Centerra Gold Inc (CGAU) 2021 Q1 法說會逐字稿

Greetings, everyone, and welcome to the first quarter results conference call. (Operator Instructions) Please note that today's conference is being recorded, Tuesday, May 11, 2021. (Operator Instructions)

It is now with pleasure that I turn today's presentation over to Mr. John Pearson, Vice President, Investor Relations. Please go ahead, sir.

Thank you, Bridget. Welcome, everyone, to Centerra Gold's First Quarter 2021 Results Conference Call. Summary slides are available on Centerra Gold's website to accompany each speaker's remarks. (Operator Instructions) Please note that all figures are in U.S. dollars unless otherwise noted. As we continue to work remotely, joining me on the call today is Scott Perry, President, Chief Executive Officer; Darren Millman, Chief Financial Officer; Dan Desjardins, our Chief Operating Officer; and Yousef Rehman, our General Counsel.

I would like to caution everyone that certain statements made today may be forward-looking statements, and as such, are subject to known and unknown risks, which may cause our actual results to differ from those expressed or implied. Also, certain of the measures we will discuss today are non-GAAP measures. So please refer to our description of non-GAAP measures in our news release and MD&A, which was issued earlier this morning. For a more detailed discussion of the material assumptions, risks, and uncertainties, please refer to our news release and MD&A, along with the unaudited financial statements and notes and our other filings, which can be found on SEDAR and now on EDGAR and on the company's website at centerragold.com.

And now I'll turn the call over to Scott Perry.

Thank you, John, and good day to everyone, and thank you for dialing into our Q1 earnings conference call. I'm just going to be referencing our accompanying presentation slide deck, which is available on our website, and I'm just starting off on Slide #5.

So look, given all of the recent developments in the Kyrgyz Republic, I thought I would take a moment to talk about those first. As we announced on Friday, a new external management law was passed by the Kyrgyz Republic Parliament last week. It was introduced at pass through 3 readings and was adopted in a single day. Mr. Akylbek Japarov was the sponsor of the law, and he stated that it only applies to Kumtor and not to any other mining companies. So from our perspective, it is clearly discriminatory.

Mr. Akylbek Japarov is also the chair of the State Commission reviewing Kumtor's activities. The State Commission is set to report their findings shortly. It's no coincidence that the $3 billion environmental claim was advanced and decided on by the Kyrgyz Republic Court at the same time as the law on the external management was approved. The law is designed to allow external management to be imposed, where there is a threat to human health or the environment. And of course, I want to state, we believe that the environmental claims are baseless. For one thing, this exact claim was settled in the 2017 strategic agreement.

Secondly, the claim relates to a practice that was stopped many, many years ago. There is no imminent danger of harm to the environment. Kumtor's environmental record is excellent. And it's important to note that the mine was first financed by EBRD and IFC, and it, therefore, had to adhere to their high environmental standards. In addition, the government's own independent consultant has noted that Kumtor is operated to international best practices, and we have carried out any and all of their recommendations.

Similarly, from a safety perspective, I want to note that Kumtor just achieved a significant milestone in terms of 1 year of lost time incident-free operations. So the suggestion that Kumtor's operations posed imminent danger to human life, we think that to be completely unreasonable. We, Kumtor, would not enjoy such excellent support of our employees and local communities if we were actually putting human health or the environment at risk. As always, Centerra has tried to engage with the Kyrgyz Government on any disputes of misunderstanding, and we will continue to do so. However, we will not hesitate to use all other means at our disposal, including international arbitration to protect the rights and interests of the company and our shareholders.

Moving into the Q1 results themselves, starting on Slide 6. As always, I'd like to start with safety. And I think Q1 was an excellent quarter for the company. We had 3 significant milestones during the quarter. As I just mentioned, Kumtor achieved 1 year of consecutive lost time incident-free operations. And in addition to that, as part of that milestone, I want to note that our contractors at Kumtor have now achieved 1,000 consecutive days of lost time incident-free operations. This was also complemented by Endako, where they achieved 6 years of reportable injury-free operations. So a great set of metrics there in terms of our ongoing objectives of zero harm operations.

You can see the third bullet point, our gold production levels were strong during the quarter. We produced just over 160,000 ounces of gold. And if you look at the fifth bullet point there, we've had a very competitive low all-in sustaining cost of $745 per ounce. So continuing to see good operating momentum carrying over from last year into Q1 and expecting this to continue.

