Centerra Gold Reports 2012 Fourth Quarter and Year-end Results

Centerra Gold Reports 2012 Fourth Quarter and Year-end Results 
TORONTO, ONTARIO -- (Marketwire) -- 02/20/13 -- Centerra Gold Inc.
(TSX:CG) - 
This news release contains forward-looking information that is
subject to the risk factors and assumptions set out on page 24 and in
our Cautionary Note Regarding Forward-looking Information on page 34.
It should be read in conjunction with the Company's audited financial
statements and notes thereto for the year ended December 31, 2012 and
the associated Management's Discussion and Analysis. The consolidated
financial statements of Centerra are prepared in accordance with
International Accounting Standard 34, as issued by the International
Accounting Standards Board and the Company's accounting policies as
described in note 3 of its annual consolidated financial statements
for the year ended December 31, 2012. 
All figures are in United States dollars. 
To view the 2012 Management's Discussion and Analysis and the Audited
Financial Statements and Notes for the year-ended December 31, 2012,
please visit the following link:
http://media3.marketwire.com/docs/CG2012FSMDAQ4.pdf. 
Centerra Gold Inc. today reported adjusted net earnings of $112.7
million or $0.48 per share in the fourth quarter of 2012 before
recognizing a one-time accounting charge of $180.7 million for the
de-recognition of the underground assets at Kumtor, which results in
the Company recording a net loss of $68.0 million or $0.29 per share
for the period. This compares to net earnings of $79.4 million or
$0.34 per common share in the same quarter of 2011. 
2012 Fourth Quarter Highlights 


 
--  Increased reserves at Kumtor by 58% with the new KS-13 life-of-mine
    plan. 
    
--  Replaced reserves, proven and probable gold reserves now total 11.1
    million ounces of contained gold. 
    
--  Agreed to acquire the remaining 30% interest for 100% ownership of the
    Oksut gold project in Turkey, which subsequently closed in January 2013.
    
--  Reported initial resource estimate on the Oksut gold project of
    indicated resources of 682,000 contained ounces and inferred resources
    of 477,000 ounces of contained gold. 
    
--  Started up the heap leach operation at the Boroo mine. 
    
--  Signed a new two year Collective Bargaining Agreement at the Kumtor
    mine. The new Agreement expires at the end of December 2014. 
    
--  Produced 219,316 ounces of gold in the quarter, including 189,438 ounces
    at Kumtor and 29,878 ounces at Boroo. 
    
--  Increased revenues to $368.5 million compared to $248.0 million in the
    same quarter of 2011. 
    
--  Cash provided by operations was $208.2 million compared to $60.3 million
    in the fourth quarter of 2011. 
    
--  Reported all-in cash cost (pre-tax) for the quarter of $839 per ounce
    compared to $934 for the 2011 fourth quarter. 

 
For the full year, the Company reported an adjusted net loss of $3.3
million or $0.01 per share before recognizing a one-time accounting
charge of $180.7 million for the de-recognition of the underground
assets at Kumtor, which results in the Company recording a net loss
of $184.0 million or $0.78 per share, compared to net earnings of
$370.9 million or $1.57 per share in 2011. The 2012 results reflects
the charge for the de-recognition of the underground assets at Kumtor
and the negative impact on production resulting from the unexpected
acceleration of ice and waste in the high movement area above the SB
Zone which made it unsafe to mine in this area and required a
revision to the production plan for 2012 delaying the release of ore. 
Consolidated gold production in 2012 totalled 387,076 ounces compared
to 642,380 ounces in the prior year. The decrease in ounces poured
was primarily due to the unexpected acceleration of ice and waste
into the Central Pit resulting in the rescheduling of mining
activities to the extension of the southwest end of the SB Zone which
was discovered in 2011. This revised mining plan led to a 46%
decrease in production at Kumtor year over year, which was partially
offset by a 21% increase in production at Boroo where the heap leach
operation was re-started in October 2012. 
Commentary 
Ian Atkinson, President and CEO of Centerra stated, "Recently we
published our updated reserves and resources and with that we were
pleased to report our initial resource estimate on the Oskut Gold
Project in Turkey. We have announced an indicated resource of 682,000
contained ounces of gold and an inferred resource of 477,000 ounces
of contained gold at Oksut. It is still early in the development of
this project, but we are excited and expect to continue to grow the
resource, with the aim to fast track it to production. From a
financial standpoint, in the fourth quarter of 2012, the Company had
strong adjusted net earnings of $112.7 million or $0.48 per share,
before recognizing the one-time accounting charge of $180.7 million
for the de-recognition of the underground assets at Kumtor. The
operations generated approximately $135 million of cash during the
quarter and our cash and short-term investments grew during the
period to $382 million. In comparing the quarter-over-quarter
operating performance, both operations performed well in the quarter
producing 45% more ounces in the fourth quarter of 2012 compared to
the same period last year. 
"Still 2012 was a challenging year, beginning with the ice and waste
movement at Kumtor, the revised mining plan, political challenges,
lower than expected mill throughput and recovery, as well as lower
than expected mill head grades encountered in the fourth quarter at
Kumtor as we were mining the newly discovered portion of the orebody.
However, as outlined in the December 2012 Kumtor technical report,
the KS-13 model has proven to be a reliable indicator of mineral
reserves relative to gold production and we expect that trend to
continue. In 2013, we expect approximately 75% of our production at
Kumtor to come from the SB Zone which has had a number of years of
historical production. For 2013, consolidated gold production is
expected to be in the 605,000 to 660,000 ounce range as Kumtor
returns to more normal production levels." 
"The State Commission has issued its final report regarding Kumtor
and has delivered it to the Kyrgyz Republic Government and the Kyrgyz
Republic Parliament. On February 20, 2013, the Parliament debated the
State Commission report and discussed a draft resolution that
endorses the report and calls on the Government to hold negotiations
with Centerra with a view to revising the agreements governing the
Kumtor project in the interests of the Kyrgyz Republic. We understand
that the draft resolution recommends that if mutually advantageous
terms cannot be agreed the Government should take a number of steps,
including annulling legislation enacted in 2009 approving the project
agreements and terminating such project agreements. See "Other
Corporate Developments - Kyrgyz Republic - State Commission
Activities - Parliament Review and Draft Resolution". The Company
believes that the conclusions and recommendations of State Commission
relating to the Company are exaggerated or without merit and has
responded in detail to the State Commission. We have always benefited
from a close and constructive dialogue with the Kyrgyz authorities
over the many years we have operated there and remain committed to
continuing to work with them to resolve these issues in accordance
with the New Project Agreements, and to the benefit of all
shareholders. However, no assurances can be given that the claims and
recommendations of the State Commission can be resolved without a
material negative impact on the Company." 
"Finally, Centerra like many of our peers is moving toward reporting
an 'all-in cash cost' methodology for its gold production at Kumtor
and Boroo mine operations. Having first reported along these lines
with the announcement of the revised life-of-mine plan for Kumtor and
with our 2012 production update and 2013 guidance, the Company
believes an all-in cash cost measure more fully reflects the actual
cost of producing an ounce of gold than the former Gold Institute
total cash cost measure. Centerra's projected consolidated all-in
cash (pre-tax) cost per ounce produced for 2013, described in our
outlook, is within a range of $1,067 to $1,164, and includes all
costs except revenue-based taxes in the Kyrgyz Republic and income
taxes. This demonstrates the Company's focus on maximizing margins
and our leverage to increases in the gold price. We continue to focus
on our exploration and business development efforts as we look for
additional operating platforms in an effort to increase our future
gold production, diversify our regions of operation and help us
achieve our goal of producing 1.5 million ounces of gold annually." 
Year-end Gold Reserves and Resources 
Reserves  
As reported in the Company's news release of February 7, 2013,
Centerra's proven and probable gold reserves as of December 31, 2012,
increased by 3.6 million contained ounces (before accounting for 2012
production) to 11.1 million ounces of contained gold, compared to 8.1
million ounces as of December 31, 2011. This represents an increase
of 45% before accounting for 534,000 contained ounces processed at
Kumtor and Boroo during 2012. The reserve increase is the result of
the significant expansion of the Kumtor Central Pit, announced
November 7, 2012 and is described in detail in a new NI 43-101
technical report filed on SEDAR in December 2012. All 2012 year-end
reserves were estimated using a gold price of $1,350 per ounce
compared to $1,200 per ounce at December 31, 2011. 
Resources 
As of December 31, 2012, Centerra's measured and indicated resources
total 5.1 million ounces of contained gold a decrease of 23% or 1.5
million ounces, compared to 6.6 million contained ounces as of
December 31, 2011. The majority of this decrease is a result of the
conversion of previously outlined Kumtor Central Pit measured and
indicated open pit resources into mineral reserves as a result of the
KS-13 Pit expansion. This conversion of resources to reserves has
been offset by increased resources at Kumtor and the addition of
682,000 contained ounces of new indicated resources at the Oksut
project (100% basis as of January 24, 2013). 
Centerra's inferred resources, as of December 31, 2012, total 4.1
million ounces of contained gold for an increase of 22,000 contained
ounces over the December 31, 2011 figures. The conversion of Kumtor
underground resources into reserves within the KS-13 expanded pit was
offset by the addition of 477,000 contained ounces of new inferred
resources at the Oksut project (100% basis) and the new high grade
resources outlined below the KS-13 pit design which resulted in the
increase. 
2012 year-end resource estimates on the Boroo, Gatsuurt, Ulan Bulag
properties in Mongolia and Kara Beldyr property in Russia remain
unchanged from those outlined at the end of 2011.  


 
                                                                            
Financial and Operating Summary                                             
Consolidated Highlights                                                     
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                        Three Months Ended              Year Ended          
                            December 31                 December 31         
----------------------------------------------------------------------------
Financial and                                                               
 Operating Summary      2012     2011 % Change      2012     2011 % Change  
----------------------------------------------------------------------------
Revenue - $ millions   368.5    248.0       49%    660.7  1,020.3      (35%)
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Cost of sales - $                                                           
 millions (1)          165.2    104.1       59%    387.5    382.3        1% 
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Abnormal mining                                                             
 costs - $ millions      8.9        -      100%     60.9        -      100% 
----------------------------------------------------------------------------
Revenue-based taxes                                                         
 - $ millions           44.5     33.6       33%     74.7    131.8      (43%)
----------------------------------------------------------------------------
Loss on de-                                                                 
 recognition of UG -                                                        
 $ millions            180.7        -      100%    180.7        -      100% 
----------------------------------------------------------------------------
Exploration - $                                                             
 millions               11.5     11.7       (1%)    37.9     39.6       (4%)
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Earnings (loss)                                                             
 before income taxes                                                        
 - $ millions          (62.8)    80.3     (178%)  (172.3)   362.8     (147%)
----------------------------------------------------------------------------
Income tax expense -                                                        
 $ millions              5.2      0.9      486%     11.7      8.1       44% 
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Net earnings (loss)                                                         
 - $ millions          (68.0)    79.4     (186%)  (184.0)   370.9     (150%)
----------------------------------------------------------------------------
Earnings(loss) per                                                          
 common share-                                                              
 $basic&diluted        (0.29)    0.34     (185%)   (0.78)    1.57     (150%)
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Cash provided by                                                            
 operations - $                                                             
 millions              208.2     60.3      245%    134.7    434.9      (69%)
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Capital expenditures                                                        
 -$ millions            85.0     30.0      184%    410.6    187.9      118% 
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Weighted average                                                            
 common shares                                                              
 outstanding - basic                                                        
 (thousands) (2)     236,339  236,323        0%  236,369  236,088        0% 
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Weighted average                                                            
 common shares                                                              
 outstanding -                                                              
 diluted (thousands)                                                        
 (2)                 236,339  236,621       (0%) 236,369  236,354        0% 
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Average gold spot                                                           
 price - $/oz          1,721    1,688        2%    1,669    1,572        6% 
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Average realized                                                            
 gold price - $/oz     1,711    1,690        1%    1,692    1,569        8% 
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Gold sold - ounces   215,361  146,704       47%  390,533  650,258      (40%)
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Cost of sales (1)                                                           
 (3) - $/oz sold         767      709        8%      992      588       69% 
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Gold produced -                                                             
 ounces              219,316  151,562       45%  387,076  642,380      (40%)
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Operating cash                                                              
 cost(3)(4)(5)- $/oz                                                        
 produced                360      603      (40%)     663      502       32% 
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Total production                                                            
 cost(3)(4)(5) -                                                            
 $/oz produced           998      820       22%    1,143      687       66% 
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All-in cash cost                                                            
 (pre-tax)                                                                  
 (3)(4)(5)-$/oz                                                             
 produced                839      934      (10%)   1,882      929      103% 
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(1)  Cost of sales excludes regional office administration.                 
(2)  As of December 31, 2012, the Company had 236,376,011 common shares     
     issued and outstanding.                                                
(3)  Operating cash cost is comprised of mine operating costs such as       
     mining, processing, regional office administration, royalties and      
     production taxes (except at Kumtor where revenue-based taxes are       
     excluded), but excludes depreciation, depletion and amortization,      
     reclamation costs, capital investments, community investments,         
     exploration expenses and corporate general and administration expenses.
     Operating cash cost, total production cost and all-in cash cost (pre-  
     tax) per ounce produced as well as cost of sales per ounce sold are    
     non-GAAP measures and are discussed under "Non-GAAP Measures".         
(4)  As a result of Kumtor's Restated Investment Agreement signed in 2009,  
     operating cash cost and total production cost per ounce measures       
     exclude operating and revenue-based taxes.                             
(5)  All-in cash cost (pre-tax) per ounce produced includes operating cash  
     costs, sustaining and growth capital, corporate general and            
     administrative expenses, global exploration expenses, and community    
     investments, but excludes revenue-based taxes at Kumtor and income     
     taxes.                                                                 

 
Fourth Quarter of 2012 compared to Fourth Quarter of 2011 


 
--  Gold production for the fourth quarter of 2012 was 219,316 ounces
    compared to 151,562 ounces in the same quarter of 2011. The increased
    gold production in the current quarter reflects 37% higher production at
    Kumtor as higher throughput was achieved in the mine and mill in the
    fourth quarter. Boroo achieved significantly higher production (+132%)
    in the fourth quarter of 2012, by processing higher grades with slightly
    lower recoveries through the mill and recovering gold from its heap
    leach operations which resumed activities in October 2012 after
    receiving all required permits. 
    
