Condensed Consolidated Interim Financial Statements
For the Three months ended March 31, 2024 and 2023
Centerra Gold Inc.
Condensed Consolidated Interim Statements of Financial Position (Unaudited)
March 31, | December 31, | ||||
2024 | 2023 | ||||
(Expressed in thousands of United States dollars) | |||||
Assets | Notes | ||||
Current assets | |||||
Cash and cash equivalents | $ | 647,606 | $ | 612,941 | |
Amounts receivable | 70,925 | 70,763 | |||
Inventories | 250,462 | 257,302 | |||
Other current assets | 4 | 22,369 | 25,021 | ||
991,362 | 966,027 | ||||
Property, plant and equipment | 5 | 1,225,201 | 1,237,506 | ||
Deferred income tax assets | 11 | 56,400 | 57,900 | ||
Other non-current assets | 6 | 54,010 | 19,333 | ||
1,335,611 | 1,314,739 | ||||
Total assets | $ | 2,326,973 | $ | 2,280,766 | |
Liabilities and shareholders' equity | |||||
Current liabilities | |||||
Accounts payable and accrued liabilities | $ | 205,088 | $ | 201,707 | |
Income tax payable | 73,722 | 40,952 | |||
Other current liabilities | 4 | 28,890 | 54,778 | ||
307,700 | 297,437 | ||||
Deferred income tax liabilities | 11 | 5,069 | 16,809 | ||
Provision for reclamation | 8 | 259,334 | 272,566 | ||
Other non-current liabilities | 6 | 36,884 | 19,712 | ||
301,287 | 309,087 | ||||
Shareholders' equity | |||||
Share capital | 12 | 859,387 | 861,536 | ||
Contributed surplus | 31,670 | 33,869 | |||
Accumulated other comprehensive income | 217 | 7,451 | |||
Retained earnings | 826,712 | 771,386 | |||
1,717,986 | 1,674,242 | ||||
Total liabilities and shareholders' equity | $ | 2,326,973 | $ | 2,280,766 |
Commitments and contingencies (note 14)
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
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Centerra Gold Inc.
Condensed Consolidated Interim Statements of Earnings (Loss) and Comprehensive Income (Loss) (Unaudited)
Three months ended March 31, | |||||
(Expressed in thousands of United States dollars) | 2024 | 2023 | |||
(except per share amounts) | Notes | ||||
Revenue | 7 | $ | 305,879 | $ | 226,529 |
Cost of sales | |||||
Production costs | 173,845 | 204,293 | |||
Depreciation, depletion and amortization | 33,334 | 18,508 | |||
Earnings from mine operations | |||||
98,700 | 3,728 | ||||
Exploration and evaluation costs | 14,957 | 17,910 | |||
Corporate administration | 9,978 | 14,792 | |||
Care and maintenance expenses | 5,892 | 7,834 | |||
Reclamation (recovery) expense | 8 | (25,002) | 15,566 | ||
Other operating expenses | 9 | 9,193 | 12,890 | ||
Earnings (loss) from operations | |||||
83,682 | (65,264) | ||||
Other non-operating income | 10 | (15,970) | (3,180) | ||
Finance costs | 3,361 | 3,368 | |||
Earnings (loss) before income tax | 11 | 96,291 | (65,452) | ||
Income tax expense | 29,861 | 7,998 | |||
Net earnings (loss) | 66,430 | (73,450) | |||
Other Comprehensive Loss | |||||
Items that may be subsequently reclassified to earnings: | 15 | ||||
Changes in fair value of hedge derivative instruments | (7,234) | (4,286) | |||
Other comprehensive loss | (7,234) | (4,286) | |||
Total comprehensive income (loss) | $ | 59,196 | $ | (77,736) | |
Earnings (Loss) per share: | 12 | ||||
Basic | $ | 0.31 | $ | (0.34) | |
Diluted | 12 | $ | 0.30 | $ | (0.34) |
Cash dividends declared per common share (C$) | $ | 0.07 | $ | 0.07 |
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
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Centerra Gold Inc.