Just before I leave this slide, I'll just highlight the second bullet point. Mount Milligan had excellent performance during the quarter, particularly from a financial perspective. We reported free cash flow of some USD 80 million, which was a record quarterly free cash flow result for the mine. So obviously benefiting from our production levels, our unitary cost performance, but also with the significantly higher copper price environment, you can see that it's definitely underpinning some strong profitability and free cash flow.

Just moving on to the next slide, on Slide 7. And in terms of our sort of bottom line financial results, first bullet point, during the quarter, we're reporting net, sorry, adjusted net earnings of some $84.2 million, which equates to $0.28 per share. The third bullet point, again, we saw meaningful levels of positive free cash flow being generated throughout the business. Company-wide, it was a total of $72 million. And then you can see in parenthesis there, each of the operation's contributing positive free cash flow.

The fourth bullet point, our balance sheet, our treasury position continues to be peer-leading and continues to be very strong. We have a debt-free balance sheet and we finished the quarter with net cash reserves of some USD 823 million. This was favorably underpinned by the last bullet point here, whereby during the quarter, we closed the divestment of our Greenstone Gold project, where we sold our 50% ownership level, and that brought in some USD 210 million of consideration.

And then just lastly, the fifth bullet point, just given the strength of the financial results, the strength of our balance sheet, as well as our outlook moving forward, the Board has once again declared a quarterly dividend of CAD 0.05 per share.

Just moving over to Slide 8. You can see the chart down the bottom here. We're just breaking out each of our sort of business unit operations in terms of each of the mine sites. And you can see over the last 5 quarters, we've seen very meaningful levels of profitability and positive free cash flow. Again, the second chart there from the left, you can see in Mount Milligan, very strong quarter. So really benefiting from these strong copper prices that we're currently seeing. And then obviously, the third chart is Oksut. This is our newest gold mining operation. We declared commercial production here in Q2 of last year. And you can see, it has since been a very meaningful contributor, obviously, in terms of production, but more so in terms of free cash flow generation.

The chart on the top right just really highlights our net cash position. And you can see, over the last 5 years, we've been increasingly transitioning into a positive net cash position. In 2020, we actually eliminated all corporate debts on the balance sheet and as you can see, finishing the most recent quarter with net cash of USD 823 million. So certainly makes for a strong financial foundation and a fully funded business model moving forward.

Just on to Slide 9, just in terms of our environmental, social governance profile and update to Q1. I'll just reference a couple of bullet points here. First bullet point, obviously, very focused on safety in terms of our company-wide Work Safe Home Safe leadership program, and I spoke to a number of the milestones that we saw during the quarter. But I think what myself and management are really pleased about, one of the key metrics that we reported is our total reportable injury frequency rate, and that currently sits at 0.27 whereas our internal target for this year is 0.41. So we're off to a great start. We've got some really good momentum there, and that's going to serve us well as we look to rally the troops and continue this good performance moving forward.

Second bullet point, just in terms of the social license to operate. We've now got a consecutive 93 months track record of no business interruptions at any of our assets. Third bullet point, just in terms of environment, again, we had no environmental incidents during the quarter as it should be. And then I might just jump down to the last bullet point. We continue to make significant headway and progress in terms of our rollout and the implementation of the World Gold Council's responsible gold mining principles. I think all of our operations are in very good shape as we look to establish full compliance and third-party assurance on that by the end of 2022.

So with that, I'm just going to pass the call over to Dan Desjardins, our Chief Operating Officer. So over to you, please, Dan.

Thank you, Scott. Good morning, everyone. Centerra continues to prioritize the health and safety and well-being of its employees, contractors and communities and other stakeholders during this COVID-19 pandemic, and we're taking steps to minimize the effect of the pandemic on our mine sites to help prevent infection and reduce the potential transmission. In addition, our operating sites, we continue to assess the resilience of our supply chain, increase the mine site inventories of key materials, and develop contingency plans, and it has allowed us to continue our operations unabated.

If you move to Slide 11. For Q1, we had a number of operating highlights. Of note, as Scott indicated, the near 4,000 people working at the Kumtor Mine achieved 1-year lost time free operation. And at our Canadian Endako operation site, we had 6 years now injury free, all excellent results. On the production front, we had a solid quarter. We produced 160,346 ounces of gold and 18.6 million pounds of copper at an all-in sustaining cost of $745 per ounce sold. Specifically, Kumtor produced 90,000 ounces at $888 per ounce sold. Milligan produced 42,000 ounces at an excellent $367 per ounce sold after the copper credit for the sales. And Oksut, excellent new operation, we have 27,601 ounces of gold produced at $804 per ounce.

