HispanicBusiness

Kumtor

At the Kumtor mine, gold production was 189,438 ounces in the fourth quarter of 2012, compared to 138,696 ounce in the same quarter in 2011. The increased production for the fourth quarter of 2012 was due to processing the higher grade ore available from cutback 14B. In comparison, in the fourth quarter of 2011 Kumtor processed consistent grades from the then newly accessed cutback 12B. Mill head grades for the fourth quarter of 2012 were 5.13 g/t with a recovery of 77.7%, versus 3.80 g/t and a recovery of 77.6% for the same quarter in 2011. Tonnes processed in the fourth quarter of 2012 were 1,547,463, 7% higher than the same period of 2011 as the Company increased mill availabilities and throughput following the seven week mill shutdown in the third quarter when extensive maintenance and remediation work was completed.

Operating cash costs including capitalized stripping and ice unloading at Kumtor (see "Non-GAAP Measures") in the fourth quarter of 2012 increased by $10.3 million due to higher mining costs, which increased by $8.6 million as a result of the 11% increase in the material mined by the expanded mine fleet which moved higher grade ore from the SB Zone. Other costs increased by $1.7 million relating to higher site support costs and higher labour costs.

Operating cash costs per ounce produced was $341 in the fourth quarter of 2012 compared to $580 in the comparative quarter of 2011. The decrease in per ounce costs in the 2012 period is the result of increased capitalized stripping and ice unload and 37% higher production partially offset by increased operating costs discussed above. Operating cash costs per ounce produced is a non-GAAP measure and is discussed under "Non-GAAP Measures".

All-in cash costs per ounce produced were $760 in the fourth quarter of 2012 compared to $769 in the same quarter of 2011. The decrease reflects the higher production in the 2012 quarter, partially offset by higher capitalized stripping and higher spending on capital. All-in cash costs per ounce produced is a non-GAAP measure and is discussed under "Non-GAAP Measures".

Exploration expenditures totaled $2.9 million for the fourth quarter of 2012, which is similar to the comparative quarter of 2011. Exploration activity focused on drilling of the southwest extension of the SB Zone and deeper portions of the SB Zone below the Central Pit. Underground exploration drilling from Declines 1 and 2 ended in November 2012, following the Company's decision to expand the Kumtor Central Pit and cease underground development activities.

During the fourth quarter of 2012, capital expenditures were $83.9 million, which included $10.5 million of sustaining capital spent mainly on the heavy equipment overhaul program ($6.1 million), the effluent treatment plant relocation ($3.4 million) and other projects ($1.0 million). Growth capital investment totalled $76.0 million mainly on capitalized stripping ($36.8 million), purchase of six CAT 789 Haul Trucks ($23.1 million) associated with the new KS-13 life-of-mine plan, purchase of four Hitachi shovels ($12.0 million), expansion of the fuel farm at the new marshaling yard ($0.9 million) and numerous other minor projects ($0.6 million). Capital expenditures in 2011 were $28.5 million, which included $7.8 million spent and accrued on sustaining capital projects and $20.7 million invested in growth capital.

Abnormal mining costs at Kumtor for the fourth quarter of 2012 were $8.9 million representing the ice and waste removal from the high movement unload zone, which is required to resume mining the southeast section of the pit and to access the higher grade ore in 2013.