Centerra Gold Updates Reserves and Resources Gold Reserves Increase by 1.7 Million Ounces to 8.2 Million Contained Ounces
Gold Reserves Increase by 1.7 Million Ounces to 8.2 Million Contained Ounces
TORONTO, ONTARIO -- (Marketwire) -- 02/07/11 -- (This news release contains forward-looking information that is subject to the risk factors and assumptions set out on page 13 and in our Cautionary Note Regarding Forward-looking Information on page 16. All figures are in United States dollars.)
Centerra Gold Inc. (TSX: CG) today issued updated estimates for the Company's reserves and resources based on its successful 2010 exploration program.
Highlights (using $1,000/oz gold)
-- A 1.7 million ounce increase (before accounting for 2010 production) in
Company-wide proven and probable open pit reserves to 8.2 million ounces
of gold
-- A 739,000 ounce increase in measured and indicated mineral resources to
4.9 million ounces of gold (exclusive of mineral reserves, and exclusive
of 3.5 million ounces of gold in the inferred category, which includes
2.0 million ounces of gold in high-grade underground inferred resources
at Kumtor)
-- New life-of-mine plan (LOM) for the open pit at Kumtor extended two
years from 2019 to 2021
-- Open pit production at Kumtor is projected to increase by approximately
500,000 ounces of gold in the 5-year period 2011 to 2015
At the Kumtor mine, in the Kyrgyz Republic, an estimated 1.5 million ounces of contained gold have been added to reserves, representing an increase of 28%, before accounting for 2010 production. After accounting for processing of approximately 723,000 ounces of contained gold in 2010, Kumtor's proven and probable mineral reserves total 6.3 million ounces of contained gold as of December 31, 2010. Based on these estimates, the additional reserves will extend the Kumtor open pit mine-life to 2021. Kumtor's life-of-mine plan is based only on the open pit reserves, and no provision has been made for production from the underground development activities.
In Mongolia, at the Boroo mine, after accounting for processing of approximately 162,000 ounces of contained gold in 2010, proven and probable reserves total 392,000 ounces of contained gold. At the reserve gold price assumption, the Boroo operation could potentially continue to feed the mill for over two years utilizing existing low-grade stockpiles. At the Gatsuurt project, proven and probable reserves increased 209,000 ounces to 1.5 million ounces of contained gold, representing a 16% increase.
A gold price of $1,000 per ounce was used for all of the updated reserve estimates, compared to $825 per ounce as of December 31, 2009. An updated NI 43-101 technical report for Kumtor will be filed within 45 days.
Steve Lang, President and CEO of Centerra Gold said: 'During 2010, our exploration program at Kumtor continued to add ounces as the SB Zone was extended to the Southwest and Northeast. At Gatsuurt successful drilling on the south slope area resulted in an increase in reserves both in oxide and sulphide material.'
'Exploration at Kumtor in 2011 will be focused on extending the underground SB Zone along strike and down dip and to infill drill the inferred resource areas on both the SB and Stockwork Zones. Additional drilling is also planned on down dip extensions of the Saddle Zone in the Central Pit as well as drilling on the Northeast Prospect. An expanded surface regional exploration program will include testing targets on the Kumtor mining concession and also the Karasay and Koendy target areas.'
Year-end Reserves and Resources
Reserves
As of December 31, 2010, Centerra's proven and probable reserves increased 1.7 million contained ounces (before accounting for 2010 production) to 8.2 million ounces of contained gold, compared to 7.3 million ounces as of December 31, 2009. This represents an increase of 24% before accounting for 885,000 contained ounces processed at Kumtor and Boroo during 2010. All 2010 year-end reserves were estimated using a gold price of $1,000 per ounce compared to $825 per ounce at December 31, 2009.
At Kumtor, before accounting for the processing of 723,000 contained ounces during 2010, proven and probable reserves increased by 1.5 million contained ounces of gold. The increase in the Central Pit open pit reserves is due to an expansion of the ultimate pit towards the southwest as a result of additional exploration drilling, and updating and optimizing the open pit to a greater depth by using a higher gold price assumption. The expansion of the open pit converted 265,000 ounces of gold of measured and indicated open pit resources to reserves as well as 773,000 ounces of gold of the high-grade SB Zone underground inferred resources to open pit reserves. The successful exploration drilling on the southwest extension of the SB Zone contributed 370,000 ounces of gold to the reserve increase. The balance of the reserve increase of 124,000 ounces of gold is a result of the lowering of the gold cut-off grade for reserves in the Central Pit from 1.0 g/t to 0.85 g/t, which is primarily a result of the increase in the gold price assumption used for reserve estimation.
The Kumtor life-of-mine plan (KS-11) has been revised and extended a further two years to 2021. Kumtor's life-of-mine plan is based only on open pit reserves and no provision has been made for production from the underground development activities or from the open pit or underground resources. The revised life-of-mine (KS-11) shows an increase of approximately 500,000 ounces of gold production over the next five years.
At Boroo, after accounting for the processing of 162,000 contained ounces during 2010, proven and probable reserves total 392,000 contained ounces of gold. At the reserve gold price assumption, the Boroo operation could potentially continue to feed the mill for over two years utilizing existing low-grade stockpiles.
At Gatsuurt, proven and probable reserves increased by 16% or 209,000 contained ounces to 1.5 million contained ounces of gold due to the successful exploration drilling in the South Slope area which added oxide, transition and sulphide material. The increase in oxide and transition material will extend the oxide mining and processing phase of the Gatsuurt project thus delaying the immediate need for construction of the bio-oxidation facility.
Resources
As of December 31, 2010, Centerra's measured and indicated resources increased by 18% or 739,000 ounces over the December 31, 2009 figures to total 4.9 million ounces of contained gold, compared to 4.1 million contained ounces as of December 31, 2009. The increase from the 2009 year-end measured and indicated resources is largely attributable to a significant increase in resources at Kumtor. The increase in resources at Kumtor is a result of successful exploration drilling in conjunction with an increase in the size of the resource shell. At Kumtor, an optimized larger pit shell (resource shell) that is considered uneconomic is used to constrain the resource estimation. This large increase in resources at Kumtor has been partially offset by the removal of the REN indicated resources from the Company's resource statement following the sale of the REN joint venture in the third quarter of 2010.
