Centerra Gold Reports First Quarter Results
All figures are in United States dollars. All production figures reflect payable metal quantities and are on a 100%-basis, unless otherwise stated. For references denoted with NG, refer to the “Non-GAAP and Other Financial Measures” disclosure at the end of this news release for a description of these measures.
TORONTO, May 15, 2023 (GLOBE NEWSWIRE) -- Centerra Gold Inc. (“Centerra” or the “Company”) (TSX: CG and NYSE: CGAU) today reported its first quarter 2023 results.
Significant financial and operating results of the first quarter ended March 31, 2023 included:
· *Net loss *for the quarter of $73.5 million, or $0.34 per common share, including (net of tax): a non-cash reclamation expense at the care and maintenance sites of $15.6 million, or $0.07 per common share, exploration and evaluation costs at the Goldfield project of $11.7 million, or $0.06 per common share, and stand-by cash costs at the Öksüt Mine of $7.8 million, or $0.04 per common share. Mining costs at the Öksüt Mine were expensed in the period due to the focus on waste stripping activities with limited mining, crushing and stacking of ore. Adjusted net loss^NG for the quarter was $52.9 million, or $0.24 per common share.
· *Cash used in operating activities and free cash flow deficit*^*NG* for the quarter of $99.8 million and $105.9 million, respectively, were primarily due to working capital requirements at the Molybdenum Business Unit and the suspension of production activities at the Öksüt Mine. Total operating cash flow deficit for the quarter was driven by a $75.8 million increase in working capital. Mount Milligan Mine generated cash from mine operating activities and free cash flow^NG of $27.6 million and $24.6 million, respectively, for the quarter. Cash used in operating activities at the Öksüt Mine was $20.8 million for the quarter. Cash used in operating activities at the Molybdenum Business Unit was $76.6 million for the quarter, primarily due to an increase in working capital, as a result of higher molybdenum prices. This is expected to partially reverse through the remainder of the year if molybdenum prices remain at their current levels.
· *Gold* *production* *and* *copper* *production* for the quarter at the Mount Milligan Mine was 33,215 ounces and 13.4 million pounds, respectively. Lower production during the quarter was driven by lower plant throughput primarily due to a planned mill maintenance shutdown as well as material handling issues during winter months. Additionally, sequencing of the mining phases during the quarter resulted in lower than expected ore grades and differences in the ore-waste transition zone which also impacted feed grades and metal recoveries. Due to mining activities remaining at expected production rates for the quarter, the Company continues to be on track to access the higher grade copper and gold from Phase 7 and Phase 9 in the second half of the year but given lower than planned production during the first quarter, the Company expects 2023 gold production to be near the low end of guidance. Copper production for the year is expected to be at the mid-point of guidance.
· *The regulatory review of Öksüt Mine’s amended Environmental Impact Assessment (“EIA”) remains on track. *The Company completed its technical review meeting with local authorities at the end of March and posted its EIA for public comment in late April, with no significant comments received. With all review steps now completed, the EIA has been submitted for final ministry approval.
· *The Company’s mercury abatement retrofit to the Öksüt Mine’s ADR plant was completed. *The system was tested in March 2023 under the supervision of the Turkish Ministry of Environment Urbanization and Climate Change. Subject to receipt of the final regulatory approvals and the restart of the ADR plant, the Company will be in a position to begin processing the gold-in-carbon inventory on hand of approximately 100,000 recoverable ounces. The ADR plant has the capacity to produce gold at a rate of approximately 35,000 ounces per month.
· *Goldfield Project significantly advanced drilling activities *in the first quarter of 2023, with the large portion of drilling costs that were planned for the year incurred during the quarter. The Company remains on track to issue an initial resource estimate by mid year 2023, followed by an updated resource estimate accompanied by a feasibility study.
· *New President and CEO Paul Tomory *joined the Company effective May 1, 2023.
· *Strong balance sheet *with a cash and cash equivalents position at the quarter-end of $412.1 million.
· *Gold production costs *for the quarter of $1,124 per ounce, due to higher allocation of costs to gold from changes in the relative market prices of gold and copper, and mill shutdown activities.
· *Copper production costs *for the quarter of $2.66 per pound.
· *All-in sustaining costs on a by-product basis*^*NG* for the quarter of $1,383 per ounce, due to higher gold production costs at the Mount Milligan Mine.
· *Quarterly dividend *declared of CAD$0.07 per common share.
*Chair of the Board of Directors and CEO Discussion*
Michael Parrett, Chair of the Board of Directors stated, “On behalf of the Board and our fellow shareholders I would like to thank Paul Wright for his leadership of Centerra as the Interim President and CEO, since September 2022. We look forward to Paul’s continued insight, input, and contribution on the Board of Directors. I am also pleased to welcome Paul Tomory who assumed the role of President and Chief Executive Officer on May 1, 2023. We are delighted to have him lead Centerra at this significant stage of the Company’s journey.”
Paul Tomory, President and Chief Executive Officer of Centerra stated, “Since starting as President and Chief Executive Officer on May 1, 2023, having spent time with our corporate and sites teams, and having visited the Mount Milligan Mine, I am excited for the future of the Company. Over the weeks and months ahead, I look forward to visiting the Öksüt Mine and our US assets and engaging with many of our shareholders and other stakeholders, with a focus on delivering sustainable value and growth at Centerra.”
Paul Tomory continued, “In the first quarter of 2023, the Company continued to demonstrate that safety remains Centerra’s top priority, with a number of our sites achieving milestones without a lost time or reportable injury. In Turkiye, I’m pleased to announce that we have completed the mercury abatement retrofit to the Öksüt Mine’s ADR plant and that the system has been tested under the supervision of the Turkish ministry. The regulatory review of Öksüt Mine’s amended EIA remains on track; all review steps have been completed and it has been submitted for final ministry approval. Subject to receipt of the final approvals of the EIA and ADR plant, the Company will be well positioned to begin processing the approximately 100,000 recoverable ounces of gold-in-carbon inventory on hand. We will then be able to shift our focus to the additional approximately 200,000 recoverable ounces of gold in the Öksüt Mine’s gold in ore stockpiles and on the heap leach pad.”
Paul Tomory stated,“Pivoting to Centerra’s other operating mine in British Colombia, there were lower levels of copper and gold production at the Mount Milligan Mine in the first quarter due to a combination of the grade profile delivered to the mill from mine sequencing that also impacted lower metal recoveries, a planned mill maintenance shutdown and challenges with material handling during winter months. As a result, the Company now expects gold production to be near the low end of guidance whilst copper production is currently tracking towards the mid-point of guidance. Mine sequencing remains on track to access the higher-grade copper and gold ore in the second half of the year resulting in back-end weighted production.”
