Q2 2021 Centerra Gold Inc Earnings Call

August 10, 2021

[music].

Greetings and welcome to the century of gold 2021 second quarter results conference call. During the presentation. All participants will be in a listen only mode. Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press the 1 for the better for.

And your telephone is.

And anytime during the conference and need to reach and operator. Please press Star Zero. As a reminder, this conference is being recorded Tuesday August 10th 2021, I would now like to turn the conference over to Mr. John Pearson Vice President Investor Relations. Please go ahead Sir.

Thank you Maria and welcome to <unk> second quarter 2021 results conference call.

Summary slides are available on <unk> website to accompany each of the speakers remarks todays call is open to all members of the investment community and media in listen only mode.

Following the formal remarks, the operator will give the instructions for asking a question and then we will open the phone lines to those questions. Please note that all figures are in U S dollars unless otherwise noted.

Joining me on the call today is Scott Perry, President and Chief Executive Officer, Dan <unk>, Chief operating Officer, and Darren Millman, Chief Financial Officer.

I would like to caution everyone that certain statements made today may be forward looking statements and as such are subject to known and unknown risks, which may cause our actual results to differ from those expressed or implied.

Also certain of these measures we will discuss today are non-GAAP measures.

So please refer to our description of non-GAAP measures and our news release and MD&A issued earlier this morning for.

For a more detailed discussion of the material assumptions risks and uncertainties. Please refer to our news release and and DNA, along with the unaudited financial statements and notes.

And all of our other filings, which can be found on SEDAR and.

And Edgar and on the company's website at <unk> Dot com.

Now I'll turn the call over to Scott.

Thanks, John and.

Good day, everyone. Thank you for joining us for our earnings conference call.

Just referencing and accompanying slide presentation deck and I'm, just starting off on slide number 5 and I just wanted to stop and some of the recent developments and the kind of news Republic with regards to our control months and just some some prepared remarks and I just wanted to.

Alright here soon.

It's been nearly 3 months since the cookies Republic took control of the control and mine and I would like to use and update on where things stand in regards to the company.

We here at <unk>, and Tara and very saddened for what our employees and friends who were to control are going for a fourth ambition, which best wishes go out to all those that was so closely affected by what the <unk> government has done.

It's important to note the key takeaway from the call today and our results. It is important to note and terror and remains financially strong with solid performance and the healthy outlook and our other operations and businesses.

These comprise the Mount Milligan gold and copper mine, the offset and gold mine and our molybdenum business unit and then.

Illustrated in our Q2 results our cash position at the end of June was up by almost 60 million total U S quarter on quarter and currently represents some $883 million.

This represents total liquidity of almost $1.3 billion U S.

We remain on track to achieve our 2021 production and cost guidance at both the Mount Milligan and offset mind Rick.

Regarding the situation and it comes off it remains largely unchanged since we updated you after the Kyrgyz government sees the mine and midnight using unsubstantiated environmental tax and safety claims to appoint a suncorp and external manager to run the operation.

Sadly the government's unjustified actions have put thousands of well paying jobs for cookies nationals and the businesses.

<unk> supplies at risk.

The government's behavior and also threatened the future of foreign investment in the country. As you know global investors want certainty they want to know that the government and with respect signed agreements and not change the rules without warning.

So that is the state of play as we've said all along we prefer to engage in a constructive dialog with the cookies authorities to resolve this dispute as we have done and the past, but so long as the cookies authorities refused to engage we will continue to pursue legal steps to preserve the value of that asset and to protect the interest of our shareholders and how various.

Other stakeholders.

And that include binding international arbitration proceedings that we have initiated as well as the court actions in Toronto, and New York and.

As we've said, while we continue to believe that the <unk> mine is a valuable asset with our with or without it. Our company is financially strong with significant cash on hand, no meaningful debt and a robust outlook at our continuing operations in Canada and Turkey.

Yes.

Using that as a segue if I can now transition to the next slide on slide 6 just wanted to provide some and the key highlights from our recent reported Q2 results. So the fifth bullet point here first and foremost in terms of safety. We continue to see our companywide website home safe leadership program paying dividends for the organization.

During the quarter, a key highlight and our oxide mine, where they achieved 1 million hours of consecutive lost time incident free operations.

Well last night, and maintaining proactive COVID-19 measures and in terms of our vaccination rollout and we're seeing very good progress whereby we have now provided second vaccine.

And second vaccine, 264% and 55% of our site employees at Mount Milligan and offset respectively.

And second bullet point here and 1 of the key notable achievements during the quarter that we're very proud of.

Gotcha and Mount Milligan team is the ongoing improvements and that demonstrating and the mill productivity during the quarter, we saw excellent mechanical availability and mountain Dew and can actually achieved record throughput for the quarter exceeding 60000 tonnes per calendar day, which is an excellent excellent result.

Third bullet point here Darrin, our Chief Financial Officer will talk about this and more detail, but obviously following the seizure of the Comed zone mine, you're seeing the appropriate accounting classification and our financial results, whereby we had consolidated cum total and classified as a discontinued operation during the quarter.

Resulted in a <unk>.

<unk> and control loss of some $926 million U S.

In terms of our continuing operations and tims with fourth bullet point here, we saw again, a very good quarter of production, we're seeing very good productivity and very good unitary cost and our operations.

And wide gold output from our continuing operations was just under 70000 ounces of gold and some 20 million pounds of copper.

In terms of the corresponding all in sustaining cost and the 6 bullet point here and see companywide, we had a very low competitive all in sustaining costs and some $676 per ounce.

And the second last bullet point here in terms of our guidance for this year, we are continuing to reiterate our guidance for Mount Milligan and offsets and I think if you look at the performance for the first half for this year, but corporations are and are an.

Excellent stead to achieve there are guarded outlook.

And also the very last bullet points as you can see we would continue to be a financially strong company and a very profitable company with generating meaningful free cash flow and you can see our guidance here for this year, we're guiding for a free cash flow of up to $175 million.

From our continuing operations.

And just moving onto the next slide on slide 7.

Just some other key highlights here the fourth bullet points and as I mentioned, we saw good production. Good good good levels and gold output corresponding all in sustaining cost was very low. So we saw good margins and you can see here and the fourth bullet point and our continuing operations generated just under $31 million of positive free cash flow.

And in terms of a treasury position and the second last bullet point, we continue to have a peer leading balance sheet debt free and we finished the quarter with just under $883 million and cash.

And last bullet point.

And again the board recognizing.

Thank you.

Recognizing the strong operating performance and financial performance during the quarter, we've increased our quarterly dividend to Canadian dollars 7 per share.

Just moving on to the next slide on slide 8.

Just again in terms of the company's cash flow profile, and and Treasury profile and you can see the chart here and the top right. It's just an illustration of our balance sheet over the last 5 to 6 years and you can see increasingly.

And building out our balance sheet, just given the strong <unk>.

Free cash flow levels that we've been generating from the operations. So as I mentioned earlier, a debt free balance sheet and they've got some $883 million.

And cash.

Referencing the chart on the bottom and particularly the Middle chart. This is offset our newest operation in Turkey, and we've had a great experience with offset and so he rebuilt this mine on time on budget and very last year was a very successful year, whereby the mine generated from $105 million and positive free cash flow and as of today.

And we've essentially recruit more than half of our investment and already.

Here at offset we're now transitioning into a higher grade profile and the back half of this year, you will see growing levels of gold output and that will continue into 2022 and 2023, we were expecting meaningful increases and gold output. So suffice to say given that a growing level of gold output. We're also expecting.

And a meaningful increase in terms of profitability and free cash flow at OXXO.

And just moving on to slide 9 just in terms of our environmental social governance profile.

Number of bullet points here and our first bullet point as I mentioned at the outset safety is obviously, absolutely Paramount and we continue to pursue a zero harm environment and we're seeing a number of milestones and demonstrating that we're on track in that regard the third bullet point and we had no environmental incidents during the quarter, which is as it should be and <unk>.

And the last bullet point here, we are continuing the journey in terms of advancing out our diversity equity and inclusion.

And including our current state assessment that was completed recently and then the last bullet point some terrorism remember the World Gold Council and we will go Council.

Approximately 18 months ago wrote out debt responsible gold mining principles. We are a signatory to these principles and we are currently implementing needs and our operations and we are in good stead in terms of being able to attest to our full compliance for these principles.

And then coming.

18 months with that and I want to pass the call over to 10 days and then our Chief operating Officer Dennis <unk>.

Thanks Scott.

Good morning, everyone.

Please move to slide 11.

