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Centerra's Q4'17 gold output slides 13% YOY; full-year output meets guidance

Centerra Gold Inc.'s fourth-quarter 2017 gold production dropped 13% year over year to 216,752 ounces, while output for the full year jumped 31% to 785,316 ounces. The full-year result was in line with the company's revised guidance of between 785,000 and 845,000 ounces, an increase from between 715,000 and 795,000 ounces.

The increased annual production was driven by the Kumtor mine in Kyrgyzstan, which exceeded the upper end of its guidance with 562,749 ounces of gold on the back of milling higher-grade ore from stockpiles compared to 2016.

The Mount Milligan mine in British Columbia produced 222,567 ounces of gold in 2017, falling short of the lower end of its revised guidance.

The company exceeded its guidance for all-in sustaining costs, which came in at US$709/oz of gold for the quarter on a byproduct basis, including taxes.

Centerra also produced 12.3 million pounds of payable copper during the final quarter of 2017, an 18% increase on an annual basis, with full-year copper output from Mount Milligan jumping 415% to 53.6 million pounds, which was slightly below guidance.

For 2018, Centerra aims to produce between 645,000 and 715,000 ounces of gold and 47 million to 52 million pounds of payable copper. The gold production forecast includes 450,000 to 500,000 ounces from Kumtor and 195,000 to 215,000 ounces from Mount Milligan.

"At Kumtor, we are expecting gold production to be weighted more towards the back-half of the year with approximately 45% of the production expected in the fourth quarter of 2018," President and CEO Scott Perry said. "At Mount Milligan we expect 60% of the production to be in the second half of the year."

The company anticipates consolidated all-in sustaining costs at US$924/oz to US$1,024/oz of gold for 2018 on a byproduct basis, including taxes.

CapEx for 2018 is estimated at US$242 million, including US$82 million for the Oksut project in Turkey, where Centerra expects to start construction in April, as well as US$36 million to advance the Kemess Underground project in British Columbia with preconstruction work.

On the financial side, Centerra's 2017 net income jumped 38% year over year to US$209.5 million as revenue surged 58% to US$1.20 billion and cost of sales increased 66% to US$682.1 million.

The increase in earnings reflects a full year of operations at Mount Milligan and the increased production at Kumtor.

The company said that for the full year, it booked a US$41.3 million impairment charge on its Mongolian assets and recorded a tax benefit of US$21.3 million as a result of U.S. tax reforms that came into effect in December 2017.