John Pearson - Vice President, Investor Relations Ian Atkinson - President and Chief Executive Officer Jeff Parr - Chief Financial Officer Gordon Reid - Chief Operating Officer.

Botir Sharipov - HSBC Daniel McConvey - Rossport Investments Alex Watt - Scotiabank.

Welcome to the Centerra Gold 2015 Second Quarter Results Conference Call and Webcast. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, July 29, 2015.

I would now like to turn the conference over to John Pearson, Vice President, Investor Relations. Please go ahead, sir..

Thank you, Melanie. Welcome to Centerra Gold second quarter conference call. Today’s conference call is open to all members of the investment community and to the media in listen-only mode at first. After our formal remarks, we will open the phone to questions. The operator will give the instructions for asking a question.

Please note that all figures are in U.S. dollars, unless otherwise noted. Joining me on the call today is Ian Atkinson, President and Chief Executive Officer; Jeff Parr, Chief Financial Officer; and Gordon Reid, Chief Operating Officer.

Before we begin, I would like to point out that we have changed the name of the Trans-Canada partnership to Greenstone Gold Mines and we will refer to the property going forward as the Greenstone Gold Property in recognition of the location within the municipality of Greenstone.

Also I would like to caution everyone that certain statements made on this call today maybe forward-looking statements and as such are subject to known and unknown risks and uncertainties, which may cause actual results to differ materially from those expressed or implied. Also, certain of the measures we will discuss today are non-GAAP measures.

And I refer you to our description of non-GAAP measures in the news release and the MD&A.

For a more detailed discussion of the material assumptions, risks and uncertainties, please refer to our news release issued last night, the MD&A, along with the unaudited financial statements and notes and to our other filings, which can all be found on SEDAR and the company’s website. And now, I will turn the call over to Ian..

Okay. Thank you, John and good morning everyone. Yesterday, along with our quarterly results, we also announced the positive results of the feasibility study for our 100% owned Öksüt project in Turkey.

The feasibility study shows that the project will produce approximately 150,000 ounces of gold a year for the first four years and will produce total of 895,000 ounces over an 8-year mine life.

The all-in cost for the project, including the preproduction expenditures and construction capital and taxes, is estimated to be $777 per ounce of gold produced. The project has an after-tax net present value, some $242 million.

That’s using an 8% discount rate and a $1,250 gold price and it gives us an excellent rate, the internal rate of return of some 43%. We expect to begin development of the Öksüt project in the first quarter of 2016 and then expect to see the first gold production from the project in the second quarter of 2017.

This of course is subject to receiving the final approval of the Turkish Environmental Impact Assessment. An EIA process is continuing on schedule at the present time and we expect approval of the EIA either late in the third quarter or early in the fourth quarter this year.

We will begin detailed engineering and ordering of long lead time items this quarter. In fact, we have already got that underway. The preproduction cost expenditures and constructions capital for the project are estimated to total about $221 million. This includes a contingency of some $25 million.

And then the payback period on that investment is about 2.5 years after production begins. Based on the estimated probable reserve at Öksüt of some 1.2 million ounces of contained gold, feasibility study envisions a conventional open pit into each operation with a net 8-year mine life.

The project is expected to process some 26.1 million tons of ore at an average grade of 1.4 grams per ton gold. And over the eight years, as I have said, it will produce 895,000 ounces of gold. And the average all-in sustaining cost for that production will be $490 per ounce sold.

The actual all-in cost including taxes is expected to be $542 per ounce sold from the start of production. So that excludes the predevelopment expenditures and construction capital. Of course there is also further upside on the property, so we are continuing to follow up on that with further exploration work and drilling.

The development of the Öksüt project is another step in Centerra’s strategy of diversifying our portfolio of profitable assets. We have a strong balance sheet and we do have the cash available for construction of the project, but we also have a number of financing opportunities with lending institutions.

Now just moving on to our quarterly results, during the second quarter we produced about 125,000 ounces of gold and most of that came from Kumtor. Our all-in sustaining costs for the quarter were $937 per ounce sold and $808 per ounce sold for the first six months of this year.

On the financial front, we reported net earnings for the quarter of $22 million or $0.09 per share and cash provided by operations was about $115 million. The Kyrgyz Republic Parliament passed a resolution on the 29 June to ensure the continued operation of the Kumtor mine.