<unk> continues to prioritize the health safety and wellbeing of our employees contractors communities and other stakeholders as COVID-19 is still with us.

Put a great emphasis on and vaccinations in the past quarter and all of our sites have higher vaccination rates in the regions that they work.

We continue to modify our COVID-19 protocols at all our locations to help prevent infection and reduce the potential spread of COVID-19.

All of these great efforts of our people have allowed for continuous operation.

For 2020, 1 we have a number of operating highlights in Q2, we continued to focus on improving our safety performance.

The Sentara a companywide with good results our trip for for Q2 was 0.0.0.18, much better than our target of zero point for 1, but we still had 2 reportable injuries in the quarter.

We have and excellent program, we call work safe home sales, which focuses on employee behavior and working at home and we rolled out.

Training virtually with great success.

And then excellent and milestone is our Oxford and mine, we achieved 1 million.

People hours lost time injury free.

And with the number and now exceeding $1.5 million work hours.

On the production front, we had another strong quarter at our 2 operating sites, producing 69854 ounces of gold and $19.8 million pounds of copper a day.

All in sustaining cost of $676 per ounce.

Mount Milligan, specifically produced 54675.

Ounces at 486.

Dollars per ounce with the copper credit $19.8 million pounds Ochs, who produced 15179 ounces at 947.

Again overall, we have a very competitive all in sustaining costs for the quarter of $6.76.

Of note the Mount Milligan mine had an excess of 8 million cubic meters of water in the tailings on inventory at June 30th.

We actually stopped pumping water from surface earlier than planned because we had the maximum water inventory that we require.

We now have access to well understood underground water as well as additional permits for surface water to the end of 2020.3.

We continue to work with our first nation partners the regulators to permit for long term solution of water and.

And for our life of mine as part of our long term water strategy.

Both Mount Milligan, and <unk> suite mines were running well and we are well on track to achieve our 2021 production and cost guidance. Please.

Please move over to slide 12, and review operational focus.

Again safety is our highest priority and we continue to rollout our safety programs to constantly improve our safety performance.

We have embraced our work safe home safe program for 3 years now and we are focused also on visible felt leadership and developing and rolling out our critical controls Q2 again had no lost time incidents, which is a great step forward.

And those who follow the company you can see that we have removed <unk> from our 2021.

And 3 year outlook production and cost guidance.

Mount Milligan continues to hit its stride and is achieving a record quarterly throughput of $5.6 million tonnes.

Through excellent mechanical availability, we have a new process control system on our Sag and we had great focus by the team on the ore blending for all.

Optimal throughput.

The BC wildfires had minimal effect on Mount Milligan and operations late in the quarter. There was fire damage on the rail group's used by CMS and transport our concentrate from the port from site to the port of Vancouver.

And has subsequently repaired the damage and we are currently not experiencing any transportation issues, but we will continue to monitor closely.

There are currently no visible forest fires in the vicinity and the mine, we don't expect and impact on 2020, 1 production, but we may have a slight lag and our Q3 shipments to catch up on the rail disruptions.

We are on track for the installation of a new staged flotation reactor to be operated by the end of the year and all studies are showing that this will have improvements and our copper and gold recoveries.

<unk> our newest operations continues as planned with a major oil coming from the <unk> debt.

Please move to slide 13.

We have detailed out our production and cost guidance for 2021 overall, our mid range of guidance is near 300000 ounces at a very competitive all in sustaining cost of 750 to $800 per ounce.

With a strong copper credit.

Mount Milligan Hasnt excellent all in sustaining cost guidance of $530 to 580 per ounce.

180, 200000 ounces of gold.

Barack suite, we are guiding 90 to 100000 ounces at an all in sustaining cost of $7.30 to $7.80 per ounce.

Again, our capital expenditures on consolidated basis are looking to come in between 95 and $115 million for the year.

Going to the next slide 14, you can see we are looking to substantially increase our gold production at Oxford for the next 2 years moving.

Our 2 higher grade ore and.

Milligan remains relatively steady at similar production levels over the 3 years.

Now Darren will take us through our financial results.

Thanks, Dan and and morning all.

Because I was following on our slide deck I'm on slide 16.

<unk> recorded 200 to mean and revenue during the quarter.

This relates to our continuing operations as defined in our financial statements. This primarily includes the Mount Milligan mine, the oxide mine and and molybdenum business unit.

Revenue and materially consists of 94 million and gold sales of $50 million and copper sales and 46 million incremental and tenant business unit.

During the quarter the company's continuing operations average gold price realized was $14.119 per ounce of gold and $2 and 92 per pound of copper.

This incorporates the existing streaming arrangements over the Mount Milligan mine.

In the quarter. Our continued operations, we saw 66000 and 642 ounces of gold.

51000 ounces from the Mac Milligan mine, which is a 47% increase compared to the prior year quarter.

And 15000 gold ounces attributable to oxide mine and as you recall, the Oxford and Miami.

Clay and commercial production and my 31 and 2020.

Prior to the actions taken by the cookies for public government control volume produced and sold approximately 49000 ounces of gold.

We also saw a $19.5 million pounds of copper and the quarter.

The net earnings during the quarter from a continued operations was $33 million. This included the adjusting out of a $10.8 million non cash expense attributable to the reclamation liability increase due to unfavorable discount rate and movement.

The adjusted earnings from continued operations perspective was 49 non EMEA for the quarter for 17 cents per share.

And and contributor from an operations perspective were $42.4 million contributed for them from the Mount Milligan mine.

$16.1 million contributed from the oxide mine.

And a $14.8 and we had loss attributable to molybdenum fish and this was primarily attributable to the reclamation expense of 10 point I mentioned earlier.

The net loss, including both continued and discontinued.

Discontinued operations was $851 million.

As noted in our disclosures, we classified the clinical operations.

And your corporations on Macy's, Inc.

Resulting from the actions for the Kyrgyz Republic government and continued actions thereafter.

The 3 auctions to highlight within discontinued operations were.

$44.8 me and net earnings from can come on record and up until May 15.

And $926 million charge recorded on the loss of control of the control volume.

And at $15.3 million gain was recorded on the close out of fuel hedges and connections with the control line.

For clarity as at 30 June no values recorded and the balance sheet associated with the coal mine.

And now move to slide 17.

Right.

<unk> continued operations and a quarter recorded production and cost of $593 per ounce and and all in sustaining cost of $676 per ounce.

And in asset level of Mount Milligan and recorded all in sustaining cost of $486 per ounce and oxy for recorded all in sustaining cost of $947 per accounts for the quarter.

As noted in the bottom right hand chart, Okay and.

Terrace continued operations you to diet has produced 140000 ounce of gold share tracking well for 2021 production guidance.

For the left hand chart.

Our free cash flow EBITDA of approximately $100 million from our continued operations.

With up to 175 million guided for 2021 at a gold price of $750.

On a go forward basis as Dan noted there is potential for <unk> and that Milligan South. This could result in a lower level of free cash flow and Q3 compared to Q4.

Now moving to slide 14 slide 18.

The company ended the quarter debt free with 883 million and cash as referenced in the bottom right hand chart.

As disclosed in the MDI and summarized in the bottom bottom left hand chart, we have debt of 3 year gold production guidance, excluding the come to mind you.

You will note, we are guiding to a 40% increase and gold output for our continued operations and a similar reduction and our cost profile.

<unk> annual guidance mid points.

As a result of our free cash flow will significantly increase as we move into 2022.

Finally, given the cash generation of our continued operations.

Closing cash position of 883 million and total liquidity of just under $1.3 P and <unk>.

And terrible debt credit quarterly dividend for <unk>.

For the second for the quarter, which represents a 40% increase from the prior quarter.

And we've got I'll pass it back to Scott.

Thanks, Darren and then just to round out and wrap up the call I'll just speak to slide 20.

And then just in terms of some of the key bullet points here and the left first bullet point is we had debt and Darren and speak to we are reiterating now.

Production guidance for Mount Milligan, and offset and you can see illustrated here. This year, we are guiding for up to 310000 ounces and in terms of the corresponding all in sustaining costs were expecting to produce this growth as well as $750 per hour and so given the prevailing metal price environment and that competitive all in sustaining cost profile.

I think that's going to make some robust margins and I think youre seeing there and to the free cash flow guidance, we are guiding up to $175 million for this year.

The fourth bullet point and again it was another strong operating quarter, we're seeing good operating momentum and our.

