Centerra Gold Repays $112 Million of Debt in Third Quarter 2017 and Generates $62 Million Free Cash Flow(NG)

TORONTO, ON--(Marketwired - October 31, 2017) -

This news release contains forward-looking information that is subject to the risk factors and assumptions set out under "Caution Regarding Forward-looking Information". It should be read in conjunction with the Company's unaudited interim condensed consolidated financial statements and the notes thereto for the three and nine month period ended September 30, 2017. The consolidated financial statements of Centerra are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. All figures are in United States dollars unless otherwise stated.

All references in this document denoted with NG, indicate a non-GAAP term which is discussed under "Non-GAAP Measures".

Centerra Gold Inc. (TSX: CG) today reported a net loss of $0.8 million or $nil per common share (basic) on revenues of $276.2 million in the third quarter of 2017. The third quarter 2017 result includes a one-time charge of $60 million ($0.20 per share) as a result of the settlement reached with the Government of the Kyrgyz Republic and a gain from proceeds received of $9.8 million ($6.9 million net of tax or $0.02 per share) on the sale of the ATO property in Mongolia. Excluding these items, adjusted earnings^NG in the third quarter 2017 were $52.3 million or $0.18 per common share (basic). During the same period in 2016, the Company reported net earnings (and adjusted earnings^NG) of $66.9 million or $0.28 per common share (basic) on revenues of $218.7 million.

The Company's results include Thompson Creek operations for the three and nine months ended September 30, 2017. Comparative results for the same periods in 2016 do not include Thompson Creek operations, as the Company closed the acquisition of Thompson Creek Metals Company Inc. on October 20, 2016.

2017 Third Quarter Highlights

• Entered into a comprehensive settlement agreement with the Government of the Kyrgyz Republic to resolve all the outstanding matters affecting the Kumtor Project. Closing expected in the fourth quarter.
• Repaid $111.9 million of debt in the quarter under the Company's credit facilities.
• Produced a total of 200,201 ounces of gold, including 138,561 ounces at Kumtor and 61,640 ounces at Mount Milligan.
• Sold a total of 174,099 ounces of gold in the quarter, including 99,514 ounces at Kumtor and 74,585 ounces at Mount Milligan. Kumtor's gold sales to the refinery were limited in the quarter.
• Mount Milligan produced 13.7 million pounds of copper during the period and sold 18.6 million pounds of copper.
• Company-wide all-in sustaining costs on a by-product basis per ounce sold^NG for the third quarter were $722, excluding revenue-based tax in the Kyrgyz Republic and income tax.
• Cash generated from operations totaled $119.5 million.
• Cash provided by operating activities before changes in working capital^NG of $108.0 million (including $74.3 million from Kumtor and $48.0 million from Mount Milligan).
• Cash, cash equivalents and short-term investments at September 30, 2017 was $352.1 million.
• Gold dor?(C) inventory held at Kumtor as of September 30, 2017 valued at market at $53.4 million.
• Revised Company-wide gold production guidance for 2017 to 775,000 to 815,000 ounces reflecting increased production guidance at Kumtor and lower payable gold production guidance at Mount Milligan.
• Completed an updated feasibility study on the Gatsuurt Project which shows total open pit mineral reserves of 1.3 million contained ounces of gold (15.4 million tonnes at an average gold grade of 2.7 grams per tonne gold), using a gold price assumption of $1,250 per ounce of gold.

Commentary
Scott Perry CEO of Centerra Gold stated, "During the third quarter both of our operating sites completed the deployment of our Company-wide safety leadership program "Work Safe, Home Safe" with every employee. For the rest of the year we will continue to deploy the program at the balance of our sites, so that by year-end every Centerra employee will have received training."

"In the quarter, we achieved an important milestone when we reached a comprehensive settlement agreement with the Government of the Kyrgyz Republic to resolve all of the outstanding matters affecting the Kumtor Project. The settlement provides for the lifting of all restrictions on the freedom of movement of Kumtor employees as well as the restrictions on the ability of Kumtor to distribute funds to Centerra. The agreement also provides business certainty for future mining operations at the Kumtor Project, as it preserves all rights of Centerra and Kumtor under the Kumtor Project Agreements."

"Operationally, we had a good quarter producing 200,201 ounces of gold and 13.7 million pounds of copper at a low all-in sustaining cost on a by-product basis of $722 per ounce sold^NG, reflecting Mount Milligan achieving all-in sustaining costs on a by-product basis per ounce sold^NG (before tax) of $437."

"Financially, both operations generated a significant amount of cash from operations before working capital changes^NG during the quarter, Mount Milligan generated $48.0 million and Kumtor generated $74.3 million."

"The lifting of Kumtor's cash restriction along with the positive cash flow generated from both our operations during the quarter enabled the Company to aggressively pay down its debt by approximately $112 million. Looking forward to the fourth quarter, our production levels are expected to increase which means the Company's cash position should continue to grow as the operations continue to generate positive cash flows. We are well positioned to achieve our updated production and cost guidance for the year, ranking the Company in the lower-cost quartile on the global gold producers All-In Sustaining Cost curve."

Management Changes
The Company also announces that Frank Herbert, President of Centerra, will be retiring at December 31, 2017. Mr. Herbert joined Centerra in 2004 as General Counsel and was named President in 2015. In recognition of Frank's service, Stephen Lang, Chairman of Centerra, stated, "On behalf of the Board of Directors and the Company, I thank Frank for his leadership, hard work and integrity as well as his thoughtful advice and contributions to the strategic direction of the Company during his many years of service, particularly in the area of government relations and negotiations with the Kyrgyz Republic and Mongolia. We wish Frank well in his retirement."

As part of the Company's succession plan, Mr. Yousef Rehman, Senior Legal Counsel, will be promoted to General Counsel. Mr. Herbert will work with Mr. Rehman to ensure a smooth transition. Yousef joined Centerra in 2013. Prior to joining Centerra, Yousef worked in the private sector and with Stikeman Elliott LLP on M&A and securities transactions. Since joining Centerra, Yousef has been involved in all of the Company's significant strategic initiatives, including the acquisition of Thompson Creek Minerals and the recently announced Strategic Agreement with the Kyrgyz Republic. Yousef holds undergraduate and law degrees from the University of Toronto and was called to the Ontario Bar in 2007. Additionally, upon Mr. Herbert's retirement, Scott Perry, CEO of Centerra, will take on the added title of President of Centerra. Mr. Perry joined Centerra and was named CEO in 2015.

Exploration Update
Exploration activities during the third quarter included drilling, geological mapping, soil/chip and channel sampling, and geophysics at the Company's various projects. Exploration expenditures for the third quarter of 2017 totalled $2.5 million compared to $3.5 million in the same period of 2016 ($6.6 million in the first nine months of 2017 compared to $8.6 million in the comparative period of 2016).

During the quarter, drilling activities were initiated at the Northern and Southern Siuna Project in Nicaragua (Calibre JV), the Klippen and K??ringberget project areas in Sweden (Erris Resources JV) and the Kapyut Project in Armenia (100% owned). At the Yama?? Project in Turkey (100% owned) a drill program is expected to commence in the fourth quarter 2017. Centerra continues to advance other exploration opportunities in Turkey, Armenia, Canada, Mexico, Nicaragua and Sweden.

Brownfields Exploration
Turkey
?-ks? 1/4 t Gold Project
Drilling activities continued during the quarter at ?-ks? 1/4 t with 12 drill holes completed for 1,870 metres, at a cost of $0.3 million ($0.6 million in the first nine months of 2017). The in-pit infill diamond drill holes were encouraging for both the Keltepe and G? 1/4 neytepe deposits with some of the better intervals being:

Keltepe (in pit)
ODD0290 from 81.8 to 231.2 metres; 148.9 metres @ 2.41 g/t gold ("Au") including 38.3 metres @ 5.96 g/t Au from 111 to 149.3 metres.

