Centerra Gold (NYSE:CGAU) reported first-quarter financial results on Thursday. The transcript from the company's first-quarter earnings call has been provided below.

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Summary

Centerra Gold reported strong financial performance in Q1 2026, with consolidated production of 68,000 ounces of gold and 14.2 million pounds of copper, and a cash balance increase to $543 million.

The company is advancing its disciplined, self-funded growth strategy with key projects like the Mount Milligan PFS, Thompson Creek development, and ongoing work on the Life of Mine Optimization study at UXIT.

Centerra Gold remains committed to returning capital to shareholders, repurchasing 1.3 million shares and declaring a quarterly dividend of $0.07 per share.

Management highlighted progress on sustainability initiatives and community engagement, including milestones at Goldfield and social programs at UXIT.

Future outlook includes maintaining strong operational performance, advancing key growth projects, and managing cost pressures like increased diesel prices.

Full Transcript

Lisa Wilkinson (Vice President, Investor Relations and Corporate Communications)

Thank you Operator and good morning everyone. Welcome to Centerra Gold's first quarter 2026 results conference call. Joining me on the call today are Paul Tamori, President and Chief Executive Officer, Brian Snyder, Chief Financial Officer and Mike Silvest, our Interim Chief Operating Officer. Other members of the executive team of the executive team are available for the Q and A session. Our news, published last night outlines our first quarter 2026 results and is complemented by our MD&A and financial statements which are available on Sedar, EDGAR and our website. All figures are in US Dollars unless otherwise noted. Presentation slides accompanying this webcast are available on Sentara's website. Following the prepared remarks, we will open the call for questions. Before we begin, we would like to remind everyone that today's discussion may include forward-looking statements which are subject to risks that could cause our actual results to differ from from those expressed or implied. For more information, please refer to the cautionary statements in our presentation and the risk factors outlined in our annual information form. We will also be referring to certain non-GAAP measures during today's discussion. For a detailed description of these measures, please see our news release and MD&A issued yesterday. I will now turn the call over to Paul Temori.

Paul Tamori (President and Chief Executive Officer)