At Kumtor, the plant operated uninterrupted for the quarter, and we continue to produce ore and feed the mill from our stockpile, and we are stripping cut-back 20, and that is continuing as per our planned rates. At Mount Milligan and Oksut, the operations were normally operated for the quarter and as per our annual plans. Again, our overall all-in sustaining cost was $745 per ounce sold.

Of note, the Mount Milligan mine has 4.5 million cubic meters of water in our tailings pond inventory as at March 31. And now just in the last month, we've built that up already to 6.1 million cubes as we go into our fresh head. Also, we did receive the amendments to access surface water near the mine site, and that is now extended to November of 2023. This gives us more time to work with our First Nations and government partners to continue to develop our long-term water strategy.

Please go to Slide 12, and we'll go over our operating key focuses. Again, safety is our highest operating priority, and we continue to roll out our safety programs to constantly improve our safety performance. We have a very robust behavior program called Work Safe Home Safe that we've embraced now for 3 years. And we are focused on Visible Felt Leadership and the development of rolling out our critical controls. In Q1, we had excellent results, as Scott spoke to, and we believe this is a great step forward.

With the normal spring melt access to underground water resources and the extension of our permits, we do have adequate water to run the plant at full capacity for this year. As part of our continuous improvement, we continue to expand the Kumtor leach circuit and add additional grinding capacity through the installation of tower mills this year.

At Mount Milligan, we continue to focus on constantly -- on constant production with a strong focus on ore blending and plant maintenance to make sure we continue to have our solid throughput. We are also installing at Mount Milligan, a staged flotation reactor to improve recoveries of both copper and gold.

As a result of productivity improvements, brownfield drilling and cost controls, we are updating the life of mine plan of both Oksut and Mount Milligan, and we are planning to have these completed this year. In addition, we are creating value with robust brownfield exploration programs across all our operations.

Darren, our CFO, now will walk us through the financial results.

Thanks, Dan, and good morning all. And I hope everyone's safe and well. For those following on the slide deck, I'll be speaking to initially Slide 14.

Centerra recorded $402 million in revenue during the quarter. This materially consisted of $293 million in gold sales, $62 million in copper sales, and $40 million from the molybdenum business unit.

During the quarter, the company's average gold price realized was $1,627 per ounce and $2.72 per pound of copper. This incorporates the existing stream arrangements over the Mount Milligan mine.

In the quarter, we sold 180,000 ounces of gold, 55 ounces from the Mount Milligan mine, a 35% increase compared to the prior year quarter. 28,000 ounces of gold attributable to the Oksut Mine and its only third quarter of production since declaring commercial operations. And finally, 98,000 ounces attributable to the Kumtor Mine. It should be noted that Kumtor Mine had a 39% reduction in ounces sold compared to the prior year quarter. This primarily was driven by a reduction in processing gold head grade by 32% compared to the prior year quarter. We also sold 22.8 million pounds of copper, a 12% increase in comparison to the prior year quarter. This represents 5 concentrate shipments in the quarter. For Q2, we are targeting 4 shipments.

Just moving over to Slide 15. The net earnings recorded during the quarter was $167 million, this is including the adjustment items of a $72 million gain on the sale of Centerra's interest in the Greenstone Gold Mine partnership and a $10.9 million gain on reduction in the reclamation liability due to favorable discount rate movement. Earnings attributable from operations perspective were $89 million contributed from the Kumtor operations, $40 million contributed from the Mount Milligan operations and $24 million contributed from the Oksut and U.S. operation.

The adjusted earnings recorded was $84 million for the quarter or $0.28 per share. This is net of the gain on the sale of the Centerra's interest in the Greenstone Gold Mines partnership and the gain on the reduction in the reclamation liability mentioned earlier.

From a consolidated cost perspective, Centerra in the quarter recorded production cost of $561 per ounce and all-in sustaining cost of $745 per ounce. At an asset level, Kumtor recorded all-in sustaining cost of $888 per ounce. Mount Milligan recorded all-in sustaining cost of $367 per ounce. And Oksut recorded an all-in sustaining cost of $804 per ounce for the quarter.