The Company's inferred resources decreased by 34,000 contained ounces of gold year-over-year. At Kumtor, the inferred resources in the high-grade underground SB Zone decreased by 384,000 contained ounces to 1.4 million contained ounces of gold with an average grade of 15.3 g/t. This reduction is the result of the expansion of the Central Pit, which captured 773,000 ounces of contained gold that were previously classified as part of the high-grade underground SB Zone inferred resources. These inferred resources are now within the new open pit design and therefore, are included in the Kumtor Central Pit as probable reserves. This reduction in inferred resources has been partially offset by the positive exploration results, which has extended the SB Zone both to the southwest and northeast adding 389,000 contained ounces of gold to the high-grade underground SB Zone inferred resource, which remains open along strike and at depth. Inferred open pit resources increased by 322,000 contained ounces of gold in the Central Pit. In addition, drilling in 2010 at the Northeast Prospect identified new mineralization resulting in the addition of 128,000 contained ounces of gold of inferred resources.
Exploration drilling at Gatsuurt added 314,000 contained ounces of gold in inferred resources.
The increases in inferred resources at Kumtor and Gatsuurt have been partially offset by the removal of the REN inferred resources from the Company's resource statement following the sale of the REN joint venture.
Centerra Gold Inc.
2010 Year-end Reserve and Resource Summary
(as of December 31, 2010)
----------------------------------------------------------------------------
Reserves(1) (Tonnes and ounces in thousands)(11) (12)
--------------------------------------------------------
Proven Probable
----------------------------------------------------------------------------
Grade Contained Grade Contained
Property(3) Tonnes (g/t) Gold (oz) Tonnes (g/t) Gold (oz)
----------------------------------------------------------------------------
Kumtor(1)(6)(13) 2,853 2.0 187 59,514 3.2 6,096
----------------------------------------------------------------------------
Boroo(1)(8) 11,769 0.8 310 891 2.9 82
----------------------------------------------------------------------------
Gatsuurt(1)(9)(15) - - - 16,349 2.8 1,489
----------------------------------------------------------------------------
Total 14,622 1.1 497 76,754 3.1 7,667
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Reserves(1) (Tonnes and ounces in thousands)(11) (12)
--------------------------------------------------------
Total Proven and Probable Reserves
----------------------------------------------------------------------------
Property(3) Tonnes Grade (g/t) Contained Gold (oz) Mining Method(4)
----------------------------------------------------------------------------
Kumtor(1)(6)(13) 62,367 3.1 6,283 OP
----------------------------------------------------------------------------
Boroo(1)(8) 12,660 1.0 392 OP
----------------------------------------------------------------------------
Gatsuurt(1)(9)
(15) 16,349 2.8 1,489 OP
----------------------------------------------------------------------------
Total 91,376 2.8 8,164
----------------------------------------------------------------------------
---------------------------------------------------------------------------
Measured and Indicated Resources(2) (Tonnes and ounces in thousands)(11)(12)
---------------------------------------------------------------
Measured Indicated
---------------------------------------------------------------------------
Grade Contained Grade Contained
Property(3) Tonnes (g/t) Gold (oz) Tonnes (g/t) Gold (oz)
---------------------------------------------------------------------------
Kumtor(5)
(6)(13) 34,979 2.1 2,411 23,579 2.3 1,723
---------------------------------------------------------------------------
Boroo(5)(8) 452 2.2 32 4,464 1.5 210
---------------------------------------------------------------------------
Gatsuurt(9)(15) - - - 5,533 2.4 426
---------------------------------------------------------------------------
Ulaan Bulag(10) - - - 1,690 1.5 80
---------------------------------------------------------------------------
Total 35,431 2.1 2,443 35,266 2.2 2,439
---------------------------------------------------------------------------
----------------------------------------------------------------------------
Measured and Indicated Resources(2) (Tonnes and ounces in thousands)(11)(12)
---------------------------------------------------------------
Total Measured and Indicated Resources
----------------------------------------------------------------------------
Contained Gold Mining
Property(3) Tonnes Grade (g/t) (oz) Method(4)
----------------------------------------------------------------------------
Kumtor(5)(6)(13) 58,558 2.2 4,134 OP
----------------------------------------------------------------------------
Boroo(5)(8) 4,916 1.5 242 OP
----------------------------------------------------------------------------
Gatsuurt(9)(15) 5,533 2.4 426 OP
----------------------------------------------------------------------------
Ulaan Bulag(10) 1,690 1.5 80 OP
----------------------------------------------------------------------------
Total 70,697 2.1 4,882
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Inferred
Resources(2)(14) (Tonnes and ounces in thousands)(11) (12)
----------------------------------------------------------
Inferred
----------------------------------------------------------------------------
Property(3) Tonnes Grade (g/t) Contained Gold (oz) Mining Method(4)
----------------------------------------------------------------------------
Kumtor(5)(6)(13) 8,645 2.3 631 OP
----------------------------------------------------------------------------
Kumtor Stockwork
Underground(7) 1,616 12.1 628 UG
----------------------------------------------------------------------------
Kumtor SB
Underground(7) 2,772 15.3 1,367 UG
----------------------------------------------------------------------------
Kumtor NE
Target(5)(6) 2,319 1.7 128 OP
----------------------------------------------------------------------------
Boroo(5)(8) 7,323 1.0 233 OP
----------------------------------------------------------------------------
Gatsuurt(9)(15) 5,926 2.6 491 OP
----------------------------------------------------------------------------
Ulaan Bulag(10) 287 1.2 11 OP
----------------------------------------------------------------------------
Total 28,888 3.8 3,489
----------------------------------------------------------------------------
(1) The reserves have been estimated based on a gold price of $1,000 per
ounce.
(2) Mineral resources are in addition to reserves. Mineral resources do not
have demonstrated economic viability.
(3) Centerra's equity interests are: Kumtor 100%, Gatsuurt 100%, Boroo 100%
and Ulaan Bulag 100%.
