Centerra Gold Inc. (CGAU) Q4 2020 Earnings Report, Transcript and Summary

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 below, obviously the strong level of free cash flow. You can see that we're quickly establishing a peer leading balance sheet. It’s a debt free balance sheet and we finished the year with some $545 million U.S. of cash reserves. One of the other key highlights in today’s announcements, is we’ve also relate our new technical report, our new 43-101 life of mine plants at Kumtor. It features a five year extension to the mine life, the new delineated mineral reserves of some 6 million ounces of gold, which is an increase of some 3.1 million ounces. And also in terms of the grade, the reserve grade, it’s increased by approximately 15%. This is a fantastic development and Dan, our Chief Operating Officer will expand on this shortly. You can see the charts on the bottom here on the slide four, you can see all of our operations. We’re generating meaningful levels of free cash flow throughout the year. I think what really strikes me is the third chart, just on Öksüt. This is pretty exciting, this is our most – this is our newest operating mine. We brought this mine into operations in January of this year – I'm sorry, January of last year where we poured first goal. At the end of May we declared commercial production, and then you can see in Q3, Q4 just the very meaningful levels of free cash flow and profitability that the mine is already demonstrating. So it’s exciting as we make our way into this year, and beyond just in terms of having a third source of high quality, low cost production and just what that means for our fundamentals moving forward. Just moving onto slide five, just in terms of Centerra’s ESG profile, just a few bullet points you know I’ll reference. First bullet point, obviously our focus is on zero harm operations. We have a number of leading, sort of safety leading initiatives underway as we speak. We are seeing some benefits of our work-site, on-site program. I think two notable milestones during the year, Öksüt mine in Turkey celebrated four million hours of lost time incidence free operations, and at Kumtor as we speak, we are getting relatively close to being one year of lost time incident free operations, where as of today we're now at 331 consecutive days. Second bullet point, just in terms of our social life, this upgrade, we’ve now extended this record to 90 consecutive months without having any interruptions at any of our operations globally, so that’s in good stead. And the third bullet point just in terms of environmental incidents, we had no reportable environmental incident in the quarter as it should be, so that was great to see. And then just touching the last bullet point, we Centerra are a member of the World Gold Council and the World Gold Council recently rolled out their responsible gold mining principals. We are a signatory to these principals. There’s 51 key, sort of ESG principals and we are looking to roll all of these out and obtain compliance over the three year period. We are good stead at all of our operations and in fact at Öksüt we are actually well ahead of schedule. We have already established assurance in 2020, albeit that’s not required until 2022, so progressing very well. Just moving to on slide six, just a number of key corporate highlights here, I’ll just reference tree of four. But just you know in the fourth bullet point, I think one of the things that really differentiates Centerra is that our low unit operating cost profiles, you can see here on a company wide basis, our all-in sustaining cost of $729 per ounce was very competitive. As I mentioned, that was favorably lower than guidance. You can see in parenthesis there, just each of the individual mines, they really are operating at that sort of first quartile relative to the world industry cost; the Kumtor at $741, Mount Milligan at $541 and Öksüt at $494. That obviously always positions us really well just in terms of our margins, you know regardless of what prevailing gold price environment we are in. The sixth bullet point, I mentioned this at the outset. A key update today is that, a new life of mine signed for Kumtor. It’s a five year extension in the reserve mine life and that's going to extend operations to 2031, which equates a 11 year delineated mine life moving forward. With today's release, the next bullet point we are providing our guidance for 2021, which is a component of our new multi-years, three year guidance, but in terms of the 2021 guidance, you can see we are guiding for a mid-point of 780,000 ounces of gold and some 75 million pounds of copper. Last bullet point, at this level of sort of metal output, as well the associated all-is sustaining cost guidance, we think the business will be generating cash flow from operations of $750 million to $800 million and corresponding free cash flow of $350 million to $400 million. This is assuming a gold price of $1,750 per ounce. Just on the next slide, on slide seven, just some of the key financial highlights. You know the first bullet point, it was a good year financially for the company. We finished the year with calendar earnings of sorry – we finish the calendar year of next earnings of $408.5 million, which equates to $1.38 per share. The third bullet