Greetings, and welcome to the Centerra Gold 2021 Third 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 on Friday, November 5, 2021.

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

Thank you, operator. Welcome to Centerra Gold’s third quarter 2021 results conference call. Summary slides are available on Centerra Gold’s website to accompany each speaker’s remarks. Today’s call is open to all members of the investment community and media in listen-only mode.

Following the formal remarks, the operator will give the instructions for asking a question, and then we will open the phone lines to questions. Please note, that all figures are in U.S. dollars unless otherwise noted.

Joining me on the call today is Scott Perry, our President and Chief Executive Officer; Dan Desjardins, Chief Operating Officer; and Darren Millman, our Chief Financial Officer.

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

Please refer to the description of non-GAAP measures in our news release and MD&A issued this morning.

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

Thanks a lot, John, and a very good day to everyone. Thank you very much for joining us for our Q3 earnings conference call. I'm just referencing the accompanying slide presentation, that's available on our website. I'm just going to start off on Slide number 5.

So on Slide 5, a number of key bullet points here, just in terms of some of the key corporate highlights, the first bullet point, just starting with safety, as always, you can see during the Q3 period, we had a number of safety highlights. One of the key ones I want to reference is that Öksüt, our producing operating gold mine in Turkey.

We recently celebrated 2 million hours, a consecutive hours of lost time incident-free operations. Moving on to the second bullet point, just with regards to the global COVID-19 pandemic, during the quarter, we're seeing very good uptake in terms of the vaccination rollout whereby the majority of that workforce is now double vaccinated.

Third bullet point, just in regards to the Kumtor matter, as you would have noted in our disclosure, we continue pursuing legal actions to preserve the value of our assets and protect the interests of our shareholders. This obviously includes the binding international arbitration, as well as the court action in Toronto and New York.

Moving to the operation results. The fourth bullet point here, we had another good quarter in Q3, we're seeing good continuity there just in terms of our operating momentum and our productivity. And that resulted in gold output of just under 77,000 ounces. That was a relatively strong level of production.

So when you look at the sixth bullet point and you can see in terms of the corresponding all-in sustaining costs, it was a low competitive $781 per ounce on a company-wide basis.

In parenthesis in terms of the individual contributions that the operations, Mount Milligan was operating at $727 per ounce during the quarter and Öksüt was operating at $603 per ounce during the quarter. So again, both operations demonstrating relatively low unitary costs.

As I mentioned earlier, is a good level of production in the third quarter, I'm just referencing the second last bullet point here. And we think that puts us in very good stead with regards to our outlook or our full year guidance. We think we're well positioned in terms of achieving our gold production targets, both at Mount Milligan and Öksüt.

Last bullet point just given that strong production that we’re seeing particularly at the Öksüt as you would have noticed in Q3, it was a strong quarter. We're also seeing very strong corresponding all-in sustaining cost performance.

And as a result of that, we've actually lowered our full year guidance for Öksüt whereby we've decreased the estimated range to $680 to $730 per ounce. Likewise that has a favorable impact just on the company-wide all-in sustaining cost range, whereby we've now lowered that to a new range of $700 to $750 per ounce. Just moving onto Slide 6.

First bullet point here, just in terms of the headline earnings result, it was an adjusted net earnings of $0.12 per share.

Darren, our CFO, who will expand on this further during his remarks, but in terms of free cash flow, the third bullet point, given the strong production, given the relatively strong all-in sustaining cost performance, and just in light of the relatively strong gold price and copper price environment.

We are seeing pretty good margins both from a profitability perspective as well as the free cash flow perspective. During the quarter, Q3 company-wide, we generated free cash flow of $41 million. And again, in parenthesis, you can see the individual contributions from the operating mine.

So Mount Milligan generated $25.9 million of positive free cash flow, and Öksüt had a significant increase in free cash flow generation coming in at $48.9 million for the quarter.

The strong profitability, the strong free cash flow, just referencing the fourth bullet point here, we finished the quarter with a debt-free balance sheet and total cash reserves of just under US$912 million.

The second last bullet point, taking into account our revolving line of credit facility, which is entirely drawn, we have a total treasury liquidity profile in excess of US$1.3 billion.

