Thank you for standing by. This is the conference operator. Welcome to the Centerra Gold Second Quarter 2023 Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Lisa Wilkinson, Vice President, Investor Relations and Corporate Communications with Centerra Gold. Please go ahead.

Thank you, operator, and good morning everyone. Welcome to Centerra Gold's Second Quarter 2023 Results Conference Call. Joining me on the call today are Paul Tomory, President and Chief Executive Officer; Paul Chawrun, Chief Operating Officer; and Darren Millman, Chief Financial Officer. Our release yesterday details our second quarter 2023 results. This should be read in conjunction with our MD&A and financial statements, both of which can be found on SEDAR, EDGAR and our website. Presentation slides are available on Centerra Gold's website to accompany this webcast. Following the prepared remarks we will open the call for questions. All figures are in US dollars unless otherwise noted. Before we begin, I would like to caution everyone that certain statements made today may be forward-looking and are subject to risks, which may cause our actual results to differ from those expressed or implied. Please refer to the cautionary statements included in the presentation, as well as the risk factors set out in our annual information form. Also, certain of the measures we will discuss are non-GAAP measures. Please refer to the description of non-GAAP measures in our news release and MD&A issued yesterday. I will now turn the call over to Paul Tomory.

Thank you, Lisa, and good morning everyone. After three months at Centerra, I've now had the opportunity to visit our operations and projects and engage with employees, the investment community and other stakeholders. I'm optimistic for the opportunities that lie ahead. In the second quarter, we've already achieved several milestones that are setting Centerra for strong performance in the second half of the year. Most notably at the end of May, we received approval of an EIA for the Oksut mine from the Turkish Ministry of the Environment. We continue to enjoy strong local community support for the project and with all the necessary regulatory approvals in hand, we restarted full operations on June 5 and produced over 20,000 ounces of gold in a month. Looking ahead, we expect Oksut to produce between 180,000 and 190,000 ounces of gold in 2023, which will make it a significant contributor to our expected stronger second half performance. Turning to Mount Milligan. We remain on track with our plan to have stronger production in the second half of the year. Our full year production guidance for both gold and copper are unchanged and including Oksut, our full year consolidated gold production guidance is between 340,000 and 360,000 ounces. Paul Chawrun will speak to our operations in more detail later in the call. One of my top priorities has been to evaluate all of Centerra's assets with an ultimate goal of developing a comprehensive value maximizing strategic plan. Key aspects of this will include, a view on the Molybdenum Business Unit with an assessment of the potential for a restart of operations at the Thompson Creek Mine, continuing to drive operational and technical improvements of Mount Milligan, repositioning our approach at the Goldfield project to target higher returns; and lastly, assessing opportunities for growth…

Thank you, Paul. On Slide 7, we show the operating highlights at Mount Milligan for the quarter. The Mount Milligan mine produced over 40,000 ounces of gold in the second quarter, a 24% increase from last quarter and produced 13.8 million pounds of copper. As we mentioned in the previous releases, we always expected the production of Mount Milligan in 2023, to be weighted towards the second half of the year. However, production in the quarter was impacted by lower-than-planned recoveries due to mine sequencing, which resulted in more oxide ore than planned in an ore-waste transition zone in Phase 9. We are now deeper in Phase 9 and have mostly mined through the ore-waste transition zone. Copper grades are expected to improve in the second half of the year, as the mine progresses deeper, which is expected to improve metal recoveries compared to the first half of the year. Mill throughput in the second quarter was 5.6 million tonnes, with the site achieving record tonnes processed in both May and June. Gold and copper sales at Mount Milligan were lower than production in the second quarter, mainly due to timing of bulk shipments. In July, concentrate shipments from Mount Milligan were not materially impacted by the union strike at the Port of Vancouver. We expect to have four concentrate shipments in the third quarter, and are targeting another four shipments in the fourth quarter. The timing of shipments and associated sales between quarters may be affected by logistical delays, from union strikes at the port. Our Mount Milligan production guidance is unchanged for gold and copper and is back half weighted for the year. We expect 2023 gold production to be near the low end of guidance of 160,000 to 170,000 ounces, while copper production is tracking towards the…