Thank you Lisa and good morning everyone. We achieved a very strong start to the year with production performing in line with our plan across operations. Consolidated first quarter production of 68,000 ounces of gold and 14.2 million pounds of copper. Mount Milligan, a mine in British Columbia, delivered results consistent with our recently published Pre-Feasibility Study (PFS) and full year guidance, while the extute delivered a strong quarter driven by higher grades supporting robust free cash flow generation across both sites. Our financial position strengthened this quarter with our cash balance increasing to $543 million. This was achieved while we continue to invest in our internal growth pipeline, built working capital at Langloth and returned $33 million to shareholders through share buybacks and dividends in the quarter. We remain focused on leveraging the strength of our balance sheet and our cash flow generation to advance our disciplined self funded growth strategy. In January we announced the results of a PEA for Kemess highlighting the long term potential of the project which remains a cornerstone of our future growth pipeline. We also continue to progress key initiatives across our portfolio including delivering on the Mount Milligan PFS and ongoing development work at Thompson Creek which is expected to achieve first production in mid-2027. Work on the Life-of-Mine Optimization study at Oksut continues to progress. We are evaluating the incremental production potential of residual leaching of the heap and the inclusion of low grade oxide mineralization outside of the current reserve pit into the mine plan. This study is on track to be completed by completion by the end of 2026. Goldfield development activities are advancing well with field campaigns and support of engineering now complete. Detailed engineering, procurement of long lead time items and mobilization activities for 2026. Early works are progressing as planned. First production at Gold Field remains on track for late 2028. Together these growth projects position Sentara to deliver sustainable value for shareholders over the long term. In January we released an updated mineral resource and preliminary economic assessment for Kemess. The study outlined a De-risk Restart Plan which leverages substantial existing infrastructure and focuses on an integrated open pit and underground mining operation. The PEA highlights an initial 15-year mine life with meaningful gold and copper production of 171,000 ounces and 61 million pounds respectively at an all-in sustaining cost on a byproduct basis of $971 per ounce. Chemist is supported by robust economics with an after tax NPV of $2.8 billion and a 29% IRR at prices of 4,500 per ounce of gold and $6 per pound of copper. The capital profile takes a phased approach with approximately 770 million in initial non sustained capital support open pit development followed by 277 million in expansionary non sustaining capital over the two years following open pit startup to support the commencement of underground operations. Most importantly, the pea only evaluates 47% of the overall resource tons, highlighting the potential for additional resources to be incorporated into future technical studies and the project's overall scale and long term production profile. Overall, CHEMEX represents a high quality, compelling and large scale growth opportunity for Sentara. We've advanced technical work on a pre feasibility study which is expected in 2027. Now I'd like to provide an update on our sustainability initiatives. We continue to make progress on our environmental and permitting activities across the portfolio. During the first quarter Goldfield reached an important milestone with the receipt of its water rights transfers, supporting the advancement of the project towards operations. We remain focused on advancing the remaining permits at Goldfield and we continue to engage constructively with regulators and with the community. We remain confident in the overall permitting process for the project. Our commitment to strong social performance also remains a key focus at Goldfield. Our team hosted two Joshua Tree donation events during the quarter, engaging local communities and supporting the responsible relocation of 340trees, including 260 for personal use and 80 replanted around the perimeter of our property. At UXEUT, our social programs continue to support education, youth development and broader community initiatives, including a sport and academic program launched this quarter that is expected to reach approximately 14,000 local students over the year. We continue to advance our commitment to responsible mining practices and transparent reporting. Our team is actively working on the 2025 Sustainability Report which will highlight our progress across key environmental, social and governance initiatives. We look forward to publishing the report in May and sharing the steps we are taking to create long term value for our stakeholders before we move into our operating highlights, I would like to welcome Mike Silvest as our new Interim Chief Operating Officer who joined us at the end of March. We've initiated a search for a permanent CEO and in the interim Mike brings a wealth of operational experience and technical expertise to the role. His leadership will be instrumental in supporting our operations and advancing our key priorities as we remain focused on safe and reliable performance across the business. I look forward to working closely with Mike and benefiting from his expertise and his leadership and with that I'll pass the call over to Ryan to walk through our operating and financial highlights.

