CENTERRA GOLD INC Annual Report 2019 CEOS MESSA GE THE C OMP ANY A CHIEVED AN IMPOR T ANT MILES T ONE WITH THE FIRS T GOLD POUR A T OKSUT IN TURKEY OKSUT IS NOW OUR THIRD OPERA TING MINE AND OUR THIRD SOURCE OF GOLD PRODUC TION GOING FORW ARD O ur performance in 2019 was overshadowed by two tr oubling safety incidents we experienced at Kumtor in December 2019 and February 2020 that r e sulted in the loss of thr ee of our employees W e most sincer ely apologize to the families friends and colleagues for these tragic incidents and we ar e fully committed to understanding and learning fr om the contributing cir cumstances so that we can take all necessary steps to pr event such tragic incidents fr om happening in the futur e W e r emain steadfast in our r esolve to ensur e that everyone who works at our operations can do so safely and will r eturn home safely each and every day Ther e is nothing mor e important During 2019 Centerra exceeded its consolidated gold pr oduction and cost guidance due to the str ong operating performance at both operations delivering mor e than 783300 ounces of gold at an allin sustaining cost on a bypr oduct basis of 708 per ounce sold 1 which was lower than the lowend of our allin sustaining cost guidance Kumtor had another str ong year exceeding its r evised pr oduction guidance in delivering 600201 ounces of gold pr oduction at an allin sustaining cost on a by pr oduct basis of 598 per ounce sold 1 which was lower than the lowend of its allin sustaining cost guidance In 2019 Mount Milligan exceeded the upper end of its gold pr oduction guidance and achieved the midpoint of its copper pr oduction guidance pr oducing 183107 ounces of gold and 711 million pounds of copper Allin sustaining cost on a bypr oduct basis was above guidance at 828 per ounce sold 1 In January 2020 the Kumtor Mine r eceived all the necessary appr ovals and permits to r ecommence mining operations and at the end of the month the Oksut Pr oject completed its first gold pour on time and under budget Financially in 2019 Centerra r ecor ded a net loss of 935 million or 032 per shar e basic and after adjusting the net loss for the 2305 million impairment char ge on the assets at Mount Milligan a 345 million ARO expense at the nonoperating sites and the 10 million char ge r elating to the completion of the Strategic Agr eement with the Kyr gyz Government adjusted net earnings 1 wer e 1815 million or 062 per shar e basic W e generated on a Companywide basis 3341 million of cash fr om operations or 114 per shar e which included the Kyr gyz Republic settlement payment of 626 million At the operating asset level the Kumtor Mine generated 240 million of fr ee cash flow 1 and Mount Milligan generated 265 million r eflecting the r educed thr oughput levels experienced in the first quarter of 2019 at Mount Milligan This enabled the Company to aggr essively pay down its debt over the year by appr oximately 111 million as well as r epaying a 27 million pr omissory note ending the year with debt net of cash of 35 million excluding r e stricted cash of 28 million On January 30 2020 we r epaid the 78 million drawn balance on the Oksut pr oject finance facility using lower cost funds fr om our corporate cr edit facility and then cancelled the 150 million facility which r esulted in the r e lease of 25 million of r estricted cash At the end of the year the Company r eported 43 million of cash and cash equivalents During 2019 the Company actively worked on a number of ESG initiatives as it dedicates mor e r esour ces to this important ar ea with the continuation of our female empowerment pr ogram Leading fr om Within adopting the W orld Gold Council s Responsible Gold Mining Principles RMPG forming a Companywide tailings storage facility TSF steering committee completing a pr eliminary desktop climate study which r eviewed the Company s physical climate risks acr oss all its sites and commencing an ESG issues assessment Companywide to identify prioritize and validate the