Centerra Gold Annual Report 2017

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5215 SD Centerra AR 2017_OK.qxp_Layout 1 2018-03-19 9:14 PM Page 1

Building
for
Tomorrow

s
s
e
m
e
K

Mount Milligan

Öksüt

K
u
m
t
o
r

Built
for Today

CENTERRA GOLD INC. ANNUAL REPORT 2017

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CORPORATE PROFILE

Centerra Gold is a Canadian-based

gold mining company engaged

in operating, developing, acquiring

and exploring gold properties in

North America, Asia and other

markets worldwide.

The Company operates two

flagship assets, the Mount Milligan

Mine in British Columbia, Canada

and the Kumtor Mine in the

Kyrgyz Republic and is the largest

Western-based gold producer

in Central Asia.

In 2017, Centerra Gold

(“Centerra”) produced

785,316 ounces of gold and

53.6 million pounds of copper

from its two operations.

Centerra’s objectives are to build

shareholder value by maximizing

the potential of its current

properties, deliver profitable

growth through the development

of its late-stage properties such

as Öksüt, Kemess Underground,

Kemess East, Gatsuurt and

Greenstone, add additional

exploration properties and

exploration joint ventures and

continue to increase its reserves

and resources.

Centerra’s shares trade on

the Toronto Stock Exchange (TSX)

under the symbol CG.

The Company is headquartered

in Toronto, Ontario, Canada.

CAUTIONARY NOTE

REGARDING

FORWARD-LOOKING

STATEMENTS

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, see

page 82. For a detailed discussion

of such risks and other factors, see

the Management’s Discussion and

Analysis (MD&A) included in this

Annual Report and the Company’s

most recent Annual Information

Form which is available on SEDAR.

All dollar amounts are expressed

in U.S. dollars in this report, except

as otherwise indicated.

CenterraGold

A Diversified
Portfolio with
a Balanced
Geographical
Profile

s
n
o

i
l
l
i

m
$
S
U

1,400

1,200

1,000

800

600

400

200

■ Retained Earnings ■ Cumulative Dividends ••• Gold Price

RETAINED EARNINGS PROFILE

2,000

1,600

1,200

800

400

)
z
o

$
S
U

(

e
c
i
r
p

o
G

Mongolia
2%

U.S.
2%

Australia
1%

Turkey
9%

Canada
53%

Kyrgyz
Republic

33%

CONSENSUS
NET ASSET VALUE
BREAKDOWN

CENTERRA GOLD INC. ANNUAL REPORT 2017

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8 9

Turkey

Mongolia

Kyrgyz Republic

Canada

United States

Development
2 Öksüt Project

Development
3 Gatsuurt Project

Operation
4 Kumtor Mine

Operation

Molybdenum Assets

5 Mount Milligan

12 Thompson Creek

Boroo Mine
Au

Mine
Au, Cu

Australia
Producing
Royalty Asset
1 Fosterville Mine

(2.0% NSR)
Au

Mine
Mo

13 Langeloth

Metallurgical
Facility
Mo

Operations

Development

Producing Royalty Assets

Molybdenum Assets

CORPORATE HIGHLIGHTS

(cid:0) Internationally Diversified Gold Producer

(cid:0) Two Cornerstone Lower-Cost Quartile Assets

(cid:0) 2017 Gold Production 785,000 ounces at AISC1 of $688 per ounce sold

and 53.6 million lbs of copper

(cid:0) January 2018, Completed Acquisition of AuRico Metals Inc.;

Received Öksüt Pastureland Permit

(cid:0) February 2018, Received Investment Incentive Certificate

and the Board’s Construction Approval for the Öksüt Project

(cid:0) Significant Operational Cash Flow Profile;

Cash Provided by Operations Totalled $501 million in 2017

(cid:0) Cash Position of $417 million at December 31, 2017

(cid:0) Positive Retained Earnings of $1.07 billion at Year-end

(cid:0) Expected 2018 Production of 645,000 to 715,000 ounces of gold at AISC1

of $799 to $885 per ounce and 47 to 52 million lbs of copper

1) All-in sustaining costs on a by-product basis per ounce sold (AISC) is a non-GAAP measure discussed

under “Non-GAAP Measures” in the Company’s MD&A and news release February 23, 2018.

CENTERRA GOLD INC. ANNUAL REPORT 2017

Development

6 Greenstone Project

(50%)
Au

7 Kemess

Underground and
East Projects
Au, Cu

Producing
Royalty Assets
8 Hemlo-Williams

Mine
(0.25% NSR)
Au

9 Eagle River Mine

(0.5% NSR)
Au

10 Young-Davidson

Mine
(1.5% NSR)
Au

Molybdenum Asset

11 Endako Mine

(75%)
Mo

FINAL_Centerra AR 2017_SINGLES_Mar 21.qxp_Layout 1 2018-03-21 4:13 PM Page 1

CEO’S MESSAGE

Building for Tomorrow

2017 was a remarkable year for Centerra,

we completed the roll out of our safety

water. Once sufficient water became available we

restarted the mill in early February 2018 at half capacity

leadership program Work Safe - Home Safe across all our

and expect to return to full capacity after the spring melt

assets and business units, we had a full year of production

(usually occurring in April).

from our Mount Milligan Mine, the Kumtor Mine had

another strong year exceeding its revised production

On the financial front in 2017, Centerra had a very strong

guidance and beating its all-in sustaining cost1 guidance,

year in terms of profitability, reporting net earnings

we reached a comprehensive settlement agreement

of $209.5 million or $0.72 per share (basic). In terms of

with the Kyrgyz Government which resolved all the

cash flow on a Company-wide basis, we generated

outstanding matters affecting the Kumtor Project and

approximately $501 million in cash flow from operations

we announced the friendly acquisition of AuRico Metals

or $1.72 per share, a very strong result. The Kumtor Mine

Inc. which closed on January 8, 2018. While we achieved

itself, at the actual operating asset level, generated

good overall safety and environmental performance

$188 million of free cash flow1 driven by a higher gold

statistics in 2017, they were overshadowed by the death

output. At the Mount Milligan Mine, we generated free

of one of our colleagues at Kumtor in an incident with

cash flow1 of $127 million, reflecting a full year of

a light duty vehicle.

production. At the end of the year, the Company

reported $417 million of cash, cash equivalents, restricted

During 2017, Centerra produced 785,316 ounces of gold

cash and short-term investments and with the strong

at all-in sustaining costs on a by-product basis of $688 per

performance from the operations transitioned to a net

ounce sold1 achieving our overall gold production

positive cash position of $119 million at year-end.

guidance and beating the low-end of our cost guidance.

Kumtor had another strong year exceeding its revised

As I mentioned earlier, in September 2017 we achieved

gold production guidance and beating its cost guidance,

an important milestone when we reached a

delivering 562,749 ounces of gold production at all-in

comprehensive settlement agreement with the Kyrgyz

sustaining cost on a by-product basis of $698 per ounce

Government to resolve all of the outstanding matters

sold1. At Mount Milligan, the mine met its cost guidance

affecting the Kumtor Project. It provided for the lifting of

realizing an all-in sustaining cost on a by-product basis

all restrictions on the freedom of movement of Kumtor

of $505 per ounce sold1 but fell short of its gold and

employees, the restrictions on the ability of Kumtor to

copper production guidance producing 222,567 ounces

distribute funds to Centerra, as well as, a path was created

of gold and 53.6 million pounds of copper. Regrettably,

for the termination of the legal proceedings affecting the

late in the year we had to temporarily shutdown

Kumtor Project. The settlement included a one-time lump

Mount Milligan’s mill due to a shortage of fresh reclaim

sum contribution of $50 million (upon closing) to a new

1 Non-GAAP measure, see discussion under “Non-GAAP Measures”.

government-administered Nature Development Fund,

CENTERRA GOLD INC. ANNUAL REPORT 2017

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Turkey

(cid:0)

Pastureland Permit received January 2018

Investment Incentive Certificate and Board approval received February 2018

Construction expected to start in April 2018

Öksüt Project: High Margin Open Pit Heap Leach Gold Project

The Öksüt Gold Project is located in

the district of Develi in Kayseri Province

in the Central Anatolia Region, Turkey.

The project site is approximately 300 km

southeast of Ankara and approximately

45 km south of the city of Kayseri.

a $7 million payment to a Cancer Care Support Fund and

Project in British Columbia, to our growth pipeline

within 12 months of closing making a further one-time

and a high quality positive cash flow generating royalty

payment of $3 million to the Cancer Care Support Fund.

portfolio to the Company’s asset mix. With this

The agreement also provides business certainty for future

acquisition the Company continues to favourably

mining operations at the Kumtor Project, as it preserves

reposition its geographic profile by adding a future

all rights of Centerra and Kumtor under the Kumtor

cornerstone asset, the Kemess Project located in Canada.

Project Agreements. Further details and a full description

Now, on a consensus basis, more than half of Centerra's

of the settlement agreement can be found in “Other

value is domiciled in North America.

Corporate Developments – Kyrgyz Republic – Strategic

Agreement” in the accompanying Management’s

In Turkey, our Öksüt Project received its final permit

Discussion and Analysis.

needed for development, an investment incentive

certificate from the Turkish Ministry of Economy which

During 2017, the Company completed and filed an

provides the project certain tax incentives and Board

updated technical report on the Gatsuurt Project. We

approval for construction. We expect to commence

have not made a development or construction decision

construction at Öksüt in April this year and anticipate first

on the project but expect to restart negotiations with

gold production in the first quarter of 2020. This will

the Mongolian Government based on the results of the

represent our third operating asset and a third source of

new technical report.

profitable low-cost production.

On the Greenstone Gold Property, during 2017, work

At the Corporate level in early 2018 we restructured

continued on minimizing the risk profile of the project.

our debt into a new four-year senior secured $500 million

The Environmental Impact Study and Environmental

revolving credit facility from which we have drawn

Assessment were completed and submitted to the

$315 million. With this new credit facility, our existing

government agencies and discussions with the applicable

cash reserves and our expectation for continued profitable

Aboriginal communities on mutually beneficial impact

production, we believe that our business plan and future

benefit agreements were advanced.

growth can all be funded internally.

Looking forward in 2018, we want to maintain the

For 2018, we are estimating Company-wide gold

momentum built in 2017. In January, we closed

production to be in the range of 645,000 to 715,000

the AuRico Metals acquisition which has added a de-risked

ounces. Additionally, we are expecting 47 million to

late-stage brownfield project, the Kemess Underground

52 million pounds of payable copper production from

Mount Milligan for the year. At Kumtor, we are expecting

CENTERRA GOLD INC. ANNUAL REPORT 2017

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Canada

(cid:0)

De-risked Brownfield Project approximately 280 km northwest of the Mount Milligan Mine

Kemess Underground Environmental Assessment received Q1 2017

First Nations Impact Benefit Agreement received Q2 2017

Kemess
Underground Project: Large, Low-Cost Gold and Copper Project

The Kemess Project is located in north-central British

Columbia, Canada approximately 250 km north of

Smithers and 430 km northwest of Prince George.

The property is host to the former Kemess South

Mine, the Kemess Underground Deposit and

the Kemess East Deposit. The Kemess Underground

Deposit lies approximately 6.5 km north of the

existing processing plant and other infrastructure.

gold production to be weighted more towards the

capital is planned for pre-construction activities at the

back-half of the year with approximately 45% of its gold

Kemess Underground Project which includes the purchase

production expected in the fourth quarter of 2018.

of a water treatment and water discharge system. Total

At Mount Milligan we expect 60% of the production

capitalized stripping costs related to the development of

to be in the second half of the year, reflecting the mill

the open pit at Kumtor in 2018 are estimated to be

returning to full capacity when additional fresh water

$168 million of which $122 million is the cash component.

becomes available from the spring melt. In the second

half of 2018, we expect Mount Milligan to achieve

We will continue our commitment to global exploration,

an average daily mill throughput of approximately

with an exploration budget of $17 million in 2018.

55,000 tonnes per calendar day.

Exploration and business development activities will focus

on our existing properties and joint ventures in Armenia,

Company-wide our all-in sustaining costs on a by-product

Canada, Mexico, Mongolia, Nicaragua, Sweden, Turkey,

basis for 2018 are expected to be in the range of

and expand into new regions to meet the long-term

$799 to $885 per ounce sold. “All-in sustaining costs”

growth targets of Centerra.

is a non-GAAP measure and includes our sustaining capital

and corporate costs on a consolidated basis, but excludes

We congratulate our employees for their continued

growth capital and taxes. It is more fully described in

commitment to maintaining the highest safety, health and

“Non-GAAP Measures” in the accompanying

environmental standards at our mines and for achieving

Management’s Discussion and Analysis.

the production goals of the Company. We look forward

to another strong year of profitable production at Kumtor

In 2018, we will continue to invest in our operating

and Mount Milligan, constructing the Öksüt Project

properties. Total capital expenditures excluding

in Turkey, advancing the Kemess Underground Project in

capitalized stripping are estimated to be $242 million,

British Columbia and the Gatsuurt Project in Mongolia,

which includes $100 million of sustaining capital and

continuing to de-risk the Greenstone Gold Project,

$142 million of growth capital. The majority of the

and lastly expanding our exploration program into

growth capital, approximately $82 million, will be spent at

new regions.

the Öksüt property where 2018 planned spending includes

haul road construction, waste dump preparation, main

access road construction, purchase of crusher equipment

and initiation of crusher construction, and various

earthworks activities for the heap leach pad, ADR plant,

administration and truck shop campus, and electrical

substation. Also approximately $36 million of growth

Scott G. Perry

President and
Chief Executive Officer

CENTERRA GOLD INC. ANNUAL REPORT 2017

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FINANCIAL AND OPERATING HIGHLIGHTS

Selected Annual Information ($ millions except as noted)

Revenue
Earnings from mine operations
Revenue-based taxes
Exploration and business development
Thompson Creek Metals Inc. acquisition and

integration expenses

AuRico Metals Inc. acquisition and integration expenses
Corporate administration
Impairment of goodwill
Asset impairment
Kyrgyz Republic settlement
Earnings from operations
Net earnings
Earnings per share – $ per share (basic)
Cash provided by operations
Cash flow per share – $ per share
Cash, cash equivalents and short-term investments

(including restricted cash)

Total assets
Gold produced – ounces
Gold sold – ounces
Copper produced – 000’s payable pounds
Copper sales – 000’s payable pounds
Adjusted operating costs – $ per oz sold (1)
All-in sustaining costs on a by-product basis – $ per oz sold (1)
All-in sustaining costs on a by-product basis

including taxes – $ per oz sold (1)

Average realized gold price (consolidated) – $ per oz sold (1)

2017

1,199
492
97
11

2
2
38
–
42
60
209
210
0.72
501
1.72

417
2,772
785,316
792,466
53,596
59,719
331
688

816
1,171

$
$
$
$

$
$
$

$
$
$
$
$
$
$

$
$

20162

758
331
96
13

12
–
28
–
–
–
167
152
0.60
371
1.48

409
2,655
598,677
580,496
10,399
9,467
346
682

849
1,228

$
$
$
$

$
$
$
$
$

$
$

2015

621
215
85
11

–
–
36
19
–
–
50
42
0.18
334
1.41

552
1,661
536,920
536,842
–
–
354
814

972
1,157

$
$
$
$

$
$

$
$
$
$
$

$
$

(1) Adjusted operating costs per ounce sold, all-in sustaining costs on a by-product basis per ounce sold, all-in costs on a by-product basis including taxes per ounce

sold and average realized gold price (consolidated) per ounce sold, are non-GAAP measures and are discussed under “Non-GAAP Measures” in the Management’s

Discussion and Analysis accompanying this Annual Report.