ODD0291 from 71.6 to 209.4 metres; 137.3 metres @ 1.47 g/t Au including 5.5 metres @ 2.48 g/t Au and 65.4 metres @ 2.32 g/t Au

G? 1/4 neytepe (in pit)
ODD0281 from the surface; 80.8 metres @ 1.23 g/t Au
ODD0282 from 21.9 to 71.5 metres 49.6 metres @ 0.58 g/t Au including 12 metres @1.28 g/t Au
ODD0283 from the surface; 42.3 metres @ 1.07 g/t Au
ODD0284 from 72.5 to 83.7 metres 11.2 metres @ 0.35 g/t Au

These results will be incorporated into the year-end reserves/resources update.

The 2017 objectives for the 3,000 metres drill program were to upgrade the resources at Keltepe and G? 1/4 neytepe, as well as to confirm oxide mineralization at Keltepe NW, Yelibelen and B? 1/4 y? 1/4 ktepe target areas. The success of the infill drilling at both Keltepe and G? 1/4 neytepe has warranted an additional 1,000 metres to be added to the 2017 drill program to improve the resource model and to close off G? 1/4 neytepe mineralization.

The above mineralized intercepts were calculated using a cut-off grade of 0.2 g/t Au and a maximum internal dilution interval of 5.0 metres. Drill collar locations and associated graphics are available at the following link: http://media3.marketwire.com/docs/CGQ32017LOC.pdf

A listing of the drill results, drill hole locations and plan map for the ?-ks? 1/4 t Project 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 www.centerragold.com.

Canada
Mount Milligan Mine
A near pit drilling program (within the ultimate open pit) was completed in the third quarter for a total of 3,168 metres in six diamond drill holes. Drilling costs in the third quarter and first nine months of 2017 were $0.5 million and were charged to operating costs. Results for three holes were available at the end of the quarter. Intersected mineralization and some of the better results are:

17-039 from 103 to 151 metres; 48 metres @ 0.23 g/t Au, 0.25% Cu
17-040 from 164 to 198 metres; 34 metres @ 0.39 g/t Au, 0.38% Cu
17-041 from 46 to 134 metres; 88 metres @ 0.27 g/t Au, 0.16% Cu

These results, along with the results from the remainder of the planned program (3,650 metres), will be incorporated into the year-end reserves/resources update.

The above mineralized intercepts were calculated using a cut-off grade of 0.1 g/t Au and a maximum internal dilution interval of 4 metres. Drill collar locations and associated graphics are available at the following link: http://media3.marketwire.com/docs/CGQ32017LOC.pdf

A listing of the drill results, drill hole locations and plan map for the Mount Milligan Mine 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 www.centerragold.com.

Qualified Person & QA/QC - Exploration
Exploration information and other related scientific and technical information in this news release regarding the ?-ks? 1/4 t Project were prepared in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum and National Instrument 43-101 (NI 43-101) and were prepared, reviewed, verified and compiled by Mustafa Cihan, Member of the Australian Institute of Geoscientists (AIG), Exploration Manager at Centerra's Turkish subsidiary ?-ks? 1/4 t Madencilik A.??., 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.

Exploration information and other related scientific and technical information in this news release regarding the Mount Milligan Mine were prepared in accordance with the standards of NI 43-101 and were prepared, reviewed, verified and compiled by C. Paul Jago, Member of the Engineers and Geoscientists British Columbia, Exploration Manager at Centerra's Mount Milligan Mine, 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.

Gastuurt Project Update
In October 2017, the Company completed a feasibility study for the Gatsuurt Project ("the Feasibility Study") located in central northern Mongolia. The Feasibility Study incorporates results from the technical and economic studies initiated in 2016, further optimization studies completed in 2017, updated capital and operating costs and the current Mongolian tax and royalty regime.

Highlights of the Feasibility Study:

• Total open-pit mineral reserves of 1.3 million contained ounces of gold (15.4 million tonnes at an average gold grade of 2.7 grams per tonne gold (g/t Au) using a gold price assumption of $1,250 per ounce;
• Mineral reserves consist of 339,000 contained ounces of gold in oxide material (4.9 million tonnes grading 2.2 g/t Au) and 977,000 contained ounces of gold in refractory sulphide material (10.5 million tonnes grading 2.9 g/t Au);
• Life-of-mine ("LOM") gold production of 1.1 million ounces and 10 years of operations; average annual gold production of 111,000 ounces;
• Mill throughput of 4,800 tonnes per day (tpd) with average LOM mill head grade of 2.7 g/t Au and 84.4% recovery;
• Planned conventional open pit and contract mining;
• LOM strip ratio of 4.7:1 (waste: ore);
• Total LOM construction capital cost of $245 million, includes Boroo mill refurbishment ($8 million), upgrades to the existing 55 km haul road ($14 million), a new 110kv and 35kv power line ($12 million), expansion of the existing tailings management facility ($21 million), water diversion and treatment ($10 million), the addition of flotation circuit, BIOX (R) plant and CIP plant ($95 million), owner's costs ($28 million) and a contingency of $27 million;
• Total LOM sustaining capital^NG of $36.6 million excluding closure costs of $13.9 million;
• LOM all-in sustaining cost^NG of $870 per ounce sold; after inclusion of growth capital^NG, LOM all-in cost^NG (excluding taxes) is $1,103 per ounce sold;
• After-tax payback period of 7 years; and
• After-tax net present value of (NPV) at 5% discount rate of $39.4 million, and an after-tax 9.3% project internal rate of return ("IRR") on a pre-finance basis.

The Company has not made a development or construction decision on the Gatsuurt Project and expects to restart negotiations with the Mongolian Government based on the results of the Gatsuurt Feasibility Study.

The economic analysis in the Feasibility Study is based on the current Mongolian tax and royalty regime which includes a 25% income tax, a government royalty of 9%, a 3% estimated special royalty to the Mongolian Government and a 3% royalty held by a previous owner of the Gatsuurt Project. The Feasibility Study and LOM plan are subject to a number of assumptions and risks noted in the Material Assumptions and Risks Section (stated below).

1. The mineral reserve has been calculated using a gold price of $1,250 per ounce and have been validated by the positive project NPV that uses a 5% discount rate.

1. The mineral resources are exclusive of mineral reserves and have estimated on the basis of a gold price of $1,450 per ounce. The resources have been constrained by an economic open pit in accordance with CIM best practices.

The Feasibility Study plan for mining is to occur in two phases, initially targeting the oxide material that can be milled at the existing Boroo processing facility followed by the refractory sulphide material which requires the addition of a BIOX ^(R) circuit. The processing plan is to refurbish the existing Boroo mill to process the oxide material in the first three years while the BIOX ^(R) circuit is being constructed which will treat the refractory sulphide material in years 4 through 10. Initial capital expenditures for the processing of the oxide material are expected to be approximately $76 million excluding contingency of $8 million.

The LOM operating cost estimates used in the Feasibility Study on a per tonne processed basis are: mining $10.97, ore haulage $5.37, oxide processing $11.90, sulphide processing $26.42 and administration $8.92.

A technical report for the Gatsuurt Project will be prepared in accordance with National Instrument 43-101 and will be filed on SEDAR at www.sedar.com and on the Company's websites before year-end.

Material Assumptions & Risks
Material assumptions or factors that have been used in the Mineral Reserve and Mineral Resource estimates and the Gatsuurt Feasibility Study and LOM plan include the following:

• A gold price of $1,250 per ounce,
• An exchange rate of 2,200 MNT: US$1.

