Centerra Gold Achieves 2023 Production Guidance; Begins 2024 with Over $600 Million in Cash and Cash Equivalents; Announces 2024 Outlook
- Centerra Gold Inc. met or exceeded its 2023 production guidance for gold and copper.
- Preliminary cash and cash equivalents as of December 31, 2023, were $613 million.
- 2024 guidance includes an 11% increase in gold production and steady copper production.
- Strategic initiatives for 2024 include optimization programs at Mount Milligan and new feasibility studies.
- The company expects to generate strong cash flow from operations in 2024.
- 2024 exploration guidance focuses on brownfield and greenfield programs to drive future growth.
- Material assumptions for 2024 production include gold and copper prices, exchange rates, and fuel costs.
- Sensitivities analysis shows potential impacts on production costs, revenues, and cash flows based on key factors.
- None.
Insights
The preliminary production results and 2024 guidance issued by Centerra Gold Inc. suggest a stable operational performance with gold production near the midpoint of the 2023 guidance range and copper production within the expected parameters. The forecast for 2024 indicates an 11% increase in gold production, which could signal a positive outlook for revenue growth if gold prices remain favorable. The anticipated increase in production costs and all-in sustaining costs (AISC) for 2024, however, raises questions about the company's cost control measures and the potential impact on profit margins.
The unaudited preliminary cash and cash equivalents figure of $613 million provides a liquidity snapshot that investors use to gauge financial health. The strong cash position may offer Centerra the flexibility to invest in strategic initiatives or return value to shareholders. Nevertheless, the increase in expected production costs and AISC could dampen the positive impact of higher production volumes on the company's financial results.
The gold and copper production sectors are highly sensitive to commodity prices and Centerra's revenue is directly tied to these fluctuations. The company's guidance for 2024, with higher projected gold production and slightly lower copper production, indicates an operational strategy that may be responding to market demand and pricing trends. The provided material assumptions, such as a market gold price of $1,850 per ounce and a market price of $3.50 per pound for copper, offer insight into the company's expectations and are critical for investors to consider when evaluating the company's future performance.
Centerra's focus on optimization programs and feasibility studies, such as the site-wide optimization program at Mount Milligan and the feasibility study for the Thompson Creek molybdenum mine restart, suggest a forward-looking approach aimed at enhancing long-term value. These strategic moves could be pivotal in maintaining competitiveness and achieving cost efficiency, which are essential for sustaining profitability in a volatile commodities market.
The technical details provided regarding the Mount Milligan and Öksüt mines, including projected recoveries and initiatives to improve occupational health and safety, mining operations and plant operability, are indicative of Centerra's commitment to operational excellence. The emphasis on enhancing gold and copper recoveries, as well as the expected completion of various assessments and studies, could potentially lead to increased efficiency and extended mine life, positively influencing the company's stock valuation.
However, the increase in production costs and AISC for 2024, especially at Öksüt due to higher royalty rates and a new mining contract, may concern investors focused on cost management. The scheduled tax and royalty payments in the second quarter of 2024 at Öksüt will also affect cash flows, which is a critical consideration for stakeholders. These financial and operational details provide a comprehensive view of the company's strategic direction and potential risks and opportunities that could affect its market performance.
All figures are in United States dollars. All production figures reflect payable metal quantities and are on a
TORONTO, Feb. 14, 2024 (GLOBE NEWSWIRE) -- Centerra Gold Inc. (“Centerra” or the “Company”) (TSX: CG) (NYSE: CGAU) announces preliminary production results for the fourth quarter and full year ended December 31, 2023, and issues 2024 guidance. Centerra will release its fourth quarter and full year 2023 operating and financial results after the market closes on Thursday February 22, 2024. The Company will host a conference call and webcast to discuss the results on Friday February 23, 2024, at 9:00 am Eastern Time. Details for the conference call and webcast are included at the end of this news release.
2023 Fourth Quarter and Full Year Highlights
- Fourth quarter 2023 gold production was 129,259 ounces.
- Full year 2023 gold production was 350,317 ounces, which was near the midpoint of the 2023 gold production guidance range of 340,000 to 360,000 ounces, as published on July 31, 2023.
