Please disable any adblockers if the video is not showing below.

Centerra Gold Inc.

View Company Profile

September 17, 2024 at 1:40 PM (MDT)|Broadmoor Hotel & Resort

Paul Tomory

President & CEO

Mr. Tomory has over 25 years of experience in mining, engineering and construction and was appointed Centerra’s President & CEO effective May 1, 2023. Prior to his appointment, he was Executive Vice President and Chief Technical Officer of Kinross Gold Corporation, where he worked for over 14 years in a series of progressive technical roles. Prior to Kinross, he worked as a consultant at Bain & Company and Golder Associates. Mr. Tomory is a professional engineer in the province of Ontario with a Master of Applied Science in Civil (Mining) Engineering from the University of Toronto and holds a Master of Business Administration from the University of Toronto’s Rotman School of Management.

This is an automatically generated transcript. Denver Gold Group cannot accept responsibility for mistakes, errors, omissions, or any action taken in reliance thereon. Use of this transcript is governed by Denver Gold Group’s Terms of Use.

Good. It's so Paul just starting off, maybe if you want to give just a quick you know, intro on Centa, just you know, telling about your existing operations. And then maybe we can start talking about the fact that you did lay out a strategic plan last time you were in in Denver. and maybe you can talk about that, you know how that has played out over the last 12 months. So I'll start with a perspective on what Centa is and I think that people still associate Centa with Kumtor and Kyrgyzstan, which was an absolutely a world class mine. And during the Kumar years, Santa was able to make acquisitions of assets principally in the Americas and all the while building UT in Turkey. And I think during the Kumor years, there was a lot of focus on Kumtor naturally. So being an absolute world class asset. And there's many of you follow the story, the the nationalization, the loss of Kumtor and it reset Sana as a company really focused on what people call stable jurisdictions, Canada, the US, Turkey. And as part of that post Kumtor reset of Sana, our strategy has been looking at our assets, what do we have in the portfolio and what latent value exists in those assets? And I think that every one of our assets in a way was underappreciated and perhaps not optimized to its full technical and operating potential. And what we've done over the last year is we've worked our way through the portfolio looking at each of the assets and what it could be in the longer term. What are its technical attributes? What are its value attributes? And we still have work to do. We've, we'll talk about it here. I'm sure we did the deal with Royal Gold which we feel unlocks a very long potential mine life at Mount Milligan. We just announced a feasibility study on the go forward decision on the Thomson Creek project. And here we are again, you and I talked in Zurich about Moly and here we are at a gold forum talking about molybdenum, but it's again part of daylighting value in the portfolio that previously perhaps wasn't as visible. And we have yet work to do with Milligan on the pe A with gold field on defining a resource. And then ultimately, also with chem s coming up with a plan for chem s that is more risk adjusted and capital efficient. So the strategy is really looking at the portfolio and providing a value maximizing plan for each one of the assets and, and you touched upon in terms of the, you know, the fees that you came out with on the Molly side, you know, that was announced last week. You know, what's your strategic plan for the US Molly operations in restart of the Thompson Creek mine and ramp up of L lot metallurgical a any, any sort of thoughts you can provide on that. Yeah. So this is another good example where these assets were in the portfolio. So would we if we had a blank slate be acquiring Moli the answer is probably no, but these assets were in the portfolio. And we fundamentally believe that there's a strong value proposition to these assets and a quick for those not familiar, a quick tour through our Maley assets. We have the Thompson Creek mine in Idaho, which has been on care and maintenance for a decade. The Indaco mine in Bridge Columbia also on care and maintenance and the Langlo metallurgical facility in Pittsburgh that has been operating essentially nonstop over the last 10 years, but at reduced capacity. So the plan that we've put forward here is reopening the Thompson Creek mine, which we view as a largely derisk project. It's principally a stripping campaign and a refurbishment of the mill build that ramp up the production in the middle of 2027 and then send the feed to Llo in Pittsburgh which will then allow us to further ramp up utilization of llo with third party feed. I'll talk about the economics in a moment, but let me do a little bit of a digression on Motum. I'm not going to spend a lot of time on Molina as metal but be it to say that it, it is a metal that is likely in a shortfall position on some supply demand for the next 5 to 8 years. We are very constructive on the metal but more importantly, rel relevant to sotera, there's not a lot of clean moy con out there in the world. Most of the world's molly comes as a byproduct's and as such, it is so called dirty because it has a copper component Thompson Creek. And by the way, NDO provide the cleanest sources of moly Con on the planet. What that then allows us to do is take that super clean con and it allows us to blend in more copper heavy cons or dirty cons and charge a bigger spread on those who realize a margin on that. So the real value proposition here is not just opening a mine which stand alone is a good mine, but there is real value created in the vertical vertical integration of Llo and Thompson Creek. And by the way, it's a made in America story, an integrated supply chain in the United States. So in terms of the economics, the feasibility study shows a combined N PV of 472 million and a 22%. Irr, as I said, on a relatively low risk project because of the nature of the principally stripping at Thompson Creek. And the total capital is just short of $400 million that will be spent over the next 2.5 years. I'll add a couple of other important points here. Often people will say, well, cent has $600 million give or take and you're spend $400 million on mill. That's not true. The molly will be financed largely certainly over the next 18 to 24 months out of ongoing cash flow. So the cash balance will be maintained, pick your commodity price at essentially or just be lower just above current level. So we're able to finance the construction of Thompson Creek or the reopening of Thompson Creek through cash flows. And another perspective here is that in the absence of a positive decision here, we are left continuing care and maintenance and ultimately closure, which has a negative N PV of 2 to 300 million. So