(2) 2016 results include results from Thompson Creek Metals operations (Mount Milligan and the Molybdenum group) from the date of acquisition (October 20, 2016)

to December 31, 2016.

GOLD MINERAL
RESERVES
(as at December 31)
(millions of contained
ounces of gold)

16.0 16.3

10.2

8.4

7.7

171

1) Includes acquisition of

AuRico Metals Inc.

17.5

15.0

12.5

10.0

7.5

5.0

2.5

0.0

GOLD
PRODUCTION
(thousands of ounces)

CASH FLOW
FROM OPERATIONS
($ millions)

691

621

599

537

800

700

600

500

400

300

200

100

785

500

484

501

376

371

334

400

300

200

100

CENTERRA GOLD INC. ANNUAL REPORT 2017

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MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)

Management’s
Discussion
and Analysis

For the Fiscal Year Ended December 31, 2017

CENTERRA GOLD INC. ANNUAL REPORT 2017

Centerra Gold Inc.
Management’s Discussion and Analysis (“MD&A”)
For the Period Ended December 31, 2017

The following discussion has been prepared as of February 22, 2018, 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 twelve months ended December 31, 2017 in comparison with the corresponding period ended
December 31, 2016. This discussion should be read in conjunction with the Company’s audited
consolidated financial statements and the notes thereto for the year ended December 31, 2017. The
consolidated financial statements of Centerra are prepared in accordance with International Financial
Reporting Standards (“IFRS”). In addition, this discussion contains forward-looking information regarding
Centerra’s business and operations. Such forward-looking statements involve risks, uncertainties and other
factors that could cause actual results to differ materially from those expressed or implied by such forward
looking statements. See “Risk Factors” and “Caution Regarding Forward-Looking Information” in this
discussion. All dollar amounts are expressed in United States dollars (“USD”), except as otherwise
indicated. Additional information about Centerra, including the Company’s most recently filed Annual
Information Form, is available at www.centerragold.com and on the System for Electronic Document
Analysis and Retrieval (“SEDAR”) at www.sedar.com.

All references in this document denoted with NG, indicate a non-GAAP term which is discussed
under “Non-GAAP Measures” and reconciled to the most directly comparable GAAP measure.

2017-AR-Combined_MDA+FS.pdf - p1 (March 7, 2018 23:00:42)

1CENTERRA GOLD INC. ANNUAL REPORT 2017TABLE OF CONTENTS

Overview .........................................................................................................................................3
Economic Indicators ......................................................................................................................6
Liquidity..........................................................................................................................................8
Mineral Reserves and Mineral Resources .................................................................................11
Consolidated Financial and Operational Highlights ................................................................15
Overview of Consolidated Results ....................................................................................16
Cash Generation and Capital Management ....................................................................18
Financial Instruments ..................................................................................................................20
Operating Mines and Facilities ...................................................................................................21
Consolidated Fourth Quarter Results – 2017 Compared to 2016 ...........................................29
Development Projects ..................................................................................................................31
Balance Sheet ................................................................................................................................32
Contractual Obligations ..............................................................................................................33
Other Financial Information –Related Party Transactions.....................................................34
Quarterly Results – Previous Eight Quarters ...........................................................................35
Other Corporate Developments..................................................................................................36
Accounting Estimates, Policies and Changes ............................................................................41
Disclosure Controls and Procedures/Internal Control Over Financial Reporting ................41
2018 Outlook.................................................................................................................................42
Non-GAAP Measures ..................................................................................................................49
Qualified Person & QA/QC ........................................................................................................56
Risks That Can Affect Our Business ..........................................................................................57
Caution Regarding Forward-Looking Information .................................................................82

2017-AR-Combined_MDA+FS.pdf - p2 (March 7, 2018 23:00:43)

2CENTERRA GOLD INC. ANNUAL REPORT 2017Overview

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

Centerra’s common shares are listed for trading on the Toronto Stock Exchange under the symbol CG. As
of February 22, 2018, there are 291,785,970 common shares issued and outstanding and options to acquire
4,816,297 common shares outstanding under its stock option plan.

As of December 31, 2017, Centerra’s significant subsidiaries are as follows:

Entity

Kumtor Gold Company (“KGC”)

Thompson Creek Metals Company Inc.

Property - Location

Kumtor Mine - Kyrgyz
Republic

Mount Milligan Mine -
Canada

Current
Status

Property
Ownership
2017

2016

Operation

100%

Langeloth Metallurgical Company LLC

Langeloth - United States

Operation

100%

(Molydbenum Processing Plant)

Boroo Gold LLC ("BGC")

Boroo Mine - Mongolia

Stand-by

100%

Centerra Gold Mongolia LLC

Gatsuurt Project - Mongolia Pre-Development

100%

Öksüt Madencilik A.S. (“OMAS”)

Öksüt Project - Turkey

Pre-Development

100%

Greenstone Gold Mines LP

Thompson Creek Mining Co.

Greenstone Gold Property -
Canada

Pre-development

50%

Thompson Creek Mine -
United States

Care and
Maintenance

100%

Thompson Creek Metals Company Inc.

Endako Mine - Canada

Care and
Maintenance

75%

On January 8, 2018, the Company completed the acquisition of AuRico Metals Inc. (“AMI”), thereby
acquiring AMI’s Kemess Underground and Kemess East properties as well as a royalty portfolio which
includes a 1.5% net smelter return (“NSR”) royalty on the Young-Davidson gold mine in Ontario and a
2.0% NSR royalty on the Fosterville mine in Australia. See “Subsequent to December 31, 2017” for further
information.

As at December 31, 2017, the Company has also entered into agreements to earn an interest in joint venture
exploration properties located in Mexico, Sweden and Nicaragua. In addition, the Company has exploration
properties in Armenia, Canada and Turkey.

Substantially all of Centerra’s revenues are derived from the sale of gold and copper. The Company’s
revenues are derived from gold and gold/copper concentrate production from its mines and gold and copper

2017-AR-Combined_MDA+FS.pdf - p3 (March 7, 2018 23:00:43)

3CENTERRA GOLD INC. ANNUAL REPORT 2017prices realized upon the sale of these products. Gold doré production from the Kumtor mine is purchased
by Kyrgyzaltyn JSC (“Kyrgyzaltyn”), a Kyrgyz Republic state owned refinery and significant shareholder
of Centerra, for processing at its refinery in the Kyrgyz Republic while gold and copper concentrate
produced by the Mount Milligan mine in Canada is sold to various smelters and off-take purchasers.

The Mount Milligan Mine in Canada is subject to a streaming arrangement whereby RGLD Gold AG and
Royal Gold Inc. (collectively “Royal Gold”) is entitled to purchase 35% of the gold and 18.75% of the
copper produced from the Mount Milligan Mine for $435 per ounce of gold delivered and 15% of the spot
price per metric tonne of copper delivered (the “Mount Milligan Streaming Arrangement”).

The Company’s costs are comprised primarily of operating costs at the Kumtor and Mount Milligan mines
and the Langeloth molybdenum processing facility, project development costs at the Öksüt Gold Project
and the Greenstone Gold Property, closure and holding costs of the Boroo Mine (a majority of the Boroo
infrastructure is on stand-by pending progress on the Gatsuurt Gold Project), care and maintenance costs at
the Company’s molybdenum mines (Endako Mine and Thompson Creek Mine), exploration expenses
relating to the Company’s own projects and its earn-in projects, administrative costs from offices worldwide
and depreciation, depletion and amortization (“DD&A”).

There are many operating variables that affect the cost of producing an ounce of gold and a pound of copper.
In the mine, unit costs are influenced by the ore grade and the stripping ratio. The stripping ratio is the ratio
of the tonnage of waste material which must be removed per tonne of ore mined. Ore grade refers to the
amount of gold and/or copper contained in a tonne of ore. The significant costs of mining include labour,
diesel fuel and equipment maintenance.

At the mill, costs are impacted by the ore grade and the metallurgical characteristics of the ore, which can
impact gold and copper recovery. For example, a higher grade ore would typically result in a lower unit
production cost. The significant costs of milling are labour, energy, grinding media, reagents, consumables
and mill maintenance.

Mining and milling costs are also affected by the cost of labour, which depends mostly on the availability
of qualified personnel in the region where the operations are located, the wages in those markets, and the
number of people required. Mining and milling activities involve the use of many materials. The varying
costs of acquiring these materials and the amount used in the processing of the ore also influence the cash
costs of mining and milling. The non-cash costs (namely DD&A) are influenced by the amount of capital
costs related to the mine’s acquisition, development and ongoing capital requirements and the estimated
useful lives of capital items.

2017-AR-Combined_MDA+FS.pdf - p4 (March 7, 2018 23:00:43)

4CENTERRA GOLD INC. ANNUAL REPORT 2017Figure A

Centerra Production Costs - 2017

Kumtor Production Costs - 2017

Mount Milligan Production Costs - 2017

$71
$71

$65
$65

$44
$44

2017
Total
$551M

$81
$81

$64
$64

$160
$160

$66
$66

12%
12%

2017
Total
$332M

7%
7%

4%
4%

14%
14%

34%
34%

15%

22%

19%

2017
Total
$219M

15%
15%

14%
14%

14%

16%

Labour costs

Equipment & Materials

Diesel Other Consumables

Energy

Third party services & freight

Other costs

In Figure A, the Company’s 2017 production costsNG at its two operating mines totaled $551 million, which
includes a full year of production at Mount Milligan. Production costs at Kumtor were 3% lower than 2016
($332 million in 2017 compared to $343 million in 2016). The reduction reflects the impact of lower input
prices (mainly for consumables) and the varying levels of production in both years. These impacts on costs
are discussed in the operational sections of this MD&A. There is no comparable data for Mount Milligan
as the Company acquired the asset on October 20, 2016.

Over the life of each mine, another significant cost that must be planned for is the closure, reclamation and
decommissioning of each operating site. In accordance with standard practices for international mining
companies, Centerra carries out remediation and reclamation work during the operating period of the mine,
where feasible, in order to reduce the final decommissioning costs. Nevertheless, the majority of
rehabilitation work can only be performed following the completion of mining operations. Centerra’s
practice is to record the estimated final decommissioning costs based on conceptual closure plans, and to
accrue these costs according to the principles of IFRS. Kumtor has established a reclamation trust fund to
pay for these costs (net of forecast salvage value of assets) from the revenues generated over the life of
mine. At Boroo, 50% of the upcoming year’s annual environmental budget is deposited by Boroo into a
government account and such funds are recovered by Boroo during the mine closure phase after completion
of the annual environmental commitments. As required by Canadian provincial laws and US federal and
state laws, the Company has provided reclamation bonds for mine closure obligations at its Canadian and
U.S. sites, including the Mount Milligan Mine.

The Company reports the results of its operations in U.S. dollars, however not all of its costs are incurred
in U.S. dollars. As such, the movement in exchange rates between currencies in which the Company incurs
costs and the U.S. dollar also impact reported costs of the Company.

2017-AR-Combined_MDA+FS.pdf - p5 (March 7, 2018 23:00:43)

5CENTERRA GOLD INC. ANNUAL REPORT 2017
Economic Indicators

Gold Price

Copper Price

The average quarterly gold spot price of $1,275
in the fourth quarter was in-line with the 2017
quarterly high of $1,278 reached in third quarter.
The average gold spot price for 2017 was $1,258
per ounce, an increase of 1% over the average in
2016.

The average quarterly copper spot price increased in the
fourth quarter to $3.09 per pound, the highest quarterly
average of 2017, from $2.88 per pound in the third
quarter. The average copper spot price for 2017 was
$2.80 per pound, an increase of 27% over the average
in 2016.

Figure B

Figure C

Average Quarterly Gold Prices

Average Quarterly Copper Prices
(London Bullion Market, average day close)

1,260

1,183

1,335

1,221

1,222

1,278

1,257

1,275

1,400

1,350

1,300

1,250

1,200

1,150

1,100

1,050

1,000

3.2

3.0

2.8

2.6

2.4

2.2

2.0

2.15

2.40

2.12

2.17

2.88

3.09

2.65

2.57

Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17

Currency

Figure D

Canadian dollar

Kyrgyz Som

CDN Exchange Rate to 1 USD

KGS Exchange Rate to 1 USD

1.40

1.35

1.30

1.25

1.20

Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17

Canadian Dollar

The Canadian dollar, despite starting the year under pressure, and facing the prospects of a widening rate
disadvantage with the U.S., saw a 7% gain against the U.S. dollar during 2017 (1.34 to 1.25). With the
exception of the U.S. dollar, the Canadian dollar underperformed against other major currencies. In
Canada, the Bank of Canada raised its overnight rate twice, from 0.5% to 1%, and suggested it is beginning

2017-AR-Combined_MDA+FS.pdf - p6 (March 7, 2018 23:00:43)

6CENTERRA GOLD INC. ANNUAL REPORT 2017

a tightening phase although it continues to be cautious on concerns surrounding ongoing NAFTA
negotiations. The Canadian dollar is highly exposed to fluctuations in crude oil prices due to the country’s
status as a major exporter of oil. Energy prices are predicted to remain strong in the short term and interest
rates to increase through 2018, which may help prevent potential depreciation of the Canadian dollar.

