Consolidated gold production in 2012 totalled 387,076 ounces compared to 642,380 ounces in the prior year. The decrease in ounces poured was primarily due to the unexpected acceleration of ice and waste into the Central Pit resulting in the rescheduling of mining activities to the extension of the southwest end of the SB Zone which was discovered in 2011. This revised mining plan led to a 46% decrease in production at Kumtor year over year, which was partially offset by a 21% increase in production at Boroo where the heap leach operation was re-started in October 2012.
Ian Atkinson, President and CEO of Centerra stated, "Recently we published our updated reserves and resources and with that we were pleased to report our initial resource estimate on the Oskut Gold Project in Turkey. We have announced an indicated resource of 682,000 contained ounces of gold and an inferred resource of 477,000 ounces of contained gold at Oksut. It is still early in the development of this project, but we are excited and expect to continue to grow the resource, with the aim to fast track it to production. From a financial standpoint, in the fourth quarter of 2012, the Company had strong adjusted net earnings of $112.7 million or $0.48 per share, before recognizing the one-time accounting charge of $180.7 million for the de-recognition of the underground assets at Kumtor. The operations generated approximately $135 million of cash during the quarter and our cash and short-term investments grew during the period to $382 million. In comparing the quarter-over-quarter operating performance, both operations performed well in the quarter producing 45% more ounces in the fourth quarter of 2012 compared to the same period last year.
"Still 2012 was a challenging year, beginning with the ice and waste movement at Kumtor, the revised mining plan, political challenges, lower than expected mill throughput and recovery, as well as lower than expected mill head grades encountered in the fourth quarter at Kumtor as we were mining the newly discovered portion of the orebody. However, as outlined in the December 2012 Kumtor technical report, the KS-13 model has proven to be a reliable indicator of mineral reserves relative to gold production and we expect that trend to continue. In 2013, we expect approximately 75% of our production at Kumtor to come from the SB Zone which has had a number of years of historical production. For 2013, consolidated gold production is expected to be in the 605,000 to 660,000 ounce range as Kumtor returns to more normal production levels."
"The State Commission has issued its final report regarding Kumtor and has delivered it to the Kyrgyz Republic Government and the Kyrgyz Republic Parliament. On February 20, 2013, the Parliament debated the State Commission report and discussed a draft resolution that endorses the report and calls on the Government to hold negotiations with Centerra with a view to revising the agreements governing the Kumtor project in the interests of the Kyrgyz Republic. We understand that the draft resolution recommends that if mutually advantageous terms cannot be agreed the Government should take a number of steps, including annulling legislation enacted in 2009 approving the project agreements and terminating such project agreements. See "Other Corporate Developments - Kyrgyz Republic - State Commission Activities - Parliament Review and Draft Resolution". The Company believes that the conclusions and recommendations of State Commission relating to the Company are exaggerated or without merit and has responded in detail to the State Commission. We have always benefited from a close and constructive dialogue with the Kyrgyz authorities over the many years we have operated there and remain committed to continuing to work with them to resolve these issues in accordance with the New Project Agreements, and to the benefit of all shareholders. However, no assurances can be given that the claims and recommendations of the State Commission can be resolved without a material negative impact on the Company."
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