Centerra Gold Inc.

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Oh, sorry. Ladies and gentlemen, welcome to the first of the afternoon sessions for the European, Mining Forum. Sorry, we're starting a few minutes late. I thought we were starting on the hour, starting at 10 minutes too. The last person to know is the, is the compere, of course. May I present for our first speaker, Mr. Paul Tomeri. He's president and CEO of Centera Gold, slightly different format. If you don't mind, from the presentations we've seen so far today and yesterday, I'll be asking, questions to Paul, and hopefully he'll have some good responses to those, so rather than we thought we'd break it up a little bit rather than the more structured traditional, corporate presentation. Let's start with the, Paul, welcome. Thank you. may I start with the first question, please. Centerra, obviously, fairly a substantial gold company, large market cap. You have a very strong cash position, no debt, growth pipeline from memory, I confess I'm a base metals analyst, but you have a bit of molly, which is, which is always good, and copper, always good. What's the strategy over the near term? In terms of unlocking some shareholder value there I always begin with a bit of a retrospective. People still do associate Centera with the Kyrgyz mine Kumt. That's long gone. So Centera is out of Central Asia, and what we've been doing over the last 2-3 years is clarifying the portfolio and advancing studies on the entire portfolio, and we're at an inflection point here where all of our assets now have a path forward, and this page summarizes it. Our cornerstone asset is Mount Milligan, 20-year mine life, copper gold in British Columbia with a lot of potential beyond there. We've got the Eukut mine in Turkey, pure gold, fairly straightforward operation mine life until at least 2930. We're looking at an extension there. Goldfield is a project in Nevada that we're advancing. We just greenlit that in July and then Chemas is our most important project, another big copper gold mine in British Columbia, a past producer with relatively low execution risk. The main message here on strategy, and if you look at our share price, we've really performed well over the last 6 to 8 months, but we believe that there's a lot of room yet to grow. We believe we traded a discount principally because there was no definition around the assets in the portfolio. So the strategy has actually been to daylight what each asset could be and then embarking on a path of execution. And the last point I'll make is we have a very strong balance sheet and we're able to afford all of these projects quite easily at prices well below spot. Great, thank you. share price has done very well in the last 89 months, I think you've outperformed, but you're still trading on at a discount, I should say global mining research our firm we actually cover Centera. so PA is, is still not quite there. what, is the reasons for this reason for this, and, and how can you overcome it? So we, on, on a consensus basis, so not using our numbers, but using analysts numbers, using consensus gold prices of 3300, we trade, At the lowest multiple in our peer group, you can see it here on the slide. There are reasons for that, and as you mentioned, our share price has been trading up, so I think each of the key drivers of the low valuation multiple are reducing in their influence. But here's the rough way I characterize it. Number one, as I said, the portfolio was unclear. There was not a path forward on a lot of a lot of our assets. Mount Milligan had a much shorter mine life. The projects were on hold. The molybdenum business was on care and maintenance. So there's there's a lot of confusion around the portfolio, especially after the exit from Kyrgyzstan. We're bringing clarity to that, so that's valuation disconnect driver number 1. Number 2 is we do have a molybdenum business. We are reopening a mine. I'll come back to it a little bit later, but we're reopening a past producer in Idaho. And going back 2 years ago, the molybdenum business represented 40% of our asset value. That's now down to 10%. And in fact, molybdenum is in a very bullish part of its cycle, so it in itself is an attractive metal right now. So there was a discount associated with the molybdenum exposure. It was 40% of NAV. Now it's 10% again. It's wearing down. And the third driver of what I think is the valuation disconnect is when gold started to run here in the last couple of years, especially say 1824 months ago, the immediate money poured into names with high free cash flow yield, so immediate production impact. We do generate good cash flow. We have good leverage to gold price, but we are also reinvesting very heavily in our assets, as evidenced by our pipeline. So the drivers of disconnect have been molybdenum. Clarity around the portfolio and its complexion. Last is a switch from hunger for free cash flow yield to more value-based names. We believe each of those is reducing an impact, and we believe we're going to continue to rerate as we execute on our plan. OK. You touched on an important point there. Of capital allocation, you have half a billion dollars cash in your balance sheet, no debt from very little positive cash flow, of course. How are you thinking about capital allocation going forward? This is obviously a key thematic for the entire industry with what do you do with the windfall cash flows right now. We have $500 million just over $500 million of cash in the bank. I showed earlier that we have development projects. We have Thompson Creek. We have Goldfield Chemas. We can very easily afford to build those with our existing liquidity and in fact at current metals prices, we don't even dip into our cash. We are able to fund the projects out of operating cash flow. And so when we look at the cash flow that we're seeing, our