Good to see you.
Yeah. Good to see you too.
Have a seat. All right. Got a couple of questions for you. Just starting off with, you've maintained a great cash position with no debt, alongside a growth pipeline in gold as well as copper, and the optionality of U.S. moly business as well. How is Centerra positioned to unlock shareholder value in the near term as well as the long term? What progress have you made over the past year?
The focus on the company over the last, I'd say three years, and it's been shifting in the last little while, but was on studies. We have a lot of metal in the ground, gold, copper, molybdenum, and we had assets that were on care and maintenance or were sitting idle. What we have to do is work through a number of studies on each of our assets, Mount Milligan, Kemess, Thompson Creek, Goldfield, to put together a cogent plan on where do these assets fit in the portfolio, and what is the value potential for each of them. Over the last year, we've transitioned from studies and visioning and determining the role of each asset in the portfolio into execution. This slide shows the portfolio on a page.
Our cornerstone asset is Mount Milligan, gold copper production for 20 years out to 2045 with potential for growth beyond there. We have the Öksüt Mine in Turkey, which we're looking at a mine life optimization study. In the case of Goldfield, we completed a study and are now executing on the project. It's a low-risk oxide heap leach project in Nevada. Kemess is going to be our second flagship asset. We completed a PEA there on a 15-year plus mine life gold copper. Again, British Columbia in a brownfield asset. In a nutshell, Ovais, it's been taking a portfolio of assets that have been sitting idle or on care and maintenance and coming up with a vision for each of them and now executing against it. We'll get into each of these.
At the bottom there, you see the molybdenum assets, which are a little bit of a separate part of the overall portfolio, but also where we see very significant value, particularly lately where molybdenum prices have been trading.
Good stuff. Again, moving on to the performance of the stock. This year, your outperformance has been fairly known on that front, but the stock still remains fairly undervalued. Why do you think that is, and what are you planning to do to continue to increase that valuation?
Yeah. It's something that has, You're right. We've had a good run here over the last year, but we still think we're undervalued. We have to ask ourselves, what were the causes of that undervaluation? I think that molybdenum was definitely something that weighed on the stock. When we were here at this conference three years ago, we had just daylighted our study on reopening Thompson Creek, and it did ask questions. What is a gold mining company doing reopening the molybdenum assets? But we've advanced that, and I think the perception on moly being potentially a liability and not an asset, that has faded, and I think that has helped drive our re-rate.
A second driver was we had performance at some of our assets, most notably Mount Milligan, which didn't always meet expectations. It was really critical to us to develop a plan at Mount Milligan that we'd execute against. I'm happy to say that we've now chalked up three consecutive quarters of meeting guidance, solid performance at Mount Milligan. We're about to finish another quarter here. We're doing very well, and we're looking to finish the year as per guidance. I think another valuation disconnect driver was as gold prices started to go up, there's an immediate trade into high free cash flow yield. Because of our development pipeline, three major projects, we don't screen high on free cash flow yield. That, I think, held us back at the start of the bull run.
Over the last year, like you said, we've had really great performance as each of those causes of underperformance is starting to fade. The one pitch I like to make here is the rightmost chart on this, is we are unbelievably undervalued, we believe, on an EV per resource ounce basis. We have a very significant resource, principally in British Columbia between Mount Milligan and Kemess. We just don't think that is fully valued. That's the point that I made is that we're advancing the projects, starting to deliver against plan, and we believe that as we continue to do that, market recognition will follow.
Good stuff. Just moving on to your balance sheet. You recently increased the corporate credit facility to $600 million, bringing your total liquidity to over $1 billion, with $450 million in cash. You also recently announced that your board has approved up to $200 million in buybacks as well. How do these developments support your capital allocation strategy?
The line of credit was really us taking advantage of an attractive market for refinancing, and we took that opportunity. In terms of capital allocation, we have a robust development pipeline. We're building Thompson Creek. We're in the final stages of that. We're building Goldfield, making good progress. We plan to invest in the Kemess reopening. So that's a big share of our free cash flow and cash going to the projects. Even then, we still have a very strong balance sheet. Given our perspective, our own valuation, we've invested a lot of money also into the buyback. As you mentioned, the board approved up to $200 million this year. We did $50 million Q2. We're on track in Q3 for a number bigger than that.