point, as I mentioned earlier, very strong year in terms of free cash flow, $604 million was generated during the calendar year. Fourth bullet point that allowed us to finish the year with a very strong treasury position. We’ve got a debt free balance sheet and finishing the year with cash reserves of some $545 million. And just the fifth bullet point there, you know yesterday the board again declared approved a quarterly dividend of Canadian $0.05 per share. Just moving on to slide eight, slide eight just gives you a little bit more detail just on our guidance for 2021. You can see just in terms of the first row here, this is our gold production guidance. Kumtor, we are guiding up to 510,000 ounces of gold, Mount Milligan up to 200,000 ounces of gold, and Öksüt up to 110,000 ounces of gold production. Just want to provide a bit of additional sort of commentary just on the quarterly profile within the calendar year. So just in terms of Kumtor, gold production is expected to rise steadily, throughout the year with the first quarter contributing approximately 15% of the annual gold production targets, and that will then be rising to approximately 35% of the annual target in the fourth quarter of 2021. In terms of Mount Milligan, both gold and copper production are expected to be slightly backend weighted in 2021, with the first half of the year representing 45% or more of their annual targets, while the second half of the year will represent up to 55% of the annual targets. And then just lastly at Öksüt, gold production is expected to be backend weighted, in the calendar year, with the first half of this year representing 35% or more of the annual target, while the second half of this year will represent up to 65% of the annual target. But again as I said earlier, when I look at this sort of metal output profile that we are guiding too, as well as the sort of corresponding operating cost structure, again assuming a gold price of $1,750, we’re expecting this year to be another meaningful year and guiding to free cash flow of $350 million to $400 million U.S. Just moving on to slide nine, this is our new multiyear guidance, and we are now providing a three year outlook for the business and I think it really does illustrate the medium term strength of that business. You can see the fourth row here, we are expecting a growing level of gold production here over the three year period, and that’s been underpinned really by each of the operations. If you look at the first, second and third rows, each of the mines are generally increasing their levels of gold output moving forward, which is a nice profile, because then when you look down on the seventh row, just in terms of the all in sustaining costs, that is kind of having a favorable economies of scale, deflationary impact in terms of our cost profile decreasing over that period of time. So again, relative to the sort of current gold price environment, I think this is going to position us well, just in terms of the margins within our business and as we demonstrated in 2020, I think over this three year period we are very well positioned for growing levels of profitability and positive free cash flow. So that really concludes the first part of our call and as John mentioned in his introduction, I’d like to move into the second part of our call, and I'm going to look to past proceedings over to Dan Desjardins and Malcolm Stallman. Obviously one of the key highlights today was the release of our new life of mine plans for Kumtor. As I mentioned, it’s a five year extension. It’s the addition of some 3.1 million ounces of new gold reserves and more importantly the institute reserve grade is increased by 15%. So it's a fantastic development and what I'll do now is I'll pass it over to Dan, our Chief Operating Officer and he can provide a lot of more color on that. So Dan, over to you please.

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 of mine plan. At the end of 2020, Kumtor has not produced more than 13 million ounces of gold at a sustained, an average grade of 3 grams per tonne. The future see us extending the pit in both directions and the depths with the new Cut-back hockey stick to the southwest and Cut-back 21 and 22 to the northeast. Next slide, in terms of performance, as a very large open pit was substantial ore stockpiles that we blend for the mill feed, Kumtor operates at a fairly steady gold production rate between 500,000 and 600,000 ounces per year, at an all-in sustaining cost of between $600 and $1,000 per ounce. The reserve is now increased to 6 million ounces at an average grade of 2.66. The previous announced increase in resources have been reduced because of this conversion. Just in the past year in 2020, Kumtor had an operating cash flow of $661 million and a free cash flow of $438 million U.S., which shows the quality of the asset. With the exploration drilling program that commenced two years ago, that had been previously stopped for five years, we successfully increased the proven and probable reserves by 87%. We have continued our near mine exploration program in 2021 with the goal to identify further extensions of the current pits, as well as nearby mineralization. Currently we are not anticipating a start to the underground as current plans require access from the bottom of