ability to afford our projects, and given our conviction in the discount in our valuation, we're putting a lot of money directly back to shareholders. We pay an annual dividend. And over the last 18 months we've really been ramping up our buyback. Last year we did nearly $100 million and this year we intend to do at least that amount again, demonstrating our very strong conviction in the share price. So principally it's reinvesting in our projects. It's giving money straight back to the shareholders but also investing in gold, and we do that through exploration within the portfolio looking at expansions to our existing ore bodies. I'll touch on it a little bit later. Our ore bodies are huge and have room to grow. And we're also investing in juniors. We, we see a compelling value in having a logical approach to our portfolio and our juniors, and we've made strategic investments both with developers and early stage explorers, so putting money to work in the commodity where we operate. OK, one of the, you guys have been fairly busy in the last few months. January you published your chemist PEA, could you very briefly give us a, a bit of a walkthrough, a run-through of that, and how it contributes to your longer term, Growth of production profile I think Chems is a bit of a game changer. Let me take a step back here on valuation. When we look at our market cap, we subtract the cash, we get our enterprise value. We believe that Mount Milligan alone at prices below spot accounts for our enterprise value. So when you're buying our stock, you're buying Mount Milligan and everything is for free. The second most important asset in the portfolio, and I think this is transformational for us, is the Chems project. Chems is a past producer 50,000 ton a day process plant, a camp, power line. Airstrip all the infrastructure in place. If you were to build it new, it would be $4 to $6 billion of a green field build. We did a PEA. We identified a starter mine life of 15 years, and I say starter because this production profile on the slide mines out less than half of the total resource. So we're beginning with a relatively straightforward scope of an open pit and a conventional underground, and the capital ticket is under $800 million. So it's a very modest capital ticket. You can see in the pictures, as I said, past producer, most of the infrastructure is already in place, so the capital is going into extensive refurbishment in the mill, in the tailings area in the camp. But we are also allocating capital to the development of a new mining area. The area that we propose to mine here is a cross section is located approximately 5 kilometers away from the process plant, and we need to essentially develop that area. This is what I spoke of, and this is perhaps the most exciting thing about Chemas. You can see the PEA proposes to mine out what you see there is an open pit. It's almost no strip, very low strip, very little waste, in conjunction with a higher grade underground approach with a conventional mining method. The gray blobs are our current resource inventory, so the 15 year mine life that we have in the PEA mines out only the open pit, the easily to access open pit and a portion of the underground. As we advance further studies and as the years go by, we're going to do more drilling. We have Another nearly 2 million ounces of gold equivalent down here that's not in the current plan. We're going to drill in this zone here, see if we can connect mineralization, see if there's continuity, and then potentially consider a ramp down concept over here and then to the west, keep drilling, see if we can fill in that saddle zone, expand into the deposit we call nugget. So there's both open pit expansion potential and underground. As you're a base metals analyst, you know, these porphyries can have decades and decades of mine life. We have an initial 15 year mine life and we're very confident through the conversion of some of these inferred resources and with continued drilling that this could have 20-30 years of mine life again, copper gold in British Columbia on a relatively de-risked asset. Most of the permits are in place. And we have existing agreements in place with First Nations, so relative to other projects, a lot lower risk. It's never without risk but lower risk. OK, actually you mentioned Mount Milligan. again, you've been said busy, a new PA PFS coming out. what's again the highlight there please and, and, and what are you, we're focusing on? So Milligan is our cornerstone asset. We released the PFS in September and you can see 20 year mine life here, and, you have a question. You're standing just in front of. Al OK. All right, I'll stand to the side here without falling off the podium. Thank you, sir. This is the cost on this bar right here in production. The cap numbers. OK, I'll try to stay out of the way. So the PFS outlines a 20 year mine life again, roughly split in value between copper and gold with a relatively low all and sustaining cost. We're in the 1000 to $1500 range. This is a very low cost mine and the other thing I'll add is both Mount Milligan and Kames are relatively insulated from oil price inflation. Both mines Milligan uses it. Ches will use it, hydropower, very, very cheap hydro power. And both mines are relatively low strip, so the diesel burden isn't as great as it might be for some other mines. So we have a 20 year mine life. We're fully permitted to 2035. We just received permits on an expedited basis from the government of British Columbia, and as I said, this mine is in operation. It's our cornerstone asset. If we go to the next slide, this is perhaps the most exciting thing about Mount Milligan. This is the current mining surface here. This next line is the end of year 2025 reserve. That's mine life for 20 years to 2045. This is mine life to 2045. We have another 200 million