I think that really underscores the belief that we have that our shares are one of the best places to invest our cash. Then just to round it out on capital allocation, we also have made a number of equity investments in juniors where we really think highly of the exploration teams or the development potential in the case of the two larger ones. So the capital allocation framework is really invest in the portfolio, continue to drive value in our projects. Number two, while we believe we are undervalued, impact the denominators or strategies to increase the value of the numerator on NAV, decrease the share count, drive those per share metrics, all the while delivering on the strategy.
Stuff. Then just moving on to the assets. Centerra now has delivered three quarters of production on plan at Mount Milligan. Congratulations for that, and we can see the performance on that and the performance on the stock as well. So congratulations on that. This was following the PFS that was released last year. What improvements have led to the stronger execution at Mount Milligan, and how are you thinking about this asset in the long term?
Well, Mount Milligan clearly is our cornerstone asset, 20 years, copper, gold, British Columbia, great jurisdiction. The reset was driven by two principal work fronts. One was a reset on the understanding of the ore body. We completed a PFS, and think about that as a reset on the technical understanding of the mine. We had completed a detailed infill drilling program, which allowed us to better characterize the grades, the recoveries, and the different geometallurgical domains in the ore body. So it was just a better understanding of the ore body. Secondly, equally importantly, we reinvested in the team. We have a new, very capable general manager. We have built a team, and just in the last six, seven weeks, we have a new Chief Operating Officer, Kelly Strong, who joined the company.
It has really been a focus on better understanding of the ore body, coming up with a plan that we can deliver against, and buttressing the team and building that out. What I want to touch on on Mount Milligan is the future. We have a cross-section here for the asset where we have the first line you see there, the 2025 reserve pit. That is mine life until 2045. If you look at the resource shell, which is the next line over, there is another 230 million tons of indicated material, which would support a further 10 years of mine life. A combination of drilling, optimization, and a perspective on gold price will fairly easily move that into reserve.
Beyond that, to the west, we continue to drill, we continue to encounter mineralization, we continue to fill in gaps that were previously waste blocks, and we have every confidence that this will be a multi-decade operation, like I said, in British Columbia, where the environment is very favorable. Milligan will remain the cornerstone asset for the company.
Excellent. Just moving on to Öksüt. We have seen a really strong performance from Öksüt, which led you to your recent production guidance increase. Can we expect this outperformance to continue, and does this have any impact on the expected outcome of the life of mine optimization study that you are looking to publish, I believe, early next year?
That is right. Öksüt has been a great asset in the portfolio. It has generated very robust cash flows over the last three years, and it continues to outperform, and thus what led to the guidance upward revision. What we are doing right now is we are looking at the life of mine, which currently has a reserve life ending in 2029, and we are looking at the opportunity to mine out lower grade material in the oxide boundary. Also taking into account that we have been realizing higher grades and higher recoveries, essentially for the entire mine life, which provides an opportunity for residual leaching. In other words, there is probably more gold in the heaps, more recoverable gold in the heaps than we had previously accounted for. So a combination of very cheap ounces coming out of the heaps as a residual with lower grade oxide material as a pit extension.
We are targeting a mine life extension study here, as you mentioned, at the end of February.
Excellent. Following the PEA released on Kemess in January of this year, you've been working on a PFS. Can you give an update on the project? What are you expecting from the study, and how do you see Kemess eventually contributing to Centerra's long-term growth strategy?
Kemess, as many people know, is a past producer. There's a 50,000 ton a day mill on site. There's a 380-kilometer power line that sits there ready to service the site. We have a camp, an airstrip, truck shop, much of the facilities required to reopen this mine. From a certain perspective, it's a much lower risk proposition than a greenfield of this scale. If you can imagine a 55,000 ton a day mine, in a remote B.C., that's a pretty high CapEx ticket, but much of that is already in place. Another aspect that is very attractive is that much of the permits are already in place. Centerra previously had a permitted project here. Much of the agreements with First Nations are in place, and British Columbia has been very supportive, not only of Mount Milligan, but also of advancing Kemess.
That gave us the confidence to put a study in, and the PEA shows an initial mine life of 15- 17 years. Gold, copper, you can see the gold is 150 to 175,000 ounces a year, and 50- 70 million pounds of copper a year, unstreamed. This mines out less than half the resource. This is a conservative plan focused on, as you see in the cross-section, mining out an open pit, which is very low strip, and then a higher grade underground using conventional mining methods. I stress again that the PEA mines out only 47% of the resource, which is the blobs shown in gray on the cross-section. We are advancing a PFS right now. The scope of works in the PFS will be essentially the same as what was in the PEA.