the central pit, which is currently an active mining phase. This opportunity continues to be analyzed and better understood. If I take you to slide 16, as a result of additional reserves the mine life is now extended from 2026 to 2031. As part of the life of mine extension we have planned to add a small percentage of new equipment which I'll detail out in a future slide. The new life of mine reflects a $1.96 billion net cash flow at $1,350. This increases to just over 3 billion at $1,600 gold. There is limited additional capital requirement, but we have plans for focused capital improvements in the plants to increase recovery and throughput. These include additional leach tanks and a new tower mill. The new life of mine calls for increasing the Tailings Dam each year in the same way that we have over the past few years, by adding additional capacity as required within the current footprint. Finally, our near mine exploration drilling has outlined significant oxide potential and future near term drilling will be focused on this as well as extending the sulphide reserve and resources. Taking you to the next slide 17, here highlighted in red you can see the reserves have increased to just over 6 million ounces. The year-over-year change in reserve and resources reflects a strong conversion of resources to reserves. The 87% increase in reserves gives Kumtor an additional five full years of production. Note, the grade and the reserves also increased from 2.31 to 2.66, giving robust economics of $1,350 in the technical report. The Kumtor underground resource stays fairly much constant at 3.1 million ounces and we continue to do engineering work to tighten up different approaches that it would take once the Centerra open pit is completed. On the next slide, slide 18 at $1,350 gold for 2021 is reflecting a breakeven in terms of net cash flow. This is a transformation year to allow large stripping of Cut-back 20 and accessing substantial ore starting in the second half of 2021. We are currently feeding from lower grade stockpile for the first half of this year. In 2022 to 2026, the release of ore is sufficient to feed the mill at a steady grade of in excess of 3.1 grams per tonne. Thus we are forecasting to produce up to 600,000 ounces per year for these five years. For the year 2027 to 2031, the current plan is to feed full tonnage but a lower grade blend, therefore averaging 330,000 ounces per year. As a result of the current near mine exploration, and as we learn more the potential to bring forward higher grade blend to these future years, to full potential is planned. The reason for final year of the life of mine being higher than previous years, if we plan to mine out the step out we did for Cut-back ’19, that was taken to increase the stability of the pit wall below the plant. This step out is a higher grade ore area, but will only be accessed near the end of the open pit life. Again, at $1,350 goal, the overall net cash flow from 2020 to the end of the mine life is 1.96 billion, fairly spread over the years. Taking you to the next slide, cover sheet on stewardship for the Kumtor mine. Currently – Centerra currently takes its stewardship of the Kumtor mine very seriously and is making all efforts to fulfill its ECG obligations for the benefit of all stakeholders. On slide 20, as a very large industrial operation at Kyrgyzstan, Kumtor is a substantial tax contributor to the state. Since inception, Kumtor has invested more than $2 billion U.S. paid in excess of $1.4 billion in taxes and is near 10% of the GDP of the country. We also contribute to other social programs, both locally and nationally. The extended life of mine is projected to contribute a further $1 billion in taxes and royalties. To go to the next slide, Kumtor has a very skilled national workforce, with only 1% of workers coming from outside the country. Our competitive wages gives us stability and helps us reduce our turnover that's giving us the ability to retain our top talent. Kumtor’s payroll is near $100 million per year and a very large percentage of our near 4,000 employees and contractors live in the region of the mine. A number of our Kyrgyz employees have been promoted to positions in Canada where we utilize their technical expertise that is world class. As leaders in their respective communities, our employees participate in many ways to help improve the lives of their fellow citizens. In terms of supporting strategic community development, as part of our commitment to the stakeholders, Kumtor works closely with local communities with a focus on sustainable activities, female employment, youth employment and training, as well as all other local community development and investment. The microcredit agency that Kumtor initiated have helped small businesses start and develop and is credited for helping to create near 5,000 new jobs in the region. The extended mine life will contribute a further 17 million in direct support to these many activities. Taking you to slide 23 now, as part of our commitment to our host country, Kumtor has embraced the goal of local procurement. Over 25% of Kumtor supplies are procured locally from near 400 different suppliers. Since the beginning of the mine life, Kumtor has purchased in excess of $1 billion U.S. locally. A particular note: For the