"Finally, Centerra like many of our peers is moving toward reporting an 'all-in cash cost' methodology for its gold production at Kumtor and Boroo mine operations. Having first reported along these lines with the announcement of the revised life-of-mine plan for Kumtor and with our 2012 production update and 2013 guidance, the Company believes an all-in cash cost measure more fully reflects the actual cost of producing an ounce of gold than the former Gold Institute total cash cost measure. Centerra's projected consolidated all-in cash (pre-tax) cost per ounce produced for 2013, described in our outlook, is within a range of $1,067 to $1,164, and includes all costs except revenue-based taxes in the Kyrgyz Republic and income taxes. This demonstrates the Company's focus on maximizing margins and our leverage to increases in the gold price. We continue to focus on our exploration and business development efforts as we look for additional operating platforms in an effort to increase our future gold production, diversify our regions of operation and help us achieve our goal of producing 1.5 million ounces of gold annually."
Year-end Gold Reserves and Resources
Reserves
As reported in the Company's news release of February 7, 2013, Centerra's proven and probable gold reserves as of December 31, 2012, increased by 3.6 million contained ounces (before accounting for 2012 production) to 11.1 million ounces of contained gold, compared to 8.1 million ounces as of December 31, 2011. This represents an increase of 45% before accounting for 534,000 contained ounces processed at Kumtor and Boroo during 2012. The reserve increase is the result of the significant expansion of the Kumtor Central Pit, announced November 7, 2012 and is described in detail in a new NI 43-101 technical report filed on SEDAR in December 2012. All 2012 year-end reserves were estimated using a gold price of $1,350 per ounce compared to $1,200 per ounce at December 31, 2011.
Resources
As of December 31, 2012, Centerra's measured and indicated resources total 5.1 million ounces of contained gold a decrease of 23% or 1.5 million ounces, compared to 6.6 million contained ounces as of December 31, 2011. The majority of this decrease is a result of the conversion of previously outlined Kumtor Central Pit measured and indicated open pit resources into mineral reserves as a result of the KS-13 Pit expansion. This conversion of resources to reserves has been offset by increased resources at Kumtor and the addition of 682,000 contained ounces of new indicated resources at the Oksut project (100% basis as of January 24, 2013).
Centerra's inferred resources, as of December 31, 2012, total 4.1 million ounces of contained gold for an increase of 22,000 contained ounces over the December 31, 2011 figures. The conversion of Kumtor underground resources into reserves within the KS-13 expanded pit was offset by the addition of 477,000 contained ounces of new inferred resources at the Oksut project (100% basis) and the new high grade resources outlined below the KS-13 pit design which resulted in the increase.
2012 year-end resource estimates on the Boroo, Gatsuurt, Ulan Bulag properties in Mongolia and Kara Beldyr property in Russia remain unchanged from those outlined at the end of 2011.
Financial and Operating SummaryConsolidated Highlights---------------------------------------------------------------------------- Three Months Ended Year Ended December 31 December 31----------------------------------------------------------------------------Financial and Operating Summary 2012 2011 % Change 2012 2011 % Change----------------------------------------------------------------------------Revenue - $ millions 368.5 248.0 49% 660.7 1,020.3 (35%)----------------------------------------------------------------------------Cost of sales - $ millions (1) 165.2 104.1 59% 387.5 382.3 1%----------------------------------------------------------------------------Abnormal mining costs - $ millions 8.9 - 100% 60.9 - 100%----------------------------------------------------------------------------Revenue-based taxes - $ millions 44.5 33.6 33% 74.7 131.8 (43%)----------------------------------------------------------------------------Loss on de- recognition of UG - $ millions 180.7 - 100% 180.7 - 100%----------------------------------------------------------------------------Exploration - $ millions 11.5 11.7 (1%) 37.9 39.6 (4%)--------------------------------------------------------------------------------------------------------------------------------------------------------Earnings (loss) before income taxes - $ millions (62.8) 80.3 (178%) (172.3) 362.8 (147%)----------------------------------------------------------------------------Income tax expense - $ millions 5.2 0.9 486% 11.7 8.1 44%----------------------------------------------------------------------------Net earnings (loss) - $ millions (68.0) 79.4 (186%) (184.0) 370.9 (150%)----------------------------------------------------------------------------Earnings(loss) per common share- $basic&diluted (0.29) 0.34 (185%) (0.78) 1.57 (150%)--------------------------------------------------------------------------------------------------------------------------------------------------------Cash provided by operations - $ millions 208.2 60.3 245% 134.7 434.9 (69%)----------------------------------------------------------------------------Capital expenditures -$ millions 85.0 30.0 184% 410.6 187.9 118%--------------------------------------------------------------------------------------------------------------------------------------------------------Weighted average common shares outstanding - basic (thousands) (2) 236,339 236,323 0% 236,369 236,088 0%----------------------------------------------------------------------------Weighted average common shares outstanding - diluted (thousands) (2) 236,339 236,621 (0%) 236,369 236,354 0%--------------------------------------------------------------------------------------------------------------------------------------------------------Average gold spot price - $/oz 1,721 1,688 2% 1,669 1,572 6%----------------------------------------------------------------------------Average realized gold price - $/oz 1,711 1,690 1% 1,692 1,569 8%--------------------------------------------------------------------------------------------------------------------------------------------------------Gold sold - ounces 215,361 146,704 47% 390,533 650,258 (40%)----------------------------------------------------------------------------Cost of sales (1) (3) - $/oz sold 767 709 8% 992 588 69%--------------------------------------------------------------------------------------------------------------------------------------------------------Gold produced - ounces 219,316 151,562 45% 387,076 642,380 (40%)----------------------------------------------------------------------------Operating cash cost(3)(4)(5)- $/oz produced 360 603 (40%) 663 502 32%----------------------------------------------------------------------------Total production cost(3)(4)(5) - $/oz produced 998 820 22% 1,143 687 66%----------------------------------------------------------------------------All-in cash cost (pre-tax) (3)(4)(5)-$/oz produced 839 934 (10%) 1,882 929 103%----------------------------------------------------------------------------(1) Cost of sales excludes regional office administration.(2) As of December 31, 2012, the Company had 236,376,011 common shares issued and outstanding.(3) Operating cash cost is comprised of mine operating costs such as mining, processing, regional office administration, royalties and production taxes (except at Kumtor where revenue-based taxes are excluded), but excludes depreciation, depletion and amortization, reclamation costs, capital investments, community investments, exploration expenses and corporate general and administration expenses. Operating cash cost, total production cost and all-in cash cost (pre- tax) per ounce produced as well as cost of sales per ounce sold are non-GAAP measures and are discussed under "Non-GAAP Measures".(4) As a result of Kumtor's Restated Investment Agreement signed in 2009, operating cash cost and total production cost per ounce measures exclude operating and revenue-based taxes.(5) All-in cash cost (pre-tax) per ounce produced includes operating cash costs, sustaining and growth capital, corporate general and administrative expenses, global exploration expenses, and community investments, but excludes revenue-based taxes at Kumtor and income taxes.