Kyrgyz Som

The Kyrgyz Som to U.S. dollar exchange rate appreciated 1% over 2017. The Som continues to be
influenced by the strengthening of currencies of the Kyrgyz Republic’s main trading partners, mainly
Russia, and by economic growth in the Kyrgyz Republic. In 2017, the Russian Ruble and Kazak Tenge,
strengthened against the U.S. dollar by 5% and 2%, respectively. The strengthening in the Russian ruble
reflects higher oil prices and Russia’s improving economic situation. Independent of the performance of
the Kyrgyz Republic’s main trading partners, economic growth in the Kyrgyz Republic in 2017 can be
attributed to increases in gold mining, manufacturing, electricity generation and construction.

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 Canada, where the Mount Milligan Mine and its corporate head office are also
located, the Kyrgyz Republic, Turkey, Mongolia and the United States of America. During 2017, the
Company
totalling approximately $1,066
million. Approximately $567 million of this (53%) was in currencies other than the U.S. dollar (Figure
F). The percentage of Centerra’s non-U.S. dollar costs, by currency was, on average, as follows:

incurred combined expenditures (including capital)

Figure F

5%
5%

40%

Cdn dollar

Kyrgyz Som

2% 1% 1%

2017 Non-U.S Spending (Figure F)

In 2017, Centerra’s non-U.S. dollar
costs were incurred 51% in Canadian
dollars, 40% in Kyrgyz soms, 5% in
Euros, 2% in Mongolian tugrik and
1% in Turkish lira. The average value
of the Turkish lira depreciated against
the U.S. dollar over the year by
approximately 3% from its value at
December 31, 2016. The Euro,
Canadian dollar, Mongolian tugrik
and Kyrgyz som appreciated against
the U.S. dollar by approximately 7%,
3%, 2%, and 1%, respectively, from
their value at December 31, 2016.
The net impact of these movements in the year ended December 31, 2017, after taking into account
currencies held at the beginning of the year, was to increase annual costs by $9.1 million (increase of $16
million in the year ended December 31, 2016), inclusive of a foreign exchange gain on Canadian dollars
acquired in the fourth quarter of 2017 due to the anticipated closing of the acquisition of AMI in January
2018 ($3.0 million) and currency derivative gain of $1.2 million (nil for the year ended December 31, 2016).

Mong Tugrik

Turkish Lira

Others

51%
51%

Euro

Diesel Fuel Prices

One of the most significant movements in commodity prices in 2017 was the continued strengthening of
oil prices.

2017-AR-Combined_MDA+FS.pdf - p7 (March 7, 2018 23:00:43)

7CENTERRA GOLD INC. ANNUAL REPORT 2017
According to the U.S. Energy Information Administration, based on the global benchmark North Sea Brent,
crude oil prices ended 2017 at $65/bbl the highest end-of-year price since 2013. Brent prices have increased
$10/bbl since the end of 2016. West Texas Intermediate (“WTI”) crude oil prices averaged $51/bbl in 2017,
up $7/bbl from the 2016 average, and ended the year $6/bbl higher than at the end of 2016.

Figure

Kumtor Diesel Cost to Oil Prices

$/bbl
$ 70

$ 65

$ 60

$ 55

$ 50

$ 45

$ 40

$ 35

$ 30

Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17

Fuel costs represent a significant cost component for
Centerra’s mining operations. Prices for Kumtor diesel
fuel in 2017 generally reflected the price movements of
Brent crude oil, which dipped downward during
summer months of 2017 and then gradually started
increasing towards the end of the year. On average, the
purchase prices for diesel fuel for Kumtor were up 8%
in 2017 compared with 2016, averaging $0.41/l for the
year. Kumtor sources its fuel from Russia either directly
or through Kyrgyz distributors. Kumtor’s diesel prices
include added costs for other factors such as seasonal
premiums
fuel and
for winterizing of diesel
transportation costs from the Russian refineries.

Kumtor Diesel Price ($/bbl)
Oil (Brent) Price ($/bbl)

To manage its exposure to fluctuations in diesel fuel
prices, the Company has established a diesel fuel price hedge program. See “Financial Instruments – Fuel
Hedges”.

Liquidity

Financial liquidity provides the Company with the ability to fund future operating activities and
investments. The Company’s financial risk management policy focuses on cash preservation, while
maintaining the liquidity necessary to conduct operations on a day-to-day basis. The Company manages
counterparty credit risk, in respect of cash and short-term investments, by maintaining bank accounts with
highly-rated U.S. and Canadian banks and investing only in highly-rated Canadian and U.S. Government
bills, term deposits or banker’s acceptances with highly-rated financial institutions, and corporate direct
credit of highly-rated, highly-liquid issuers.

Centerra generated $500.9 million in cash from operations in 2017 and has a balance of cash, cash
equivalents and short-term investments of $415.9 million as at December 31, 2017.

As at December 31, 2017, the Centerra B.C. Facility, which was entered into as part of the acquisition of
Thompson Creek, had an outstanding balance of $190 million at December 31, 2017, after repayments of
$135 million in 2017 (outstanding balance as at December 31, 2016 - $325 million). Subsequent to
December 31, 2017, this facility was amended and restated to become a corporate facility (see Credit
Facility - Centerra Revolving Term Corporate Facility).

As at December 31, 2017, Centerra had drawn $76 million against its $150 million revolving line of credit
with the European Bank for Reconstruction and Development (“EBRD”). Subsequent to December 31,
2017, the funds drawn were repaid and the credit facility with EBRD was cancelled.

2017-AR-Combined_MDA+FS.pdf - p8 (March 7, 2018 23:00:44)

8CENTERRA GOLD INC. ANNUAL REPORT 2017The Company believes its cash on hand, cash flow from the Company’s Kumtor and Mount Milligan
operations and cash from the Company’s existing credit facilities will be sufficient to fund its anticipated
operating, construction and development cash requirements through to the end of 2018.

Capital Management

The Company’s primary objective with respect to its capital management is to provide returns for
shareholders by ensuring that it has sufficient cash resources to maintain its ongoing operations, pursue
and support growth opportunities, continue the development and exploration of its mineral properties,
satisfying debt repayment requirements and other obligations, and certain benefits for other stakeholders.

Management is aware that market conditions, driven primarily by metal prices, may limit the Company’s
ability to raise additional funds. The Company is also required to maintain a number of financial covenants
as part of its credit facilities, which may limit the Company’s ability to access future funding. These and
other factors are considered when shaping the Company’s capital management strategy.

Credit Facilities

Centerra was in compliance with the terms of all of its facilities at December 31, 2017.

Centerra EBRD Corporate Facility

In 2016, the Company entered into a five-year $150 million revolving credit facility (the “EBRD Facility”)
with EBRD. The EBRD Facility included $50 million for the purpose of funding direct and indirect costs
associated with the Gatsuurt Project. At December 31, 2017, the Company had drawn $76 million under
the EBRD Facility, after making $74 million of repayments in 2017.

Subsequent to December 31, 2017 and in connection with the entering into of the Corporate Facility, the
Company repaid the remaining $76 million principal amount outstanding under the EBRD Facility and
subsequently cancelled the EBRD Facility.

Centerra B.C Holdings Credit Facility

As part of the acquisition of Thompson Creek in October 2016, Centerra B.C. Holdings Inc., 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.

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. 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
precedents were satisfied, including the execution of hedges for 50% of the gold and 75% of the 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
term facility, the Company repaid the outstanding balance on the revolving facility ($74.4 million). As at
December 31, 2017, $190 million was drawn on the Centerra B.C. Facility ($190 million non-revolving

2017-AR-Combined_MDA+FS.pdf - p9 (March 7, 2018 23:00:44)

9CENTERRA GOLD INC. ANNUAL REPORT 2017term facility and nil from the revolving credit facility). See also “Centerra Revolving Term Corporate
Facility” below.

Subsequent to December 31, 2017, Centerra B.C. Facility was amended and restated in connection with the
Company entering into the Corporate Facility.

OMAS Facility

In 2016, OMAS, a wholly-owned subsidiary of the Company, entered into a $150 million five-year
revolving credit facility (the “OMAS Facility”) that currently expires on December 30, 2021. The purpose
of the OMAS Facility is to assist in financing the construction of the Company’s Öksüt Project.

Availability of the OMAS Facility is subject to customary conditions precedent, including receipt of all
necessary permits and approvals. If the conditions are not satisfied, waived or amended by the deadline
(noted below), the commitments under the OMAS Facility will be cancelled. The original deadline for
satisfaction of the conditions of June 30, 2017 has been extended several times given the delay in obtaining
necessary permits for the Öksüt Project. The current deadline is March 15, 2018, however OMAS and
lenders are currently negotiating to further extend the deadline to June 30, 2018. As part of these
negotiations, it is expected that the term of the facility will be extended beyond December 30, 2021 and
that Centerra will provide a guarantee of OMAS’s obligations under the OMAS Facility but that such
guarantee would only be effective if certain conditions relating to the tenure of the Öksüt mining license
are not satisfied by August 22, 2022.

As at December 31, 2017, $4.8 million (December 31, 2016 - $4.2 million) of OMAS Facility deferred
financing fees were included in prepaid expenses (note 10) as the Company has yet to draw from the facility.
The deferred financing fees are being amortized over the term of the OMAS Facility. The Company expects
to be in a position to draw on the OMAS Facility in the second quarter of 2018. See “Caution Regarding
Forward Looking information”.

AuRico Metals Inc. Acquisition Facility

Subsequent to the end of the year, on January 8, 2018, the Company announced it had acquired all of the
issued and outstanding common shares of AuRico Metals Inc. (“AMI”). The purchase was funded, in part,
by a new $125 million acquisition facility (“AuRico Acquisition Facility”) with the Bank of Nova Scotia,
as administrative agent, lead arranger and lender. The AuRico Acquisition Facility was repaid and cancelled
subsequent to December 31, 2017, after the Company entered into the Corporate Facility, as noted below.

Centerra Revolving Term Corporate Facility

On February 1, 2018, the Company entered into a $500 million four-year senior secured revolving credit
facility (the "Corporate Facility") with a lending syndicate led by The Bank of Nova Scotia and National
Bank of Canada.

The Corporate Facility is to be held at the corporate level and is an amendment and restatement of the
Centerra B.C. Facility (discussed above), which had an outstanding balance owed of $190 million
(continued under the Corporate Facility). The Corporate Facility also replaced the EBRD Facility and the
AuRico Acquisition Facility discussed above. The Corporate Facility is for general corporate purposes,
including working capital, investments, acquisitions and capital expenditures and as at February 22, 2018,
$315 million was drawn on the Corporate Facility.

2017-AR-Combined_MDA+FS.pdf - p10 (March 7, 2018 23:00:44)

10CENTERRA GOLD INC. ANNUAL REPORT 2017Mineral Reserves and Mineral Resources

On February 8, 2018, the Company released the results of the updated mineral reserve and mineral resource
estimates for the Kumtor mine, the Mount Milligan mine and re-iterated mineral reserve and mineral
resource estimates for the Company’s other projects, including the Hardrock deposit, all as of December
31, 2017. The release also included the Kemess Project which was acquired on January 8, 2018 as part of
the AuRico Metals Inc. acquisition. For additional details, please see the news release “Centerra Gold
2017 Year-End Statement of Mineral Reserves and Resources and Fourth Quarter Exploration Update”
filed on SEDAR and posted on the Company’s website on February 8, 2018.

Mount Milligan’s mineral reserves and mineral resources are presented on a 100% basis. Sales of gold and
copper from the Mount Milligan mine are subject to the Mount Milligan Streaming Arrangement whereby
Royal Gold is entitled to 35% and 18.75% of gold and copper sales respectively. Under the Mount Milligan
Streaming Arrangement this streaming arrangement, Royal Gold pays Centerra $435 per ounce of gold
delivered and 15% of the spot price per metric tonne of copper delivered.

Highlights:

Gold Mineral Reserves

• Centerra’s estimated proven and probable gold mineral reserves increased by 343,000 contained
ounces, after processing of 1.1 million contained ounces of gold in 2017 and the addition of 1.9
million contained ounces of gold as a result of the purchase of AuRico Metals which closed on
January 8, 2018. Centerra’s proven and probable mineral reserves now total an estimated 16.3
million ounces of contained gold (746.8 Mt at 0.7 g/t gold), compared to 16 million contained
ounces (673.4 Mt at 0.7 g/t gold) as of December 31, 2016. The 2017 year-end gold mineral
reserves have been verified and estimated using a gold price of $1,250 per ounce, except for the
Kumtor Mine and the Kemess Underground Project which used a gold price of $1,200 per ounce.
At the Kumtor Mine estimating gold mineral reserves using a gold price of $1,250 per ounce would
result in no material change to the contained ounces.

Gold Mineral Resources

• Centerra’s measured and indicated gold mineral resources, exclusive of gold mineral reserves,
increased by 2.8 million contained ounces compared to the December 31, 2016 estimate and are
now estimated to total 10.2 million ounces of contained gold (559.2 Mt at 0.6 g/t gold). The
increase is primarily a result of the inclusion of 3.2 million contained ounces of gold (1.5 million
contained ounces of gold from the Kemess Underground and 1.7 million contained ounces of gold
from the Kemess East deposit) as a result of the acquisition of AuRico Metals and the removal of
771,000 contained gold ounces of measured and indicated mineral resources from the ATO
property in Mongolia as a result of the sale of the property to Steppe Gold LLC and Steppe Gold
Limited.

• Centerra’s inferred gold mineral resource estimate totals 6.8 million contained ounces of gold (168
Mt at 1.3 g/t gold), an increase of 1.0 million contained ounces from December 31, 2016. The
increase is primarily a result of the inclusion of 917,000 contained ounces of gold (277,000
contained ounces of gold from the Kemess Underground and 640,000 contained ounces of gold
from the Kemess East deposit) as a result of the acquisition of AuRico Metals. In addition, at
Mount Milligan inferred mineral resources increased by 265,000 contained ounces of gold from
additional drilling.