--  Revenues in the fourth quarter of 2012 increased by $120.5 million to
    $368.5 million from $248 million in the same period last year mainly as
    a result of 47% higher ounces sold, (215,361 ounces compared to 146,704
    ounces). The average gold price realized in the fourth quarter of 2012
    was $1,711 per ounce, an increase from the $1,690 per ounce realized in
    the same quarter of 2011.  
    
--  Cost of sales for the fourth quarter of 2012 was $165.2 million compared
    to $104.1 million in the same quarter of 2011. The increase reflects the
    higher ounces sold at both sites and higher operating costs due to price
    increases for diesel, volume increases due to the increased use of
    consumables for the expanded fleet at Kumtor and the start-up of the
    heap leach operation at Boroo.
    
    Depreciation, depletion and amortization (DD&A) included in costs of
    sales for the fourth quarter of 2012 of $91.2 million increased by $60.7
    million compared to the same period last year, due in part to the
    processing and sale of significantly higher ounces in the fourth quarter
    of 2012. In addition, depreciation expense for the fourth quarter of
    2012 was higher than the comparative quarter reflecting the increased
    depreciation from the expanded mining fleet and achieving higher
    throughput mining cut-back 14B in the last quarter of 2012 compared to
    the same quarter of 2011 where lower volumes were mined in cut-back 14A.
    
    
--  The Company recorded an amount of $8.9 million of abnormal mining costs
    at Kumtor in the fourth quarter of 2012 representing the ice and waste
    removal from the high movement unload zone. There were no abnormal
    mining costs in the comparative quarter. 
    
--  Other operating expenses for the fourth quarter of 2012 totalled $4.8
    million compared to $3.6 million in the same quarter of 2011. Costs in
    the current quarter of 2012 include $2.9 million for the closure of the
    underground development project at Kumtor and $1.9 million for ongoing
    sustainable development projects in both countries where the Company
    operates. 
    
--  Exploration expenditures for the fourth quarter of 2012 were $11.5
    million compared to $11.7 million in the same quarter of 2011 mainly
    reflecting increased drilling activity at the ATO property in Mongolia,
    the Dvoinoy Joint Venture in Russia and Kumtor. 
    
--  A one-time accounting charge of $180.7 million was recorded in the
    fourth quarter of 2012 to reflect the de-recognition of the underground
    assets at Kumtor. This results from the decision in early November to
    expand the open pit at Kumtor and as a result consume a major portion of
    the underground infrastructure. 
    
--  A net loss of $68.0 million was recorded in the fourth quarter of 2012
    compared to net earnings of $79.4 million in the same quarter of 2011.
    Before the charge for the de-recognition of the underground assets, net
    earnings of $112.7 million were recorded. The higher earnings (pre-
    accounting charge) in the current quarter of 2012 reflect the increased
    production and sales at both operations. 
    
--  Cash provided by operations was $208.2 million in the fourth quarter of
    2012 compared to $60.3 million in the same period of 2011. The increase
    over 2011 reflects higher earnings from higher production and ounces
    sold, higher realized prices and a reduction in working capital levels,
    partially offset by higher operating costs. 
    
--  Capital expenditures (spent and accrued) in the fourth quarter of 2012
    were $85.0 million, which included sustaining capital of $11.1 million.
    Growth capital of $73.9 million in the fourth quarter of 2012 reflects
    $73.4 million of spending at Kumtor mainly on fleet expansion ($23.1
    million) and the stripping of cut-back 14A ($36.8 million) and spending
    at Boroo of $0.3 million. Capital expenditures in the same quarter of
    2011 were $30.0 million, which included $9.0 million spent and accrued
    on sustaining capital projects and $21.0 million invested in growth
    capital. 
    
 
                                                                            
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                                     Three Months Ended      Year Ended     
All-in Cash Costs(1)- Consolidated       December 31         December 31    
----------------------------------------------------------------------------
$ millions unless otherwise                                                 
 specified                                2012      2011      2012      2011
----------------------------------------------------------------------------
                                                                            
Operating cash costs                      78.9      91.4     256.6     322.4
Capitalized stripping and ice unload                                        
 - cash (1)                               32.2       6.0     152.7      39.4
                                    ----------------------------------------
Operating cash costs and capitalized                                        
 stripping                               111.1      97.4     409.3     361.8
                                                                            
Sustaining capital (cash)                 11.1       9.0      43.5      34.6
Growth capital (cash)                     37.1      12.7     177.2      99.9
----------------------------------------------------------------------------
Operating Cash Costs including                                              
 capital (1)                             159.3     119.1     630.0     496.3
----------------------------------------------------------------------------
                                                                            
Corporate and other cash costs (2)        24.6      22.5      98.5     100.4
----------------------------------------------------------------------------
All-in Cash Costs (pre-tax) (1)          183.9     141.6     728.5     596.7
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Ounces poured                          219,316   151,562   387,076   642,380
All-in Cash Costs (pre-tax) per                                             
 ounce produced(1)                   $     839 $     934 $   1,882 $     929
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(1)  All-in cash costs (pre-tax), capitalized stripping - cash and          
     sustaining and growth capital (excluding stripping) are non-GAAP       
     Measures and are discussed under "Non-GAAP Measures".                  
(2)  Corporate and other cash costs include corporate general and           
     administrative expenses, global exploration expenses, and community    
     investments.                                                           
                                                                            
 
--  Operating cash costs in the fourth quarter of 2012 was $78.9 million
    compared to $91.4 million in the comparative quarter of 2011. The
    decrease in the 2012 period results from higher capitalized stripping
    costs and charges for the unloading of ice and waste, partially offset
    by higher operating costs for labour, diesel fuel and other consumables
    for the expanded fleet at Kumtor. 
    
--  Operating cash costs per ounce produced was $360 in the fourth quarter
    of 2012 compared to $603 in the comparative quarter of 2011. The
    decrease in the 2012 period results mainly from significantly higher
    production at both sites, partially offset by higher operating costs.
    Operating cash costs per ounce produced is a non-GAAP measure and is
    discussed under "Non-GAAP Measures". 
    
--  All-in cash costs per ounce produced pre-tax were $839 in the fourth
    quarter of 2012 compared to $934 in the same quarter of 2011. The
    decrease reflects the higher production at both sites in the 2012
    quarter, partially offset by higher capitalized stripping and higher
    spending on capital. All-in cash costs per ounce produced is a non-GAAP
    measure and is discussed under "Non-GAAP Measures". 

 
Full Year 2012 compared to Full Year 2011 


 
--  Gold production for 2012 totalled 387,076 ounces compared to 642,380
    ounces in the prior year. The decreased gold production was mainly due
    to the March 2012 revised mine plan at Kumtor, as a result of the
    accelerated ice and waste movements in the SB Zone, which led to a 46%
    decrease in production at Kumtor year-over-year, partially offset by a
    21% increase in production at Boroo, which was positively impacted by
    the start-up of the heap leach operation in October 2012. 
    
--  Revenues for 2012 decreased to $660.7 million compared to $1,020.3
    million in 2011 due to a 40% decrease in ounces sold (390,533 ounces
    compared to 650,258 ounces), partially offset by an 8% increase in the
    realized gold price. The reduction in sales reflects the lower gold
    production at Kumtor (-46%) mostly due to lower volumes as a result of
    the revised mine plan. The average gold price for 2012 was $1,692 per
    ounce, compared to $1,569 per ounce realized in 2011. 
    
--  Operating cash cost per ounce produced for 2012 increased to $663
    compared to $502 per ounce in 2011. The increase in 2012 reflects the
    impact of lower production levels due to lower grades and recoveries
    from the processing of stockpiled material at Kumtor and higher
    operating costs at both Kumtor and Boroo as discussed in "Operations
    Update". Operating cash cost per ounce produced is a non-GAAP measure
    and is discussed under "Non-GAAP Measures". 
    
--  All-in cash costs per ounce produced for 2012 increased to $1,882
    compared to $929 per ounce in 2011. The increase in 2012 reflects the
    impact of lower production levels due to lower grades and recoveries
    from the processing of stockpiled materials at Kumtor, higher
    capitalized stripping and ice and waste unloading costs, and higher
    spending on capital at Kumtor and higher operating costs at both Kumtor
    and Boroo. All-in cash costs per ounce produced is a non-GAAP measure
    and is discussed under "Non-GAAP Measures". 
    
--  Cost of sales in 2012 was $387.5 million compared to $382.3 million in
    2011, reflecting the processing of lower grade, higher cost, stockpiled
    material at Kumtor for the period to September 2012, higher operating
    costs for labour, diesel and other consumables and increased DD&A. Cost
    of sales in 2012 also includes a charge of $7.2 million representing a
    metal reconciliation variance between the gold content estimated in the
    stockpiles and the gold actually recovered through processing. In 2011
    costs of sales included a charge of $5.8 million for the settlement
    resulting from an audit by the Kyrgyz Social Fund, relating to the
    calculation of the premium for work conducted at high altitude at the
    Kumtor project.
    
    Depreciation, depletion, and amortization associated with production
    increased by 44% to $142.6 million in 2012 from $99.3 million in 2011 as
    a result of higher depreciation for the expanded mobile fleet at Kumtor
    and higher amortization of deferred stripping at both sites, partially
    offset by lower volumes.
    
    
--  The Company recorded $60.9 million of abnormal mining costs at Kumtor in
    2012 (nil in 2011) representing $24.8 million for the cost of removing
    the ice and waste from the high movement unload zone and $36.1 million
    of stripping costs during the period while little or no ore was mined. 
    
--  Other operating expenses for 2012 totalled $34.3 million, which includes
    $26.2 million spent on corporate social responsibility programs and $7.8
    million for the closure of the underground project at Kumtor, compared
    to $15.5 million in 2011. 
    
--  Exploration expenditures in 2012 were $37.9 million compared to $39.6
    million in 2011. Exploration expenditures in 2012 decreased slightly
    from 2011 reflecting reduced regional exploration programs in Kyrgyz
    Republic and the closure of the Reno, Nevada office and cessation of the
    US exploration program in mid-2012. 
    
--  A one-time accounting charge of $180.7 million was recorded in the
    fourth quarter of 2012 to reflect the de-recognition of the underground
    assets at Kumtor. This results from the decision in early November to
    expand the open pit at Kumtor which expansion will consume a major
    portion of the underground infrastructure. 
    
--  The net loss for 2012 was $184.0 million or $0.78 per share compared to
    net earnings of $370.9 million or $1.57 per share in 2011, reflecting
    the de-recognition of Kumtor's underground assets and lower earnings at
    Kumtor from the revised mining plan. 
    
--  Cash provided from operations for 2012 totalled $134.7 million compared
    to $434.9 million in 2011, primarily as a result of significantly lower
    earnings at Kumtor in 2012. 
    
--  Capital expenditures (spent and accrued) in 2012 were $410.6 million,
    which included sustaining capital of $40.8 million. Growth capital of
    $367.1 million in 2012 reflects $359.0 million of spending at Kumtor
    mainly on fleet expansion ($117 million), the stripping of cut-back 14B
    and 14A ($179.8 million) and on underground development of decline 1 and
    2 ($30.0 million) and spending at Boroo of $7.7 million in 2012 mainly
    to strip Pit 6 prior to reaching ore. Capital expenditures in 2011 were
    $187.9 million, which included $34.6 million spent and accrued on
    sustaining capital projects and $153.3 million invested in growth
    capital.

 
As at December 31, 2012, the Company had $76 million outstanding debt
under its $150 million revolving credit facility with the European
Bank for Reconstruction and Development ("EBRD") leaving a balance of
$74 million undrawn at December 31, 2012. The drawn amount is due to
be repaid on August 8, 2013, or at the Company's discretion,
repayment of the loaned funds could be extended until February 2014. 
Net cash and short-term investments decreased to $382.1 million from
$568.2 million at December 31, 2011. 


 
                                                                            