Condensed Consolidated Interim Statements of Cash Flows (Unaudited)
Three months ended March 31, | |||||
2024 | 2023 | ||||
(Expressed in thousands of United States dollars) | |||||
Operating activities | Notes | ||||
Net earnings (loss) | $ | 66,430 | $ | (73,450) | |
Adjustments: | |||||
Depreciation, depletion and amortization | 34,732 | 20,435 | |||
Reclamation (recovery) expense | 8 | (25,002) | 15,566 | ||
Share-based compensation expense | 1,155 | 3,121 | |||
Finance costs | 3,361 | 3,368 | |||
Income tax expense | 11 | 29,861 | 7,998 | ||
Unrealized fair value loss on financial asset related to the Additional | |||||
Royal Gold Agreement | 15a | 1,500 | - | ||
Unrealized foreign exchange (gain) loss | (9,780) | 748 | |||
Other | 2,634 | (680) | |||
Cash provided by operating activities prior to changes in working capital | 104,891 | (22,894) | |||
Income taxes paid | (394) | (1,130) | |||
Other changes in working capital | 13 | (5,068) | (75,762) | ||
Cash provided by (used in) operating activities | 99,429 | (99,786) | |||
Investing activities | |||||
Property, plant and equipment additions | (18,212) | (6,102) | |||
Increase in restricted cash | - | (3,424) | |||
Proceeds from disposition of property, plant, and equipment | - | 1,472 | |||
Cash settlement related to the Additional Royal Gold Agreement | 15a | (24,500) | - | ||
Cash used in investing activities | (42,712) | (8,054) | |||
Financing activities | |||||
Dividends paid | 12 | (11,104) | (11,150) | ||
Payment of borrowing and financing costs | (539) | (580) | |||
Repayment of lease obligations | (1,859) | (1,542) | |||
Proceeds from common shares issued | 1,406 | 1,264 | |||
Payment for common shares repurchased | 12 | (9,956) | - | ||
Cash used in financing activities | (22,052) | (12,008) | |||
Increase (decrease) in cash and cash equivalents during the period | 34,665 | (119,848) | |||
Cash and cash equivalents at beginning of the period | 612,941 | 531,916 | |||
Cash and cash equivalents at end of the period | $ | 647,606 | $ | 412,068 |
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
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Centerra Gold Inc.
Condensed Consolidated Interim Statements of Shareholders' Equity (Unaudited)
(Expressed in thousands of United States dollars, except share information)
Number of | Accumulated | |||||||||
Share | Contributed | Other | Retained | |||||||
Common | Comprehensive | Total | ||||||||
Shares | Capital | Surplus | Income (Loss) | Earnings | ||||||
Balance at January 1, 2024 | 215,497,133 | $ | 861,536 | $ | 33,869 | $ | 7,451 | $ | 771,386 | $1,674,242 |
Net earnings | - | - | - | - | 66,430 | 66,430 | ||||
Other comprehensive loss | - | - | - | (7,234) | - | (7,234) | ||||
Transactions with shareholders: | ||||||||||
Repurchase of shares - Normal | ||||||||||
Course Issuer Bid ("NCIB") | (1,783,800) | (9,956) | - | - | - | (9,956) | ||||
(note 12) | ||||||||||
Related to the effect of share | - | 3,426 | - | - | - | 3,426 | ||||
repurchase liability (note 12) | ||||||||||
Share-based compensation expense | - | - | 727 | - | - | 727 | ||||
Issued on exercise of stock options | 237,773 | 1,747 | (539) | - | - | 1,208 | ||||
Issued under the employee share | 39,262 | 243 | - | - | - | 243 | ||||
purchase plan | ||||||||||
Issued on redemption of restricted | 371,035 | 2,391 | (2,387) | - | - | 4 | ||||
share units | ||||||||||
Dividends declared and paid | - | - | - | - | (11,104) | (11,104) | ||||
(C$0.07 per share) | ||||||||||
Balance at March 31, 2024 | 214,361,403 | $ | 859,387 | $ | 31,670 | $ | 217 | $ | 826,712 | $1,717,986 |
Balance at January 1, 2023 | 218,428,681 | $ | 886,479 | $ | 29,564 | $ | (3,323) | $ | 897,571 | $1,810,291 |
Net loss | - | - | - | - | (73,450) | (73,450) | ||||
Other comprehensive loss | - | - | - | (4,286) | - | (4,286) | ||||
Transactions with shareholders: | ||||||||||
Share-based compensation expense | - | - | 1,174 | - | - | 1,174 | ||||
Issued on exercise of stock options | 239,429 | 1,570 | (473) | - | - | 1,097 | ||||
Issued under the employee share | ||||||||||
purchase plan | 37,512 | 203 | - | - | - | 203 | ||||
Issued on redemption of restricted | ||||||||||
share units | 31,391 | 253 | (182) | - | - | 71 | ||||
Dividends declared and paid | ||||||||||
(C$0.07 per share) | - | - | - | - | (11,150) | (11,150) | ||||
Balance at March 31, 2023 | 218,737,013 | $ | 888,505 | $ | 30,083 | $ | (7,609) | $ | 812,971 | $1,723,950 |
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
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Centerra Gold Inc.