(4) 'OP' means open pit and 'UG' means underground.
(5) Open pit resources occur outside the current ultimate pits which have
been designed using a gold price of $1,000 per ounce.
(6) The open pit reserves and resources at Kumtor are estimated based on a
cutoff grade of 0.85 gram of gold per tonne for the Central Pit and 1.0
grams of gold per tonne for the Southwest, Sarytor and Northeast deposits.
(7) Underground resources occur below the Central pit and are estimated
based on a cutoff grade of 7.0 grams of gold per tonne.
(8) The reserves and resources at Boroo are estimated based 0.5 gram of gold
per tonne cutoff grade.
(9) The reserves and resources at Gatsuurt are estimated using either a 1.2,
1.4 or 1.5 grams of gold per tonne cutoff grade depending on ore type and
process method.
(10) The resources at Ulaan Bulag are estimated based on a cutoff grade of
0.8, 0.9 or 1.0 grams of gold per tonne depending on ore type and process
method
(11) A conversion factor of 31.10348 grams per ounce of gold is used in the
reserve and resource estimates.
(12) Numbers may not add up due to rounding.
(13) Kumtor reserves and resources include Sarytor and Southwest reserves of
14.3 million tonnes grading 2.5 g/t for 1,145,000 contained ounces, Sarytor
and Southwest indicated resources of 4.8 million tonnes grading 2.1 g/t for
325,000 contained ounces and Sarytor and Southwest inferred resources of 3.7
million tonnes grading 2.5 g/t for 303,000 contained ounces.
(14) Inferred mineral resources have a great amount of uncertainty as to
their existence and as to whether they can be mined economically. It cannot
be assumed that all or part of the inferred resources will ever be upgraded
to a higher category.
(15) In July 2009, the Mongolian Parliament enacted legislation that would
prohibit mineral prospecting, exploration and mining in water basins and
forest areas in the territory of Mongolia and provides for the revocation of
mining and exploration licenses affecting such areas. The legislation
exempts any 'mineral deposit of strategic significance'. If the legislation
is not repealed or amended or if Gatsuurt is not designated as a 'mineral
deposit of strategic importance' that is exempt from this legislation,
mineral reserves at Gatsuurt may have to be reclassified as mineral
resources or eliminated entirely. See 'Update on Mongolian Legislation'.
Reconciliation of Gold Reserves and Resources
(in thousands of ounces of contained gold) (8) (9)
----------------------------------------------------------------------------
December 31 Jan-1 to Dec-31 2010 Addition December 31
2009(1)(4) 2010 Throughput (Deletion)(3) 2010
(2)
----------------------------------------------------------------------------
Reserves - Proven
and Probable
----------------------------------------------------------------------------
Kumtor(5) 5,474 723 1,532 6,283
----------------------------------------------------------------------------
Boroo 567 162 (13) 392
----------------------------------------------------------------------------
Gatsuurt(7)(12) 1,280 0 209 1,489
----------------------------------------------------------------------------
Total Proven and
Probable Reserves 7,321 885 1,728 8,164
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Resources -
Measured and
Indicated
----------------------------------------------------------------------------
Kumtor(6) 2,201 0 1,933 4,134
----------------------------------------------------------------------------
Boroo 242 0 0 242
----------------------------------------------------------------------------
Gatsuurt(7)(12) 480 0 (54) 426
----------------------------------------------------------------------------
REN(11) 1,220 0 (1,220) 0
----------------------------------------------------------------------------
Ulaan Bulag 0 0 80 80
----------------------------------------------------------------------------
Total Measured &
Indicated
Resources 4,143 0 739 4,882
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Resources -
Inferred(10)
----------------------------------------------------------------------------
Kumtor(6) 309 0 322 631
----------------------------------------------------------------------------
Kumtor Stockwork
Underground 621 0 7 628
----------------------------------------------------------------------------
Kumtor SB
Underground 1,751 0 (384) 1,367
----------------------------------------------------------------------------
Kumtor NE Area 0 0 128 128
----------------------------------------------------------------------------
Boroo 233 0 0 233
----------------------------------------------------------------------------
Gatsuurt(7)(12) 177 0 314 491
----------------------------------------------------------------------------
REN(11) 432 0 (432) 0
----------------------------------------------------------------------------
Ulaan Bulag 0 0 11 11
----------------------------------------------------------------------------
Total Inferred
Resources 3,523 0 (34) 3,489
----------------------------------------------------------------------------
(1) Reserves and resources as reported in Centerra's Annual Information Form
filed in March 2010.
(2) Corresponds to mill feed at Kumtor and Boroo and material stacked on the
heap leach pad at Boroo.
(3) Changes in reserves or resources, as applicable, are attributed to
information provided by drilling and subsequent reclassification of reserves
or resources, an increase in the gold price, changes in pit designs,
reconciliation between the mill and the resource model, and changes to
operating costs.
(4) Centerra's equity interests as at December 31, 2009, were as follows:
Kumtor 100%, Gatsuurt 100%, Boroo 100%, Ulaan Bulag 100% and REN 64%.
(5) Kumtor reserves include the Central Pit and the Southwest and Sarytor
Deposits.
(6) Kumtor open pit resources include the Central Pit and the Southwest
Deposit and Sarytor Deposit.
(7) Gatsuurt reserves and resources include the Central Zone and Main Zone
deposits.
(8) Centerra reports reserves and resources separately. The amount of
reported resources does not include those amounts identified as reserves.
(9) Numbers may not add up due to rounding.
(10) Inferred mineral resources have a great amount of uncertainty as to
their existence and as to whether they can be mined economically. It cannot
be assumed that all or part of the inferred resources will ever be upgraded
to a higher category.
(11) Centerra sold its interest in the REN joint venture in 2010.
(12) In July 2009, the Mongolian Parliament enacted legislation that would
prohibit mineral prospecting, exploration and mining in water basins and
forest areas in the territory of Mongolia and provides for the revocation of
mining and exploration licenses affecting such areas. The legislation
exempts any 'mineral deposit of strategic significance'. If the legislation
is not repealed or amended or if Gatsuurt is not designated as a 'mineral
deposit of strategic importance' that is exempt from this legislation,
mineral reserves at Gatsuurt may have to be reclassified as mineral
resources or eliminated entirely. See 'Update on Mongolian Legislation'.