Ryan

Thanks Paul. Starting with the operations, Slide 7 shows the operating highlights at Mount Milligan for the first quarter. Mount Milligan produced over 29,500 ounces of gold in the quarter, representing approximately 20% of full year guidance in line with the production profile we previously outlined, copper production was 14.2 million pounds of copper. Gold and copper sales exceeded production, reflecting the impact of weather-related logistics disruptions at the end of December that deferred some sales into 2026. We continue to expect gold production and sales to be higher in the second and third quarters reflecting planned mine sequencing, all-in sustaining costs on a byproduct basis for $1,060 per ounce in the first quarter, benefiting from higher byproduct credits driven by elevated copper and silver prices. Recent increases in diesel prices did not have a material impact on Mount Milligan's cost structure in the first quarter. Moving on to Oxu, first quarter production was over 38,400 ounces of gold higher than planned due to higher grades. Full year 2026 production at Oxu remains in the range of 110,000 to 125,000 ounces, with production the remaining quarters of 2026 expected to be more evenly weighted and lower than the first quarter. Production ASIC on a byproduct basis was $1,653 per ounce in the first quarter, lower compared to last quarter, driven by higher gold ounces produced and sold and lower sustaining capex. This was partially offset by a higher royalty expense due to elevated gold prices at Thompson Creek. Restart activities are advancing with approximately 38% of the infrastructure refurbishment complete. Non sustaining CapEx in the first quarter was 41 million. Since the September 2024 restart decision, capital expenditures have totaled 205 million. The project remains in line with the total Capital estimate of 425 to 450 million and is on track for first production in mid-2027. Operations at Langloth have provisionally resumed in April following the temporary suspension on January 29th. During the restart, we identified items requiring additional testing and validation, which is typical of bringing a processing facility back to stable operations, and commissioning continues to progress. A total of $2 million for repairs was incurred in the first quarter of 2026, including both expensed and capitalized costs, with the remaining costs expected to be incurred over the balance of the year and in line with the total estimated repair costs of 5 to 10 million. A $73 million investment in working capital was made at Landloth in the first quarter, primarily related to building inventory during the temporary suspension of operations. This investment is not expected to unwind in the near term as Sentara plans to hold higher inventory levels through 2026 while operations and shipments normalize and as Landloss ramps up production as part of our commercial optimization strategy. Now shifting to the financials, Slide 10 details our first quarter financial results. Adjusted net earnings in the first quarter were 88 million or $0.44 per share. Key adjustments to net earnings include 25 million of unrealized loss on a financial asset related to the additional agreement with Royal Gold, among other things. In the first quarter, sales were almost 73,000 ounces of gold and 14.9 million pounds of copper. The average realized price was $4,172 per ounce of gold and $4.48 per pound of copper, which incorporates the existing streaming arrangements at Mount Milligan. Approximately 3.7 million pounds of molybdenum was sold in the first quarter at the Langloth facility at an average realized price of $26.11 per pound. Consolidated all in sustaining costs on a byproduct basis in the first quarter were $1,705 per ounce. As mentioned previously, recent increases in diesel prices did not have a material impact on Sentara's costs in the quarter. The diesel price volatility may impact costs in 2026, however, at current price levels, any such impact is not expected to be material. Slide 11 shows our financial highlights for the quarter. In the first quarter we generated strong cash from operations of 120 million and free cash flow of 49 million, driven by strong operational performance at Mount Milligan and Oxu as well as elevated metal varists. In the first quarter, Mount Milligan generated 125 million in cash from operations and 106 million in free cash flow. Oxu generated $134 million in cash from operations and $132 million in free cash flow. US Molly used $75 million of cash in operations and had a free cash flow deficit of $117 million this quarter, mainly related to spending on the Thompson Creek restart and the working capital increase at Langloth. In the second quarter of 2026 we expect to make routine payments to the Turkish government for taxes and royalties approximately 90 to 100 million. Assuming current exchange rates, this will impact the free cash flow at OXXU next quarter. Returning capital to shareholders remains a key pillar in our disciplined approach to capital allocation. In the first quarter we repurchased 1.3 million shares for total consideration of 22.5 million and we continue to believe that repurchasing our shares is an accretive high return use of cash dependent on market conditions, we expect to remain active on the share buybacks. We also declared the quarterly dividend $0.07 per share per share. At the end of the quarter our cash balance is $543 million, bringing total liquidity to $943 million. This strong financial position gives us the flexibility to fully fund our organic growth projects at Mount Milligan, Goldfield, Kemess and Thompson Creek while continuing to return capital to shareholders. I'll pass it back to Paul for some concluding remarks.

Paul Tamori (President and Chief Executive Officer)

Thank you Ryan. We are pleased with our strong start to 2026 reflecting consistent operational performance and continued delivery across the portfolio. Our operations are generating robust free cash flow, strengthening our balance sheet and providing the flexibility to continue investing in our self funded growth pipeline while still returning capital to shareholders. With a solid operating base and clear progress across our key growth initiatives including Mount Milligan, Kemess, Thompson Creek, Goldfield and Oksut. We believe Centerra remains very well positioned to deliver sustainable value for shareholders in 2026 and over the long term. With that operator, we will be happy to take any questions.

OPERATOR

Certainly. We'll now begin the question and answer session. To join the question queue you May press star, then 1. On your telephone keypad you'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please Press Star then two. Our first question is from Don DeMarco with National Bank. Please go ahead.