the real delta here is on the one hand, a negative two or $300 million NPV heading to closure versus 472 million of positive good project N PV for a delta of about 800 million. So we, we really believe that notwithstanding the fact that we're a gold mining company and we're here at a Gold Forum. And we're telling the gold story, this is value realization for our shareholders, which is the principal reason why we are proceeding with the reopening of Thompson Creek. So that, that seems like a pretty great opportunity in terms of, you know, how you're looking at the mo business. Now, you've talked previously as well in terms of, you know, running a strategic process on that. How has that been progressing? Yes. So I'll recap why we're doing that. So here we are, we have a lot of cash on the balance sheet. So we don't provide a lot of financial leverage to gold. Our operating gold assets are relatively low cost, so we don't have that much operational leverage to gold. And then here we are putting our capital dollars into a Moli project. So that is a, that is a bit of a challenging message coming here in a historic high gold price environment telling the world we're proceeding with a Moli project. But as I said, it's about value realization and delivery of the shareholders. But strategically where Ctera wants to be in a year from now is both a reduction of exposure to Molina and an increase in exposure to gold. So to that end, we have been running a strategic process, meaning looking for a partner in outright sale on the Molly assets and that process is going well, most would be bidders wanted a full feasibility study with all the technical detail as well as detail around the Langlo commercial plan. We now have that. And additionally, we felt that having conviction around this project improves its overall sale and potential potential exit. Now, I'm not guaranteeing a successful outcome to strategic process, but we are pleased at the levels of interest that we're getting from outside parties and they range from miners and traders and a whole range of very interested potential parties. And I'll just move over to the other side of the equation. So as we seek to rebalance the metal mix in the portfolio, there's a process on milium that we're running, but we're also looking to deploy capital into gold and I think you're going to get into it, but we have internal opportunities at Mount Milligan at Goldfield and Chem for value generation on the gold side. So stay tuned on that and again, just shifting gears from Molly again, back to kind of upper gold. your your flagship patches, which is you know Mark Milligan. you know how are things progressing on any sort of optimization work that you've been doing there? So there's two major efforts ongoing at Mount Milligan. One I would say is operational technical which is really looking at optimizing what we have the asset and its performance. And the other is on the longer term potential from a mine life perspective. So we're focused on a site wide optimization plan that begins first and foremost with health and safety. A he a safe mine with low incident is a mine that will ultimately perform better. And we have a myriad of initiatives across the mine. The plant in the GN A, the way we look at procurement where we've identified tangible potential improvements. And in fact, we've already locked in a bunch of improvements in this mine's performance. I'll illustrate with a couple of examples. On the processing side, we produce a 20% copper con and the system is a copper flotation plant and the gold is in the pyrite and the system rejects the pyrite. So you want to be able to get more gold recovery and we're able to do that by having done test runs on lower copper copper percentage in the concentrate. The smelters will take that. We've done some test runs that increases gold recovery because you're capturing more of the pyrite in the concentrate. So that's one example, we've also been focused on better optimizing the operation of the process plant, for example, set points on reagents and timing and grind size and all that to better respond to feed coming out of the mine. So we're better able to optimize throughput and recovery. And indeed, the mine has been setting records on through and we're also seeing better recoveries as with any large low grade high through put process plant. It's not something that you optimize overnight. These are a lot of it is empirical activity. A lot of it is just hard work blocking and tackling. But we are showing that you've seen it quarter over quarter, better operating performance, lower cost, better productivity, higher throughput, higher recovery at Milligan. And we expect that journey to continue. Same in the mine, we're working on optimized load haul cycles, better effective utilization all the classic bread and butter of a continuous improvement program. So we're very happy with the progress of activities at Milligan, but we still see significant operating potential. That's great. And then just staying with Martin again in February of this year, you announced additional streaming agreement with Royal Gold. Can you talk about the rationale behind this deal? And and why it's important for the future growth of Mount Milligan? So a quick recap on the geology here, Mount Milligan is a very large copper gold porphyry that is open in several directions and at depth. And the, the, the deal we struck with Royal Gold creates an environment where there is a strong incentive for Centre to invest in exploration and studies and engineering and permitting. Fundamentally, what we see at Mount Milligan is first of all, the deal immediately unlocked two additional years of reserve. So we have a 2035 mine plan, a reserve that goes up to 2035. So just over 10 years of production, that is 250 million tons of proven and probable material in addition to that 250 million tons, we have 260 million tons or about the same again of material at measured and indicated. So another 10 years of production, the principal reason that that second chunk that 260 million tons is not currently in reserve is because we are limited on tailings capacity. Fundamentally, this pe A is about coming up with a technical and operating plan for this mine that unlocks a second decade of production. And I'll come back to that in a moment concurrent to the pe we are continuing to drill. And the slide up on the screen right now shows that the ore body is open principally to the west and also to the south. And we're drilling along those axes that are illustrated on planned view and we see very strong continuity of mineralization. So parallel to the P we are executing an exploration program that we believe will add a third decade of production. So the objective of the pe is to get mine life out to the mid 2040 s. And the objective of the exploration program is to get mine life out to the 2050 s. And we have a strong conviction that it will come to pass because the