TORONTO - Centerra Gold Inc. (TSX: CG) (NYSE: CGAU) has announced a comprehensive plan to restart the Thompson Creek Mine and optimize the Langeloth Metallurgical Facility, aiming to enhance the performance of its Molybdenum Business Unit (MBU). The integrated operation is expected to generate an after-tax net present value (NPV8%) of $472 million with an internal rate of return (IRR) of 22%.
The feasibility study for Thompson Creek, located in Idaho, forecasts robust project economics with an NPV8% of $185 million and an after-tax IRR of 15%, assuming a molybdenum price of $20 per pound. The facility is projected to produce an average of 13 million pounds of molybdenum annually over a 12-year lifespan. The anticipated initial capital investment for the mine restart is estimated at $397 million over three years, with $55 to $65 million expected for the second half of 2024.
Langeloth, in Pennsylvania, plans a phased ramp-up to full capacity, aiming to process 40 million pounds of molybdenum per year by 2028. At full capacity, the facility is forecasted to generate about $45 million in earnings from operations and $50 million in EBITDA annually. The operation will integrate approximately one-third of its molybdenum feed from Thompson Creek and two-thirds from third-party sources.
President and CEO Paul Tomory emphasized the strategic importance of integrating Thompson Creek with Langeloth, supported by strong market fundamentals for molybdenum. The integration is expected to result in significant synergies and robust annual EBITDA, enhancing overall value.
Centerra will host a conference call on Friday to discuss the strategic plan for US Moly. The company is exploring strategic options to maximize the potential of its molybdenum assets, acknowledging their value alongside its gold-focused strategy.
The molybdenum market is critical for various industrial applications, including steel manufacturing and green energy technologies. The integration of Thompson Creek and Langeloth is expected to position Centerra to capitalize on market demand and improve operational flexibility. This announcement is based on a press release statement.
In other recent news, Centerra Gold Inc. reported a robust operational performance for the second quarter of 2024, meeting their guidance and showcasing a strong financial position. The company emphasized its strategic focus on asset maximization, sustainable practices, and shareholder returns. Centerra Gold reported a stable cash flow and production costs for Q2 2024, along with a strong cash balance of $592 million, and total liquidity reaching $992 million.
The company is progressing with the optimization of Mount Milligan and exploring the potential for long-term operation. Work is also advancing on the Goldfield property, with an initial resource expected to be released by year-end. Furthermore, Centerra has achieved its 2026 gender diversity goal ahead of schedule, highlighting their commitment to sustainable mining practices.
In terms of shareholder returns, the company plans a capital return through share buybacks and declared a quarterly dividend of $0.07 per share. They aim to deliver consistent operating results and drive value for shareholders, with future releases including the Thompson Creek Mine feasibility study and the Langeloth commercial optimization plan. However, CEO Paul Chawrun noted the potential impact of forest fires in BC on operations, although the risk is currently low. These are the recent developments in the company's operations.
InvestingPro Insights
As Centerra Gold Inc. (NYSE: CGAU) gears up to revitalize the Thompson Creek Mine and enhance the Langeloth Metallurgical Facility, investors may find encouragement in some key financial metrics and management strategies. The company's market capitalization stands at a solid $1.49 billion, signaling a strong presence in the industry. The forward-looking P/E ratio, last measured in Q2 2024, is 10.82, which may suggest the stock is reasonably valued relative to its earnings. This valuation comes alongside an impressive revenue growth of 59.33% over the last twelve months leading up to Q2 2024, indicating robust business performance.
On the operational front, an InvestingPro Tip highlights that Centerra's management has been actively repurchasing shares, which can often be a sign of confidence in the company's future prospects. Additionally, the company holds more cash than debt on its balance sheet, providing financial flexibility as it undertakes the expansion of its Molybdenum Business Unit. This is a critical factor for investors considering the substantial initial capital investment estimated for the Thompson Creek mine restart.
Another positive signal for potential investors is Centerra's strong free cash flow yield, as suggested by an InvestingPro Tip. This could be particularly relevant given the capital-intensive nature of the mining industry and the company's ambitious plans for the MBU. For those interested in deeper analysis, InvestingPro offers additional tips on Centerra Gold, providing a more comprehensive view of the company's financial health and future outlook.
As the company prepares to discuss its strategic plan for US Moly, these financial insights and management strategies could provide a foundation for investor confidence in Centerra's ability to execute its plan and deliver value. For further detailed InvestingPro Tips on Centerra Gold, investors can explore the full list available at: https://www.investing.com/pro/CGAU.
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