The Öksüt project is currently comprised of the Keltepe deposit and the smaller Güneytepe deposit.
The resource estimate used as the basis for the PEA was made as of December 31, 2013 using a cut-off grade of 0.2 grams per tonne of gold and a gold price of $1,300 per ounce.
The resource estimate consists of: (i) indicated mineral resources from the Keltepe deposit, estimated at 29 million tonnes grading 1.2 grams per tonne of gold for 1.1 million contained ounces of gold; and (ii) inferred mineral resources located at the Güneytepe deposit, estimated at 4.7 million tonnes grading 0.9 grams per tonne of gold for 134,000 contained ounces of gold.
The PEA envisions a conventional open-pit and heap leach facility with an expected 34 million tonnes of ore to be stacked at a maximum rate of 11,000 tonnes per day.
Highlights of the PEA study (using a $1,300 per ounce gold price) include:
11 year mine life (2016 to 2027),
Life of mine gold production of 893,000 ounces, average annual gold production of 125,000 ounces in years 4 through 6,
Total construction capital and preproduction costs of $166 million,
Total sustaining capital of $9 million,
All-in costs(1) for the project of $849 per ounce,
All-in costs including taxes(1) for the project of $914 per ounce,
After tax net present value (NPV) of $117 million at an 8% discount rate with a 19% project internal rate of return,
Payback on construction capital and pre-production costs is expected to be 4.5 years after production begins.
(1) Non-GAAP measure. Centerra has adopted the World Gold Council’s (WGC) guidelines regarding "all-in-costs". These financial measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers, even issuers applying the WGC’s guidelines. See description of "Non-GAAP Measures" in the Company’s Management Discussion & Analysis dated February 19, 2014 and filed on SEDAR.
The PEA is preliminary in nature and includes the use of inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. Thus, there is no certainty that the PEA will be realized. Actual results may vary, perhaps materially. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The PEA is subject to a number of assumptions, including, among others, that an environmental impact assessment will be completed within the required timelines, all required permits will be obtained in a timely manner, the Company will continue to have the support of local communities, a constant regulatory environment and no material increase occurs to the estimated costs. A full list of the relevant assumptions will be set out in the PEA.
Ian Atkinson, president and CEO of Centerra Gold stated, "We are very pleased with the positive results of the PEA study which confirmed our expectations based on the known resources. The Keltepe deposit is still open to the south in the direction of the Güneytepe deposit and we have additional exploration targets on our land package which we will continue to follow-up on through exploration and drilling. Now we will move forward with a feasibility study for the project with the target of achieving initial gold production sometime in late 2016."
The PEA study envisions a conventional open pit and heap leach facility with the mining of the two pits completed by a local mining contractor. The heap leach pad design is based on an expected 34 million tonnes of ore to be stacked at a maximum rate of 11,000 tonnes per day, with a nominal crush size of 80% less than 37.5 mm.
Over the life of mine, mining costs are estimated to average $2.77 per tonne mined, processing costs are estimated to average $4.00 per tonne processed and administrative costs will average about $9 million per operating year.
To account for mining dilution and losses during the mining process, the mineral resources have had a 95% factor applied to the gold grades in the production schedule and are constrained by an optimized pit shell defined using optimization software, a gold price of $1,300 per ounce, an overall metallurgical recovery of 77%, and estimated average mining, processing and administrative costs. Overall pit-slope angles range from 38º to 42º depending on the location in the pit and result in a low overall stripping ratio of 2.0 over the mine life.
Using a gold price of $1,300 per ounce and a discount rate of 8%, the Öksüt open pit LOM outlined in the PEA has an estimated project NPV (after tax) of approximately $117 million and a project internal rate of return of 19% after accounting for all operating costs and capital expenditures related to the open pit operation as well as required tax and royalty payments. Additional exploration costs going forward have not been included in the financial analysis.