Don DeMarco

Thank you operator and good morning Paul and team. Congratulations on another successful quarter. And to that point I think I'll start off with the first question on Oksut. Another strong quarter here and maybe if you could provide a little more color on the reasons for the outperformance and whether they were expected or potentially surprised. You know, I heard that the production for the rest of the year is going to be more evenly weighted. Is there also potential for positive surprises in the next three quarters??

Paul Tamori (President and Chief Executive Officer)

Yeah. Thanks, Don. Good morning. In fact, I'll answer the question by taking a longer term perspective on Oxuit and why we're running a Life of Mine optimization project. This mine has reconciled positively almost since first production. And so accumulated inventories in the heaps. tend to be greater than that which would have been indicated by the ingoing resource model. And so when we have these elevated grades, ultimately it moves through inventories and it's whether it's in the heaps. or in solution. But ultimately the root of the outperformance is better than expected or better than modeled grades reporting to the heaps.. And so your second question is, will this continue? There will be times where Oxford continues to exhibit better than planned grades, but for the remainder of this year we are holding to the, to the guidance that we put out in the numbers here. So in other words it'll be. They won't be quite as good as Q1, but I'll just make a plug here for our life of mine optimization project. We are looking at a production life extension here through a combination of mining lower grade oxides that we know are outside of the current reserve pit, supplemented by the drawdown of these accumulated inventories which we know are reasonably significant. And that's what we're pretty excited about, putting out a study with our year end this year on a production life extension. But it ultimately comes down to positive reconciliation, on the material coming out of the pit.

Don DeMarco

Okay, thanks for that and then just shifting over to diesel prices. I heard during the call that the impact is not expected to be material. It was not material in Q1, but even going forward for the rest of the year, it's not expected to be material. But can you quantify this impact maybe by in terms of dollars per ounce or percent opex for say current diesel prices relative to what you budgeted? And beyond opex, do you see any other cost pressures across your supply chain maybe on capex on some of the projects you have underway related to the higher diesel prices? Thank you.

Ryan

Hi Don, thanks for the question. It's Ryan here. Just generally speaking, if we look across Mount Milligan and Oxu, a little under 10% of the cost profile is diesel with more at Milligan, less at Oxy. We are somewhat hedged at Mount Milligan, so we're about 30% hedged on diesel for this year, which helps negate some of these price movements. And oxyt again is a smaller number. And then for the Thompson Creek. projects, it's about 10% of their CapEx profile and we're about 75% hedged for Thompson Creek. through the initial CapEx CapEx period. So we do have a bit of COVID with our hedges. You know, if diesel's around $100 a barrel, we believe we're going to stay within our cost ranges that we have out there for guidance. And within our capex range at Thompson Creek, we have obviously sensitized that. And if diesel does go up $50 a barrel, it's about a $75 an ounce impact on ASIC. But at current diesel prices, we expect our cost ranges and capex ranges to hold.

Don DeMarco

Okay, thanks. And then just finally on Kemess, you know, of course as Paul mentioned, the something like 40 plus percent of the resource was not in the PEA mine plan. And looking ahead to the PFS in 2027, what are your plans to advance the resource and would a portion of that resource that wasn't in the PEA be included in the PFS or would that be something to be targeted later? Maybe after the mine's in production?

Paul Tamori (President and Chief Executive Officer)

It's more of the latter there. So the Pre-Feasibility Study (PFeasibility Study (FS)) is focused on increasing the level of confidence across all areas of engineering plus associated permitting activities. So by and large the Pre-Feasibility Study (PFeasibility Study (FS)) will deliver that 15-year mine plan that is associated with that, roughly half the total resource. What we would then intend to do is as we move to execution of an Feasibility Study (FS) and into construction, should we approve the project, we would continue to drill and look to add further material to the mine plan afterwards. As I said, the PEA generates a 15-year mine life. So we, strictly sPEAking we don't need more resources in the plan. We want to focus on delivering a robust job on the study around that which we indicated in the PEA. The other thing we're doing during this Pre-Feasibility Study (PFeasibility Study (FS)) is we're just increasing the confidence in the drilling so we're converting more inferred to indicated just to bring up the degree of rigor in the resource that we propose to mine here in the PEA.

