Centerra Gold Q1 2026 Earnings Call - Self-Funded Growth Pipeline and Record Cash Flow

Operator: Thank you for standing by. This is the conference operator. Welcome to the Centerra Gold First Quarter 2026 conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there’ll be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. You’ll hear a tone acknowledging your request. Should you need assistance during the conference call, you may signal an operator by pressing star then 0. I would now like to turn the conference over to Lisa Wilkinson, Vice President, Investor Relations and Corporate Communications with Centerra Gold. Please go ahead.

Lisa Wilkinson, Vice President, Investor Relations and Corporate Communications, Centerra Gold: 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 Tomory, President and Chief Executive Officer, Ryan Snyder, Chief Financial Officer, and Mike Sylvestre, our Interim Chief Operating Officer. Other members of the executive team are available for the Q&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 U.S. dollars unless otherwise noted. Presentation slides accompanying this webcast are available on Centerra’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 those expressed or implied. For more information, please refer to the cautionary statements in our presentations 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 Tomory.

Paul Tomory, President and Chief Executive Officer, Centerra Gold: 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 tons of copper. Mount Milligan delivered results consistent with our recently published PFS and full-year guidance, while Öksüt 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 continued to invest in our internal growth pipeline, built working capital at Langeloth, 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 continued 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 Öksüt 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 remains on track for completion by the end of 2026. Goldfield development activities are advancing well with field campaigns and supportive 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 Goldfield remains on track for late 2028. Together, these growth projects position Centerra 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-risked 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.

Kemess 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-sustaining capital to support open pit development, followed by $277 million in expansionary non-sustaining capital over the two years following open pit start-up 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, Kemess represents a high-quality, compelling, and large-scale growth opportunity for Centerra. 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. 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 2 Joshua Tree donation events during the quarter, engaging local communities and supporting the responsible relocation of 340 trees, including 260 for personal use and 80 replanted around the perimeter of our property.

At Öksüt, 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 Sylvestre as our new interim Chief Operating Officer, who joined us at the end of March.

We’ve initiated a search for a permanent COO, and in the interim, Mike Sylvestre 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 Sylvestre and benefiting from his expertise and his leadership. With that, I’ll pass the call over to Ryan Snyder to walk through our operating and financial highlights.

Ryan Snyder, Chief Financial Officer, Centerra Gold: 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. 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 were $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 Öksüt, first quarter production was over 38,400 ounces of gold, higher than planned due to higher grades. Full year 2026 production at Öksüt remains in the range of 110,000 to 125,000 ounces, with production in the remaining quarters of 2026 expected to be more evenly weighted and lower than the first quarter production. AISC 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 million-$450 million and is on track for first production in mid-2027. Operations at Langeloth 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 million-$10 million. A $73 million investment in working capital was made at Langeloth 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 Centerra plans to hold higher inventory levels through 2026 while operations and shipments normalize and as Langeloth ramps up production as part of our commercial optimization strategy. 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 Langeloth 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 Centerra’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 Öksüt, as well as elevated metal prices. In the first quarter, Mount Milligan generated $125 million in cash from operations and $106 million in free cash flow. Öksüt generated $134 million in cash from operations and $132 million in free cash flow.

U.S. Mali 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 Liming. In the second quarter of 2026, we expect to make routine payments to the Turkish government for taxes and royalties of approximately $90 million-$100 million, assuming current exchange rates. This will impact the free cash flow at Öksüt 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 a total consideration of $22.5 million, 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 a quarterly dividend $0.07 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 Tomory, President and Chief Executive Officer, Centerra Gold: 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 Öksüt, we believe Centerra remains very well positioned to deliver sustainable value for shareholders in 2026 and over the long term. With that operator, we’ll 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 one 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, Analyst, National Bank: Thank you, operator. Good morning, Paul and team. Congratulations on another successful quarter. To that point, I think I’ll start off with the first question on Öksüt. Another strong quarter here. 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 gonna be more evenly weighted. Is there also potential for positive surprises in the next three quarters?