Kumtor Life-of-Mine Plan
The Kumtor life-of-mine plan is based only on open pit reserves and has no provision for production from the underground mining activities.
Kumtor Life-of-Mine Plan, Mine and Mill Production Forecast
(thousands of tonnes of ore and waste and ounces of gold)
------------------------------------------------------------------------
2011 2012 2013 2014 2015 2016
------------------------------------------------------------------------
Mining Central Pit
------------------------------------------------------------------------
Ore Tonnes 6,060 7,254 5,105 11,246 1,387 14,195
------------------------------------------------------------------------
Grade Au (g/t) 3.8 4.2 4.9 2.8 1.9 2.9
------------------------------------------------------------------------
Waste Tonnes 165,565 185,508 186,520 180,379 152,714 105,618
------------------------------------------------------------------------
Strip
Ratio 27.3 25.6 36.5 16.0 110.1 7.4
------------------------------------------------------------------------
Mining Sarytor Pit
------------------------------------------------------------------------
Ore Tonnes - - - - 2,424 -
------------------------------------------------------------------------
Grade Au (g/t) - - - - 3.6 -
------------------------------------------------------------------------
Waste Tonnes - - - - 35,100 46,883
------------------------------------------------------------------------
Strip
Ratio - - - - 14.5 No ore
------------------------------------------------------------------------
Mining Southwest
Pit
------------------------------------------------------------------------
Ore Tonnes - - - - - -
------------------------------------------------------------------------
Grade Au (g/t) - - - - - -
------------------------------------------------------------------------
Waste Tonnes - - - - - -
------------------------------------------------------------------------
Strip
Ratio - - - - - -
------------------------------------------------------------------------
Total Mining
------------------------------------------------------------------------
Ore Tonnes 6,060 7,254 5,105 11,246 3,811 14,195
------------------------------------------------------------------------
Grade Au (g/t) 3.9 4.7 5.1 3.1 3.0 3.3
------------------------------------------------------------------------
Waste Tonnes 165,565 185,508 186,520 180,379 187,814 152,501
------------------------------------------------------------------------
Strip
Ratio 27.3 25.6 36.5 16.0 49.3 10.7
------------------------------------------------------------------------
Stockpile Closing
Inventory
------------------------------------------------------------------------
Ore Tonnes 2,853(1) 3,249 4,724 3,939 9,256 7,175 15,463
------------------------------------------------------------------------
Au (g/t) 2.0(1) 2.5 3.1 3.8 2.5 1.6 1.9
------------------------------------------------------------------------
Contained
Gold Oz 187(1) 260 465 484 750 370 946
------------------------------------------------------------------------
Milling
------------------------------------------------------------------------
Ore Tonnes
Processed Tonnes 5,664 5,779 5,891 5,929 5,891 5,907
------------------------------------------------------------------------
Feed Grade Au (g/t) 3.7 4.2 4.1 3.9 3.9 3.9
------------------------------------------------------------------------
Feed
Contained
Gold Au (oz) 671 779 784 752 747 743
------------------------------------------------------------------------
Plant
Recovery % 84.9 82.5 83.1 84.9 80.4 83.9
------------------------------------------------------------------------
Recovered Au (oz)
Gold 570 642 651 638 600 624
------------------------------------------------------------------------
------------------------------------------------------------------------
2017 2018 2019 2020 2021 Total
------------------------------------------------------------------------
Mining Central Pit
------------------------------------------------------------------------
Ore Tonnes - - - - - 45,247
------------------------------------------------------------------------
Grade Au (g/t) - - - - - 3.4(2)
------------------------------------------------------------------------
Waste Tonnes - - - - - 976,304
------------------------------------------------------------------------
Strip
Ratio - - - - - 21.6(2)
------------------------------------------------------------------------
Mining Sarytor Pit
------------------------------------------------------------------------
Ore Tonnes 6,633 - - - - 9,057
------------------------------------------------------------------------
Grade Au (g/t) 2.2 - - - - 2.6(2)
------------------------------------------------------------------------
Waste Tonnes 74,421 - - - - 156,404
------------------------------------------------------------------------
Strip
Ratio 11.2 - - - - 17.3(2)
------------------------------------------------------------------------
Mining Southwest
Pit
------------------------------------------------------------------------
Ore Tonnes - 950 4,260 - - 5,210
------------------------------------------------------------------------
Grade Au (g/t) - 3.0 2.3 - - 2.4(2)
------------------------------------------------------------------------
Waste Tonnes 10,196 46,500 26,296 - - 82,993
------------------------------------------------------------------------
Strip
Ratio No ore 49.0 6.2 - - 15.9(2)
------------------------------------------------------------------------
Total Mining
------------------------------------------------------------------------
Ore Tonnes 6,633 950 4,260 - - 59,514
------------------------------------------------------------------------
Grade Au (g/t) 2.2 3.0 2.3 - - 3.2
------------------------------------------------------------------------
Waste Tonnes 84,617 46,500 26,296 - - 1,215,700
------------------------------------------------------------------------
Strip
Ratio 12.8 49.0 6.2 - - 20.4
------------------------------------------------------------------------
Stockpile Closing
Inventory
------------------------------------------------------------------------
Ore Tonnes 2,853(1) 16,206 11,369 9,739 3,829 0
------------------------------------------------------------------------
Au (g/t) 2.0(1) 1.4 1.1 1.0 0.9 0
------------------------------------------------------------------------
Contained
Gold Oz 187(1) 747 415 327 116 0
------------------------------------------------------------------------
Milling
------------------------------------------------------------------------
Ore Tonnes
Processed Tonnes 5,891 5,786 5,891 5,910 3,829 62,367
------------------------------------------------------------------------
Feed Grade Au (g/t) 3.5 2.3 2.1 1.1 0.9 3.1(2)
------------------------------------------------------------------------
Feed
Contained
Gold Au (oz) 657 425 398 211 116 6,283
------------------------------------------------------------------------
Plant
Recovery % 75.3 74.6 69.6 55.4 50.1 79.4(2)
------------------------------------------------------------------------
Recovered
Gold Au (oz) 495 317 277 117 58 4,990
------------------------------------------------------------------------
(1) Closing Ore Stockpile Inventory at December 31, 2010.