past five years, 100% of the food required for our 1,800 person camp is locally sourced. The additional mine life will mean an additional local procurement of near 7 million for the country. Side 24, terms of environmental stewardship. As an important part of Centerra’s social license, Kumtor applies the highest standards towards the approach of managing the environmental effects. We hold ourselves to the highest international standards and focus on transparency. Not only do we do constant monitoring on site, we also contribute to the local area in terms of water management for farming, supply of clean water to local communities and participate in waste management strategies in the region. We have a substantial budget and highly skilled environmental employees and consultants to help us achieve our goals and plan to spend in excess of $50 million over the life of the mine. Now I’ll take you to slide 26, get back to the reserves and resources. As indicated, the reserves over the year have increased 87% from 3.2 million to 6 million ounces, reflecting the extension of the Central pit on both sides. One side 27, this is a reflection of the changes of the dates of the techno report from July 1, 2020 to our announced reserve at year-end. This reflects the depletion of the ore from stockpiles during the latter half of 2020, as we were stripping waste from Cut-back ‘20 during this time. Slide 28, in terms of the plan view. There is only a small expansion of the footprint of the Resource Pit Shell. The Resource Pit Shell in the blue from 2019 is expanded only marginally to the left in the Hockey Stick zone and on the right as part of Cut-back ‘21 and ‘22. The total ounces in a resource shell only changed slightly, but the major change is moving ounces from resource to reserve. On slide 29, you can see that this is a sectional view over in Cut-back ‘21. You can see that we have lowered the pit angle on the right side to account for better understanding of the geo text stability as a result of both, actual mining and additional drilling. This section to the left shows that we are not changing the slope substantially due to good stability in this area. To note the upper green line is the bottom of the pit at July 1, 2020. I move you forward now to slide 31. These are pictures of the open pit design. The ultimate pit, mine pit plan are depicted here. The pictures on the top right labels the mining zones. It is important to note that we are not developing any new pit. On the right you can see the areas that we call Cut-back ‘22, both Cut-back ‘21 and Cut-back ‘20 are below this Cut-back. On the left you see the Hockey Stick and Southwest Sarytor near to the west of the Hockey Stick zone. We are mining Cut-back ‘20 currently up until mid-2022. Then we shift to approximately 25% of our efforts over to southwest and 25% to Hockey Stick beginning in 2021. Southwest is completed by 2023, but Hockey Stick continues all until 2025. Cut-back ‘22 starts after Hockey Stick in 2026 and it is our final mining Cut-back ending in 2028. Sarytor starts during that period of time in 2026 and is completed in 2027, as we need to release the ore while we are doing a large stripping of 2022. Next slide, slide 32. We’ve had question before about the fleet. Kumtor has a very large fleet of CAT haul trucks, combined with Liebherr and Hitachi Shovel. The truck fleet is in excellent condition, but due to the longer hauling distances that life of the mine calls for, an additional 29 trucks. In anticipation of this requirement, Kumtor did procure 11 used 789 from Chile in 2020 last year, as well as ordering 10 news 789D trucks from CAT. The first 11 trucks are on site operating, and two of our new trucks have already arrived. The remaining eight of these trucks are in transit; three are in country and five more will be arriving and operating April. Due to productivity improvements in all, including more fully utilizing the mine sense technology, improving loading and efficiency, truck speeds, we have postponed the finally eight trucks and will only procure them if required. This is why our 2021 capital expenditures are forecasted to be less than what we reported in this technical report due to the eight trucks being purchased deferred and potentially canceled. As for shovels, the Liebherr shovels are our smallest and oldest shovels. So we are looking to trade in the four for four larger shovels, and that’s what's depicted in the plant. The plan has not been finalized and will be continued to be studied. The smaller graders of the fleet are being replaced by larger graders as they are retired given the capability to maintain the longer haul distances. The remaining replacement equipment is simply to shut down the older equipment as conditions warrant and replace them with new equipment. I’ll take you to the next slide, the mining schedule. In the mining schedule you can see the phasing of ore release in Central-pit and separately Sarytor in the southwest. The Central-pit cut-backs of cut-back ‘20, Cut-back ‘21 and Cut-back ‘22 are large. Each take two or even three years and the majority of ore in these respective cutbacks or in their last year. To the balance the ore release, the plan is to have ore released from Hockey Stick, Sarytor in southwest during these large stripping segments. The