Other important assumptions (and corresponding risks) that are implicit in the Mineral Reserve and Mineral Resource estimates and Gatsuurt Feasibility Study and LOM plan are as follows:

• All necessary permits, licenses, and approvals, including the EA/EIS and waste dump footprints, are received in a timely manner;
• All licenses held by Centerra in relation to the Gatsuurt Project and all related administrative acts remain in good standing and are not revoked.
• Ore tonnes, grade and metallurgical recoveries at the Gatsuurt Project remain consistent with the LOM plan to achieve the forecast gold production;
• Tax and royalty rates remain at current levels for the life of the project;
• Power and water supply will remain uninterrupted during operations;
• No unplanned delays in or interruption of scheduled production at the Gatsuurt Project, including due to labour disruptions, civil unrest, natural phenomena, regulatory or political disputes, equipment breakdown, or other developmental and operational risks; and
• The Gatsuurt Project does not make allowance for inflation, changes in exchange rates and movements in gold prices.

Production and cost forecasts and capital estimates are forward-looking information and are based on key assumptions and subject to material risk factors.

Qualified Person & QA/QC
The feasibility study was undertaken by Centerra staff with the assistance of several external consultants. Reserve and resource estimates, life-of-mine plan and other 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 ("NI-43-101") and were reviewed, verified and compiled by Centerra's geological and mining staff under the supervision of Gordon Reid, Professional Engineer and Centerra's Vice-President and Chief Operating Officer, 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 on the Gatsuurt Project have been done consistent with industry standards and independent certified assay labs have been used. Available quality control data indicates that the gold assay data used for resource estimation are reliable.

This Management Discussion and Analysis ("MD&A") has been prepared as of October 31, 2017, and is intended to provide a review of the financial position and results of operations of Centerra Gold Inc. ("Centerra" or the "Company") for the three and nine months ended September 30, 2017 in comparison with the corresponding period ended September 30, 2016. This discussion should be read in conjunction with the Company's unaudited condensed consolidated interim financial statements and the notes thereto for the three and nine months ended September 30, 2017. This MD&A should also be read in conjunction with the Company's audited annual consolidated financial statements for the years ended December 31, 2016 and 2015, the related MD&A and the Annual Information Form for the year ended December 31, 2016 (the "2016 Annual Information Form"). The Company's unaudited condensed consolidated interim financial statements and the notes thereto for the three and nine months ended September 30, 2017, 2016 Annual Report and 2016 Annual Information Form are available at www.centerragold.com and on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com. The consolidated financial statements of Centerra are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. All figures are in United States dollars unless otherwise stated.

All references in this document denoted with ^NG, indicate a non-GAAP term which is discussed under "Non-GAAP Measures".

1. Overview

Centerra is a gold mining company focused on operating, developing, exploring and acquiring gold properties in North America, Asia, and other markets worldwide. Centerra is a leading Canadian-based gold producer and is one of the largest Western-based gold producers in Central Asia. Centerra's principal operations are the Kumtor Mine located in the Kyrgyz Republic and the Mount Milligan Mine located in British Columbia, Canada.

The Company's significant wholly-owned subsidiaries include Kumtor Gold Company ("KGC" or "Kumtor") in the Kyrgyz Republic, Thompson Creek Metals Company Inc. ("Thompson Creek") in Canada, Langeloth Metallurgical Company LLC ("Langeloth") and Thompson Creek Mining Co. in the United States of America , ?-ks? 1/4 t Madencilik Sanayi vi TicaretA.S. ("OMAS") in Turkey and Boroo Gold LLC and Centerra Gold Mongolia LLC ("CGM") in Mongolia. Additionally, the Company holds, through Thompson Creek, a 75% joint venture interest in the Endako Mine in British Columbia, Canada. It also owns a 50% partnership interest in Greenstone Gold Mines LP (the "Greenstone Partnership") which owns the Greenstone Gold development property including the Hardrock deposit, located in Ontario, Canada. See "Operating Mines and Facilities", "Development Projects" and "Other Corporate Developments" for further details.

The Company also has agreements to earn interests in joint venture exploration properties located in Canada, Mexico, Sweden and Nicaragua.

The Company's results include Thompson Creek operations for the three and nine months ended September 30, 2017. Comparative results for the same periods in 2016 do not include Thompson Creek operations, as the Company closed the acquisition of Thompson Creek Metals Company Inc. on October 20, 2016.

Centerra's shares trade on the Toronto Stock Exchange (TSX) under the symbol CG. The Company is headquartered in Toronto, Ontario, Canada.

2. Market Conditions

Gold Price
During the third quarter of 2017, the spot gold price fluctuated between a low of $1,211 per ounce and a high of $1,346 per ounce. The average spot gold price for the third quarter was $1,278 per ounce, a decrease of $57 per ounce from the third quarter of 2016 average ($1,335 per ounce), and a $21 per ounce increase compared to the second quarter of 2017 average ($1,257 per ounce).

Copper Price
The average spot copper price for the quarter was $2.88 per pound, a $0.71 per pound increase compared to the third quarter of 2016 average of $2.17 per pound, and a $0.31 per pound increase compared to the second quarter of 2017 ($2.57 per pound).

Spot copper prices reached a 52-week record high of $3.13 per pound during the third quarter of 2017 with prices continuing to rise at the beginning of the fourth quarter.

Foreign Exchange Rates

USD to CAD
The average U.S. dollar exchange rate for the third quarter of 2017 (1.25) weakened by 4% when compared to the average of the third quarter of 2016 (1.30), with rates in the third quarter of 2017 ranging from 1.21 to 1.30 and averaging 1.25. The Bank of Canada executed two successive domestic interest rate hikes in July and September, raising the key overnight rate target from 0.5% to 1.0%. The Canadian dollar peaked in early September following news that Canadian second quarter growth was 4.5%, with the USD/CAD exchange rate briefly dipping below 1.21.

USD to Kyrgyz Som
The average U.S. dollar exchange rate for the third quarter of 2017 was consistent with the average of the second quarter of 2016 (68.2), with rates in the third quarter of 2017 ranging from 68.3 to 69.6 and averaging 68.9. The Kyrgyz som continues to be influenced by the strengthening of currencies of the Kyrgyz Republic's main trading partners - mainly Russia. The strengthening in the Russian ruble reflects higher oil prices and an improving economic situation.

Foreign Exchange Transactions
The Company receives its revenues through the sale of gold, copper and molybdenum in U.S. dollars. The Company has operations in the Canada, where the Mount Milligan Mine and its corporate head office are also located, Kyrgyz Republic, Turkey, Mongolia and the United States of America. During the first nine months of 2017, the Company incurred combined expenditures (including capital) totalling approximately $856 million. Approximately $411 million of this (48%) was in currencies other than the U.S. dollar. Centerra's non-U.S. dollar costs includes 50% in Canadian dollars, 42% in Kyrgyz soms, 4% in Euros, and 1% in Turkish lira. The average value of the Turkish lira depreciated against the U.S. dollar by approximately 2% from its value at December 31, 2016. The Euro, Canadian dollar, British pound, Mongolian tugrik and Kyrgyz som appreciated against the U.S. dollar by approximately 5%, 3%, 3%, 2% and 1%, respectively, from their value at December 31, 2016. The net impact of these movements in the nine months ended September 30 2017, after taking into account currencies held at the beginning of the year, was to increase annual costs by $6.3 million (increase of $13.6 million in the nine months ended September 30 2016), inclusive of an foreign exchange gain on derivatives of $1.2 million (nil for the nine months ended September 30 2016).