2017-AR-Combined_MDA+FS.pdf - p11 (March 7, 2018 23:00:44)

11CENTERRA GOLD INC. ANNUAL REPORT 2017Gold (000s attributable ozs contained) (1)(4)(5)
Total proven and probable mineral reserves
Total measured and indicated mineral resources (2)
Total inferred mineral resources(2)(3)(4)

2017
16,321

10,204

6,819

2016
15,978

7,442

5,780

(1) Centerra’s equity interests are as follows: Mount Milligan 100%, Kumtor 100%, Gatsuurt 100%, Boroo 100%, Ulaan Bulag 100%, Öksüt
100%, Kemess Underground and Kemess East 100% and Greenstone Gold properties (Hardrock, Brookbank, Key Lake, Kailey) 50%. The
mineral reserves and mineral resources above reflect Centerra's equity interests in the applicable properties.
(2) Mineral resources are in addition to mineral reserves. Mineral resources do not have demonstrated economic viability.
(3) Inferred mineral resources have a great amount of uncertainty as to their existence and as to whether they can be mined economically. It
cannot be assumed that all or part of the inferred mineral resources will ever be upgraded to a higher category.
(4) Production at Mount Milligan is subject to a streaming agreement which entitles Royal Gold to 18.75% of copper sales from the Mount
Milligan Mine. Under the stream arrangement, Royal Gold will pay 15% of the spot price per metric tonne of copper delivered. Mineral
resources for the Mount Milligan property are presented on a 100% basis.

(5) As of January 8, 2018, Centerra Gold closed the acquisition of AuRico Metals Inc. The Kemess Underground and Kemess East reserves
and resources have been included in the Company’s annual mineral reserves and mineral resources statement above.

Copper Mineral Reserves

• Centerra’s proven and probable copper mineral reserves increased by 519 million pounds after
processing 72 million pounds of contained copper in 2017 and recording a negative model
adjustment of 40 million pounds at Mount Milligan, along with the addition of 630 million pounds
of contained copper as a result of the purchase of AuRico Metals which closed January 8, 2018.
Centerra’s proven and probable copper mineral reserves now total an estimated 2,568 million
pounds of contained copper (575.3 Mt at 0.202% copper), compared to an estimated 2,049 million
pounds of contained copper (496.2 Mt at 0.187% copper). The copper mineral reserves have been
estimated based on a copper price of $3.00 per pound for the Mount Milligan Mine and a copper
price of $2.50 per pound for the Kemess Underground Project.

Copper Mineral Resources

• Centerra’s measured and indicated copper mineral resources, exclusive of mineral reserves, total
an estimated 5,541 million pounds of contained copper (988 Mt at 0.254% copper). The copper
mineral resources are located at the Mount Milligan Mine, the Berg Property, the Kemess
Underground, and Kemess East properties that are all located in Canada.

• At Mount Milligan, measured and indicated mineral resources total an estimated 663 million
pounds of contained copper (229.7 Mt at 0.131% copper) at the end of December 2017 and have
been estimated based on a copper price of $3.50 per pound. In comparison to the end of December
2016 measured and indicated resources have decreased by 55 million contained copper pounds.

• The acquisition of AuRico Metals added the Kemess Underground and Kemess East projects to the
Company’s copper statement. Kemess added measured and indicated resources of an estimated
1,519 million contained copper pounds. This is based on Kemess Underground measured and
indicated resources of an estimated 565 million contained copper pounds (139 Mt at 0.184%
copper) and Kemess East measured and indicated resources of an estimated 954 million contained
copper pounds (113 Mt at 0.383% copper).

• Centerra’s inferred copper mineral resource estimate totals 1,427 million pounds of contained
copper (265.0 Mt at 0.244% copper). This includes at Mount Milligan an estimated 111 million
pounds of contained copper (35 Mt at 0.143% copper) that represents a year-over-year increase of
80 million pounds of contained copper that is largely attributable to additional in-pit drilling

2017-AR-Combined_MDA+FS.pdf - p12 (March 7, 2018 23:00:44)

12CENTERRA GOLD INC. ANNUAL REPORT 2017completed in 2017. The Company continues to build on this exploration success with additional
drilling planned in 2018.

• The Company’s inferred copper mineral resources also increased through the acquisition of AuRico
Metals whose inferred copper mineral resources are an estimated 583 million contained copper
pounds (85.4 Mt at 0.309% copper), including an estimated 105 million contained copper pounds
(21.6 Mt at 0.220% copper) at Kemess Underground and an estimated 478 million contained copper
pounds (63.8 Mt at 0.340% copper) at Kemess East.

Copper (million pounds contained) (1)(4)(5)
Total proven and probable mineral reserves(2)
Total measured and indicated mineral resources(2)
Total inferred mineral resources(2)(3)(4)

2017

2016

2,568

5,541

1,427

2,049

4,076

764

(1) Centerra’s equity interests are as follows: Mount Milligan 100%, Kemess Underground 100%, Kemess East 100%, Berg 100%, Thompson
Creek 100%, and Endako 75%. The mineral reserves and mineral resources above reflect Centerra's equity interest in the applicable properties.
(2) Mineral resources are in addition to mineral reserves. Mineral resources do not have demonstrated economic viability.

(3) Inferred mineral resources have a great amount of uncertainty as to their existence and as to whether they can be mined economically. It
cannot be assumed that all or part of the inferred mineral resources will ever be upgraded to a higher category.

(4) Production at Mount Milligan is subject to the Mount Milligan Streaming Arrangement. Under the Mount Milligan Streaming Arrangement,
Royal Gold will pay 15% of the spot price per metric tonne of copper delivered. Mineral resources for the Mount Milligan property are
presented on a 100% basis.

(5) As of January 8, 2018, Centerra Gold completed the purchase of AuRico Metals. The Kemess Underground and Kemess East reserves and
resources have been included in the Company’s annual mineral reserves and mineral resources statement set out above.

Molybdenum Mineral Resources

• Centerra’s measured and indicated molybdenum mineral resources, exclusive of mineral reserves,
total an estimated 758 million pounds of contained molybdenum (792 Mt at 0.043% molybdenum).
The molybdenum mineral resources are located at the Berg Property, the Thompson Creek Mine,
and the Endako Mine.

• Centerra’s inferred molybdenum mineral resource estimate totals 150 million pounds of

contained molybdenum (193 Mt at 0.035% molybdenum).

Molybdenum (million pounds contained) (1)(3)(4)

2017

2016

Total measured and indicated mineral resources(2)

Total inferred mineral resources(3)

758

150

557

108

(1) Centerra’s equity interests are as follows: Berg 100%, Thompson Creek 100%, and Endako 75%.
(2) Mineral resources are in addition to mineral reserves. Mineral resources do not have demonstrated economic viability.

(4) Molybdenum mineral resources at Berg were estimated using a molybdenum price of $10.00 per pound, at Thompson Creek and a
molybdenum price of $14.00 per pound was used.

2017-AR-Combined_MDA+FS.pdf - p13 (March 7, 2018 23:00:44)

13CENTERRA GOLD INC. ANNUAL REPORT 2017Material assumptions used to determine mineral reserves and mineral resources are as follows:

Gold price
Gold mineral reserves ($/oz) (1)
Gold mineral resources ($/oz) (2)

Copper price
Copper mineral reserves ($/lb) (3)
Copper mineral resources ($/lb) (4)

Foreign exchange rates
1 USD : Cdn$ (5)
1 USD : Kyrgyz som
1 USD : Mongolian tugriks
1 USD : Turkish Lira

2017

2016

$1,250

$1,450

$1,200

$1,450

$3.00

$3.50

1.25
65
2,200
3.50

$2.95

$3.50

1.30
65
1,900
2.50

(1) Kumtor and Kemess Underground were estimated based on a gold price of $1,200. At the Kumtor Mine estimating gold mineral reserves using
a gold price of $1,250 per ounce would result in no material change to the contained ounces.
(2) Mineral resources at the Kemess Underground and Kemess East projects were estimated based on a gold price of $1,275, while resources at
the Hardrock Project was estimated at Cdn$1,625.

(3) Copper mineral reserves at Kemess Underground were estimated using a copper price of $2.50 per pound.

(4) Copper mineral resources at the Kemess Underground and Kemess East projects were estimated using a copper price of $3.20 per pound
while resources at the Berg property was estimated at $1.60 per pound.

(5) Cdn$ exchange rate used for Kemess Underground and Kemess East were 1USD:1.33CAD; at the Hardrock Project a rate of
1USD:1.30CAD was used; at the Berg property a rate of 1USD:1.00CAD was used.

2017-AR-Combined_MDA+FS.pdf - p14 (March 7, 2018 23:00:44)

14CENTERRA GOLD INC. ANNUAL REPORT 2017Consolidated Financial and Operational Highlights

Unaudited ($ millions, except as noted)
Financial Highlights

Three months ended December 31,
2016 (5) % Change

2017

Year ended December 31,

2017

2016 (5) % Change
58%

757.8

Revenue

Cost of sales

Earnings from mine operations

Corporate administration
Asset Impairment (net of tax)
Kyrgyz Republic settlement
Gain on sale of ATO (net of tax)

Net earnings (loss)
Adjusted earnings (3)

Cash provided by operations
Cash provided by operations before changes in working capital (3)
Capital expenditures (sustaining) (3)
Capital expenditures (growth) (3)

Capital expenditures (stripping)

Total assets

Long-term debt and lease obligation

Cash, cash equivalents and restricted cash

Per Share Data
Earnings per common share - $ basic (1)
Earnings per common share - $ diluted (1)
Adjusted earnings per common share - $ basic (1)(3)
Adjusted earnings per common share - $ diluted (1)(3)

Per Ounce Data (except as noted)
Average gold spot price - $/oz(2)
Average copper spot price - $/lbs(2)
Average realized gold price (Kumtor) - $/oz(3)
Average realized gold price (Mount Milligan - combined) - $/oz(3)
Average realized gold price (Consolidated) - $/oz(3)

Operating Highlights

Gold produced – ounces

Gold sold – ounces

Payable Copper Produced (000's lbs)

Copper Sales (000's payable lbs)

358.2 $

180.8

170.4

6.3
0.7
-
(6.9)

130.0 $
108.7

170.4

159.9

29.3

7.2

31.9

305.7

167.2

132.0

9.3
-
-
-

63.6
68.6

170.4

133.4

15.0

4.5

58.3

17% $

1,199.0 $

29%

(32%)
0%
0%
0%

682.1

492.3

37.9
39.7
60.0
(6.9)

104% $
58%

209.5 $
281.0

(0%)

20%

96%

60%

(45%)

500.9

512.6

92.2

18.1

200.2

411.6

331.1

27.6
-
-
-

151.5
160.9

371.4

338.8

65.2

17.9

136.7

2,772.2 $

2,654.8

4% $

2,772.2 $

2,654.8

211.6

416.6

422.8

408.8

(50%)

211.6

416.6

422.8

408.8

0.45 $

0.43 $

0.37 $

0.36 $

1,275

3.10

1,262

1,005

1,197

0.23

0.24

1,222

2.40

1,206

861

1,154

97% $

92% $

53% $

48% $

29%

17%

0.72 $

0.96 $

1,258

2.80

1,245

1,003

1,171

0.60

0.64

1,248

2.21

1,251

861

1,228

216,752

242,228

12,261

13,105

248,479

225,996

10,399

9,467

(13%)

785,316

18%

38%

792,466

53,596

59,719

598,677

580,496

10,399

9,467

66%

49%

37%
0%
0%
0%

38%
75%

35%

51%

41%

46%

(50%)

19%

51%

27%

(0%)

17%

(5%)

31%

37%

415%

531%

Operating costs (on a sales basis) (3) (4)

132.0

81.8

61%

487.1

209.2

133%

Unit Costs
Operating costs (on a sales basis) - $/oz sold (3) (4)
Adjusted operating costs on a by-product basis - $/oz sold(3)(4)
Gold - All-in sustaining costs on a by-product basis – $/oz sold(3)(4)
Gold - All-in sustaining costs on a by-product basis (including taxes) –
$/oz sold(3) (4)

Gold - All-in sustaining costs on a co-product basis (before taxes) – $/oz
sold(3)(4)

Copper - All-in sustaining costs on a co-product basis (before taxes) –
$/pound sold(3)(4)

545 $

320 $

571 $

709 $

362

287

586

733

51% $

11% $

(3%) $

615 $

331 $

688 $

(3%) $

816 $

360

346

682

849

71%

(5%)

(4%)

593 $

632

(6%) $

737 $

700

1.70 $

1.65

3% $

1.47 $

1.65

(11%)

2017-AR-Combined_MDA+FS.pdf - p15 (March 7, 2018 23:00:44)

15CENTERRA GOLD INC. ANNUAL REPORT 2017(1) As at December 31, 2017, the Company had 291,782,846 common shares issued and outstanding (291,785,970 common
shares as of February 22, 2018). As of February 22, 2018, Centerra had 4,816,297 share options outstanding under its share
option plan with exercise prices ranging from Cdn$5.04 per share to US$36.74 per share, with expiry dates between 2018 and
2025.

(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, adjusted earnings per common shares (basic and diluted), capital expenditures (sustaining and growth),
operating costs (on a sales basis), adjusted operating costs on a by-product basis per ounce sold, gold all-in sustaining costs
on a by-product or co-product basis (excluding and including taxes) per ounce sold, copper all-in sustaining costs on a co-
product basis (before taxes) per pound sold, cash provided by operation before changes in working capital, as well as average
realized gold price per ounce (Kumtor, Mount Milligan – combined and Consolidated) are non-GAAP measures and are
discussed under “Non-GAAP Measures”.

(4) Excludes Molybdenum business.
(5) Comparative results for Thompson Creek operations (Mount Milligan and the Molybdenum group) have been presented from

the date of acquisition (October 20, 2016) to December 31, 2016.