Paul Tomory, President and Chief Executive Officer, Centerra Gold: Thanks, Don, and morning. In fact, I will answer the question by taking a longer-term perspective on Öksüt and why we are running a life of mine optimization project. This mine has reconciled positively almost since first production. Accumulated inventories in the heaps tend to be greater than that which would have been indicated by the ongoing resource model. When we have these elevated grades, ultimately it moves through inventories and it’s whether it’s in the heaps or in solution. Ultimately, the root of the outperformance is better than expected or better than modeled grades reporting to the heaps. Your second question is, will this continue?

There will be times where Öksüt continues to exhibit better than planned grades, but for the remainder of this year, we are holding to the guidance that we put out in the numbers here. In other words, it’ll be, they won’t be quite as good as Q1. 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. That’s what we’re pretty excited about, putting out a study with our year-end this year on a production life extension.

It ultimately comes down to positive reconciliation on the material coming out of the pit.

Don DeMarco, Analyst, National Bank: Okay. Thanks for that. Just shifting over to diesel prices. I heard during the call that the impact is not expected to be material. It’s not material in Q1, but even going forward for the rest of the year, it’s not expected to be material. Can you quantify this impact, you know, 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 the CapEx and some of the projects you have underway related to the higher diesel prices? Thanks.

Ryan Snyder, Chief Financial Officer, Centerra Gold: Hi, Don. Thanks for the question. It’s Ryan here. Just generally speaking, if we look across Mount Milligan and Öksüt, a little under 10% of the cost profile is diesel, with more at Milligan, less at Öksüt.

We are somewhat hedged at Mount Milligan. We’re about 30% hedged on diesel for this year, which helps negate some of these price movements. Öksüt again is a smaller number. 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 period. We do have a bit of cover with our hedges. You know, if diesel is around $100 a barrel, we believe we’re gonna 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 AISC.

Paul Tomory, President and Chief Executive Officer, Centerra Gold: At current diesel prices, we expect our cost ranges and CapEx ranges to hold.

Don DeMarco, Analyst, National Bank: Okay, thanks. Then just finally on Kemess. you know, of course, as Paul mentioned, the something like 40-plus% of the resource was not in the PEA mine plan. 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 Tomory, President and Chief Executive Officer, Centerra Gold: It’s more of the latter there. The PFS is focused on increasing the level of confidence across all areas of engineering plus associated permitting activities. By and large, the PFS will deliver that 15-year mine plan that is associated with that roughly half the total resource. What we would intend to do is, as we move to execution of an FS and into construction, should we approve the project, we will 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.

Don DeMarco, Analyst, National Bank: Yeah.

Paul Tomory, President and Chief Executive Officer, Centerra Gold: Strictly speaking, we don’t need more resources in the plan. We wanna focus on delivering a robust job on the study around that which we indicate in the PEA. The other thing we’re doing during this PFS 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, Analyst, National Bank: Okay. Thank you. That’s all for me. Good luck with the rest of the year.

Paul Tomory, President and Chief Executive Officer, Centerra Gold: Thanks, Don.

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, Analyst, Bank of America Securities: Thank you very much, operator. 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 Tomory, President and Chief Executive Officer, Centerra Gold: Our capital allocation is a discussion we have every quarter. 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. 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. The other message that 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.

It’s an ongoing debate, but I’ll tell you, we remain committed to a very robust buyback here.

Lawson Winder, Analyst, Bank of America Securities: Okay. Understood. Then just thinking about the Öksüt 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 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 Tomory, President and Chief Executive Officer, Centerra Gold: Well, I’ll repeat what I said in Don’s question there, is there’s 2 sources of opportunity. One is just a capitalization on higher gold price, which will mobilize hitherto sub-economic oxide material outside their reserve pit. We wouldn’t do it just for that, the real opportunity is 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 look at the geometry of the heaps. We’d like this to be more than a year. This is not gonna be an insubstantial extension, I don’t wanna get into predicting the exact number of years. 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. Even before releasing the results of this project, we’re already seeing leach curves even before that project pushing us into 2030.