(2) Weighted Average.
Kumtor Operating and Capital Costs, 2011 - 2021
----------------------------------------------------------------------------
2011 2012 2013 2014 2015 2016
----------------------------------------------------------------------------
Production
----------------------------------------------------------------------------
Mining
Operating (tonnes x
Cost (1) 1000) 128,057 88,591 103,521 113,547 98,273 109,567
----------------------------------------------------------------------------
Mining
Capital
Pre-
Stripping (tonnes x
(2) 1000) 43,568 104,171 88,104 78,078 93,352 57,129
----------------------------------------------------------------------------
Mining Total (tonnes x
(3) 1000) 171,625 192,762 191,625 191,625 191,625 166,696
----------------------------------------------------------------------------
Milling (tonnes x
1000) 5,664 5,779 5,891 5,929 5,891 5,907
----------------------------------------------------------------------------
Gold (oz x
Produced 1000) 570 642 651 638 600 624
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Costs
----------------------------------------------------------------------------
Mining
(Charged as
Operating
Cost) (1) ($ x 1000) 134,654 69,599 94,476 101,461 85,363 117,920
----------------------------------------------------------------------------
Milling ($ x 1000) 58,266 58,266 58,266 58,266 62,184 58,724
----------------------------------------------------------------------------
Administrati-
on ($ x 1000) 56,457 56,566 56,566 56,566 56,566 54,271
----------------------------------------------------------------------------
Refining and
Management
Fees ($ x 1000) 2,566 2,892 2,928 2,874 2,703 2,807
----------------------------------------------------------------------------
Open Pit
Operating
Cost Total ($ x 1000) 251,943 187,323 212,236 219,167 206,815 233,722
----------------------------------------------------------------------------
Cash Cost
per Ounce
of Gold (4)
(5) ($/oz) 442 292 326 343 344 375
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Unit Costs
----------------------------------------------------------------------------
Operating
Cost Mining ($/t
(1) mined) 1.05 0.79 0.91 0.89 0.87 1.08
----------------------------------------------------------------------------
Capital Pre-
Stripping ($/t
Waste (2) mined) 1.06 1.28 0.94 0.88 0.87 0.87
----------------------------------------------------------------------------
Milling ($/t
milled) 10.29 10.08 9.89 9.83 10.56 9.94
----------------------------------------------------------------------------
Administrati- ($/t
on milled) 9.97 9.79 9.60 9.54 9.60 9.19
----------------------------------------------------------------------------
Total
Operating
Cost per
tonne ($/t
Milled milled) 44.48 32.41 36.03 36.97 35.11 39.57
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital and
Other
----------------------------------------------------------------------------
New Revenue
Based
Taxes (5) ($ x 1000) 79,810 89,940 91,073 89,384 84,065 87,305
----------------------------------------------------------------------------
Capitalized
Pre-
Stripping
(2) ($ x 1000) 46,182 133,352 82,582 68,346 81,142 49,861
----------------------------------------------------------------------------
Open Pit
Sustaining
Capital ($ x 1000) 35,860 96,960 28,850 19,895 10,550 12,984
----------------------------------------------------------------------------
Open Pit
Expansion
Capital ($ x 1000) 54,658 18,060 49,990 15,100 5,500 3,750
----------------------------------------------------------------------------
Total
Capital and
Other ($ x 1000) 216,510 338,312 252,496 192,725 181,257 153,900
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2017 2018 2019 2020 2021 Total
----------------------------------------------------------------------------
Production
----------------------------------------------------------------------------
Mining
Operating (tonnes x
Cost (1) 1000) 58,977 31,089 30,556 762,178
----------------------------------------------------------------------------
Mining
Capital
Pre-
Stripping (tonnes x
(2) 1000) 32,273 16,361 513,036
----------------------------------------------------------------------------
Mining Total (tonnes x
(3) 1000) 91,250 47,450 30,556 1,275,214
----------------------------------------------------------------------------
Milling (tonnes x
1000) 5,891 5,786 5,891 5,910 3,829 62,367
----------------------------------------------------------------------------
Gold (oz x
Produced 1000) 495 317 277 117 58 4,990
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Costs
----------------------------------------------------------------------------
Mining
(Charged as
Operating
Cost) (1) ($ x 1000) 52,156 30,298 27,708 713,634
----------------------------------------------------------------------------
Milling ($ x 1000) 64,287 59,610 64,524 58,266 35,751 636,410
----------------------------------------------------------------------------
Administrati-
on ($ x 1000) 52,176 50,127 48,127 42,510 20,287 550,219
----------------------------------------------------------------------------
Refining and
Management
Fees ($ x 1000) 2,228 1,428 1,245 526 262 22,458
----------------------------------------------------------------------------
Open Pit
Operating
Cost Total ($ x 1000) 170,847 141,462 141,604 101,302 56,300 1,922,721
----------------------------------------------------------------------------
Cash Cost
per Ounce
of Gold (4)
(5) ($/oz) 345 446 512 867 966 385
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Unit Costs
----------------------------------------------------------------------------
Operating
Cost Mining ($/t
(1) mined) 0.88 0.97 0.91 0.94
----------------------------------------------------------------------------
Capital Pre-
Stripping ($/t
Waste (2) mined) 0.92 0.88 0.99
----------------------------------------------------------------------------
Milling ($/t
milled) 10.91 10.30 10.95 9.86 9.34 10.20
----------------------------------------------------------------------------
Administrati- ($/t
on milled) 8.86 8.66 8.17 7.19 5.30 8.82
----------------------------------------------------------------------------
Total
Operating
Cost per
tonne ($/t
Milled milled) 29.00 24.45 24.04 17.14 14.70 30.83
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital and
Other
----------------------------------------------------------------------------
New Revenue
Based
Taxes (5) ($ x 1000) 69,298 44,404 38,739 16,358 8,160 698,536
----------------------------------------------------------------------------
Capitalized
Pre-
Stripping
(2) ($ x 1000) 29,544 14,439 505,449
----------------------------------------------------------------------------
Open Pit
Sustaining
Capital ($ x 1000) 16,850 7,540 12,540 2,150 244,179
----------------------------------------------------------------------------
Open Pit
Expansion
Capital ($ x 1000) 1,750 12,500 161,308
----------------------------------------------------------------------------
Total
Capital and
Other ($ x 1000) 117,442 78,883 51,279 18,508 8,160 1,609,471
----------------------------------------------------------------------------
(1) Mining tonnage, total cost and unit cost charged as operating costs and
used in cash cost per ounce calculation.
