Centerra puts production plans on ice
John Feary, 18th May 2012
TORONTO, May 18 – Centerra Gold remains confident it will make up for the loss of gold production caused by excessive ice at its Kumtor mine in the Kyrgyz Republic in the March 2012 quarter.
The company’s Q1 2012 net loss of $C14.7M (Q1 2011: net earnings $136.6M), on revenues of $133.8M ($250.2M), includes $19.2M of abnormal mining costs, $4.6M of mine standby costs related to a 10-day strike at Kumtor and $1M provision for the closure of the Reno exploration office.
Consolidated gold production was 72,555oz (Q1 2011: 180,716oz) at a total cash cost of $985/oz ($370). The reduction reflects the change in the mine plan to weight production towards the fourth quarter as well as accelerated ice movement at Kumtor that made it unsafe to continue the cut-back to access the SB Zone.
Despite the addition of 50Mt of additional ice and waste material to the life-of-mine plan, CEO Steve Lang says Centerra is executing its mitigation plan. He confirmed its 2012-14 production outlook of about 1.87Moz gold at Kumtor over three years. Material deferred from this year will be produced by the end of 2014.
“The decision to offload this high movement area in the upper portion of the southeast section of the pit wall provides an opportunity to examine the potential to expand the limits of the ultimate pit and the life-of-mine plan at Kumtor,” Lang said. “We expect to complete and announce the results of this review before the end of the third quarter this year.”
The upper portion of the southeast section of the pit wall above the SB Zone at Kumtor consists primarily of re-handled waste and ice that fluctuates considerably with seasonal changes.
The higher movement rates have been typically observed in the warmer summer months, but the rate of movement is not consistent and material may accelerate or decelerate daily. In the first quarter of 2012, rapid movement of material and the toppling-type failure of the ice made it unsafe to continue mining the cut-back to gain access to the ore that was scheduled for production from March.
By accelerating mining in the unaffected southwest portion of the Kumtor pit, access to part of the new ore reserves in September is expected to provide higher grade ore for the Kumtor mill and provides an opportunity to expand the limits of the ultimate pit and the life-of-mine plan. The company expects to complete and announce the results of the review before the end of Q3.
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