3. Consolidated Highlights Summary

1. As at September 30, 2017, the Company had 291,780,532 common shares issued and outstanding (291,782,075 common shares as of October 31, 2017). As of October 31, 2017, Centerra had 4,747,700 share options outstanding under its share option plan with exercise prices ranging from Cdn$3.82 per share to US$36.74 per share, with expiry dates between 2017 and 2024.
2. Average for the period as reported by the London Bullion Market Association (US dollar Gold P.M. Fix Rate) and London Metal Exchange (LME). This is a non-GAAP measure and is discussed under "Non-GAAP Measures".
3. Adjusted earnings per common share (basic and diluted) for three and nine months ended September 30, 2017 were $0.18 and $0.59 respectively.
4. Adjusted net earnings, adjusted earnings per common shares (basic and diluted), capital expenditures (sustaining and growth), operating costs (on a sales basis), adjusted operating costs per ounce sold, gold all-in sustaining costs on a by-product or co-product basis (excluding and including taxes) per ounce sold, gold all-in sustaining costs on a co-product or co-product basis (including taxes) per ounce sold, copper all-in sustaining costs on a co-product or co-product basis (including taxes) per ounce sold, cash provided by operation before changes in working capital, as well as average realized gold price per ounce and average realized copper price per pound are non-GAAP measures and are discussed under "Non-GAAP Measures".
5. Excludes Molybdenum business.
6. No comparative results for Thompson Creek operations have been presented.

4. Overview of Consolidated Results

Third Quarter 2017 compared to Third Quarter 2016
The Company recorded a net loss of $0.8 million in the third quarter of 2017, compared to net earnings of $66.9 million in the comparative quarter of 2016, reflecting 40% fewer gold ounces sold at Kumtor, as Kumtor had 17% lower gold production and limited its shipments of gold to Kyrgyzaltyn starting in September 2017 due to concerns about the financial stability of Kyrgyzaltyn's off-take bank which purchases the refined gold from Kyrgyzaltyn, lower average realized gold prices^NG, the acquisition of the Mount Milligan operations and a one-time charge for a settlement reached with the Kyrgyz Government of $60 million and a gain of $9.8 million ($6.9 million net of tax) on the sale of the ATO property in Mongolia. Excluding these one-time items, adjusted earnings^NG in the third quarter of 2017 were $52.3 million compared to $66.9 million in the comparative quarter.

Production:
Gold production for the third quarter of 2017 totalled 200,201 ounces. Gold production at Kumtor was 138,561 ounces in the third quarter of 2017, 17% lower than the 166,030 ounces produced in the comparative quarter of 2016. The decrease in ounces poured at Kumtor is a result of milling lower grade ore and achieving lower recoveries from stockpiles and from the initial benches of the Sarytor pit, compared to the higher grade ore mined and processed from the lower benches in cut-back 17 of the Central pit during the comparative period. During the quarter, Mount Milligan produced 61,640 ounces of gold and 13.7 million pounds of copper.

Safety and Environment:
Centerra had six reportable injuries which included three lost time injuries, two medical aid injuries and one restricted work injury in the third quarter of 2017. During the third quarter both operating sites completed the deployment of the Company-wide safety leadership program "Work Safe, Home Safe" with every employee.

There was a reportable environmental incident during the third quarter of 2017. On July 9, 2017, a reportable spill occurred at Kumtor when a diesel fuel truck rolled over a safety berm on the technical road on its way to the mine site. Approximately 8.8 tonnes of diesel fuel leaked but was fully contained, with no release to any watershed. Clean-up of the affected area was initiated immediately and was completed on the same day. By the end of the third quarter of 2017, Kumtor and local authorities completed and closed their detailed investigations.

Financial Performance:
Revenue increased by 26% to $276.2 million in the third quarter of 2017 as a result of more gold ounces sold (174,099 ounces compared to 164,847 ounces in the third quarter of 2016), the addition of copper sales ($40.9 million) and molybdenum sales ($36.6 million) were partially offset by a 14% lower combined average realized gold price ^NG during the quarter ($1,141 per ounce compared to $1,327 per ounce in the same quarter of 2016). The increase in gold ounces sold results from the addition of Mount Milligan which recorded sales of 74,585 ounces of gold and contributed $74.4 million in gold revenues, partially offset by 40% lower gold ounces sold at Kumtor (99,514 ounces compared to 164,847 ounces in the same quarter of 2016) which was impacted by lower production and reduced gold shipments to Kyrgyzaltyn's refinery in the month of September.

Beginning in September 2017, Kumtor began to limit shipments of gold dor?(C) to Kyrgyzaltyn due to concerns about the financial stability of Kyrgyzaltyn's off-take bank which purchases gold refined by Kyrgyzaltyn and makes payment to Kumtor on behalf of Kyrgyzaltyn. At the end of the third quarter of 2017, Kumtor had in inventory 48,678 ounces of gold dor?(C) due to the reduction in shipments to Kyrgyzaltyn. See "Other Corporate Developments - Kyrgyz Republic".

Cost of sales increased by 70% in the third quarter of 2017 ($164.2 million compared to $96.5 million in the third quarter of 2016) reflecting the addition of Mount Milligan (gold and copper sales) and the molybdenum business, partially offset by lower gold ounces sold from the Kumtor mine (as explained above). Depreciation, depletion and amortization ("DD&A") associated with production was $41.1 million in the third quarter of 2017 as compared to $51.3 million in the same period of 2016, primarily due to lower sales and production volumes at Kumtor in the third quarter of 2017, partially offset by the addition of Mount Milligan and the molybdenum business in the third quarter of 2017.

As part of the settlement agreement with the Kyrgyz Republic the Company recorded a charge of $60 million (described above). Kumtor also accrued $2.0 million in the third quarter of 2017 as other operating expenses representing the increased annual payment for the new Nature Development Fund (See "Other Corporate Development - Kyrgyz Republic).

Corporate administration costs were $12.6 million in the third quarter 2017 compared to $5.9 million in the same period of 2016. The increase was mainly due to share-based compensation which increased by $3.6 million compared to the prior year, mainly due to increases in the Company's share price. The third quarter 2017 also included additional costs for legal and consulting in relation to settlement negotiations as well as costs for the Denver office (formerly Thompson Creek's corporate office).

Operating Costs (excluding molybdenum business):
Operating costs (on a sales basis)^NG increased to $89.3 million in the third quarter of 2017 compared to $45.2 million in the same period of 2016, which reflects the addition of Mount Milligan ($62.7 million) and lower volumes sold at Kumtor.

Centerra's all-in sustaining costs on a by-product basis per ounce of gold sold^NG, which excludes revenue-based tax and income tax, for the third quarter of 2017 increased to $722 from $591 in the comparative period mainly as a result of 40% less ounces sold at Kumtor ($135 per ounce), higher operating costs and capitalized stripping ($94 per ounce), higher administration and other costs ($88 per ounce), higher sustaining capital^NG ($26 per ounce), partially offset by the positive impact from the acquisition of Mount Milligan ($213 per ounce).

To view the Consolidated All-in Sustaining Costs on a by-product basis (per ounce sold) chart please click the following link: http://media3.marketwire.com/docs/1031pg12.jpg

First Nine Months 2017 compared to First Nine Months 2016
The Company recorded net earnings of $79.6 million in the first nine months of 2017, compared to net earnings of $87.9 million in the comparative period of 2016, reflecting more gold ounces sold at Kumtor, despite Kumtor limiting its shipments of gold to Kyrgyzaltyn starting in September 2017, the acquisition of the Mount Milligan operations, one-time charges for a settlement reached with the Kyrgyz Government of $60 million, an impairment charge of the Company's Mongolian assets of $41.3 million ($39.7 million net of tax) and a one-time credit representing a gain of $9.8 million ($6.9 million net of tax) on the sale of the ATO property in Mongolia. Excluding these one-time items, adjusted earnings^NG for the first nine months of 2017 were $172.4 million compared to $87.9 million in the comparative period.