What we're really doing is advancing baseline studies in the areas where we have to update our permits and just putting a finer point on some of the estimates around CapEx, metallurgical recoveries, mine plan, and infrastructure development. Fundamentally what it is the refurbishment of processing facilities, mill tailings, ancillary facilities, and the development of a new mining area located approximately 10 kilometers from where the mill building is. The PFS is progressing well, and we intend to release that in the middle part of next year.
Good stuff. Just moving on to Goldfield, your project in Nevada that you are currently building. You increased the 2026 CapEx guidance at Goldfield. Can you give us an update on the progress of the project, why you increased guidance, and what is the focus of the spending for the remainder of 2026?
Goldfield is an oxide heap leach project in Nevada, one of the best jurisdictions in the world. We have a project here where the study has showed $250 million of CapEx and then production in mid-2028. The higher CapEx guidance for this year is a result of significant acceleration on work. We have been able to get into civil earthworks and site prep activities a lot more quickly than we had envisaged in the study. It is really a pull forward. The overall project remains on schedule and on budget. We just took the opportunity to advance some of the works and lead to a de-risking. We are going to assess what the ultimate impact will be on timelines, but for now we are saying on time, on budget, but with accelerated de-risking taking place here in the current year.
Good stuff. Is there any exploration upside within Goldfield that you are also targeting right now, or the focus is just on the step into construction?
The focus is on delivering the project, but it is a very large land package located in the Goldfield area of Nevada, and we are surrounded by claim blocks that some of the majors have picked up and are drilling on. We do have a drill program on the property. As I said, it is a very large land package. In addition to that, this is the oxide inventory. There is a sulfide inventory as well that we have not included in the current study and which, as we do more drilling and get a better understanding of the sulfide, we may also choose to study the sulfide potential down the road at Goldfield.
Excellent. Just looking at the moly assets. You're about one year from first production at Thompson Creek. I believe it's mid-2027 is the start. How's the restart progressing, and what are your plans for the US Moly business as we move closer to that first production?
So quick snapshot of what the business is. As you know, we have the Thompson Creek mine in Idaho, which we're proceeding on schedule and budget to reopen, first production targeted in the middle of next year. That's a $425 million- $450 million project, and we're tracking very well against the execution timeline. In addition to that, in our US Molybdenum business, we have a roaster in Pittsburgh where we treat currently third-party unroasted moly cons. Together, this business we call US Moly, we're almost treating it like a company within a company. Just to touch on the mine and the metal. As I said, the project is proceeding well. We're moving the tons required to expose the ore. We're well on track for first ore production and the physical works in the mill, the construction, and the tailings proceeding per schedule.
We were just out at site a couple of weeks ago, and it showed really well, in fact. The metal itself, we approved this project when molybdenum was trading at $20 a pound. It's currently at $33, $34 a pound. There is a structural deficit in the molybdenum market, which will persist for four to seven years. Molybdenum is used to make steel stronger, and it is used extensively in pipelines, energy infrastructure, power generation, defense, aerospace, and increasingly in semiconductors as a switch out from tungsten prices, which have really gone up. So that has really driven the price of molybdenum up to $33, $34. In addition, our business here is a U.S.-based business. It's a mine in Idaho, a roaster in Pittsburgh. We sell finished moly product to U.S. steelmakers.
Over the last couple of years, we've seen a tremendous increase in demand for steel and a commensurate increase in steel production in the U.S. We are the only producer of a product known as ferromolybdenum, which is the molybdenum product used in electric arc furnaces. By the way, all of the incremental steelmaking capacity takes place in electric arc furnaces. So we believe we have a U.S.-based business here that is very attractive in the context of the current reindustrialization push, particularly in the steel supply chain that is taking place in the U.S. We treat it as a company within a company. We recognize that there are some that view this as non-core in the context of a gold and copper company. So we will be open to options, and I've been asked this question publicly before. I don't mind saying it.
We are open to an IPO or a separation, but we will do that on our own terms when we see full value recognition for our shareholders. We're not just going to rush headlong into it because we don't think moly belongs in the portfolio. We think this is a great business with great cash flow generation potential, and we want to deliver the maximum of that value to our shareholders.
Perfect. I think we're almost out of time, but maybe you can talk about some of the catalysts that are expected over the next 12 months.
We're really focused on execution. It's delivering quarter after quarter, putting up good numbers at Milligan, advancing our projects. As you can see on the slide here, our catalysts are really execution related, and we believe that that has driven our rerates, and we'll continue to do that. In addition to that, we've got the