I think somewhat closer to 200,000 ounces for Unit 2. Can you just walk me through what the changes were? I know you're talking about grade, but why a grade change? Most people are trying to get their capital costs back upfront?

Dan, do you want to respond to that? I think the theme on the sequencing and the phasing?

Yes, exactly. It is certainly both, a combination of the sequencing between pits, Güneytepe and Keltepe, but also the sequencing of the release of ore in Keltepe. We have been studying the geotech stability on certain walls and we've just adjusted our mining plans to do further stripping ahead of – out of hitting the higher grade ore at the bottom. So it's simply the safest sequencing within the current pit shells.

Okay. So then what did the old technical report have as the – at the end of this year, what would it have been in terms of your overall pit angle and what are you changing it to?

We'll have to take that offline, the material.

Detail, okay. Alright, okay thank you very much.

Next question comes from the line of John Tumazos, John Tumazos Very Independent Research. Please go ahead.

Thank you very much. Your stock trades at a single-digit PE, maybe it implies a discount rate of 12% by the market. What is your policy on share buybacks and how big of a discount would your stock have to trade at for you to buy back shares?

Hi John, it's Scott. We don't actually have a formal policy when it comes to share buybacks. As I mentioned in responding to an earlier question, you know it is something that we've been discussing with our Board. We are looking at potential, possible capital return initiatives. I mean we're looking at you know every in that’s typical in terms of what you'd find in that sort of toolkit, so you know dividends looking at normal clause issuer bid, substantial issuer bid, I mean all of that is being deliberated and discussed. I've been having a number of discussions with our sort of institutional shareholders and am also looking for input from our number one shareholder which is effectively the government of Kyrgyzstan through Kyrgyzaltyn. We're also seeking their input and then you know looking to take that all into account. We'll discuss that with the Board and see where we land. It's hard for me to answer your question, because we don't have any sort of formal policy in place.

With the sale of Hardrock and Kemess being not a priority, what do you expect would be your largest capital needs over the next several years, and with acquisitions being expensive, does that sort of create return to capital by default?

I think that's something that we're evaluating, John, absolutely, because as you've noted, the balance sheet is strong. Your question with regards to capital expenditure requirements, I mean all of our operations are positively free cash flowing and we expect that to be the case as per our guidance for the next three years. But you know nonetheless, when it does come to your sort of capital investment opportunities, I think there are various opportunities that Dan and Malcolm spoke to at Kumtor in terms of some of those Golden Sunrise opportunities. We're going to continue to invest in drilling and we've potentially got this new oxide gold mineralization system, which is potentially exciting and with the passing of time if we can prove up the scale of that and prove up the merits of that, that could be an exciting step change for the property, which would come as a capital investment. None of this is currently reflected in the now recently released 43-101, but it's an exciting opportunity in terms of a subsequent chapter over and above what we're currently illustrating in the new life of mine.

If I could ask one more question, forgive me, and it's sort of water over the dam. I'm surprised the price for selling half of Hardrock wasn't a little bit more. And the projects would seem to have improved with Equinox arriving as the 50% partner. Was the rationale there simply capital cost avoidance?

The rationale there was that you know we use a long-term gold price assumption of $1,350 and when you run it at that assumption, you look at the result in sort of economics and value proposition, it wasn't meeting Centerra's internal sort of hurdle rates. And so as I mentioned, we deprioritized that project. I think it ended up being a win-win for both partners in terms of ourselves and Premier. The face value of that deal, the indicative valuation was approximately US$300 million, and from memory that's at $1,650 gold price, because I'm including the contingent consideration payment. But anyway, if you take that number, if you accept that number that I just quoted, US$300 million, as and when we announced that deal, that was higher than the street consensus estimates for the value of the project. And I think it was received well as and when we announced it and we have had positive feedback from our shareholders. So I don't think we have any regrets in terms of what we've – in terms of that deal.

Thank you very much.

Our next question comes from the line of Terence Ortslan with TSO & Associates.

Just a couple of questions Scott to you actually as well. Just a fragment of it has shown up so far. With respect to capital allocation, how much of room do you have to increase your exploration budget, because we see so many juniors right now with great land positions, but scarcity of capital, but the land positions are pretty important in the gold belt in North America for instance. But given the geopolitics that you have, would you be spending more exploration money in North and South America for instance?

Our global exploration budget for this year is US$50 million to US$55 million, which is a significant increase relative to the trailing sort of five year period. So we have been growing our exploration budget and that's largely success-based driven. If you look at the majority of our budget dedicated to Kumtor, as Malcolm mentioned, we're attempting to achieve a record budget this year. We're looking to invest $21 million in drilling. But what we're targeting is an additional 75,000 meters of drilling and if we can successfully achieve that, that will be a record level. Again, that's just based on all these additional targets that we're now pursuing. The majority of our budget is really brownfield focused. So when I say brownfield, it's focused on our existing operations. So again, we've got meaningful budgets at Mount Milligan as well as Öksüt in Turkey. And then in terms of our sort of greenfield exploration budget, which is sort of early stage opportunities, we tend to be focused on those jurisdictions where we're currently operating. So North America and let's say Central Asia; we don't have any presence in South America, which was a part of your question.

Okay, thanks. On Kumtor I have a few questions. How much flexibility is there if the price of gold on a sustaining basis goes above $1,600, $1,700, $1,800, let's say, what flexibility is there for a cut-off grade change and also the expected mine plans?

Dan, do you want to take that, please?

Yes, certainly. So we're currently using a cut-off of 0.85 grams. We have studied that quite extensively. There isn't very – it's not a high percentage of ounces that are below that. So we already have a very high strip ratio and the pit is very large. So we're obviously mining it all. But the cutoff is 0.85, and there's just not that many ounces below that, so the higher price would not dictate then much of a change there.

Okay, thank you for that. And in the discussions with the government that you have, it goes back to the revenue-based taxation that's been an issue in the mining industry. How much of a discussion is there if revenue-based taxation changes, which also will change your cut-off grade one more time, it's another reason for that, so there will be a longer mine life.

The revenue-based tax, so we remit 13% of our gross revenues to the government in the form of our annual taxes, we don't pay any income tax. So that gross revenue tax of 13%, that's dictated by our 2009 investment agreement, which is like our stability agreement. And so that really dictates what is the fiscal code for Kumtor up until 2042, which is the length of duration of all of our concessions. So that's kind of – you know it’s a stability agreement. It's like subject to international law, international arbitration. So that has not been a discussion with the government.

Okay, and not likely to come up. Coming back to the oxides at Kumtor, what were the magic number of grades and ounces to justify a) let's say, an economic sized mill to follow it up; 3 grams, 3 million ounces, 4 versus 4? What would be the minimal number you would consider to put a mill up there?

I apologize Terence, we're just not in a position to answer that right now. It's just too preliminary. We have to do a lot more evaluation and what have you to fully appreciate what is the scale? It looks like it leaches well, but we've got to truly – you know a lot of engineering to do just to truly ascertain how you would develop and extract it, etc. so it's just too early.

Thanks. A great presentation on Kumtor one more time. Thanks again guys.

Okay.

And we have no further questions on the phone line.

Okay, thank you Carlos. John, did you want to close the meeting or...

Yes, thank you. Thank you everyone for joining us on our call today and we will end the call right now. Thank you.

That concludes today's call. We thank you for your participation and ask you to please disconnect your lines.