Overview of Consolidated Results

Year ended December 31, 2017 compared to 2016

The Company recorded net earnings of $210 million in 2017, compared to $152 million in 2016. The
increase in earnings in 2017 reflects full-year operations at Mount Milligan, increased gold production at
Kumtor, due primarily to higher average mill gold head grades processed in the mill, partially offset by
lower realized gold prices. In addition, the 2017 earnings include charges for a settlement reached with the
Kyrgyz Republic Government of $60 million, an impairment charge relating to the Company’s Mongolian
assets of $41.3 million ($39.7 million net of tax), a tax benefit of $21.3 million due to new tax legislation
enacted in the United States and a gain of $9.8 million ($6.9 million net of tax) on the sale of the ATO
property in Mongolia. Excluding these items, adjusted earningsNG in 2017 were $281.0 million compared
to $160.9 million in the comparative year.

Production:
Gold production for 2017 totaled 785,316 ounces compared to 598,677 ounces for 2016. Gold production
at Kumtor was 562,749 ounces in 2017, 2% higher than the 550,960 ounces produced in 2016. The increase
in ounces poured at Kumtor is a result of milling higher grade ore from stockpiles (3.58 g/t compared to
3.44 g/t) compared to 2016. During the year ended December 31, 2017, Mount Milligan produced 222,567
ounces of gold and 53.6 million pounds of copper.

Safety and Environment:
Centerra had sixteen reportable injuries in 2017, including one fatal injury, eight lost time injuries, six
medical aid injuries and one restricted work injury. On April 11, 2017, an industrial accident near the
Kumtor mobile maintenance shop resulted in an employee fatality. Investigations involving the Kyrgyz
State Inspectorate for Environmental and Technical Safety have been completed and no charges are
expected to be filed.

During 2017 there was one reportable release to the environment. The 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,
spilling 8.8 tonnes of diesel fuel that was immediately contained and, within the day, the contaminated soil
was excavated and transported to a waste facility licensed for such material. By the end of the third quarter
of 2017, Kumtor and local authorities completed and closed their detailed investigations.

2017-AR-Combined_MDA+FS.pdf - p16 (March 7, 2018 23:00:44)

16CENTERRA GOLD INC. ANNUAL REPORT 2017Financial Performance:
Revenue increased to $1,199 million in 2017 from $758 million in 2016, as a result of additional gold
ounces sold (792,466 ounces compared to 580,496 ounces), the addition of copper sales $125.9 million at
Mount Milligan and molybdenum sales of $145.0 million. The increase in gold ounces sold in 2017 results
from the addition of Mount Milligan which operated for the full year and recorded sales of 242,331 ounces
of gold and contributed $242.9 million in gold revenues. However, the increase in overall revenue was
partially offset by a 6% lower combined average realized gold priceNG during the year ($1,171 per ounce
compared to $1,228 per ounce in 2016).

Cost of sales increased in 2017 to $682 million compared to $412 million in 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 $195.0 million in 2017 as compared to $205.9
million in 2016 due to the impact of the positive stockpile reconciliation of cut-back 17 ore at Kumtor
during 2017, which was partially offset by increased sales from the addition of Mount Milligan and the
molybdenum business in 2017.

The Company reduced the carrying value of its Mongolian assets by $41.3 million (pre-tax) in the second
quarter of 2017 to reflect the receipt of preliminary results from the ongoing technical and economic studies
related to the Gatsuurt Gold Project. As a result, the Company has reduced the carrying value of the
Mongolian assets to their estimated recoverable value of approximately $60 million. On December 22,
2017, the Company issued a new technical report relating to the Gatsuurt Gold Project which included the
results of such technical and economic studies.

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. The Company also recorded a gain on the sale of
the ATO property in Mongolia of $9.8 million (or $6.9 million net of tax).

In the fourth quarter of 2017, the Company accrued a tax benefit of $21.3 million resulting from new tax
legislation in the United States (the Tax Cuts and Jobs Act enacted on December 22, 2017, “the Act”). In
addition to reducing the U.S. corporate tax rate from 35 percent to 21 percent, the new rules make other
significant changes to the U.S. tax code, in particular the repeal of the Alternative Minimum Tax (“AMT”).
Prior to the new tax legislation, the Company’s molybdenum business had paid income tax under the AMT
regime, which was deductible against income tax subsequently payable by the Company. Due to the repeal
of the AMT under the new tax legislation, the Company expects to receive a refund of $21.3 million of the
AMT credit balance, in respect of its 2018 to 2021 income tax years. The final impact of the Act may
differ, possibly materially, due to changes in interpretations of the Act or due to any legislative action taken
to address questions that arise because of the Act. As a result, the benefit as recorded could be adversely
impacted in future periods.

Exploration expenditures in the year ended December 31, 2017 totalled $11.3 million compared to $12.5
million in 2016, reflecting lower spending on advanced projects, mainly at Gatsuurt, as compared to the
prior year.

Corporate administration costs were $38 million in 2017, an increase of $10 million compared to the same
period of 2016, mainly due to an increase in share-based compensation of $2.3 million as a result of
increases in the Company’s share price, additional costs for legal and consulting mainly in relation to the
Kumtor settlement negotiations ($1.9 million), $1.6 million of costs associated with the acquisition of
AuRico Metals Inc., and an increase in the Denver administration office costs of $1.7 million (formerly
Thompson Creek Metals Company’s corporate office).

2017-AR-Combined_MDA+FS.pdf - p17 (March 7, 2018 23:00:45)

17CENTERRA GOLD INC. ANNUAL REPORT 2017Operating Costs:
Operating costs (on a sales basis)NG increased to $487 million in 2017 compared to $209 million in 2016,
which includes full-year Mount Milligan costs of $209.7 million.

Centerra’s all-in sustaining costs on a by-product basis per ounce of gold soldNG, which excludes revenue-
based tax and income tax, increased to $688 in 2017 from $682 in the comparative period mainly as a result
of higher operating costs, higher capitalized stripping costs at Kumtor, higher sustaining capitalNG,
increased administration costs, as a result of the Thompson Creek acquisition and the impact of the full year
of Mount Milligan’s operations in 2017 as compared to 2016.

Consolidated All-in Sustaining Costs on a by-product basis (per ounce sold)

682

688

d
o
s
z
O

/
$

800

750

700

650

600

550

500

F Y 2 0 1 6
H i g h e r o p e r a t

i n g &

t r i p p i n g c a s h c o s

H i g h e r c o r p o r a t e G & A c o s
K R E n v i r o n m e n t

d e v e l o p m e n t

f u n d c o s

V o l u m e v a r i a n c e a t
I m p a c t

K u m t o r
f r o m F Y M o u n t

i o n

i g a n a d d i

M i

F Y 2 0 1 7

Cash generation and capital management

Cashflow

Unaudited ($ millions, except as noted)

Cash provided by operating activities
Cash used in investing activities:

- Capital additions (cash)
- Short-term investment net redeemed (net purchased)
- Payment to Thompson Creek debtholders
- Cash received on Thompson Creek acquisition
- Decrease (increase) in restricted cash
- Proceeds from sale of ATO Project
- Other investing items

Cash used in investing activities
Cash received from (used in) financing activities:

- Proceeds from (repayment of) debt
- Proceeds from equity offering (net)
- Dividends paid
- Payment of interest and borrowing costs and other

Cash (used in) provided by financing activities
Increase in cash and cash equivalents

Year ended December 31,
2017

2016

% Change

500.9

371.4

35%

(266.8)
-
-
-
248.0
9.8
(1.6)
(10.6)

(208.5)
-
-
(26.0)
(234.5)
255.8

(212.8)
181.6
(881.0)
98.1
(248.0)
-
(9.8)
(1,072.0)

398.3
141.3
(22.9)
(16.7)
500.0
(200.6)

25%
(100%)
(100%)
(100%)
-
-
(84%)
(99%)

(152%)
(100%)
(100%)
55%
(147%)
(228%)

2017-AR-Combined_MDA+FS.pdf - p18 (March 7, 2018 23:00:45)

18CENTERRA GOLD INC. ANNUAL REPORT 2017

Cash provided by operations before working capital changesNG increased to $512.6 million in 2017,
compared to $338.8 million in the prior period, as a result of higher earnings in the current year, reflecting
one full year of operation at Mount Milligan. Working capital movements in 2017 reflect a reduction in
levels at Kumtor mainly due to timing, partially offset by increased levels at Mount Milligan and in the
molybdenum business.

The Company generated $500.9 million in cash from operations in 2017, an increase of $129.5 million
compared to 2016. With a full year of operation in 2017, Mount Milligan contributed $150.6 million
(compared to $92.3 million for the period from October 20 to December 31, 2016), while Kumtor generated
$416.1 million, similar to its contribution in 2016. Kumtor’s production and gold sales were slightly above
the comparative year.

Cash used in investing activities decreased to $10.6 million in 2017 as compared to $1,072.0 million in
2016, reflecting in 2017 the release of Kumtor’s restricted cash of $248.0 million, proceeds from the sale
of the ATO project, a reduction in net purchases of short-term investments, partially offset by an increase
in capital spending (mainly additional sustaining capitalNG and capitalized stripping at Kumtor) as compared
to 2016. The comparative 2016 period reflected payments of $782.9 million on the acquisition of Thompson
Creek (net of cash received) and the restriction of Kumtor’s cash.

Cash used in financing activities of $234.5 million in 2017 represents debt repayments under the
Company’s credit facilities. The Company made quarterly payments on the Centerra B.C. Facility non-
revolving term loan of $12.5 million, in addition to a required prepayment of $10 million in connection
with a $10 million distribution from Mount Milligan to its parent. The Company also paid in full the
balance under the revolving portion of the Centerra B.C. Facility of $74.4 million on the Centerra B.C.
Facility at the end of the third quarter of 2017. In addition, the Company re-paid $74 million under the
EBRD Facility during 2017. In 2016, the Company drew $325 million on the Centerra B.C. Facility and
raised equity financing of $145.4 million in the form of subscription receipts in support of its acquisition
of Thompson Creek Metals Inc., drew an additional $74 million on its EBRD Facility, paid interest on
borrowings and paid dividends to its shareholders.

Cash, cash equivalents, restricted cash and short-term investments at December 31, 2017 increased to
$416.6 million from $408.8 million at December 31, 2016 (including $247.8 million of restricted cash and
investments at Kumtor).

Capital Expenditure (spent and accrued)

$ millions

Consolidated:

Year ended December 31,

2017

2016 % Change

Sustaining capitalNG
Capitalized stripping (1)
Growth capitalNG
Gatsuurt Project development
Öksüt Project development (2)
Greenstone Gold Property capital (3)
Total

92.2

200.2

18.1

1.8

9.0

5.0

65.2

136.7

17.9

7.2

12.0

8.7

41%

46%

(75%)

(25%)

(43%)

32%

326.3
(1) Includes cash component of $149.4 million in the year ended December 31, 2017 (2016: $100.5 million).
(2) Year ended December 31, 2016 includes $3 million for the purchase of the net smelter royalty from Teck Resources Limited.

247.7

2017-AR-Combined_MDA+FS.pdf - p19 (March 7, 2018 23:00:45)

19CENTERRA GOLD INC. ANNUAL REPORT 2017(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 2017 totaled $326.3 million compared to $247.7 million in 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 capitalNG for equipment rebuilds and overhauls, partially offset by lower
spending on the Company’s development projects.

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 to the cost of operations at the Kumtor Mine.
The diesel fuel hedging program is a 24-month rolling program and the Company targets to hedge up to
50% of monthly diesel purchases. 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 Mount Milligan Streaming Arrangement by delivering
refined physical gold and 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 an amendment to the Centerra B.C.
Facility (see “Credit Facilities”) to cover the period from July 2017 to June 2019. The amendment required
hedging 50% of future un-streamed gold and 75% of 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 December 31, 2017 are summarized as follows:

2017-AR-Combined_MDA+FS.pdf - p20 (March 7, 2018 23:00:45)

20CENTERRA GOLD INC. ANNUAL REPORT 2017Program

Fuel Hedges

Instrument

Crude oil options(1)

Zero-cost collars

Unit

Barrels

Centerra B.C. Facility Hedging Program (Strategic Hedges):

Settlement

As at December 31, 2017

Average strike
price

Type

2018

2019

Total position

Fair value gain
(loss) ('000')

$64.60

Fixed

288,000

$46/$59

Fixed

72,000

23,000

360,000

23,000

$1,324

$135

Copper Hedges

Gold Hedges

Forward contracts(1)

Pounds

$2.90

Fixed

6.7 million

Zero-cost collars(2)

Pounds

$2.47/$3.22 Fixed

38.6 million

27.5 million

66.1 million

Forward contracts(1)

Ounces

$1,285

Fixed

Zero-cost collars(2)

Ounces

$1,247/$1,363 Fixed

39,097

47,906

36,799

39,097

84,705

$(2,608)

$(17,724)

$(1,119)

$(1,699)

Gold/Copper Hedges (Royal Gold deliverables):

Gold Derivative Contracts

Copper Derivative Contracts

Forward contracts(1)

Ounces

Pounds

Float

31,940

Float

5.3 million

31,940

5.3 million

$568

$467

FX Hedges

26 million
USD/CAD Derivative Contracts
ND = Royal Gold hedging program with floating terms, that are not defined as at December 31, 2017.
(1) Under the forward contracts (including crude oil options), the Company can buy and sell specified assets, typically metals or currency, at a

CAD Dollars 1.2570/1.3000 Fixed

Zero-cost collars

26 million

$177

(2)

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.

The gold hedging program in 2018 consists of 87,003 gold ounces, including 39,097 ounces sold under
forward contracts at an average strike price of $1,285 per ounce and 47,906 ounces of zero-cost collars at
an average strike price range of $1,245 to $1,359 per ounce. The copper hedging program in 2018 consists
of 45.3 million pounds of copper, including 6.7 million pounds sold under forward contracts at an average
strike price of $2.90 per pound and 38.6 million pounds of zero-cost collars at an average strike price range
of $2.45 to $3.14 per pound.

The gold hedging program is more heavily weighted to zero cost collars in the second half of the program
in 2018 and 2019 with 55% collars and 100%, collars 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.

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
11.5 million ounces of gold to December 31, 2017.

2017-AR-Combined_MDA+FS.pdf - p21 (March 7, 2018 23:00:45)

21CENTERRA GOLD INC. ANNUAL REPORT 2017Developments in 2017

• 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.

