Centerra Results Rise, But Cuts Production Outlook

Centerra Gold reported a higher third-quarter profit Friday helped by a boost in gold production and a spike in gold prices, but the miner cut its 2008 production outlook on lower-than-expected output at its Kyrgyz Republic-based Kumtor mine.

Centerra, which is 53% owned by uranium miner Cameco Corp, also said negotiations are continuing with Cameco and the Kyrgyz government regarding Kumtor.

The Canadian company has been trying for the past year to finalise an ownership agreement with the Kyrgyz government that would see Cameco reduce its ownership share, while the government will double its 15% stake.

The deal was reached last August and seemed to put to rest concerns that the government might nationalise the project. However, the agreement was stalled in parliament and expired in June. The company is now trying to revive the deal.

For the quarter, Centerra earned $16.9m, or 8 cents a share, compared with a loss of $90.4m, or 42 cents a share for the same time last year when it took a big non-cash charge related to a Kumtor mine agreement.

Revenue for the quarter rose 26% to $139.4m helped by an increase in the realised gold price which averaged $860 during the quarter.

The company said it produced 186,145 ounces in the third quarter of 2008 at a cost of $498 an ounce, up from 136,461 ounces of gold produced and a cost of $440 in the same quarter in 2007.

Centerra also cut its 2008 gold production outlook. It now sees total production in a range between 740,000 and 790,000 ounces, down from an earlier outlook of between 770,000 and 830,000 ounces. The reduction is due to lower than expected gold production at Kumtor.

Total cash cost in 2008 is now expected to be between $460 and $495 per ounce up from the previous range of between $409 and $449 per ounce due to the lower ounce production and rising operating costs.

By Scott Anderson, Reuters.