We are continuing to work with the state agency for Environmental Protection and Forestry to obtain the necessary approvals of the – of Kumtor’s 2015 annual mine plan. On the 3 July, Kumtor did receive extensions to its emissions and waste disposal permits until the end of the year.

In addition, we are also continuing our discussions relating to the possible restructuring of the Kumtor project with the government of Kyrgyz Republic. In Mongolia, the parliament so far has declined to approve the level of state ownership in the Gatsuurt project.

In June of this year, the bill regarding the level of state ownership in the project was returned by Parliament to the government for further consideration. And the company understands that the government intends to submit a revised proposal to parliament later this year.

So we are continuing discussions with the government on their ownership interest in the Gatsuurt project. So with that, I will now turn it over to Gordon for an update on our operations..

Thanks Ian. During the quarter, Kumtor produced 122,000 ounces at an all-in sustaining cost per ounce sold of $835 per ounce. This brings Kumtor’s production for the first six months of 2015 to 286,000 ounces at an all-in sustaining cost per ounce sold of $717 per ounce. Mill feed for the quarter was provided by surface ore stockpiles.

The 45% decrease in all-in sustaining cost per ounce sold as compared to 2014 is due to the increased ounces produced and sold in the second quarter of 2015 and to lower operating costs related to lower diesel costs, lower labor costs and favorable movements in the currency exchange rates.

Mining costs during the quarter including capitalized stripping decreased $13.3 million compared to Q2 2014. The reduction in costs is primarily due to a $7.5 million savings in diesel fuel costs. Our fuel costs averaged $0.56 per liter in the second quarter of this year.

We also had $2.5 million savings in blasting costs and $2 million savings in labor costs due to the favorable currency exchange rate I mentioned earlier and to a reduced employee headcount. Kumtor continues to evaluate every opportunity to further reduce operating costs and improve operating efficiencies.

At Boroo, gold production in the second quarter of 2015 was 3,000 ounces, which was lower than last year’s second quarter and reflects the closure of the Boroo mill in Q4 of 2014 and the transition from primary to secondary leaching in the heap leach facility. During the quarter, Boroo remained cash positive.

Gold production in the first six months at Kumtor has been ahead of schedule as we processed higher grades. We are maintaining our production guidance. So in the second half of this year, we will process lower grades, particularly in the third quarter, as we continue stripping cut back 17 to access the SB Zone in the fourth quarter at Kumtor.

We would now turn it over to Jeff to talk about our financials..

Thanks, Gordon and good morning everyone. On a consolidated basis, our second quarter revenue of $147 million reflects a 32% increase in the gold sold compared to the same quarter of last year, which along with cost reductions, resulted in net earnings of $22 million or $0.09 a share as Ian indicated.

Cash provided by operations was about $115 million or $0.49 a share. These results were achieved in spite of a 7% lower average realized gold price of $1,192 compared to $1,285 an ounce in the second quarter of 2014. Our cost of sales decreased by 26% to $81 million compared to the same quarter last year.

Now, cost of sales benefited from lower operating costs for diesel, labor and other consumables as well as reduced waste stripping as compared to cut-back 15 ore that was processed in the second quarter of 2014. In addition, cut-back 16 processed this quarter contained more ounces.

DD&A associated with production was down $16 million in the second quarter of 2015, reflecting lower capitalized stripping charges announced from cut-back 16 ore. Our cash and short-term investments totaled $582 million at the end of the quarter, which include $76 million outstanding under our revolving credit facility.

This is after investing $71 million in our properties, $4 million of predevelopment costs at Greenstone Gold and Öksüt, $2 million in exploration and business development and paying about $8 million in dividends. For 2015, we're increasing our outlook for capital expenditures at the operations to $97 million from $76 million.

Our new estimate includes $55 million of sustaining capital, but excludes capitalized stripping of $162 million. Growth capital is now expected to be $42 million, reflecting slightly lower spending at Kumtor, but now includes about $18 million for detailed engineering and down payments on long lead items for Öksüt.

The $5 million increase in our sustaining capital is primarily due to the replacement of a production drill at Kumtor that’s been problematic as well as higher costs for maintenance of the heavy-duty mine equipment.

Our projected cash component of capitalized stripping costs at Kumtor is expected to decrease to $162 million from $185 million, reflecting lower labor and diesel costs. Our total capitalized stripping, including DD&A for 2015, is forecast at $212 million, which is down from $234 million in our prior guidance.