•

In December 2017, the Kumtor mine received approval from Kyrgyz Republic authorities of its life
of mine plan, state reserves, and ecological passport. It also received its maximum allowable
emissions permit (“MAE”) and its maximum allowable discharge permit (“MAD”) from the
Kyrgyz Republic State Agency for Environmental Protection and Forestry (“SAEPF”) for the full
calendar year of 2018. With such approvals in place, Kumtor now has all the necessary permits
and approvals to operate throughout 2018.

2017-AR-Combined_MDA+FS.pdf - p22 (March 7, 2018 23:00:45)

22CENTERRA GOLD INC. ANNUAL REPORT 2017Kumtor Operating Results

($ millions, except as noted)

Financial Highlights:
Revenue - $ millions

Cost of sales (cash)
Cost of sales (non-cash)
Cost of sales (total)

Cost of sales - $/oz sold (1)

Cash provided by operations
Cash provided by operations before changes in working capital(1)

Operating Highlights:
Tonnes mined - 000s
Tonnes ore mined – 000s
Average mining grade - g/t
Tonnes milled - 000s
Average mill head grade - g/t
Mill Recovery - %
Mining costs - total ($/t mined material)
Milling costs ($/t milled material)

Gold produced – ounces
Gold sold – ounces
Average realized gold price (1) - $/oz sold

Capital Expenditures (sustaining) (1) - cash
Capital Expenditures (growth) (1) - cash
Capital Expenditures (stripping) - cash
Capital Expenditures (stripping) - non-cash
Capital expenditures (total)

Operating Costs (on a sales basis)(2)

All-in sustaining costs (including taxes) (1)

Three months ended December 31,
% Change
2017

2016

Year ended December 31,
2016

2017

% Change

228.1

231.3

(1%)

685.2

683.4

43.1
59.9
103.0

4%
(34%)
(18%)

146.0
145.7
291.7

167.4
180.0
347.4

(13%)
(19%)
(16%)

537

(13%)

530

636

(17%)

193.6
151.3

(22%)
(4%)

414.0
424.3

416.1
394.7

(1%)
8%

35,543
223
8.62
1,581
4.71
83.5%
1.24
9.37

43%
1068%
(73%)
6%
(20%)
(4%)
(13%)
(2%)

181,878
5,084
2.12
6,246
3.58
79.1%
1.10
10.69

144,399
8,911
3.45
6,303
3.44
79.2%
1.27
9.87

158,165
180,703

1,262 $

200,762
191,842
1,206

(21%)
(6%)

562,749
550,134

5% $

1,245 $

550,960
546,342
1,251

44%
399%
(43%)
(52%)
(22%)

60.6
18.1
149.4
50.9
279.0

61.0
14.8
100.5
36.2
212.5

11.5
1.4
42.9
15.4
71.2

43.1

146.0

167.4

(13%)

103.1

(8%)

383.9

349.2

10%

44.9
39.7
84.7

468

150.8
145.0

50,770
2,607
2.30
1,668
3.76
80.4%
1.08
9.16

16.5
7.1
24.4
7.5
55.5

44.9

95.1

26%
(43%)
(39%)
(1%)
4%
(0%)
(13%)
8%

2%
1%
(0%)

(1%)
23%
49%
40%
31%

Adjusted operating costs (1)- $/oz sold
Operating Costs (on a sales basis)- $/oz sold(1)
Gold - All-in sustaining costs on a by-product basis - $/oz sold(1)

$
$
$

297 $
249 $
526 $

253
224
538

18% $
11% $
(2%) $

313 $
265 $
698 $

342
306
640

(8%)
(13%)
9%

Gold - All-in sustaining costs on a by-product basis (including taxes) - $/oz sold(1)

7%
(1) Adjusted operating costs per ounce sold, operating costs (on a sales basis) ($ and per ounce sold), all-in sustaining costs (including
taxes), gold all-in sustaining costs on a by-product basis per ounce sold (including and excluding taxes), as well as average realized gold
price per ounce sold and capital expenditures (sustaining and growth) are non-GAAP measures and are discussed under “Non-GAAP
Measures”.

(0%) $

704 $

874 $

707

815

(2) Operating costs (on a sales basis) is comprised of mine operating costs such as mining, processing, administration, royalties and
production taxes (except at Kumtor where revenue-based taxes are excluded), but excludes reclamation costs and depreciation, depletion
and amortization.

Production

During 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, was completed in November 2017 and has supplemented the previously stockpiled ore from
the Central pit in advance of obtaining access to the higher-grade ore from cut-back 18 in 2018.

Total waste and ore mined in 2017 was 181.9 million tonnes compared to 144.4 million tonnes in 2016,
representing an increase of 26%. The main reasons for this increase were due to favourable weather
conditions in 2017 compared to 2016, which resulted in fewer weather delays, 12% shorter average haulage
distance compared to 2016 due to the shorter hauls required to mine at the Sarytor pit and various process
improvements that increased truck payloads, average truck speeds and truck utilization hours.

2017-AR-Combined_MDA+FS.pdf - p23 (March 7, 2018 23:00:45)

23CENTERRA GOLD INC. ANNUAL REPORT 2017Kumtor produced 562,749 ounces of gold in 2017 compared to 550,960 ounces of gold in 2016. The
increase in ounces poured is a result of processing during the first half of 2017 higher grade ore from
stockpiles containing ore from the lower benches of cut-back 17, whereas lower grade ore mined and
processed from the initial benches in cut-back 17 was milled during the comparative period. During 2017,
Kumtor’s average mill head grade was 3.58 g/t with a recovery of 79.1% compared to 3.44 g/t and a
recovery of 79.2% for the same period in 2016.

Operating costs and All-in Measures:

Operating costs (on a sales basis)NG for 2017 decreased by $21 million to $146.0 million, as compared to
2016, reflecting 26% more tonnage moved including a significant amount of waste removal in cut-back 18
of the Central pit which was capitalized in 2017. Including capitalized stripping, operating costs were
$295.4 million compared to $267.9 million in 2016. The increase in the major components of operating
costs (mining, milling and site support) including capitalized stripping but before changes in inventory is
explained below.

Mining Costs, including capitalized stripping (2017 compared to 2016):

205.0

197.0

189.0

s
n
o
i
l
l
i

M
$

181.0

183.6

2 0 1 6

4.5

1.7

200.9

4.2

6.9

M a i n t e n a n c e

L a b o u r

D i e s e l

i n g

B l a s

2 0 1 7

Mining costs, including capitalized stripping, totaled $200.9 million in 2017, which was $16.2 million
higher than the comparative year. Increased costs for the year include higher maintenance costs ($6.9
million) resulting from additional repair work on the haul trucks, shovels and drills, higher labour cost ($4.2
million) due to a new collective bargaining agreement and strengthening of the local currency and higher
diesel prices ($3.4 million). In addition, higher blasting costs ($1.7 million) resulted from increased blasting
volumes.

Milling Costs (2017 compared to 2016):

s
n
o
i
l
l
i

M
$

1.2

0.6

0.2

66.7

62.2

1.4

O t

r M ill M a i n

a ll s

g B

d i n

G r i n

S D

M i l l T

L a

O t

2017-AR-Combined_MDA+FS.pdf - p24 (March 7, 2018 23:00:45)

24CENTERRA GOLD INC. ANNUAL REPORT 2017

Milling costs amounted to $66.7 million in 2017 compared to $62.2 million in the 2016. The higher milling
costs were mainly due to comprehensive maintenance work during the planned total shutdown for the SAG,
ball and regrind mills liners and increased mill reliability projects performed in 2017. In addition, higher
grinding balls costs ($1.2 million) was mainly due to the increased consumption rate resulting from harder
ore type processed in 2017, and higher labour cost ($0.6 million) due to a new collective bargaining
agreement and strengthening of the local currency.

Site support Costs (2017 compared to 2016):

s
n
o
i
l
l
i

M
$

43.1

0.8

0.7

0.2

45.1

M a i n

v i c

u i p S

L a

O t

Site support costs in 2017 totaled $45.1 million compared to $43.1 million in 2016. Site support costs
increased slightly due to higher costs for light duty vehicle maintenance ($0.8 million), higher contracted
equipment services costs ($0.7 million) for a major site clean-up initiative, higher labour costs ($0.7
million) due to a new collective bargaining agreement and strengthening of the local currency.

Other Cost movements

Depreciation, depletion and amortization (“DD&A”) associated with sales decreased to $145.7 million in
2017 from $180.0 million in the comparative year, lower than the 2017 guidance of $153 million to $169
million. This is mainly due to the impact on non-cash costs resulting from the positive stockpile
reconciliation of cut-back 17 ore during 2017, partially offset by increased sales volumes in 2017.

All-in sustaining costs on a by-product basis per ounce sold, which excludes revenue-based tax, was $698
for 2017 compared to $640 in 2016, representing an increase of 9%. The increase resulted from higher
capitalized stripping costs totaling $149.4 million compared to $100.5 million in 2016. The increased
capitalization, was partially offset by 3,792 more ounces sold.

Including revenue-based taxes, all-in sustaining costs on a by-product basis per ounce sold was $874 for
2017 compared to $815 in 2016 representing an increase of 7%. The increase is mainly due to the higher
all-in sustaining costs (explained above).

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 the Mount Milligan Streaming
Arrangement pursuant to which Royal Gold is entitled to purchase 35% of the gold produced and 18.75%
of the copper production at the Mount Milligan mine for $435 per ounce of gold delivered and 15% of the
spot price per metric tonne of copper delivered.

2017-AR-Combined_MDA+FS.pdf - p25 (March 7, 2018 23:00:45)

25CENTERRA GOLD INC. ANNUAL REPORT 2017
During the year, Mount Milligan experienced unexpected maintenance issues that resulted in greater than
anticipated downtime thereby negatively impacting average daily mill throughput. Significant cost and
effort was expended to minimize unplanned downtime and to improve the maintenance planning processes.
The maintenance function was further improved during the year by adding additional experienced
maintenance personnel including a Maintenance Manager.

Developments in 2017

On December 27, 2017, the Company reported that, due to a lack of sufficient water resources, mill
processing operations at the Mount Milligan mine had been temporarily suspended. Mount Milligan
experienced a drier than normal spring and summer during 2017 with a limited amount of spring snow melt.
This resulted in lower than expected reclaim water volumes in the tailings storage Facility (TSF) at Mount
Milligan which is used for mill processing operations. The water shortage was exacerbated by unanticipated
extremely cold temperatures at Mount Milligan, which has resulted in a greater than expected loss of
available water volumes in the TSF due to ice formation.

Subsequent to December 31, 2017

On February 5, 2018, the Company reported that its Mount Milligan operation restarted mill operations at
a reduced capacity, utilizing one ball mill to minimize water requirements. Following a ramp-up period,
mill operations achieved sustainable mill throughput levels of approximately 30,000 tonnes per day by mid-
February. The Company expects to return to full capacity when additional fresh water becomes available,
restarting the second ball mill once the spring freshet (spring melt leading to surface run off) has
commenced, typically in April. Centerra anticipates steadily improving mill throughput, quarter over
quarter, during 2018, as water becomes available and improvements are made to the milling and
maintenance processes. In the second half of 2018, the Company expects to achieve an average daily
throughput of approximately 55,000 tonnes per calendar day.

The company has received an amendment to the Mount Milligan Environmental Assessment Certificate
that allows for limited withdrawal of water from Philip Lake until October 2018. The Company expects to
commence drawing water by the end of February and expects to carry out the necessary studies, and to
consult with affected First Nations groups to work toward a further, longer-term amendment to the
Environmental Assessment Certificate.

2017-AR-Combined_MDA+FS.pdf - p26 (March 7, 2018 23:00:46)

26CENTERRA GOLD INC. ANNUAL REPORT 2017Mount Milligan Operating Results

($ millions, except as noted)

Financial Highlights:
Gold sales
Copper sales
Total Revenues

Cost of sales (cash)
Cost of sales (non-cash)
Cost of sales (total)
Cash provided by operations
Cash provided by operations before changes in working capital(2)

Operating Highlights:
Tonnes mined - 000s
Tonnes ore mined – 000s

Tonnes milled - 000s
Mill Head Grade Copper (%)
Mill Head Grade Gold (g/t)
Copper Recovery - %
Gold Recovery - %
Mining costs - total ($/t mined material)
Milling costs - total ($/t milled material)
Concentrate Produced (dmt)
Payable Copper Produced (000's lbs) (5)
Payable Gold Produced (oz) (5)

Gold Sales (payable oz)(5)
Copper Sales (000's payable lbs)(5)
Average Realized Price - Gold (combined) - $/oz (2) (4)
Average Realized Price - Copper (combined) - $/lb (2) (4)

Capital Expenditures (sustaining) (2) - cash
Capital Expenditures (growth) (2) - cash
Capital expenditures (total)

Operating Costs (on a sales basis) ('000s) (3)

$
$

Operating Costs- $/oz sold
Adjusted Operating costs- $/oz sold (2)
Gold - All in Sustaining costs on a by-product basis - $/oz sold (2)
Gold - All in Sustaining costs on a by-product basis (including taxes) - $/oz
sold (2)
Gold - All in Sustaining costs on a co-product basis - $/oz sold (2)
Copper - All in Sustaining costs on a co-product basis - $/pound sold (2)

Three months ended December 31,
2016 (1) % Change

2017

Year ended December 31,
2016 (1) % Change

61.7
29.2
90.9

51.6
8.9
60.5
29.2
30.3

9,792
4,776

3,840
0.19%
0.75
78.4%
64.3%

2.12 $
5.70 $

28,158
12,261
58,587

61,524
13,105
1,005 $
2.23 $

11.9
-
11.9

51.6

839
385
594

611

706

29.4
26.0
55.4

38.8
5.9
44.7
92.3
45.2

7,592
3,910

3,904
0.19%
0.58
74.7%
58.8%
1.93
4.27
23,022
10,399
47,717

34,154
9,467
861
2.74

3.4
3.1
6.5

38.8

1,137
407
509

529

811

110%
13%
64%

33%
50%
35%
(68%)
(33%)

29%
22%

(2%)
0%
30%
5%
9%
10% $
34% $
22%
18%
23%

80%
38%
17% $
(19%) $

249%
(100%)
83%

33%

(26%)
(5%)
17%

16%
(13%)

242.9
125.9
368.8

209.7
43.9
253.6
150.6
138.6

41,966
21,501

17,743
0.18%
0.64
79.0%
62.4%

1.86 $
5.41 $

121,502
53,596
222,567

242,331
59,719
1,003 $
2.11 $

30.0
-
30.0

209.7

866
370
505

525

663

29.4
26.0
55.4

38.8
5.9
44.7
92.3
45.2

7,592
3,910

3,904
0.19%
0.58
74.7%
58.8%
1.93
4.27
23,022
10,399
47,717

34,154
9,467
861
2.74

3.4
3.1
6.5

38.8

1,137
407
509

529

811

726%
385%
566%

440%
645%
467%
63%
206%

453%
450%

354%
(6%)
10%
6%
6%
(4%)
27%
428%
415%
366%

610%
531%
17%
(23%)

782%
(100%)
361%

440%

(24%)
(9%)
(1%)

(1%)
(18%)

(11%)
(1) Comparative results for Mount Milligan have been presented from the date of acquisition (October 20, 2016) to December 31,

1.70

1.65

1.47

1.65

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 unit 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) – cash 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 Mount Milligan Streaming Arrangement.
(5) Mount Milligan payable production and sales are presented on a 100% basis (the Mount Milligan Streaming Agreement
entitles it to 35% and 18.75% of gold and copper sales, respectively). Under the Mount Milligan Streaming 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%
for copper and 97.5% for gold, which may be revised on a prospective basis after sufficient history of payable amounts is
determined.