Paul Tomory concluded, “Lastly, I’m happy to announce that Lisa Wilkinson has joined the Company as Vice President, Investor Relations & Corporate Communications, and will lead these functions going forward.”
*Update on Öksüt Mine Operations*
In March 2022, Centerra announced it had temporarily suspended gold doré bar production at the Öksüt Mine due to mercury detected in the gold room at the ADR plant. From the date of suspension of gold room operations through to the end of 2022, the Company built up gold-in-carbon inventory of approximately 100,000 recoverable ounces and 200,000 recoverable ounces of gold in ore stockpiles and on the heap leach pad. For the gold-in-carbon inventory, substantially all the production costs have already been incurred. Once operations resume, the ADR plant is expected to have sufficient production capacity to process up to approximately 35,000 ounces of gold per month.
The Company has completed construction of a mercury abatement system to allow processing of mercury-bearing ores. In February and March 2023, the ADR facility underwent inspection and testing by the Turkish Ministry of Environment, Urbanization and Climate Change (the “Ministry of Environment”) and the Ministry of Labour and Social Security. The Company continues to work with relevant authorities to obtain the required approvals to restart gold room operations at the ADR plant.
Permitting
Following inspection by and several discussions with the Ministry of Environment in 2022, the Company determined that an updated EIA should be prepared and submitted to clarify various production and other capacity limits for the Öksüt Mine and to align the EIA production levels with current operating plans. The updated EIA was submitted in January 2023. The Company completed its technical review meeting with local authorities at the end of March and posted its EIA for public comment in late April, with no significant comments received. With all review steps now completed, the EIA has been submitted for final ministry approval. The Company continues to work with Turkish officials and other stakeholders on the approval of its EIA and other permits that may be required to allow for a timely full restart of all operations.
The Öksüt Mine suspended leaching of ore on the heap leach pad and ceased using activated carbon on site as of late August 2022 though mining, crushing and stacking activities continued in line with existing EIA limits for the remainder of 2022. After building substantial inventories of gold-in-carbon, ore stacked on the heap leach pad and ore stockpiles, crushing and stacking activities were paused during the first quarter of 2023 until the new EIA is received. The Öksüt Mine is currently focusing mining activities on the Phase 5 pit wall pushback to expand the Keltepe pit.
In January 2023, the Öksüt Mine received notice of approval of its operating license extension application for a period of ten years, as well as approval of an enlarged grazing land permit to allow for the expansion of the Keltepe and Güneytepe pits, as planned.
As noted above, Centerra is involved in several permitting processes with Turkish regulatory authorities and notes that a general election in Türkiye on May 14, 2023 could result in administrative delays to such processes. The Company will continue to diligently pursue approvals of an amended EIA and all required permits for the Öksüt Mine.
*Conference Call*
Centerra invites you to join its 2023 first quarter conference call on Monday, May 15, 2023 at 11:00 AM Eastern Time. The call is open to all investors and the media. To join the call, please dial toll-free in North America 1 (800) 954-0651. International participants may access the call at +1 (416) 620-9188. Presentation slides will be available on Centerra’s website at www.centerragold.com. Alternatively, an audio feed webcast will be broadcast live by Notified and can be accessed live at Centerra’s website at www.centerragold.com. A recording will be available after the call and via telephone until midnight Eastern Time on May 29, 2023 by calling +1 (416) 626-4100 or (800) 558-5253 and using passcode 22026857.
*Non-GAAP and Other Financial Measures*
This MD&A contains “specified financial measures” within the meaning of NI 52-112, specifically the non-GAAP financial measures, non-GAAP ratios and supplementary financial measures described below. Management believes that the use of these measures assists analysts, investors and other stakeholders of the Company in understanding the costs associated with producing gold and copper, understanding the economics of gold and copper mining, assessing operating performance, the Company’s ability to generate free cash flow from current operations and on an overall Company basis, and for planning and forecasting of future periods. However, the measures have limitations as analytical tools as they may be influenced by the point in the life cycle of a specific mine and the level of additional exploration or other expenditures a company has to make to fully develop its properties. The specified financial measures used in this MD&A do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers, even as compared to other issuers who may be applying the World Gold Council (“WGC”) guidelines. Accordingly, these specified financial measures should not be considered in isolation, or as a substitute for, analysis of the Company’s recognized measures presented in accordance with IFRS.
*Definitions*
The following is a description of the non-GAAP financial measures, non-GAAP ratios and supplementary financial measures used in this MD&A:
· All-in sustaining costs on a by-product basis per ounce is a non-GAAP ratio calculated as all-in sustaining costs on a by-product basis divided by ounces of gold sold. All-in sustaining costs on a by-product basis is a non- GAAP financial measure calculated as the aggregate of production costs as recorded in the condensed consolidated statements of (loss) earnings, refining and transport costs, the cash component of capitalized stripping and sustaining capital expenditures, lease payments related to sustaining assets, corporate general and administrative expenses, accretion expenses, asset retirement depletion expenses, copper and silver revenue and the associated impact of hedges of by-product sales revenue. When calculating all-in sustaining costs on a by- product basis, all revenue received from the sale of copper from the Mount Milligan Mine, as reduced by the effect of the copper stream, is treated as a reduction of costs incurred. A reconciliation of all-in sustaining costs on a by-product basis to the nearest IFRS measure is set out below. Management uses these measures to monitor the cost management effectiveness of each of its operating mines.
· All-in sustaining costs on a co-product basis per ounce of gold or per pound of copper, is a non-GAAP ratio calculated as all-in sustaining costs on a co-product basis divided by ounces of gold or pounds of copper sold, as applicable. All-in sustaining costs on a co-product basis is a non-GAAP financial measure based on an allocation of production costs between copper and gold based on the conversion of copper production to equivalent ounces of gold. The Company uses a conversion ratio for calculating gold equivalent ounces for its copper sales calculated by multiplying the copper pounds sold by estimated average realized copper price and dividing the resulting figure by estimated average realized gold price. For the first quarter ended March 31, 2023, 423 pounds of copper were equivalent to one ounce of gold. A reconciliation of all-in sustaining costs on a co-product basis to the nearest IFRS measure is set out below. Management uses these measures to monitor the cost management effectiveness of each of its operating mines.
· Sustaining capital expenditures and Non-sustaining capital expenditures are non-GAAP financial measures. Sustaining capital expenditures are defined as those expenditures required to sustain current operations and exclude all expenditures incurred at new operations or major projects at existing operations where these projects will materially benefit the operation. Non-sustaining capital expenditures are primarily costs incurred at ‘new operations’ and costs related to ‘major projects at existing operations’ where these projects will materially benefit the operation. A material benefit to an existing operation is considered to be at least a 10% increase in annual or life of mine production, net present value, or reserves compared to the remaining life of mine of the operation. A reconciliation of sustaining capital expenditures and non-sustaining capital expenditures to the nearest IFRS measures is set out below. Management uses the distinction of the sustaining and non-sustaining capital expenditures as an input into the calculation of all-in sustaining costs per ounce and all-in costs per ounce.