Operations Update - Summary of Key Operating Results                        
                                                                            
----------------------------------------------------------------------------
                          Three Months Ended              Year Ended        
                              December 31                 December 31       
----------------------------------------------------------------------------
Kumtor Operating                                                            
 Results                 2012    2011  % Change      2012    2011 % Change  
----------------------------------------------------------------------------
Revenue - $ millions    317.8   239.7        33%    533.6   941.1      (43%)
----------------------------------------------------------------------------
Gold sold - ounces    185,936 141,897        31%  314,987 599,494      (47%)
----------------------------------------------------------------------------
Average realized gold                                                       
 price - $/oz           1,709   1,689         1%    1,694   1,570        8% 
----------------------------------------------------------------------------
Cost of sales - $                                                           
 millions (1)           137.3    96.9        42%    311.1   332.6       (6%)
----------------------------------------------------------------------------
Cost of sales - $/oz                                                        
 sold (3)                 738     683         8%      988     555       78% 
----------------------------------------------------------------------------
Tonnes mined - 000s    38,185  37,124         3%  147,610 150,605       (2%)
----------------------------------------------------------------------------
Tonnes ore mined -                                                          
 000s                   4,463   1,095       308%    4,955   6,020      (18%)
----------------------------------------------------------------------------
Tonnes milled - 000s    1,547   1,450         7%    4,756   5,815      (18%)
----------------------------------------------------------------------------
Average mill head                                                           
 grade - g/t (2)         5.13    3.80        35%     2.79    3.79      (26%)
----------------------------------------------------------------------------
Recovery - %             77.7    77.6         0%     75.6    80.8       (6%)
----------------------------------------------------------------------------
Gold produced -                                                             
 ounces               189,438 138,696        37%  315,238 583,156      (46%)
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Operating cash cost                                                         
 (3) (4) - $/oz                                                             
 produced                 341     580       (41%)     655     482       36% 
----------------------------------------------------------------------------
Total production cost                                                       
 (3) (4)-$/oz                                                               
 produced               1,021     808        26%    1,175     673       75% 
----------------------------------------------------------------------------
All-in cash cost                                                            
 (pre-tax) (3) (5)-                                                         
 $/oz produced            760     769        (1%)   1,808     768      135% 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Capital expenditures                                                        
 - $ millions            83.9    28.5       195%    399.9   180.7      121% 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Boroo Operating                                                             
 Results                                                                    
----------------------------------------------------------------------------
Revenue - $ millions     50.6     8.3       512%    127.2    79.3       60% 
----------------------------------------------------------------------------
Gold sold - ounces     29,425   4,807       512%   75,546  50,764       49% 
----------------------------------------------------------------------------
Average realized gold                                                       
 price - $/oz           1,720   1,719         0%    1,684   1,562        8% 
----------------------------------------------------------------------------
Cost of sales - $                                                           
 millions (1)            27.9     7.2       286%     76.4    49.7       54% 
----------------------------------------------------------------------------
Cost of sales - $/oz                                                        
 sold (3)               948.0   1,504       (37%) 1,011.0     979        3% 
----------------------------------------------------------------------------
Total tonnes mined -                                                        
 000s                       0       0         -     6,338       0      100% 
----------------------------------------------------------------------------
Tonnes mined heap                                                           
 leach - 000s               0       0         -       143       0      100% 
----------------------------------------------------------------------------
Tonnes stacked heap                                                         
 leach - 000s             456     100%        -       456       0      100% 
----------------------------------------------------------------------------
Tonnes ore mined                                                            
 direct mill feed                                                           
 -000's                     0       0         -       907       0      100% 
----------------------------------------------------------------------------
Tonnes ore milled -                                                         
 000s                     581     629        (8%)   2,382   2,340        2% 
----------------------------------------------------------------------------
Average mill head                                                           
 grade - g/t (2)         2.07    1.09        90%     1.32    1.11       19% 
----------------------------------------------------------------------------
Recovery - %             58.3    66.5       (12%)    64.0    68.9       (7%)
----------------------------------------------------------------------------
Gold produced -                                                             
 ounces                29,878  12,866       132%   71,838  59,224       21% 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Operating cash cost                                                         
 (3) - $/oz produced      479     849       (44%)     699     694        1% 
----------------------------------------------------------------------------
Total production cost                                                       
 (3)-$/oz produced        846     951       (11%)     999     828       21% 
----------------------------------------------------------------------------
All-in cash cost                                                            
 (pre-tax) (3) (5)-                                                         
 $/oz produced            502     940       (47%)     820     800        3% 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Capital expenditures                                                        
 (Boroo) - $ millions     0.7     1.1       (39%)     9.8     6.3       55% 
----------------------------------------------------------------------------
Capital expenditures                                                        
 (Gatsuurt) - $                                                             
 millions                 0.1     0.0       504%      0.4     0.3       39% 
----------------------------------------------------------------------------
 

 
                                                                            
(1)  Cost of sales excludes regional office administration.                 
(2)  g/t means grams gold per tonne.                                        
(3)  Operating cash cost is comprised of mine operating costs such as       
     mining, processing, regional office administration, royalties and      
     production taxes (except at Kumtor where revenue-based taxes are       
     excluded), but excludes depreciation, depletion and amortization,      
     reclamation costs, capital investments, community investments,         
     exploration expenses and corporate general and administration expenses.
     Operating cash cost, total production cost and all-in (pre-tax) cost   
     produced as well as cost of sales per ounce sold are non-GAAP Measures 
     and are discussed under "Non-GAAP Measures".                           
(4)  Kumtor's operating cash cost and total production cost per ounce       
     measures exclude operating and revenue-based taxes.                    
(5)  All-in cash cost (pre-tax) per ounce produced for Kumtor and Boroo     
     includes operating cash cost, sustaining and growth capital, but       
     excludes corporate general and administrative expenses, global         
     exploration expenses, and community investments, revenue-based taxes at
     Kumtor and income taxes.                                               
                                                                            
                                                                            
----------------------------------------------------------------------------
                                   Three Months Ended        Year Ended     
All-in Cash Costs (1)- Kumtor         December 31           December 31     
----------------------------------------------------------------------------
$ millions unless otherwise                                                 
 specified                             2012       2011       2012       2011
----------------------------------------------------------------------------
                                                                            
Operating cash costs                   64.6       80.4      206.5      281.3
Capitalized stripping and ice                                               
 unload - cash (1)                     32.2        6.0      146.4       39.4
                                --------------------------------------------
Operating cash costs and                                                    
 capitalized stripping                 96.8       86.4      352.9      320.7
                                                                            
Sustaining capital (cash)              10.5        7.8       40.8       32.2
Growth capital (cash)                  36.6       12.4      176.4       95.0
----------------------------------------------------------------------------
Operating Cash Costs including                                              
 capital (1)                          143.9      106.6      570.1      447.9
----------------------------------------------------------------------------
                                                                            
Corporate and other cash costs                                              
 (2)                                      -          -          -          -
----------------------------------------------------------------------------
All-in Cash Costs (pre-tax)                                                 
 (1)(3)                               143.9      106.6      570.1      447.9
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
                                                                            
Ounces poured                       189,438    138,696    315,238    583,156
All-in Cash Costs (pre-tax) per                                             
 ounce produced (1)(3)             $    760   $    769   $  1,808   $    768
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
                                   Three Months Ended        Year Ended     
All-in Cash Costs (1)- Boroo           December 31           December 31    
----------------------------------------------------------------------------
$ millions unless otherwise                                                 
 specified                             2012       2011       2012       2011
----------------------------------------------------------------------------
                                                                            
Operating cash costs                   14.3       10.9       50.2       41.1
Capitalized stripping - cash (1)        0.0        0.0        6.3        0.0
                                --------------------------------------------
Operating cash costs and                                                    
 capitalized stripping                 14.3       10.9       56.5       41.1
                                                                            
Sustaining capital (cash)               0.4        0.9        2.1        1.8
Growth capital (cash)                   0.3        0.3        0.3        4.5
----------------------------------------------------------------------------
Operating Cash Costs including                                              
 capital (1)                           15.0       12.1       58.9       47.4
----------------------------------------------------------------------------
                                                                            
Corporate and other cash                                                    
 costs(2)                                 -          -          -          -
----------------------------------------------------------------------------
All-in Cash Costs (pre-tax)                                                 
 (1)(3)                                15.0       12.1       58.9       47.4
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
                                                                            
Ounces poured                        29,878     12,866     71,838     59,224
All-in Cash Costs (pre-tax) per                                             
 ounce produced (1)(3)             $    502   $    940   $    820   $    800
----------------------------------------------------------------------------
                                                                            
(1) All-in cash costs (pre-tax), capitalized stripping -cash and sustaining 
and growth capital (excluding stripping) are non-GAAP Measures and are      
discussed under "Non-GAAP Measures".                                        
(2) Corporate and other cash costs include corporate general and            
administrative expenses, global exploration expenses, and community         
investments.                                                                
(3) All-in cash costs (pre-tax) for Kumtor and Boroo exclude corporate and  
other cash costs.                                                           

 
Kumtor  
At the Kumtor mine, gold production was 189,438 ounces in the fourth
quarter of 2012, compared to 138,696 ounce in the same quarter in
2011. The increased production for the fourth quarter of 2012 was due
to processing the higher grade ore available from cutback 14B. In
comparison, in the fourth quarter of 2011 Kumtor processed consistent
grades from the then newly accessed cutback 12B. Mill head grades for
the fourth quarter of 2012 were 5.13 g/t with a recovery of 77.7%,
versus 3.80 g/t and a recovery of 77.6% for the same quarter in 2011.
Tonnes processed in the fourth quarter of 2012 were 1,547,463, 7%
higher than the same period of 2011 as the Company increased mill
availabilities and throughput following the seven week mill shutdown
in the third quarter when extensive maintenance and remediation work
was completed. 
Operating cash costs including capitalized stripping and ice
unloading at Kumtor (see "Non-GAAP Measures") in the fourth quarter
of 2012 increased by $10.3 million due to higher mining costs, which
increased by $8.6 million as a result of the 11% increase in the
material mined by the expanded mine fleet which moved higher grade
ore from the SB Zone. Other costs increased by $1.7 million relating
to higher site support costs and higher labour costs. 
Operating cash costs per ounce produced was $341 in the fourth
quarter of 2012 compared to $580 in the comparative quarter of 2011.
The decrease in per ounce costs in the 2012 period is the result of
increased capitalized stripping and ice unload and 37% higher
production partially offset by increased operating costs discussed
above. Operating cash costs per ounce produced is a non-GAAP measure
and is discussed under "Non-GAAP Measures". 
All-in cash costs per ounce produced were $760 in the fourth quarter
of 2012 compared to $769 in the same quarter of 2011. The decrease
reflects the higher production in the 2012 quarter, partially offset
by higher capitalized stripping and higher spending on capital.
All-in cash costs per ounce produced is a non-GAAP measure and is
discussed under "Non-GAAP Measures". 
Exploration expenditures totaled $2.9 million for the fourth quarter
of 2012, which is similar to the comparative quarter of 2011.
Exploration activity focused on drilling of the southwest extension
of the SB Zone and deeper portions of the SB Zone below the Central
Pit. Underground exploration drilling from Declines 1 and 2 ended in
November 2012, following the Company's decision to expand the Kumtor
Central Pit and cease underground development activities. 
During the fourth quarter of 2012, capital expenditures were $83.9
million, which included $10.5 million of sustaining capital spent
mainly on the heavy equipment overhaul program ($6.1 million), the
effluent treatment plant relocation ($3.4 million) and other projects
($1.0 million). Growth capital investment totalled $76.0 million
mainly on capitalized stripping ($36.8 million), purchase of six CAT
789 Haul Trucks ($23.1 million) associated with the new KS-13
life-of-mine plan, purchase of four Hitachi shovels ($12.0 million),
expansion of the fuel farm at the new marshaling yard ($0.9 million)
and numerous other minor projects ($0.6 million). Capital
expenditures in 2011 were $28.5 million, which included $7.8 million
spent and accrued on sustaining capital projects and $20.7 million
invested in growth capital. 
Abnormal mining costs at Kumtor for the fourth quarter of 2012 were
$8.9 million representing the ice and waste removal from the high
movement unload zone, which is required to resume mining the
southeast section of the pit and to access the higher grade ore in
2013.  
During the fourth quarter of 2012, the Company recorded a one-time
charge of $180.7 million for the de-recognition of the underground
assets at Kumtor following the decision to expand the open pit. The
larger open pit will partially consume the declines rendering them
unusable for future mining activities. 
Other operating expenses were incurred in the fourth quarter for the
closure of the underground operation at Kumtor in the amount of $2.9
million. Kumtor will incur further closure costs for the underground
during the first quarter of 2013. 
Boroo  
At the Boroo mine in the fourth quarter of 2012, gold production was
29,878 ounces, compared to 12,866 ounces in the same period of 2011.
The production increase of 12,614 ounces is a result of processing
higher grade ore from Pit 6 with an average mill head grade of 2.07
g/t compared to 0.86 g/t last year and the addition of 7,486 ounces
of production from the heap leap operation which resumed in October
2012. 
Operating costs at Boroo were up $3.8 million quarter-over-quarter
primarily due to increased costs for mining ($0.4 million), heap
leaching ($1.9 million) and royalties ($1.8 million), partially
offset by a decrease in milling costs ($0.2 million). Heap leaching
costs were higher due to stacking, crushing and processing activities
which commenced in the fourth quarter in 2012. Royalties increased in
2012 due to the additional 24,618 ounces sold in the 2012 fourth
quarter. Milling cost decreased mainly due to lower consumption of
consumables. 
Operating cash costs per ounce produced in the fourth quarter 2012
was $479 compared to $849 per ounce for 2011. The decrease in the
unit cash cost is a result of the higher production partially offset
by higher operating cost incurred for heap leach operations in the
fourth quarter of 2012. Operating cash costs per ounce produced is a
non-GAAP measure and is discussed under "Non-GAAP Measures". 
Boroo's all-in cash costs per ounce produced for the fourth quarter
of 2012 is $502 and includes all costs directly related to gold
production except for income tax paid in Mongolia. The same all-in
cash costs measure for 2011 was $940 per ounce produced. The decrease
in all-in cash costs is due to the 21% increase in production
partially offset by higher costs at Boroo year-over-year. All-in cash
costs per ounce produced is a non-GAAP measure and is discussed under
"Non-GAAP Measures". 
During the fourth quarter of 2012 exploration expenditures in
Mongolia decreased to $3.0 million from $4.2 million in the same
period in 2011. The majority of the exploration work in the fourth
quarter 2012 was conducted at the ATO property in eastern Mongolia. 
During the fourth quarter of 2012, capital expenditures at Boroo were
$0.7 million, $0.4 million of sustaining capital and $0.4 million of
growth capital.  
Other Corporate Developments  
The following is a summary of corporate developments with respect to
matters affecting the Company and its subsidiaries in the Kyrgyz
Republic, Mongolia and Canada:  
Kyrgyz Republic  
Since the Company's most recent quarterly news release dated November
7, 2012, there have been several developments with respect to the
state commission established by the Kyrgyz Government for the purpose
of inspecting and reviewing Kumtor's compliance with Kyrgyz
operational and environmental laws and regulations and community
standards (the "State Commission"). In particular, the following
developments have occurred, each of which will be discussed below in
greater detail: (a) The State Commission released its final report
(the "State Commission Report") on December 25, 2012; (b) Kumtor
received five claims from the State Inspectorate Office for
Environmental and Technical Safety under the Government of the Kyrgyz
Republic ("SIETS") for an aggregate of $152 million for alleged
environmental violations, which was previously disclosed in a news
release of the Company on December 14, 2012; (c) The Kyrgyz Republic
Government received the State Commission Report on January 24, 2013
and created a working group to hold discussions with Centerra on
revising the terms under which the Kumtor Project operates; and (d)
the Kyrgyz Republic Parliament received the State Commission Report
on February 20, 2013 and is considering a draft Parliamentary
resolution. Such draft Parliamentary resolution calls on the
Government to hold negotiations with Centerra with a view to revising
the Kumtor Project Agreements (as defined below) in the interest of
the Kyrgyz Republic and recommends that, if mutually advantageous
terms cannot be agreed, the Government take a number of steps
including, without limitation, the repeal of the 2009 laws approving
the Kumtor Project Agreements and the termination of the Kumtor
Project Agreements; and(e) the Kyrgyz Republic Social Fund (the
"Social Fund") has appealed to the Supreme Court a lower court ruling
that dismissed the Social Fund's request to invalidate documentary
acts (assessments) of the Social Fund against Kumtor for the years
2004 to 2009. 
The Company addresses each of the developments below in detail.
Reference should also be made to the historical information contained
in the Company's news release dated November 7, 2012 regarding the
State Commission and the related Parliamentary Commission which was
formed in early 2012. The Company believes that the agreements
entered into in 2009 governing the Kumtor Project (the "Kumtor
Project Agreements") are legal, valid and enforceable obligations.
The Kumtor Project Agreements were reviewed and approved by the
Kyrgyz Republic Government and the Kyrgyz Republic Parliament, and
were the subject of a positive decision of the Kyrgyz Republic
Constitutional Court and a legal opinion by the Kyrgyz Republic
Ministry of Justice. The Company continues to be in discussions with
the Government regarding the State Commission Report, with the
objective of resolving these outstanding concerns through
constructive dialogue. However, there can be no assurances that the
Company will be able to successfully resolve any or all of these
matters currently affecting the Kumtor Project. There can also be no
assurance that the Kyrgyz Republic Government and/or Parliament will
not take actions that are inconsistent with the Kyrgyz Republic's
obligations under the Kumtor Project Agreements or cancel government
decrees, orders or licenses under which Kumtor currently operates.
Any such actions could have a material adverse impact on the
Company's future cash flows, earnings, results of operations and
financial condition. See "Material Assumptions & Risks" and
"Cautionary Note Regarding Forward-looking Information" below. For
further information on risk factors relevant to Centerra and its
operations, please see "Risk Factors" in the most recently filed MD&A
and in the Company's most recently filed Annual Information Form.
State Commission Activities  
(A) State Commission Report  
In December 2012, the State Commission issued its final report
following five months of study and several visits to the Kumtor mine
site, and over 120 written requests for information on a wide variety
of matters going back to 1993 when the original agreement regarding
the Kumtor Project was executed. The State Commission was comprised
of three working groups with responsibility for environmental and
technical matters, legal matters (including a review of all prior and
current agreements relating to the Kumtor Project), and
social-economic matters (including a review of financial, taxation,
procurement and employment-related matters). 
The State Commission Report includes a large number of allegations in
regard to prior transactions relating to the Kumtor Project and the
Kumtor Project's operations and management, including the following:  