plan is to keep the feed grade at over thee grams per tonne to have enough ore in stockpile to always have targeted feed tonnage for the plants. Slide 34, in 2020 we had focused on Cut-back ‘20 in the northeast with the majority of the waste going to Central Valley dump as we regained permission to utilize the Lysii waste dump. On the next slide 35, currently all of our equipment used in Cut-back ‘20 and 50% of the waste is going to Lysii and 50% is going to Central Valley. We will ship a small amount of equipment to the southwest later in the year. Slide 36, in 2020 we are much more spread out in our mining zones in the Central pit as well as a large Cut-back in the southwest. Slide 37, in 2023 a majority of the focus is the hockey stick and we begin to do cut-back ‘21 again back on top. This is a projection of our stockpile balances, both in past years and the future years. Kumtor has a number of large areas for stockpiling ore with different grades. 100% of the blend of our mill is managed by our metallurgist team to ensure maximum recovery. A large amount of ore is released by Cut-back ’20, starting in the latter half of 2021, but a very high amount in 2022, thus reflecting the large stockpile at the end of 2022, which is subsequently depleted during 2023. You can see the same movements that we had in previous cutbacks during 2018, ‘19 and 2020. This is the addition and subsequent depletion from cut-back ‘18 on the plant side and from cut-back ’19, which was the cut-back below cut-back ‘20. The next slide, slide 39, Kumtor has three main dumps. From left to right they are Sarytor, Central and on the right Lysii. These dumps have all been permitted for their footprints and no new dumps are planned at this time. Over the remaining life of mine, Central will receive 40% of the waste, while Sarytor and Lysii receive 30% each. The loading of each waste dump is tightly managed to limit any risk of movement. Now we shift to the mill. The process flow of the plant, slide 41 has only one change, that being the addition of a Tower Mill, which is planned to be commissioned in October of this year. The additional leach tanks have been delayed from the targeted operation in late of 2020 due to construction issues mostly caused by limited manpower due to COVID. They are anticipated now to be operational in the second quarter of this year. In terms of mill statistics, slide 42, the Kumtor mill has an excellent mechanical availability of 97%, which has been demonstrated over the past few years. We have a strategy at 2x per year of full maintenance shut down and it has proven very successful to keep the mechanical availability high. The plan is to run the plant at $6.5 million tons per year and with the additional leach time due to the new tanks and finer grinding with the Tower Mill, the recoveries are expected to be in the mid-80’s with most of the different feeds. Recovery due to – it will vary due to grade in ore type, but that is taken into account in our planning and focused on when we decide ore blends by our metallurgists. Slide 43 shows the Tower Mill and leach tanks. The capital addition of the Tower Mill and leach tanks are well in programs and both will be contributing to improving our recoveries and increasing our ounces starting this year, and will continue for the life of mine. On the next slide 44, the current tailings storage facility is very robust. With the additional five years of life, the current footprint is only slightly increased and the lifts each year will give us sufficient capacity for non-stop operations. The following slide shows some details on the raising of the dam. The dam is engineered to world class standards by third party experts and external experts to do an annual audit, an inspection of the condition and help us manage the dam. To improve stability, the strategy of excavating a shear key at the foot of the dam to the depth of 20 meters into the base has proven to be very effective. As can be seen on the table, the capital cost of the tailings raising is spread over the remaining life of mine. Construction is contracted out to local earth work contractors and is completed during the warmer summer months of April through October of each year. Finally, we'll bring it to the financials in slide 47. As indicated in the summary highlights, the new life of mine reflects $1.96 billion in free cash flow, a $1,350 goal. Starting in 2022 we have five solid years of production, each producing near $200 million free cash flow at $1,350. The all-in sustaining cost during the same time is in the $650 to $900 range and the life of mine comes in at a very competitive $828 an ounce. Mining cost per tonne were higher in 2020 due to the reduced tonnage, but at full mining rates the mine can run at an average of $1.39 life of mine. Drilling costs are steady near average at $11.34 a tonne. Mill and administration costs come in at $9 and $7.87 life of mine. Next slide, net cash flow at $1,350, it is only during the large stripping years of 2021 this year and 2027 where we are feeding lower grade stockpile or resulting in a break even cash flow. The NPV comes in at a robust $1.55 billion at a 5% discount rate and $1.37 billion at an 8% discount rate. Next slide, in terms of operating costs quickly, Centerra has a long history and experience