Don DeMarco

Okay, thank you, that's all for me. Good luck with the rest of the year.

OPERATOR

Once again, if you have a question, please press star, then 1. Any further questions, Please press star, then 1. Our next question is from Lawson Winder with Bank of America securities. Please go ahead.

Lawson Winder

Thank you very much operator and good morning Paul and team. Nice to see you guys continuing on the strong buyback. path. I wanted to just ask about your thinking on the buyback.. I mean in light of the current gold price environment your CapEx needs. I mean I think a lot of projects already and still decent free cash flow yield,. I mean, do you see room to accelerate what you've been doing on the buyback. versus Q1?

Paul Tamori (President and Chief Executive Officer)

Our capital allocation is a discussion we have every quarter. And what has happened here with these elevated commodity prices is that not only are we able to fund our development pipeline. out of cash plus operating cash flow as evidenced by this quarter, we continue to build cash while funding the development pipeline.. So it's always a question on what do we do with that. I suppose excess cash. We are committed to a very robust buyback. here. You saw it in the quarter and it's an ongoing debate. And the other message that we, we'd like to get out there is we believe we're very compelling value right now and buying our shares is a strong signal that we are convinced in that valuation opportunity. So it's an ongoing debate, but I, I'll tell you we remain committed to a very robust buyback. here.

Lawson Winder

Okay, understood. And then just thinking about the Oksut Life of Mine study, could you maybe give us just a bit of a preview in terms of what we're expecting? I mean, I mean, I think right now the expectation is an extra year, maybe a little bit more than a year of mine life. I mean, is there any upside or downside risk? to that expectation that we have at this point?

Paul Tamori (President and Chief Executive Officer)

Well, I'll repeat what I said in Don's question. There is, there's two sources of opportunity. One is just a capitalisation on higher gold price which will mobilize previously sub economic oxide material outside their reserve pit. We wouldn't do it just for that. But the real opportunities on the residual leach, as I mentioned, historic positive reconciliation in some years quite significant, which has left significant inventories in the heap under leached or in some cases certain areas not leached. When you, when you look at the geometry of the heaps, we'd like this to be more than a year. Like this is not going to be an insubstantial extension. But I don't want to get into predicting the exact number of years. But there's a good amount of inventory between the residual material and those lower grade oxides. I mean in fact,, even right now, even before the addition of those, our current models show heap drawdown even into 2030. So even before the, even before releasing the results of this project, we're already seeing leach curves even before that project pushing us into 2030.

Lawson Winder

Okay, no, that's clear. I guess what I'm hearing from you is. Yeah, I mean one year probably wouldn't be that satisfactory internally. And so the hope is that it would be longer. I think that that's fair. But push back if that's incorrect.

Paul Tamori (President and Chief Executive Officer)

That's right, yeah. No, that's correct, Lawson. I mean I don't want to tell you an exact number because I frankly don't know what that number is. We have to do the work right now, but it's. We wouldn't be satisfied with just a year.

Lawson Winder

Yeah, okay. No, that's very clear. Thank you for clearing that up. Thank you.

Paul Tamori (President and Chief Executive Officer)

Yeah, thanks Lawson.

OPERATOR

The next question is from Brian McArthur with Raymond James. Please go ahead.

Brian McArthur

Good morning. Thank you for taking my question. It relates to the free cash flow and the molybdenum operations. Can you just go through. There's discussion here about why capital is different between additions and total capital and it talks about ROU (right-of-use) and ROU (right-of-use). Is that all tax that's happening? I'm just trying to reconcile the free cash flow that's actually coming out of here. And the second part of that question, is there any capital in there for cost to fix laying loss as well? Thank you.

