According to 1Q2017 operational results, Centerra Gold increased its gold production by 47% yoy, reaching figure of 173 koz of gold.
During the 1Q2017, the Company has produced 173 koz of gold, a 47% increase yoy. Growth in production was mainly achieved by Mount-Milligan acquisition with contribution equal to 45.2 koz of gold and 5.7 kt of copper.
Based on 1Q2017 results, the Company’s overall 2017 production outlook has not been changed. Centerra plans to produce approximately 715-795 koz of gold, including 455-505 koz at the Kumtor mine and 260-290 koz at the Mount Milligan mine. The Mount-Milligan copper production, according to the Company's plans, should reach 25-30 kt.
Given the gold mining seasonality, where about 30-35% of the annual production falls on 4 quarter, the level of production based on the recent results are within our expectations. We maintain our Hold recommendation noting high political risks associated with Kumtor mine and estimating our 12M TP at CAD 8.45/share.