Production:
Gold production for the first nine months of 2017 totalled 568,564 ounces. Gold production at Kumtor was 404,584 ounces in the first nine months of 2017, 16% higher than the 350,199 ounces produced in the first nine months of 2016. The increase in ounces poured at Kumtor is a result of milling higher grade ore from stockpiles (3.51 g/t compared to 3.01 g/t) and realizing higher recoveries (78.6% compared to 77.0%) compared to the same period in 2016. Blending of the more complex, lower grade ore from the Sarytor pit impacted recoveries in the third quarter of 2017. During the first nine months of 2017, Mount Milligan produced 163,980 ounces of gold and 41.3 million pounds of copper.

Safety and Environment:
Centerra had eleven reportable injuries in the first nine months of 2017, including one fatal injury to a maintenance employee at Kumtor. There were five lost time injuries and four medical aid injuries.

During the first nine months of 2017 there was one reportable release to the environment. As noted above, a reportable incident occurred at Kumtor on July 9, 2017 when a diesel fuel truck rolled over a safety berm on the technical road on its way to the mine site.

Financial Performance:
Revenue increased to $840.8 million in the first nine months of 2017 from $452.0 million, as a result of additional gold ounces sold (550,238 ounces compared to 354,500 ounces), including copper sales of $96.8 million and molybdenum sales $105.7 million, partially offset by a 9% lower combined average realized gold price ^NG during the first nine months ($1,160 per ounce compared to $1,275 per ounce in the same period of 2016). The increase in gold ounces sold (369,431 ounces compared to 354,500 ounces in the same period of 2016) was mainly due to the addition from Mount Milligan while Kumtor's sales only grew by 4% due to the limitations on gold shipments in September to Kyrgyzaltyn, as described earlier. Mount Milligan sold 180,807 ounces of gold and 46.6 million pounds of copper during the first nine months of 2017 which contributed $278.0 million in revenues.

Cost of sales increased in the first nine months of 2017 to $501.3 million compared to $244.4 million in the first nine months of 2016, mainly resulting from the addition of Mount Milligan gold and copper sales and the molybdenum business. Depreciation, depletion and amortization associated with production was $146.2 million in the first nine months of 2017 as compared to $120.1 million in the same period of 2016 as a result of higher sales and the addition of Mount Milligan and the molybdenum business in the first nine months of 2017.

In the third quarter of 2017, the Company entered into a settlement agreement with the Kyrgyz Republic Government which resulted in a charge of $60 million. It also recorded a gain on the sale of the ATO property in Mongolia of $9.8 million (or $6.9 million net of tax).

Corporate administration costs were $31.6 million in the first nine months of 2017, an increase of $13.1 million compared to the same period of 2016, mainly due to an increase in share-based compensation of $6.3 million as a result of increases in the Company's share price, additional costs for legal and consulting mainly in relation to settlement negotiations ($1.2 million) and costs for the Denver office of $4.3 million (formerly Thompson Creek's corporate office).

Operating Costs (excluding molybdenum business):
Operating costs (on a sales basis)^NG increased to $259.4 million in the first nine months of 2017 compared to $124.3 million in the same period of 2016, which includes Mount Milligan costs of $158.3 million.

Centerra's all-in sustaining costs on a by-product basis per ounce of gold sold^NG, which excludes revenue-based tax and income tax, for the first nine months of 2017 decreased to $739 from $748 in the comparative period mainly as a result of the addition of gold and copper sales from Mount Milligan which was partially offset by higher capitalized stripping and spending on maintenance and labour at Kumtor and incremental administration costs, as a result of the Thompson Creek acquisition, in the first nine months of 2017 as compared to the same period of 2016.

5. Liquidity and Capital Resources

The Company believes its cash on hand and working capital as at September 30, 2017, together with future cash flows from operations and cash provided by the Company's existing credit facilities will be sufficient to fund its anticipated operating cash requirements, although there can be no assurance of this.

Starting in September 2017, Kumtor has limited its shipments of gold to Kyrgyzaltyn in response to concerns about the financial stability of the bank that purchases Kyrgyzaltyn's refined gold. Centerra understands that Kyrgyzaltyn expects to appoint a new purchaser bank in the fourth quarter at which time full shipments from Kumtor to Kyrgyzaltyn can be resumed. If a new purchaser bank is not appointed, Kumtor expects to continue limiting its shipments of gold to Kyrgyzaltyn such that the value of any shipment will not exceed the value of the Centerra Gold shares pledged by Kyrgyzaltyn. See "Caution Regarding Forward-Looking Information".

In the third quarter of 2017, Centerra generated cash from operations before working capital changes^NG of $108.0 million, compared to $119.3 million in the prior period, as a result of lower earnings in the current quarter. Working capital movements in the first nine months of 2017 reflect a reduction in levels at Kumtor mainly due to timing, partially offset by increased levels at Mount Milligan and in the Moly business.

At the end of the third quarter of 2017, Kumtor had in inventory 48,678 ounces of gold dor?(C) due to a reduction in shipments in September to Kyrgyzaltyn. See "Other Corporate Developments".

The Company generated $119.5 million in cash from operations in the third quarter of 2017, a decrease of $15.0 million compared to the third quarter of 2016, mainly as a result of lower earnings. In addition to lower gold production, Kumtor's gold sales in the third quarter of 2017 were limited (down 40% compared to the same period in 2016) as the Company reduced its gold shipments to Kyrgyzaltyn while Kyrgyzaltyn searches for alternative off-take banks to purchase its refined gold. The lower sales at Kumtor were partially offset by the contribution from Mount Milligan and from the molybdenum business in the third quarter of 2017.

Cash provided by investing activities increased to $248.8 million in the third quarter of 2017 as compared to $204.9 million in the third quarter of 2016, reflecting the release of Kumtor's restricted cash ($239.2 million), a reduction in net purchases of short-term investments, partially offset by an increase in capital spending (mainly additional sustaining capital^NG and capitalized stripping at Kumtor) as compared to the same quarter in 2016. On September 4, 2017, the Bishkek Inter-District Court lifted the interim court order which prohibited KGC from taking any actions relating to certain financial transactions including, transferring property or assets, declaring or paying dividends, pledging assets or making loans. As a result, KGC transferred cash balances over and above its ordinary working capital requirements to Centerra on September 15, 2017, when the lifting of the interim court order became effective.

Cash used in financing of $117.5 million in the third quarter of 2017 represents debt repayments under the Company's credit facilities. The Company made a quarterly payment on the Centerra B.C. Facility (defined below) term loan of $12.5 million and also paid in full the revolver balance of $74.4 million at the end of the quarter. In addition, the Company paid EBRD $25 million against its Corporate Facility (defined below) at the end of the third quarter of 2017. In the third quarter of 2016, the Company raised equity financing of $145.4 million in the form of subscription receipts in support of its acquisition of Thompson Creek Metals Inc., paid interest on borrowings and paid a dividend to its shareholders.

Cash, cash equivalents, restricted cash and short-term investments at September 30, 2017 decreased to $352.0 million (with no restricted cash at Kumtor) from $401.4 million at the end of June 2017 (including $299.2 million of restricted cash and investments at Kumtor) as cash from operations was more than offset by capital additions and cash used to repay debt. At December 31, 2016, cash and investment balances totaled $408.8 million (including $247.8 million of restricted cash at Kumtor).