Just lastly here, in terms of last bullet point again, just recognizing the solid operating performance and the strong financial position, the board has again declared a quarterly dividend of C$0.07 per share. You can see the chart down the bottom.

I just want to highlight the chart in the middle, which is Öksüt, obviously this is our newest operating gold mine that operating in Turkey. You can see the quarter-over-quarter free cash flow.

And as you can see in Q3, it was a significant increase in free cash flow performance, and that's consistent, what we've been guiding to, we've always expected the back half of this year to be a backend weighted or production year.

And what's really driving that is the grade dissemination profile and just where we are in terms of our mine plants and the sequencing of operations. So we are now into that high grade sequence. We expect that to continue here in Q4, and likewise that will continue into next year as well and beyond.

Particularly next year, whereby we are expecting a very meaningful, significant increase in gold production levels relative to what we are guiding for this year. So suffice to say, Öksüt is in a very good position, and we are seeing that in terms of its profitability and its free cash flow generation.

Just moving on to the next slide on Slide 7, just in terms of Centerra’s environmental social governance profile. And just in terms of some of the key quarterly updates here. I won't reference all of these bullet points, but in terms of the first bullet point, obviously, from a safety perspective, that's absolutely paramount.

We continue to be relentlessly focused on achieving a zero harm environment. As I mentioned earlier, we had a number of safety highlights during the quarter, which was fantastic. And I'm sure Dan will expand on some of this during his remarks.

I do want to mention the sixth bullet point here, Centerra is a member of the World Gold Council and the World Gold Council is currently – the members of the World Gold Council, we're currently rolling out the responsible gold mining principles.

I think all of us as an industry, very well advanced on this, but particularly at Centerra that is the case. We're looking to be achieving full compliance, these 52 key principles by the end of 2022. And I think operations are well positioned for us to achieve that.

And then just lastly, I want to give recognition to Mount Milligan, you can see here during the quarter, they received a Mine Reclamation Award from the British Columbia regulators, and again, just recognizing their proactive approach to reclamation. So that was a good achievement during the quarter.

With that, I'm going to look to pass the presentation over to Dan Desjardins, our Chief Operating Officer, and Dan can provide some more detail on the operating highlights. So Dan, over to you, please..

Thanks Scott. Good morning, everybody. Please move to Slide 9. Centerra continues to prioritize the health, safety and well-being of its employees, contractors, communities, and other stakeholders, as COVID-19 is still with us.

We have put great emphasis on vaccinations this quarter, and all of our sites have higher vaccination rates than the regions that they work. We continue to modify our COVID protocols at all of our locations to help prevent infection and reduce the potential transmission of COVID-19.

All of the great efforts of our people have allowed us to reduce the potential transmission and continue our operations in the normal mode. Just as other businesses though, we are seeing stresses in our supply chain, but our supply chain management experts have been staying ahead of it.

And there has not been a material negative effect on any of our operations. For employees and other workers, safety in Q3, we continue to focus on improving the safety performance of Centerra, company-wide with good results.

Our TRIFR for Q3 was 1.21, which is in line with our target of 1.26, but we still did have eight reportable injuries in the quarter, which was a 7% improvement over the previous year's quarter.

As part of our Work Safe Home Safe program, which is a focus on employee behavior at work and at home, we have rolled out our training virtually with great success and we continue to roll out our critical control management approach.

And that's the milestone as Scott spoke to was at our Öksüt mine, where we did achieve 2 million man hours without a lost time injury and Endako had an impressive eight years without an LTI and one-year at our Thompson Creek mine and Langeloth metallurgical facility.

On the production front, we had another strong quarter with our two operations producing as Scott indicated near 77,000 ounces of gold and 17.9 million pounds of copper at an all-in sustaining costs of $630 per ounce sold. Mount Milligan produced 39,658 ounces at $774 after the copper credit and Öksüt produced 37,255 at $481.

Of note, Mount Milligan mine had an excess of 6 million cubic meters of water in our tailings inventory at September 30.

And we have had a steady level of water now for the last eight weeks as we've benefited from having access to well-understood underground aquifer water, as well as the permitted draw that we had some surface water earlier in the summer. We do still have access and permits to the end of 2023.