Continuing operations, so we can and producing some 70000 ounces of gold and at a very low competitive all in sustaining cost of 676 boats turnaround and then just lastly, the final bullet point as Darin just spoke to I think we really are continuing to maintain and grow our peer leading balance sheet.

It's debt free finished the quarter with cash of $883 million and just given where we see our business going in terms of the free cash flow guidance for this year in terms of the growing level of gold output coming from Turkey next year.

And this balance sheet will continue to growth moving forward.

Look as I mentioned at the very outset of the call and as we've disclosed and now and DNA. There are a number of legal proceedings that we have commenced and connection with control.

And both against the cookies government and cookies zoltan.

Moving to the question and answer portion of the call and I just want to caveat that Unfortunately, we will be limited and our ability to provide details related to those ongoing proceedings and so with that caveat.

And operator, Maria if I can now positive EBITDA you too.

Coordinate the Q&A portion please.

Thank you.

And if you would like to register a question. Please press the 1 followed by the flooring and telephone and you'll hear us retail and pump tweaking on share request.

For your question has been answered and I would like to withdraw your registration. Please press the 1 followed by the 3.

Yeah.

Our first question comes from the line of Trevor Turnbull from Scotiabank.

Your line is open.

Thank you.

Scott.

And maybe start with operations just a quick question on Mount Milligan I know that Darren was talking about the long term water plant and solutions up there.

Can you talk a little bit about what that might look like or what the capex might be involved with that I did notice that.

And tell that's finalized you haven't provided any capex guidance, but I wondered if you could just give order of magnitude.

The description of it.

Yeah, Thanks, Trevor and Dan and you happy to respond to that question just in terms of some of our current evaluations that are underway.

Absolutely.

Trevor.

Right now.

And a very very strong position.

Tailings opponents for.

And we're drawing and probably more than half of our required water from from underground and basically those are permanent facilities now we have a little bit of connecting up.

Green power.

In terms of hydroelectric permanent solutions to some of our pumps, but that's going very well we are drawing right now from 2 very local rivers within 4 kilometers of the mine site that those were temporary installations that we've been setting up each year, using a contractor and and so we've.

That has been able to satisfy our water needs fully so we're looking at 2 solutions right. Now 1 is further distance away, we're still engineering the capital cost.

That'll be in the neighborhood of say $30 million to $40 million and we also are still.

Wrongly looking at very near mine and solutions that would be.

And certainly less than $10 million in terms of capital for rate right now we're sitting in a very good position and we have permits to the end of 2023 for the way we're set up right now.

Okay. Thanks, Dan.

I also had a quick question on Oct suite, just was there any or maybe I missed it but was there any update on permitting for the goonies tap a pet.

And I can say debt.

Yeah absolutely.

We continue to work with the government. There is still a court case between 2 of the government agencies on who has control of the land and.

And that would that should be coming to fruition here in September when they cut and they go back into session.

And we've adjusted our plans, but certainly in the near term debt. There is no effect and we also have reengineered, our access to the good and <unk> pit.

And in case, we don't get permit for the larger footprint, we would be we would.

B are still able to access as our original feasibility plans indicated.

Okay. Thank you.

And then maybe I had a quick question on the dividends.

You mentioned that you've raised the dividend.

And that the dividends are essentially waived.

For Kirk assault and shares.

It said that they're waived to the extent that they can be attributed to pay juicy couture and I guess I had a question about the language does that mean that there is a portion of the dividend debt.

Net cricket saltiness eligible for that say its not attributable to come to work.

Trevor It's Scott no. It's al determination I mean, as you know dividends debt Paydown and retained earnings and without a determination that the entirety of average range of any physician has been attributable to control and in turn.

For the dividend distribution during the quarter again, the determination was that it's entirely attributable to come to us. So as you as you notice is this.

Series of restrictions in place in terms of the cookies and shareholding and since their ability to receive dividends in terms of their ability to transfer shares since their ability to vote on their shelves. So they will have no entitlement to the recently declared dividend.

Okay.

That's helps clear it up.

And I guess my last point or comment is just on your summary, slide that you closed with you make a very compelling case on on the on the continuing operations in terms of their cost structures and their cash flow generation, but it doesn't really get to any per share metrics switch.

<unk> is kind of where I struggle and I just wonder how you would kind of frame the investment thesis.

With respect to kind of per share metrics and per share valuation.

Should we be thinking.

About your capital structure is as intact going forward with the kirch assault and shares.

Or should we be thinking that at some point there will be.

A reduced share count debt that negates debt essentially remove some shares from the calculus.

Yes, I mean, if you look at our free cash flow guidance for this year.

Up to $175 million and cash debt approximately 65 per share in terms of free cash flow, which.

Moving forward, we expect that to growth.

And just given the rising gold output that we're expecting from Turkey, as we move into that high grade sequence next year 2022, 2023, I think you're going to see some very meaningful increases in terms of the free cash flow generated from continuing operations, assuming the current sort of prevailing metal price environment.

Obviously in terms of our border.

Share count.

There are some opportunities here, obviously, we're open to it.

Engaging and negotiations with the political leadership and Craig you stand in terms of looking to resolve the situation for a constructive dialogues and look we're certainly open to all possibilities which could include.

The cookies older and shareholding and what that could potentially mean for a reduction in and share counts for the other thing I want to mention is <unk>.

<unk>.

I have been describing it as a <unk>.

For a leading balance sheet relative to the comparative figures, we think it's going to continue to growth and maybe there's opportunities there as well and in terms of strategizing with the board around capital return initiatives et cetera, but it's all kind of preliminary right now Trevor and I think as a management team and speaking on behalf of board and we do recognize that we.

Have some opportunities here and which will continue to evaluate.

Obviously during the quarter you source took 1 take.

And 1 small step or.

Measure a token and some of the increase and the dividend by some 40%.

And I think we certainly have the financial capacity to continue to evaluate.

And the potential hepworth and initiatives, so sorry, Trevor that was alone.

Yeah, Yeah no debt.

And that's good.

And I guess, maybe 1.1 last question just with respect you mentioned.

You mentioned potentially you know you we remain open to speaking to the government and and ways that you may be able to.

Talk to them about the shares.

Or are there also legal remedies.

And and if so are they are they something that you kind of need the other legal processes to take to kind of play out before you would you would consider those in other words for the international Arbitration case, you have and Canada, and so forth do those need to kind of conclude before you you think about next steps are illegally.

It's difficult for me to kind of respond to that Trevor as I mentioned, it's tough for us to comment on the legal proceedings, but right now our primary focus is on the international arbitration as well as the chapter 11 proceedings down and New York.

And the legal measures, we're taking right now that we think best position us in terms of protecting the rice and our shareholders and and the overall value.

On behalf of our stakeholders.

Yeah, and then there's also the case and Canada against the temporary manager.

And kind of what is the what.

What is the outcome, you're looking for there and in that particular case.

It's all part of our sort of legal measures looking to substantiate that whats taking place here is is invalid.

Without merit and it's in direct contravention and something about project agreements and our investment agreement.

Okay Fair enough alright. Thank you Scott that's all I had.

Okay.

The next question comes from the line of Michael <unk> from RBC capital markets. Please go ahead.

Thank you guys for taking my question Scott you just touched on it a little bit.

But I was hoping you could talk a little bit more about.

That balance sheet and capital allocation and and.

And I suppose that would be a key question come tour notwithstanding.

As you said it is still preliminary.

But what really drives your thinking on those fronts. If we're looking at dividends cash return and M&A as well I suppose are you seeing opportunities out there or is it too early to think about that.

Can you give a little bit more color around how youre thinking about the balance sheet.

Yes.

Yeah.

And we recognize that we have a significant and sort of debt free balance sheet and and we think that's going to continue to grow just given where the position where the business is positioned and just the underlying profitability that you're seeing right now.

We regularly sort of strategize and deliberate on this with the board and I think over the last sort of 18 months you have seen us take a number of steps with regards to that and distributions.

Very quickly we instituted a dividend program. We then increase the dividend for 4 cents per share and last year, we increased it to 5 cents per share and and you saw most recently and now declared a dividend of <unk> <unk> per share and so on that front, we have been taking some steps.

Obviously, there's potentially other capital return.

Opportunities here.

And I was mentioning earlier and as we could be evaluating and thinking about our share counts, but 1 of the challenges. We have Michael is I don't think we can do anything until we have results.

Situation with <unk> and that could result in shareholding and so what I mean by that and say you're asking me about a share buyback scenarios under that scenario, if cookies alts and was not participating we would be effectively increasing ore concentrating.

<unk> position and we've been there.