(2) Mining tonnage, total cost and unit costs charged as capital cost pre-
stripping and excluded in cash cost per ounce calculation.
(3) Total Mining tonnage = mining operating cost tonnage (1) plus mining
capitalized pre-stripping (2).
(4) Cash cost per ounce is a non GAAP measure and does not include revenue-
based taxes. For a complete description refer to Company's MDA for the
period September 30, 2010.
(5) As defined by the April 2009 Investment Agreement and calculated using
$1,000 per ounce gold price.
The Kumtor life-of-mine plan (KS-11) has been revised and extended to 2021 as a result of the exploration drilling, higher gold price assumption and lower gold cut-off grade, which allowed for an expanded Central Pit.
Pit Expansion
-- A net increase of approximately 500,000 ounces of gold production,
increasing gold production by 20% for the 2011 to 2015 period, to
average 620,000 ounces per year over the five-year period.
-- Overall peak annual mining rate is reduced 4% compared to the forecast
peak annual mining rate in the 2009 NI 43-101 technical report. Mining
production rates will increase from current rates of 430,000 tonnes of
ore and waste per day to a peak level of 526,000 tonnes of ore and waste
per day, which is maintained for four years.
-- The Central Pit will be increased by 30% (by tonnes) with expansion of
the mining limits in the southwest wall of the SB Zone.
-- With the expanded pit, a larger component of stripping will be
capitalized in accordance with the Company's accounting policies.
-- The revised life-of-mine plan increases both sustaining capital to
replace older, less efficient mining equipment, and expansion capital
for increased mining fleet capacity, resulting in an increase in both
sustaining and expansion capital with a corresponding decrease in
operating costs.
-- The ultimate pit bottom in the SB Zone will now be at the 3,618 metre
elevation compared to the prior mine plan of 3,642 metre elevation. The
ultimate pit bottom of the Stockwork Zone section of the pit will remain
at the 3,722 metre elevation.
-- Pre-stripping of the Sarytor Pit will now begin in 2015 and mining of
the current Sarytor open pit reserves will be completed in 2017.
-- Pre-stripping of the Southwest Pit will begin in 2017 and mining of the
current Southwest open pit reserves will be completed in 2019.
-- New LOM plan is based only on open pit reserves; no provision has been
made for production from the underground development activities or from
the open pit or underground resources.
Impact on Underground
-- Converted 773,000 contained ounces shallow high-grade underground
inferred resources to open pit probable reserves, which brings the gold
production forward to maximize cash flow.
-- Reorienting underground access, Decline 1 for the SB Zone, resulting in
a 9 to 12 month delay to access the SB Zone for delineation drilling
from late 2011 to late 2012
-- Impact on underground will be more fully discussed in the NI 43-101
Technical Report
The southwest extension of the SB Zone, which has been outlined by exploration drilling in 2009 and 2010, now falls within the expanded open pit. Therefore, Decline 1 has been reoriented to provide access to the main section of the high-grade underground portion of the SB Zone. The Company estimates that this redesign of the decline will delay access to the SB Zone by up to 12 months. The new decline design will give better access to explore the untested section of the down dip sector of the Kumtor structure.
To view an updated Kumtor Long Section, showing the changes in the open pit design, please visit the following link: http://media3.marketwire.com/docs/cgkumtor207.pdf.
Exploration Update
To view the graphics, maps/drill sections and complete drill results discussed in this news release, please visit the following link: http://media3.marketwire.com/docs/cgkumtor207.pdf or visit the Company's web site at: www.centerragold.com.
Kyrgyz Republic
During the fourth quarter of 2010, exploration drilling programs continued in the Kumtor Central Pit and from the underground in Declines 1 and 2. Regional exploration drilling continued on the Kumtor concession area at the Northeast area, Muzdusuu, Southwest and Sarytor areas.
Kumtor Pit
In the fourth quarter of 2010, the drilling program focused on testing the extent and grade of mineralization within, below and along strike of the SB Zone in the Central Pit. Ten drill holes were completed during the quarter and a further three holes were in progress at quarter-end.
Drilling in the fourth quarter to test the Southwest Extension of the SB Zone returned significant results. Holes D1460 and D1475, both drilled on section -14, returned significant intercepts within and immediately below the expanded pit design. Hole D1460 intersected 4.1 g/t Au over 55.4 metres, including 8.1 g/t Au over 5.7 metres and 9.1 g/t Au over 8.0 metres at the 3,600 metre elevation. Hole D1475 intersected high-grade mineralization including 12.4 g/t Au over 33.6 metres, including 18.3 g/t Au over 4.4 metres and 22.6 g/t Au over 9.2 metres at the 3,700 metre elevation, 50 metres above the expanded pit design.
Holes D1461 and D1466 were drilled on section -22 and both returned significant intercepts within the expanded pit design. Hole D1461 intersected 11.0 g/t Au over 9.0 metres including 14.7 g/t Au over 6.6 metres, 11.9 g/t Au over 11.2 metres including 24.7 g/t Au over 5.9 metres and 4.8 g/t Au over 8.2 metres at the 3,650 metre elevation. Hole D1466 intersected 2.9 g/t Au over 10.8 metres, 3.3 g/t Au over 23.2 metres and 2.9 g/t Au over 9.7 metres at the 3,600 metre elevation.