And finally, as the company continues to have a strong balance sheet and good cash balances, we've announced that we'll be paying other quarterly dividend. And I will turn it back to Ian to wrap up..

Thank you, Jeff. So just a few comments in summary, overall, the company has a solid financial position with a substantial cash balance of some $505 million net of debt, and this we can use to develop projects and add to our asset base.

We are moving ahead with our plans to build our portfolio of profitable assets as we move forward with the development of our Öksüt project in Turkey. And as Jeff mentioned, we have increased our growth capital budget for 2015 to reflect $18 million we expect to spend on Öksüt this year to move the project forward as quickly as possible.

Approval of the EEI and EIA for the Öksüt project is on track so that we can apply for the required permits to develop the project with production expected in the second quarter of 2017.

At the Greenstone Gold property, the resource model for the Hardrock project is currently being updated, and we expect to have a new resource estimate complete later this quarter. We'll be continuing our discussions with the Kyrgyz Government to resolve all of the outstanding concerns relating to the Kumtor project.

But as we've said many times, any agreement we reach with the government will have to be fair to all shareholders. One last item for 2015, our expected consolidated all-in sustaining costs have been reduced to a range of $865 to $959 per ounce sold. So with that, let's open up the call for questions.

So operator, if you would, could you please give instructions on the process to the question-and-answer session?.

Thank you. [Operator Instructions] I apologize. Our first question comes from the line of Botir Sharipov with HSBC. Please proceed with your question..

Good morning, Ian and the team. Congratulations on another solid quarter and great results on the Öksüt feasibility study. A few questions from me first. Recoveries at Kumtor, they fell from Q1.

Was it mainly a result of blending in lower grade stockpiles? And what should we expect I guess in the second half of the year?.

Yes, this is Gordon. We did have some difficulties at Kumtor with recoveries. We had a maintenance issue with the pre-aeration tank. We also had an issue with the hydroclone cyclones. Those have since been repaired. There was also some problematic ore, as you noted.

There were some finer grain material, and we were managing our cyanide use getting to be – in waiting for the next shipment of cyanide to recover or to be received. So, all those together caused – resulted in that slightly lower than anticipated recovery. But we’re back to normal now, and we’ll expect to be there until the end of the year..

Great, thank you. Switching to Öksüt, what is your level of confidence in obtaining the EIA approval and also other permits to start the development as early as Q1 of next year? I guess a little more color on the permitting time line would be helpful as well..

Sure. It’s Ian. We are very confident that we will get the EIA approved either later this quarter or early in the fourth quarter of this year. We’ve been now in the EIA process for some 12 months.

And so far the process has moved along very smoothly, and actually, everything’s been scheduled – has been scheduled for us by the government a little ahead of our plan. So, so far, we’ve made very good progress. And the permitting schedule itself, we – the subsequent permits can only be applied for once you receive the formal approval of the EIA.

So we expect, as I said, to have that done later this quarter – later in the third quarter, early in the fourth quarter.

And then we’ll apply for the necessary mining permits and other permits, and we would expect to see those all done early in the New Year, which will, again, put us in good position to start construction on the project in February, March as planned..

Great, thank you.

And then I guess lastly, on the Gatsuurt, with the Mongolian Parliament rejecting both options, are they now seeking a combination maybe of both participating stake and a special royalty on the project? What’s the latest, I guess, on that?.

Hi, Botir, it’s Jeff. We’ve been in discussions with the government. And as you know, they did pass an amendment to the mining law, which allows the government to negotiate a special purpose royalty in exchange for the 34%.

So our understanding after having discussions fairly recently is that they will go back to parliament, and we’ve had discussions both on the on-chip side and the special purpose royalty side. So the only thing we know for sure is that their options on the special purpose royalty, is such that it gives them the same economics as the ownership.

So to be frank, we would anticipate we would probably end up with a special purpose royalty..

Great, thank you so much. Thank you for taking my questions..

[Operator Instructions] Our next question comes from the line of Daniel McConvey with Rossport Investments. Please proceed with your question..

Hi, good morning everyone. That was my questions on the permit for Öksüt, but maybe, Ian, can you describe a little bit why the permitting is so short. I think we talked of this before. There’s no force involved. I mean, I’ve seen a couple of products take a lot longer than this to get permitted.