Thanks, Paul. Slide 10 details our second quarter financial results. Net loss from continuing operations was $40 million or a loss of $0.18 per share. There were two adjusting items in the second quarter. First, $8 million of reclamation provision revaluation recovery at sites on care and maintenance, primarily attributable to a decrease in the risk-free interest rate applied to discounts the estimated future reclamation cash flows; and second, $6 million of deferred income tax resulting from the effects of foreign exchange rates on monetary assets and liabilities in the determination of taxable income related to the Öksüt and Mount Milligan mines. As a result of these two items, adjusting net loss from continuing operations was $42 million or a loss of $0.20 per share. Centerra recorded $185 million in net revenue during this quarter with contributions from our two operating mines Mount Milligan and Öksüt as well as our Molybdenum Business Unit. In the second quarter, sales were 48,155 ounces of gold and 12.8 million pounds of copper. Gold sales were lower than production in the quarter by 22%, mainly due to Turkish national holidays that delayed gold sales at the end of June. The average realized price was $1,532 per ounce of gold and $2.56 per pound of copper which incorporates the existing streaming arrangements at the Mount Milligan mine. At the Molybdenum Business Unit in the second quarter approximately three million pounds of moly was sold, generating revenue of $76 million with an average market price of $21.23 per pound. Consolidated all-in sustaining costs on a byproduct basis for the quarter were $1,711per ounce consolidated all-in sustaining guidance for the full year is expected to be in the range of $1,000 to $1,050 per ounce. As noted by Paul Chawrun earlier, our gold inventory levels remain elevated…

Thank you, Darren. After achieving several milestones in the second quarter, we're well positioned for strong performance in the second half of the year. In the meantime, we continue to work diligently on delivering safe and sustainable production and developing Centerra's strategic vision which will clearly articulate our path to value realization for each asset in the portfolio. We look forward to updating the market in the coming months. And with that, operator, I'll stop and open the call for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Fahad Tariq of Credit Suisse. Please go ahead.

Hi. Good morning. Thanks for taking my question. In the press release you mentioned, in the paragraph talking about evaluating all the assets that you're assessing opportunities for growth in gold production. Can you talk a little bit about, how you're thinking about organic versus inorganic growth? And if it's organic growth specifically what type of opportunities may exist at Öksüt, Mount Milligan, Goldfield? Thanks.

Yeah. Thanks, Fahad. Our overall strategy right now is, focused on looking at our current assets. What is the value that we think is in those assets. And as you've seen we're repositioning the way we look at Goldfield as an example. At Milligan, we continue to drive the technical and operating improvements. And most importantly, we think that there's value in the molybdenum business which will be day-lighting over the course of the coming months. But in terms of your specific question on, growth in gold production, we will from time-to-time as opportunities become available, assess potential bolt-on type acquisitions things that make sense given our skill set and where we think we can add value. And that's something we do as a normal part of business assessing external opportunities. Given that, it's an M&A point I won't speculate much further on it, but it's just a general statement that we are open to M&A where it makes sense.

Okay. That makes sense. And then just switching gears to Mount Milligan on the cost side. It sounds like the majority of the cost increase in the quarter was really the sequencing in the transition kind of material. Can you talk a little bit about the inflationary pressures? Are they as expected? And am I understanding that correctly that it's really the -- it's really the grades in the quarter that drove the cost higher?

Yes. I'll make a general comment on inflation and then hand it over to Paul on the specifics. Mount Milligan saw significant inflation through 2021 -- 2021 and the first call it three, four – sorry, two, three quarters of 2022 that inflation has abated and it is now more what I would call normal inflation, but it experienced significant inflation in 2021 and 2022. And to comment specifically on this year this quarter Paul will talk about that.

Yes. On the cost we're -- I mean we are seeing some increases pretty much comparable on benchmarking with the other operators in the industry. We do have a little bit of pressure with a competitive labor market in D.C. But as you mentioned the main reason for the increase in guidance on the all-in sustaining cost is the denominator. We are guiding towards the low end of guidance on our gold production and that's really what is affecting the increase in ASIC and the main reason for that is the recovery. And so we did intercept some -- a little bit more oxide than we had planned and then the replacement for that was the stockpile. And then as a result we did get an impact on our gold recovery and that's the main reason.

Okay. Great. Thank you.

Our next question comes from Dalton Baretto of Canaccord. Please go ahead.