We continue to work with our First Nations partners and regulators to permit the long-term surface water solution or a life of mine as part of our long-term water strategy and we feel confident on that.

Both Mount Milligan and Öksüt mines are running well, and we are well on track to achieve our 2021 production targets as we approach the end of the year. And as Scott also indicated, we are lowering our cost guidance for Öksüt to an all-in sustaining cost of $680 to $730 per ounce sold.

Please move to Slide 10 and we can talk specifically about Öksüt for 2021. Safety again is our highest operating priority and we continue to roll over safety programs to consistently improve our safety performance.

We did have the milestone of 2 million man hours without an LTI, but unfortunately last week therefore, in the fourth quarter one of our contract drillers did injure his hand, which got squeezed on the drill rig. We are reviewing that in detail this incident to further improve our guarding and employee adherence to our safety policies and procedures.

Öksüt continues to mine in both of our pits with the majority of the ore coming from Keltepe. We are moving into the higher grades zones, as you can see from the table below and plan to have access to these levels over the next two years.

We have expanded the near mine exploration drilling program to 30 meter – 30,000 meters in order to work towards further expansion of the reserve and resources. Our final point as mentioned earlier, we are seeing good results so far in 2021.

Therefore, we have lowered our cost guidance for Öksüt to the all-in sustaining costs of $680 to $730 for the year. Turning to Slide 11 and looking at our key focus for the remainder of 2021. Our Q3 results reflect what we will continue on and focus for the rest of the year.

We are putting great emphasis on improving our safety performance throughout the company. Exploration has been a big focus and we continue to try to drive to zero harm in this area. Öksüt has been a great addition to our operations and mines and continues to deliver better than planned financial and operating results.

We are much more confident in our access to the required water from Mount Milligan, and we require – we continue to manage this area closely to ensure that we have water to run at full capacity.

Our major continuous improvement project of the installation of the staged flotation reactors is on target and to be operational by the end of the year at Mount Milligan. Öksüt mining is continuing as planned in higher grades in both pits and we are putting a strong effort to understand our near mine resources with additional exploration meters plan.

Moving to Slide 12 on guidance. We have detailed out as you can see our cost guidance for 2021. Overall, as we approach the end of the year, we are guiding a total of the 270,000 to 300,000 ounces of gold and 70 million to 80 million pounds of payable copper at a very competitive all-in sustaining cost of $700 to $800 per ounce.

With a strong copper credits at Mount Milligan has an excellent all-in sustaining cost of $530 to $580 per ounce on 100,000 to 200,000 ounces of gold production. For Öksüt, we are guiding 90,000 to 110,000 ounces of gold and all-in sustaining costs of $680 to $730, which was lowered by $50 from the last quarter of guidance.

Capital expenditures on a consolidated basis are still looking to come in between the $95 million and $115 million for the year. So that is well under control. Now over to Darren, our CFO to review our third quarter financial results..

Thanks, Dan and good morning all. For those following on the slide deck, I’m on Slide 14. Centerra recorded $220 million in revenue during the quarter consisting of the Mount Milligan mine, the Öksüt Mines and our Molybdenum Business Unit.

Revenue materially consisted of $118 million gold sales, $53 million in copper sales and $52 million from our Molybdenum Business Unit. During the quarter, the company’s operational average gold price realized was $1,543 per ounce of gold and $0.255 per pound of copper.

This incorporates the existing streaming arrangements over the Mount Milligan mine. In the quarter our continued operation sold 75,721 ounces of gold, 38,517 ounces for the Mount Milligan mine and 37,204 gold ounces attributed to the Öksüt Mines. We also sold 18.5 million pounds of copper in the quarter from Mount Milligan.

The adjusted net earnings during the quarter from continued operations was $35.7 million. The net earnings from a consolidate operation was $27.6 million. This included the adjusting item of $8.1 million attributable to legal and other costs relating to the seizure of the Kumtor Mine.

Earnings attributable from an operations perspective were $19.4 million contributed from the Mount Milligan mine, $37.4 million contributed from the Öksüt Mines and $6.9 million from the Molybdenum Business Unit. The adjusted earnings from continued operations was $0.12 per share for the quarter. Now moving to Slide 15.