As noted in the bottom right-hand chart, the Turkish lira has continued to be volatile. In Q1, there was a 12% deflation in the lira during the quarter compared to the U.S. dollar, with some offsetting inflation on a net basis, but we are currently not experiencing any inflationary pressures. The Kyrgyz som and the Canadian dollar has been volatile compared to the prior year quarter, but minimal change in Q1.

Just move to Slide 16. As previously highlighted, $153 million was generated from cash provided from operations during the quarter and $72 million in company-wide free cash flow. When you combine the free cash flows, $72 million and $210 million from the proceeds from the sale of the Greenstone partnership, the company ended the quarter with debt-free and $823 million in cash, as referenced in the bottom right-hand chart.

The key contributor for free cash flow during the quarter were the Mount Milligan on Oksut Mines of $80 million and $26 million, respectively. In 2021, these 2 mines alone are expected to generate $160 million, representing the midpoint of guidance.

As disclosed in the MD&A, caution should be taken at all forward-looking guidance, but I would highlight on the bottom left-hand chart, the significant step-up in production in 2022 is targeted to be driven by the new Oksut Mine, an approximate 125% increase in production comparing 2021 to 2022 production guidance.

Finally, given the cash flow generation from operations, a closing cash position of $823 million and liquidity in excess of $1.2 billion, the Centerra Board declared a quarterly dividend of $0.05 per share for the quarter.

With that, I'll hand it back to Scott.

Thanks, Darren. Just on Slide '18 and just referencing the bullet points here on the top left, I'll just look to kind of sort of round out the core here.

But, again, just the third bullet point, just to recap, it's another strong quarter just in terms of our operating momentum that we're seeing. Again, quarterly gold production in excess of 160,000 ounces of gold. And again, we continue to produce this gold at a pretty low competitive all-in sustaining cost of around $745 per ounce. Obviously, in the prevailing gold price environment as well as the prevailing copper price environment, if you look at the fifth bullet point, we're continuing to see meaningful levels of profitability and free cash flow, producing some $72 million of positive free cash flow during the quarter.

And then the final bullet point there, again, just given that level of free cash flow, our balance sheet continues to be very strong, if not peer leading, finishing the quarter with a net cash position of some USD 823 million, which gives us a lot of confidence in terms of our ability to advocate that Centerra's business model is a internally fully funded business model moving forward.

So that really concludes my prepared remarks. But just before we open it up to the Q&A portion of the call, I know that a number of investors and attendees will have a lot of questions regarding Kumtor. Obviously, we want to be forefront about our assessment and our plans, but I'm sure there will be certain questions that we simply cannot answer given the evolving situation, particularly so as it relates to legal matters. But do rest assured that we will provide further disclosure as and when appropriate.

But with that, Bridget, if I can pass it over to you just to conduct the Q&A portion of the call, please.

(Operator Instructions) And our first question comes from the line of Trevor Turnbull of Scotiabank.

Thank you for your candid comments at the open on the recent developments in the Kyrgyz Republic. I know it's kind of hard to know where to begin, given the breadth and the scale of the issues raised by the government and the courts. I assume that high-level discussions with the country are really one place to start. And I guess my question is, how do you plan to respond aside from potentially seeking arbitration with respect to the government? Have you requested a meeting with them?

Yes. Thanks, Trevor. Look, we have been reaching out and looking to engage with the senior political leadership in country. But there's been no meaningful engagement to date. I did note in my earlier remarks that in terms of the State Commission review that's underway, we are expecting that that commission review will be finalized this month. And I think that in itself will be the catalyst for those discussions to start taking place with the political leadership in country. So that's still a -- obviously, a development that's in progress, but as and when that's finalized, I think that will be the catalyst to those discussion to be embarked on.

Then the only other question, I guess, I have, and obviously there are some developments pending such as this report, although it's hard to be optimistic about it. But given the uncertainty, are there any modifications to your CapEx plans for Kumtor at this point? Or perhaps, given further negative developments or how do you -- do you plan on modifying perhaps the level of investment you're making?