Revenue

In 2017, total revenues were $368.8 million, including gold sales of $242.9 million and copper sales of
$125.9 million. Gold ounces sold were 242,331 at an average realized priceNG of $1,003 per ounce, while

2017-AR-Combined_MDA+FS.pdf - p27 (March 7, 2018 23:00:46)

27CENTERRA GOLD INC. ANNUAL REPORT 2017

59.7 million pounds of copper were sold at an average realized priceNG of $2.11 per pound. These figures
include gold and copper sales to Royal Gold under the Mount Milligan Streaming Arrangement as described
above and the impact of hedging transactions.

Production

During 2017, total payable gold production was 222,567 ounces while total payable copper production was
53.6 million pounds. Total mill throughput was 17.7 million tonnes and averaged 48,612 tonnes per
calendar day during 2017 (approximately 54,000 tonnes per operating day), impacted by significant
unplanned downtime during the year and by the mill being shut down in late December. Mine production
was 42.0 million tonnes. Mined total tonnes (ore and waste) were slightly behind plan due to the reduced
mill throughput and increased focus on tailings dam core construction.

Operating costs and All-in Measures

Operating costs (on a sales basis)NG for 2017 was $209.7 million and included mining costs of $63.4 million,
milling costs of $95.9 million, administration costs of $31.8 million and other costs (including
transportation, royalties, inventory movements, net of silver credits) of $18.6 million.

Other Cost movements

DD&A associated with sales were $43.9 million in 2017, representing depreciation of assets related to
production which is within the 2017 guidance of $40 million to $45 million.

All-in sustaining costs on a by-product basis per ounce sold, which excludes revenue-based tax, was $505
for 2017, which was in line with the Company’s revised guidance of $483 to $523 per ounce sold.

Including income taxes, all-in sustaining costs on a by-product basis per ounce sold was $525 for 2017
which was in line with the Company’s revised guidance of $503 to $544 per ounce sold.

Production initiatives

After several months of intensive data generation and analysis, a geometallurgical (GeoMet) program 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.

Mine engineering initiatives in drilling and blasting continued in the fourth quarter to target optimum
fragmentation and particle size distribution for mill feed, based on specific rock types and geological
domains. This data will be used in conjunction with the GeoMet program, which aims to optimize recovery
and throughput for targeted ore types.

Mount Milligan is working closely with consultants to develop and prioritize projects to improve
comminution performance and simplify the flotation circuits to improve recovery. Continuous
improvement initiatives to improve mill circuit efficiencies were undertaken such as improved process
control through froth crowder installations, equipment sizing, and reagent control strategies. Primary
cyclone surveys were conducted in conjunction with the manufacturer to find the optimum apex size, feed
density and pressure for the installed cyclones.

2017-AR-Combined_MDA+FS.pdf - p28 (March 7, 2018 23:00:46)

28CENTERRA GOLD INC. ANNUAL REPORT 2017Molybdenum Business

The molybdenum business includes two North American primary molybdenum mines that are currently on
care and maintenance: the Thompson Creek Mine ("TC Mine") (mine and mill) in Idaho, U.S.A. and the
75%-owned Endako Mine (mine, mill and roaster) is in British Columbia, Canada. The molybdenum
business also includes the Langeloth metallurgical roasting facility (the "Langeloth Facility") in
Pennsylvania, U.S.A. TC Mine operates a commercial molybdenum beneficiation circuit to treat
molybdenum concentrates to supplement the concentrate feed sourced directly for the Langeloth Facility.
This beneficiation process at the TC Mine has allowed the Company to process high copper molybdenum
concentrate, which is then transported to the Langeloth Facility for processing.

The molybdenum business provides tolling services for customers by converting molybdenum concentrates
to molybdenum oxide powder and briquettes and ferromolybdenum products. Additionally, molybdenum
concentrates are also purchased to convert to upgraded products which are then sold in the metallurgical
and chemical markets.

Molybdenum Operating Results

($ millions, except as noted)

Financial Highlights:
Molybdenum (Mo) Sales - $ millions
Tolling, Calcining and Other
Total Revenues and Other Income

Cost of sales - cash
Cost of sales - non-cash
Cost of Sales - Total

Care & Maintenance costs - Molybdenum mines

Total capital expenditure

Cash provided by operations
Cash provided by operations before changes in working capital(2)

Three months ended December 31,
% Change
2017

2016 (1)

2017

Year ended December 31,
% Change

2016 (1)

36.9
2.4
39.3

35.5
0.1
35.6

3.3

0.4

(0.1)
0.6

16.8
2.2
19.0

18.1
1.5
19.6

1.8

0.3

(2.2)
(1.0)

120%
9%
107%

96%
(93%)
81%

85%

23%

(93%)
(157%)

136.8
8.2
145.0

131.5
5.3
136.8

13.2

0.9

(8.3)
1.0

16.8
2.2
19.0

18.1
1.5
19.6

1.8

0.3

(2.2)
(1.0)

715%
273%
664%

626%
250%
597%

647%

182%

279%
(202%)

Production Highlights:
359%
Mo purchased
342%
Mo oxide roasted
583%
Mo sold
Toll roasted and upgraded Mo
199%
(1) Comparative results for the Molybdenum business have been presented from the date of acquisition (October 20, 2016) to December 31, 2016.
(2) Cash (used in) provided by operations before changes in working capital, is a non-GAAP measure and is discussed under “Non-GAAP Measures”.

15,513
18,555
14,946
4,736

4%
15%
75%
(28%)

3,378
4,198
2,188
1,584

3,516
4,825
3,831
1,145

Production:

A total of 14.9 million pounds of molybdenum were sold and 4.7 million pounds were tolled during 2017
resulting in sales revenue of $145.0 million. Net of $13.2 million in care and maintenance expenses at the
two molybdenum mines, as well as total capital spending of $0.9 million, the molybdenum business
generated $1.0 million of cash from the operations before changes in working capitalNG.

Consolidated Fourth Quarter Results - 2017 compared to 2016

Net earnings in the fourth quarter of 2017 were $130.0 million ($0.45 per common share - basic), compared
to $63.6 million in the same period of 2016. The fourth quarter 2017 result includes a tax benefit of $21.3
million as a result of a change in tax legislation enacted in the U.S. Excluding this item, adjusted earningsNG
in the fourth quarter of 2017 were $108.7 million or $0.37 per common share (basic). During the same

2017-AR-Combined_MDA+FS.pdf - p29 (March 7, 2018 23:00:46)

29CENTERRA GOLD INC. ANNUAL REPORT 2017

period in 2016, the Company reported net earnings of $63.6 million or $0.23 per common share (basic) and
adjusted earningsNG of $68.6 million or $0.24 per common share (basic). The following provides an
overview of the major items impacting the fourth quarter in 2017 as compared to 2016:

• Gold production for the fourth quarter of 2017 decreased 13% to 216,752 ounces poured, including
158,165 ounces from Kumtor and 58,587 ounces from Mount Milligan. The 21% decrease in ounces
poured at Kumtor is a result of milling lower grade ore from the remaining stockpile of cut-back 17
central pit ore and ore from Sarytor pit, compared to the higher grade ore mined from the lower
benches of cut-back 17 and processed during the comparative period. During the fourth quarter of
2017, Kumtor’s average mill head grade was 3.76 g/t with a recovery of 80.4%, compared to 4.71 g/t
and a recovery of 83.5% in the fourth quarter of 2016. This was partially offset by higher mill
throughput achieved.

•

In the fourth quarter of 2017, Mount Milligan produced 28,158 dry metric tonnes (dmt) of
concentrate, containing 12.3 million pounds of copper and 58,587 ounces of gold, compared to 23,022
dmt containing 10.4 million pounds of copper and 47,717 ounces of gold in the fourth quarter of
2016, since the acquisition on October 20, 2016. Milling operations were negatively impacted by the
shutdown on December 27, 2017 as a result of a water shortage, as discussed earlier (see “Operating
Mines and Facilities – Mount Milligan Mine”).

• Revenues in the fourth quarter of 2017 increased 17% to $358.2 million, reflecting a higher average
realized gold priceNG and higher sales volumes from Mount Milligan and from the Molybdenum
business as results for both reflects the entire fourth quarter of 2017.

• Cost of sales for the fourth quarter of 2016 increased 8% to $180.8 million compared to the same
quarter of 2016. The increase reflects higher sales volumes for gold, copper and molybdenum as
compared to the fourth quarter of 2016.

• Regional administration costs increased to $5.8 million in the fourth quarter of 2017 (from $3.8
million in the comparative quarter), as a result of higher employee costs and the strengthening of the
Som in relation to the U.S. dollar. Corporate administration costs decreased by $3.3 million as
compared to the same period of 2016, as a result of lower share-based compensation in the fourth
quarter of 2017, driven by Centerra’s share price performance and reduced spending at the
Company’s administration office in Denver.

• Exploration expenditures in the fourth quarter of 2017 totalled $4.7 million compared to $3.9 million

in the comparative period of 2016, reflecting increased drilling activities for the quarter.

• The Company accrued a $21.3 million tax benefit in the fourth quarter of 2017 due to the enactment
of the Tax Cuts and Jobs Act, which reduced the U.S. corporate tax rate from 35 percent to 21 percent
and repealed the Alternative Minimum Tax which positively impacted the molybdenum business.
See “Overview of Consolidated Results”.

• Cash provided by operations was $170.4 million in the fourth quarter of 2017 compared to $170.4

million in the same period of 2016.

• Cash used in investing activities in the fourth quarter of 2017 totalling $64.9 million represents
mainly spending on capital additions. This compares to $969.8 million of cash used in investing
activities in the same quarter of 2016 and reflects the payment to Thompson Creek debtholders of

2017-AR-Combined_MDA+FS.pdf - p30 (March 7, 2018 23:00:46)

30CENTERRA GOLD INC. ANNUAL REPORT 2017$783 million (net of cash assumed), the restriction of Kumtor’s cash ($126.1 million), increased
capital expenditures and a net redemptions of $25 million in short-term investment.

• Capital expenditures (spent and accrued) in the fourth quarter of 2017 were $71.8 million as
compared to $83.6 million in the same period of 2016. Sustaining capitalNG in the fourth quarter of
2017 of $29.4 million compares to $15.3 million the same period of 2016 and reflects increased
spending of approximately $9 million, mainly on capital repairs, at Mount Milligan. Growth capitalNG
in the fourth quarter of 2017 of $7.1 million was spent entirely at Kumtor, while $10.1 million was
spent in the fourth quarter of 2016 and included $3.1 million spent on the secondary crusher at Mount
Milligan. Development project spending totaled $3.4 million in the current period, with $1.6 million
spent at the Greenstone Gold Property and $1.8 million at the Öksüt Project. Capitalized stripping in
the fourth quarter of 2017 was $31.9 million compared to $58.3 million in the fourth quarter of 2016.
In the fourth quarter of 2017, the mining fleet at Kumtor focused primarily on waste stripping from
cut-back 18.

• All-in sustaining costs (on a by-product basis) per ounce soldNG, which excludes revenue-based tax
and income tax, in the fourth quarter of 2017, decreased to $571 compared to $586 in the same period
of 2016. The reduction reflects a 2% unit cost improvement at Kumtor in the fourth quarter of 2017,
mainly as a result of lower capitalized stripping, partly offset by higher sustaining capitalNG. The
fourth quarter of 2017 includes the impact of the Thompson Creek acquisition and the full year
inclusion of Mount Milligan as compared to the same period of 2016.

Development Projects

Öksüt Project:

At the Öksüt Project in Turkey, the Company spent $8.9 million during the year ended December 31, 2017
($12.0 million the year ended December 31, 2016) on development activities to advance access and site
preparation and to progress detailed engineering plans which are 96% complete, as well as spending on
administration and financing costs.

Subsequent to December 31, 2017

On January 11, 2018, the Company announced that its wholly-owned Turkish subsidiary, Öksüt Madencilik
Sanayi ve Ticaret A.S. received approval of its pastureland permit for the Öksüt Project located in central
Turkey. OMAS also received notice from the Kayseri Directorate of Food, Agriculture and Livestock
(“Directorate”) for payment of the necessary “grass fee” (approximately $4 million) and a refundable
deposit to the Directorate to commence the land delivery process which converts the pastureland to
industrial usage land. It is expected that the land delivery process may take upwards of 45 days.

On February 12, 2018, the Company also announced that it had received an investment incentive certificate
from the Turkish Ministry of Economy. The investment incentive certificate provides OMAS with certain
anticipated tax incentives.

Centerra’s Board of Directors approved the development of the Öksüt Project subject to continued
availability of the OMAS Facility. The Company expects to start construction in April 2018. See “2018
Outlook”.

2017-AR-Combined_MDA+FS.pdf - p31 (March 7, 2018 23:00:46)

31CENTERRA GOLD INC. ANNUAL REPORT 2017Gatsuurt Project:

In December 2017, the Company filed an updated technical report for the Gatsuurt Project located in central
northern Mongolia. The technical report 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. 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 new technical report.