The organization and that brings with it and a number of other considerations as part of the overall calculus.

And I think until we have that result, and it kind of restrict our ability to.

Evaluate and.

Ernest any kind of.

Share buyback scenario.

And on the M&A front I mean, you still obviously you sold some assets you've got some other assets and the portfolio and and again looking at that cash balance and I agree. It's a huge asset how have you.

Is it too early to think about longer term strategy is it still sort of dependent and the timeline on what happens.

And Kurdistan.

Yeah.

And myself.

Personally I like to kind of be a little bit more contrarian and terms of when we do get.

And in terms of inorganic growth. So for example, and during the time and I've been NUCYNTA or when we were quite active and in terms of.

Acquiring bid and I don't know.

<unk> it.

Was it was and the low the low phase of the gold price cycle and gold was trading around $12.50, I think that's a better times and in terms of and maximizing the likelihood of a value creating.

Creating sort of transaction, so given where we are and the gold price gold price cycle right now.

I find it a little bit more difficult.

And to envision.

And doing things that are going to represent compelling relative value accretive opportunities, but at the same time I'm not I'm not ruling it out obviously I think in terms of that and go forward position here and our balance sheet, our profitability our cost profile I think for and a fantastic position and it's something that we can look to capitalize on but I think just.

Speaking more broadly in terms of where the industry is positioned I think the industry is doing really well for the industry quite profitable at these gold prices and I think everyone's balance sheets that have largely been repaired so.

I think it's going to be difficult in terms of action ability in terms of the opportunities presenting themselves and.

That's fine for us from my perspective.

And willing to be patient and and I think we've got a great business and moving forward, but we recognize that our balance sheet provides us with a lot of optionality and I think thats, a competitive position for us to be.

Okay, great. Thanks, and maybe just 1 last 1 for me.

High level on the dispute with Curtis and obviously the situation is very different than it's been in the past and this is maybe my just my perception or opinion, but it does seem that.

Based on local media reports that the governments comments or maybe more heated rhetoric is more heated and a more specific commentary about.

Past agreements denunciation that sort of thing.

Absent direct contact with the government can you comment at all on on what Youre seeing in terms of their public statements maybe relative to those past disputes.

Well.

And I'm seeing what you're seeing and.

It's a lot of hype of both a lot of rhetoric and all of it is unsubstantiated and.

This has been the typical sort of Kirby's playbook.

And if you got to take it would be appropriate.

Pinch of Salt if you will we'll put it in that context.

We don't react to it as you're seeing what we're focused on is.

Obviously trying to engage with it the cookies leadership and that's how we've always resolve these disputes and skirts constructive dialogues.

If you look at history, eventually and both sides eventually come from the tables, but in the absence of having any.

And for engagement it for.

And as us to take the legal measures that you've seen is pursuing and some in central arbitration and the chapter 11 proceedings.

And we just have to continue to watch and see how this unfolds for Mike.

Okay, great. Thanks, very much for the time.

The next question comes from the line of Anita Soni from CIBC World markets.

And as open.

Glenn Thanks for taking my call.

So I'm not really going to ask anything about oh from trucks and I think that's probably been oh.

So Jeff at this point, but.

Can you I wanted to focus a little bit on operations and some of the other moving parts and molybdenum business is now and net you said, it's a net $35 million cash draw. This year is that going to continue going forward and your and your view and when you look at 2000 and 'twenty 2 'twenty 3 have you.

Thanks for that.

And ongoing titration or should that.

Only be a 1 time kind of 2021 and forecast.

Yes, Thanks Anita.

And do you want to respond to that and in your response, there and just make sure you pointed out that it's a buildup in inventory that will be monetized and in due course, but every day.

Quite a day yeah, it's basically driven by as you know the molybdenum prices has dramatically increased and it gets up for and adding a pan when we put out guidance for 2021 and the start of the year I think we'll be using around $12. A pound. So it's predominantly driven by a working capital increase call. It I did and non U.

Net of that.

We don't.

The molybdenum prices continue to spike up again into 2022, 2023, and then you'll see potentially.

And additional buildup.

Of all the need for additional cash and to the business, but that's probably just driven by double digit and price increase and nothing more so if it's if it is currently flat obviously, we'd like to recoup some of that $30 million approximate Inc.

Cash flow into the business.

But that's kind of the real driver behind it.

Okay, and then secondly therein.

Mount Milligan depreciation increase can you just walk me through.

Why and increase for this year.

Hum.

Trying to reflect what would you shoot the Mount Milligan.

A lot of new lots of mine and I think back in 2020.

When we say reduce the mine life. So that was the driver of the <unk>.

<unk> expense needs to increase out depreciation and a period on period. So I'll have to look at dog and a little bit David at the top of my head that would be and a driver and obviously, we've had a high throughput high production coming in during the quarter. So obviously that will be attached to that that piece of it and once again, we can talk in a bit further and get back to you as well.

Good luck.

Yes that would be helpful. I think what youre describing.

Driver we're not.

<unk>.

We'll not be doing a movement that youre talking about its going out for them.

This quarter also for this year.

Sure.

Hey, lifecycle and got around and to understand what lets me and drivers there were and then on corporate administration and I think there was an increase there.

<unk>.

Is that a is that a 15 million bucks is that more along the lines of all the legal.

Things that youre dealing with and perhaps on a long run rate and that should be more along the lines of the original number of $35 million to $40 million or even less now that youre not necessarily them.

And about Kentucky.

Yes.

Okay.

And then lastly, just on operations for for Oxy.

And the Keller, Kathy and I guess for phase 3.4 and 5 are largely stripping there is largely complete.

Is that should we expect higher grades more along the line of reserve grades going into the back half of the euro and will that be more next year.

And then do you want to speak for that please yes, certainly and you're correct. We are now starting to already experienced higher grades and a plan to carry that forward to really over the next 2 and a half years.

And I guess, 1 last question on Mount Milligan and it seems like you are running a little higher than the top end of your guidance range, particularly on gold and.

Is there something that we should be thinking about and the second half of the year in terms of.

Throughput.

Ramifications are greenbaum applications.

More to that and about to the net pointing toward or within the guidance range are you continuing to expect from that performance.

Dan do you want to speak with us.

And I certainly can.

And we're having excellent throughput and that debt is continuing into the third quarter, which is as great.

We are we are.

Focused as well on both gold and copper, but we have gone through some fairly high grade gold sections.

Sections over of our pit so were still confidence on guidance. We're also seeing excellent recovery and both copper and gold and and hopefully that will continue because we've got additional process controls and our plant. So we're still feeling very strong guidance there.

Okay. Thank you that's it for my questions.

Our last question comes from the line of Mike gentlemen from Bank of America. Your line is open.

Oh, Bart and Scott.

Just following on that comment about the trial.

And our branch about Nelligan and all of this year.

I can't remember, who said it's Scott.

That was pending new life and widen studies at both Mount Milligan and oxygen and October November and then.

I'd say I think and this time about those is that still and the plan.

For those to be released are completed.

Yeah, Hi, Mike, So, yes, Dan and his engineering and technical services team.

Doing a number of evaluations in terms of what we're seeing in terms of conceptual sort of life of mine opportunities at Mount Milligan and as well as offsets that work is well underway.

But in terms of committing to a timeline.

And we haven't made that commitment in terms of a public disclosure.

And it's potentially and opportunity for us in terms of our typical year end reserves and resources and it really come down too and whether or not what is the materiality in terms of what we're seeing if it's something material. Then obviously, we'd have to disclose it and it's not material and.

And maybe something that we don't disclose so that's something that we'll continue to evaluate and we'll just have to see how that unfolds here over the course of this year.

Okay, well, thanks and goodbye.

1 last question, Scott and I guess.

Well, yes, if you put some charge from our side.

Obviously, you got a great balance sheet, great free cash flow, but for gold World is awash with 3.4 and 1000 ounce gold producers.

And.

And I could go into Denver going forward might be trampling all over them.

And the atrium of the bar just wondering Oh does.

The returns obviously is 1 way.

How does some charges taken this yourself among all of these companies now.

Well look.

Speaking talking to Miami and book, obviously average portfolio that would differentiate differentiates us and Tara will distinguish us and Tara and obviously the peer leading cash position, but I think also.

Pretty much a peer leading cost profile and if you look at our guidance for this year and you look at the results and Q2, I mean sub $700 per ounce net.

Really as the lower fourth quarter and I think.

And that distinguishes us, but then also we've got some natural and.

Organic growth taking place here as we move forward over the next 2 and a half years and that's particularly in Turkey.