- Copper production was 19.7 million pounds in the fourth quarter 2023, and 61.9 million pounds for the full year 2023, in line with the 2023 copper production guidance range of 60 to 70 million pounds, as published on January 16, 2023.
- As at December 31, 2023, unaudited preliminary cash and cash equivalents was
$613 million . - Consolidated full year 2023 production costs and all-in sustaining costs (“AISC”) on a by-product basisNG are expected to be near the midpoint of the previously disclosed guidance ranges of
$700 t o$750 per ounce and$1,000 t o$1,050 per ounce, respectively.
2024 Guidance Highlights
- 2024 gold production guidance of 370,000 to 410,000 ounces, an
11% increase from the midpoint of guidance year-over-year. - 2024 copper production guidance of 55 to 65 million pounds.
- 2024 gold production cost guidance of
$800 t o$900 per ounce and AISC on a by-product basisNG guidance of$1,075 t o$1,175 per ounce. - 2024 sustaining capitalNG guidance of
$100 t o$125 million and non-sustaining capitalNG guidance of$8 t o$15 million . - 2024 exploration guidance of
$35 t o$45 million , including$17 t o$22 million of brownfield exploration, and$18 t o$23 million of greenfield and generative exploration programs.
President and CEO, Paul Tomory, commented, “We ended the year with strong operating performance from Öksüt and Mount Milligan, which allowed us to achieve our production guidance for both gold and copper for the year. We generated strong free cash flow for a second consecutive quarter, with our cash and cash equivalents exceeding
“Our team is focused on several key areas in 2024, including the completion of Mount Milligan’s site-wide optimization program in the second half of the year, which is focused on assessments of safety, productivity, and cost efficiency opportunities. We will be initiating a Preliminary Economic Assessment at Mount Milligan to evaluate the substantial resources with the goal to unlock value beyond the current 2035 mine life, targeted for the first half of 2025. We are also expecting to complete a feasibility study for the Thompson Creek molybdenum mine restart in mid-2024, as well as an initial resource estimate at the Goldfield Project by the end of 2024. In the year ahead, we expect to continue to deliver on our strategic plan that will drive future value and growth for Centerra.”
2023 Preliminary Production Results
| Q4 2023 | Full Year 2023 | 2023 Full Year Guidance(1) | |
| Total Gold Production (oz) | 129,259 | 350,317 | 340,000 - 360,000 |
| Mount Milligan (oz) | 40,503 | 154,391 | 150,000 - 160,000 |
| Öksüt (oz) | 88,756 | 195,926 | 190,000 - 200,000 |
| Total Copper Production (Mlbs) | 19.7 | 61.9 | 60 - 70 |
(1) As disclosed with the Q3 2023 financial results on October 31, 2023 (LINK).
2024 Guidance
| | 2024 Guidance | 2023 Consolidated Actuals | ||||
| Mount Milligan(5,6) | Öksüt(6) | Consolidated | Q3 2023 YTD(2) | Q4 2023(3) | FY 2023(4) | |
| Production | ||||||
| Total Gold Production (koz) | 180 – 200 | 190 – 210 | 370 – 410 | 221 | 129 | 350 |
| Total Copper Production (Mlbs) | 55 - 65 | n/a | 55 - 65 | 42 | 20 | 62 |
| Costs | ||||||
| Gold Production Cost ($/oz) | 950 – 1,050 | 650 – 750 | 800 – 900 | 820 | - | - |
| AISC on a by-product basisNG ($/oz) | 1,075 – 1,175 | 900 – 1,000 | 1,075 – 1,175 | 1,122 | - | - |
| Capital Expenditures | ||||||
| Additions to PP&E | 55 – 65 | 40 – 50 | 108 – 140 | 54 | - | - |
| Total capital expenditures | 55 – 65 | 40 – 50 | 108 – 140 | 52 | ||
| Sustaining capital expendituresNG ($M) | 55 – 65 | 40 – 50 | 100 – 125 | 49 | - | - |
| Non-sustaining capital expendituresNG ($M) | 0 | 0 | 8 – 15 | 3 | - | - |
| Other Items | ||||||
| Depreciation and amortization ($M) | 90 – 100 | 45 – 55 | 140 – 165 | 84 | - | - |
| Current income tax paid ($M) | 1 – 5 | 85 - 95 | 86 – 100 | 9 | - | - |
| General and administrative expenses ($M) | n/a | n/a | 37 – 42(1) | 33 | - | - |
| (1) | General and administrative expenses include |
| (2) | Nine months ended September 30, 2023. |
| (3) | Three months ended December 31, 2023. |
| (4) | Twelve months ended December 31, 2023. |
| (5) | 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 |
| (6) | In 2024, gold and copper production at the Mount Milligan Mine is projected with recoveries estimated at |
Mount Milligan
Mount Milligan’s 2024 gold production is expected to be in the range of 180,000 to 200,000 ounces, a
In 2024, gold production costs at Mount Milligan are expected to be
- Occupational health and safety: improvements through a complete engagement of the operating team, with a focus on improving employee retention and reduced turnover.