· All-in costs on a by-product basis per ounce is a non-GAAP ratio calculated as all-in costs on a by-product basis divided by ounces sold. All-in costs on a by-product basis is a non-GAAP financial measure which includes all- in sustaining costs on a by-product basis, exploration and study costs, non-sustaining capital expenditures, care and maintenance and other costs. A reconciliation of all-in costs on a by-product basis to the nearest IFRS measures is set out below. Management uses these measures to monitor the cost management effectiveness of each of its operating mines.
· Adjusted net (loss) earnings is a non-GAAP financial measure calculated by adjusting net (loss) earnings as recorded in the condensed consolidated statements of (loss) earnings for items not associated with ongoing operations. The Company believes that this generally accepted industry measure allows the evaluation of the results of income-generating capabilities and is useful in making comparisons between periods. This measure adjusts for the impact of items not associated with ongoing operations. A reconciliation of adjusted net (loss) earnings to the nearest IFRS measures is set out below. Management uses this measure to monitor and plan for the operating performance of the Company in conjunction with other data prepared in accordance with IFRS.
· Free cash flow (deficit) is a non-GAAP financial measure calculated as cash provided by operating activities from continuing operations less property, plant and equipment additions. A reconciliation of free cash flow to the nearest IFRS measures is set out below. Management uses this measure to monitor the amount of cash available to reinvest in the Company and allocate for shareholder returns.
· Free cash flow (deficit) from mine operations is a non-GAAP financial measure calculated as cash provided by mine operations less property, plant and equipment additions. A reconciliation of free cash flow from mine operations to the nearest IFRS measures is set out below. Management uses this measure to monitor the degree of self-funding of each of its operating mines and facilities.
*Certain unit costs, including all-in sustaining costs on a by-product basis (including and excluding revenue-based taxes) per ounce, are non-GAAP ratios which include as a component certain non-GAAP financial measures including all-in sustaining costs on a by-product basis which can be reconciled as follows:*
*(Unaudited - $millions, unless otherwise specified)* *Three months ended March 31,*
*Consolidated* *Mount Milligan* *Öksüt*
*2023* 2022 *2023* 2022 *2023* 2022
Production costs attributable to gold *43.8* 47.1 *43.8* 26.0 *—* 21.1
Production costs attributable to copper *40.8* 32.6 *40.8* 32.6 *—* —
Total production costs excluding molybdenum segment, as reported *84.6* 79.7 *84.6* 8.6 *—* 21.1
Adjust for: * *
Third party smelting, refining and transport costs *1.9* 3.2 *1.9* 3.0 *—* 0.2
By-product and co-product credits *(54.6* ) (75.5 ) *(54.6* ) (75.5 ) *—* —
Adjusted production costs *31.9* 7.4 *31.9* (13.9 ) *—* 21.3
Corporate general administrative and other costs *14.7* 12.3 *0.1* 0.1 *—* —
Reclamation and remediation - accretion (operating sites) *0.9* 1.6 *0.5* 0.5 *0.4* 1.1
Sustaining capital expenditures *4.9* 14.7 *1.8* 12.6 *3.1* 2.1
Sustaining lease payments *1.5* 1.5 *1.3* 1.3 *0.2* 0.2
All-in sustaining costs on a by-product basis *53.9* 37.5 *35.6* 0.6 *3.7* 24.7
Exploration and study costs *15.3* 8.2 *0.4* 3.4 *0.4* 0.4
Non-sustaining capital expenditures *—* 0.9 *—* 0.9 *—* —
Care and maintenance and other costs *12.9* 2.4 *—* — *9.5* —
All-in costs on a by-product basis *82.1* 49.0 *36.0* 4.9 *13.6* 25.1
Ounces sold (000s) *39.0* 94.9 *39.0* 40.2 *—* 54.7
Pounds sold (millions) *15.3* 19.4 *15.3* 19.4 *—* —
Gold production costs ($/oz) *1,124* 497 *1,124* 647 *n/a* 386
All-in sustaining costs on a by-product basis ($/oz) *1,383* 395 *914* 15 *n/a* 451
All-in costs on a by-product basis ($/oz) *2,107* 516 *924* 121 *n/a* 459
Gold - All-in sustaining costs on a co-product basis ($/oz) *1,603* 735 *1,134* 819 *n/a* 451
Copper production costs ($/pound) *2.66* 1.68 *2.66* 1.68 *n/a* n/a
Copper - All-in sustaining costs on a co-product basis ($/pound) *2.67* 2.11 *2.67* 2.11 *n/a* n/a
*
Adjusted net (loss) earnings is a non-GAAP financial measure and can be reconciled as follows:*
*Three months ended March 31,*
*($millions, except as noted)* *2023* 2022
*Net (loss) earnings* *$* *(73.5* *)* $ 89.4
Adjust for items not associated with ongoing operations:
Kumtor Mine legal costs and other related costs *—* 6.5
Reclamation expense (recovery) at sites on care and maintenance *15.6* (42.0 )
Income and mining tax adjustments(1) *5.0* 2.5
*Adjusted net (loss) earnings* *$* *(52.9* *)* $ 56.4 *Net (loss) earnings per share - basic*
*$*
*(0.34*
*)* $
0.30
*Net (loss) earnings per share - diluted* *$* *(0.34* *)* $ 0.30
*Adjusted net (loss) earnings per share - basic* *$* *(0.24* *)* $ 0.19
*Adjusted net (loss) earnings per share - diluted* *$* *(0.24* *)* $ 0.19
(1) Income tax adjustments reflect the impact of a one-time income tax levied by the Turkish government and impact of foreign currency translation on deferred income taxes at the Öksüt Mine.
*Free cash flow (deficit) is a non-GAAP financial measure and can be reconciled as follows:*
*Three months ended March 31,*
*
Consolidated* *
Mount Milligan* *
Öksüt* *
Molybdenum* *
Other* *2023
* *2022
* *2023* *2022* *2023* *2022* *2022
* *2021
* *2023* *2022*
*Cash (used in) provided by operating activities*^*(1)* *$* * (99.8 * *)* $ 28.3 *$* * 27.6 * $ 20.8 *$* * (20.8 * *)* $ 63.6 *$* * (76.6 * *)* $ (19.8 ) *$* *(30.0* *)* (36.3 )
Deduct:
Property, plant & equipment additions^(1) *(6.1* *)* (19.2 ) *(3.0* *)* (14.4 ) *(3.1* *)* (2.2 ) *—* (0.3 ) *—* (2.3 )
*Free cash flow (deficit)* *$* *(105.9 * *)* $ 9.1 *$* * 24.6 * $ 6.4 *$* * (23.9 * *)* $ 61.4 *$* * (76.6 * *)* $ (20.1 ) *$* * (30.0 * *)* $ (38.6 )
(1) As presented in the Company’s condensed consolidated statements of cash flows.