As Dan mentioned earlier, we are getting into a high grade seasons, and we expect.

And our gold production levels and offset to more than double.

2022, 2023 relative to this year and.

And so that's obviously going and makes it growing free cash flow and growing profitability.

I think as we spoke to and we've been doing some things in terms of capital return initiatives or shareholder friendly initiatives as being some meaningful increases and our dividend distributions is there opportunity to do more and that's something that to continue to evaluate with the board.

Some of those attributes I, just put forward, Mike and I really do think that distinguishes us and Tara and her.

Favorable manner, and then obviously underpinning all of this will be the evaluation and does that represent.

And interesting.

Investment proposition.

I think that's how I'd respond Mike.

Okay.

Okay, well, thank you for that and good luck.

Thanks, Mike.

There are no further questions from the lines.

With that I'd like to thank everyone for joining us on our call today and.

We'll.

Wrap up the call right now so thank you everyone Goodbye.

And that does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your lines.

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And.

And welcome to the century Gold 2021 second quarter results conference call. During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press the 1 followed by the flooring and telephone if at any time during the conference you need to reach and operator.

Please press star zero and.

As a reminder, this conference is being recorded Tuesday August 10th 2021.

I'd now like to turn the conference over to Mr. John Pearson, Vice President Investor Relations. Please go ahead Sir.

Thank you Maria and welcome to <unk> Gold's second quarter 2021 results conference call.

Summary slides are available on Sentara gold website to accompany each of the speakers remarks todays call is open to all members of the investment community and media in listen only mode. Following the formal remarks, the operator will give the instructions for asking a question and then we will.

And the phone lines to those questions. Please note that all figures are in U S dollars unless otherwise noted.

Joining me on the call today is Scott Perry, President and Chief Executive Officer, Dan days are Dan Chief operating Officer, and Darren Millman, Chief Financial Officer.

Also certain of these measures we will discuss today are non-GAAP measures.

So please refer to our description of non-GAAP measures and our news release and MD&A issued earlier this morning for.

For a more detailed discussion of the material assumptions risks and uncertainties. Please refer to our news release and and DNA, along with the unaudited financial statements and notes.

And all of our other filings, which can be found on SEDAR and.

And Edgar and on the company's website at <unk> Dot com.

Now I'll turn the call over to Scott.

Thanks, John and.

Good day, everyone. Thank you for joining us for our earnings conference call.

Referencing our accompanying slide presentation deck and I'm, just starting off on slide number 5 and I just wanted to start with some of the recent developments and the Kobe and Republic with regards to our control months and just some some prepared remarks and I was just wondering.

Alright here. So look it's been nearly 3 months since the cookies Republic took control of the comes from mine and I would like to use and update on where things stand with regards to the company.

We hear its and Tara very saddened for what our employees and friends who were to control are going for a fourth ambition, which best wishes go out to all those that were so close to the affected by what the cookies government has done.

It is important to note.

Key takeaway from the call today and our results. It's important to note and Terra remains financially strong with solid performance and a healthy outlook at our other operations and businesses.

These comprise the mountain Milligan gold and copper mine, and the offset and gold mine and our molybdenum business unit and.

As illustrated in our Q2 results our cash position at the end of June was up by almost 60 million total U S quarter on quarter and currently represents some $883 million.

This represents total liquidity of almost $1.3 billion U S.

We remain on track to achieve our 2021 production and cost guidance at both the Mount Milligan and oxide mine.

Regarding the situation and come till it remains largely unchanged since we updated you after the Kyrgyz government sees the mine and midnight using unsubstantiated environmental tax and safety claims to appoint a suncor and external manager to run the operation.

The governments unjustified actions have put thousands of well paying jobs for cookies nationals and the businesses of hundreds of Turkey suppliers at risk.

And the government's behavior has also expressed and the future of foreign investment in the country. As you know global investors want certainty. They want to know that the government will respect signed agreements and not change the rules without warning.

Various other stakeholders.

That include binding international arbitration proceedings that we have initiated as well as the court actions in Toronto, and New York and.

And.

And using that as a segue if I can now transition to the next slide on slide 6 just wanted to provide some of the key highlights from our recent reported Q2 results for this.

The first bullet point here first and foremost in terms of safety, we continue to see a companywide website home safe leadership program paying dividends for the organization during the quarter, a key highlight and our oxide mine was where they achieved 1 million hours of consecutive lost time incident free operations.

We'll have sites and maintaining proactive COVID-19 measures and in terms of a vaccination rollout and we're seeing very good progress whereby we have now provided second vaccine.

Second vaccine, 264% and 55% of our site and employees at Mount Milligan and offset respectively.

Second bullet point here and 1 of the key notable achievements during the quarter that we're very proud of with regards to and Mount Milligan team is the ongoing improvements that they're demonstrating and the mill productivity during the quarter, we saw excellent mechanical availability and mountain Dew and can actually achieved record throughput for the quarter exceeding 60000 tons to.

Calendar day, which is an excellent excellent result.

Third bullet point here, Darrin now and Chief Financial Officer will talk about this and more detail, but obviously following the seizure of the come to mind you are seeing the appropriate accounting classification and our financial results, whereby we had consolidated cum total and classified as a discontinued operation during the quarter.

Resulted in a.

Change of control loss of some $926 million U S.

In terms of our continuing operations in terms of the fourth bullet point here, we saw again, a very good quarter of production and seeing very good productivity and very good unitary costs and our operations and our company wide gold output from our continuing operations, which just under 70000 ounces of gold and some 20 million pounds of copper and.

In terms of the corresponding all in sustaining costs and the 6 bullet point here can see company wide, we had a very low competitive all in sustaining cost for some $676 per ounce.

And the second last bullet point here in terms of our guidance for this year continuing to reiterate our guidance for Mount Milligan and offsets and I think if you look at the performance for the first half for this year, but corporations are and are in.

Excellent stead to achieve there are guarded outlook.

And also the very last bullet points as you can see we would continue to be a financially strong company and very profitable company with generating meaningful free cash flow and you can see our guidance here for this year guiding for free cash flow of up to $175 million from our continuing operations.

Just moving onto the next slide on slide 7.

Just some other key highlights here for.

Bullet points and as I mentioned, we saw good production good good good levels and gold output corresponding all in sustaining cost was very low. So we saw good margins and you can see here and the fourth bullet point and our continuing operations generated just under 31 million and does a positive free cash flow and tends to be a treasury position and the second last bullet point.

We continue to have a peer leading balance sheet is debt free and we finished the quarter with just under $883 million and cash and the last.

Bullet point.

Again the board recognizing.

And.

Recognizing the strong operating performance and financial performance during the quarter, we've increased our quarterly dividend to Canadians and 7 cents per share.

Just moving on to the next slide on slide 8.

Again in terms of the company's cash flow profile and Treasury profile you can see the chart here and that's what Ryan just an illustration of our balance sheet over the last 5 to 6 years and you can see increasingly.

We've been doing on our balance sheet, just given the strong free cash flow levels that we've been generating from the operation So as I mentioned earlier.

Debt free balance sheet, and we've got some 883 million Boes and cash.

Referencing the chart down the bone and particularly the Middle chart. This is offset and our newest operation and Turkey.

And a great experience with offset and so he rebuilt this mine on time on budget and very.

Last year was a very successful year, whereby the mine generated from $105 million and positive free cash flow and as of today.

And we've essentially recruit more than half of our investment and already here.

Acting a meaningful increase in terms of profitability and free cash flow at OXXO.

And just moving on to slide 9 just in terms of our environmental social governance profile.

A number of bullet points here and our first bullet point as I mentioned at the outset safety is obviously, absolutely Paramount and we continue to pursue a zero harm environment and we're seeing a number of milestones demonstrating that we're on track in that regard.

Bullet point, we had no environmental incidents during the quarter, which is as it should be and the second last bullet point here, we continuing the <unk>.

In terms of advancing diversity equity and inclusion and.

Initiatives, including our current state assessment that was completed recently and then.

Last bullet point, some terrorism remember the World Gold Council and we will go Council.

Approximately 18 months ago wrote out debt responsible gold mining principles. We are a signatory to these principles and we are currently implementing needs and our operations and we are in good stead in terms of being able to have tests to a full compliance for these principles and.

Coming 18 months.

With that I now want to pass the call over to 10 days and then our Chief operating officer.

Thanks, Scott good.

Good morning, everyone.

Please move to slide 11.

So <unk> continues to prioritize the health safety and well being over.

Our employees contractors communities and other stakeholders as COVID-19 is still with us.