- Mine: improvements of the load/haul cycle, productivity, enhanced mine maintenance practices and refinement of the geology-metallurgy model; working towards seamless integration of mine and plant operations.
- Plant: continuous improvement in the overall operability of the plant, flotation circuit, consumables, materials handling systems, and blending consistency of feed to the plant. The Company expects these actions to enhance plant throughput and recovery.
The Company is encouraged by the preliminary cash flow improvement estimates from the first phases of work on the program. Estimates of the potential cost savings from the asset optimization review are still being developed and are not included in Mount Milligan’s 2024 cost guidance ranges.
In 2024, Mount Milligan is expected to have between
Öksüt
At Öksüt, 2024 gold production is expected to be in the range of 190,000 to 210,000 ounces, which is unchanged from the previously disclosed life of mine (“LOM”) plan, published on September 18, 2023 (LINK). Gold production is expected to be weighted more towards the first half of 2024, as the elevated leach pad inventories and stockpiles are processed through the adsorption, desorption, and recovery (“ADR”) plant.
In 2024, gold production costs at Öksüt are expected to be
In 2024, Öksüt is expected to have between
The Turkish corporate income tax rate applicable to Öksüt is
Molybdenum Business Unit
In 2024, the care and maintenance and reclamation expenditures for the Molybdenum Business Unit (“MBU”) are expected to be between
For the first six months of 2024, project development costs at Thompson Creek are expected to be
In 2024, cash from operations at the Langeloth Metallurgical Facility (“Langeloth”) is expected to be between positive
Goldfield Project
In 2024, Goldfield Project development costs are expected to be
Kemess Project
In 2024, the Kemess Project will continue to be on care and maintenance. Care and maintenance costs are expected to be
Exploration Expenditures
In 2024, exploration expenditures are expected to be
2024 Material Assumptions
Material assumptions or factors used to forecast production and costs for 2024, after giving effect to the hedges in place as at December 31, 2023, include the following:
- A market gold price of
$1,850 per ounce and an average realized gold price at Mount Milligan of$1,355 per ounce after reflecting the streaming arrangement with Royal Gold (35% of Mount Milligan’s gold at$435 per ounce). - A market price of
$3.50 per pound for the unhedged portion of copper production. This equates to a blended copper price of$3.50 per pound, reflecting a minimum projected impact of a reduced volume of copper hedges in place for 2024. Realized copper price at the Mount Milligan Mine is estimated to average to$2.94 per pound after reflecting the Mount Milligan Streaming Arrangement (18.75% of the Mount Milligan Mine’s copper is sold at15% of the spot price per metric tonne), and copper treatment and refining costs. - A molybdenum price of
$20.00 per pound. - Exchange rates:
$1 USD:$1.33 Canadian dollar;$1 USD:30.00 Turkish lira. - Diesel fuel price assumption:
$1.06 per litre (CAD$1.41 per litre) at Mount Milligan.
Other Material Assumptions
Other material assumptions used in forecasting production and costs for 2024 can be found under the heading “Caution Regarding Forward-Looking Information” in this document. Production, cost, and capital forecasts for 2024 are forward-looking information and are based on key assumptions and subject to material risk factors that could cause actual results to differ materially, and which are discussed under the heading “Risk Factors” in the Company’s most recent Annual Information Form.