Lawson Winder, Analyst, Bank of America Securities: 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, the hope is that it would be longer. I think that’s fair, Pushback if that’s incorrect.

Paul Tomory, President and Chief Executive Officer, Centerra Gold: That’s right. Yeah, no, that’s correct, Lawson. I mean, I don’t wanna tell you an exact number because I frankly don’t know what that number is. We have to do the work right now. We wouldn’t be satisfied with just a year.

Lawson Winder, Analyst, Bank of America Securities: Yeah, okay. No, that’s very clear. Thank you for clearing that up. Thank you.

Paul Tomory, President and Chief Executive Officer, Centerra Gold: Yeah, thanks, Lawson.

Operator: The next question is from Brian MacArthur with Raymond James. Please go ahead.

Brian MacArthur, Analyst, Raymond James: Good morning, and thank you for taking my question. It relates to the free cash flow in the Mali operations. Can you just go through? There’s discussion here about why capital’s different between additions and total capital, and it talks about AROs and ROUs. Is that all tax that’s happening? I’m just trying to reconcile the free cash flow that’s actually coming out of here. The second part of that question, is there any capital in there for cost to fix Langeloth as well? Thank you.

Ryan Snyder, Chief Financial Officer, Centerra Gold: Thanks, Brian. I think I understand your question. If you’re looking at the conversation around CapEx in additions to PP&E and the guidance in those areas, there is a difference. It’s usually for non-cash accounting things. If you’re trying to look at cash flow, looking at the CapEx number and not the additions to PP&E for Thompson Creek, is the right way to go. The Thompson Creek number is just for Thompson Creek. We have not put Langeloth 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 million-$10 million for the year for the totality of the repairs at Langeloth, 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 Langeloth.

Brian MacArthur, Analyst, Raymond James: Okay, great. Thanks. I think that clears it up. I was just trying to match everything up here, and it didn’t quite match. 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 Langeloth. 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 Langeloth in any of that. Is that correct?

Ryan Snyder, Chief Financial Officer, Centerra Gold: That’s correct. Other than the Langeloth working capital you noted. That’s the right number, Brian.

Brian MacArthur, Analyst, Raymond James: Thank you very much.

Ryan Snyder, Chief Financial Officer, Centerra Gold: 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, Analyst, Canaccord Genuity: Hi, thanks for taking my questions. 2 for 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 the grades being somewhat lower. 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. 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. Thanks.

Paul Tomory, President and Chief Executive Officer, Centerra Gold: 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 by many geometallurgical characteristics, but principally the pyrite to chalcopyrite ratio in the ore. Depending on what that ratio is in the mill feed, that will drive higher and or lower recoveries. 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.

What will drive the better quarters in our guidance at Milligan in Q2 and Q3 is great. We knew that Q1 was going to be a low-grade quarter, particularly on gold, and in the same way, we were confident that Q2 and Q3 will be higher grade. I’ll add 1 other point. 1 of the reasons that we are much more confident in our guidance and forecast at Milligan, 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. We’re able to modify the resource model with those RC numbers. That gives us much better predictability on grade and then, of course, associated recoveries depending on metallurgical characteristics of the ore. That, that’s the answer on recovery. Ryan, you want to take the cost question?

Ryan Snyder, Chief Financial Officer, Centerra Gold: 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 produced. 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. That can give you some guidance there. 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.

I don’t think there’s anything surprising to us or unique in the cost structure for Milligan during that quarter.

Jeremy Hoy, Analyst, Canaccord Genuity: Okay. Appreciate the color. Thank you.

Paul Tomory, President and Chief Executive Officer, Centerra Gold: Thanks, Jeremy.

Operator: This concludes the question and answer session and today’s conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.