Hole D1467, drilled on section -18, intersected moderate to high-grade mineralization including 30.7 g/t Au over 3.8 metres and 5.3 g/t Au over 47.2 metres including 13.6 g/t Au over 9.0 metres and 3.2 g/t Au over 4.7 metres at the 3,650 metre elevation.
The results from these five holes have been used in the expanded pit design and the associated increase in reserves and resources.
During the fourth quarter, drilling to test the northeast strike extension of the SB Zone returned intercepts of moderate to high-grade mineralization. Hole D1469, drilled on section 46, intersected 3.2 g/t Au over 37.6 metres including 7.5 g/t Au over 5.7 metres; and 4.6 g/t Au over 24.5 metres including 14.7 g/t Au over 5.0 metres. Hole D1479, drilled on section 42, intersected 16.3 g/t Au over 3.9 metres and 7.1 g/t Au over 35.7 metres including 27.4 g/t Au over 3.2 metres. Hole D1481, drilled on section 58, intersected 4.4 g/t Au over 38.9 metres including 14.5 g/t Au over 4.1 metres; and 4.3 g/t Au over 17.1 metres including 9.4 g/t Au over 6.0 metres. Hole D1482, drilled on section 50, intersected 3.7 g/t Au over 13.0 metres and 7.9 g/t Au over 4.5 metres. Hole D1487, drilled on section 46, intersected 4.6 g/t Au over 24.8 metres and 3.9 g/t Au over 15.5 metres.
These holes have extended the SB Zone a further 100 metres along strike and down dip at the 3,300 metre elevation. Further drilling to test the strike and down dip extension of the SB Zone to the northeast is planned in the first quarter of 2011.
True widths for the mineralized zones are typically from 70% to 95% of the stated intercept.
Decline Exploration
Three underground exploration holes were completed during the fourth quarter, and one hole is in progress. Drill hole, UD1450, was drilled on section -90 in Decline 1 to test for mineralization on the Kumtor structure below the Davidoff glacier. No significant mineralization was intersected.
Two holes were completed on section 114 in Decline 2 Stockwork Drive to test for extensions of the Stockwork Zone immediately below the design pit. Hole UD1468 intersected 5.1 g/t Au over 6.5 metres and UD1484A intersected 1.9 g/t Au over 11.8 metres, 3.5 g/t Au over 2.7 metres and 3.5 g/t Au over 12.0 metres.
Drilling will continue from both declines in the first quarter of 2011 as drill bays become available.
True widths for the mineralized zones are typically from 40% to 95% of the stated intercept.
Regional Exploration
Regional exploration drilling continued in the fourth quarter of 2010 at Northeast, Muzdusuu, Southwest and Sarytor areas.
Northeast Area
The drill program in the fourth quarter was as a 40 to 80 metre spaced infill program to confirm the extent of the mineralization within the 100-200 metres of surface over the known 800 metre strike extent of mineralization at the Northeast Prospect.
Some of the better intercepts are; hole DN1463 5.2 g/t Au over 5.1 metres, hole DN1464 2.4 g/t Au over 21.4 metres including 1.5 g/t Au over 10.3 metres and 1.4 g/t Au over 7.7 metres, hole DN1472 2.0 g/t Au over 10 metres, hole DN1478 2.8 g/t Au over 7.2 metres and hole DN1483 3.2 g/t Au over 4.7 metres.
True widths for the mineralized zones are typically from 70% to 95% of the stated intercept.
Southwest Area
Two drill holes were completed during the fourth quarter and one hole is in progress at the end of the quarter. The wide spaced drilling was designed to test for zones of high-grade mineralization below the planned open pit. The holes intersected zones of moderate to strong alteration with low to moderate grade mineralization.
Sarytor Area
One hole was completed at Sarytor during the fourth quarter. Hole SR-10-196A was drilled to test for high-grade mineralization on the structure below the planned Sarytor open pit returning an intercept of 1.1 g/t Au over 7.7 metres.
Muzdusuu Area
One hole was completed in the fourth quarter. Hole DM1476 was drilled to test for structurally bounded blocks of carbonate rocks which are considered as prospective settings for mineralization in the footwall of the Kumtor Fault. The hole intercepted the carbonate rocks which returned assays of 6.4 g/t Au over 2.9 metres.
A complete listing of the drill results and supporting maps for the Kumtor pit have been filed on the System for Electronic Document Analysis and Retrieval ('SEDAR') at www.sedar.com and are available at the company's web site at: www.centerragold.com.
MONGOLIA
Gatsuurt
During the fourth quarter of 2010, exploration drilling continued at Gatsuurt with 18 holes completed. Exploration was focused on the Central Zone on the SS-01 and SS-02 targets and on the GT-60 target which is located approximately 150 metres to the northeast of the Central Pit on the Sujigtei fault.
During the fourth quarter eight holes were completed on the SS-01 target to infill gaps in the 30 by 30 metre grid and define the eastern margin of the zone. The drilling indicates that mineralization is decreasing to the east, however, holes GT-505 on section 3 and GT-506 on section 6 intersected significant mineralization to the east of an interpreted fault indicating the SS-01 target is still open to the south and southeast. Hole GT-505 returned best intersections, including 4.2 g/t Au over 19.1 metres, 3.0 g/t Au over 13.6 metres, and 3.3 g/t Au over 7.3 metres including 8.1 g/t Au over 1.5 metres.
True widths for the mineralized zones are typically from 60% to 90% of the stated intercept.
A complete listing of the drill results and supporting maps for the Gatsuurt Project have been filed on the System for Electronic Document Analysis and Retrieval ('SEDAR') at www.sedar.com and are available at the Company's web site at: www.centerragold.com.
Ulaan Bulag Prospect
During the fourth quarter, a further 26 holes were completed to test the western part of the Nuga Zone at the Ulaan Bulag prospect south of the Boroo mine. The results continue to be encouraging and indicate that the western continuation of the Nuga Zone has potential to host additional mineralization that is similar to the eastern zone.
Drilling indicates that the Ulaan Bulag gold mineralization is similar to the Boroo deposit with the mineralization being primarily confined to the gently dipping Ulaan Bulag fault. Gold mineralization has been outlined over a strike length of approximately 600 metres with widths from 100 to 150 metres. The combined thickness of gold mineralization ranges from a few metres up to 50 metres. Results from this work have been used to develop an indicated and inferred resource that has been included in the 2010 year-end reserve and resource update.