Put a great emphasis on vaccinations in the past quarter and all of our sites have higher vaccination rates in the regions that they work.

We continue to modify our COVID-19 protocols at all our locations to help prevent infection and reduce the potential spread of COVID-19.

All of these great efforts of our people have allowed for continuous operation.

For 2020, 1 we have a number of operating highlight and Q2, we continued to focus on improving our safety performance.

The Sentara companywide with good results our trip for for Q2 was 0.0.0.18, much better than our target of zero point for 1, but we still had 2 reportable injuries in the quarter we.

We have an excellent program, we call works if home sales, which focuses on employee behavior working at home and we rolled out.

Training virtually with great success.

And and excellent milestone is our Oxford mine, we achieved 1 million.

People hours lost time injury free.

The number now exceeding $1.5 million work hours.

From a production front, we had another strong quarter out or 2 operating sites, producing 69854 ounces of gold and $19.8 million pounds of copper a day.

All in sustaining costs of $676 per ounce.

Mount Milligan, specifically produced 54675.

Ounces at 486.

<unk> per ounce for copper credit $19.8 million pounds produced.

Produced 15179 ounces at 947.

Again overall, we have a very competitive all in sustaining costs for the quarter for $6.76.

Of note the Mount Milligan mine had an excess of 8 million cubic meters of water in the tailings pond inventory at June 30.

We actually stopped pumping water from surface earlier than planned because we had the maximum water inventory that we require.

We now have access to well understood underground water as well as additional permits for surface water to the end of 2023.

We continue to work with our first nation partners the regulators to permit for long term solution of water and.

And for our life of mine as part of our long term water strategy.

Both Mount Milligan, and <unk> suite mines were running well and we are well on track to achieve our 2020, 1 production and cost guidance. Please.

Please move over to slide 12, and review operational focus.

Again safety is our highest priority and we continue to rollout our safety programs to constantly improve our safety performance.

And those who follow the company you can see that we have removed <unk> from our 2021.

And 3 year outlook production and cost guidance.

No Milligan continues to hit its stride and is achieving a record quarterly throughput of $5.6 million tonnes.

Through excellent mechanical availability, we have a new process control system on our Sag and we had great focus by the team on the ore blending for all.

Optimal throughput.

The BC wildfires had minimal effect on Mount Milligan operations late in the quarter. There was fire damage on the rail group's used by CMS and transport our concentrate from the port from site to the port of Vancouver.

And has subsequently repaired the damage and we are currently not experiencing any transportation issues, but we will continue to monitor closely.

There are currently no visible forest fires in the vicinity of the mine, we do not expect and impact on 2020.1 production, but we may have a slight lag and our Q3 shipments to catch up on the rail disruptions.

We are on track for the installation of a new staged flotation reactor to be operated by the end of the year and all studies are showing that this will have improvements in our copper and gold recoveries.

<unk> our newest operations continues as planned with a major oil coming from the Celts Hubby.

Yes.

Please move to slide 13.

We have detailed out our production cost guidance for 2021 overall, our mid range of guidance is near 300000 ounces at a very competitive all in sustaining cost of 750 to $800 per ounce.

With a strong copper credit.

Mount Milligan Hasnt excellent all in sustaining cost guidance of $530 to 580 per ounce.

180 to 200000 ounces of gold.

For US suite, we are guiding 90 to 100000 ounces at an all in sustaining cost of $730 to $7.80 per ounce.

Again, our capital expenditures on consolidated basis are looking to come in between 95 and $115 million for the year.

Going to the next slide 14, you can see we are looking to substantially increase our gold production at Oxford for the next 2 years moving.

2 higher grade ore from them.

Milligan remains relatively steady at similar production levels over the 3 years.

No Darren will take us through our financial results.

Thanks, Dan and morning all.

Because I was following on the slide deck I'm on slide 16.

<unk> recorded 202 million and revenue during the quarter. This relates to our continuing operations as defined in our financial statements. This primarily includes day Milligan mine, the oxide mine and and molybdenum business unit.

Revenue and materially consists of 94 million and gold sales 50 million and copper sales and 46 million incremental lipton and business unit.

During the quarter the company's continuing operations average gold price realized was $14.119 per ounce of gold and $2 and 92 per pound of copper.

This incorporates the existing streaming arrangements over the Mount Milligan mine.

In the quarter, our continued operations, we sold 66000 and 642 ounces of gold.

51000 ounces from the Mac Milligan mine, which is a 47% increase compared to the prior year quarter.

And 15000 gold ounces attributable to oxide mine and as you recall, the Oxford and Miami.

Declared commercial production and my 31 and 2020.

Prior to the actions taken by the cookies Republic government come from wine produced and sold approximately 49000 ounces of gold.

We also saw a $19.5 million pounds of copper and the quarter.

The net earnings during the quarter from a continued operations was 33 me and this included the adjusting out of a $10.8 million non cash expense attributable to the reclamation liability increase due to unfavorable discount rate and movement.

These adjusted earnings from continued operations perspective was 49 EMEA for the quarter for 17 cents per share.

Earnings attributable from an operations perspective, we're 42 for me contributed for them from the Mount Milligan mine.

$16.1 million contributed from the Oxford mine.

And a 14.8 and me and loss attributable to the molybdenum business unit. This was primarily attributable to the reclamation expense of 10 point I mentioned earlier.

The net loss, including both continued and discontinued.

Discontinued operations was $851 million.

And as noted in our disclosures, we classified the cominco operations.

Operations on Macy's, Inc.

Resulting from the actions for the Cougars Republic government and continued actions thereafter.

The 3 auctions to highlight within discontinued operations were.

$44.8 me and net earnings from couldn't come on record and up until May 15.

And $926 million charge recorded on the loss of control of the control volume.

And at $15.3 million gain was recorded on the close out a few hedges and connections with the control volume.

For clarity as at 30 June no values recorded net balance sheet associated with the <unk> line.

And now move to slide 17.

Right.

So can terrorists continued operations and the quarter recorded production cost of $593 per ounce and and all in sustaining cost of $676 per ounce and.

And then asset level of Mount Milligan and recorded all in sustaining cost of $486 per ounce and oxy for recorded all in sustaining cost of $947 per accounts for the quarter.

As noted in the bottom right hand chart and.

Terrace continued operations you to diet has produced 140000 ounce of gold share tracking well to a true 2021 production guidance.

For the left hand chart.

Free cash flow either day of approximately 100 million from our continued operations.

With up to 175 million guided for 2021 at a gold price of <unk> $150.

On a go forward basis as Dan noted there is potential for <unk> and that Milligan South. This could result in a lower level of free cash flow and Q3 compared to Q4.

Now moving to slide 14 slide 18.

The company ended the quarter debt free with 883 billion and cash as referenced in the bottom right hand chart.

As disclosed in the MD&A and summarized in the bottom bottom left hand chart, we have debt of 3 year gold production guidance, excluding the come to mind you.

You will note, we are guiding to a 40% increase and gold output for our continued operations and a similar reduction and our cost profile.

<unk> annual guidance for mid points.

As a result of our free cash flow will significantly increase as we move into 2022.

Finally, given the cash generation of our continued operations.

Closing cash position of items, and 83 million and total liquidity of just under $1.3 P and this.

<unk> debt credit quarterly dividend of 7 <unk>.

Perfect for.

For the quarter, which represents a 40% increase from the prior quarter.

With that I'll pass it back to Scott.

Thanks, Darren and then just.

And round out and wrap up the call I'll just speak to slide 'twenty. So again just in terms of some of the key bullet points here and the left first bullet point, as we hooked and and Darren and speak to we are reiterating gold.

Gold production guidance for Mount Milligan, and offset you can see as illustrated here. This year, we are guiding for up to 310000 ounces and in terms of the corresponding all in sustaining costs were expecting to produce this growth as well as $750 per ounce. So given the prevailing metal price environment and that competitive 1 study and cost profile.

I think thats going to make some robust margins and I think youre seeing that there and to the free cash flow guidance, we are guiding up to $175 million.

For this year.

And fourth bullet point and again it was another strong operating quarter, we're seeing good operating momentum and continue.

Continuing operations, so again, producing some 70000 ounces of gold at a very low competitive all in sustaining cost of 676 volts turnaround and then just lastly, the final bullet point as Darin just spoke to I think we really are continuing to maintain and growth our peer leading balance sheet.

And this balance sheet will continue to growth moving forward.

Look as I mentioned at the very outset of the call and as we've disclosed and now and DNA. There are a number of legal proceedings that we have commenced and connection with control.