No. I mean, when I look at our plan for this year, Trevor, obviously, we're adding the additional trucks in terms of expanding our haulage trucking capacity in terms of the fleets. All those additions have taken place. We're in the final stage, and as Dan mentioned in his remarks, in terms of expanding our leach circuit as well as the installing a tower mill in the mill processing facility. Both of those are underway as we speak. Our exploration program, it's a 75,000 meter program, and we're 1/4 of the way through that program. And so we continue to carry on with each of these items. And, I guess, I do that -- I guess, we make those decisions philosophically on the premise that we want to be a good shoot of the asset. We want to do what's in the best interest of the mine, of the ore body. So we continue to make those investments. And I think that also reflects my optimism that despite the fact that there's a bit of uncertainty in Kyrgyzstan right now. I think we, Centerra, the organization, has proven through time that we usually always find a way to resolve these issues in a constructive manner. And I have to take that as my sort of data piece scenario. And so I want to make sure that whatever we do, that Kumtor is going to be in the best position possible when we get to the other side of this. A bit of a long answer to that, Trevor, but I just wanted to give you that color.

Our next question comes from the line of Brian MacArthur of Raymond James.

I just want to have a quick question. One of the things that talks about there is banking restrictions, so I just want to confirm the current USD 823 million sits outside Kyrgyzstan. So you have Kyrgyz Republic see a full access to that right now. And secondly, on Page 19, there's also a statement about accounts receivable and talking about an additional shipment of gold from Kumtor that came in April. So can I assume, in fact, that balance, if it's true, is outside the country is even higher right now as that cash has been out too, please?

Yes. In terms of the $823 million, the answer is yes, but I'll let Darren speak to that to be able to give you the exact numbers. And Darren, if you can just touch on the April gold shipment, please?

Sure, Brian. So different order, so the -- we have received that gold shipment that was recorded in our accounts receivable at the end of March. And I guess, as normal course, our treasury team does cash sweeps from all our subsidiaries, including KGC, our Kumtor subsidiary, and we generally target a cash flow no greater than $10 million in Kyrgyzstan. So all funds are materially outside of the country.

Our next question comes from the line of Dalton Baretto of Canaccord.

I want to start by asking where your Kyrgyz directives sit on all of this and whether they've been part of any Board discussions you've had following the announcements of Friday? And then as Part B of that question, if the Kyrgyz do end up taking over the mine, what happens to the 26% corporate stake that Kyrgyzaltyn has?

Yes. Thanks, Dalton. As you can appreciate, we just had our Board meetings over the last 2 business days prior to releasing our results. And in terms of our discussions and deliberations with the Kyrgyz directives, unfortunately, they're not within the inner circle, if you will, that might be a poor choice of words, but the inner circle when it comes to the State Commission review or the senior political leadership. So they weren't really in a position to offer us a lot of insights or intelligence over and above what we as an executive management team already have. So that would be the -- my response to your first question regarding the Kyrgyz directives. And then your second question, with regards to Kyrgyzaltyn shareholding in Centerra. Obviously, there's a number of legal responses that we're considering and evaluating right now, that at this stage we're not in a position to comment on that.

And then just in terms of your options that are available to you, you mentioned arbitration, what other options are available to you?

Yousef, is there anything that you want to expand on there?

Yes. Thanks, Scott. I think -- I mean, we're -- obviously, we mentioned arbitration. We've gone to arbitration before. That's something we're evaluating. There's a number of other legal options that we're looking at. But again, given that this is evolving pretty quickly, we're not really in a position to talk about those, unfortunately. So I can't really answer that question or provide more color.

And then last question for you, Scott. Just given what's happened, how are you now thinking about capital allocation in M&A, just in light of these events as well as your current balance sheet?

Well, in terms of capital allocation, all of our operations are positively free cash flowing, and we expect that to continue over the course of this year and even over the subsequent years, as per our 3-year guidance. So really, a lot of the focus and discussion with the Board over the past 6 months has been with regards to possible capital return initiatives and what we could potentially be doing there? And if there's anything that would potentially be deemed measured and smart, then that's something we'll evaluate. But again, you can appreciate there's a bit of uncertainty right now and now sort of boardroom setting when we're strategizing, just with regards to the uncertainty in Kyrgyzstan. So for now, those sort of capital return discussions have been put on hold. You referenced M&A. That's not something that we're primarily focused on right here right now. I think as you've seen in prior years, we've always been pretty internally focused, just looking to ensure that we're maximizing the intrinsic asset value of our business and of each of the existing operations. And I expect that to continue here moving forward.

And our next question comes from the line of Fahad Tariq of Credit Suisse.

Just one question for me. Given the dynamics of what's going on right now, is there any thought on reassessing Kemess or new studies there? Any thought around that project?