 
(i)   that the Kumtor Project violated Kyrgyz Republic legislation relating 
      to corporate, environment, and subsoil legislation at various times   
      since project activities began in 1993, including allegations relating
      to the tender process for the deposit in 1993, the approval process   
      for the initial development of the Kumtor Project, the placing of     
      waste rock on glaciers, and causing environmental damage to water and 
      land resources in the area of the Kumtor Project;                     
                                                                            
(ii)  that the Kumtor management is ineffective;                            
                                                                            
(iii) that incorrect valuation of assets occurred during the 2003/2004      
      restructuring process, which purportedly led to significant losses    
      sustained by the Kyrgyz Republic;                                     
                                                                            
(iv)  that the Kumtor Project Agreements adopted in 2009 were improperly    
      approved and violate the Kyrgyz Republic constitution.                

 
The State Commission Report recommends that the Kyrgyz Government
open negotiations under which the Kumtor Project is governed,
including requiring Kumtor to accept the current tax regime and pay
higher environmental charges; changes in the management of Kumtor and
Centerra including greater representation by Kyrgyzaltyn on the
Centerra board of directors and greater representation of Kyrgyz
citizens in management of the Kumtor Project; and recommendations for
additional charges and fees to be paid by the Kumtor Project
including for land use, and for those items raised by SIETS (see
disclosure below regarding environmental claims received by Kumtor
Project). The State Commission Report also recommends various actions
to be taken by Kyrgyzaltyn, by the Kyrgyz Government, including
revisions to Kyrgyz law, and the Kyrgyz Republic General Prosecutor's
Office with respect to investigating the personal liability of
parties who were involved in negotiating previous agreements
governing the Kumtor Project for violations of Kyrgyz legislation and
for inflicting losses to the Kyrgyz Republic's interests. The State
Commission recommended the establishment of a working group to give
effect to the recommendations, in particular the opening of
negotiations with Centerra and Kumtor.  
The Company received the final copy of the State Commission Report on
January 18, 2013. The Company believes that the conclusions and
claims in the State Commission Report are exaggerated or without
merit. While the Company has responded in detail in writing to such
conclusions and claims, it also makes the following general
responses:  


 
(i)   The Company operates in accordance with Kyrgyz and international      
      standards, and this has been proven over the years in systematic      
      audits by Kyrgyz and international experts. In particular, in August  
      2012, the Safety, Health and Environment Committee of the Board of    
      Directors of Centerra engaged an independent internationally          
      recognized consultant to carry out a due diligence review of Kumtor's 
      performance on safety, health and environmental matters. The report   
      issued in October 2012 concluded that "no major or materially         
      significant environmental issues were identified".                    
                                                                            
(ii)  The Kumtor Project Agreements provide for a full regime of all        
      payments to the Kyrgyz Government including a comprehensive revenue-  
      based tax and specified fees and payments for other matters including 
      environmental charges. The Kumtor Project Agreements were negotiated  
      at arm's length, and reviewed and approved by the Kyrgyz Government   
      and its Parliament. The agreements were the subject of a positive     
      decision by the Kyrgyz Constitutional Court and a legal opinion of the
      Kyrgyz Republic Ministry of Justice. The Company believes these       
      agreements are legal, valid and enforceable obligations of the        
      parties.                                                              
                                                                            
(iii) Centerra, Kumtor and the Kyrgyz Government, among other parties,      
      entered into a release agreement (the Release Agreement) on June 6,   
      2009, as part of Kumtor Project Agreements. The Release Agreement     
      provides that parties agreed to release each other from any claims,   
      including any legal, tax and fiscal matters, in respect of any matter 
      arising or existing prior to June 6, 2009, whether such matters were  
      known or unknown as of June 6, 2009, subject to certain exemptions    
      which are not applicable in the circumstances. Accordingly, the       
      conclusions and recommendations relating to alleged wrong doings prior
      to June 6, 2009, including matters relating to the 1993 Master        
      Agreement and the 2003 Restructuring Agreement, have been released by 
      all parties.                                                          

 
(B) Kumtor Has Received Claims from Kyrgyz Authorities for Alleged
Environmental Violations 
As previously disclosed, Kumtor received in mid-December 2012, five
claims from the SIETS for alleged environmental violations. The
claims are for an aggregate amount of approximately $152 million,
including (i) a claim for approximately $142 million for alleged
damages in relation to the placement on waste dumps of waste rock
(unprocessed rock) from mining operations for the period from 2000 to
2011; (ii) a claim for approximately $4 million for use of water
resources from Petrov Lake for the period of 2000 to 2011; and (iii)
a claim for approximately $2.3 million for alleged damages caused to
land resources, including in some cases from the time of initial
construction of the Kumtor facilities in 1995. One Claim for $2.8
million for waste placed in the tailings management facilities and
for emissions for 2009-2011 was withdrawn after discussions with the
applicable Kyrgyz regulatory authorities, although there are no
assurances that further claims will not be issued on this matter. The
claims reference the review of the Kumtor Project carried out by the
environmental and technical working group of the State Commission.
Kumtor disagrees with these claims and has responded to them in
detail in writing to the relevant authority. While the Company
believes that such claims are exaggerated or without merit, there can
be no assurances that these claims will be successfully resolved in
favour of the Company or that further claims will not be issued.  
(C) Government Decree #34 
The Kyrgyz Government received the State Commission Report on January
24, 2013 and issued a decree, Decree of the Kyrgyz Government dated
January 24, 2013, #34 ("Decree #34"), accepting the State Commission
Report and sending it to the Kyrgyz Parliament. Pursuant to Decree
34, the Kyrgyz Government also established a working group to hold
discussions on the revisions of terms governing the Kumtor Project,
particularly on revisions to the tax regime and other matters
identified in the State Commission Report.  
The Company intends to meet with the working group and other Kyrgyz
Government officials, with the objective of resolving matters through
constructive dialogue. However, there can also be no assurance that
such discussions will result in a successful outcome for the Company,
or that the Kyrgyz Government will not take actions that are
inconsistent with its obligations under the Kumtor Project Agreements
or cancel government decrees, orders or licenses under which the
Kumtor Project currently operates. Any such actions could have a
material adverse impact on the Company's future cash flows, earnings,
results of operations and financial conditions.  
(D) Parliament Review and Draft Resolution  
On February 20, 2013, the Parliament of the Kyrgyz Republic debated
the State Commission Report and discussed a draft resolution (the
"Draft Resolution") that endorses the Report and calls on the
Government to hold negotiations with Centerra with a view to revising
the Kumtor Project Agreements in the interests of the Kyrgyz
Republic. The Company understands that the Draft Resolution further
recommends that if mutually advantageous terms cannot be agreed the
Government should take a number of steps including the following:  


 
i.  annul the legislation enacted by Parliament in 2009 approving the Kumtor
    Project Agreements; 
ii. terminate the Kumtor Project Agreements, including the Restated
    Investment Agreement and Restated Concession Agreement dated June 6,
    2009; 
iii.initiate legal proceedings with a view to implementing a Government
    decree of July 5, 2012 "On Cancellation of the Government's Decree on
    granting land plots to Kumtor Gold Company CJSC dated as of March 25,
    2010. (Such March 25, 2010 decree granted Kumtor certain surface rights
    in relation to the project. See Centerra's news release dated July 6,
    2012.); 
iv. review Government decisions issued between 1992 and 2012 which granted
    areas for carrying out exploration, mining operations and construction
    of facilities for the Kumtor Project; and 
v.  develop and submit amendments to laws on biosphere territories and
    prevention of damage to glaciers. 

 
In addition, the Draft Resolution advises the Government to:  


 
i.  ensure that the Kumtor mine remains in continuous operation; 
ii. require Kumtor to develop additional designs for reclamation and
    determine relevant financial resources required to implement such
    designs; and 
iii.ensure that the recommendations of the State Commission (the Report) and
    Draft Resolution are fulfilled. 

 
The Draft Resolution also recommends that the Government review
allegations that Kumtor has understated reserves of silver, tellurium
and other elements.  
The Draft Resolution calls for the Government to report on the
fulfillment of the recommendations contained in the State Commission
Report and the Parliamentary resolution by June 1, 2013. While it is
not certain that Parliament will pass the Draft Resolution in its
current form, Centerra is reviewing the provisions of the Draft
Resolution and will respond to any final Parliamentary resolution
accordingly. However, as already stated in this news release,
Centerra continues to be confident in the continued validity of the
Kumtor Project Agreements, which provide for disputes concerning the
project to be resolved by international arbitration.  
Kyrgyz Republic Social Fund Dispute 
As previously disclosed, the Social Fund commenced a claim in the
Kyrgyz courts to invalidate documentary acts (assessments) issued by
the Social Fund for the years 2004-2009. Preliminary motions
regarding jurisdictional matters were argued on August 28, 2012 and
subsequently determined in favour of Kumtor. Such decision was
appealed by the Social Fund to the Bishkek City Court, which
dismissed the appeal of the Social Fund on November 28, 2012. In
early February 2013, the Social Fund appealed this decision of the
Bishkek City Court to the Kyrgyz Republic Supreme Court.  
For a further discussion regarding the Social Fund claim and the
dispute for the 2010 taxation year regarding the payment of Social
Fund contributions on the high altitude coefficient, please see the
Company's Annual Information Form for 2011. There are no assurances
that the Company and Kumtor will be able to resolve the outstanding
matters relating to the Social Fund without any material impact on
the Company's future cash flows, earnings, results of operations and
financial condition.  
Other 
The Company is aware of certain statements made by the Kyrgyz
Minister of Health and published on the Ministry's website indicating
that Centerra has committed to certain donations related to the
improvement of cardiology, cardiac surgery and hemodialysis care in
the Kyrgyz Republic. While the Company is reviewing the
appropriateness of this donation along with other possible donations
in the Kyrgyz Republic, the Company has not yet made a determination
thereon. 
Mongolia  
Gatsuurt and the Impact of the Mongolian Water and Forest Law 
Further to information disclosed in Centerra's MD&A for the third
quarter 2009 and Centerra's Annual Information Form for 2011, the
Mongolian Parliament enacted in July 2009 the Mongolian Law to
Prohibit Mineral Exploration and Mining Operations at River
Headwaters, Protected Zones of Water Reservoirs and Forested Areas
(the "Water and Forest Law") which prohibits mineral prospecting,
exploration and mining in water basins and forestry areas in
Mongolia. The law provides for a specific exemption for "mineral
deposits of strategic importance", which exempts the Boroo hard rock
deposit from the application of the law. Centerra's Gatsuurt licenses
are currently not exempt. Under the Mineral Laws of Mongolia,
Parliament on its own initiative or, on the recommendation of the
Mongolian Government, may designate a mineral deposit as strategic.
Such designation could result in Mongolia receiving up to a 34%
interest in the applicable project.  
Centerra is currently in discussions with the Mongolian Government
regarding the development of the Gatsuurt property. Centerra is
reasonably confident that the economic and development benefits
resulting from its exploration and development activities will
ultimately result in the Water and Forest Law having a limited impact
on the Gatsuurt property, in particular, and other Company's
Mongolian activities including ATO. There can be no assurance,
however, that this will be the case. Unless the Water and Forest Law
is repealed or amended such that the law no longer applies to the
Gatsuurt project or Gatsuurt is designated as a "mineral deposit of
strategic importance" that is exempt from the Water and Forest Law,
mineral reserves at Gatsuurt may have to be reclassified as mineral
resources or eliminated entirely and the Company may be required to
write-off the associated investment in Gatsuurt and Boroo.  
As at December 31, 2012, the Company had net assets recorded
amounting to approximately $37 million related to the investment in
Gatsuurt and approximately $28 million remaining capitalized for the
Boroo mill facility and other surface structures which are expected
to be utilized for the processing of ore from Gatsuurt. Although the
Company expects to exploit the Gatsuurt deposit, should this not be
the case, the Company would be required to write-off these amounts. A
revocation of the Company's mineral licenses, including the Gatsuurt
mineral license, or the reclassification of mineral reserves or the
write-off of assets could have an adverse impact on Centerra's future
cash flows, earnings, results of operations or financial condition.
For a further discussion relating to the Water and Forest Law, please
see the Company's Annual Information Form for 2011.  
The Boroo Heap Leach 
Boroo received regulatory approval for the mine plan for the heap
leach facility in September 2012. As a result, Boroo recommenced heap
leach operations in the fourth quarter of 2012.  
Corporate  
Enforcement Notice by Sistem: 
As previously disclosed, in March 2011, Centerra was served by a
Turkish company, Sistem Muhenkislik Insaat Sanayi Ticaret SA
("Sistem"), with a notice of enforcement to seize any shares and
dividends in Centerra held in the name of the Kyrgyz Republic,
followed by a notice of garnishment in April 2011 for any debts owed
by Centerra to the Kyrgyz Republic. These notices were served by
Sistem as part of the enforcement proceedings brought by Sistem in
the Ontario Superior Court to collect approximately US$11 million
with additional interest, owed to Sistem by the Kyrgyz Republic in
accordance with a judgment of the Ontario Superior Court enforcing an
international arbitration award against the Kyrgyz Republic. In these
Ontario proceedings, Sistem alleges that the shares in Centerra owned
by Kyrgyzaltyn and any dividends paid in respect of those shares, are
in fact legally and beneficially owned by the Kyrgyz Republic and are
therefore subject to execution to pay the judgment.  
Based on legal advice received, Centerra disputes those allegations
and paid to Kyrgyzaltyn its portion of Centerra dividends payable on
May 18, 2011 (approximately C$31 million) and on May 31, 2012
(approximately C$3 million). Sistem is continuing with its claim
regarding the Centerra shares owned by Kyrgyzaltyn. If this claim is
successful in the Ontario court proceedings, Sistem may have a right
to execute its judgment against those shares and may assert a claim
against Centerra in respect of the payment of the dividends to
Kyrgyzaltyn. However, Centerra believes it has a strong defense to
that claim based on the facts and the law. 
Preliminary motions regarding jurisdictional matters have been heard
in the Ontario Superior Court over the course of 2012, with the
objective of setting aside the Ontario judgment enforcing the
arbitration award. The lower court decision found in favour of Sistem
and dismissed the motion. Kyrgyzaltyn appealed such decision to the
Court of Appeal where it was not successful. At this point, the
matter can either be appealed further by Kyrgyzaltyn or the trial on
the substantive issue will commence.  
Pursuant to a Ontario court decision dated September 5, 2012 (the
"Court Order"), Centerra is required to hold in trust to the credit
of the Sistem court proceeding, Kyrgyzaltyn's portion of dividends
payable on shares of Centerra, up to a maximum of C$11.2 million. The
Court Order has been put in place until the resolution of the court
proceedings. To date, Centerra is holding in trust for the credit of
the Sistem court proceedings, an amount equal to $5.9 million. The
Court Order also places certain restrictions on 4 million of the
Centerra shares held by Kyrgyzaltyn, including restrictions on the
transfer or encumbrance of such shares. The Centerra shares pledged
by Kyrgyzaltyn to Kumtor Gold Company and Kumtor Operating Company as
security for payments due from Kyrgyzaltyn under the Restated Gold
and Silver Sale Agreement dated as of June 6, 2009 are not subject to
the Court Order restrictions.  
For a full discussion of risk factors that can have a material effect
on the profitability, future cash flow, earnings, results of
operations, stated mineral reserves and financial condition of the
Company, please see "Caution Regarding Forward-looking Information".
For information regarding risk factors relevant to Centerra and its
operations, please see "Risk Factors" in the most recently filed MD&A
and in the Company's most recently filed Annual Information Form. 
2013 Outlook  
Centerra's 2013 gold production and unit costs are forecast as
follows: 