Centerra’s continued operations in the quarter recorded production costs of $630 per ounce, and an all-in sustaining cost of $791 per ounce. At an asset level, Mount Milligan recorded an all-in sustaining cost of $727 per ounce and Öksüt recorded all-in sustaining cost of $603 per ounce for the quarter.

The key cash flow metrics of note for the quarter were $62.4 million in cash provided by operating activities from continued operations, free cash flow from continued operations of $41 million with our ending cash balance for the quarter has now grown to $912 million.

As you will note at the bottom right hand chart, Centerra’s continued operations year-to-date has produced 217,000 ounces of gold, so tracking well to achieve 2021 production guidance.

The bottom left hand chart notes our free cash flow year-to-date of approximately $140 million from our continued operations with up to $175 million guided for 2021 at a gold price of $1,750 per ounce. I would draw your attention to two things. Firstly, 2021 capital expenditure guidance in the MD&A remains unchanged.

For Mount Milligan we are guiding to capital expenditure of $70 million to $80 million with year-to-date expenditure of $48 million. For Öksüt, we are guiding to total capital expenditure of $15 million to 25 million with year-to-date of $15 million. Therefore, we are guiding to capital expenditure in the final quarter of 2021.

Secondly, there has been congestion at the Port of Vancouver as reported by other users of the port. We are targeting four shipments in Q4 for Mount Milligan operations. This may have an impact on timing of cash receipts. I’m now moving to Slide 16.

As was noted by Dan on Slide 10, we have entered the high-grade phase of the Öksüt Mines, which will continue into 2022. The result of processing the higher grade material is evidenced in the bottom left hand chart with a targeted 40% increase in consolidated production, comparing guidance midpoint from 2021 to 2022.

As noted by Scott and Dan earlier, we have also reduced our 2021 all-in sustaining costs at Öksüt to the new range of $680 to $730 per ounce and a consolidated basis reducing the new range to $700 to $750 per ounce a from relevant all-in sustaining cost perspective.

Midpoint all-in cost for 2021 is now $875 per ounce and reducing to a low $575 per ounce in 2022 as per our guidance. If gold and copper prices remained at current levels, significant margins will be achieved as we move into 2022.

Now finally given the cash flow generation of our continued operations at a closing cash position of $912 million Centerra Board has declared a quarterly dividend of $0.07 per share for the quarter. With that, I’ll pass back to Scott..

Thanks, Darren. So just to sort of close out our prepared remarks here on Slide 18, just referencing some of the bullet points here in the top left of this slide. So as Dan and Darren have already spoken to, we’re continuing to guide up to 310,000 ounces of gold production for this year. We’ve seen good operating momentum as we’ve spoken to.

We have favorably reduced our all-in sustaining costs guidance for the full year, so expecting to produce this goal at a cost of low as $700 per ounce in terms of all-in sustaining costs metric. Second bullet point, we continue to see a good gold and copper price environment.

And again, just given how strong operating performance we continue to guide for a free cash flow up to $175 million. Just in terms of the last bullet point there in the top left.

The strong operating momentum, profitability, free cash flow generation as Darren just spoke to, we finished the quarter with a debt-free balance sheet with total cash reserves of approximately $912 million. So again, this in conjunction with our available revolving on a credit facility, we have very strong liquidity.

And I think that allows us to advocate that Centerra is operating a fully funded business model here moving forward. As I spoke to earlier, the middle chart there down the bottom, I think we’re seeing very strong contributions from Öksüt right now. And we do expect that to continue now that we’re into the higher grade sequence.

And as Darren spoke to, as we look forward to next year Öksüt is going to underpin some meaningful organic growth in terms of our gold production levels from Centerra. Just lastly, a key announcement I want to make and we referenced that in our disclosure today, particularly in terms of my CEO quote.

But I just want to reiterate that we here at Centerra, we would like to recognize that after more than 15 years of Centerra, John Pearson, our Vice President of Investor Relations, who is on the call. John will be retiring at the end of this year.

Obviously, we all want to congratulate John on his upcoming retirement and thank him for his continuous commitment and dedicated service. So John, on behalf of myself, the company and the Board, we would like to wish you a very happy retirement.