*Sustaining capital expenditures and non-sustaining capital expenditures are non-GAAP measures and can be reconciled as follows:*
*Three months ended March 31,*
*Consolidated* *Mount Milligan* *Öksüt* *Molybdenum* *Other* *2023* *2022* *2023* *2022* *2023* *2022* *2023* *2022* *2023* *2022*
*Additions to PP&E*^*(1)* *$* * 8.0* $ 210.2 *$* *4.3* $ 9.7 *$* * 3.7* $ (0.5 ) *$* *—
* $ 0.2 *$* *—
* $ 200.7
Adjust for:
Costs capitalized to the ARO assets *(2.9* *)* 13.3 *(1.8* *)* 3.7 *(1.1* *)* 1.9 *—* — *—* 7.7
Costs capitalized to the ROU assets *(0.1* *)* (0.2 ) *(0.1* *)* — *—* (0.2 ) *—* — *—* —
Costs relating to the acquisition of Goldfield Project *—* (208.2 ) *—* — *—* — *—* — *—* (208.2 )
Other^(2) *(0.1* *)* 0.9 *(0.6* *)* 0.0 *0.5* 0.9 *—* 0.2 *—
* (0.2 )
*Capital expenditures* *$* * 4.9 * $ 16.0 *$* * 1.8* $ 13.4 *$* * 3.1 * $ 2.1 *$* *—* $ 0.4 *$* *—* $ 0.1
Sustaining capital expenditures *4.9* 15.1 *1.8* 12.5 *3.1* 2.1 *—
* 0.4 *—* 0.1
Non-sustaining capital expenditures *—* 0.9 *—* 0.9 *—* — *—* — *—* —
(1) As presented in the Company’s condensed consolidated financial statements.
(2) Includes reclassification of insurance and capital spares from supplies inventory to PP&E.
*About Centerra*
Centerra Gold Inc. is a Canadian-based mining company focused on operating, developing, exploring and acquiring gold and copper properties in North America, Türkiye, and other markets worldwide. Centerra operates two mines: the Mount Milligan Mine in British Columbia, Canada, and the Öksüt Mine in Türkiye. The Company also owns the Goldfield Project in Nevada, United States, the Kemess Underground Project in British Columbia, Canada, and owns and operates the Molybdenum Business Unit in the United States and Canada. Centerra's shares trade on the Toronto Stock Exchange (“TSX”) under the symbol CG and on the New York Stock Exchange (“NYSE”) under the symbol CGAU. The Company is based in Toronto, Ontario, Canada.
*For more information:*
Lisa Wilkinson
Vice President, Investor Relations & Corporate Communications
(416) 204-3780
lisa.wilkinson@centerragold.com
Shae Frosst
Manager, Investor Relations
(416) 204-2159
shae.frosst@centerragold.com
*Additional information on Centerra is available on the Company’s website at *www.centerragold.com and at SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.
*Management’s Discussion and Analysis*
*For the Three months ended March 31, 2023 and 2022*
This Management’s Discussion and Analysis (“MD&A”) has been prepared as of May 12, 2023 and is intended to provide a review of the financial position and results of operations of Centerra Gold Inc. (“Centerra” or the “Company”) for the three months ended March 31, 2023 in comparison with the corresponding periods ended March 31, 2022. This discussion should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2022 prepared in accordance with International Financial Reporting Standards (“IFRS”) available at www.centerragold.com and on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and EDGAR at www.sec.gov/edgar. In addition, this discussion contains forward-looking information regarding Centerra’s business and operations. Such forward- looking statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. See “Caution Regarding Forward-Looking Information” below. All dollar amounts are expressed in United States dollars (“USD”), except as otherwise indicated. All references in this document denoted with ^NG indicate a “specified financial measure” within the meaning of National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure of the Canadian Securities Administrators. None of these measures is a standardized financial measure under IFRS and these measures might not be comparable to similar financial measures disclosed by other issuers. See section “Non-GAAP and Other Financial Measures” below for a discussion of the specified financial measures used in this document and a reconciliation to the most directly comparable IFRS measure.
*Caution Regarding Forward-Looking Information*
Information contained in this document which is not a statement of historical fact, and the documents incorporated by reference herein, may be “forward-looking information” for the purposes of Canadian securities laws and within the meaning of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information involves risks, uncertainties and other factors that could cause actual results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. The words “assume”, “anticipate”, “believe”, “budget”, “contemplate”, “continue”, “de-risk”, “estimate”, “expand”, “expect”, “explore”, “forecast”, “future”, “in line”, “intend”, “may”, “on track”, “optimize”, “plan”, "potential", “restart”, “result”, “schedule”, “seek”, “subject to”, “target”, “understand”, “update”, “will”, and similar expressions identify forward-looking information. These forward-looking statements relate to, among other things: statements regarding 2023 Outlook and 2023 Guidance, including production, costs, capital expenditures, sales, forecasts, interest rates, depreciation, depletion and amortization expenses and taxes; expectations regarding copper credits and gold, copper and molybdenum prices in 2023; the expected trend of the Company’s performance toward achieving guidance; including expectations that 2023 production at the Mount Milligan Mine will be back-end weighted and that Mount Milligan Mine is on track to access higher grades in the second half of 2023, including expectations that 2023 production at the Mount Milligan Mine will be back-end weighted and that Mount Milligan Mine is on track to access higher grades in the second half of 2023; expected cash outflows at the Oksut Mine for 2023; completion of mercury abatement, containment and safety work in the gold room of the ADR plant at the Öksüt Mine; the expected restart of gold room operations, related regulatory approvals and the expected timing thereof; the capacity of the Öksüt Mine’s ADR plant to process inventories of loaded gold in carbon; expectations concerning the exploration plans and drilling programs at the Company’s mines and projects and the timing thereof; the Company’s intention to earn-in to Phase 2 at the Oakley Project; strategic options for the Molybdenum BU, including a potential restart of the Thompson Creek Mine, net cash required to maintain the business and expectations for molybdenum prices; including the reversal of working capital as a result thereof; expectations for ongoing activities at the Goldfield project, including drilling, resource estimation and a feasibility study; expected lower corporate payroll costs; expected lower costs related to the implementation of a new enterprise resources planning software system; and expectations regarding contingent payments to be received from the sale of Greenstone Partnership.
Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable by Centerra, are inherently subject to significant technical, political, business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward- looking information. Factors and assumptions that could cause actual results or events to differ materially from current expectations include, among other things: (A) strategic, legal, planning and other risks, including: political risks associated with the Company’s operations in Türkiye, the USA and Canada, including potential uncertainty or delays resulting from upcoming presidential and parliamentaryy elections in Türkiye and their potential to disrupt or delay Turkish bureaucratic processes and decision making; resource nationalism including the management of external stakeholder expectations; the impact of changes in, or to the more aggressive enforcement of, laws, regulations and government practices, including unjustified civil or criminal action against the Company, its affiliates, or its current or former employees; risks that community activism may result in increased contributory demands or business interruptions; the risks related to outstanding litigation affecting the Company; risks of actions taken by the Kyrgyz Republic, or any of its instrumentalities, in connection with the Company’s prior ownership of the Kumtor Mine or the Global Arrangement Agreement; including unjustified civil or criminal action against the Company, its affiliates, or its current or former employees; risks that Turkish regulators pursue aggressive enforcement of the Öksüt Mine’s current EIA and permits or that the Company experiences delay or disruption in its applications for new or amended EIA or other permits, including the formal issuance thereof; the impact of any sanctions imposed by Canada, the United States or other jurisdictions against various Russian and Turkish individuals and entities; potential defects of title in the Company’s properties that are not known as of the date hereof; the inability of the Company and its subsidiaries to enforce their legal rights in certain circumstances; risks related to anti-corruption legislation; Centerra not being able to replace mineral reserves; Indigenous claims and consultative issues relating to the Company’s properties which are in proximity to Indigenous communities; and potential risks related to kidnapping or acts of terrorism; (B) risks relating to financial matters, including: sensitivity of the Company’s business to the volatility of gold, copper and other mineral prices; the use of provisionally-priced sales contracts for production at the Mount Milligan Mine; reliance on a few key customers for the gold-copper concentrate at the Mount Milligan Mine; use of commodity derivatives; the imprecision of the Company’s mineral reserves and resources estimates and the assumptions they rely on; the accuracy of the Company’s production and cost estimates; the impact of restrictive covenants in the Company’s credit facilities which may, among other things, restrict the Company from pursuing certain business activities or making distributions from its subsidiaries; changes to tax regimes; the Company’s ability to obtain future financing; the impact of global financial conditions; the impact of currency fluctuations; the effect of market conditions on the Company’s short-term investments; the Company’s ability to make payments, including any payments of principal and interest on the Company’s debt facilities, which depends on the cash flow of its subsidiaries; and (C) risks related to operational matters and geotechnical issues and the Company’s continued ability to successfully manage such matters, including the stability of the pit walls at the Company’s operations; the integrity of tailings storage facilities and the management thereof, including as to stability, compliance with laws, regulations, licenses and permits, controlling seepages and storage of water where applicable; the risk of having sufficient water to continue operations at the Mount Milligan Mine and achieve expected mill throughput; changes to, or delays in the Company’s supply chain and transportation routes, including cessation or disruption in rail and shipping networks whether caused by decisions of third-party providers or force majeure events (including, but not limited to, flooding, wildfires, earthquakes, COVID-19, or other global events such as wars); the success of the Company’s future exploration and development activities, including the financial and political risks inherent in carrying out exploration activities; inherent risks associated with the use of sodium cyanide in the mining operations; the adequacy of the Company’s insurance to mitigate operational and corporate risks; mechanical breakdowns; the occurrence of any labour unrest or disturbance and the ability of the Company to successfully renegotiate collective agreements when required; the risk that Centerra’s workforce and operations may be exposed to widespread epidemic including, but not limited to, the COVID-19 pandemic; seismic activity including earthquakes; wildfires; long lead-times required for equipment and supplies given the remote location of some of the Company’s operating properties and disruptions caused by global events; reliance on a limited number of suppliers for certain consumables, equipment and components; the ability of the Company to address physical and transition risks from climate change and sufficiently manage stakeholder expectations on climate-related issues; the Company’s ability to accurately predict decommissioning and reclamation costs and the assumptions they rely upon; the Company’s ability to attract and retain qualified personnel; competition for mineral acquisition opportunities; risks associated with the conduct of joint ventures/partnerships; and, the Company’s ability to manage its projects effectively and to mitigate the potential lack of availability of contractors, budget and timing overruns and project resources. For additional risk factors, please see section titled “Risks Factors” in the Company’s most recently filed Annual Information Form (“AIF”) available on SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.
There can be no assurances that forward-looking information and statements will prove to be accurate, as many factors and future events, both known and unknown could cause actual results, performance or achievements to vary or differ materially from the results, performance or achievements that are or may be expressed or implied by such forward-looking statements contained herein or incorporated by reference. Accordingly, all such factors should be considered carefully when making decisions with respect to Centerra, and prospective investors should not place undue reliance on forward-looking information. Forward-looking information is as of May 12, 2023. Centerra assumes no obligation to update or revise forward-looking information to reflect changes in assumptions, changes in circumstances or any other events affecting such forward-looking information, except as required by applicable law.
*TABLE OF CONTENTS*
*Overview *
*Overview of Consolidated Financial and Operational Highlights*
*Overview of Consolidated Results *
*Outlook *
*Recent Events and Developments *
*Liquidity and Capital Resources *
*Financial Performance *
*Financial Instruments *
*Balance Sheet Review *
*Operating Mines and Facilities *
*Quarterly Results – Previous Eight Quarters *
*Accounting Estimates, Policies and Changes *
*Disclosure Controls and Procedures and Internal Control Over Financial Reporting*
*Non-GAAP and Other Financial Measures
Qualified Person & QA/QC – Production, Mineral Reserves and Mineral Resources
* *1*
*2*
*3*
*5*
*10*
*11*
*12*
*14*
*15*
*15*
*22*
*22*
*23*
*23
27
*
*Overview*
*Centerra’s Business*
Centerra is a Canada-based mining company focused on operating, developing, exploring and acquiring gold and copper properties worldwide. Centerra’s principal operations are the Mount Milligan gold-copper mine located in British Columbia, Canada (the “Mount Milligan Mine”), and the Öksüt gold mine located in Türkiye (the “Öksüt Mine”). The Company also owns the Goldfield District Project (the “Goldfield Project”) in Nevada, United States, the Kemess Underground Project (the “Kemess Project”) in British Columbia, Canada as well as exploration properties in Canada, the United States of America and Türkiye and has options to acquire exploration joint venture properties in Canada, Türkiye, and the United States. The Company owns and operates a Molybdenum Business Unit (the “Molybdenum BU”), which includes the Langeloth metallurgical processing facility, operating in Pennsylvania, USA (the “Langeloth Facility”), and two primary molybdenum mines on care and maintenance: the Thompson Creek Mine in Idaho, USA, and the Endako Mine (75% ownership) in British Columbia, Canada.