2024 Sensitivities
| Impact on ($ millions) | Impact on ($ per ounce sold) | ||||||
| Production Costs & Taxes | Capital Costs | Revenues | Cash Flows | AISC on a by-product basis per ounceNG | |||
| Gold price(1) | - + | 8.5 - 10.5 8.5 - 10.5 | - - | 15.5 - 17.0 15.5 - 17.0 | 7.0 - 8.5 7.0 - 8.5 | 10 - 12 10 - 12 | |
| Copper price(1) | - + | 0.3 - 0.5 0.3 – 1.0 | - - | 8.5 - 11.0 18.0 - 21.0 | 8.0 - 11.0 17.5 - 20.5 | 20 - 30 45 – 55 | |
| Diesel fuel(1) | 10 | % | 1.0 - 1.5 | 0.5 – 1.0 | - | 1.5 – 2.5 | 4 – 6 |
| Canadian dollar(1) (2) | 10 cents | 18.5 - 20.0 | 0.1 – 0.2 | - | 18.5 - 20.0 | 45 – 55 | |
| Turkish lira(3) | 1 lira | 0.2 - 0.5 | 0.1 - 0.2 | - | 0.3 - 0.7 | 1 – 2 | |
(1) Includes the effect of the Company’s copper, diesel fuel and Canadian dollar hedging programs, with current exposure coverage as of December 31, 2023 of approximately
(2) Appreciation of the currency against the US dollar results in higher costs and lower cash flow and earnings, depreciation of the currency against the US dollar results in decreased costs and increased cash flow and earnings.
(3) Assumes an increase in the Turkish Lira will be partially offset by inflation.
Fourth Quarter and Full Year 2023 Operating and Financial Results and Conference Call
Centerra will release its fourth quarter and full year 2023 operating and financial results after the market closes on Thursday February 22, 2024. The Company will host a conference call and webcast to discuss the results on Friday February 23, 2024, at 9:00 am Eastern Time. Details for the conference call and webcast are included below.
Webcast
- Participants can access the webcast at the following link:
https://services.choruscall.ca/links/centerragold2023q4.html - An archive of the webcast will be available until the end of day on May 23, 2024.
Conference Call
- Participants can register for the conference call at the following registration link. Upon registering, you will receive the dial-in details and a unique PIN to access the call. This process will bypass the live operator and avoid the queue. Registration will remain open until the end of the live conference call.
- Participants who prefer to dial in and speak with a live operator can access the call by dialing 1-800-319-4610 or 604-638-5340. It is recommended that you call 10 minutes before the scheduled start time.
- After the call, an audio recording will be made available via telephone for one month, until the end of day March 23, 2024. The recording can be accessed by dialing 412-317-0088 or 1-855-669-9658 and using the passcode 0641. In addition, the webcast will be archived on Centerra’s website at: www.centerragold.com/investor/events-presentations.
Qualified Person
The scientific and technical information presented in this document, including the production estimates, were prepared in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum and National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and were prepared, reviewed, verified, and compiled by Centerra’s geological and mining staff under the supervision of Paul Chawrun, P.Eng., who is a member of the Professional Engineers Ontario and Centerra’s Executive Vice President and Chief Operating Officer, who is a qualified person for the purpose of NI 43-101.
About Centerra Gold
Centerra Gold Inc. is a Canadian-based gold 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 District Project in Nevada, United States, the Kemess 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
Lana Pisarenko
Senior Manager, Investor Relations
lana.pisarenko@centerragold.com
Additional information on Centerra is available on the Company’s website at www.centerragold.com, on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar.
Caution Regarding Forward-Looking Information
This news release contains or incorporates by reference “forward-looking statements” and “forward-looking information” as defined under applicable Canadian and U.S. securities legislation. All statements, other than statements of historical fact, which address events, results, outcomes or developments that the Company expects to occur are, or may be deemed to be, forward-looking statements. 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. Forward-looking statements are generally, but not always, identified by the use of forward-looking terminology such as “aimed at”, “assume”, “believe”, “contingent”, “continue”, “expect”, “forecast”, “goal”, “near”, “ongoing”, “potential”, “preliminary”, “project”, “target” or “update”, or variations of such words and phrases and similar expressions or statements that certain actions, events or results “may”, “could”, “would” or “will” be taken, occur or be achieved or the negative connotation of such terms.
