Diverging Analyst Views Reflect Adjustments in Gold Miners Q3 Forecasts

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Centerra Gold Inc. (CG:TSX; CADGF:OTCPK) has received varied analyst ratings following updates to its Q3 2024 financial results and projections. CIBC World Markets analyst Anita Soni has maintained her "neutral" rating for Centerra, lowering her 12-month price target from CA$13.00 to CA$12.50.

Soni's revised target is based on adjustments to Centerra's NAV per share, which declined from CA$10.26 to CA$9.03. Her CFPS projection, however, saw a slight increase from CA$1.53 to CA$1.56, reflecting higher anticipated gold prices and recalibrated operational assumptions. The updates align with Centerra's Q4 2024 to 2025 forecast models.

Soni's latest assessment continues a trend in her evaluations of Centerra, following her April 2023 upgrade from "neutral" to "outperform" when shares were trading at CA$10.01.

Meanwhile, in September 2024, BMO Capital Markets analyst Raj Ray upheld his "outperform" rating, reflecting a more favorable outlook as Centerra's share price stood at CA$9.37.

Centerra's Q3 financial results showed a gold production level of 93.7 thousand ounces. This exceeded the industry projection of 91 thousand ounces, though slightly below CIBC's estimate of 96.7 thousand ounces. Copper production guidance for 2024 remained steady at 55 to 65 million pounds, with the company expecting to meet around 56.2 million pounds by year-end. Gold production guidance also stayed within a range of 370 to 410 thousand ounces, with the midpoint estimated at 390 thousand ounces. While free cash flow (FCF) rose to CA$37.4 million — substantially higher than the prior quarter's negative CA$27 million — this figure came in slightly below CIBC's CA$43.9 million estimate. The company also renewed its Normal Course Issuer Bid (NCIB) program, allowing for the repurchase of up to 5% of common shares.

Centerra's adjusted guidance maintained its 2024 cash cost and all-in sustaining cost (AISC) projections at US$800–$900 per ounce and US$1,075–US$1,175 per ounce, respectively. Current Q3 cash costs are estimated at US$873 per ounce, with an AISC of US$1,086 per ounce. Despite variances in production targets and cash flow, Centerra's Q3 capex spending came in below estimates, with actual expenditures at CA$61 million versus the projected CA$67 million.

The gold production increase in Q3 was driven by higher throughput and improved gold grades at Centerra's Mount Milligan mine in British Columbia, partially offset by a slight decrease in production at the Öksüt mine in Turkey due to lower-grade ores.

Precious Metals Surge Amid Global Tensions and Financial Instability

The gold sector has seen a surge in 2024. On October 29, Gary Wagner of Kitco commented on gold's ascent toward US$2,800, stating that this price rise reflected "purely bullish market sentiment." Wagner attributed this rally to various geopolitical and economic conditions, including ongoing international conflicts, interest rate normalization by the Federal Reserve, robust central bank purchases, and the U.S. presidential election. He observed that these issues collectively formed what he termed a "perfect storm" that propelled gold prices to historic highs, describing how sustained demand from emerging-market central banks added significant support for gold's upward trajectory.

On November 4, Egon von Greyerz echoed a similar perspective, pointing to gold's enduring strength as a protector of wealth. In his article, von Greyerz commented, "Gold is the best-performing asset class in this century," emphasizing gold's critical role in preserving purchasing power as fiat currencies depreciate. He described gold as "stable purchasing power in a world where goods and services go up exponentially." His stance was that gold remains resilient in an environment marked by currency devaluation and rising public debt.

Finally, on November 5, Yahoo! Finance's Ambrose Evans-Pritchard discussed the gold sector's gains amid what he described as a "forewarning of fiscal ruin and global dystopia." Evans-Pritchard noted that gold has been defying traditional market indicators, such as bond yields. The report also observed that the metal's rally appeared "heedless of traditional drivers" as it continued to climb without pause. He cited Ross Norman, founder of Metals Daily, who remarked on the "mystery" of this movement. He then noted that traditional drivers like U.S. Treasury yields and central bank purchases no longer fully explained the demand for gold. Instead, Evans-Pritchard suggested that the sector's upward trend could be tied to geopolitical and fiscal uncertainties, as authoritarian governments and investors globally seek to protect their assets in the face of shifting political risks.

Strategic Advancements Across Centerra Gold's Key Assets

Centerra Gold is actively pursuing multiple initiatives across its portfolio to enhance long-term value. The focus has been on operational optimization and development at each of its key assets. At the Mount Milligan mine in British Columbia, Canada, Centerra recently extended the mine's life to 2035 through an additional agreement with Royal Gold, establishing favorable parameters for potential future extensions. Alongside this extension, the company is implementing a comprehensive site-wide optimization program aimed at improving occupational health and safety. Continued investment in exploration drilling supports Centerra's growth ambitions.

At the Öksüt mine in Türkiye, Centerra has reaffirmed its commitment to steady gold production through an updated life-of-mine plan. For this, the company is projecting consistent output until 2029. The asset remains integral to Centerra's production strategy, demonstrating reliable operating performance that complements the broader portfolio. Centerra is also advancing its Molybdenum Business Unit (MBU), with plans to restart operations at the Thompson Creek Mine in Idaho, USA, where initial production is anticipated in H2 2027. This restart will be supported by a progressive ramp-up at the Langeloth Metallurgical Facility in Pennsylvania, expected to continue from 2025 to 2028. As Centerra evaluates strategic options for its molybdenum operations, these developments are positioned to unlock significant additional value in the coming years.

The Goldfield Project in Nevada remains a focal point of Centerra's exploration efforts. The company is exploring the project's extensive land package and its priority has been oxide and transition ores to maximize capital efficiency. Centerra aims to release an initial resource estimate in early 2025, setting a foundation for potential development. Meanwhile, at the Kemess Project in British Columbia, Centerra is exploring options to leverage existing infrastructure to unlock the region's gold and copper production potential. Collectively, these initiatives underscore Centerra's commitment to sustained growth through a diversified portfolio. The goal is to position itself as a low-cost producer with exposure to gold, copper, and molybdenum markets. 

Ownership and Share Structure

According to Refinitiv, institutions hold 85.55% of Centerra Gold. Of them, Van Eck Associations Corporation holds the most with 8.69%, followed by BlackRock Investment Management with 7.20%, Acadian Asset Management LLC at 4.19%, The Vanguard Group Inc holds 3.81%, and Ruffer LLP holds 3.48%.

Strategic Investors hold 0.26%. The rest is retail.

The company has 207.93 million shares. They have a market cap of CA$1363.13 and a 52 week range of CA$4.47 - 7.82.