Centerra Gold reported third quarter results on October 29 and used them to cut the cost outlook at its Mount Milligan copper gold mine in British Columbia. Mount Milligan’s all in sustaining costs on a by product basis were 985 dollars an ounce in the quarter, down 22 percent quarter on quarter, and the company lowered full year by product AISC guidance to 1,100 to 1,200 dollars an ounce from 1,200 to 1,300 dollars.
The company was explicit about the mechanism. Gold production costs at the mine were 1,392 dollars an ounce in the quarter, and full year gold production cost guidance was reaffirmed at 1,450 to 1,550 dollars. The improvement came from stronger gold production and sales plus copper by product credits, which are subtracted from gold costs in the by product presentation.
Operations held plan for a fourth straight quarter. Mount Milligan produced 44,070 ounces of gold and 12.8 million pounds of copper in the quarter, and full year targets of 140,000 to 155,000 ounces of gold and 50 to 60 million pounds of copper remain intact. Consolidated gold production was 75,429 ounces and revenue was 500.3 million dollars, with free cash flow of 17.1 million dollars as growth projects absorbed cash.
For readers, the distinction matters. A by product AISC cut driven by copper prices flatters gold margins while copper is strong and reverses if copper weakens, whereas Centerra’s unchanged gold cost guidance is the cleaner read on mine performance. Consolidated AISC guidance was held at 1,650 to 1,750 dollars an ounce.