 
----------------------------------------------------------------------------
                                          2013 Operating    2013 All-in Cost
                     2013 Production        Cash Cost(1)          Pre-tax(2)
                            Forecast        ($ per ounce        ($ per ounce
                    (ounces of gold)           produced)           produced)
----------------------------------------------------------------------------
Kumtor             550,000 - 600,000    $      342 - 373    $      853 - 931
----------------------------------------------------------------------------
Boroo                55,000 - 60,000    $  1,055 - 1,151    $  1,225 - 1,336
----------------------------------------------------------------------------
Consolidated       605,000 - 660,000    $      406 - 443    $  1,067 - 1,164
----------------------------------------------------------------------------
                                                                            
(1)  Operating cash cost per ounce produced is a non-GAAP measure and       
     includes mine operating costs such as mining, processing, regional     
     office administration, royalties and production taxes (except at Kumtor
     where revenue-based taxes are excluded), but excludes depreciation,    
     depletion and amortization, reclamation costs, capital investments,    
     community investments, exploration expenses and corporate general and  
     administration expenses.                                               
(2)  All-in cost (pre-tax) per ounce produced is a non-GAAP measure and     
     includes cash operating cost, sustaining and growth capital, corporate 
     general and administrative expenses, global exploration expenses, and  
     community investments, but excludes revenue-based taxes at Kumtor and  
     income taxes.                                                          

 
2013 Production  
Centerra's 2013 consolidated gold production is forecast to be in the
605,000 to 660,000 ounce range. 
In 2013, approximately 50% of Kumtor's gold production is expected to
occur in the fourth quarter creating a potential variability to
Kumtor's 2013 production guidance. Centerra estimates that the Kumtor
mine will produce between 550,000 and 600,000 ounces in 2013. Ore
production in the fourth quarter is planned to come from the
high-grade SB Zone ore that has several years of production history.
The high-grade ore from the SB Zone is only available for mining at
the end of the third quarter when it is exposed by Cut Back 15.  
According to the KS-13 mine plan, 2013 is expected to be the last
year with a significant back-end loaded production profile as the
mine continues to build stockpiles, which will allow for more
consistent production on a quarterly basis going forward. 
At the Boroo mine, gold production is forecast to be approximately
55,000 to 60,000 ounces, which includes about 24,000 ounces from heap
leaching and 36,000 ounces from processing mill stockpiles. The Boroo
mill is expected to process ore stockpiles during the year with an
average grade of 0.82 g/t. The 2013 forecast assumes no mining
activities at Boroo and Gatsuurt, and no gold production from
Gatsuurt. 
2013 All-in Unit Cash Costs  
Centerra's 2013 all-in unit cash production costs per ounce are
forecast as follows: 


 
----------------------------------------------------------------------------
                                    Kumtor            Boroo     Consolidated
----------------------------------------------------------------------------
                              ($ per ounce     ($ per ounce     ($ per ounce
                                 produced)        produced)        produced)
----------------------------------------------------------------------------
Operating cash costs(1)    $     342 - 373  $ 1,055 - 1,151  $     406 - 443
----------------------------------------------------------------------------
Capitalized stripping                                                       
 costs - cash                    354 - 386                -        322 - 351
----------------------------------------------------------------------------
Operating cash and                                                          
 stripping costs           $     696 - 759  $ 1,055 - 1,151  $     728 - 794
----------------------------------------------------------------------------
Sustaining capital (cash)        105 - 115        170 - 185        113 - 124
----------------------------------------------------------------------------
Growth capital (cash)              52 - 57                -          49 - 53
----------------------------------------------------------------------------
Operating cash costs                                                        
 including capital         $     853 - 931  $ 1,225 - 1,336  $     890 - 971
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Corporate and other cash                                                    
 costs(2)                                -                -        177 - 193
----------------------------------------------------------------------------
All-in cash costs (pre-                                                     
 tax)(1)                   $     853 - 931  $ 1,225 - 1,336  $ 1,067 - 1,164
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Revenue-based tax and                                                       
 income tax                      234 - 255        130 - 142        224 - 245
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Total all-in cash costs                                                     
 including taxes(1)        $ 1,087 - 1,186  $ 1,355 - 1,478  $ 1,291 - 1,409
----------------------------------------------------------------------------
                                                                            
1.   Operating cash costs, all-in cash costs (pre-tax) and total all-in cash
     costs including taxes per ounce produced are non-GAAP measures and are 
     discussed under "Non-GAAP Measures".                                   
2.   Corporate and other cash costs per ounce produced include corporate    
     general and administrative expenses, global exploration expenses, and  
     community investments.                                                 

 
2013 Exploration Expenditures  
Exploration expenditures of $45 million are planned for 2013, which
is unchanged from the budgeted expenditures for 2012. The 2013
program will continue the successful exploration work below and west
of the Central Pit at the Kumtor mine and includes drilling on the
adjacent Sarytor and Northeast satellite deposits. Planned
exploration expenditures on the Kumtor concession are expected to be
about $13.5 million. 
In Mongolia, approximately $7 million is allocated for exploration
programs that will focus on expanding the mineral resource at the
Altan Tsagaan Ovoo ("ATO") project and evaluating targets in the
greater ATO district. 
Exploration spending in Turkey will increase to approximately $8
million as work focuses on expanding and upgrading the Oksut gold
deposit resource, advancing ongoing metallurgical testwork and
initiating detailed environmental and technical project studies. 
In 2013, drilling programs will continue in Russia on the Kara Beldyr
and Dvoinoy Joint Ventures and commence on the new Umlekan Joint
Venture adjoining Dvoinoy. Expenditures for the projects in Russia
are expected to be, in the aggregate, approximately $6 million. 
The China 2013 exploration program of $2 million includes the
drilling of targets developed on the Laogouxi Joint Venture project
and generating new projects in several prospective areas. Generative
programs will continue in Central Asia, Russia, China, Turkey and
several new regions to increase the pipeline of projects that the
Company is developing to meet the longer term growth targets of
Centerra. 
2013 Capital Expenditures  
Centerra's capital expenditures for 2013, excluding capitalized
stripping, are estimated to be $107 million, including $75 million of
sustaining capital and $32 million of growth capital. 
Capital expenditures (excluding capitalized stripping) include: 


 
----------------------------------------------------------------------------
                                               2013 Growth   2013 Sustaining
                                                   Capital           Capital
                                              (millions of      (millions of
Projects                                          dollars)          dollars)
----------------------------------------------------------------------------
Kumtor mine                              $              31 $              64
----------------------------------------------------------------------------
Mongolia                                 $               1 $              10
----------------------------------------------------------------------------
Corporate                                                - $               1
----------------------------------------------------------------------------
Consolidated Total                       $              32 $              75
----------------------------------------------------------------------------

 
Kumtor  
At Kumtor, 2013 total capital expenditures, excluding capitalized
stripping, are forecast to be $95 million including $64 million of
sustaining capital. The largest sustaining capital spending will be
the major overhaul maintenance of the heavy duty mine equipment ($29
million), purchase of new mining equipment ($17 million), tailings
dam construction raise ($5 million) and other items ($13 million).  
Growth capital investment at Kumtor for 2013 is forecast at $31
million, which includes the relocation of certain infrastructure at
Kumtor related to the KS-13 life-of-mine expansion ($26 million) and
other items ($5 million).  
Capitalized stripping costs related to the development of the open
pit are expected to be $212 million (cash) in 2013. 
Mongolia (Boroo & Gatsuurt)  
At Boroo, 2013 sustaining capital expenditures are expected to be $10
million primarily for raising the tailings dam at Boroo ($6 million),
and maintenance rebuilds and overhauls. 
Growth capital for the Gatsuurt deposit is forecast at $1 million,
related to environmental studies. 
2013 Corporate Administration and Community Investment  
Corporate and administration expenses for 2013 are forecast at $45
million, which includes $7 million for business development
activities.  
Total community investments for 2013 are forecast at $27.5 million,
which includes $7.5 million for donations and sustainable development
projects in the various communities in which Centerra operates and
$20 million for strategic community investment projects. Note that
these costs are not included in cash operating cost per ounce.  
2013 Depreciation, Depletion and Amortization  
Depreciation, depletion and amortization expenses included in costs
of sales expense for 2013 are forecast to be approximately $218
million. Changes in DD&A are a result of increases or decreases to
certain of the Company's capital assets. 


 
----------------------------------------------------------------------------
                                            2013         2012         2011  
                                            DD&A         DD&A         DD&A  
(In millions)                            Forecast       Actual       Actual 
----------------------------------------------------------------------------
Kumtor                                                                      
----------------------------------------------------------------------------
Mine equipment                        $        95  $        87  $        69 
----------------------------------------------------------------------------
Less DD&A capitalized to stripping                                          
 costs (1)                                    (77)         (59)         (14)
----------------------------------------------------------------------------
Stripping costs amortized                     291          117           32 
----------------------------------------------------------------------------
Other mining assets                             1            1            5 
----------------------------------------------------------------------------
Mill assets                                     6            4            8 
----------------------------------------------------------------------------
Administration assets and other                12            3           10 
----------------------------------------------------------------------------
Inventory movement (non-cash)                (127)         (32)         (22)
----------------------------------------------------------------------------
Subtotal for Kumtor                   $       201  $       121  $        88 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Boroo                                                                       
----------------------------------------------------------------------------
Mine equipment                        $         1  $         1  $         2 
----------------------------------------------------------------------------
Less DD&A capitalized to stripping                                          
 costs                                          -           (1)           - 
----------------------------------------------------------------------------
Stripping costs amortized                       2            9            - 
----------------------------------------------------------------------------
Mine development and other mining                                           
 assets                                         1            1            1 
----------------------------------------------------------------------------
Mill assets                                     6            4            1 
----------------------------------------------------------------------------
Administration assets and other                 6            8            3 
----------------------------------------------------------------------------
Inventory movement (non-cash)                   1           (1)           3 
----------------------------------------------------------------------------
Subtotal for Boroo                    $        17  $        21  $        10 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Consolidated Total                    $       218  $       142  $        98 
----------------------------------------------------------------------------
                                                                            
(1) Use of the Company's mining fleet for stripping activities results in a 
    portion of the depreciation related to the mine fleet to be allocated to
    capitalized stripping costs. In 2012, $2 million of depreciation was    
    expensed as mine standby costs, $7 million of depreciation was expensed 
    as abnormal ice unload costs, and $51 million of depreciation was       
    allocated to capitalized stripping costs.                               