mineralization simply put is there the pe A will look at opportunities. How do we better manage tailings? How do we find incremental tailing capacity? And we've made really good progress already on identifying potentially other sites. But we're also looking at more efficient ways of managing tailing. So for example, a agen waste rock goes into the tailings and that cannibalizes tailing space. We're looking at perhaps in pit or, or different ways to deal with that to free up tailings capacity. Can we get more out of the current tailings facility? But regardless, we will identify room for further tailings. Once you start to have a mine life that has a couple decades, maybe more of life, you have to start looking at throughput and we are looking at ways to increase throughput at Mount Milligan. And I'll again, I'll use a very specific example. The recirculating load in the SAG mill at Mount Milligan is the highest I've seen in my career. It's 20 25%. It's a very significant recirculating load, no standing. The fact that we have pebble crushers and a re grind there. So we're going to look at potentially looking at better grinding on a recirculating basis, perhaps with H PGR as a tertiary to immediately free up 10 to 15,000 tons additional a day of milling capacity. And that's a relatively capital, efficient way to free up a lot of capacity. And of course, when you have a long mine life bringing some of that forward is that advantageous. The other reason we would want to bring some production forward is as you'll recall, the stream arrangement, the additional streaming arrangement with Royal Gold sees two discrete steps in how we receive more money for the gold and copper that is streamed. Those are production based milestones, not calendar based milestones. So the faster we can produce, the better it is for Royal Gold and the better it is for us because we accelerate the period to which those adjustments to the stream come. We will also as part of the pe a look at permitting ongoing discussions with our first nations parties and looking at other tweaks, for example, on recovery or or other initiatives. Another example I use is that currently we, we put the pyrite tails in a separated part of the tailings and currently we have around 400,000 ounces in there. Is there something we can do to go back and get those tails and get the gold out of those tails? So there's a whole bunch of initiatives that we're looking at in this pa to essentially improve the overall economics at Mount Milligan. And again, like I said, the pe is just a step in time that will incorporate the current drilling and yet we will continue to drill and look for mine life extensions beyond what the pe is envisaging excellent to do it. There is a lot of work in Mount Milligan and then, and just shifting gears again to ox suit. you know, since the restart of operations there, that was in June of last year. Ox suit has delivered a lot of free cash flow. A lot of you know, operating cash flow and Value Center. The current mine life is about to 2029. Do you see any potential to further extend that we are doing some exploration there, largely speaking, there's not going to be a lot of exploration. There may be little bits here and there that we add and there may be a residual Lee tail at oxy as well. But what I want to talk about in this one is we view Turkey as a very attractive place to invest. Geologically. Turkey is extremely well endowed with double the grade on any given deposit, whether it's a porphyry or ether will take your pick, the grades are just really, really excellent. Turkey is also characterized by not having a particularly well developed junior market. So a lot of the assets are held in state hands or in private hands and one has to have presence in the country to really understand what assets might come up for auction or for sale. So companies that operate in Turkey have an advantage, an incumbency advantage in having visibility on assets that may come available there. So we are committed to Turkey, we have a great workforce and we are always looking for opportunities to extend our presence there. Is there any obvious opportunities that you see right now? Or we're always working about things that come up through, for example, the state auction process. And there's always interesting things that come out in both gold and copper and I'll leave it at that. There's, there's always interesting things there. Got it and, and just then moving to your growth pipeline, you've got some development projects. You've got two development projects that are you know, goldfields in Nevada and CS in BC at Goldfields, you've taken a strategic pivot on the project. What are your plans in terms of gold fields? And what's the focus for 2024? So Goldfield is a relatively straightforward oxide sulfide gold deposit in Goldfield, Nevada. Most of the permits are already in place as you, as you alluded to. We did a bit of reset in how we conceive of the asset we're for. Now, we're not going to focus on the sulfides. We're going to look at a run of mine oxide only heat bleach project. And in order for us to get to a project that is executable, we need, we think 700,000 to a million ounces of resource, we need to see recoveries in the mid to high sixties on a run of mine material. And we would like to see Capex in that 150 to 180 range. We believe on the latter two point. We, we have a pretty good view that we will be able to realize that and we continue to drill. So at the end of this year, we'll be providing a resource update on on gold field, as well as a perspective on how we might move forward. In a best case scenario, we have a project, we move it to an FS. And then ultimately, the execution is a very big, very straightforward project. It'd be a 6 to 9 month FS followed by 18 to 20 months of execution. But on the other hand of the spectrum, there may be continued drilling, continued study which would just push out the timeline, but we do see prospect and we continue to identify more oxide gold resources. We just have almost less than a minute left. But I did have, you know, just a question on M and A in terms of any thoughts on M and a jurisdiction size stage. Yes. So the important part we've been meeting with investors, we are not going to use shares for M and A I mean, we think we're absurdly cheap and so our M and A universe is constricted by that which we can buy for cash. Now, in terms of increasing our gold exposure, we think the best place to go is inside our own portfolio, Mount Milligan, Goldfield and Che we've run out of time for C MS, but we think the best opportunities are within the portfolio in terms of M and A, we are open to making acquisitions in gold in our operating jurisdictions or, or, or places of similar risk profile where it makes sense for Sentara. But we're going to be very disciplined about our approach to M and A. Perfect. Thank you very much Paul for the update., we don't have time. All right.