So I guess this product is – has less sensitivities to it, given I believe its grassland, etcetera.

What things help you in achieving this timeline?.

Good morning, Dan. Well, you got part of it right. It is – the property itself is up about 2,000 meters and it’s not inhabited. It’s primarily pasture land or grazing land for sheep and goat. So, it only gets summer use. There actually is some white snow up there in the winter. So, it’s not treed at all.

It’s – the nearest communities of the three small villages close by. And one of the key issues is that we have maintained excellent relationships with those communities from the early stages of exploration.

And we have set up a group on the ground with all of our local and permitting and CSR work is done by a group of Turkish nationals that some of them have now worked for us for three or four years that have built up, as I say, excellent communications and relationships with the local villages and regional staff.

So that it’s been a large part, I think to the communication exercise. So, that when we file the EIA with the initial public hearings, which were held last August, we got a very good attendance, very good input that you can probably guess for yourself what the three principal questions were, so we were ready to address them.

That’s how you handle cyanide, where you are going to get your water and what is in it for us, i.e., what’s the local procurement, local employment opportunities. And again, we would organize for that.

And particularly, the water aspects are critical in many parts of the world today, and we’ve been very fortunate that we actually, again, hired a Turkish consultant and expert. We’ve been able to actually already purchase and drill two wells, so we have the water supply for the project secured.

And we actually did, again, get the local villages involved in that, so they’ve been aware of where we’re going to be drawing water from. And it’s been clearly demonstrated that it doesn’t have any impact on their – the availability of water for them for their agricultural activities.

So the other part – I guess, again, we are in an area that has been, in the past, mining activity. So it’s not on the property itself, but it is a historical mining district. There is still ongoing mining in the region as well as other commodities..

Great, that’s helpful. Thank you very much and congrats on a solid quarter..

Great, thanks Dan..

Our next question comes from the line of Alex Watt with Scotiabank. Please proceed with your question..

Hi, guys. Thanks for taking my call today.

Just in light of the Öksüt feasibility results, can you talk to the priorities of your development projects, like Öksüt, Gatsuurt and Greenstone? If metal prices stay where they are, do you have one that you would focus on or trim spending at on other?.

Alex, it’s Ian. Sorry, actually one of my summary comments was actually we do have a strong balance sheet resource. So, we do have resources to move these three projects forward simultaneously. But if you just look at the natural scheduling of efforts, Öksüt, we are clearly committed to.

I mean, it’s a very robust project, fairly quick payback and clearly quick construction period as well the all-in costs that are including predevelopment, capital, etcetera, less than $800 an ounce. So it’s a solid investment, and so we’ll proceed with that. Gatsuurt actually doesn’t need a lot of capital to get it up and running.

Capital – in fact, we’ve already sunk what we need for the first two years of production. Just if you recall, the first two years of production from Gatsuurt is all oxide material, and we actually own the mill that we’re going to process it then. We own the trucking fleet. We bought that some time ago. It’s been mothballed.

And initially, we’ll be doing contract mining. So there’s very little additional capital ready – required for Gatsuurt until we look at processing the sulfide. So again, that’s manageable. And then Hardrock, we’re expecting to get the feasibility study complete, either late this year or early next year.

But the key there – the time – the critical part-time path for starting production, then is the permitting activity. So we have to complete the permitting and the discussions with the First Nations. So that’s in Ontario. It’s likely to take a couple of years. So that would push any construction on Hardrock out to 2018.

So, if you look at the sequence, they are – they come along one after the other. And I think then the other key element is we do have an opportunity to finance these. We have already been in discussions with a number of financial institutions for project financing of both Öksüt and Gatsuurt and we have also had some initial discussions on Hardrock.

So that – we do have the ability, I think from our balance sheet through our – through other debt funding to move all three forward together fairly quickly and without having to make that decision..

Okay, great. Thanks. That’s all from me..

[Operator Instructions] Mr. Pearson, there are no further questions at this time. I will turn the call back to you. Please continue with your closing remarks..

Okay. Thank you, Melanie. With that, we will – if there are any other questions, please get a hold of us here. And we want to thank you for joining us on our call today..

Ladies and gentlemen, that does conclude today’s conference call. We thank you for your participation and ask that you please disconnect your lines..