Such statements include, but may not be limited to: preliminary production results for the fourth quarter and the full year ended December 31, 2023; achieving 2023 annual guidance; statements regarding 2024 guidance, outlook and expectations, including production, cash flow, costs including care and maintenance and reclamation costs, capital expenditures, depreciation, depletion and amortization, taxes and cash flows; exploration potential, budgets, focuses, programs, targets and projected exploration results; gold and copper prices; a Preliminary Economic Assessment at Mount Milligan and any related evaluation of resources or a LOM beyond 2035; a feasibility study regarding a potential restart of the Thompson Creek molybdenum mine; an initial resource estimate at the Goldfield Project including the success of exploration programs or metallurgical testwork; the Company’s strategic plan; increased gold production at Mount Milligan and the success of any metallurgical reviews including the blending of elevated pyrite bearing high-grade gold, low-grade copper ore and any recoveries thereof; the optimization program at Mount Milligan including any improvements to occupational health and safety, the mine and the plant and any potential costs savings resulting from the same; the expected gold production at Öksüt in 2024; the new multi-year contract with the existing mining and hauling services provider at Öksüt; royalty rates and taxes, including withholding taxes related to repatriation of earnings from Türkiye; project development costs at Thompson Creek and the Goldfield Project; the decommissioning of the Kemess South TSF sedimentation pond and associated works; financial hedges; and other statements that express management’s expectations or estimates of future plans and performance, operational, geological or financial results, estimates or amounts not yet determinable and assumptions of management.
The Company cautions that forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by the Company at the time of making such statements, are inherently subject to significant business, economic, technical, legal, political and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements and undue reliance should not be placed on such statements and information.
Risk factors that may affect the Company’s ability to achieve the expectations set forth in the forward-looking statements in this news release include, but are not limited to: (A) strategic, legal, planning and other risks, including: political risks associated with the Company’s operations in Türkiye, the USA and Canada; 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; 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: labour action, 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 or 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.
Additional risk factors and details with respect to risk factors that may affect the Company’s ability to achieve the expectations set forth in the forward-looking statements contained in this news release are set out in the Company’s latest 40-F/Annual Information Form and Management’s Discussion and Analysis, each under the heading “Risk Factors”, which are available on SEDAR+ (www.sedarplus.ca) or on EDGAR (www.sec.gov/edgar). The foregoing should be reviewed in conjunction with the information, risk factors and assumptions found in this news release.
The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether written or oral, or whether as a result of new information, future events or otherwise, except as required by applicable law.
Non-GAAP and Other Financial Measures
This document 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 document 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 document:
- 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.
- 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.
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:
