Yahoo Finance Centerra stock pops after miner announces share buyback, extends life of a B.C. mine
Centerra Gold Inc.’s shares rose to their highest in nearly two months after the Toronto-based miner announced that it intended to repurchase stock, and that it had extended the life of its Mount Milligan mine in British Columbia by four years.
The company said it would purchase about 7.1 per cent of its outstanding 220 million shares, assuming it gets the approval of the Toronto Stock Exchange, stating in a press release on Oct. 4 that recent prices don’t “adequately reflect the value” of Centerra’s “assets and its future prospects.”
It’s been a while since Centerra shareholders received good news.
The share price dropped to a two-year low in August, after the miner nearly halved its annual gold production guidance due to a pause in production at its Oksut mine in Turkey over permit issues. The change in outlook was compounded by an adjusted net loss of US$36.2 million in the second quarter, down from a profit a year ago.
Earlier this year, Centerra sold its Kumtor mine in Central Asia to the Kyrgyz government as part of a settlement over environmental and safety issues. Last month, the company replaced chief executive Scott Perry, who worked at Centerra for seven years, with director Paul Wright. The board is currently on the hunt for a new long-term head.
On Tuesday, the company also said it had increased its proven and probable gold mineral reserves at its Mount Milligan mine by 1.1 million ounces, to a total of 2.9 million ounces, and its copper mineral reserves by 260 million pounds to a total of 996 million pounds, which would add at least four years to the mine’s life and allow the company to operate the mine until 2033.
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Bank of Nova Scotia analyst Trevor Turnbull, who follows the company, described Centerra’s update as “mixed” in a note sent to clients on Oct. 4.
“Gold reserves added were 20 per cent higher than we had anticipated while copper reserves added were 29 per cent lower,” said Turnbull, adding that the project’s expected cash costs would now be higher than before due to a longer mine life and “significantly lower copper credits,” triggered by lower-than expected copper grades.
Turnbull said he expects the company to “consume cash” till 2023, as the Oksut mine remains offline.
Still, as of about 12:45 p.m. Toronto time, shares of Centerra were trading at $6.93, up 68 cents or 10.88 per cent, within a 52-week trading range of $5.18 and $13.52. The company has a market cap of about $1.5 billion.
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