As of March 31, 2023, Centerra’s significant subsidiaries were as follows:
*Entity* *Property - Location* *Current Status* *Ownership*
Thompson Creek Metals Company Inc. Mount Milligan Mine - Canada Operation 100% Endako Mine - Canada Care and maintenance 75%
Öksüt Madencilik A.S. Öksüt Mine - Türkiye Operation 100%
Langeloth Metallurgical Company LLC Langeloth - USA Operation 100%
Gemfield Resources LLC Goldfield Project - USA Advanced exploration 100%
AuRico Metals Inc. Kemess Project - Canada Care and maintenance 100%
Thompson Creek Mining Co. Thompson Creek Mine - USA Care and maintenance 100%
The Company’s common shares are listed on the Toronto Stock Exchange and the New York Stock Exchange and trade under the symbols “CG” and “CGAU”, respectively.
As of May 12, 2023, there are 218,807,695 common shares issued and outstanding, options to acquire 3,634,354 common shares outstanding under the Company’s stock option plan, and 1,740,079 restricted share units outstanding under the Company’s restricted share unit plan (exercisable on a 1:1 basis for common shares).
*Overview of Consolidated Financial and Operating Highlights*
*($millions, except* *as* *noted)* **Three months ended March* *31,** *2023* 2022 % Change
*Financial Highlights*
Revenue *226.5* 295.2 (23 )%
Production costs *204.3* 144.2 42 %
Depreciation, depletion, and amortization ("DDA") *18.5* 37.5 (51 )%
Earnings from mine operations *3.7* 113.5 (97 )%
Net (loss) earnings *(73.5* *)* 89.4 (182 )%
Adjusted net (loss) earnings^(1) *(52.9* *)* 56.4 (194 )%
Cash (used in) provided by operating activities *(99.8* *)* 28.3 (453 )%
Free cash flow (deficit) *(105.9* *)* 9.1 (1264 )%
Adjusted free cash flow (deficit) *(105.9* *)* 19.1 (654 )%
Additions to property, plant and equipment (“PP&E”) *8.0* 210.2 (96 )%
Capital expenditures - total^(1) *4.9* 16.0 (69 )%
Sustaining capital expenditures^(1) *4.9* 15.1 (68 )%
Non-sustaining capital expenditures^(1) *—* 0.9 (100 )%
Net (loss) earnings per common share - $/share basic^(2) *(0.34* *)* 0.30 (213 )%
Adjusted net (loss) earnings per common share - $/share basic^(1)(2) *(0.24* *)* 0.19 (226 )%
*Operating highlights*
Gold produced (oz) *33,215* 93,784 (65 )%
Gold sold (oz) *38,990* 94,909 (59 )%
Average market gold price ($/oz) *1,890* 1,879 1 %
Average realized gold price ($/oz )^(3) *1,446* 1,687 (14 )%
Copper produced (000s lbs) *13,355* 20,558 (35 )%
Copper sold (000s lbs) *15,332* 19,449 (21 )%
Average market copper price ($/lb) *4.05* 4.53 (11 )%
Average realized copper price ($/lb)^(3) *3.42* 3.77 (9 )%
Molybdenum sold (000s lbs) *3,347* 2,887 16 %
Average market molybdenum price ($/lb) *32.95* 19.08 73 %
*Unit costs*
Gold production costs ($/oz) *1,124* 497 126 %
All-in sustaining costs on a by-product basis ($/oz)^(1) *1,383* 395 250 %
All-in costs on a by-product basis ($/oz)^(1) *2,107* 516 308 %
Gold - All-in sustaining costs on a co-product basis ($/oz)^(1) *1,603* 735 118 %
Copper production costs ($/lb) *2.66* 1.68 58 %
Copper - All-in sustaining costs on a co-product basis – ($/lb)^(1) *2.67* 2.11 27 %
(1) Non-GAAP financial measure. All per unit costs metrics are expressed on a metal sold basis. See discussion under “Non-GAAP and Other Financial Measures”.
(2) As at March 31, 2023, the Company had 218,737,013 common shares issued and outstanding.
(3) This supplementary financial measure within the meaning of National Instrument 52-112 - Non-GAAP and Other Financial Measures Disclosure (“NI 51-112”). is calculated as a ratio of revenue from the consolidated financial statements and units of metal sold and includes the impact from the Mount Milligan Streaming Arrangement, copper hedges and mark-to-market adjustments on metal sold not yet finally settled.
*Overview of Consolidated Results*
*First Quarter 2023 compared to First Quarter 2022*
Net loss of $73.5 million was recognized in the first quarter 2023, compared to net earnings of $89.4 million in the first quarter 2022. The decrease in net earnings was primarily due to:
· lower earnings from mine operations of $3.7 million in the first quarter of 2023 compared to earnings from mine operations of $113.5 million in the first quarter of 2022 primarily due to no ounces of gold sold at the Öksüt Mine as well as lower gold ounces and copper pounds sold, lower average realized gold and copper prices and higher production costs at the Mount Milligan Mine.
· Higher production costs at the Mount Milligan Mine were primarily due to higher mining and milling costs. Mining costs were impacted by higher labour costs due to inflationary pressures, higher spending on equipment spare parts from additional maintenance on mobile equipment, higher consumption of diesel and explosives due to areas mined, higher diesel prices and approximately $4.5 million less in mining costs capitalized to the the Tailings Storage Facility (“TSF”). Higher milling costs were primarily due to liner replacement and related contractor costs of approximately $5.5 million associated with general mill shutdown which was performed in the first quarter of 2023 but not in the first quarter of 2022. A decrease in earnings from mine operations was partially offset by a decrease in DD&A at the Mount Milligan Mine due to the increase in proven and probable reserves in 2022 and lower tonnes processed;
· a reclamation expense of $15.6 million in the first quarter of 2023 compared to reclamation recovery of $42.0 million in the first quarter of 2022, primarily due to a decrease in the risk-free interest rates applied to discount the estimated future reclamation cash flows;
· higher other operating expenses primarily attributable to standby-by costs of $10.4 million at the Öksüt Mine expensed in the period instead of being capitalized to production inventory due to the focus on waste stripping activities in the period and limited mining, crushing and stacking of ore; and
· higher exploration and development costs of $17.9 million in the first quarter of 2023 compared to $8.2 million in the first quarter of 2022 primarily related to various drilling activities and technical studies undertaken at the Goldfield Project the Oakley Project and project advancement work at the Thompson Creek Mine.
The decrease in net earnings was partially offset by lower income tax expense primarily resulting from suspension of operations at the Öksüt Mine. The decrease in income tax expense was partially offset by a one-time income tax of approximately $5.0 million levied by the Turkish government on taxpayers eligible to claim Investment Incentive Certificate benefits in 2022. In addition, the decrease in net earnings was partially offset by higher non-operating income primarily attributable to litigation and related costs incurred in connection with the seizure of the Kumtor Mine incurred in the first quarter of 2022 that did not occur in 2023 and higher interest income earned on the Company’s cash balance in the first quarter of 2023 from rising interest rates.
