Centerra Gold Inc. (NYSE:CGAU) Q4 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed picture. Financial metrics are stable, with strong cash flow and liquidity, but there are no significant year-over-year improvements. The company's commitment to share buybacks and dividends is positive, yet there are concerns about lower gold recoveries and limited exploration potential at key sites. The Q&A section reveals cautious optimism but also highlights uncertainties in future growth and production targets. Given the market cap, the overall sentiment suggests a neutral stock price reaction in the short term.
Key Financial Performance
Gold Production (Q4 2024) 73,000 ounces, no year-over-year change mentioned.
Copper Production (Q4 2024) 12.8 million pounds, no year-over-year change mentioned.
Free Cash Flow (Q4 2024) $47 million, driven by robust contributions from Mount Milligan.
Cash Balance (End of 2024) $625 million, increased due to strong free cash flow.
Gold Production (Mount Milligan Q4 2024) 38,000 ounces, down from previous year due to lower grades.
Copper Production (Mount Milligan Q4 2024) 12.8 million pounds, no year-over-year change mentioned.
All-in Sustaining Costs (Mount Milligan Q4 2024) $1,114 per ounce, 15% lower quarter-over-quarter due to decreased sustaining capital expenditures.
Milling Costs (Mount Milligan Full Year 2024) $5.33 per ton processed, 11% lower than 2023.
Gold Production (Öksüt Q4 2024) 35,000 ounces, no year-over-year change mentioned.
All-in Sustaining Costs (Öksüt Q4 2024) $1,327 per ounce, higher due to lower sales and higher royalty costs.
All-in Sustaining Costs (Öksüt Full Year 2024) $1,015 per ounce, near the upper end of guidance range.
Adjusted Net Earnings (Q4 2024) $37 million or $0.17 per share, no year-over-year change mentioned.
Sales (Q4 2024) 84,000 ounces of gold and 16.4 million pounds of copper, no year-over-year change mentioned.
Average Realized Price (Gold Q4 2024) $2,207 per ounce, no year-over-year change mentioned.
Average Realized Price (Copper Q4 2024) $2.88 per pound, no year-over-year change mentioned.
Cash Flow from Operations (Q4 2024) $93 million, driven by strong performance at Mount Milligan.
Free Cash Flow (Mount Milligan Q4 2024) $65 million, no year-over-year change mentioned.
Free Cash Flow (Öksüt Q4 2024) $41 million, no year-over-year change mentioned.
Free Cash Flow (Molybdenum Business Unit Q4 2024) Deficit of $35 million, mainly due to spending on Thompson Creek restart.
Share Buybacks (Q4 2024) 1.8 million shares for total consideration of $12 million, no year-over-year change mentioned.
Dividends (Full Year 2024) $44 million, no year-over-year change mentioned.
Total Liquidity (End of 2024) Over $1 billion, providing strong position for strategic plans.
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Operating Highlights
Goldfield Resource: Published an initial resource at Goldfield of 706,000 ounces of gold, but decided it does not meet requirements for near-term development.
Thompson Creek Restart: Restart of operations at Thompson Creek announced in September 2024, with a focus on refurbishment and ramp-up.
Mount Milligan Pre-feasibility Study: Decided to move straight to completing a pre-feasibility study for Mount Milligan.
Kemess Project: Evaluating technical concepts for potential restart options at Kemess, with an updated resource estimate expected in Q2 2025.
Market Positioning: Focus on Mount Milligan and Kemess as foundations for future growth, with optimism about Kemess as a future source of gold and copper.
Operational Performance: Produced over 73,000 ounces of gold and 12.8 million pounds of copper in Q4 2024.
Cash Flow Generation: Generated strong free cash flow of $47 million in Q4 2024, with a cash balance of $625 million.
Cost Management: All-in sustaining costs on a byproduct basis were $1,296 per ounce in Q4 2024.
Strategic Plan Execution: Made meaningful progress in executing strategic plan to maximize asset value, including the restart of Thompson Creek and focus on Mount Milligan.
Sustainability Initiatives: Continued commitment to responsible mining and environmental efforts, including engagement with the Government of BC for permitting.
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Risk or Challenges
Operational Performance Risks: Lower grades encountered in areas of Phases 6 and 9 at Mount Milligan resulted in production being below guidance, indicating potential operational challenges.
Regulatory Risks: The establishment of a new mining and critical minerals ministry in British Columbia is seen as a positive step, but any changes in regulatory frameworks could pose risks to project timelines and approvals.
Economic Factors: Inflation in Turkey is impacting costs at Öksüt, with all-in sustaining costs expected to rise due to a lower production profile and inflationary pressures.
Supply Chain Challenges: The restart of operations at Thompson Creek involves significant capital investment and detailed engineering work, which could face delays or cost overruns.
Market Risks: The company’s financial performance is sensitive to fluctuations in metal prices, which can impact cash flow and profitability.
Environmental and Compliance Risks: Ongoing engagement with government authorities is necessary to ensure compliance with environmental and regulatory standards, which can be a challenge in the mining sector.
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Guidance & Outlook
Free Cash Flow from Öksüt: Since the restart of operations at Öksüt in June 2023, the mine has generated over $480 million of free cash flow.
Thompson Creek Restart: In September, we announced the restart of operations at Thompson Creek, marking a major step in unlocking value in our U.S. Molybdenum operations.
Mount Milligan Pre-Feasibility Study: Technical studies are progressing better than planned, leading to a decision to complete a pre-feasibility study for Mount Milligan.
Kemess Project Evaluation: We started evaluating technical concepts and engineering trade-off studies for potential restart options at Kemess.