 
Kumtor  
At Kumtor, the forecast for 2013 DD&A expensed as part of costs of
sales is $201 million. The increase over the three years reflects a
significant expansion of the mining fleet in order to achieve higher
throughput levels of materials moved and the increased stripping of
waste required to access the deposit. The amortization of capitalized
stripping costs is the largest component of depreciation expense in
2013 totalling $291 million. The mine equipment assets are
depreciated on a straight-line basis over their estimated useful
lives. The depreciation expense related to mine equipment engaged in
a stripping campaign is capitalized as stripping costs ($77 million
forecasted to be capitalized as stripping costs in 2013). 
During 2013 Kumtor will be mining the remaining ore from cut-backs
14A and 14B and starting stripping campaigns on cut-backs 15, 16 and
17. The costs to remove waste and ice within the various cut-backs
include mining operating costs such as labour, diesel and maintenance
costs, as well as the depreciation expense for the mine equipment
used in the stripping campaign. Labour and consumables costs (such as
diesel costs) have been steadily increasing over the last several
years due to both increases in price and demand with the expanding
operation at Kumtor. These costs are capitalized as stripping costs
and amortized over the ounces contained in the ore body exposed by
the stripping campaign. 
Based on the sequencing of production at Kumtor for 2013, ore from
cut-backs 14A, 14B and 15 will be mined resulting in the amortization
through cost of sales of $291 million in capitalized pre-stripping
costs. As Kumtor completes mining of the ore from cut-backs 14A and
14B, it will amortize the remaining unamortized capitalized stripping
costs of $101 million related to those cut-backs. The forecast
assumes that the stripping campaign for cut-back 15 is completed in
the third quarter of 2013 providing access to the ore in the third
and fourth quarters. As the ore in cut-back 15 is mined in the third
and fourth quarters, the amortization expense for 2013 for the
capitalized stripping costs related to cut-back 15 is forecast at
$190 million. 
Boroo 
At Boroo, the forecast for 2013 DD&A expensed as part of costs of
sales is $17 million, compared to $21 million in 2012 and $10 million
in 2011. The decrease in 2013 reflects the completion of mining
activities in Pit 6 in 2012. The largest components of depreciation
expense are related to depreciation of the mill, the administration
buildings and other assets forecasted at $6 million. 
Taxes 
Pursuant to the Restated Investment Agreement, Kumtor's operations
are not subject to corporate income taxes. The Agreement replaced the
prior tax regime applicable to the Kumtor project with a simplified
regime effective January 1, 2008. This simplified regime, which
assesses tax at 13% on gross revenue (plus 1% for the Issyk-Kul
Oblast Development Fund effective January 2009), was approved and
enacted by the Parliament of the Kyrgyz Republic in 2009. 
The corporate income tax rate for Centerra's Mongolian subsidiary,
BGC is 25% for taxable income over 3 billion Mongolian tugriks
(approximately $2.2 million at the 2012 year-end foreign exchange
rate) with a tax rate of 10% for taxable income up to that amount.
These tax rates will continue to apply until the expiration of the
Boroo Stability Agreement in July 2013, after which Boroo's
operations will be subject to a prevailing income tax rate of 25%.
Royalty fees will increase from 5% under Boroo's Stability Agreement
to the current graduated royalty fee structure which would charge the
maximum of 10% based on current gold prices. 
Sensitivities 
Centerra's revenues, earnings and cash flows for 2013 are sensitive
to changes in certain variables and the Company has estimated their
impact on revenues, net earnings and cash from operations. 


 
                                                                            
----------------------------------------------------------------------------
                                                   Impact on                
                                                  ($ millions)              
                                   -----------------------------------------
                                                       Cash  Earnings before
                             Change  Costs  Revenues   flow       income tax
----------------------------------------------------------------------------
Gold Price                   $50/oz    5.1      32.5   27.4             27.4
----------------------------------------------------------------------------
Diesel Fuel (1)                 10%    8.2         -    8.2              8.2
----------------------------------------------------------------------------
Kyrgyz som (2)                1 som    2.8         -    2.8              2.8
----------------------------------------------------------------------------
Mongolian tugrik(2)       25 tugrik    1.3         -    1.3              1.3
----------------------------------------------------------------------------
Canadian dollar (2)        10 cents    3.2         -    3.2              3.2
----------------------------------------------------------------------------
                                                                            
(1) a 10% change in diesel fuel price equals $13/oz produced                
(2) appreciation of currency will result in higher costs and lower cash flow
    and earnings, depreciation of currency results in decreased costs and   
    increased cash flow and earnings                                        

 
Material Assumptions & Risks 
Material assumptions or factors used to forecast production and costs
for 2013 include the following: 


 
--  a gold price of $1,700 per ounce, 
--  exchange rates: 
    --  $1USD:$0.99 CAD 
    --  $1USD:47.0 Kyrgyz som 
    --  $1USD:1,375 Mongolian tugriks 
    --  $1USD:0.78 Euro 
--  diesel fuel price assumption: 
    --  $0.80/litre at Kumtor 
    --  $1.18/litre at Boroo 

 
The assumed diesel price of $0.80/litre at Kumtor assumes that no
Russian export duty will be paid on the fuel exports from Russia to
the Kyrgyz Republic. Diesel fuel is sourced from separate Russian
suppliers for both sites and only loosely correlates with world oil
prices. The diesel fuel price assumptions were made when the price of
oil was approximately $87 per barrel. 
Other material assumptions include the following: 


 
--  any recurrence of political or civil unrest in the Kyrgyz Republic will
    not impact operations, including movement of people, supplies and gold
    shipments to and from the Kumtor mine. No assurances can be given by the
    Company in this regard, 
--  the activities of the State Commission, referred to under the heading
    "Other Corporate Developments - Kyrgyz Republic - State Commission
    Activities" do not have an impact on operations or financial results. No
    assurances can be given by the Company in this regard, 
--  the Government and the Parliament of the Kyrgyz Republic taking no
    action in connection with the matters referred to under the heading
    "Other Corporate Developments - Kyrgyz Republic - State Commission
    Activities" that has an impact on operations or financial results. This
    includes the Parliament adopting the Draft Resolution referred to
    therein, and the Government (or a working group formed by the
    Government) seeking to negotiate the Kumtor Project Agreements, and
    taking the steps referred to in the Parliamentary Draft Resolution if
    such negotiations are not successful, including repealing laws passed in
    2009 approving the Kumtor Project Agreements and terminating the Kumtor
    Project Agreements. No assurances can be given by the Company in this
    regard, the previously disclosed environmental claims received from the
    Kyrgyz regulatory authorities in the amount of $152 million, in
    aggregate, and any further claims that may result from the State
    Commission, are resolved without material impact on Centerra's
    operations or financial results. No assurances can be given by the
    Company in this regard, 
--  grades and recoveries at Kumtor will remain consistent with the life-of-
    mine plan to achieve the forecast gold production, 
--  the Company is able to manage the risks associated with the increased
    height of the pit walls at Kumtor over the life-of-mine, 
--  the design of the new and expanded waste dumps (contemplated by the new
    KS-13 life-of-mine plan) at Kumtor adequately address the risks
    associated with size and stability, 
--  the dewatering program at Kumtor continues to produce the expected
    results and the water management system works as planned, 
--  the Company is able to satisfactorily manage the ice movement and to
    unload the ice and waste in the southeast portion of the Kumtor pit, 
--  prices of key consumables are not significantly higher than prices
    assumed in planning, 
--  no unplanned delays in or interruption of scheduled production from our
    mines, including due to civil unrest, natural phenomena, regulatory or
    political disputes, equipment breakdown or other developmental and
    operational risks, 
--  the Mongolian legislation which prohibits mineral prospecting,
    exploration and mining in water basins and forest areas in Mongolia (the
    "Water and Forest Law") will be amended or repealed to allow Gatsuurt to
    proceed as planned, (see Company's most recently filed AIF), 
--  the royalty paid by Boroo increases to 10% after the Boroo stability
    agreement expires in July 2013 and the current 25% income tax rate
    remains unchanged, and 
--  all necessary permits, licenses and approvals are received in a timely
    manner. 

 
Production and reserve estimates and cost forecasts are
forward-looking information and are based on key assumptions and
subject to material risk factors. If any event arising from these
risks occurs, the Company's business, prospects, financial condition,
results of operations or cash flows and the market price of
Centerra's shares could be adversely affected. Additional risks and
uncertainties not currently known to the Company, or that are
currently deemed immaterial, may also materially and adversely affect
the Company's business operations, prospects, financial condition,
results of operations or cash flows and the market price of
Centerra's shares. See the section entitled "Risk Factors" in the
Company's most recently filed Annual Information Form (the "2011
Annual Information Form"), available on SEDAR at www.sedar.com and
see also the discussion below under the heading "Cautionary Note
Regarding Forward-looking Information". 
Non-GAAP Measures 
This news release presents information about operating cash costs of
production of an ounce of gold produced, total production costs per
ounce produced and all-in cash costs per ounce produced for the
operating properties of Centerra. Operating cash costs per ounce
produced is calculated by dividing operating cash costs by gold
ounces produced for the relevant period. Total production costs per
ounce produced include operating cash costs plus depreciation,
depletion and amortization attributable to production divided by gold
ounces produced for the relevant period. All-in cash costs per ounce
produced includes operating cash costs, plus capitalized stripping,
plus capital spent and accrued (sustaining and growth capital)
divided by gold ounces produced for the relevant period. Cost of
sales per ounce sold is calculated by dividing cost of sales by gold
ounces sold for the relevant period. Operating cash costs, total
production costs and all-in cash costs per ounce produced, as well as
cost of sales per ounce sold are non-GAAP measures. 
Operating cash costs include mine operating costs such as mining,
processing, site and regional office administration, royalties and
operating taxes (except at Kumtor where revenue-based taxes are
excluded), but exclude depreciation, depletion and amortization,
reclamation costs, capital investments and exploration expenses.
Certain amounts of stock-based compensation at the corporate level
have been excluded. Total production costs includes total operating
cash cost plus depreciation, depletion and amortization attributable
to production. All-in cash costs includes operating cash costs, plus
capitalized stripping and total sustaining and growth capital spent
and accrued. 
Operating cash costs per ounce produced, total production costs per
ounce produced and all-in cash costs per ounce produced have been
included because certain investors use this information to assess
performance and also to determine the ability of Centerra to generate
cash flow for use in investing and other activities. The inclusion of
operating cash cost per ounce produced, total production cost per
ounce produced and all-in cash costs per ounce produced and cost of
sales per ounce sold may enable investors to better understand
year-over-year changes in production costs, which in turn affect
profitability and cash flow. 
Reporting measure going forward 
Centerra has initiated an "all-in cash cost" reporting methodology
for its gold production. Having first reported along these lines with
the announcement of the revised life-of-mine plan for Kumtor in
November 2012, the Company believes an all-in cash cost measure more
fully reflects the actual cash cost of producing gold than the former
Gold Institute total cash cost measure. The new measure does have
limitations as an analytical tool as it may be distorted in periods
where significant capital investments are being made to expand for
future growth or where significant cash mining costs are being
expended on stripping to benefit future periods. This new measure
should therefore not be considered in isolation, or as a substitute
for, analysis of our results as reported under GAAP. 
It should also be noted that the mining industry is in early stages
of defining an industry-wide standard on the reporting of "all-in
cash costs" hence, the definition adopted by the mining industry may
differ from the Company's current definition. The Company may modify
the calculation of its "all-in cash cost" to conform to the
industry's standard once it is known. 
Management uses all-in cash cost per ounce produced to evaluate
current operating performance and for planning and forecasting of
future periods. Management believes that the presentation of this new
measure is useful for the investor because it allows investors to
view results in a manner similar to the method used by management. 


 
                                                                            
Operating Cash Cost per Ounce Produced and Total Production Cost per Ounce  
 Produced can be reconciled as follows:                                     
                                                                            
                                             Year ended      Fourth Quarter 
                                            December 31,       December 31  
Unaudited                                                                   
($ millions, unless otherwise specified)     2012    2011      2012    2011 
                                         -----------------  ----------------
Centerra:                                                                   
Cost of sales, as reported                $ 387.5 $ 382.3   $ 165.2 $ 104.1 
 Less: Non-cash component                   142.2    98.4      91.1    30.3 
                                         -----------------  ----------------
Cost of sales, cash component             $ 245.3 $ 283.9   $  74.1 $  73.8 
Adjust for:                                                                 
  Refining fees & by-product credits         (1.2)   (3.3)     (0.7)   (0.3)
  Regional office administration             21.0    21.3       5.6     5.9 
  Mining Standby Costs                        4.6     0.2         -       - 
  Non-operating costs                        32.6   (14.1)     15.2       - 
  Inventory movement                        (45.7)   34.4     (15.3)   11.9 
                                         -----------------  ----------------
Operating cash cost                       $ 256.7 $ 322.4   $  78.9 $  91.3 
 Depreciation, depletion, amortization                                      
  and accretion                             142.6    99.3      91.2    30.5 
 Inventory movement - non-cash               43.0    19.5      48.7     2.5 
                                         -----------------  ----------------
Total production cost                     $ 442.3 $ 441.1   $ 218.8 $ 124.3 
Ounces poured (000)                         387.1   642.4     219.3   151.6 
Operating cash cost per ounce produced    $   663 $   502   $   360 $   603 
Total production cost per ounce produced  $ 1,143 $   687   $   998 $   820 
Kumtor:                                                                     
Cost of sales, as reported                $ 311.1 $ 332.6   $ 137.3 $  96.9 
 Less: Non-cash component                   121.1    88.3      80.1    29.1 
                                         -----------------  ----------------
Cost of sales, cash component             $ 190.0 $ 244.3   $  57.2 $  67.7 
Adjust for:                                                                 
  Refining fees & by-product credits         (1.0)   (3.3)     (0.6)   (0.3)
  Regional office administration             15.5    15.3       4.2     4.1 
  Mining Standby Costs                        4.6       -         -       - 
  Non-operating costs                        32.6   (14.1)     15.2       - 
  Inventory movement                        (35.2)   39.1     (11.4)    8.9 
                                         -----------------  ----------------
Operating cash cost                       $ 206.5 $ 281.3   $  64.6 $  80.4 
 Depreciation, depletion, amortization                                      
  and accretion                             121.4    88.9      80.1    29.2 
 Inventory movement - non-cash               42.6    22.0      48.8     2.5 
                                         -----------------  ----------------
Total production cost                     $ 370.5 $ 392.2   $ 193.5 $ 112.1 
Ounces poured (000)                         315.2   583.2     189.4   138.7 
Operating cash cost per ounce produced    $   655 $   482   $   341 $   580 
Total production cost per ounce produced  $   960 $   673   $   491 $   808 
Boroo:                                                                      
Cost of sales, as reported                $  76.4 $  49.7   $  27.9 $   7.2 
 Less: Non-cash component                    21.1    10.1      11.0     1.1 
                                         -----------------  ----------------
Cost of sales, cash component             $  55.3 $  39.6   $  16.9 $   6.1 
Adjust for:                                                                 
  Refining fees & by-product credits         (0.2)   (0.1)     (0.1)      - 
  Regional office administration              5.5     6.0       1.5     1.8 
  Mining Standby Costs                                0.2                 - 
  Non-operating costs                                   -                 - 
  Inventory movement                        (10.5)   (4.7)     (4.0)    3.0 
                                         -----------------  ----------------
Operating cash cost                       $  50.2 $  41.1   $  14.3 $  10.9 
 Depreciation, depletion, amortization                                      
  and accretion                              21.2    10.4      11.1     1.3 
 Inventory movement - non-cash                0.4    (2.5)     (0.1)      - 
                                         -----------------  ----------------
Total production cost                     $  71.8 $  49.0   $  25.3 $  12.2 
Ounces poured (000)                          71.8    59.2      29.9    12.9 
Operating cash cost per ounce produced    $   699 $   694   $   479 $   849 
Total production cost per ounce produced  $ 1,033 $   828   $   793 $   951 