Yes. Thanks, Fahad. The answer is no. I think as we've discussed with yourselves and other participants in the investment community previously, we did have our strategy session back in -- I think it was September of last year with our Board of Directors. And we took a long hard look at each of our development projects that we had in the portfolio back then, which back then was Greenstone and Kemess. And we ultimately concluded that based on our long-term metal price assumptions, we weren't seeing a compelling value proposition or economic rate of return, and we actually concluded that we're going to deprioritize both of those projects. So you've seen, obviously, that we've already actioned our 50% ownership in Greenstone, we ultimately divested that asset and that closed in January. And again, with Kemess, it's potentially a similar sort of strategy, whereby the Board has encouraged us that if there are counterparties out there that ascribe more value to Kemess than what's potentially embedded in our company-wide valuation, then those are opportunities that we should be exploring, i.e., any opportunity to surface value or daylight value, that would be on strategy from Centerra's perspective. And obviously, I note that the current copper price environment is particularly strong. And you may recall that approximately half of the Kemess' revenues are actually denominated in copper. So it's an interesting opportunity right here right now, and that's something that we'll potentially be pursuing and stay tuned just to see what we can do there in terms of potentially daylighting any additional value in that Kemess.

And our next question comes from the line of John Tumazos of John Tumazos Very Independent.

And you have our support and sympathy for this unprecedented situation. Excuse me, if a couple of my questions might express frustration to the situation that the government's created there. First, don't you think that the May 6 actions create irreparable damage in the stock market, where even if the government begins to behave like a hospitable host country, the stock market is never going to give you a full valuation like a normal gold mining company with a premium valuation 2x NAV or something? So at this point, the damage is done, and it's not a settleable situation. You have to move on. Second, it would appear that there's a ready market. There's Russian, Chinese, Turkish, Maltan, and Saudi Arabia, the Uzbek State Mining Company. And you could have a reasonable auction process to get a fraction of the value, say, half to some other country that might have more understanding of the politics of Kyrgyzstan?

Okay. Thanks, John. Look, I take your point. As and when and if we find ourselves in the other side of this, then through constructive dialogue, we're able to resolve the situation. I think I would accept your assertion that you're never going to get full value for Kumtor vis-a-vis what you would get for the asset if it was located in what the market deems to be top-tier jurisdictions. I would probably accept that assertion. However, Kumtor is a very meaningful asset. And as you know, we've been investing in the asset significantly on a number of fronts, and those investments have certainly paid dividends. And the amount of positive free cash flow or the level of profitability that we have realized from Kumtor year in, year out is very meaningful. And I think that more than offsets any jurisdictional considerations when it comes to achieving the utmost valuation of the asset. And I think it's suffice to say, it's also in the best interest of our shareholders, that we've got to stick at this and try and resolve this situation because there would certainly be a lot of additional value that you could daylight, which has obviously since come out of our share price and our company-wide valuation since that announcement on Friday. Second part of your question, in terms of selling the asset and moving on, as you said, I don't see that being a realistic scenario right now because I think before any third-party would even be willing to evaluate the asset and the opportunity, you've still got to resolve this situation. So I think in terms of our strategy moving forward here, it's going to remain consistent and steadfast, whereby we're looking to engage in meaningful dialogue with the political leadership, and we'll look to resolve this situation. And I think, again, that's what's going to be in the best interest of all our shareholders.

So Scott, would you consider a reasonable tactic to walk down to the Ontario courts today in file an injunction to cancel their 77.4 million shares and remove their 3 directors in view of the government's behavior, hostile to the shareholders of your company? And bear in mind that if you don't, there could be an active shareholder that thinks that's reasonable.

Yes. Look, I think, as I said earlier and as Yousef said, we're evaluating all of the various legal and other options that are available to us, and we'll continue to evaluate that and report back in due course.

And our next question comes from the line of Anita Soni of CIBC World Markets.

And let me echo my comments about -- or John's comments about my sympathies on this unfortunate situation. He also asked the same question I was going to ask about canceling the shares of the Kyrgyz Republic if that was within your jurisdictional power to do that. And then my -- so could you give a little bit more clarity? Do you think that's added a possibility if you had to go down that path?

Anita, I apologize, I'm going to frustrate you and others, but again, considering all options that are available to us, and we'll look to report back on that in due course.

And then the second question, I guess, would be the total tax bill right now. Was it $352 million that you guys had said? Or is there potentially more than that at this stage?

Darren, do you want to confirm that, please?