operating the Kumtor mine, therefore the costs of operating are well understood and is very world competitive. Even with including sustaining capital, the mining cost comes in at $1.66 per tonne mined. The milling cost is just over $12 per ton milled and administration just over $8 per tonne milled. On the next slide, slide 50, as Kumtor is well established and the additional life, life as extension of the current pits, there is little growth capital required to extend the life of mine. Our all-in sustaining costs per year in the full mining years ranges between $400 and $510 million per year. Once mining is completed in 2028, then the remaining three years, the all-in sustaining cost drops to $250 million to $300 million per year. The whole life of mine average all-in sustaining cost grounds comes in at the $853 per ounce, and inclusive of gross revenue tax and capital growth, we are still very competitive at just over $1,000 at $1,044 per ounce. In terms of capital expenditures on slide 51, a majority of new equipment needed to execute the plan is scheduled to be purchased in the first three years. After that the majority capital is mobile component replacement than the annual raising of our Tailings Dam followed by our annual mill maintenance type repairs. If you look at sensitivities, at a 5% discount rate the NPV does come in at $1.6 billion. The value fluctuates most with the price of gold. When gold is increased 20%, the $1,620 an ounce, the NPV increases to $2.5 billion. At a 20% decrease in gold price down to $1,080, the NPV is still $600 million. The NPV is second most sensitive to our operating costs and with an additional 20% of operating costs, the NPV drops to $950 million. Both FX and capital fluctuations have little effect on the overall life of mine NPV of Kumtor. Finally, Kumtor’s opportunities of the future, we call it the golden sunrise. There are a number of large opportunities that we are investigating with Kumtor. The current extension of the Kumtor’s life of mine has all been well assessed. There are also a number of additional opportunities that we can add substantial value to the company. First, the gold in the Kumtor ore is very fine, with the recovery over life of mine of 83%, giving an opportunity to continue to find ways to improve that. As the Kumtor pit deepens, it is now constrained to the northwest by our plant. Additional drilling is shown. The ore body does extend in this direction, therefore at some point it may be economic to develop a new plant. This is also tied to the opportunity number three as exploration is uncovering a potential oxide resource. This would also require a new processing plant, which could be tied to movement of the old plan. Currently the operation utilizes a truck shovel configuration. As mining methods change, there may be an opportunity to move to a conveyor or the like type system, which would also change the location of the waste dumps and potentially use green hydropower. The company has been doing work on testing different methods of recovering gold through the tailings processing. Currently there are in excess of 3 million ounces in our tailings. Finally, the underground resource is well delineated and open in a number of directions, and we continue to study that. Now, Malcolm will take us through the Kumtor’s exploration opportunities.

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 in Southern Kyrgyzstan. Within the Kumtor concession brownfields like the targets include sulphide gold mineralization in the vicinity of existing pits and oxide gold mineralization outside the existing pits. Greenfields targets include new styles mineralization and previously underexplored targets along the strike of the Kumtor gold trend. Infield building will also be undertaken to update resource categories around the existing pits. Since the exploration drilling resumed in mid-2018, 550 drill holes have been completed for over 143,000 meters of mainly diamond drilling. In 2021 we have a $21 million exploration budget, which will include 75,000 meters of drilling. We believe that there is significant potential to increase the existing sulphide gold resources and to drilling at new oxide gold resources within the Kumtor concession. Slide 58, this slide gives more specific information on the main areas to be drilled in 2021. I won’t go into the details for each area as you can read them from the slide, because there are so many takeaways from this slide. Firstly, preliminary metallurgical test work in the form of bottle roll tests on oxide gold material from the Sarytor and Hope areas has returned gold recoveries in excess of 80%. These out metallurgical test work will commence in 2021. Secondly, some very significant drill intercepts were returned from the southwest deep oxide zone late last year and I’ll refer to these again later on. Thirdly, there's a gap known as the Lysii Gap of over 1 kilometer between the Central and northeast deposits. It has previously been drill tested with only a handful of holes. This gap was covered by the Lysii glacier, but as the glacier is retreating due to the effects of climate change, the potential of this zone, the whole sulphide gold mineralization could now be tested. Slide 59, this slide shows the cross section, which is looking towards the northeast and