Lower production and higher costs sent
That translates to US12 per share, and compares with year-earlier earnings of US$29 million (US40 per share). Revenue between the two periods slipped by nearly 12% to US$76.5 million.
Cash flow from operations was off 41% to US$17.2 million on lower production, increased exploration and corporate development activities, and a buildup in working capital due to the timing of gold shipments.
Still, Centerra says its quarterly gold production of 193,896 oz. was better than expected, but 18% lower than a year earlier. The decline is mostly attributed to lower grades at the Kumtor mine in Kyrgyzstan, which slipped to 3.4 grams per tonne from 4.3 grams in the corresponding period of 2004. Average cash costs between the two periods jumped 41% to US$245 per oz.
On the sales side, Centerra realized an average of US$429 for each ounce of gold sold, a significant increase over the US$398 per oz. realized a year ago. This reflects a US$39-per-oz. increase in the quarter’s average spot gold price to US$440 per oz.
Centerra expects to produce around 177,000 oz. gold at US$258 per oz. during the fourth quarter, with Kumtor pitching in 110,000 oz. (at US$307 apiece), off about 10% from the third quarter as grades continue to decline. Grades at Kumtor are expected to improve in 2006.
For the full year, production is forecast at about 800,000 oz. (with 783,500 oz. toward Centerra’s account) at a slightly higher cash cost of US$232 per oz.
At quarter’s end, Centerra had US$212 million in cash and some 72.1 million shares outstanding.
Back at Kumtor, mine-scale exploration is finding new mineralization both on extensions of the known deposit and on the Sarytor prospect southwest of the mine.
Three holes drilled on the SB zone to the south of the orebody intersected the Kumtor mineralized horizon over core lengths of 20 to 44 metres. The best intersection was a 44.2-metre interval that graded an average 12.2 grams gold per tonne, in a hole that intersected multiple mineralized zones. More typical gold grades of 2 grams to 6 grams per tonne were encountered in all the holes.
Nine drill holes on the NB zone, north of the pit, cut lengths of 10 to 44 metres of mineralized rock, including a 38-metre interval that graded 5.9 grams per tonne and an 11.9-metre interval running 5.1 grams.
Both the NB and SB zones remain open downdip and the SB zone is open along strike to the south. A resource figure for the SB zone should be complete by the end of the year.
At Sarytor, 5 km southwest of the Kumtor mill site, a 2,552-metre drilling program to provide infill data on the Sarytor deposit confirmed the continuity of the mineralized zones between earlier drill holes. Drilling also closed off the zone to the west and north.
The Sarytor intersections were mainly 14 to 37 metres long, with grades between 2 and 4 grams gold per tonne.
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