Yes. So the -- it's unclear, Anita. There is -- the recent press release we put out that covers the same period that the -- I think the 16th of March press release. So we basically just simply combine those 2 numbers, it's approximately that figure. But obviously we're looking for some more clarity from the government on that to see whether it is 1 plus 1 equals the 350 or is less than that, but that's the total sum as we understand today.

And then just a bit of a question on, in terms of government relations, I guess, as they stand. So you are reaching out to them to try to talk to them. But can you give us an idea of how, do you feel there's like hostility there that you might be concerned about potentially keeping your expats in the country at this stage? Or has that been something that you've consider at this stage?

No, I would not use the word hostile or hostility. It's not -- there's no hostility. I think the challenge we have in terms of the dynamic is the State Commission review is in the final stages of their review. As I mentioned earlier, we expect that review to be finalized here in the month of May. And I think until that review, until that metaphorical document is on the table, I don't think it's possible for us to engage with the Kyrgyz Republic in terms of the political leadership. But once that document is on the table and available, I think that will serve as the catalyst, hopefully, for engagement to begin.

And has there historically been a good separation between the political and the judiciary?

It's difficult for me to answer, Anita. I can answer that.

(Operator Instructions) Our next question comes from the line of Mike Jalonen of Bank of America.

Hello, Scott, just actually to go away from Kumtor. I'm intrigued by the life of mine updates of Oksut and Mount Milligan. Just wondering when they'll be released and what they'll entail? It sounds like these could be positive developments for Centerra.

Yes. Thanks, Mike. Dan, do you want to just speak to that, just in terms of the latest update on timing and what have you?

Sure, I can, Scott. Thank you. Yes, let's start on Mount Milligan. At Mount Milligan, we've had some very good changes in our drivers of a life of mine. We've had excellent cost control the last 1.5 years. And we've had some productivity improvements in our mill, et cetera, as well as some brownfields exploration. So we are updating that life of mine, and we should have the results of that in early -- late in the third quarter, early in the fourth quarter and updating a 43-101 with that. With Oksut, now that we understand the operation better and we understand our -- the whole dynamics there, we're also updating that, along with the exploration drilling results. And again, we should have the results of that completed by the fourth quarter.

And our next question comes from the line of Mike Parkin of National Bank.

I guess it's pretty early, but in terms of some of your suppliers with respect to Kumtor, are you seeing any changes in terms of payment? Like is there a need to pay first before delivery is made? Or is it too early to kind of see any changes on that front?

Dan, do you want to comment, please?

Happy to. No, that's fair. Okay, good. Right now, no. I think we have a robust inventory at Kumtor due to its distances from a number of our large suppliers. And during COVID, we deliberately took a good look at our inventory supplies. So we're very comfortable right now. We have had talks with a couple of large suppliers because they also have employees in country, et cetera. But we have great support of our international and national suppliers. So at this point in time, there hasn't really been any change in that respect.

And can you just -- the fleet over there, that's completely owner operated, none of its leased?

That is correct.

And our final question comes from the line of [Frederico Regio of Pelicon].

I just have one question on Oksut. I -- so basically, the production number for Q1 were kind of strong if you compare with the 35% production that I think you were expecting in H1 2021 over the full year guidance of 2021. So is, let's say, Q2 going to be very weak? Or should we expect that probably Oksut should probably over-perform a bit, let's say, is over-performing a bit your expectation this year?

Yes. Thanks for the question. You're correct. When we issued our guidance for the calendar year, we were guiding that the first 6 months of this year at Oksut will represent around 35% of the annual gold production level. Our performance in Q1 was slightly better, slightly stronger than what we were expecting or what was implicit in terms of our guidance. In Q2, it will be a weaker quarter, which is just due to a lower grade mining production profile that we've been going through. So in terms of the first 6 months of this year, I still think it's going to be -- comfortably, it will represent 35% of the annual total. It could be as high as 40%. So just -- so yes, just to round out the answer again, I do think the second quarter will be lower than what we produced in Q1, but I think the first 6 months of this year will represent 35% to 40% of the annual total.

And that does conclude the question-and-answer session portion of today's call. Panelists, I'll now turn the call back to you. Please continue.

Okay. Well, thank you, everyone, for your participation again. Again, we all hope you're safe and well, and we'll be looking to updating everyone accordingly as we move forward here in terms of our ongoing disclosure. But thank you, everyone, for your participation.

And that does conclude today's presentation. We do thank you for your participation and ask that you please disconnect your lines. Have a great rest of the day, everyone.