it explains a simple schematic model for the three main types of gold mineralization at Kumtor. On the right hand, the southeastern side, the majority of the sulphide gold resources at Kumtor are hosted within Unit 2, which comprises fill-outs and black shales. Moving to the left or further northwest, oxide gold mineralization is hosted within Unit 0, which comprises of sandstone, siltstone and limestone. Moving further to the northwest again, dispersed gold mineralization is mineralization that has been eroded from both Unit 2 and Unit 0 and is hosted in much younger conglomeratic rocks. The dispersed mineralization is also oxidized. There have been no resources calculated at this stage for the oxide disperse styles mineralization. Slide 60, this slide shows the ultimate pit outlines in pile green. Designs of sulphite gold mineralization are shown in red and these are also by Unit 2 which is in pink. The oxide gold mineralization intersected to-date is shown in orange and was hosted in Unit 0, which is shown in green. It can be seen from this map that there’s substantial intervals within Unit 0 that have not been tested by drilling. I’ll now show a series of cross sections through some of the deposits over sections looking towards the northeast. Slide 61 shows a section through the Central deposit. On the right hand side you can see that there are zones of sulphide gold mineralization within Unit 2 below the ultimate pit. The pit outline is a faint grey line; apologies it’s a little hard to see. Moving to the left on northwest, the potential for oxide gold mineralization within Unit 0 remains largely untested in this area. Further to the northwest, drilling these intersected wide zones of low grade dispersed style oxide gold mineralization which requires a follow-up. Slide 62, this shows a section through the southwest deposit. On the right hand side you can see that there are zones of sulphide gold mineralization within Unit 2 below the ultimate pit, again shown as a grey line. Moving to the left on northwest, oxide gold mineralization has been intersected at depth within Unit 0 in the deep oxide zone, where the hole SW-20-317 between the 158 meters of 2.95 grams per tonne gold. Further to the northwest, a shallow zone of oxide gold mineralization called the Hope Zone has returned some significant drill intercepts and then further to the northwest again drilling has intersected dispersed style oxide gold mineralization, which requires further follow up. Slide 63 shows the section 40 meters further to the southwest of the previous slide. Here recent drilling returned oxide gold mineralization at depth in the oxide zone. Hole 20-386 returned 222 meters at 4.11 grams per tonne gold. Slide 64 shows another section 40 meters further to the southwest again. Again, the recent drilling returned oxide gold mineralization of depth from the deep oxide zone. Hole SW-20-380 returned 225 meters of 3.11 grams per tonne gold. Slide 65 shows a section through the Sarytor deposit. On the right hand side you can see that there are zones of sulphide gold mineralization within Unit 2 below the ultimate pit, again shown as a grey line. Moving to the northwest, shallow oxide gold mineralization has been intersected within Unit 0. Slide 66 shows a section through the northeast deposit at the other end of the Kumtor gold trend. On the right hand side you can see that there are zones of sulphide gold mineralization within Unit 1 in pale pink. Generally we don't see such significant gold mineralization in unit one, so this may open up new zones with potential for sulphide gold mineralization. Moving to the left, the northwest shallow mixed oxide and sulphide gold mineralization has been intersected within Unit 0. Slide 67, this slide shows an image from an airborne electromagnetic survey that was completed in 2019. The bright pink colors on the left represent zones of low resistivity, that relate to altered and potentially gold mineralized rocks along the Kumtor gold trend. The four main deposits are shown and it can be seen that there's still a considerable strike length of the Kumtor gold trend that is under explored. Slide 68, this slide summarized what has been achieved over the last few years and what our objectives will be over the coming years. After restarting exploration in 2018, we successfully increased measured and indicated resources by 112%, which is now reflected in the expanded reserve along the mine lives. In 2020 drilling focused on further expanding sulphide and oxide gold mineralization in a number of areas. For 2021 our exploration budget is $21 million, representing some 75,000 meters of drilling and going forward we would expect to maintain this level of spending. Our four key objectives this year are to expand the southwest, Sarytor and Northeast sulphide gold resources, evaluate oxide gold mineralization potential along the Kumtor Lower Thrust at Sarytor, Hope, Triangle, Muzdusuu and Northeast and test potential of peripheral targets in the Bordoo-Akbel, LysiiGap and Petrov areas. We're going to be calculating maiden resources for the Hope, Northeast and Koshuluu zones at the end of 2021 or early 2022. Thank you. That now completes the Kumtor exploration update. I’ll now pass it back to Scott.

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.