Both against the cookies government and cookies out and as we move into the question and answer portion of the call I just want to caveat that Unfortunately, we will be limited and our ability to provide details related to those ongoing proceedings, so with that caveat.

Operator, Maria if I can now, possibly that'd be to you too.

Coordinate the Q&A portion please.

Thank you.

If you would like to register a question. Please press the 1 followed by the flooring and telephone and you'll hear us retail and pump to acknowledge your request.

Your question has been answered and I would like to withdraw your registration. Please press the 1 followed by the 3.

Yes.

Our first question comes from the line of credit.

Turnbull from Scotiabank.

Your line is open.

Thank you.

Thank you Scott.

And maybe start with operations just a quick question on <unk>.

Milligan I know that Darren was talking about the long term water plan and solutions up there.

Can you talk a little bit about what that might look like or what the capex.

Might be involved with that I did notice that.

And tell that's finalized you haven't provided any capex guidance, but I wondered if you could just give order of magnitude.

A description of it.

Yeah, Thanks, Trevor and Dan and you happy to respond to that question just in terms of some of our current evaluations that are underway.

Absolutely.

Trevor.

Right now we are and a very very strong position.

Ceilings opponents for.

We're drawing and probably more than half of our required water from from underground and basically those are permanent facilities now we have a little bit of connecting up grew.

Green power and.

In terms of hydroelectric permanent solutions to some of our pumps, but so that's going very well.

We are drawing right now from 2 very local rumors within 4 kilometers of the mine site that those were temporary installations that we've been setting up each year using a contractor and.

And so that has been able to satisfy our water needs fully so we're looking at 2 solutions right. Now 1 is further distance away, we're still engineering the capital cost.

But that'll be in the neighborhood of say $30 million to $40 million and we also are still.

Strongly looking at very near mine and solutions that would be certainly less than $10 million in terms of capital for rate right. Now we're sitting in a very good position and we have permits to the end of 2023 for the way we're set up right now.

Okay. Thanks, Dan.

I also had a quick question on <unk> just was there any maybe I missed it but was there any update on permitting for the goonies tap a pet.

And I can say debt.

Absolutely.

We continue to work with the government. There is still a court case between 2 of the government agencies, and who has control of the land and.

And that would that should be coming to fruition here in September when they cut and they go back into session.

We've adjusted our plans, but certainly in the near term debt.

There is no effect and we also have reengineered, our access to the good and <unk> pit.

In case, we don't get permit for the larger footprint, we would be.

Would be still able to access as our original feasibility plans indicated.

Okay. Thank you.

And then maybe I had a quick question on the dividends and you mentioned that you've raised the dividend.

And that the dividends are essentially waived.

For Kirk assault and shares.

And it said that they're waived to the extent that they can be attributed to pay juicy couture and I guess I had a question about the language does that mean that there is a portion of the dividend debt that Kirk assault and is eligible for that say its not attributable to <unk>.

Trevor It's Scott no. It's al determination I mean, as you know dividends debt pay down and retained earnings and a determination that the entirety of average range of any physician has been attributable to control and in turn.

And for the dividend distribution during the quarter again, the determination was that it's entirely attributable to come to us. So as you as you notice this.

Series of restrictions in place in terms of the Covid building share holding and their ability to receive dividends and typically our ability to transfer shares since their ability to vote on those shares. So they will have no entitlement to the recently declared dividend.

Okay.

That's helps clear it up.

And I guess my last.

Point or comment is just on your summary, slide that you closed with.

You make a very compelling case on on net.

And the continuing operations in terms of their cost structures and their cash flow generation, but it doesn't really get to any per share metrics, which is kind of where.

I struggle and I, just wonder how you would kind of frame the investment thesis.

With respect to kind of per share metrics and per share valuation.

Should we be thinking.

How about your capital structure is as intact going forward with the kirch assault and shares or should we be thinking that at some point there will be.

A reduced share count debt that negate that essentially remove some shares from the calculus.

Yes, I mean, if you look at our free cash flow guidance for this year.

Up to a $175 million and cash debt approximately 65 per share in terms of free cash flow, which.

Moving forward, we expect that to growth.

And just given the rising gold output that we're expecting from Turkey, as we move into that higher grade sequence. So next year 2022, 2023, I think you're going to see some very meaningful increases in terms of the free cash flow generated from continuing operations, assuming the current sort of prevailing metal price environment.

Obviously in terms of our border.

Share count.

There are some opportunities here, obviously, we're open to it.

Engaging and negotiation with the political leadership and Craig and stand in terms of looking to resolve the situation through constructive dialogues and look we're certainly open to all possibilities which could include.

And the cookies golden share holding and what that could potentially mean for a reduction and a share count.

And the other thing I want to mention is <unk>.

<unk>.

I've been describing it as a.

Leading balance sheet relative to the comparative figures, we think it's going to continue to growth and and maybe there's opportunities there as well and in terms of strategizing and the board around capital return initiatives et cetera.

It's all kind of preliminary right now Trevor and I think as a management team and speaking on behalf of the board. We do recognize that we have some opportunities here and which will continue to evaluate obviously during the quarter you source took 1 take.

And then 1 small step for.

Measure tokens and the increase and the dividend by some 40%.

I think we certainly have the financing capacity to continue to evaluate.

The potential hepworth and initiatives, so sorry, Trevor that was a long answer.

Yeah, Yeah no no.

And that's good.

I guess, maybe 1.1 last question just with respect you mentioned.

You mentioned potentially you we remain open to speaking to the government and in ways that you may be able to.

Talk to them about the shares.

Or are there also legal remedies.

And and if so are they are they something that you kind of need the other legal processes to take to kind of play out before you at <unk>.

You would consider those in other words for the international Arbitration case, you have and Canada, and so forth, but those need to kind of conclude before you think about next steps legally.

And the legal measures, we're taking right now that we think best position us in terms of protecting the right for that shareholders and and the overall value.

And behalf and that stakeholders.

Yes, and then there's also the case and Canada against the temporary manager.

Kind of what is the.

And what is the outcome and Youre looking for there and that particular case.

It's all part of our sort of legal measures and looking to substantiate that what's taken place here is invalid.

Without merit, and it's and direct contravention income without forgetting agreements and our investment agreement.

Okay Fair enough alright. Thank you Scott that's all I had.

Okay.

The next question comes from the line of Michael <unk> from RBC capital markets. Please go ahead.

Thank you guys for taking my question Scott you just touched on it a little bit.

And I was hoping you could talk a little bit more about.

That balance sheet and capital allocation and I suppose that would be a key question come tour notwithstanding.

As you said it is still preliminary but what really drives your thinking on those front and so if we're looking at dividends cash return and M&A.

Well I suppose are you seeing opportunities out there or is it too early to think about that.

Can you give a little bit more color around how youre thinking about the balance sheet.

Yes.

We recognize that we have a significant and sort of debt free balance sheet and and we think that's going to continue to grow just given where the position where the business is positioned and just the underlying profitability that you're seeing right now.

We regularly sort of strategize and deliberate on this with the board and I think over the last for the 18 months you have seen us take a number of steps with regards and distributions.

Very quickly we instituted additive and program. We then increase the dividend to <unk> <unk> per share and last day rate increased to <unk> <unk> per share and and the Assortments recently have now declared a dividend of <unk> <unk> per share. So on that front, we have been taking some steps.

Obviously, you know there's potentially other capital return opportunities.

Opportunities here.

I was mentioning earlier and as we.

It could be evaluating and thinking about our share counts, but 1 of the challenges. We have Michael is I don't think we can do anything until we have results.

Situation with <unk> and that could result in shareholding and so what I mean by that and say you're asking me about a share buyback scenario under that scenario, if cookies alts and was not participating we would be effectively increasingly concentrating.

<unk> position and we've been there.

The organization and that brings with it and a number of other considerations and as part of the overall count to us.

And I think until we have that result, and it kind of restrict our ability to.

Evaluate and.

Ernest any kind of.

Share buyback scenario.

And on the M&A front I mean, you still obviously you sold some assets <unk> got some other assets and the portfolio and and again looking at that cash balance and I agree. It's a huge asset have you.

Is it too early to think about longer term strategy is it still sort of dependent and the timeline on what happens.

And Kurdistan.

Yeah.

And myself.

Personally I like to kind of be a little bit more contrarian and terms of when we do get.

We've had it in terms of inorganic growth. So for example, and during the time and I've been listening Terra and when we were quite active in terms of.

Acquiring bid.

And <unk> it.