 
Total capital and capitalized stripping presented in the All-in cash
cost calculation can be reconciled as follows: 


 
                                                                            
----------------------------------------------------------------------------
Fourth Quarter 2012 ($ millions,                                            
 unaudited)                           Kumtor   Boroo  All other Consolidated
----------------------------------------------------------------------------
Capitalized stripping - cash            26.1        -         -         26.1
----------------------------------------------------------------------------
Sustaining capital - cash               10.5      0.4       0.2         11.1
----------------------------------------------------------------------------
Growth capital - cash                   36.6      0.3       0.2         37.1
----------------------------------------------------------------------------
Increase in accruals included in                                            
additions to PP&E                        9.1        -         -          9.1
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Total - Additions to PP&E               82.3      0.7       0.4     83.4 (1)
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Fourth Quarter 2011                                                         
----------------------------------------------------------------------------
Capitalized stripping - cash             6.0        -         -          6.0
----------------------------------------------------------------------------
Sustaining capital - cash                7.8      0.9       0.3          9.0
----------------------------------------------------------------------------
Growth capital - cash                   12.4      0.3         -         12.7
----------------------------------------------------------------------------
Increase in accruals included in                                            
additions to PP&E                        2.1        -         -          2.1
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Total - Additions to PP&E               28.3      1.2       0.3     29.8 (1)
----------------------------------------------------------------------------
                                                                            
                                                                            
----------------------------------------------------------------------------
2012 Year ($ millions, unaudited)     Kumtor   Boroo  All other Consolidated
----------------------------------------------------------------------------
Capitalized stripping - cash           129.3      6.3         -        135.6
----------------------------------------------------------------------------
Sustaining capital - cash               40.8      2.1       0.6         43.5
----------------------------------------------------------------------------
Growth capital - cash                  176.4      0.3       0.5        177.2
----------------------------------------------------------------------------
Increase in accruals included in                                            
additions to PP&E                       10.1        -         -         10.1
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Total - Additions to PP&E              356.6      8.7       1.1    366.4 (1)
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
2011 Year                                                                   
----------------------------------------------------------------------------
Capitalized stripping - cash            39.4        -         -         39.4
----------------------------------------------------------------------------
Sustaining capital - cash               32.2      1.8       0.6         34.6
----------------------------------------------------------------------------
Growth capital - cash                   95.0      4.5       0.4         99.9
----------------------------------------------------------------------------
Increase in accruals included in                                            
additions to PP&E                        1.3        -         -          1.3
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Total - Additions to PP&E              167.9      6.3       1.0    175.2 (1)
----------------------------------------------------------------------------
                                                                            
(1) As reported in the Company's Consolidated Statement of Cash Flows as    
    "Investing Activities - Additions to property, plant & equipment".      

 
Corporate and other cash costs presented in the All-in cash cost
calculation can be reconciled as follows: 


 
                                                                            
--------------------------------------------------------------------------- 
--------------------------------------------------------------------------- 
(Unaudited)                          Fourth Quarter            Year         
                                       2012      2011       2012       2011 
--------------------------------------------------------------------------- 
--------------------------------------------------------------------------- 
($ millions)                                                                
                                                                            
 Other operating expenses           $   4.8   $   3.7   $   34.3   $   15.5 
 Exploration and business                                                   
  development                          11.6      11.1       38.5       42.9 
 Corporate administration               8.8      10.3       27.0       44.9 
--------------------------------------------------------------------------- 
Subtotal (1)                        $  25.2   $  25.1   $   99.8   $  103.3 
                                                                            
 Adjust for:                                                                
 Non-operating charge - claim                                               
  settlement and other                    -      (2.5)       0.1       (2.5)
 Depreciation and amortization         (0.6)     (0.1)      (1.4)      (0.4)
--------------------------------------------------------------------------- 
Total corporate and other cash                                              
 costs                              $  24.6   $  22.5   $   98.5   $  100.4 
--------------------------------------------------------------------------- 
--------------------------------------------------------------------------- 
                                                                            
(1) As reported on the Consolidated Statements of Earnings (Loss) and       
    Comprehensive Income (Loss) for the reported periods                    
                                                                            
Centerra Gold Inc.                                                          
Condensed Consolidated Statements of Financial Position                     
(Unaudited)                                       December 31,  December 31,
                                                          2012          2011
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(Expressed in Thousands of United States Dollars)                           
                                                                            
Assets                                                                      
Current assets                                                              
  Cash and cash equivalents                      $     334,115 $     195,539
  Short-term investments                                47,984       372,667
  Current portion of restricted cash                         -           179
  Amounts receivable                                    75,338        56,749
  Inventories                                          289,012       279,944
  Prepaid expenses                                      49,317        26,836
                                                ----------------------------
                                                       795,766       931,914
Property, plant and equipment                          589,209       590,151
Goodwill                                               129,705       129,705
Restricted cash                                          6,087             -
Long-term receivables and other                         23,270        24,674
Long-term inventories                                   10,094        12,174
                                                ----------------------------
                                                       758,365       756,704
                                                ----------------------------
Total assets                                     $   1,554,131 $   1,688,618
                                                ----------------------------
                                                ----------------------------
                                                                            
Liabilities and Shareholders' Equity                                        
Current liabilities                                                         
  Accounts payable and accrued liabilities       $      63,940 $      76,385
  Short-term debt                                       74,617             -
  Revenue-based taxes payable                           18,643        15,178
  Taxes payable                                          5,180         1,074
  Current portion of provision                           5,257         1,848
                                                ----------------------------
                                                       167,637        94,485
Dividend payable                                         5,949             -
Provision                                               49,911        53,777
Deferred income tax liability                            1,808         1,897
                                                ----------------------------
                                                        57,668        55,674
Shareholders' equity                                                        
  Share capital                                        660,420       660,117
  Contributed surplus                                   36,243        33,994
  Retained earnings                                    632,163       844,348
                                                ----------------------------
                                                     1,328,826     1,538,459
                                                ----------------------------
Total liabilities and shareholders' equity       $   1,554,131 $   1,688,618
                                                ----------------------------
                                                ----------------------------
 

 
                                                                            
Centerra Gold Inc.                                                          
Condensed Consolidated Statements of Earnings (Loss) and Comprehensive      
 Income (Loss)                                                              
                                                                            
(Unaudited)                    Three months ended     Twelve months ended   
                                  December 31,            December 31,      
                                   2012       2011        2012         2011 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(Expressed in Thousands of United States Dollars)                           
(except per share amounts)                                                  
                                                                            
                                                                            
Revenue from Gold Sales       $ 368,461  $ 247,962  $  660,737  $ 1,020,344 
                                                                            
  Cost of sales                 165,199    104,083     387,470      382,295 
  Abnormal mining costs           8,855          -      60,881            - 
  Mine standby costs                  -          -       4,585          213 
  Regional office                                                           
   administration                 5,636      5,930      21,042       21,322 
----------------------------------------------------------------------------
Earnings from mine operations   188,771    137,949     186,759      616,514 
                                                                            
  Revenue based taxes            44,499     33,558      74,697      131,750 
  Other operating expenses        4,793      3,592      34,280       15,471 
  Loss on de-recognition of                                                 
   underground assets           180,673          -     180,673            - 
  Exploration and business                                                  
   development                   11,551     11,070      38,531       42,894 
  Corporate administration        8,794     10,279      27,046       44,902 
----------------------------------------------------------------------------
Earnings (loss) from                                                        
 operations                     (61,539)    79,450    (168,468)     381,497 
                                                                            
  Other (income) and expenses       (55)    (1,377)       (132)      (1,056)
  Finance costs                   1,263        521       3,978        3,545 
----------------------------------------------------------------------------
Earnings (loss) before income                                               
 taxes                          (62,747)    80,306    (172,314)     379,008 
                                                                            
  Income tax expense              5,239        894      11,684        8,130 
----------------------------------------------------------------------------
Net Earnings (loss) and                                                     
 comprehensive income (loss)    (67,986)    79,412    (183,998)     370,878 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Basic and diluted earnings                                                  
 (loss) per common share      $   (0.29) $    0.34  $    (0.78) $      1.57 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Centerra Gold Inc.                                                          
Condensed Consolidated                                                      
 Statements of Cash Flows      Three months ended     Twelve months ended   
(Unaudited)                       December 31,            December 31,      
                                   2012        2011        2012        2011 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(Expressed in Thousands of                                                  
 United States Dollars)                                                     
                                                                            
Operating activities                                                        
Net (loss) earnings          $  (67,986) $   79,412  $ (183,998) $  370,878 
Items not requiring                                                         
 (providing) cash:                                                          
  Depreciation, depletion                                                   
   and amortization              92,038      30,366     152,869      98,840 
  Finance costs                   1,262         521       3,978       3,545 
  Loss on disposal of                                                       
   equipment                        932         383       1,403       1,305 
  Share-based compensation                                                  
   expense                          704         483       2,335       1,759 
  De-recognition of                                                         
   underground assets           180,673           -     180,673           - 
  Change in provision              (123)    (12,481)        614           - 
  Income tax expense              5,239         894      11,684       8,130 
  Other operating items            (128)       (250)       (673)     (2,430)
                            ------------------------------------------------
                                212,611      99,328     168,885     482,027 
  Change in operating                                                       
   working capital                  935     (40,560)      1,593     (44,150)
  Change in long-term                                                       
   inventory                        439           -       2,080         703 
  Revenue-based taxes                                                       
   (advanced) utilized              155           -     (30,000)          - 
  Income taxes paid              (5,952)      1,546      (7,838)     (3,657)
                            ------------------------------------------------
Cash provided by operations     208,188      60,314     134,720     434,923 
                            ------------------------------------------------
                                                                            
Investing activities                                                        
  Additions to property,                                                    
   plant and equipment          (83,362)    (29,833)   (366,423)   (175,155)
  Net redemption (purchase)                                                 
   of short-term investments    (45,985)   (106,971)    324,683    (290,389)
  Increase in restricted                                                    
   cash                          (3,096)        (19)     (5,908)       (616)
  Increase in other assets        6,752          77      (1,070)     (7,375)
  Proceeds from disposition                                                 
   of fixed assets                   32          11          79          19 
                            ------------------------------------------------
Cash used in investing         (125,659)   (136,735)    (48,639)   (473,516)
                            ------------------------------------------------
                                                                            
Financing activities                                                        
  Dividends paid                 (6,571)          -     (22,238)    (99,322)
  Payment of borrowing costs       (231)        (57)     (1,416)       (630)
  Proceeds from short term                                                  
   debt                               -           -      76,000           - 
  Proceeds from common                                                      
   shares issued for cash           (20)        321         149       3,347 
                            ------------------------------------------------
Cash provided by (used in)                                                  
 financing                       (6,822)        264      52,495     (96,605)
                            ------------------------------------------------
                                                                            
(Decrease) increase in cash                                                 
 during the period               75,707     (76,157)    138,576    (135,198)
                                                                            
Cash and cash equivalents at                                                
 beginning of the period        258,408     271,696     195,539     330,737 
                                                                            
                            ------------------------------------------------
Cash and cash equivalents at                                                
 end of the period           $  334,115  $  195,539  $  334,115  $  195,539 
                            ------------------------------------------------
                            ------------------------------------------------
                                                                            
Cash and cash equivalents                                                   
 consist of:                                                                
Cash                         $   51,675  $   75,193  $   51,675  $   75,193 
Cash equivalents                282,440     120,346     282,440     120,346 
                            ------------------------------------------------
                             $  334,115  $  195,539  $  334,115  $  195,539 
                            ------------------------------------------------
                            ------------------------------------------------
                                                                            
Centerra Gold Inc.                                                          
Condensed Consolidated Statements of Shareholders' Equity                   
(Unaudited)                                                                 
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(Expressed in Thousands of United States Dollars, except share information) 
                                                                            
                   Number of     Share                                      
                      Common   Capital Contributed    Retained              
                      Shares    Amount     Surplus    Earnings        Total 
----------------------------------------------------------------------------
                                                                            
Balance at                                                                  
 January 1, 2011 235,869,397 $ 655,178   $  33,827  $  572,792  $ 1,261,797 
----------------------------------------------------------------------------
                                                                            