Adjusted net loss^NG of $52.9 million was recognized in the first quarter of 2023, compared to adjusted net earnings^NG of $56.4 million in the first quarter of 2022. The decrease in adjusted net earnings^NG was primarily due to lower earnings from mine operations, higher reclamation expense at care and maintenance sites, higher non-operating expenses and higher exploration and development costs, partially offset by lower non-operating expenses as outlined above.
The adjusting items to net loss in the first quarter of 2023 were:
· $5.0 million of current income tax expense resulting from the introduction by the Turkish government of a one- time income tax levied on taxpayers eligible to claim Investment Incentive Certificate benefits in 2022; and
· $15.6 million of reclamation provision revaluation expense at sites on care and maintenance at the Endako Mine, Kemess Project and the Thompson Creek Mine primarily attributable to a decrease in the risk-free interest rates applied to discount the estimated future reclamation cash flows.
The adjusting items to net earnings in the first quarter of 2022 were:
· $42.0 million reclamation provision revaluation recovery at sites on care and maintenance in the Molybdenum BU primarily attributable to an increase in the risk-free interest rates applied to discount the estimated future reclamation cash flows;
· $6.5 million legal and other costs directly related to the seizure of the Kumtor Mine; and
· $2.5 million of income tax adjustments resulting from foreign currency exchange rate impact on the deferred income taxes related to the Öksüt Mine.
Cash used in operating activities was $99.8 million in the first quarter of 2023, compared to cash provided by operating activities of $28.3 million in the first quarter of 2022. The decrease in cash provided by operating activities was primarily due to a $65.3 million increase in working capital requirements at the Molybdenum BU arising from higher molybdenum prices. Other contributing factors were no ounces of gold sold at the Öksüt Mine as well as lower average realized gold and copper prices, lower gold ounces and copper pounds sold and higher production costs at the Mount Milligan Mine as noted above. In addition, there was an unfavourable working capital change at the Öksüt Mine from the timing of vendor payments. The unfavourable working capital change at the Molybdenum BU is expected to partially reverse over the course of 2023 as sales are collected and concentrate purchases are finalized at lower anticipated molybdenum prices. The overall decrease in cash provided by operating activities was partially offset by a favourable working capital change at the Mount Milligan Mine due to the effect of the timing of concentrate shipments and lower income taxes paid primarily resulting from no gold ounces sold at the Öksüt Mine.
Free cash flow deficit^NG of $105.9 million was recognized in the first quarter of 2023, compared to free cash flow^NG of $9.1 million in the first quarter of 2022. The decrease in free cash flow^NG was primarily due to lower cash provided by operating activities as outlined above, partially offset by lower sustaining capital expenditures^NG.
*2023 Outlook*
The Company’s 2023 outlook was disclosed in the MD&A for the year ended December 31, 2022 filed on SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar. At the Öksüt Mine, construction of the mercury abatement system is complete, and the Company is working with the applicable authorities in Türkiye to obtain final approval of the updated Environmental Impact Assessment (“EIA”).
The full year 2023 outlook for the Mount Milligan Mine, as previously disclosed on February 23, 2023, and comparative actual results for the three months ended March 31, 2023 are set out in the following table:
*Mount Milligan Mine*^*(1)* *Units*^*(2)* *Three months ended
March 31,* *2023* *2023*
*Guidance*
*Production*
Unstreamed gold production (Koz) 22 104 -111
Streamed gold production (Koz) 12 56 - 59
*Total gold production*^*(3)* *(Koz)* *33* *160 - 170*
Unstreamed copper production (Mlb) 11 49 - 57
Streamed copper production (Mlb) 3 11 - 13
*Copper production*^*(3)* *(Mlb)* *13* *60 - 70*
*Costs*^*(*^*4*^*)*
Gold production costs ($/oz) 1,124 900 - 950
All-in sustaining costs on a by-product basis^NG ($/oz) 914 1,075 - 1,125
All-in costs on a by-product basis^NG ($/oz) 924 1,125 - 1,175
All-in sustaining costs on a co-product basis^NG ($/oz) 1,134 1,150 - 1,200
Copper production costs ($/lb) 2.66 1.90 - 2.15
All-in sustaining costs on a co-product basis^NG ($/lb) 2.67 2.75 - 3.00
*Capital Expenditures*
Additions to PP&E ($M) 4.3 65 - 70
*Total Capital Expenditures*^*NG* *($M)* *1.8* *65 - 70*
Sustaining^NG ($M) 1.8 65 - 70
Non-sustaining^NG ($M) — —
Depreciation, depletion and amortization ($M) 17.3 65 - 80
British Columbia mineral tax ($M) 0.6 1 - 3
1. The Mount Milligan Mine is subject to an arrangement with RGLD Gold AG and Royal Gold, Inc. (together, “Royal Gold”) which entitles Royal Gold to purchase 35% and 18.75% of gold and copper produced, respectively, and requires Royal Gold to pay $435 per ounce of gold and 15% of the spot price per metric tonne of copper delivered (“Mount Milligan Streaming Arrangement”). Using an assumed market gold price of $1,750 per ounce and a blended copper price of $3.85 per pound for the remaining three quarters ending December 31, 2023 ($1,600 per ounce and $3.55 per pound in the previous guidance), the Mount Milligan Mine’s average realized gold and copper price for the remaining three quarters of 2023 would be $1,250 per ounce and $2.99 per pound, respectively, compared to average realized prices of $1,446 per ounce and $3.42 per pound in the three months period ended March 31, 2023, when factoring in the Mount Milligan Streaming Arrangement and concentrate refining and treatment costs. The blended copper price of $3.85 per pound factors in copper hedges in place as of March 31, 2023 and a market price of $3.75 per pound for the unhedged portion for the remainder of 2023.
2. Unit costs include a credit for forecasted copper sales treated as by-product for all-in sustaining costs. Production for copper and gold reflects estimated metallurgical losses resulting from handling of the concentrate and metal deductions levied by smelters.
3. Gold and copper production at the Mount Milligan Mine assumes recoveries of 66% and 81%, respectively. 2023 gold ounces and copper pounds sold are expected to be consistent with production.
4. Units noted as ($/oz) relate to gold ounces and ($/lb) relate to copper pounds.
The full year 2023 outlook for the Goldfield Project, Kemess Project, the Molybdenum BU and corporate administration, as previously disclosed, and comparative actual results for three months ended March 31, 2023 are set out in the following table:
*Other Costs* *Units* *Three months ended
March 31, 2023* *2023*
*Guidance*
Goldfield Project - Project Development Costs ($M) 4.0 15 - 20
Goldfield Project - Exploration Costs ($M) 7.7 10
Other Exploration Projects^(1) ($M) 6.2 12 - 18
*Total Exploration and Project Development*^*(2)* *($M)* *17.9* *50 - 65*
Kemess Project Care & Maintenance Costs ($M) 3.1 15 - 17
Molybdenum BU Free Cash Flow Deficit^NG(3) ($M) 76.6 45 - 80
Corporate Administration Costs^(4) ($M) 14.8 40 - 45
1. 2023 costs include $2.6 million costs related to project advancement work at the Thompson Creek Mine.