And we’d also note that upon John’s retirement, all investor relation responsibilities are going to be assumed by Toby Caron, who is our Treasurer and Director for Investor Relations moving forward. With that, I’d like to pass the proceedings back to the operator and we can move into the Q&A please..

Thank you. [Operator Instructions] Our first question comes from Trevor Turnbull with Scotiabank. Please proceed..

Yes. Thank you. And I’d like to add my congratulations to John as well on his upcoming retirement. And thank him really for many years of discussions and great tours over the years and congratulations to Toby as well. My first question, I guess is about the higher grades at Öksüt. Dan mentioned they’re going to carry well into 2022.

I just wondered if the grades that we saw placed in Q3 were kind of typical of what we can expect for this higher grade material or if that 1.6 grams was really particularly high relative to what we should be thinking about?.

Dan, I’ll let you take that please..

Yes. That’s a very good point. I think that’s – it’s fairly close on target obviously through the year we’ll be placing as we pull the high grade out of the bottom of mostly Keltepe, but also a Guneytepe pit.

But we are looking probably slightly less than that closer to maybe 1.2 grams, but through the year average, but certainly it will be blended and we’ll try to maintain our steady rate..

Trevor just from my perspective, just to help with your modelling, we would expect Öksüt to be at the upper end of our gold production guidance in terms of where we’re going to finish this year. And perhaps you could kind of just calculate what the grade is just given where we’re expecting to finish the year on guidance..

Sure.

The 1.2 grams that Dan just referenced that’s for this year or for 2022?.

No. You were speaking – sorry, you were speaking to 2022..

Okay. Great. Got it.

And then I just – to follow-up on that, I was wondering if the Guneytepe approval is still expected kind of mid 2022 or is that date up in the year?.

I can probably speak to that, Scott. Yes. No, that’s fine. We have commitments from the government and the legal authorities to be tightly reviewing that by the end of this year, early next year. Then we go through the normal permitting process. So we’re still feeling fairly confident that by mid-year, we will have the new footprint.

We do – we are fully permitted in Guneytepe and we do have plans to see if this permit was continued to be delayed. We would continue on with our original design and the access. So right now we are mining in Guneytepe, but within the old permitted footprint..

Okay. And then just changing gears, I wanted to ask about the comment in the MD&A about the resignation of the appointed international arbitrator. And I wondered if that worries you in terms of finding a new arbitrator to take on the role.

And I asked that because it sounded like the arbitrator wanted some protections against future prosecution from the Kyrgyz, which he wasn’t able to secure. And I’m just wondering if any arbitrator wouldn’t want that same sort of protection.

And so I guess the question is, are you worried about the timeline for arbitration and finding someone to replace that person? And what other avenues can you really pursue for a timely resolution on the whole Kumtor story?.

Well, the first part of the question, Trevor, we’re in that process right now, in terms of appointing a new arbitrator. Obviously, our lawyers are looking at this pretty carefully. But unfortunately I’m not really in a position to comment any further on that aspect.

In terms of expediting a resolution of the Kumtor Mine, the second part of your question. I think as we’ve always said, we obviously would prefer to engage in a constructive dialogue with the Kyrgyz authorities to resolve this dispute.

And there has been some engagement, but really absent any indications in the Kyrgyz authorities that they are willing to reach a reasonable resolution for such dialogue. We will, of course continue to pursue our legal avenues with full force, which is what’s currently on the way..

Okay. I understand. Thanks, Scott..

Our next question comes from Anita Soni with CIBC World Markets. Please proceed..

Good morning. And I also wanted to congratulate John Pearson on a well deserved retirement and all that he’s contributed to the analyst community over the past 15 years. My question is with regard to Öksüt, I was clear and now I’m confused.

So in Q2 I’m looking at the outlook that you guys had put out for 2022 and 2023, I believe in the MD&A and I’m sure you don’t have it handy. But in the MD&A you basically say that grades would be approximately 2.2 gram per ton material during 2022 and 2023. And so I’m just kind of trying to reconcile that to that 1.2 gram that was just quoted.

