TSX Commentary » Centerra Gold Inc.

Centerra Gold Inc. CG Strong Q4 Production Ends Year on a Positive Note

admin — Wed, 13 Jan 2010 18:48:55 +0000

Centerra Gold Inc. (CG) – $12.98 – Strong Q4 Production Ends Year on a Positive Note
Outperform, Speculative Risk, Price Target: $17.00
Centerra pre-released Q4/09 and full year production results and 2010 production guidance. Record Quarterly Production at Kumtor and Higher Recovery at Boroo. Q4 gold production of 296Koz was better than RBC CM’s 273Koz estimate, as a
record 247Koz of gold production at Kumtor during the quarter contributed to the solid quarter overall. The company reported higher than expected production from the Boroo mine in Mongolia due to 10-12% higher than anticipated recoveries from the mill with less refractory material processed. Due to these strong results, Centerra reported $320 million in cash at year end, up $157 million as of Q3/09. The company’s strong cash flow is expected to fund an estimated $600 million in growth and sustaining capital in the next 3 years without any debt or new equity being issued. 2010 Production Forecast: Centerra forecasts 2010 production between 640-700Koz, in line with RBC CM’s 658Koz estimate. No cost guidance was given, however RBC CM expects 2010 cash costs to be $460/oz. Centerra expects the 2010 gold production profile to be similar to that of 2009, with a strong Q1 and Q4 aided by higher grade ores from the SB Zone as part of the mining plan. Lower grades and maintenance will impact the second and third quarters.

Centerra Gold Inc Target Increased to C$17 with Revised Mine Plan and New Underground Scenario

admin — Fri, 08 Jan 2010 16:33:38 +0000

Centerra Gold Inc. (CG) – $11.08 – Target Increased to C$17 with Revised Mine Plan and New Underground Scenario Outperform, Speculative Risk, Price Target: $17.00 (prev. $11.00)
RBC CM has modelled a high-grade underground scenario at Kumtor and incorporated Centerra’s revised Kumtor open-pit mine plan and reserve-resource update, which was released just prior to its research restriction. Centerra has guided for 2010 production of 660k to 680k oz versus RBC CM’ new estimate of 658k oz, which has been lowered from 760k oz, and RBC CM is lowering its cost estimates from $480/oz to $468/oz. The new Kumtor Underground Scenario has been added to its model. Given increased confidence in the conversion of Inferred resources to reserves, RBC CM now models high-grade ore mined from underground starting in 2013, with a 50/50 mix from open-pit at an average grade of 2.2 g Au/t and underground at 12 g Au/t. With Kumtor Underground considered a key value driver, RBC CM has increased its price target to C$17/sh.

Centerra Gold Inc. Gold For Free

admin — Wed, 05 Aug 2009 01:03:46 +0000

The saying “grade is king” was never more appropriate than at the Kumtor
mine. We estimate that the incremental value for H2 production at $220
million, or almost $1/share, as about 270,000 ounces coming for free. The
calculation assumes a $950/oz gold price and is derived after tax.

Higher grades and recoveries should lead to production levels that are
180% above H1 figures at Kumtor. Operating costs are expected to drop by
more than 40%. We do not think the company will fall victim to shortfalls as
it did last year when a similar potential turnaround was derailed.

Political overhangs have plagued the shares of CG for much of the past two
years. Key differences have been resolved and although one minor one
remains, we expect it too will be handled soon. This would leave only
approval for Gatsuurt as the outstanding issue.

With a higher risk than normal, investors in the current market may shun
participation in unstable jurisdictions. While CG offers excellent value from
all metrics, a limited audience may not propel the shares as much as would
be expected given the dramatic changes coming.