HIGHLIGHTS

  • Revenue rose twenty-seven per cent to about five hundred million United States dollars, while adjusted EBITDA slipped six per cent.
  • Mount Milligan All-In Sustaining Cost guidance was cut on stronger copper by-product credits; consolidated guidance was reaffirmed.
  • The company repurchased about two point six million shares for fifty-three million dollars, a quarterly record, and kept its seven-cent Canadian dividend.

Centerra Gold Inc. (TSX:CG), the gold and copper producer that also trades on the New York Stock Exchange under the symbol CGAU, released its third-quarter results on Thursday, reporting a twenty-seven per cent increase in Revenue to about five hundred million dollars and net Earnings of eighty-eight point seven million dollars, or forty-six cents per share. The company also lowered full-year cost guidance for its Mount Milligan mine in British Columbia on the back of strong copper by-product credits and completed the largest quarterly share repurchase in its history. Unless otherwise noted, figures are in United States dollars, the currency used in the release.

Revenue Climbs While Adjusted EBITDA Slips

The top-line gain and the profit measures moved in different directions during the quarter. Revenue of five hundred point three million dollars compared favourably with the prior-year period, yet adjusted EBITDA eased about six per cent to roughly one hundred and thirty-eight million dollars. Reported net earnings of eighty-eight point seven million dollars were well above adjusted net earnings of seventy-one point eight million dollars, or thirty-seven cents per share, indicating that items the company excludes from its underlying measure added to the headline profit figure in the period.

Cash generation told a similar two-part story. Cash provided by Operating Activities reached one hundred and forty-three point one million dollars, but free cash flow, which deducts Capital spending from operating cash, came in at a much smaller seventeen point one million dollars. The gap reflects heavy Investment across operating mines and a growing development slate. Free Cash Flow at that level was well below the roughly sixty-three million dollars returned through share repurchases and the Dividend combined in the quarter.

Mount Milligan and Oksut Output in the Third Quarter

Centerra produced roughly seventy-five thousand four hundred ounces of gold in the quarter. Mount Milligan, the gold-copper operation in British Columbia, contributed about forty-four thousand ounces, while the Oksut mine in Turkiye delivered close to thirty-one thousand four hundred ounces. Gold sales totalled about seventy-four thousand four hundred ounces at an average realized price of three thousand four hundred and eighty-three dollars per ounce, and copper production reached twelve point eight million pounds.

On a consolidated basis, all-in sustaining costs on a by-product basis were one thousand seven hundred and seventy-five dollars per ounce. All-in sustaining cost, often shortened to AISC, is the industry's broad yardstick for what it takes to produce an ounce of gold and keep a mine running, including sustaining capital and certain corporate costs. Under by-product accounting, revenue from copper sold alongside gold is credited against those costs, which is why copper prices and volumes matter so much at a mine such as Mount Milligan.

Why Copper Credits Lowered Mount Milligan's Cost Outlook

The most notable change to the outlook was at Mount Milligan, where the company lowered its full-year AISC guidance to a range of one thousand one hundred to one thousand two hundred dollars per ounce, down from one thousand two hundred to one thousand three hundred dollars previously. Management attributed the revision to strong copper by-product credits. Guidance for Oksut was reaffirmed at one thousand eight hundred and fifty to one thousand nine hundred and fifty dollars per ounce, and the consolidated range of one thousand six hundred and fifty to one thousand seven hundred and fifty dollars per ounce was also reaffirmed.

Production guidance for the year was left in place. Centerra continues to expect between two hundred and sixty thousand and two hundred and ninety thousand ounces of gold, made up of one hundred and forty thousand to one hundred and fifty-five thousand ounces from Mount Milligan and one hundred and twenty thousand to one hundred and thirty-five thousand ounces from Oksut. Copper output is still guided at fifty to sixty million pounds, and total Capital Expenditure at one hundred and eighty-five million to two hundred and thirty million dollars.

A Record Quarter for Share Repurchases

Capital returns were a prominent feature of the release. During the quarter the company repurchased two million five hundred and eighty-four thousand six hundred shares for fifty-three million dollars, its largest quarterly repurchase to date, bringing the year-to-date total to about one hundred and twenty-five million dollars. As of October twenty-ninth, roughly one hundred and ninety-three and a half million shares were outstanding. The current normal course issuer bid expires on November ninth, and the company said it plans to renew the programme, subject to approval from the Toronto Stock Exchange.

Centerra also maintained its quarterly dividend of seven Canadian cents per share, a payout that amounted to about nine point eight million United States dollars in the quarter. For readers who follow Canadian value stocks, the release provides a clear set of measurable data points: the pace of share repurchases relative to free cash flow, the size of the dividend, the balance-sheet cushion and the cost trajectory at each mine.

Liquidity of Nearly One Billion Dollars Behind the Pipeline

The Balance Sheet remains a central part of the company's positioning. Centerra reported total Liquidity of about nine hundred and ninety-eight million dollars at the end of the quarter, consisting of roughly three hundred and ninety-eight million dollars in cash and six hundred million dollars available under an undrawn Credit facility. That cushion sits alongside a development programme with sizeable capital needs.

Langeloth Outlook Raised as Thompson Creek Restart Advances

Beyond its gold mines, Centerra operates the Langeloth metallurgical facility, which processes molybdenum. The company raised its full-year adjusted EBITDA guidance for Langeloth to seventeen million to twenty-two million dollars, up from seven million to twelve million dollars. The Facility also links to the plan to bring the Thompson Creek molybdenum mine back into production. For Thompson Creek, the company continues to target first production in the middle of next year and estimates total capital for the restart at four hundred and twenty-five million to four hundred and fifty million dollars. A restarted mine feeding the company's own processing capacity would broaden Centerra's revenue mix beyond gold and copper, although the timeline and budget remain subject to construction and commissioning risk.

Goldfield and Kemess Shape the Longer-Term Picture

Further out, the Goldfield gold project is targeted to reach first production by the end of the year after next, with major permits already in place, according to the release. At Kemess, a gold-copper project in northern British Columbia, a pre-feasibility study is expected in the middle of next year. A preliminary economic assessment published in January estimated an after-tax net present value, at a five per cent discount rate, of about one point one billion dollars. Preliminary assessments carry a lower level of engineering confidence than feasibility work, so the coming study will be an important checkpoint.

Oksut Optimisation Study and a Lower Turkish Tax Rate

In Turkiye, the company expects results from a life-of-mine optimisation study at Oksut early next year. The release also noted that the Turkish corporate tax rate applicable to the operation is set to fall from twenty-five per cent to twelve and a half per cent, effective the first of January next year. A lower tax rate would, all else being equal, raise the after-tax cash flow from the mine, which makes the timing of the optimisation study relevant to the operation's future economics.

Within the broader [S&P/TSX Composite Index], gold producers form a sizeable group, and the [S&P/TSX Global Gold Index] serves as a common benchmark for the sector; Centerra's realized price of nearly three thousand five hundred dollars per ounce illustrates the pricing backdrop the company reported for the quarter. Centerra's quarter shows how a producer with meaningful copper exposure can see its cost profile shift with by-product prices. The next milestones the company has flagged include the renewal of its issuer bid, the Oksut study results, the Kemess pre-feasibility study and first production at Thompson Creek.