Credit Facilities:
Centerra Corporate Facility
On February 12, 2016, the Company entered into a five-year $150 million revolving credit facility (the "Corporate Facility") with the European Bank for Reconstruction and Development ("EBRD"). The Corporate Facility includes $50 million for the purpose of funding direct and indirect costs associated with the Gatsuurt Project. In February and September 2017, the Company repaid the $50 million reserved for the Gatsuurt Project in two $25 million instalments. At September 30, 2017, the Company had drawn $100 million under the Corporate Facility.

Funds drawn under the Corporate Facility are available to be re-drawn on a semi-annual basis and, at the Company's discretion, repayment of the loaned funds may be extended until 2021.

Centerra B.C Holdings Credit Facility
As part of the acquisition of Thompson Creek which closed on October 20, 2016, Centerra B.C. Holdings, a wholly-owned subsidiary of the Company, secured financing from a lending syndicate in the aggregate amount of $325 million (the "Centerra B.C. Facility"), consisting of a $250 million non-revolving term facility and a $75 million senior secured revolving credit facility. The revolving portion of the facility is to be repaid at the end of the five-year term. The principal amount of the term portion of the Centerra B.C. Facility is to be repaid in $12.5 million quarterly instalments which commenced on March 31, 2017.

In July 2017, the Company entered into an amendment of the Centerra B.C. Facility to increase the senior secured revolving credit facility under the Centerra B.C. Facility from $75 million to $125 million. As part of the amendment, the revolving facility must be reduced by $50 million by June 30, 2019. The amendment also includes additional favourable terms such as permitting upstream distributions of up to $50 million without the matching pre-payment requirement of the original agreement. Prior to the amendment, the Centerra B.C. Facility required Centerra B.C. Holdings to make a matching pre-payment on all distributions to Centerra. The amendment became effective in August 2017, when the conditions were satisfied, including the execution of hedges for a portion of the gold and copper production covering Mount Milligan's production from July 2017 to June 2019.

In September 2017, in addition to making the scheduled $12.5 million payment towards the non-revolving facility, the Company repaid the outstanding balance on the revolving facility ($74.4 million). As at September 30, 2017, $202.5 million was drawn on the Centerra B.C. Facility.

OMAS Facility
On April 5, 2016, OMAS, a wholly-owned subsidiary of the Company, entered into a 5-year $150 million credit facility agreement (the "OMAS Facility"). The purpose of the OMAS Facility is to assist in financing the construction of the Company's ?-ks? 1/4 t Project. Availability of the OMAS Facility is subject to customary conditions precedent, including receipt of all necessary permits and approvals for the ?-ks? 1/4 t Project. The Company is currently awaiting a pastureland permit at the ?-ks? 1/4 t Project. If the conditions are not satisfied or waived by the specified deadline, or an additional extension is not granted by the lenders, the commitments under the OMAS Facility will be cancelled. In the second quarter of 2017, the previous deadline of June 30, 2017 for satisfaction of the conditions precedent was extended to December 31, 2017. As at September 30, 2017, the OMAS Facility remains undrawn. There can be no assurances that the Facility will be extended beyond December 31, 2017.

Centerra was in compliance with the terms of all of its facilities at September 30, 2017.

Capital Expenditures (spent and accrued):

1. Includes cash component of $10.7 million and $43.4 million in the three and nine months ended September 30, 2017 respectively ($10.5 million and $20.8 million in the comparative periods of 2016, respectively).
2. Nine months ended September 30, 2016 includes $3 million for the purchase of the net smelter royalty from Teck Resources Limited.
3. In accordance with the Company's accounting policy, the 50% share paid on behalf of Premier Gold Mines Limited in the project is capitalized as part of mineral properties in Property, Plant & Equipment.

Capital expenditures in the third quarter of 2017 totalled $74.2 million compared to $63.7 million in the same period of 2016, resulting mainly from increased spending on capitalized stripping at Kumtor to develop cut-back 18 in the Central pit and in the Sarytor pit, higher sustaining capital^NG for equipment rebuilds and overhauls, partially offset by lower spending on the Company's development projects.

6. Financial Instruments

The Company seeks to manage its exposure to fluctuations in diesel fuel prices, commodity prices and foreign exchange rates by entering into derivative financial instruments from time-to-time.

Fuel Hedges:
In 2016, the Company established a diesel fuel price hedging strategy using derivative instruments to manage the risk associated with changes in diesel fuel prices on the cost of operations at the Kumtor Mine. The Company targets to hedge up to 70% of monthly diesel purchases at Kumtor for the first 12 months and 50% of the 13 through 24 month exposure. The Company hedges its exposure with crude oil futures contracts, as the price of diesel fuel closely correlates to the price of crude oil.

Gold and Copper Derivative Contracts:
The Company must satisfy its obligation under the gold and copper stream arrangement with RGLD Gold AG and Royal Gold Inc. (collectively "Royal Gold") by delivering refined physical gold or LME copper warrants to Royal Gold after receiving payment from third-party purchasers who purchase concentrate from the Mount Milligan Mine. In order to hedge the metal price risk that arises when physical purchase and concentrate sales pricing periods do not match, the Company has entered into certain forward gold and copper purchases and forward sales contracts pursuant to which it purchases gold or copper at an average price during a future quotational period and sells gold or copper at the current spot price. These derivative contracts are not designated as hedging instruments.

Mount Milligan Gold and Copper Facility Hedges:

The Company entered into a hedging program required as part of the amendment to the Centerra B.C. Facility (see "Credit Facilities" section) to cover the period from July 2017 to June 2019.

The facility amendment required hedging of future un-streamed gold and un-streamed copper production at the Mount Milligan mine at a minimum average floor price of $1,200 per gold ounce and minimum average floor price of $2.50 per copper pound.

The hedge positions for each of these programs as at September 30, 2017 are summarized as follows:

ND = Royal Gold hedging program with floating terms, that are not defined as at September 30, 2017.

1. Under the forward contracts (including crude oil options), the Company can buy and sell specified assets, typically metals or currency, at a specified price at a certain future date.
2. Under the zero-cost collar: (i) the Company can put the number of gold ounces or copper pounds to the counterparty at the minimum price, if the price were to fall below the minimum, and (ii) the counterparty has the option to require the Company to sell to it the number of gold ounces or copper pounds at the maximum price, if the price were to rise above the maximum.

As noted above, the remaining gold hedging program in 2017 consists of 32,453 gold ounces, including 23,453 forward contracts at an average strike price of $1,276 per ounce and 9,000 zero-cost collars at an average strike price range of $1,225 to $1,372 per ounce. The remaining copper hedging program in 2017 consists of 9.9 million pounds of copper, including 7.1 million forward contracts at an average strike price of $2.73 per pound and 2.8 million pounds of zero-cost collars at an average strike price range of $2.25 to $3.21 per pound.

The gold hedging program is more heavily weighted to zero cost collars in 2018 and 2019 with 55% and 100%, respectively. This hedging strategy has also been adopted for copper hedges with 85% zero cost collars in 2018 and 100% in 2019.

Centerra does not enter into off-balance sheet arrangements with special purpose entities in the normal course of its business, nor does it have any unconsolidated affiliates.

7. Operating Mines and Facilities

Kumtor Mine

The Kumtor open pit mine, located in the Kyrgyz Republic, is one of the largest gold mines in Central Asia operated by a Western-based gold producer. It has been in production since 1997 and has produced over 11.3 million ounces of gold to September 30, 2017.