Notes to the Condensed Consolidated Interim Financial Statements (Unaudited)
March 31, 2024
(Expressed in thousands of United States dollars, except share and per share amounts, unless otherwise indicated)
1. Nature of operations
Centerra Gold Inc. ("Centerra" or the "Company") was incorporated under the Canada Business Corporations Act on November 7, 2002. Centerra's common shares are listed on the Toronto Stock Exchange under the symbol "CG" and on the New York Stock Exchange under the symbol "CGAU". The Company is domiciled in Canada and its registered office is located at 1 University Avenue, Suite 1800, Toronto, Ontario, M5J 2P1. The Company is primarily focused on operating, developing, exploring and acquiring gold and copper properties in North America, Türkiye, and other markets worldwide.
2. Basis of presentation
These unaudited condensed consolidated interim financial statements ("interim financial statements") of the Company and its subsidiaries have been prepared in accordance with International Financial Reporting Standards ("IFRS"), International Accounting Standard 34, Interim Financial Reporting ("IAS 34"), as issued by the International Accounting Standards Board ("IASB"). These interim financial statements do not contain all of the annual disclosures required by IFRS, and should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2023.
These financial statements were authorized for issuance by the Board of Directors of the Company on May 13, 2024.
3. Summary of material accounting policies, critical accounting estimates and judgements
These interim financial statements have been prepared using material accounting policies and critical accounting estimates and judgments consistent with those used in the Company's audited consolidated financial statements as at and for the year ended December 31, 2023, except for the ones as listed below:
Critical accounting estimates and judgements
i. Additional Royal Gold Agreement
On February 13, 2024, the Company and its subsidiary Thompson Creek Metals Company Inc. ("TCM") entered into the Additional Royal Gold Agreement relating to the Mount Milligan Mine (refer to note 15a). Significant judgement was required to determine accounting for the contract, including the conclusion that it is a modification of a contract with a customer, under IFRS 15, Revenue recognition from contracts with customers, whereby the Company received the consideration in the form of a financial asset. Significant judgement was also required to determine whether all the cash flows in the Additional Royal Gold Agreement should be accounted for a single financial asset under IFRS 9, Financial Instruments. In addition, significant judgement was required to determine the basis for the initial valuation of the financial asset, including, among other things, Mount Milligan Mine's life of mine viewed from the perspective of the specific market participant deemed most relevant for this transaction.
Measurement of the financial asset includes various material assumptions that are subject to significant estimation. Actual results may differ from those amounts estimated. A change in any, or a combination of, the key assumptions used to determine the measurement of the financial asset, could have a material impact on the fair value of the financial asset. Refer to note 15a for key assumptions and estimation used in determining the fair value of the financial asset.
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Centerra Gold Inc.
Notes to the Condensed Consolidated Interim Financial Statements (Unaudited)
March 31, 2024
(Expressed in thousands of United States dollars, except share and per share amounts, unless otherwise indicated)
New standards and amendments issued but not yet effective or adopted are described below:
IAS 1, Presentation of Financial Statements
In January 2020, the IASB issued an amendment to IAS 1, Presentation of Financial Statements, to clarify one of the requirements under the standard for classifying a liability as non-current in nature. The amendment includes:
- Specifying that an entity's right to defer settlement must exist at the end of the reporting period;
- Clarifying that classification is unaffected by management's intentions or expectations about whether the entity will exercise its right to defer settlement;
- Clarifying how lending conditions affect classification; and
- Clarifying if the settlement of a liability refers to the transfer of cash, equity instruments, other assets, or services.
The Company performed it's assessment on the amendment on its financial statements prior to the effective date of January 1, 2024. There is no material impact on the financial statements from the implementation of this amendment.