Yes. Thank you. I want to start by wishing you Paul all the best in this new role. I also want to continue in this kind of vein of strategy, but I want to ask you at a higher level than some of the tactical things you've alluded to in your prepared comments. From where I said I mean arguably your portfolio has too many non-producing assets. It's two base metals heavy. You've got this onerous stream at Mount Milligan. Your cash balance is down 58% since the end of 2021. So I guess three questions for me. Number one , do you still want to be a gold company? And if so how much at a base metal value are you willing to tolerate in the portfolio? And secondly, how are you thinking about restructuring the portfolio at a pretty high level? And then third, what are some of the more immediate strategic milestones we can look forward to? Thank you.

Yes, there's a lot in there and I think you've identified some of the attributes that we're dealing with here at Centerra. Your first question on gold, yes, we are Centerra Gold Inc. and we intend to remain primarily a gold producer. We do like the angle on base metals the strong copper production and reserve at Mount Milligan and even an openness to molybdenum here. But we will -- we are and will remain principally a gold mining company. My first three months -- as I said in my prepared remarks I've been out to all the sites and it was there's really no substitute for seeing and meeting and getting a sense for the attributes of each asset in the portfolio. And Centerra will look at each asset and that's the focus right now as you said more tactical. And one the most concrete example I can refer to right now is Goldfield. I think previously there was a plan to develop Goldfield sooner rather than later. But we think that there's an opportunity for a higher return project here taking more time on exploration and looking at a different potential flow sheet. In the case of Kemess as another potential example there is the resource in the ground there, but we also acknowledge we have a strategic location in that part of British Columbia and perhaps that lends itself to opportunities. And of course molybdenum is the biggest one where we think that there's a lot of unrealized potential in the molybdenum business. We have to walk that forward carefully given that we are Centerra Gold, but we do believe that there is value to be realized in the molybdenum business and we will be advancing the thinking on restarting Thompson Creek and we'll be providing more detail in the third quarter on that. I've tried to touch on all your questions. I've been somewhat general, but if you want to go more specific on any of them let me know.

No, I think, that's helpful. And then just immediately speaking outside from the potential restart of Thompson Creek are you planning to update us with an overall strategic plan, or is it going to continue to be more tactical at each of the assets until you can execute on some of these higher level things?

Yes. I think that in the third quarter, we'll probably -- we'll paint a broader picture on strategy, meaning where do we want to be, where do we see value, what are our strengths? How we look at capital allocation. But of course, the main components of that will be tactical plans at each of the assets principally like I said molybdenum and Goldfield, and to a lesser extent the other ones. But it will be a more overarching view on what we want to be, as we look forward two, three, four years.

That’s helpful. Thank you, Paul.

Thank you.

Our next question comes from Ovais Habib of Scotiabank. Please go ahead.

Hi Paul and team. Just a couple of questions have already been answered. So, just two questions from me. Starting off with the Goldfields. In regards to the resource estimate or update, I'm guessing, you're seeing a lot more potential to add additional mineralization and that's why you've kind of increased exploration budget, can you kind of just walk us through where you see upside? And you talked a little bit about the flow sheet as well. So maybe a little bit of color there as well.

Yes. Thanks, Ovais. Just a quick highlight on what Goldfield is. It's principally two deposits. There are other smaller ones, but it's principally got two deposits. One, which is a sulfide potential sulfide resource and the other one is a potential oxide resource. At this stage, we don't think that the sulfide resource is a sufficient scale to pursue. And that has the beneficial corollary of greatly simplifying the flow sheet. So rather than requiring a much finer grind to achieve the recoveries, we're going to look at whether we can tackle the oxide material, through a run of mine or a simplified crushing circuit. That would greatly simplify the flow sheet, reduce the capital and target higher returns. To your question, are we seeing exploration potential? The answer is, yes. As you can see, we've ramped up our spending or our planned spending in exploration and we are focused on oxide targets. So we are delaying what had previously been communicated as the timing for a resource estimate. But that's principally associated with our shift in strategy to focus on oxide and transitional material that will be associated with a much leaner capital profile. So, what we're going to be doing in the near term is, more focused metallurgical test work on oxides only and transition material and specifically targeting oxide material to add to the potential resource.

Okay. Thanks. Thanks for the color on that. And just switching gears to the moly business. I think Dalton touched upon it a little bit with you as well. I mean, with the study in progress expected in Q3, are you kind of -- how are you leaning? I mean are you leaning more towards selling the moly business, or how should we look at the restart of Thompson Creek Mine.