Recent Developments

• On September 11, 2017, Centerra announced it had signed a comprehensive settlement agreement with the Government of the Kyrgyz Republic. See "Other Corporate Developments - Kyrgyz Republic".
• On September 4, 2017, the Bishkek Inter-District Court lifted the interim court order which prohibited KGC from taking any actions relating to certain financial transactions including, transferring property or assets, declaring or paying dividends, pledging assets or making loans. As a result, KGC transferred cash balances over and above its ordinary working capital requirements to Centerra on September 15, 2017, when the lifting of the interim court order became effective.
• Gold revenues at Kumtor were lower in the third quarter of 2017 partially due to reduced gold shipments to Kyrgyzaltyn. Beginning in September 2017, Kumtor began to limit shipments of gold to Kyrgyzaltyn due to concerns about the financial stability of Kyrgyzaltyn's off-take bank which purchases the refined gold from Kyrgyzaltyn. At the end of the third quarter of 2017, Kumtor had in inventory 48,678 ounces of gold dor?(C) due to the reduction in shipments to Kyrgyzaltyn. See "Other Corporate Developments - Kyrgyz Republic" for further details.

1. Adjusted operating costs per ounce sold, all-in sustaining costs on a by-product basis (including and excluding taxes) per ounce sold, cash provided by operations before changes in working capital, cost of sales per ounce sold, operating costs (on as sales basis), average realized gold price per ounce sold and capital expenditures - cash (sustaining and growth) are non-GAAP measures and are discussed under "Non-GAAP Measures".

Third Quarter 2017 compared to Third Quarter 2016

Production:
During the third quarter of 2017, Kumtor continued to develop both the Central pit through mining cut-back 18 and the Sarytor pit, which is approximately three kilometres south of the Central pit. Ore production commenced in Sarytor in July 2017, and is expected to supplement the historical stockpiled ore in advance of obtaining access to the higher-grade ore from the Central pit in the fourth quarter of 2018.

Total waste and ore mined in the third quarter of 2017 was 49.3 million tonnes, an increase of 14.4 million tonnes or 41% compared to the same period of period of 2016. The major reasons for this increase, were due to favorable weather conditions during the summer of 2017 compared to 2016, which resulted in fewer weather delays, 17% shorter average haulage distance compared to the same period of 2016 due to the commencement of mining at the Sarytor Pit, and various process improvements that increased truck payloads, average truck speeds and truck utilization hours.

During the third quarter of 2017, Kumtor produced 138,561 ounces of gold compared to 166,030 ounces of gold in the comparative period of 2016. The decrease in ounces poured is a result of, milling lower grade ore from the remaining stockpile of cut-back 17 Central pit ore and lower grade ore from the initial benches of the Sarytor Pit, compared to the higher grade ore mined and processed from the high grade, lower benches in cut-back 17 during the comparative period. During the third quarter of 2017, Kumtor's head grade was 3.47 g/t with a recovery of 80.5%, compared to 4.11 g/t and a recovery of 81.4% for the same period of 2016. Blending of the more complex, initial lower grade ore from the Sarytor pit impacted recoveries in the third quarter of 2017. Throughput through the mill decreased to 738 tpoh ("tonnes per operating hour") compared to 760 tpoh in the same period of 2016 due to a scheduled shutdown to reline the SAG mill, ball mill and regrind mill.

Operating costs and All-in Measures:
Operating costs (on a sales basis)^NG for the third quarter of 2017 decreased by $18.5 million to $26.7 million, as compared to the same quarter of 2017, reflecting 41% more tonnage moved including significant amount of waste removal in cut-back 18 of the Central pit which was capitalized in the third quarter of 2017. Including capitalized stripping, operating costs were $57.5 million compared to $83.9 million in the comparative third quarter of 2016. The increase in the major components of operating costs (mining, milling and site support) before changes in inventory is explained below.

To view the Mining Costs, including capitalized stripping (Third Quarter 2017 compared to Third Quarter 2016) chart please click the following link: http://media3.marketwire.com/docs/1031pg20.jpg

Mining costs, including capitalized stripping, totaled $49.2 million in the third quarter of 2017, which was $4.7 million higher than the comparative quarter of 2016. Increased costs for the third quarter of 2017 includes higher diesel costs ($1.8 million) mainly due to increased purchase price, higher blasting costs ($1.3 million) primarily due to increased blasting volumes, higher labour cost ($1.2 million) due to a new collective bargaining agreement and strengthening of the local currency. In addition higher maintenance cost ($0.7 million) resulted from additional repair work required on the 785 haul trucks.

To view the Milling Costs (Third Quarter 2017 compared to Third Quarter 2016) chart please click the following link: http://media3.marketwire.com/docs/1031pg21.jpg

Milling costs increased to $19.5 million in the third quarter of 2017, as compared to $16.1 million in the comparative quarter of 2016. The higher milling costs were due to comprehensive maintenance work during the planned total shutdown for the SAG, ball and regrind mills liners performed during the third quarter of 2017, whereas only SAG mill reline work occurred in the comparative period in 2016. During the shutdown, Kumtor took the opportunity to replace other mill components to boilers, derrick screens, and on the crusher.

Site Support Costs (Third Quarter 2017 compared to Third Quarter 2016):

Site support costs in the third quarter of 2017 totaled $10.5 million compared to $10.1 million in the comparative quarter in 2016. Site support costs increased slightly due to higher contractors costs for a major site clean-up initiative.

Other Cost movements:
DD&A associated with sales, decreased to $27.8 million in the third quarter of 2017, from $51.3 million in the comparative quarter of 2016, a 46% decrease. The decrease in 2017 is primarily due to 40% fewer ounces sold in the third quarter of 2017.

All-in sustaining costs on a by-product basis per ounce sold^NG, which excludes revenue-based tax, was $807 for the third quarter of 2017 compared to $555 in the third quarter of 2016, representing an increase of 45%, primarily as a result of 40% fewer ounces sold. The third quarter of 2017 also includes the new environmental fee ($2.0 million accrued not yet paid) for the Nature Development Fund as a result of the comprehensive settlement agreement reached with the Kyrgyz Republic Government (impact $20 per ounce) - see "Other Corporate Development - Kyrgyz Republic".

Including revenue-based taxes, all-in sustaining costs on a by-product basis per ounce sold^NG was $983 for the third quarter of 2017 compared to $742 in the same period of 2016. The increase is due to the higher all-in sustaining costs (explained above).

First Nine Months 2017 compared to First Nine Months 2016

During the first nine months of 2017, mining at Kumtor focused on advancing cut-back 18 in the Central pit and developing the Sarytor pit.

Total waste and ore mined in the first nine months of 2017 was 131.1 million tonnes compared to 108.9 million tonnes in the comparative period of 2016, representing an increase of 20%. The main reasons for this increase was an 11% shorter average haulage distance in the comparative period of 2016 due to the shorter hauls required upon commencing mining activities at the Sarytor pit.

During the first nine months of 2017, the Company processed ore from stockpiles, including the higher grade ore remaining from cut-back 17 in the Central pit mined at the end of 2016. Kumtor produced 404,584 ounces of gold in the first nine months of 2017 compared to 350,199 ounces of gold in the first nine months of 2016. The increase in ounces poured is a result of milling higher grade ore from stockpiles, partially offset by blending the initial lower grade ore from the Sarytor pit, compared to the lower grade ore mined and processed from the initial benches in cut-back 17 during the comparative period. During the first nine months of 2017, Kumtor's average mill head grade was 3.51 g/t with a recovery of 78.6%, compared with 3.01 g/t and a recovery of 77.0% for the same period in 2016.

Operating costs and All-in Measures:
Operating costs (on a sales basis) decreased by $23.2 million to $101.1 million as compared to the same period of 2016. Including capitalized stripping, operating costs were $226.1 million compared to $202.7 million in the first nine months of 2016, reflecting 20% more tonnage moved including significant amount of waste removal in cut-back 18 in the Central pit capitalized in the first nine months of 2017. The increase in the major components of operating costs (mining, milling and site support) before changes in inventory is explained below.