tons of inferred and indicated which would support another 10 years of mine life to 255, and we continue to drill to the west and at depth. We're very confident that this mine could have 30, 40, 50 years. of M life again, copper gold in British Columbia. So Mount Milligan is our cornerstone asset, and it is operating. It had a really good year last year and, given commodity prices we're looking for very strong cash flows this year. OK, great. moving on to Turkey, life of M optimization at Oxford, how's that going? when do you expect to complete it? Do we have a timeline on that please? So our second production gold asset is in Turkey. It's a straightforward oxide heat bleach. And current mine life ends in 2930, and what we're working on right now is a combination project where we would look to extend the mine life by addressing lower grade oxides. The higher gold price does allow for that, but this mine has reconciled very positively since inception, and the inventories in the heaps are much greater than initial estimates have shown. So we see a significant project. A drawdown leach, so what we're doing is we're working on a joint study on oxide pit expansion potential combined with residual leaching, and we will be putting that study out at the end of this year and we're expecting that 2 to 5 years of production life. OK, great, you announced the decision to proceed with Goldfields project, late last year. is there any update on that please and how's the project going? So we are, we are proceeding with Goldfield. Goldfield is another relatively straightforward oxide heat bleach project. It's in Nevada, one of the most friendly mining jurisdictions in the world. standing in front of the numbers here again. The total capital ticket here is $250 million very affordable in our overall liquidity profile and as I said, very friendly mining jurisdiction. The project is advancing. We are awarding long lead time procurement packages and this summer we will see early works being initiated. So as of right now the project is on plan and we're aiming for first production in 2028. Great, thank you. OK, a bit closer to my heart, Molly, molybdenum, how is the update on the Thompson Creek restart progressing, latest developments there, please. So let me talk first about molybdenum as a metal. It's, we're here at a gold forum and we're talking about molybdenum. As I said, it's about 10% of our total asset value. Molybdenum is used to alloy steel in high performance applications, high temperature, high pressure, high cyclic fatigue, and it is extensively used in liquefied natural gas. In pipelines, nuclear defense, and aerospace, all things which are very thematic right now. In addition, we have an American business model. We have a mine in Idaho, a roaster in Pittsburgh, and the current US administration's policies around industrial development, particularly in the steel supply chain supported by tariffs, has created a very attractive business model for us. So in short, what we're doing is we're reopening a past producer located in Idaho, the Thompson Creek mine. $450 million of capital. We're about halfway done. First production is next year, and the concept is to take the concentrate from the mine, truck it to Pittsburgh, and feed it to the roaster that we own over there. As I said, the price of Mali has really traded up on very attractive fundamentals both on the supply side. A lot of molybdenum comes out of copper mines and the copper mines are just not keeping up with their production. And especially on the demand side, particularly in the US, we've seen demand go up, so the price of molybdenum has traded up from $20 to $28. The project is going well, on track for first production next year. Great, time for one last question from me. Certainly, from the sell side analysts point of view, always important. What are the catalysts that you'll be announcing please in the coming 12 months? what should the investors be looking for, please? We are focused on execution right now, so we've outlined a path forward for all of our assets. As I said, we've traded up substantially over the last 8 months. We think there's room for that valuation gap to close, and it's all on execution, so it's really delivering as per the plan. At our production assets and also at our projects and as I mentioned, everything right now, all of our projects remain on track, on budget and on time. So it's the catalysts are principally delivery related milestones on projects and of course as I mentioned earlier, the study of Turkey for the life of M extension. Any questions from the audience, we just have a very short minute, And we can get you these numbers for the ones I'm sure Paul Paul Paul and the team are, yes, thank you. Paul and the team will be happy to ask any questions, sir. Maybe one word, for the molybdenum molybdenum business. How profitable is it? I mean, what are the economics of it? So, at, at, when we greenlit the project. Molybdenum was trading at $20 and in our study we showed annual cash flows, free cash flows of around $100 million for the integrated business unit. Mali is now $28 and it's quite leveraged to the price, so you're looking at $150 to $160 to $170 depending on the spot price. $450 million investment. Current prices, call it $150 million a year, 3 year payback. So it's a very profitable business and one of the things we would look to do is recognizing that molybdenum is an odd fit in the gold company, there will be a potential exit once it's up and running, so we're going to assess all possibilities. Paul, thank you, we're out of time, apologies, partly my fault. great presentation and apologies for being so tall tall and taking up all the space. I don't have that problem being short. so ladies and gentlemen, thank you for your attention. Let's thank you, thank Paul for his presentation. Thank you. Thanks very much.