| Nine months ended September 30, | |||||||||||
| Consolidated | Mount Milligan | Öksüt | |||||||||
| (Unaudited - $millions, unless otherwise specified) | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||
| Production costs attributable to gold | 178.8 | 125.9 | 135.3 | 104.8 | 43.5 | 21.1 | |||||
| Production costs attributable to copper | 106.0 | 94.3 | 106.0 | 94.3 | — | — | |||||
| Total production costs excluding molybdenum segment, as reported | 284.8 | 220.2 | 241.3 | 199.1 | 43.5 | 21.1 | |||||
| Adjust for: | |||||||||||
| Third party smelting, refining and transport costs | 7.8 | 8.6 | 7.4 | 8.4 | 0.4 | 0.2 | |||||
| By-product and co-product credits | (137.5 | ) | (169.5 | ) | (137.2 | ) | (169.5 | ) | (0.3 | ) | — |
| Adjusted production costs | 155.1 | 59.3 | 111.5 | 38.0 | 43.6 | 21.3 | |||||
| Corporate general administrative and other costs | 32.8 | 35.7 | 0.1 | 0.6 | — | — | |||||
| Reclamation and remediation - accretion (operating sites) | 4.3 | 5.4 | 1.8 | 1.3 | 2.5 | 4.1 | |||||
| Sustaining capital expenditures | 48.1 | 54.6 | 27.6 | 43.2 | 20.5 | 11.4 | |||||
| Sustaining lease payments | 4.3 | 4.3 | 3.8 | 3.9 | 0.5 | 0.4 | |||||
| All-in sustaining costs on a by-product basis | 244.6 | 159.3 | 144.8 | 87.0 | 67.1 | 37.2 | |||||
| Exploration and study costs | 50.4 | 42.6 | 4.2 | 10.1 | 1.3 | 2.5 | |||||
| Non-sustaining capital expenditures | 2.9 | 2.0 | — | 1.5 | — | — | |||||
| Care and maintenance and other costs | 23.0 | 9.1 | — | — | 14.2 | 0.4 | |||||
| All-in costs on a by-product basis | 320.9 | 213.0 | 149.0 | 98.6 | 82.6 | 40.1 | |||||
| Ounces sold (000s) | 218.1 | 192.7 | 119.3 | 138.0 | 98.8 | 54.7 | |||||
| Pounds sold (millions) | 43.5 | 58.0 | 43.5 | 58.0 | — | — | |||||
| Gold production costs ($/oz) | 820 | 653 | 1,134 | 759 | 440 | 386 | |||||
| All-in sustaining costs on a by-product basis ($/oz) | 1,122 | 826 | 1,214 | 629 | 679 | 680 | |||||
| All-in costs on a by-product basis ($/oz) | 1,471 | 1,105 | 1,249 | 713 | 836 | 732 | |||||
| Gold - All-in sustaining costs on a co-product basis ($/oz) | 1,168 | 1,062 | 1,300 | 958 | 679 | 680 | |||||
| Copper production costs ($/pound) | 2.43 | 1.63 | 2.43 | 1.63 | n/a | n/a | |||||
| Copper - All-in sustaining costs on a co-product basis ($/pound) | 2.78 | 2.04 | 2.78 | 2.04 | n/a | n/a | |||||
Sustaining capital expenditures and non-sustaining capital expenditures are non-GAAP measures and can be reconciled as follows:
| Nine months ended September 30, | |||||||||||||||||||||||||||
| Consolidated | Mount Milligan | Öksüt | Molybdenum | Other | |||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||
| Additions to PP&E(1) | $ | 53.8 | $ | 247.2 | $ | 25.4 | $ | 34.6 | $ | 23.4 | $ | 9.1 | $ | 0.6 | $ | 1.0 | $ | 4.4 | $ | 202.5 | |||||||
| Adjust for: | |||||||||||||||||||||||||||
| Costs capitalized to the ARO assets | 1.0 | 18.1 | 2.5 | 9.9 | (1.5 | ) | 1.90 | — | — | — | 6.3 | ||||||||||||||||
| Costs capitalized to the ROU assets | (2.7 | ) | (0.2 | ) | (0.1 | ) | — | (1.2 | ) | (0.2 | ) | — | — | (1.4 | ) | — | |||||||||||
| Costs relating to the acquisition of Goldfield Project | — | (208.2 | ) | — | — | — | — | — | — | — | (208.2 | ) | |||||||||||||||
| Other(2) | (0.2 | ) | 0.9 | (0.2 | ) | 0.2 | (0.2 | ) | 0.6 | — | 0.1 | 0.2 | — | ||||||||||||||
| Capital expenditures | $ | 51.9 | $ | 57.8 | $ | 27.6 | $ | 44.7 | $ | 20.5 | $ | 11.4 | $ | 0.6 | $ | 1.1 | $ | 3.2 | $ | 0.6 | |||||||
| Sustaining capital expenditures | 49.0 | 55.8 | 27.6 | 43.2 | 20.5 | 11.4 | 0.6 | 1.1 | 0.3 | 0.1 | |||||||||||||||||
| Non-sustaining capital expenditures | 2.9 | 2.0 | — | 1.5 | — | — | — | — | 2.9 | 0.5 | |||||||||||||||||
| (1) | As presented in note 14 of the Company’s condensed consolidated financial statements. |
| (2) | Includes reclassification of insurance and capital spares from supplies inventory to PP&E. |
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