To view the Mining Costs, including capitalized stripping (First Nine Months 2017 compared to First Nine Months 2016) chart please click the following link: http://media3.marketwire.com/docs/1031pg22.jpg

Mining costs, including capitalized stripping, totaled $145.1 million in the first nine months of 2017 compared to $139.5 million in the comparative period of 2016. Increased costs for the first nine months of 2017 includes higher labour cost ($3.0 million) due to a new collective bargaining agreement and strengthening of the local currency in comparison to 2016, higher maintenance cost ($2.5 million) resulting from higher repair costs across the fleet to support the increased mine production. In addition, costs were also higher for diesel purchases ($0.7 million) mainly due to higher prices and higher blasting costs ($0.5 million) mainly due to increased blasting volumes. These were partially offset by lower tire costs ($0.7 million) mainly due to lower purchase prices.

To view the Milling Costs (First Nine Months 2017 compared to First Nine Months 2016) chart please click the following link: http://media3.marketwire.com/docs/1031pg23.jpg

Milling costs of $51.5 million in the first nine months of 2017 compared to $47.4 million in the comparative period of 2016. The increase is mainly due to increased maintenance work during the mill planned shutdown for the SAG, ball and regrind mills liners performed during the third quarter of 2017 and increased mill reliability projects performed in the first nine months of 2017. In addition, costs for labour were higher in 2017 ($0.4 million) due to a new collective agreement and strengthening of the local currency.

Site support Costs (First Nine Months 2017 compared to First Nine Months 2016):
Site support costs in the first nine months of 2017 totaled $32.5 million compared to $31.8 million in the comparative year. Site support costs increased due to higher labour costs resulting from the collective bargaining agreement and strengthening of local currency.

Other Cost movements
DD&A associated with sales, decreased to $106.0 million in the first nine months of 2017, from $120.1 million in the comparative period of 2016. The overall depreciation costs were comparable after adjusting for the $18.4 million reversal of a non-cash inventory impairment recognized during the first nine months of 2016.

All-in sustaining costs on a by-product basis per ounce sold, which excludes revenue-based tax, was $782 for the first nine months of 2017 compared to $695 in the first nine months of 2016, representing an increase of 12%. The increase is due to $67.4 million higher capitalized stripping costs, which resulted from capitalizing 113.5 million tonnes from cut-back 18 in the Central pit and the Sarytor Pit in the first nine months of 2017, compared to 45.5 million tonnes from cut-back 18 in the comparative period of 2016. This was partially offset by 14,931 more ounces sold during the first nine months of 2017.

Including revenue-based taxes, all-in sustaining costs on a by-product basis per ounce sold was $956 for the first nine months of 2017 compared to $874 in the first nine months of 2016. The increase is due to higher all-in sustaining costs (explained above) partially offset by lower growth capital expenditures.

Mount Milligan Mine

The Mount Milligan Mine is an open pit mine located in north central British Columbia, Canada producing a gold and copper concentrate. Production at Mount Milligan is subject to a streaming arrangement with Royal Gold pursuant to which Royal Gold is entitled to receive 35% of the gold produced and 18.75% of the copper production at our Mount Milligan project. Royal Gold pays Centerra $435 per ounce of gold delivered and 15% of the spot price per metric tonne of copper delivered (the "Royal Gold Stream Arrangement").

⁽¹⁾ No comparative results for Mount Milligan have been presented. Reporting of comparative information will start in the fourth quarter of 2017, from date of acquisition (October 20, 2016).
⁽²⁾ Adjusted operating costs per ounce sold, all-in sustaining costs (for gold and copper) on a by-product or co-product basis (excluding and including tax) per ounce sold, cash provided by operations before changes in working capital, payable copper produced, payable gold produced, as well as average realized price per unit sold (gold and copper), and capital expenditures (sustaining and growth) are non-GAAP measures and are discussed under "Non-GAAP Measures".
⁽³⁾ Operating costs (on a sales basis) is comprised of mine operating costs such as mining, processing, site and regional office administration, royalties and production taxes, but excludes reclamation costs and depreciation, depletion and amortization.
⁽⁴⁾ The average realized price of gold is a combination of market price paid by third parties and $435 per ounce paid by Royal Gold, while the average realized price of copper is a combination of market price paid by third parties and 15% of the spot price per metric tonne of copper delivered paid by Royal Gold, in each case under the Royal Gold Stream Arrangement.
⁽⁵⁾ Mount Milligan payable production and sales are presented on a 100% basis (the Royal Gold Stream Agreement entitles it to 35% and 18.75% of gold and copper sales, respectively). Under the Royal Gold Stream Arrangement, Royal Gold will pay $435 per ounce of gold delivered and 15% of the spot price per metric tonne of copper delivered. Payable production for copper and gold reflects estimated metallurgical losses resulting from handling of the concentrate and payable metal deductions, subject to metal content, levied by smelters. The current payable percentage applied is approximately 95.0% for copper and 96.5% for gold, which may be revised on a prospective basis after sufficient history of payable amounts is determined.

Third Quarter 2017
In the third quarter 2017, total payable gold production was 61,640 ounces while total payable copper production was 13.7 million pounds. Total gross gold sales, representing four concentrate shipments, were $74.4 million with a total of 74,585 ounces of gold sold at an average realized price^NG of $998 per ounce. Total gross copper sales for the quarter were $40.9 million with a total of 18.6 million pounds sold at an average realized price^NG of $2.19 per pound. The gold and copper sales include sales to Royal Gold under the Royal Gold Stream Arrangement as described above and the impact of hedging transactions.

During the third quarter, total mill throughput was 4.5 million tonnes and averaged 48,619 tonnes per day (tpd) in the quarter. During July and August mill throughput averaged 52,600 tpd, but in September mill throughput was significantly impacted primarily by lower-than-expected availability of pebble crusher #1 (72%, which impacted the hourly throughput rates) and other supporting or auxiliary equipment such as blocked tailings trench, the premature failure of SAG discharger liners, and repair of the reclaim water line. During the quarter, the SAG Mill was also down for 4.5 days, planned maintenance, to complete a full liner change in the last week of September. Mount Milligan continues to upgrade its mill maintenance functions with the overall objective to reduce breakdown maintenance from greater than 70% in the first quarter 2017 to less than 20% by the first quarter 2018. An experienced Maintenance Manager and two experienced Maintenance General Foremen have been hired, and proactive high performance planner and scheduler training is ongoing for all mill maintenance planning and reliability staff. Mount Milligan anticipates over time steady improvement in mill equipment availability as a result.

Mine production was 10.5 million tonnes during the quarter and averaged 114,580 tpd. Mined total tonnes (ore and waste) were slightly behind plan due to the reduced mill throughput and increased focus on tailings dam core construction.

After several months of intensive data generation and analysis, the geometallurgical (GeoMet) team was able to identify significant relationships and trends between various complex ore types to mill throughput and recovery. From these studies, short- and long-term block models have been built to predict mill throughput, metal content, alteration, float speed, copper and gold recoveries, and concentrate production. These models are being monitored, validated and beginning to be used in mine planning and scheduling forecasts. Mineralogical limits of single-feed ore have been defined, and resulting ore blend parameters have been put into practice. As a result of these on-going projects, Mount Milligan expects to be able to more accurately predict and maximize future metal production.

In conjunction with the GeoMet program, mine engineering initiatives in drilling and blasting to target optimum fragmentation and particle size distribution for mill feed will continue into the fourth quarter.

Mount Milligan has worked closely with corporate and external consultants to develop and prioritize projects for expansion of the flotation circuit to improve metal recoveries. Continuous improvement initiatives to improve mill circuit efficiencies were undertaken such as improved process control through froth crowder installations, equipm