NOTICE

The Denver Gold Group does not make any express or implied condition, representation, warranty or other term as to the accuracy, validity, reliability, timeliness or completeness of any information or materials in general or in connection with any particular use or purpose presented at the Gold Forum. Denver Gold Group cannot accept responsibility for sourcing variances, mistakes, errors or omissions or for any action taken in reliance thereon. Use of this data is governed by Denver Gold Group's Terms of Use.

The Denver Gold Group does not represent or endorse the accuracy or reliability of any third party advice, opinion, statement, information or materials received during the Gold Forum.

INVESTMENT ADVICE - NO OFFER OR RECOMMENDATION

The Gold Forum and the information and materials presented at the Gold Forum do not, and shall not be construed as, making any recommendation or providing any investment or other advice with respect to the purchase, sale or other disposition of any regulated gold related products or any other regulated products, securities or investments, including, without limitation, any advice to the effect that any gold related transaction is appropriate or suitable for any investment objective or financial situation of a prospective investor. A decision to invest in any regulated gold related products or any other regulated products, securities or investments should not be made in reliance on any of the information or materials presented or obtained during the Gold Forum. Before making any investment decision, prospective investors should seek advice from their financial, legal, tax and accounting advisers, take into account their individual financial needs and circumstances and carefully consider the risks associated with such investment decision.