Ryan

Thanks, Brian. I think I understand your question. If you're looking at the conversation around capex in addition to PP and E and the guidance in those areas, there is a difference. It's usually for non cash accounting things. So if you're trying to look at cash flow, looking at the CapEx number and not the additions to PP and E for Thompson Creek is the right Way to go. The Thompson Creek number is just for Thompson Creek. We have not put Langloth's guidance out yet. So in terms of repairs, that's not in the guidance table per se, but we have included in the commentary an estimate of 5 to 10 million for the year for the totality of the repairs at Langloth and we believe that's still accurate. We spent 2 million in the quarter. There's some ongoing fixes that'll need to happen, but that's about the range you're looking at for Langloth.

Brian McArthur

Okay, great, thanks. I think that clears it up. I was just trying to match everything up here and it didn't quite match. So again, simply when you know, if I look at it, there's the free cash flow deficit at Thompson Creek and then the free cash flow for the working capital at langloth. That's the 116.5 you're just getting. And that's the true, what I would call cash impact of all that. And the rest of it's all non cash accounting. And there's no Lang loss in any of that. Is that correct?

Ryan

That's correct. Other than the Lang loss working capital you noted. So that that's the right number.

Brian McArthur

Brian, thank you very much. No problem.

OPERATOR

Once again, if you have a question, Please press star then 1. The next question is from Jeremy Hoy with Canaccord Genuity. Please go ahead.

Jeremy Hoy

Hi, thanks for taking my questions. Two from me on Mount Milligan.. First one, I noticed gold recoveries are trending higher recently and you guys have had some ongoing optimization initiatives. Just wondering if you guys have seen any sort of breakthroughs at the plant which are resulting in these higher recoveries despite being grades being somewhat lower. And the other question is on costs at Milligan. I think production costs are up to 94 million in the quarter, up from the prior run rate and above what I was projecting for the remainder of the year. So just wondering if you could provide any commentary there and if we're expecting to see those normalize for the remainder of the year and sort of more in line with guidance.

Ryan

Thanks. Okay, I'll take the question on recovery and Ryan will take the cost question. With recoveries, I wouldn't necessarily fixate on the first quarter and apply to the rest of the year. Recoveries at Mount Milligan are highly dependent on, yes, the optimization work that we're doing and trying to get better recoveries, but much more so. They are driven. They're driven by many geometallurgical characteristics, but principally the pyrite-to-chalcopyrite ratio in the ore. And so depending on what that ratio is in the mill feed, that will drive higher and or lower recoveries. So I wouldn't necessarily, though we're thrilled with the recoveries in Q1, I wouldn't necessarily say that that will continue for the year. It'll really be a function of where we are in the ore body. Now. What will drive the better quarters in our guidance of Milligan in Q2 and Q3 is great. We knew that Q1 was going to be a low grade quarter, particularly in gold. And in the same way we were confident that Q2 and Q3 will be higher grade. I'll add one other point. One of the reasons that we are much more confident in our guidance and forecast a million, say compared to previous years is we've implemented a grade control program or an RC drilling program where we drill a number of benches ahead. And so we're able to modify the resource model with those RC numbers. So that gives us much better predictability on grade. And then of course associated recoveries depending on metallurgical characteristics they are. So that's the answer on repairing. Ryan, you want to take that cost question? Yeah, sure. On cost, maybe two answers on the gross cost for the quarter. I think one thing to point out is we did sell more than we produce. So some of that is just pulling through costs that were sitting in inventory at the end of the year. I think on a quarter by quarter basis, Mount Milligan costs going forward are expected to be more or less in line with the previous year. So that can give you some guidance there. And then on a unit cost basis, a little bit higher in Q1. But as we get into the higher production quarters in Q2 and Q3, we expect the unit costs on a per ounce basis to pull down a little bit as well. So I don't think there's anything surprising to us or unique in the cost structure for Milligan during the quarter.

Jeremy Hoy

Okay. Appreciate the color. Thank you.

Paul Tamori (President and Chief Executive Officer)

Thanks, Jeremy.

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