And my question was with regards to that – original question was with regards to the grades and throughput and specifically the throughput. It says also that your that’s partially offset by lower ore ton stacked.

So I was just trying to get an idea of lower relative to the average for the year or lower relative to the pretty good stacking rate that you saw in Q3 and probably in Q4..

Anita, thank you for the comments regarding John and I should have thanked Trevor as well earlier. We obviously appreciate that. I’m sure John appreciates that recognition.

Dan, the first part of Anita’s question, when you quoted 1.2 gram, Dan, I think you and I may have misspoken, I think we were trying to reference Trevor’s previous question on what could be the great profile for Q4 of this year.

Dan, would you agree?.

Yes. Fair enough. And yes, we did. I think we both got a little digging off. But we have only one other I can speak to that Scott is, as part of our adjusting plan.

We are – we do – we have added to life of mine in the last couple of months some run of mine ore, which we did not include in our plan before that will bring down the grade and increase the tons. But I unfortunately, I don’t have that those numbers right in front of me.

So I think I’ll have to leave that to Toby to or John to follow back – follow up later in a separate communication..

Maybe run of mine is very close to cut off.

Is that a fair assumption?.

That’s a fair assumption. But it is economic, so we’ve included that that’ll lower the grade substantially..

So maybe the throughput levels remain the same, but the grade will be a little bit lower than what you guided to in Q2..

Yes. We’re still targeting....

In Q3, Anita..

Sorry, I mean, in Q2 you had guided to a specific number when you were updated, when you refreshed outlook for 2022 to 2023. That’s what I’m talking about..

Right. It was much, much lower tons of ore but higher grade. That’s correct. And we keep adjusting our plan based on additional tons and including some much lower grade..

Okay. And then secondly, along the same vein as we – given Öksüt, relative to the prior guidance, which it would’ve been a very slight dip in Mount Milligan for next year.

Is there anything we should think about that might have been updated within that plan for 2022?.

We haven’t come forward with the numbers from our updated life of mine. We are still – we’ve just finalized our drilling program and we’re working on our resource and reserve block models to bring to a new pit design. So I think it’d be premature to speak to that at this time..

Okay. Last question would be on Q4 at Mount Milligan. So a slightly lower grade this quarter you did have that planned shutdown as a result of that we should expect higher grades going into Q4 more normalized to what we’ve had that’s been average for this year..

Dan, I’ll let you comment..

Yes. Our shutdown is as planned here in later November, so we are doing that. And we’re still feeling as Scott indicated, we’ll be coming into at the higher end of guidance. We are looking at normal grades, so we’re feeding both from stockpile and from run of mine..

I’m sorry. I thought in the MD&A that the shutdown had already occurred that I’ll take a look at that again. Okay. All right. Thank you, guys for taking my question..

Operator, is there any further – any additional questions in this queue?.

Our next question comes from Dalton Baretto with Canaccord. Please proceed..

Thanks. Good morning, Scott and team. And yes, I’ll jump on the John Pearson congratulations, bandwagon as well. I’m also confused with regards to the gold profile at Öksüt here. So I just want to hear – so, first of all, I’m talking about 2022 now, okay.

And your previous guidance suggests an average grade of 2.2 grams per ton, and production guidance of 210,000 to 240,000 ounces.

Is that a valid?.

Yes. There’s been no change. So I’m sorry you got confused Dalton. I think Dan and I got confused when Trevor was asking the question the way Trevor framed the question, I think it got us confused. Got everyone confused, but when it comes to 2022, there is no change..

Okay. So 2022 and 2023, there’s no change..

Correct..

In the overall ounce guidance, correct..

In the overall ounce guidance, but based on what Dan said earlier, the tonnage and grade profile has changed because of these run on mine times..

There will be some changes in that, but we won’t necessarily be filing a new full through ounce, it’s not material from at this point. But that’s correct. The ounce guidance that we had indicated is not changing..

Got it. Okay. Okay. And then just maybe switching gears to the whole Kumtor situation. Again I got to ask, just given everything that’s happened and what these guys are doing to the mine.

Do you actually want the mine back or would you prefer this be a resolved from a monetary perspective?.