IFRS 18, Presentation and Disclosure in Financial Statements
In April 2024, the IASB has issued IFRS 18, the new standard on presentation and disclosure in financial statements, with a focus on updates to the statement of profit or loss. The key new concepts introduced in IFRS 18 relate to:
- the structure of the statement of profit or loss;
- required disclosures in the financial statements for certain profit or loss performance measures that are reported outside an entity's financial statements (that is, management-defined performance measures);
- enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes in general.
IFRS 18 will replace IAS 1 while many of the other existing principles in IAS 1 are retained, with limited changes. IFRS 18 will not impact the recognition or measurement of items in the financial statements, but it might change what an entity reports as its 'operating profit or loss'.
IFRS 18 will apply for reporting periods beginning on or after January 1, 2027 and also applies to comparative information. The Company will perform an assessment of the impact of this new standard on its financial statements prior to the effective date of January 1, 2027.
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Centerra Gold Inc.
Notes to the Condensed Consolidated Interim Financial Statements (Unaudited)
March 31, 2024
(Expressed in thousands of United States dollars, except share and per share amounts, unless otherwise indicated)
4. Other current assets and liabilities
March 31, | December 31, | |||
2024 | 2023 | |||
Other current assets | ||||
Current portion of derivative assets(1) (note 15b) | $ | 5,018 | $ | 10,304 |
Prepaid insurance expenses | 4,621 | 5,999 | ||
Deposits for consumable supplies | 6,237 | 3,629 | ||
Marketable securities | 3,210 | 2,834 | ||
Prepaid assets | 2,562 | 560 | ||
Asset held-for-sale | - | 1,510 | ||
Other | 721 | 185 | ||
Total other current assets | $ | 22,369 | $ | 25,021 |
Other current liabilities | ||||
Current portion of lease obligations | $ | 6,022 | $ | 6,106 |
Current portion of derivative liabilities(1) (note 15b) | 3,810 | 2,965 | ||
Current portion of provision for reclamation (note 8) | 14,400 | 28,087 | ||
Share repurchase liability (note 12) | 4,658 | 8,084 | ||
Deferred revenue (2) | - | 9,536 | ||
Total other current liabilities | $ | 28,890 | $ | 54,778 |
- Relates to the gold, diesel, foreign exchange, and copper hedging contracts.
- Relates to an advanced payment received on the gold and copper concentrate for which control was transferred in January 2024.
5. Property, plant and equipment
The following is a summary of the carrying value of property, plant and equipment ("PP&E"):
Buildings, | Mineral | Capitalized | Construction | |||||||
Plant and | Stripping | in | Total | |||||||
Equipment | Properties(1) | Costs | Progress | |||||||
Net book value | ||||||||||
Balance January 1, 2023 | $ | 732,848 | $ | 494,571 | $ | 14,438 | $ | 30,935 | $ | 1,272,792 |
Balance January 1, 2024 | $ | 692,592 | $ | 456,068 | $ | 35,093 | $ | 53,753 | $ | 1,237,506 |
Balance March 31, 2024 | $ | 678,123 | $ | 449,742 | $ | 43,173 | $ | 54,163 | $ | 1,225,201 |
- Includes exploration and evaluation assets of $273.5 million related to the Goldfield Project and the Kemess Project.
During the three months ended March 31, 2024, $15.3 million of additions were capitalized to PP&E. No PP&E was disposed of during the period.
During the year ended December 31, 2023, $121.7 million of additions were capitalized to PP&E, including lease arrangements with right-of-use asset additions of $16.5 million. During the year ended December 31, 2023, PP&E with a carrying value of $6.3 million was disposed of.
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Centerra Gold Inc.
Notes to the Condensed Consolidated Interim Financial Statements (Unaudited)
March 31, 2024
(Expressed in thousands of United States dollars, except share and per share amounts, unless otherwise indicated)
6. Other non-current assets and liabilities
March 31, | December 31, | |||
2024 | 2023 | |||
Other non-current assets | ||||
VAT receivable(1) | $ | 6,479 | $ | 8,688 |
Non-current derivative assets(2) | 1,392 | 5,332 | ||
Non-current supplies inventory | 1,732 | 1,732 | ||
Non-current financial asset(3) | 42,200 | - | ||
Other | 2,207 | 3,581 | ||
Total other non-current assets | $ | 54,010 | $ | 19,333 |
Other non-current liabilities | ||||
Non-current portion of lease obligations | $ | 16,113 | $ | 18,102 |
Non-current deferred revenue(3) | 19,200 | - | ||
Post-retirement benefits | 1,332 | 1,244 | ||
Non-current derivative liabilities(2) | 239 | 366 | ||
Total other non-current liabilities | $ | 36,884 | $ | 19,712 |
- Relates to the Öksüt Mine.