Yes, that's a great question and it will underpin the way we talk about this in the coming quarters, but let me give you a high-level view on it. Right now the fundamentals for molybdenum are very strong. The market is very constructive, both on the supply and the demand side. Part of what's driving strong demand in molybdenum is in part energy transition and molybdenum is used for stainless steel production and its applications are significant in things like offshore, wind, the retooling of Europe's, gas infrastructure, but also things like hydrogen that it has very strong properties in alloying steel for corrosion resistance in hydrogen applications. So that's a note on what we believe to be very strong fundamentals in the market. And we're confident in those fundamentals to be advancing this. Our principal initial phase of work on molybdenum is to demonstrate value to show the market to our shareholders and other participants of their significant value in this business. And that's what we intend to do as a first phase of activity is to demonstrate value. There will be some early work spending as we advance this project over the coming months and quarters, but that will be a relatively modest in advance of what would be a more -- a bigger notice to proceed on the asset. Are we open to M&A on this front? The answer is, yes. I mean, we always have to look at what surfaces the greatest amount of value for our shareholders. But a first step, prior to that is a demonstration of value and a well-articulated and thoughtful strategy and an execution plan for that molybdenum business.

Okay. Thanks. Thanks for the color, Paul. And that’s it for me. Thanks for taking my questions.

Thank you.

Our next question comes from Michael Siperco of RBC Capital Markets. Please go ahead.

Yeah. Thanks very much. Flipping back to Öksüt if we could for a second. I know you've provided some measures of cash costs already incurred to produce the ounces in inventory and the remaining cash operating cost. But is there a reconciliation that you can provide to the forward ASIC guidance that reflects the actual cash outflow associated with the goal you expect to produce over the balance of the year?

Yeah. It's Darren Michael. So yeah we did -- we can provide that. We referred to what it's going to cost from a cash perspective on processing the gold and carbon which will be under $50 an ounce cash cost. And similarly for the gold on the heap and in stockpiles, I think ranging between $100 to $250. So we've historically guided that what was on the heap and what was on stockpiles of approximately $100 an ounce each site. So that's the ballpark. But if you need more color or some more details we can keep that offline.

Well, yeah. I mean I guess I'm asking at a high level, even if you don't want to provide the number, it's fair to say that if your ASIC guidance for Öksüt over the rest or over 2023 is $650 to $700, only a subset of that will actually be incurred in costs, whether that's $500 $550 whatever the number is. That's the right way to look at it correct?

That's right. And we historically also referenced that the 100,000 ounces that was on our inventory was recorded all-in sustaining at approximately between $450 to $500. So that was what was already incurred but put on our balance sheet.

Right. Okay. Okay. Thank you. And then maybe on the sequencing into 2024 as you work through the inventory, can you give some high-level guidance on how long we should be expecting elevated levels of production beyond the inventory ounces you currently have out of the pit, as you presumably continue to mine and stack new ounces is there some idea of when the volume starts to slow down as you catch up with that backlog?

Yeah. We expect to have elevated levels well into the first half. And then as we move towards midpoint of next year, it will start to transition into normal state.

You're expecting normal state in the second half, or is that a transition down to more...

That will be a transition down starting approximately midyear.

Great. So then I guess safe to assume you'd reach normal state by 2025. Is that the way to think about it?

Yeah, I would say that's a reasonable estimate.

Okay. And then last one maybe for -- maybe on strategy, realizing you're doing this portfolio review looking forward to that. But can you talk in particular about how you view the buyback as a use of cash? And maybe how aggressive you think you'll be over the rest of the year and what your thinking is around that?

Well, we certainly believe that buying our shares is good value and has been over the last couple of months. And shareholder returns whether through dividends or buybacks remains a cornerstone of our capital allocation framework. Darren, you can provide some more detail on what we've been doing.

Yeah. So approximately just under $8 million has been returned or repurchased to date. Our Board continues to support the program. As recent, as yesterday, we had the Board meeting who are very -- we continue to be active in July. So, I don't see it abating in the short-term.

Can you maybe talk -- is there a trigger you're looking at as to when you'd be active? Is it a function of your NAV versus the share price or anything along those lines?

We're not going to put a number out there but we see good value in our shares.

Okay. Copy. Thanks very much.

Thank you.

Our next question comes from Anita Soni of CIBC World Markets. Please go ahead.

Hi. Just to follow-up with Mike's question there about Öksüt. So, I guess when we're talking about elevated levels basically the Q4 run rate is kind of what we should be thinking about going into Q1 and Q2 of next year and then it starts to taper down.