Share-based                                                                 
 compensation                                                               
 expense                   -         -       1,759           -        1,759 
Shares issued on                                                            
 exercise of                                                                
 stock options       469,644     4,939      (1,592)          -        3,347 
Dividend                                                                    
 declared                  -         -           -     (99,322)     (99,322)
Net earnings for                                                            
 the period                -         -           -     370,878      370,878 
----------------------------------------------------------------------------
Balance at                                                                  
 December 31,                                                               
 2011            236,339,041 $ 660,117   $  33,994  $  844,348  $ 1,538,459 
----------------------------------------------------------------------------
Share-based                                                                 
 compensation                                                               
 expense                   -         -       2,335           -        2,335 
Shares issued on                                                            
 exercise of                                                                
 stock options        30,752       235         (86)          -          149 
Shares issued on                                                            
 redemption of                                                              
 restricted                                                                 
 share units           6,218        68           -           -           68 
Dividend                                                                    
 declared                  -         -           -     (28,187)     (28,187)
Net loss for the                                                            
 period                    -         -           -    (183,998)    (183,998)
----------------------------------------------------------------------------
Balance at                                                                  
 December 31,                                                               
 2012            236,376,011 $ 660,420   $  36,243  $  632,163  $ 1,328,826 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
To view the 2012 Management's Discussion and Analysis and the Audited
Financial Statements and Notes for the year ended December 31, 2012,
please visit the following link:
http://media3.marketwire.com/docs/CG2012FSMDAQ4.pdf.  
The 2012 Audited Financial Statements and Notes and Management's
Discussion and Analysis for the year-ended December 31, 2012 have
been filed on the System for Electronic Document Analysis and
Retrieval ('SEDAR') at www.sedar.com and are available at the
Company's web site at: www.centerragold.com. 
Qualified Person & QA/QC  
All reserve and resource estimates, production information and other
related scientific and technical information in this news release
were prepared in accordance with the standards of the Canadian
Institute of Mining, Metallurgy and Petroleum and National Instrument
43-101 - Standards of Disclosure for Mineral Projects ("43-101") and
were prepared, reviewed, verified and compiled by Centerra's
geological and mining staff under the supervision of Dan Redmond,
Ontario Professional Geoscientist, Centerra's Director, Technical
Services - Mining, who is the qualified person for the purpose of NI
43-101. Sample preparation, analytical techniques, laboratories used
and quality assurance-quality control protocols used during the
exploration drilling programs are done consistent with industry
standards and independent certified assay labs are used with the
exception of the Kumtor project as described in its Technical Report. 
The Kumtor deposit is described in a technical report dated December
20, 2012, which is filed on SEDAR at www.sedar.com. The technical
report describes the exploration history, geology and style of gold
mineralization at the Kumtor deposit. Sample preparation, analytical
techniques, laboratories used and quality assurance-quality control
protocols used during the drilling programs at the Kumtor site are
described in the technical report. 
The Boroo deposit is described in Centerra's 2011 Annual Information
Form and a technical report dated December 17, 2009 prepared in
accordance with NI 43-101, which is available on SEDAR at
www.sedar.com. The technical report describes the exploration
history, geology and style of gold mineralization at the Boroo
deposit. Sample preparation, analytical techniques, laboratories used
and quality assurance-quality control protocols used during the
drilling programs at the Boroo site are the same as, or similar to,
those described in the technical report. 
The Gatsuurt deposit is described in Centerra's 2011 Annual
Information Form and a technical report dated May 9, 2006 prepared in
accordance with NI 43-101. The technical report has been filed on
SEDAR at www.sedar.com. The technical report describes the
exploration history, geology and style of gold mineralization at the
Gatsuurt deposit. Sample preparation, analytical techniques,
laboratories used and quality assurance-quality control protocols
used during the drilling programs at the Gatsuurt project are the
same as, or similar to, those described in the technical report. 
Production and cost forecasts and capital estimates are
forward-looking information and are based on key assumptions and
subject to material risk factors. If any event arising from these
risks occurs, the Company's business, prospects, financial condition,
results of operations or cash flows could be adversely affected.
Additional risks and uncertainties not currently known to the
Company, or that are currently deemed immaterial, may also materially
and adversely affect the Company's business operations, prospects,
financial condition, and results of operations or cash flows. See the
sections entitled "Risk Factors" in the Company's most recently filed
annual information form, available on SEDAR at www.sedar.com and see
also the discussion below under the heading "Cautionary Note
Regarding Forward-looking Information". 
Cautionary Note Regarding Forward-looking Information  
Information contained in this news release which are not statements
of historical facts, and the documents incorporated by reference
herein, may be "forward looking information" for the purposes of
Canadian securities laws. Such forward looking information involves
risks, uncertainties and other factors that could cause actual
results, performance, prospects and opportunities to differ
materially from those expressed or implied by such forward looking
information. The words "believe", "expect", "anticipate",
"contemplate", "target", "plan", "intends", "continue", "budget",
"estimate", "may", "will", "schedule" and similar expressions
identify forward-looking information.  
These forward-looking statements relate to, among other things, the
successful resolution of matters in the Kyrgyz Republic relating to
the State Commission Report, including discussions with the
Government working group formed to open negotiations on the Kumtor
Project Agreements, the Kyrgyz Republic Parliament consideration of
the Draft Resolution referred to under the heading "Other Corporate
Developments - Kyrgyz Republic - State Commission Activities -
Parliament Review and Draft Resolution", the resolution of
environmental claims for the aggregate amount of $152 million;
statements made under the heading, "Gold Industry, Key Economics and
Recent Market Uncertainty" regarding expectations in the gold
industry, investor demand, and global financial markets; statements
made under the heading "Outlook for 2013", including the Company's
future production, estimates of cash operating costs and all-in unit
cash costs, exploration expenditures and the success thereof, capital
expenditures; mining plans at each of the Company's operations; the
continued success with the management of the ice, waste and water
movements at Kumtor; the outcome of discussions with the new
Mongolian government on the way forward for the Company's Gatsuurt
deposit, the impact of the Water and Forest Law on the Company's
Mongolian activities; the Company's business and political
environment and business prospects; and the timing and development of
new deposits.  
Forward-looking information is necessarily based upon a number of
estimates and assumptions that, while considered reasonable by
Centerra, are inherently subject to significant political, business,
economic and competitive uncertainties and contingencies. Known and
unknown factors could cause actual results to differ materially from
those projected in the forward looking information. Material
assumptions used to forecast production and costs include those
described under the heading "2013 Outlook". Factors that could cause
actual results or events to differ materially from current
expectations include, among other things: (A) political and
regulatory risks, including the political risks associated with the
Company's principal operations in the Kyrgyz Republic and Mongolia,
resource nationalism, the impact of changes in, or to the more
aggressive enforcement of, laws, regulations and government practices
in the jurisdictions in which the Company operates, the impact of any
actions taken by the Kyrgyz Republic Government and Parliament as a
result of the Kyrgyz State Commission on Kumtor, any impact on the
purported cancellation of Kumtor's land use rights at the Kumtor
Project, the effect of the Water and Forest Law on the Company's
operations in Mongolia, the effect of the 2006 Mongolian Minerals Law
on the Company's Mongolian operations, the effect of the November
2010 amendments to the 2006 Mongolian Minerals Law on the royalties
payable in connection with the Company's Mongolian operations, the
impact of continued scrutiny from Mongolian regulatory authorities on
the Company's Boroo project, the impact of changes to, or the
increased enforcement of, environmental laws and regulations relating
to the Company's operations, the Company's ability to successfully
negotiate an investment agreement for the Gatsuurt project to
complete the development of the mine and the Company's ability to
obtain all necessary permits and commissions needed to commence
mining activity at the Gatsuurt project; (B) risk related to
operational matters, including the waste and ice movement at the
Kumtor Project and the Company's continued ability to successfully
manage it, the occurrence of further ground movements at the Kumtor
Project, the success of the Company's future exploration and
development activities, including the financial and political risks
inherent in carrying out exploration activities, the adequacy of the
Company's insurance to mitigate operational risks, mechanical
breakdowns, the Company's ability to obtain the necessary permits and
authorizations to raise the tailings dam at the Kumtor Project to the
required height, the Company's ability to replace its mineral
reserves, the occurrence of any labour unrest or disturbance and the
ability of the
Company to successfully re-negotiate collective agreements when
required, seismic activity in the vicinity of the Company's
operations in the Kyrgyz Republic and Mongolia, long lead times
required for equipment and supplies given the remote location of the
Company's properties, reliance on a limited number of suppliers for
certain consumables, equipment and components, illegal mining on the
Company's Mongolian properties, the Company's ability to accurately
predict decommissioning and reclamation costs, the Company's ability
to attract and retain qualified personnel, competition for mineral
acquisition opportunities, and risks associated with the conduct of
joint ventures; (C) risks relating to financial matters including the
sensitivity of the Company's business to the volatility of gold
prices, the imprecision of the Company's mineral reserves and
resources estimates and the assumptions they rely on, the accuracy of
the Company's production and cost estimates, the impact of
restrictive covenants in the Company's revolving credit facility
which may, among other things, restrict the Company from pursuing
certain business activities, the Company's ability to obtain future
financing, the impact of global financial conditions, the impact of
currency fluctuations, the effect of market conditions on the
Company's short-term investments, the Company's ability to make
payments including any payments of principal and interest on the
Company's debt facilities depends on the cash flow of its
subsidiaries; and (d) risks related to environmental and safety
matters, including the ability to continue obtaining necessary
operating and environmental permits, licenses and approvals, the
impact of the significant environmental claims made in December 2012
relating to the Kumtor Project, inherent risks associated with using
sodium cyanide in the mining operations; legal and other factors such
as litigation, defects in title in connection with the Company's
properties, the Company's ability to enforce its legal rights, risks
associated with having a significant shareholder, and possible
director conflicts of interest. There may be other factors that cause
results, assumptions, performance, achievements, prospects or
opportunities in future periods not to be as anticipated, estimated
or intended. See "Risk Factors" in the Company's most recently filed
AIF available on SEDAR at www.sedar.com.  
Furthermore, market price fluctuations in gold, as well as increased
capital or production costs or reduced recovery rates may render ore
reserves containing lower grades of mineralization uneconomic and may
ultimately result in a restatement of reserves. The extent to which
resources may ultimately be reclassified as proven or probable
reserves is dependent upon the demonstration of their profitable
recovery. Economic and technological factors which may change over
time always influence the evaluation of reserves or resources.
Centerra has not adjusted mineral resource figures in consideration
of these risks and, therefore, Centerra can give no assurances that
any mineral resource estimate will ultimately be reclassified as
proven and probable reserves. 
Reserve and resource figures included in this news release are
estimates and Centerra can provide no assurances that the indicated
levels of gold will be produced or that Centerra will receive the
gold price assumed in determining its reserves. Such estimates are
expressions of judgment based on knowledge, mining experience,
analysis of drilling results and industry practices. Valid estimates
made at a given time may significantly change when new information
becomes available. While Centerra believes that these reserve and
resource estimates are well established and the best estimates of
Centerra's management, by their nature reserve and resource estimates
are imprecise and depend, to a certain extent, upon analysis of
drilling results and statistical inferences which may ultimately
prove unreliable.  
Centerra has not adjusted resource figures included herein in
consideration of these risks and, therefore, Centerra can give no
assurances that any resource estimate will ultimately be reclassified
as proven and probable reserves or incorporated into future
production guidance. If Centerra's reserve or resource estimates or
production guidance for its gold properties are inaccurate or are
reduced in the future, this could have an adverse impact on
Centerra's future cash flows, earnings, results of operations and
financial condition. Centerra estimates the future mine life of its
operations and provides production guidance in respect of its mining
operations. Centerra can give no assurance that mine life estimates
will be achieved or that actual production will not differ materially
from its guidance. Failure to achieve estimates or production
guidance could have an adverse impact on Centerra's future cash
flows, earnings, results of operations and financial condition.  
Mineral resources are not mineral reserves, and do not have
demonstrated economic viability, but do have reasonable prospects for
economic extraction. Measured and indicated resources are
sufficiently well defined to allow geological and grade continuity to
be reasonably assumed and permit the application of technical and
economic parameters in assessing the economic viability of the
resource. Inferred resources are estimated on limited information not
sufficient to verify geological and grade continuity or to allow
technical and economic parameters to be applied. Interred resources
are too speculative geologically to have economic considerations
applied to them to enable them to be categorized as mineral reserves.
There is no certainty that mineral resources of any category can be
upgraded to mineral reserves through continued exploration.  
There can be no assurances that forward looking information and
statements will prove to be accurate, as many factors and future
events, both known and unknown could cause actual results,
performance or achievements to vary or differ materially, from the
results, performance or achievements that are or may be expressed or
implied by such forward looking statements contained herein or
incorporated by reference. Accordingly, all such factors should be
considered carefully when making decisions with respect to Centerra,
and prospective investors should not place undue reliance on forward
looking information. Forward looking information is as of February
20, 2013. Centerra assumes no obligation to update or revise forward
looking information to reflect changes in assumptions, changes in
circumstances or any other events affecting such forward looking
information, except as required by applicable law. 
About Centerra  
Centerra Gold Inc. is a gold mining company focused on operating,
developing, exploring and acquiring gold properties primarily in
Asia, the former Soviet Union and other emerging markets worldwide.
Centerra is the largest Western-based gold producer in Central Asia.
Centerra's shares trade on the Toronto Stock Exchange (TSX) under the
symbol CG. The Company is based in Toronto, Ontario, Canada. 
Additional information on Centerra is available on the Company's
website at www.centerragold.com and at SEDAR at www.sedar.com. 
Conference Call  
Centerra invites you to join its 2012 fourth quarter, year-end
conference call on Thursday, February 21, 2013 at 10:00AM Eastern
Time. The call is open to all investors and the media. To join the
call, please dial Toll-Free in North America (800) 745-8951 or
International callers dial +1 (212) 231-2900. Alternatively, an audio
feed web cast will be available on www.centerragold.com. A recording
of the call will be available on www.centerragold.com shortly after
the call, and via telephone until midnight on Thursday, February 28,
2013 by calling (416) 626-4100 or (800) 558-5253 and using passcode
21644903. 
Additional information on Centerra is available on the Company's web
site at www.centerragold.com and at SEDAR at www.sedar.com. 
Contacts:
Centerra Gold Inc.
John W. Pearson
Vice President, Investor Relations
(416) 204-1241
john.pearson@centerragold.com
www.centerragold.com
 
 
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