- Relates to the diesel, foreign exchange and copper hedging contracts (note 15b).
- Relates to the Additional Royal Gold Agreement (note 15a).
7. Revenue
Total revenue consists of the following:
Three months ended March 31,
2024 | 2023 | |||
Gold revenue | $ | 190,940 | $ | 53,976 |
Copper revenue | 48,777 | 49,435 | ||
Molybdenum revenue | 60,235 | 113,504 | ||
Other by-product revenue(1) | 4,807 | 4,328 | ||
Revenue from contracts with customers | $ | 304,759 | $ | 221,243 |
Provisional pricing adjustment on concentrate sales(2) | 4,775 | 7,598 | ||
Metal content adjustments on concentrate sales | (3,655) | (2,312) | ||
Total revenue | $ | 305,879 | $ | 226,529 |
- Includes silver, rhenium, toll and sulfuric acid sales.
-
Includes mark-to-market adjustment related to 12.5 million pounds of copper, 37,631 ounces of gold, and 214,819 pounds of
molybdenum (March 31, 2023 - 17.7 million pounds of copper, 24,952 ounces of gold, and 104,076 pounds of molybdenum) in the gold and copper concentrate and molybdenum product shipments subject to final pricing as at the period-end.
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Centerra Gold Inc.
Notes to the Condensed Consolidated Interim Financial Statements (Unaudited)
March 31, 2024
(Expressed in thousands of United States dollars, except share and per share amounts, unless otherwise indicated)
8. Reclamation
- Reclamation provision
The following table reconciles the beginning and ending carrying amounts of the Company's provision for reclamation.
March 31, 2024 December 31, 2023
Non-operating sites (1) | ||||
Balance, beginning of year | $ | 218,330 | $ | 175,121 |
Changes in cost estimates | (9,117) | 32,956 | ||
Changes in discount rate | (16,415) | 1,407 | ||
Accretion | 1,857 | 6,554 | ||
Liabilities settled | - | (222) | ||
Foreign exchange revaluation | (1,887) | 2,514 | ||
Balance, end of period | $ | 192,768 | $ | 218,330 |
Operating sites (1) | ||||
Balance, beginning of year | $ | 82,323 | $ | 63,688 |
Changes in cost estimates | 1,120 | 14,664 | ||
Changes in discount rate | (2,323) | 756 | ||
Accretion | 714 | 2,413 | ||
Foreign exchange revaluation | (868) | 802 | ||
Balance, end of period | $ | 80,966 | $ | 82,323 |
Current portion of reclamation provision (2) | 14,400 | 28,087 | ||
Non-current portion of reclamation provision | 259,334 | 272,566 | ||
Total provision for reclamation | $ | 273,734 | $ | 300,653 |
- Non-operatingsites include the Endako Mine, Thompson Creek Mine, Kemess project and Goldfield project. Operating sites include the Mount Milligan Mine and Öksüt Mine.
- Relates primarily to the Endako Mine.
For the three months ended March 31, 2024, the nominal risk-free interest rates used in discounting the reclamation provision were in the range of 3.42% to 4.20% (2023 - 3.09% to 3.88%) at operating sites and in the range of 3.34% to 4.34% (2023 - 3.02% to 4.03%) at non-operating sites.
b. Reclamation (recovery) expense
Reclamation recovery recognized in the condensed consolidated interim statements of earnings (loss) and comprehensive income (loss) for the three months ended March 31, 2024 was $25.0 million (expense of $15.6 million for the period ended March 31, 2023). The (recovery) expense was primarily attributable to the following:
March 31, 2024 | March 31, 2023 | |||
Changes in cost estimates | $ | (9,619) | $ | 1,100 |
Changes in discount rate | (16,391) | 14,454 | ||
Other | 1,008 | 12 | ||
Total reclamation (recovery) expense | $ | (25,002) | $ | 15,566 |
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Centerra Gold Inc. published this content on 14 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 May 2024 10:13:03 UTC.