Yes, that's a reasonable estimate. I mean we'll issue our guidance and outline what we expect to do for production, because some of that is depending on how much success we have now and how much of the inventory we can run through, and we're still ramping up right now. But I think a reasonable estimate is elevated levels through the midyear, it will start to taper down. And then by 2025, it will be normal state.

On assets that are not operating right now. I think one of the forgotten ones, which I guess I don't forget about because I actually covered North Gate about 20 years ago, now is Kemess. And given all the activity up in that region, could you talk about how you're thinking about that asset?

Yes. Thanks Anita. It's a very prospective region of BC. There are a lot of deposits that are in that area including ours. At this stage we're not advancing our Kemess project, but we are looking at opportunities which might leverage our infrastructure. We have an asset up there and the asset is as much in the ground as it is in the property plant and equipment the access to power and the water. And we're looking at whether there are creative opportunities for some sort of value realization plan. It's early stage right now, but conceptually, you can use your imagination. There might be some interesting ideas there but we're early in the game on that.

Would you consider opening it up panel or would it be more an outright sale?

Anything is on the table. Any of those could be options.

Okay. I’ll leave that. Thank you.

Thanks.

[Operator Instructions] Our next question comes from Mike Parkin of National Bank. Please go ahead.

Hey, guys. Thanks for taking my questions. A couple of follow-ups. With Öksüt, are you stacking all on the same pad, or at any point over the course of the next year, will you be transitioning to a new pad.

We're stacking on a new pad right now. And then as time moves on, we'll be going on to new pads. We have approximately 50 meters and it goes down a hill. So as we start to fill up that space we stack on new pads.

Okay. That certainly supports the stronger production to kind of elevated leach kinetics with the new pad. Is that fair to assume?

I would say similar leach kinetics as before on the new pad. And then what we're doing is we have an elevated grade on the PLS. Right now, we're processing the loaded carbon and then once we've completed that, it will be the elevated PLS, and then we'll slowly taper down into a normal state on the PLS grade, and that will be on the existing pads and we're stacking on new pads now.

Okay. And we heard from one of your peers in Turkey, about significant rain and it specifically impacted the PON concentration at their heap leach. Did you have a similar impact at Oksut or did those range kind of miss you given maybe you're not close to where the rains came through?

We did have an elevated wet spring. The POS grade, wasn't impacted materially. But what we were concerned about for a period of time was that, we would start to run out of PON space. We certainly had plenty of mitigation, but at some point, that could have been an impact, but it's starting to dry up and our overall water inventory on site is declining. And we're going to be creating additional PON space going forward, as is normal course.

Okay. With respect to your cost assumptions, can you just give us an idea -- I may have missed it in the release, but did -- what's your assumption for the Turkish lira for the second half?

You got me there, Mike.

It's just about 28 right now.

Yes.

28?

I think it's something around 28.

We will get back to you.

Yes, we'll have to get back to you on that.

Okay. Okay. And then switching gears over to Goldfields. Can you just give me, a recap on how big the land package is there. And with respect to exploring for more oxides, where are you in that kind of process? Is it you have good target identified and it's just mobilization of rigs or you're needing to do more earlier-stage, studies to identify those targets?

I can't tell you exactly, how big the line package is, but I can tell you it's big. In other words, there are enough targets on the land package to justify elevated spending. I'll just reiterate, what I said to Ovais' question is that, we're going to focus on oxide here. It's just a leaner CapEx flow sheet higher returns. And on the land package, we do have a number of oxide targets that we are currently drilling and where we are encountering gold. So the strategy is, I'll just reiterate, focus on oxide material only, which lends itself to a much lower CapEx, much more simplified flow sheet and we do see targets on that land package. And so we have a combination of both established targets ones that we are drilling, as well as targets that are earlier stage based on surface expressions or geochem, which we're going to work through the system as the months go by. The main reason to delay the resource estimate is twofold. We're not going to focus on the sulfide and two, allow more time for oxides to come into that estimate so that we can come up, with a tighter scope of potential works.

And Mike, just going back to your earlier question, we're using US$ 1 to 20 Turkish lira. So we're a bit conservative in our numbers.

Sorry I didn't catch that.

Well, for the Turkish lira exchange rate, we've used for our going forward guidance it's US$1, 20 Turkish lira. So we're being, a bit conservative.

All right. That’s it for me. Thank you

Thanks, Mike.

This concludes the question-and-answer session, as well as today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.