RUSSIA
Kara Beldyr JV
During the fourth quarter of 2010, 22 diamond drill holes were completed at the Gord Zone on the Kara Beldyr project. Assay results have been received for 14 holes and the remaining assays are pending. Previous drilling at the Gord Zone has outlined a zone of sulphide hosted gold mineralization over a strike length of 750 metres to a depth of greater than 250 metres with an average width of 25 metres and the mineralization is open to depth. During the quarter drilling on a 50 X 50 metre grid was initiated to evaluate the resource potential of the prospect.
The preliminary results have confirmed the main geological features previously identified including the major fault and the alteration zones in both the foot and hanging walls. Visible gold was recorded in 50% of the drill holes which is more than in the initial drilling. Drilling will continue in the first quarter of 2011.
A complete listing of the drill results and supporting maps for the Kara Beldyr Project have been filed on the System for Electronic Document Analysis and Retrieval ('SEDAR') at www.sedar.com and are available at the Company's web site at: www.centerragold.com.
To view the graphics, maps/drill sections and complete drill results discussed in this news release, please visit the following link: http://media3.marketwire.com/docs/cgkumtor207.pdf or visit the Company's web site at: www.centerragold.com.
Major Assumptions
The following material assumptions have been used in the life-of-mine plans, estimates of operating and capital costs and reserve and resource estimates:
-- a gold price of $1,000 per ounce,
-- exchange rates:
-- $1USD:$1.03 CAD
-- $1USD:48.50 Kyrgyz Som
-- $1USD:1,250 Mongolian Tugrik
-- $1USD:0.74 Euro
-- diesel fuel price assumption:
-- $0.78/litre at Kumtor
-- $0.94/litre at Boroo
The assumed diesel price of $0.78/litre at Kumtor includes a customs export duty imposed by the Russian authorities on the diesel fuel exported to the Kyrgyz Republic. Russia imposed a customs duty of approximately $194 per tonne on gasoline and diesel fuel exports to the Kyrgyz Republic that went into effect on April 1, 2010. The customs export duty for 2011 is assumed to be at approximately $0.18/litre or $212.77 per tonne of diesel fuel; however, there have been public statements made by Kyrgyz authorities that it could be revoked retroactive to January 1, 2011. Should the Russian authorities revoke the customs export duty, Kumtor's cash costs are expected to decrease by approximately $17 million annually.
Diesel fuel is sourced from separate Russian suppliers for Kumtor and Boroo and only loosely correlates with world oil prices. The diesel fuel price assumptions were made when the price of oil was approximately $84 per barrel.
Other important assumptions include the following:
-- any recurrence of political and civil unrest in the Kyrgyz Republic will
not impact operations, including movement of people, supplies and gold
shipments to and from the Kumtor mine,
-- grades and recoveries at Kumtor will remain consistent with the life-of-
mine plan to achieve the forecast gold production,
-- the dewatering program at Kumtor continues to produce the expected
results and the water management system works as planned,
-- the remedial plan to deal with the Kumtor waste and ice movement is
successful ( see 'Kumtor Mine - Remedial Plan to Manage the High
Movement Area' in the Company's December 7, 2009 news release),
-- no unplanned delays in or interruption of scheduled production from our
mines, including due to civil unrest, natural phenomena, labour,
regulatory or political disputes, equipment breakdown or other
developmental and operational risks,
-- certain issues at Boroo raised by the General Department of Specialized
Inspection ('SSIA') concerning state alluvial reserves, the production
and sale of gold from the Boroo heap leach facility and other matters
will be resolved through negotiation without material adverse impact on
the Company, see 'Other Corporate Developments, Mongolia, Mongolian
Regulatory Matters' in the Company's MDA for the period ended September
30, 2010,
-- no further suspension of Boroo's operating licenses, and
-- all necessary permits, licences and approvals are received in a timely
manner.
Update on Mongolian Legislation
In July 2009, the Mongolian Parliament enacted legislation (the 'Water and Forest Law') that would prohibit mineral prospecting, exploration and mining in water basins and forest areas in the territory of Mongolia and provides for the revocation of mining and exploration licenses affecting such areas.
The legislation provides a specific exemption for 'mineral deposits of strategic importance'. Accordingly, Centerra's main Boroo mining licenses are not subject to the law, as they have been designated as 'mineral deposits of strategic importance'. Centerra's Gatsuurt licenses and its other exploration license holdings in Mongolia, however, are currently not exempt. Under the Minerals Law of Mongolia, Parliament on its own initiative or on the recommendation of the Government, may designate a mineral deposit as strategic. Such a designation could result in Mongolia receiving up to a 34% interest in the deposit. In April 2010, the Company received a letter from Mongolia's Ministry of Mineral Resources and Energy ('MMRE') indicating that the Gatsuurt licenses are within the area designated on a preliminary basis where minerals mining is prohibited under the Water and Forest Law.
In November 2010, Mongolia's cabinet announced its intention to initiate the revocation of 1,782 mineral licenses under the Water and Forest Law on a staged basis, beginning with the revocation of 254 alluvial gold mining licenses. The Company has four licenses on the list of alluvial gold mining licenses that may be revoked. None of these licenses are material to the Company. In particular, Centerra's principal Gatsuurt hardrock mining licenses are not on the list of alluvial licenses to be revoked.
The Mongolian Government has announced that it is considering taking the following actions as the next stages of its implementation of the Water and Forest Law:
-- preparing and submitting to the cabinet a proposal to designate as
'strategic' those deposits, development of which would contribute to
regional social and economic development and, at the same time, require
significant amounts of compensation;
-- revoking all licenses for non-gold mining operations which utilize
surface water;
-- revoking all 460 gold exploration licenses and providing compensation ;
-- revoking all 931 non-gold exploration licenses and providing
compensation;
-- revoking and providing compensation to all remaining affected mining
licenses.
Of the Company's 55 mineral licenses, 36 licenses (including the Gatsuurt hard rock licenses) are included