It was and the low the low phase of the gold price cycle and gold was trading around $12.50, I think that's a better times and in terms of and maximizing the likelihood of a value creating.

Creating sort of transaction, so given where we are and the gold price gold price cycle right now.

I find it a little bit more difficult.

And to envision.

Doing things that are going to represent compelling value accretive opportunities at the same time and I'm not ruling it out obviously I think in terms of that and go forward position here and our balance sheet, our profitability our cost profile I think for in a fantastic position and Thats something that we can look to capitalize on but I think just.

Speaking more broadly in terms of where the industry is positioned and the industry is doing really well for the industry quite profitable at these gold prices and I think everyone's balance sheets that have largely been repaired so.

I think it is going to be difficult in terms of action ability and in terms of the opportunities presenting themselves and.

That's fine for us from my perspective.

And willing to be patient and and I think we've got a great business and moving forward, but we recognize the debt balance sheet provides us with a lot of Optionality and I think thats, a competitive position for us to be.

Okay, great. Thanks, and maybe just 1 last 1 for me.

High level on the dispute with Kurdish and obviously the situation is very different than it's been in the past and this is maybe my just my perception or opinion, but it does seem that.

Based on local media reports that the governments comments or maybe more heated rhetoric is more heated more specific commentary about.

Past agreements denunciation that sort of thing.

Direct contact with the government can you comment at all on on what Youre seeing in terms of their public statements maybe relative to those past disputes.

And well.

And I'm, saying, what you're seeing and.

It's a lot of hype of both a lot of rhetoric and all of it is unsubstantiated and.

And this has been the typical sort of cookie playbook.

And you got to take it would be appropriate.

And just so if you will we'll put it in that context.

We don't react to it as you've seen what we're focused on is.

And obviously trying to engage with it the cookies leadership and that's how we've always resolve these disputes and spruce constructive dialogues.

And as you look at history, eventually and both sides eventually come from the tables, but in the absence of having any.

And for engagement.

And as us to take the legal measures that you've seen us sharing and some in central arbitration and the chapter 11 proceedings.

And we just have to continue to watch and see how this unfolds Mike.

Okay, great. Thanks, very much for the time.

Yes.

The next question comes from the line of Anita Soni from CIBC World markets.

And as open.

Glenn Thanks for taking my call.

So I'm not really going to ask anything about Oh.

And I think that's probably then.

So Jeff at this point.

And can you.

And I wanted to focus a little bit on operations and from the other moving parts and molybdenum business just now and net you said that the.

And net $35 million cash draw. This year is that going to continue going forward and your and your view and when you look at 2000 and 'twenty 2 'twenty 'twenty 3 have you.

Thanks for that.

And ongoing situation or should that.

Only be a 1 time kind of 2021 and forecast.

Yes, Thanks, Anita Darren do you want to respond to that and in your response, there and just make sure you pointed out that it's a buildup in inventory that will be monetized in due course, but every day.

And it basically driven by as you know the molybdenum prices has dramatically increased and it gets up there and adding a pound when we put out guidance for 2021 day started a year I think we'll be using around $12. A pound. So it's predominantly driven by working capital increase call. It I didn't know.

90% of that.

We don't unless the molybdenum prices continue to spike up again into 2022, 2023, and then you'll see potentially.

And additional buildup.

And all the need for additional cash and to the business, but it's primarily just driven by double digit and price increase and nothing more so if it's if it is currently flat obviously, we'd like to recoup some of that $30 million approximate Inc.

Cash flow into the business.

But that's kind of the real driver behind it.

Okay, and then secondly therein.

Mount Milligan depreciation increase can you just walk me through.

Why and increase for this year.

I'm just trying to reflect when would you shoot the Mount Milligan.

And.

A lot of new lots of mine and I think back in 2020.

When we say reduce the mine life. So that was the driver of the.

Should a mine life of expense need to increase out depreciation and a period on period. So I'll have to look and diving a little bit David at the top of my head that would be and a driver and obviously, we've had a high throughput high production coming in during the quarter. So obviously that'll be attached to that that piece and again, we can talk in a bit further and get them.

Back to you as well good luck.

Yes that would be helpful. I think what youre describing.

And drive that we're not.

We'll not be doing and movement that youre talking about going out for them.

This quarter also.

Well this year.

And lifecycle and I get around and to understand what the main drivers there were and then on corporate administration and I think there was an increase there.

And.

Is that a is that a.

15 million Bucks is that more along the lines of all the legal.

And about Kentucky.

Yes.

Okay.

And then lastly, just on operations for for Oxy.

And the telepathy and I guess for phase 3.4 and 5 are largely and stripping there is largely complete.

Is that should we expect higher grades more along the line of reserve grades going into the back half of the euro and will that be more next year.

And then do you want to speak to that and please yes, certainly and you're correct. We are now starting to already experienced higher grades and a plan to carry that forward to really over the next 2 and a half years.

And I guess, 1 last question on Mount Milligan and it seems like you are running a little higher than the top end of your guidance range, particularly on gold and.

Is there something that we should be thinking about and the second half of the year in terms of.

Throughput.

Ramifications are greenbaum applications.

And more about the net pointing for or within the guidance range are you continuing to expect from that performance.

Dan do you want to speak with us.

And I certainly can.

And we're having excellent throughput and that.

And that is continuing into the third quarter, which is great.

We are we are.

Focused as well on both gold and copper, but we have gone through some fairly high grade gold.

And sections over of our pit so were still confidence on guidance. We're also seeing excellent recovery and both copper and gold and.

And and hopefully that will continue because we've got additional process controls and our plant. So we're still feeling very strong guidance there.

Okay. Thank you that's it for my questions.

Our last question comes from the line of Mike gentlemen from Bank of America. Your line is open.

Oh, Bart and Scott and.

Just following on that comment about China.

And our branch about Nelligan and all are this year I can't remember who said it's Scott.

Pending new life and widen studies at both Mount Milligan and oxygen and all.

<unk> November and I didn't say anything and this time about those is that still and the plan.

For those to be released are completed.

Yeah, Hi, Mike, So, yes, Dan and his engineering and technical services team.

And they're doing a number of evaluations in terms of what we're seeing in terms of conceptual sort of life of mine opportunities at Mount Milligan and as well as offset that work is well underway.

But in terms of committing to a timeline.

Haven't made that commitment and terms about public disclosure.

And potentially an opportunity for us and terms without typical year end reserves and resources.

Really come down to whether or not what is.

The materiality in terms of what we're seeing if there was something material and then obviously we'd have to disclose it and it's not material.

And maybe something that we don't disclose so that's something that we'll continue to evaluate and we'll just have to see how that unfolds here over the course of this year.

Okay, well, thanks, and 1 last question, Scott and I guess.

Oh, Yes, you put charged from the side.

And obviously you got a great balance sheet, great free cash flow, but gold world is awash with 3.4 and a thousand ounce gold producers.

And Laura.

I could go into Denver going forward might be trampling all over them.

And the atrium and all the bar just wondering Oh does.

And the returns obviously as 1 way, but how do.

And how does some charges taken this yourself among all of these companies now.

Well look.

Speaking talking to Miami and book, obviously average portfolio that would differentiate differentiates us and Tara what distinguishes and Tara and then obviously the peer leading cash position, but I think also.

Pretty much appeal, leading cost protocols and if you look at our guidance for this year you look at the results and Q2, I mean sub $700 per ounce that really is a lower cost quarter. So I think that distinguishes us. But then also we've got some natural and.

Organic growth taking place here as we move forward over the next 2 and a half years, and that's particularly in Turkey, where debt.

Mentioned earlier, we are getting into a high grade statements and we're expecting our gold production levels and offset more than doubles.

<unk> thousand 22, 2023 relative to this year and so that.

Obviously and it makes it a growing free cash flow and growing profitability.

I think as we spoke to and we've been doing some things in terms of capital return initiatives or shareholder friendly initiatives and things and meaningful increases and our dividend distributions and is there opportunity to do more and that's something that too and they continue to evaluate with the board.

Some of those attributes I just pulled forward and I really do think that distinguishes us and Tara and her.

Favorable manner, and then obviously underpinning all of this would be the valuation and does that represent.

And interesting.

Investment proposition.

I think that's how I'd respond Mike.

Okay.

Okay, well, thank you for that and good luck.

Thanks, Mike.

There are no further questions from the lines.

With that I'd like to thank everyone for joining us on our call today and.

And.

And we will.

Wrap up the call right now so thank you everyone Goodbye.

And that's does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your lines.

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