Dalton, obviously we’re steadfast right now in terms of our focus on protecting our rights and protecting the value as well as from a shareholders perspective, doing everything we can from that perspective.

But I think if one was to say, in the context of your question that some of these steps that the Kyrgyz has taken, it may be difficult for one to envision how you would return back to that position of owner and operator of the project.

So we had a number of shareholders who would certainly advocate that moving on from the situation in some form of clean exits would be the appropriate measure for Centerra to take. So obviously we are taking all that into our calculus in terms of what’s going to ultimately be the best sort of long-term value proposition for Centerra’s shareholders.

There certainly a sentiment that parallels with the context of your question there..

Okay, great. And then you exit a Q3 with more than $900 million in cash on your balance sheet here. And as you're thinking about capital allocation going forward, I know Scott in the past, you've said, buybacks are not an option.

Just you wouldn't want to increase the concentration of the Kyrgyz’s position, is that still your possession, given the restrictions you put on their shares?.

I think it is, Dalton. And again, when it comes to capital return, that's obviously a board decision that in terms of ops management strategizing deliberating with the board, we recognize that there's various capital return initiatives available to us. Obviously, we've been focused on dividend distributions and we have been growing that.

But in terms of some form of meaningful share buyback, I think it's very difficult for us to envision doing that until the Kyrgyz situation has been resolved. As you pointed out yourself, we're just concentrating their ownership position. It would just be off strategy.

Now, I know you've referenced the current restrictions that are in place in terms of their ability to vote transfer, or sell their shares, et cetera.

Those restrictions continue to be in place, but just – you can't project what the future may look like, vis-à-vis what would be a very significant decision in terms of a share buyback at a meaningful quantum level. So in terms of how this has staged conceptually, I think we need to resolve the Kumtor situation first..

Okay. That makes sense. And then as I look at your consolidated production outlook, there is a reasonably substantial drop coming in somewhere in that 2024, 2025 timeframe.

How important is M&A to you right now?.

And sorry, Dalton, you broke up.

How important is a?.

Is M&A becoming a much more important priority for you and the board?.

That's still quite a ways out we would put forward, in terms of production declining and really that Öksüt where indicatively based on the prior sort of 41 – 43-101 profile, you would be seeing production starting to decline three years out. But what Dan and his team and our exploration division, we're very focused on our expiration program at Öksüt.

We've got a pretty significant sort of exploration budget underway and we are seeing it's early stage, but we are seeing some interesting results.

We are doing some additional internal work on what we think the life of mind profile is going to be moving forward, as you can appreciate, like most companies were now our sort of budget cycle right now, as well as our long range planning cycle.

And I think we are seeing some conceptual opportunities at Öksüt that may assist us in addressing that production decline. I know, I recognize – your question is more focused on M&A, but because look, I wouldn't say that we're spending in an ordinance amount of time on that topic right now, Dalton.

I think as I've said before, it's a pretty strong gold price environment and I think valuations are reasonable. So the ability for one to identify a transaction that's going to create meaningful shareholder value, I think it's still pretty difficult right now and just given where we're at in the cycle.

So I would put forward that like you've seen for the last two to three years, we continue to be pretty internally focused and again, just coming back to any sort of production decline, three years out, we're going to try and do everything we can in terms of optimizing our existing assets, as well as success for the exploration drill bit to try and as best possible find every bit of organic growth internally that we can..

Okay, great.

And there's maybe one last one, if I can squeeze today, Mount Moly is north of $19 a pound now, is there a market for your Moly business? Like, I mean, are you looking to offload it, other potential buyers, does anyone approached you?.

Yes, I mean, we have seen a significant appreciation in the Moly price as you've referenced and coinciding with that. We have seen interest, unsolicited interest from third parties.

As and when people – as and when, there is interest, we of course we engage and hear out what are their proposals or what could be the inherent sort of value proposition here. And there are a couple of parties that we have been having discussions with again, is still early stage.

But we'll see what comes of that, using analogy, we'll pull on that string and see where it takes us. But suffice to say that if any of those led to again, a value proposition that we think is going to set the value and create value for our shareholders, then we would certainly proceed accordingly.

So I think the current Molybdenum prize is strong and maybe this will present that window of opportunity, only time will tell..