Sustainability Initiatives: We are committed to responsible mining and have made progress in environmental and permitting efforts.
2025 Gold Production Guidance: In 2025, we expect to produce between 270,000 and 310,000 ounces of gold on a consolidated basis.
2025 Copper Production Guidance: Copper production is expected to be between 50 million and 60 million pounds.
2025 All-in Sustaining Costs Guidance: Consolidated all-in sustaining costs are expected to be $1,400 to $1,500 per ounce.
2025 Capital Expenditures Guidance: Sustaining capital expenditures are expected to be $97 million to $119 million and non-sustaining capital expenditures are $140 million to $160 million.
Exploration Expenditures Guidance: We expect to spend $35 million to $45 million on exploration.
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Shareholder Return Plan
Quarterly Dividend: The Board declared a quarterly dividend of Canadian $0.07 per share.
Total Dividends in 2024: In the full year 2024, Centerra returned $44 million to shareholders in dividends.
Share Buybacks in Q4 2024: In the fourth quarter, Centerra repurchased 1.8 million shares for total consideration of $12 million.
Total Shareholder Returns in 2024: In the full year 2024, Centerra returned $88 million to shareholders, including $44 million in share buybacks and $44 million in dividends.
Future Share Buybacks: Centerra expects to remain active on share buybacks depending on market conditions.
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Key Q&A
Q:What is your thinking around growing in gold going forward, particularly regarding Öksüt and M&A?
A:We intend to keep gold as our primary metal. Our focus is on unlocking value within our existing portfolio, particularly through the extension of Milligan and Kemess. We are committed to Turkey and would be interested in assets there if they become available.
Q:Is there a need to rethink the dividend or get more aggressive on the buyback given the rising gold price?
A:We are committed to the buyback and believe our shares are cheap. Our preference is to allocate capital to gold growth while maintaining current levels of dividend and buyback.
Q:What is the target for materially increasing gold recoveries at Mount Milligan?
A:Q4 had lower recoveries due to operational issues, but we expect improvements moving forward. A target of mid-60s for recoveries is reasonable.
Q:Could you comment on the potential impact of tariffs on Milligan costs?
A:We’re not worried about tariffs; 95% of Milligan’s costs are from Canadian suppliers, so we don’t expect significant impacts.
Q:What drove the grade increase at Mount Milligan?
A:The increase is due to the domaining of mineralization and remodeling based on 2023 drilling, which tightened the domain and increased the grade.
Q:What is the strategy for Goldfield now?
A:Goldfield is on the shelf for now as it didn’t meet our thresholds for advancement. We are open to a sale or JV.
Q:Is there potential to extend the reserve life at Öksüt?
A:There’s limited exploration potential at Öksüt; our focus is on Greenfield targets in Turkey.
Q:Is there an opportunity to shock the pad at Öksüt to pull additional ounces out?
A:The sensitivity to cyanide concentration is low, so we don’t see significant gains from that approach.
Q:Is there potential to reclassify some waste material as ore at Öksüt?
A:Not at Öksüt; the mineralogy does not support that.
Q:What is the update on Kemess?
A:We are focusing on near-surface mineralization rather than the block cave concept and will provide a resource update soon.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer regarding the potential for extending the reserve life at Öksüt, stating there is limited exploration potential and focusing on Greenfield targets instead.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
British Columbia
Molybdenum unit
capital cash
capital expenditure
concept
copper production
development
engineering work
exploration
flow contribution
inflation Turkey
infrastructure
option
ounce end
permit
power line
process mineral
procurement lead
production level
progress
project
refurbishment
restart Thompson
share buyback
tailing capacity
ton
truck shovel
upgrade
volume Langeloth
Öksüt
CGAU Transcript
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The earnings call presents mixed signals: a revenue increase and higher production are positive, but net earnings decline and increased AISC raise concerns. The lack of strategic and operational updates adds uncertainty. Forward-looking risks were highlighted, but without clear negative sentiment from analysts. Given the small-cap nature and absence of strong catalysts, the stock is likely to remain stable in the short term.
Centerra Gold Inc. (CGAU) Q2 2025 Earnings Call Transcript
Unknown8-8
The earnings call presents a mixed picture: strong adjusted net earnings and increased share buybacks are positive, but lower expected production and higher royalty costs at Oksut are concerns. The Q&A reveals management's confidence in project financing and improved project economics at Goldfield, but vague responses on Mount Milligan's production and recovery improvements raise uncertainties. Considering the market cap, these factors suggest a neutral stock price movement over the next two weeks.
Centerra Gold Inc. (CGAU) Q1 2025 Earnings Call Transcript
Unknown5-6
The earnings call summary presents a mixed picture. While there are positive developments like the restart of Thompson Creek and share buybacks, challenges such as lower production at Mount Milligan and Öksüt, as well as significant restart costs, pose risks. The Q&A section reveals management's cautious approach and lack of clarity on some projects, which may cause investor uncertainty. The positive shareholder return plan and stable financial health balance out the negatives, leading to a neutral sentiment. Given the company's small market cap, the stock price is likely to remain within a -2% to 2% range.
Centerra Gold Inc. (NYSE:CGAU) Q4 2024 Earnings Call Transcript
Unknown2-22
The earnings call presents a mixed picture. Financial metrics are stable, with strong cash flow and liquidity, but there are no significant year-over-year improvements. The company's commitment to share buybacks and dividends is positive, yet there are concerns about lower gold recoveries and limited exploration potential at key sites. The Q&A section reveals cautious optimism but also highlights uncertainties in future growth and production targets. Given the market cap, the overall sentiment suggests a neutral stock price reaction in the short term.
CGAU Slides
CGAU Report
Frequently Asked Questions
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