Centerra Gold (OTCPK:CAGDF) is a diversified mid-tier gold producer that operates their flagship Kumtor mine in Kyrgyzstan, Mount Milligan in Canada and the new Oksut operation in Turkey. The company’s share price was hit hard on Tuesday after reporting on civil unrest in Kyrgyzstan following disputed election results, sending the stock down 15%.
Looking at the share price performance over the past year, it’s clear to see the company has underperformed its peer group and the gold miners index (NYSEARCA:GDX) since a poor Q3 result last October. Since then, the company has reported two positive quarters that led to its share price starting to catch up to the sector, but further uncertainty at Kumtor has now caused it to slump again.
One-year share price performance
Kumtor: A World-Class Mine In the Wrong Place
Kumtor is by far the company’s most important asset, churning out between 550,000 and 600,000 ounces per year at $750/oz to $800/oz all-in sustaining costs (AISC). This production profile ranks it as the 20th largest gold mine globally, and it has been operating for 23 years, producing over 13 million ounces of gold over that time.
It is an open-pit mine with a total resource of 14 million ounces gold and a current estimated mine life of 6 years in the open pit. An updated technical report will be released this quarter, including an updated life of mine that will likely detail the long-term underground mining potential at Kumtor.
Kumtor made up 77% of the company’s total gold production of 783,308 ounces in 2019, even after a temporary halt of operations in December due to a waste rock slide that killed two employees.
Kumtor mine overview
(Source: Company presentation)
Despite Kumtor being a potential tier-one gold mine, the main issue that has kept many investors