2. The exploration and project development costs include both expensed exploration and project development costs as well as capitalized exploration costs and exclude business development expenses. Approximately $2.7 million and $0.5 million ($3.0 million and $1.0 million in the previous guidance) of these capitalized exploration costs are also included in the full year 2023 sustaining capital expenditures^NG estimates for Mount Milligan Mine and Öksüt Mine, respectively. No exploration costs were capitalized in the three months period ended March 31, 2023.
3. Includes an additional cash outflow to cover increased working capital requirements at the Langeloth Roasting Facility, which is expected to partially reverse as a large portion of cash tied up in working capital becomes released during the remaining nine months of 2023 if molybdenum prices remain at their current levels.
4. 2023 actual costs include severance costs of $1.2 million and share-based compensation costs of $3.1 million.
*Mount Milligan Mine Production Profile*
Mount Milligan Mine’s production the first quarter of 2023 was impacted by mine sequencing and lower gold grades than planned when mining was occurring in an ore-waste transition zone, with this lower grade ore also impacting plant recoveries. The Company remains on track to access the higher grade copper and gold from Phase 7 and Phase 9 in the second half of the year, but given the lower than planned production during the first quarter, the Company expects 2023 gold production to be near the low end of guidance. Copper production is tracking towards the mid-point of guidance for the year. Mount Milligan Mine’s 2023 gold production and copper production is expected to be back-end weighted, driving a higher proportion of concentrate sales into the fourth quarter of 2023. The Company expects approximately 30% to 35% of concentrate sales to occur in the fourth quarter of 2023.
*Mount Milligan Mine Cost Profile*
Mount Milligan Mine gold production costs are expected to be in the range of $900 to $950 per ounce sold in 2023, which is unchanged from the previous guidance. Mount Milligan Mine gold production costs in the three months ended March 31, 2023 were $1,124 per ounce sold, higher than the guidance range, primarily due to planned mill shutdown costs, lower amounts capitalized to the TSF and the mine’s production profile. The Company expects increased gold production levels later in 2023 and higher allocation of costs to the TSF of approximately $14 to $16 million, which are expected to result in lower average costs per ounce.
Copper production costs at the Mount Milligan Mine are unchanged from the previous guidance and expected to be in the range of $1.90 to $2.15 per pound sold for the 2023 year compared to $2.66 per copper pound sold in the three months ended March 31, 2023. Similar to the gold production profile, copper production is expected to increase later in 2023, driving full year copper production costs per pound lower than the amounts realized in the three months ended March 31, 2023.
The Mount Milligan Mine’s all-in sustaining costs on a by-product basis^NG in 2023 are expected to be in the range of $1,075 to $1,125 per ounce sold. Mount Milligan Mine’s all-in sustaining costs on a by-product basis^NG were $914 per ounce sold for the three months ended March 31, 2023. All-in sustaining costs on a by-product basis^NG for the remaining nine months ending December 31, 2023 are expected to be higher compared to the three months ended March 31, 2023 due to lower copper by-product credits estimated for the remaining nine months of 2023 from lower expected average realized copper price of $2.99 per pound after reflecting the concentrate refining and treatment costs, Mount Milligan Streaming Arrangement, and existing hedges in place as of March 31, 2023 and increased capital expenditures through the remainder of 2023 due to timing of projects.
*Mount Milligan Mine Capital Expenditures*
Additions to PP&E, an IFRS accounting figure includes certain non-cash additions to PP&E such as changes in future reclamation costs and capitalization of leases. Capital expenditures^NG, which comprise sustaining capital expenditures^NG and non-sustaining capital expenditures^NG, exclude such non-cash additions to PP&E. The Mount Milligan Mine’s planned additions to PP&E in 2023 are unchanged from the previous guidance and expected to be in the range of $65 to $70 million compared to $4.3 million in the three months ended March 31, 2023. Planned total capital expenditures^NG in 2023 are unchanged from the previous guidance and expected to be in the range of $65 to $70 million, compared to capital expenditures^NG of $1.8 million in the three months ended March 31, 2023. Most of the capital expenditures are expected to be incurred during the remainder of 2023, due to the timing of major projects and TSF additions.
*Mount Milligan Mine Depreciation, Depletion and Amortization (DD&A)*
Mount Milligan Mine’s planned DD&A included in costs of sales for 2023 is unchanged from the previous guidance and expected to be in the range of $65 to $80 million, compared to $17.3 million for the three months ended March 31, 2023.
*Mount Milligan Mine Current Taxes*
The Mount Milligan Mine is subject to the British Columbia mineral tax, which is unchanged from the previous guidance and estimated to be between $1 and $3 million in 2023 compared to $0.6 million for the three months ended March 31, 2023.
*Öksüt Mine*
Due to the continued suspension of gold production activities at the Öksüt Mine, the Company did not issue 2023 guidance. It is estimated that the Öksüt Mine will incur average cash expenditures of approximately $7 to $10 million per month to maintain partial mining operations while its doré bar production remains suspended. Cash expenditures incurred during the three months ended March 31, 2023 were $23.8 million, in line with this expectation. The Company recorded $9.5 million in cash standby costs due to limited mining, crushing and stacking of ore activities in the period. Other cash expenditures during the period included $3.1 million for capital expenditures^NG, $2.6 million in cash costs allocated to product inventory related to stockpiled and stacked ore, with the remainder related to advance payments to vendors and other working capital changes. As of March 31, 2023, the carrying value of stored gold-in-carbon inventory was $46.9 million.
*Molybdenum Business Unit*
The Company’s costs at the Molybdenum BU’s care and maintenance sites in the three months ended March 31, 2023 were $7.3 million. The Company’s full year 2023 expenditures for the Molybdenum BU’s care and maintenance sites are estimated to be between $30 and $35 million, which is unchanged from the previous guidance.
The Company’s actual expenditures at the Endako Mine in the three-month period ended March 31, 2023 were $1.1 million with no costs for reclamation expenditures. The full year 2023 expenditures at the Endako Mine are expected to be between $12 to $15 million including approximately $6 to $8 million of care and maintenance costs and $6 to $7 million of reclamation expenditures primarily relating to work on the closure spillway for Tailings Pond 2.
The Company’s expenditures at the Thompson Creek Mine for the three months ended March 31, 2023 were $6.2 million, including $3.6 million for care and maintenance and $2.6 million costs related to project advancement work. The full year 2023 expenditures at the Thomp