Great, thanks. That's all from me, guys..

Thanks Dalton..

Our next question comes from Fahad Tariq with Credit Suisse. Please proceed..

Hi, good morning. Thanks for taking my question. One of the things that stuck me was that your company seems very immune, not even immune, but just completely safe from the inflationary pressures that we're seeing – your peers facing.

So I'm just curious, can you talk a little bit through just like the lower cost guidance and how you're able to achieve that in a pretty high inflation environment? Thanks..

So, Dan, do you want to speak to that first? And then once you're done Dan, maybe pass it over to Darren, just to talk about the hedging as well, but Dan over to you please..

Yes, no, very good. We are seeing some small amount of inflation pressure especially on steel, but our usage of steel at Mount Milligan for example, is not like you would say in an underground mine. And we had longer term contracts, some fairly large inventories, so we're still looking very good there.

At Öksüt, combination of – it's a very small operation. We have an ADR plant, long-term contracts with our major supplies. As well we benefited somewhat from the exchange rate improvements in Turkey. Although, we did have wage pressures, we were able to offset that.

And again our biggest cost in Turkey is our contracted mining cost and that's a long-term contract as well. So yes, we're looking at better guidance and with the good productivity, we're solid on those numbers..

And Darren?.

Sorry, over to Darren..

I was going to say, Darren may want to comment as well. Go ahead, Darren..

I'd draw your attention to Page 28 of the MD&A and basically what you'll see there is, we have for many years been implementing FX for more Canadian dollar and fuel hedges and call it, the fruits of that labor have paid off.

Year-to-date from an FX perspective, we realized $14 million in gains and the FX hedges recognize $19 million in gains from a fuel perspective. As we head into 2022, the FX hedges, we're getting a range for 2022, between 130 to 137, obviously a lot better than the current rates – and we've got some forwards at 129, similar.

So that's been approximately 50% coverage and similar for the fuel hedges are actually got a coverage of approximately 70%. So I think those that sort of three year rolling programs have kept us a good stead in particular the FX that's kind of kept us in good stead..

Okay. Sorry, I just want to catch the number. You said 70% covered for fuel next year.

Is that right?.

Yes. So there's a table on this, on Page 28 of the MD&A and that is approximately 70% coverage on our fuel hedges for next year. And then into 2023, we've actually got 40% coverage and 2022, it's all laid out there..

Okay, great. Yes, it looks like it's worked out well. I'm not aware of any other gold producer keeping cost flat, let alone lowering their cost profile..

Okay, great. That's it for me. Thanks..

Our last question comes from Anita Soni with CIBC World Markets. Please proceed..

Yes, sorry for the follow up. I just checked the MD&A and it does say that there was a shutdown in the third quarter at Mount Milligan.

So is there another one planned in November? Is that what you were saying?.

Dan, do you want to take that please?.

I believe that one did get pushed. It was going to be in late September and we were able to push it into November..

Okay. So it didn't actually happen. So then can I – so it hasn't happened.

So then can I ask why this throughput in grade was a little lower at Mount Milligan this quarter than your run rate?.

Yes, we did have a couple of more minor maintenance issues and we've been working with changing our liners and our big SAG mill. So we took the SAG mill down a number of times for 12 hour shuts to remove crack liners, et cetera, but it was a fairly much normal maintenance..

Okay. So then next quarter, there might be a little bit lower throughput with the shutdown.

How long is the shutdown?.

The plan is five days..

Okay. So probably – okay.

And then in terms of the grade, is there – could we expect a bump up in grade versus what you had this quarter or would that something that we should expect going forward like this 0.38 versus the kind of 0.45, you've been running so far?.

Yes. Again, I don't have that in front of me, but the guidance, you can back calculate that, I guess..

Okay. All right. Thank you..

Operator, was there any further questions?.

No further questions at this time..

Okay. Thanks operator.

John, did you want to close out the call?.

Sure Scott. Thanks. Want to thank everyone for their kind words and remarks. It's been a pleasure working with you all over these many, many years and just wanted to thank you all. So with that, we will end the call here. And if you have further questions, reach out to me, Toby or the team and we'll get back to you. Thank you very much..

That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day, everyone..