Financial Post – Weather leaves Centerra investors cold even as gold prices sizzle.

Centerra’s woes have caught the attention of a Bank of Montreal analyst, Andrew Breichmanas, who reduced the target price for the stock by a buck to $9.50, still far above where it is trading

Back in October 2016, Centerra Gold CEO Scott Perry told investors that purchasing the Mount Milligan gold and copper mine would give the company an asset In “one of the lowest risk jurisdictions”  in the world – British Columbia.

At the time, his company’s other flagship asset, a gold mine in the Kyrgyz Republic, was mired in disputes with the local government about pollution and corruption. But about one year after Centerra acquired Mount Milligan -about 120 kilometres northwest of Prince George – as part of its US$1.1 billion takeover of Thompson Creek Metals in 2016, Perry is learning that even B.C.’s interior carries risks, including unpredictable weather.

After experiencing drought through spring and summer, the company its water supply was dangerously low, and then froze when an unexpected cold snap hit in late December.

“Due to a lack of sufficient water resources, mill processing operations at the Mount Milligan mine have been temporarily suspended.” Centerra told investors on Dec. 27

Although the Mount Milligan property may be the first mine affected by B.C.’s drought, hydrologists and climatologists in Canada said water management will increasingly create challenges as climate change wreaks havoc on precipitation patterns.

“What we’re seeing is that weather systems  are very hard to predict,”said John Pomeroy, a professor and director of the Centre for Hydrology at the University of Saskatchewan. “It’s very hard to design something like a tailing pond, because we’re seeing weather events that aren’t normal, so the capacity you designed your tailing pond for isn’tt working anymore.”

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