Greenstone Gold Property:

As previously disclosed, the Greenstone Partnership has not made a development or construction decision
on the Hardrock Project. During 2017 the partnership continued programs to minimize the risk profile of
the project. The Company completed and submitted the Environmental Impact Study and Environmental
Assessment (“EIS/EA”) to CEAA and MOECC in July 2017, anticipating a decision in the fall of 2018.

In 2017, the Company spent $9.8 million on project development activities ($19.4 million in 2016). The
focus areas included completing the EIS/EA, advancing public infrastructure engineering, and supporting
local communities in their review of the EIS/EA. The Company continues to engage and consult with local
communities of interest, including First Nations, and is seeking to enter into mutually beneficial impact
benefit agreements in 2018.

Centerra’s funding to date of its C$185 million commitment in the Greenstone Partnership totals C$67.2
million ($51.6 million).

Balance Sheet

Inventory
Total inventory at December 31, 2017 was $507.9 million (2016 - $542.5 million) including product
inventory of $298.9 million (2016 - $338.4 million) and supplies inventory of $209.0 million (2016 - $204.1
million). The consolidated decrease year over year of $34.6 million reflects a 17.4% decrease in product
inventories at Kumtor as the mill processed stockpiled material in 2017 due to lower tonnage of mined ore
from the pit. Product inventories at Mount Milligan were also lower, partially offset by higher inventory
levels at the Langeloth processing facility due to the timing of receipt of molybdenum feed material.

Property, Plant and Equipment
The aggregate book value of property, plant and equipment at December 31, 2017 was $1.7 billion, which
compares to $1.6 billion at the end of 2016. The increase in 2017 of $109.6 million is attributed to an
increase of $145.1 million at Kumtor representing additions of $279.7 million mainly consisting of
capitalized stripping costs related to cut-back 18 and Sarytor, mobile equipment re-build programs and
tailings dam construction net of depreciation of $134.5 million. However, such increases were partially
offset by a decrease of $41.3 million due to the impairment of Mongolian assets and a decrease of $6.6
million at Mount Milligan due to depreciation of $38.5 million net of additions of $32.2 million mainly
consisting of tailings storage facility construction.

2017-AR-Combined_MDA+FS.pdf - p32 (March 7, 2018 23:00:46)

32CENTERRA GOLD INC. ANNUAL REPORT 2017Asset Retirement Obligations
The total future asset retirement obligations were estimated by management based on the estimated costs
to reclaim the mine sites and facilities and the estimated timing of the costs to be incurred in future periods.

The Company has estimated the net present value of the total asset retirement obligations to be $167.0
million as at December 31, 2017 (2016 - $158.4 million). The increase in 2017 reflects changes from the
regularly scheduled updates to the Company’s closure costs estimates at its various properties. These
payments are expected to commence over the next 1 to 20 years.

The Company’s future undiscounted decommissioning and reclamation costs have been estimated to be
$232.8 million at December 31, 2017 before salvage value.

These liabilities are secured by a combination of reclamation bonds, cash on deposit and a reclamation trust
fund as prescribed by the regulatory bodies in the jurisdictions where these mines operate and project
agreements with relevant governments. For further details, refer to note 17 in the Company’s 2017
Consolidated Financial Statements.

Share capital and share options
As of February 22, 2018, Centerra had 291,785,970 common shares outstanding and options to acquire
4,816,297 common shares outstanding under its stock option plan with exercise prices ranging between
Cdn$5.04 and US$36.74 per share, with expiry dates ranging between 2018 and 2025.

Contractual Obligations

The following table summarizes Centerra’s contractual obligations as of December 31, 2017, including
payments due over the next five years and thereafter:

$ millions
Kumtor

Reclamation trust fund (1)
Capital equipment (2)
Operational supplies

Mount Milligan

Operational supplies
B.C. Hydro liability
Equipment leases (principal + interest) (3)

Öksüt and Greenstone

Project development
Operational supplies

Corporate and other

Loan repayment (principal only)
Operational supplies
Lease of premises (4)
Derivative liability
Total contractual obligations (5)

Due in Less
than One
Year

Total

Due in 1 to 3
Years

Due in 4 to 5
Years

Due After 5
Years

$42.6
1.2
36.0

15.2
6.9
34.1

48.9
0.1

266.0
1.4
3.2
23.3
$478.9

$6.0
1.2
36.0

15.2
6.9
34.1

21.0
0.1

50.0
1.4
0.8
16.0
$188.7

$18.0
-
-

-
-
-

27.9
-

100.0
-
1.0
7.3
$154.2

$12.0
-
-

-
-
-

-
-

116.0
-
0.7
-
$128.7

$6.6
-
-

-
-
-

-
-

-
-
0.7
-
$7.3

(1)

Centerra’s future decommissioning and reclamation costs for the Kumtor mine are estimated to be $66.2 million to be incurred beyond
2026. The estimated future cost of closure, reclamation and decommissioning of the project are used as the basis for calculating the amount
remaining to be deposited in the Reclamation Trust Fund ($39.8 million). The settlement agreement with the Kyrgyz Republic Government
requires this restricted cash to be funded at a rate of $6 million per year until the Reclamation Trust Fund reaches a balance of $69 million.

2017-AR-Combined_MDA+FS.pdf - p33 (March 7, 2018 23:00:46)

33CENTERRA GOLD INC. ANNUAL REPORT 2017On December 31, 2017 the balance in the Reclamation Trust Fund was $26.4 million (2016 - $22.0 million), with the remaining $39.8 million
to be funded over the life of the mine.

(2) Agreements as at December 31, 2017 to purchase capital equipment.
(3)

(4)

(5)

In January 2017, this lease was renegotiated and converted into a financing with a one-year term.
Lease of the Toronto corporate office premises expiring in November 2021.
Excludes trade payables and accrued liabilities.

Other Financial Information- Related Party Transactions

Kyrgyzaltyn JSC

Revenues from the Kumtor gold mine are subject to a management fee of $1.00 per ounce based on sales
volumes, payable to Kyrgyzaltyn, a shareholder of the Company and a state-owned entity of the Kyrgyz
Republic.

The table below summarizes the management fees paid and accrued by KGC to Kyrgyzaltyn and the
amounts paid and accrued by Kyrgyzaltyn to KGC according to the terms of a Restated Gold and Silver
Sale Agreement (“Sales Agreement”) between KGC, Kyrgyzaltyn and the Government of the Kyrgyz
Republic dated June 6, 2009.

Sales:

Gross gold and silver sales to Kyrgyzaltyn
Deduct: refinery and financing charges

Net sales revenue received from Kyrgyzaltyn
Expenses:
Contracting services provided by Kyrgyzaltyn
Management fees payable to Kyrgyzaltyn

Expenses paid to Kyrgyzaltyn
Dividends:
Dividends declared to Kyrgyzaltyn
Withholding taxes
Net dividends payable to Kyrgyzaltyn

2017

2016

695,288
(4,364)

690,924

691,630
(3,825)

687,805

1,250
550

1,800

-
-
-

1,543
546

2,089

7,097
(355)
6,742

Related party balances
The assets and liabilities of the Company include the following amounts receivable from and payable to
Kyrgyzaltyn:

Amounts receivable (a)

Amount payable

2017

1,160

2016

11,611

1,218

(a) Subsequent to December 31, 2017, the balance receivable from Kyrgyzaltyn was paid in full.

2017-AR-Combined_MDA+FS.pdf - p34 (March 7, 2018 23:00:47)

34CENTERRA GOLD INC. ANNUAL REPORT 2017
Gold produced by the Kumtor Mine is purchased at the mine site by Kyrgyzaltyn for processing at its
refinery in the Kyrgyz Republic pursuant to the Sale Agreement. Amounts receivable from Kyrgyzaltyn
arise from the sale of gold to Kyrgyzaltyn. Kyrgyzaltyn is required to pay for gold delivered within 12 days
from the date of shipment. Default interest is accrued on any unpaid balance after the permitted payment
period of 12 days. The obligations of Kyrgyzaltyn are partially secured by a pledge of 2,850,000 shares of
Centerra owned by Kyrgyzaltyn.

Transactions with directors and key management

The Company transacts with key individuals from management and with its directors who have authority
and responsibility to plan, direct and control the activities of the Company. The nature of these dealings
were in the form of payments for services rendered in their capacity as director (director fees, including
share-based payments) and as employees of the Company (salaries, benefits and share-based payments).

For 2017, key management personnel are defined as the executive officers of the Company including the
Chief Executive Officer, the President, the Vice President and Chief Financial Officer, the Vice President
and Chief Operating Officer and the Vice President, Business Development & Exploration.

In the year ended December 31, 2017, compensation of directors was $2.2 million, including share-based
compensation expense of $1.1 million (December 31, 2016 - $1.5 million, including share-based
compensation credit of $0.6 million). Compensation of key management personnel in 2017 was $8.1
million, including shared-based compensation of $2.6 million, (December 31, 2016 - $7.2 million, including
share-based compensation of $2.1 million).

Disclosure regarding related party transactions is included in Note 27 of the Company’s December 31, 2017
Annual Financial Statements.

Quarterly Results – Previous Eight Quarters

Over the last eight quarters, Centerra’s results reflect the impact of decreasing input costs (mainly for
consumables) which have seen a continued decrease since 2015, except for diesel prices which increased
in 2017. Over the same periods, gold prices progressively increased over the first three quarters of 2016,
until dropping in the fourth quarter following the 2016 U.S. election and resumed a steady increase over
the 2017 year. In 2017, the Euro, Canadian dollar, Mongolian tugrik and Kyrgyz som appreciated against
the U.S. dollar thereby putting pressure on operating costs spent in these currencies. Comparatively, most
currencies weakened in 2016 as compared to the U.S. dollar which had a positive impact on foreign-
denominated costs (such as labour). The Company reduced its carrying value of its Mongolian assets by
$41.3 million (pre-tax) in the second quarter of 2017 and provided $60 million regarding the Strategic
Agreement in the third quarter of 2017. The quarterly production profile at Kumtor for 2017 was more
consistent across each quarter, while the production profile in 2016 was more concentrated in the last nine
months of the year. Non-cash costs have progressively increased at Kumtor due to its expanded mining
fleet and the increased amortization of capitalized stripping resulting from increased stripping as the Central
pit has become larger. The addition of Mount Milligan’s results began with the closing of the acquisition
of Thompson Creek on October 20, 2016. The quarterly financial results for the last eight quarters are
shown below:

2017-AR-Combined_MDA+FS.pdf - p35 (March 7, 2018 23:00:47)

35CENTERRA GOLD INC. ANNUAL REPORT 2017$ million, except per share data
Quarterly data unaudited

Revenue
Net earnings (loss)
Basic earnings (loss) per share
Diluted earnings (loss) per share

2017

2016

358
130
0.45
0.43

276
(1)
-
-

279
23
0.08
0.08

285
57
0.20
0.20

306
64
0.23
0.23

220
67
0.28
0.28

162
3
0.01
-

73
18
0.08
0.07

Other Corporate Developments

The following is a summary of corporate developments with respect to matters affecting the Company and
its subsidiaries. Readers are cautioned that there are a number of legal and regulatory matters that are
currently affecting the Company and that the following is only a brief summary of such matters. For a more
complete discussion of these matters, see the Company’s news releases and its 2016 Annual Information
Form and specifically the section entitled “Risks that can affect our business” therein available on SEDAR
at www.sedar.com. The following summary also contains forward-looking statements and readers are
referred to “Caution Regarding Forward-looking Information”.

Kyrgyz Republic

Strategic Agreement

As previously disclosed, Centerra and its Kyrgyz subsidiaries (Kumtor Gold Company (“KGC”) and
Kumtor Operating Company) entered into a comprehensive settlement agreement (the “Strategic
Agreement”) with the Government of the Kyrgyz Republic (the “Government”) on behalf of the Kyrgyz
Republic on September 11, 2017. The Strategic Agreement includes, among other things:

(i) full and final reciprocal releases and resolution of all existing arbitral and environmental claims,
disputes, proceedings and court orders, and releases of the Company and its Kyrgyz subsidiaries
from future claims covering the same subject matter as the existing environmental claims arising
from approved mine activities;

(ii) the agreement of KGC to:

a. make a one-time lump sum payment totaling $57 million to a new, government-
administered Nature Development Fund ($50 million) and to a new, government
administered Cancer Care Support Fund ($7 million);

b. within 12 months of closing make a further one-time payment of $3 million to the new,

government administered Cancer Care Support Fund;

c. make annual payments of $2.7 million to the Nature Development Fund, conditional on
the Government continuing to comply with its obligations under the Strategic Agreement;
and

d. accelerate its annual payments to Kumtor’s Reclamation Trust Fund in the amount of $6
million a year until the total amount contributed by KGC reaches the total estimated
reclamation cost for the Kumtor Project (representing the independent assessment of

2017-AR-Combined_MDA+FS.pdf - p36 (March 7, 2018 23:00:47)

36CENTERRA GOLD INC. ANNUAL REPORT 2017Kumtor’s current reclamation costs) subject to a minimum total reclamation cost of $69
million (which is broadly in line with KGC’s current estimated reclamation cost for the
Kumtor Project);

The releases of liability and all payments are subject to a range of initial conditions precedent designed to
protect Centerra, KGC and KOC, including (i) the approval by the Government of various outstanding
items, including the Kumtor life-of-mine (LOM) plan, official reserves report and the tailings dam
expansion, (ii) compliance by the Government with its obligations under the Kumtor Project Agreements,
(iii) continued operation of the Kumtor Mine by KGC and KOC with all necessary permits, (iv) no
expropriatory action having been taken by the Government, and (v) termination of the environmental
disputes and the civil and criminal proceedings instigated by the Kyrgyz General Prosecutor’s Office on
terms satisfactory to Centerra. The Government approvals conditions noted in (i) above all been obtained
and the Company is continuing to work closely with the Government to expeditiously satisfy the remaining
conditions precedent to the Strategic Agreement, which are expected to be completed in the first quarter of
2018. The initial longstop date for the satisfaction of all of the conditions precedent to completion of the
Strategic Agreement has been extended to April 20, 2018.

In connection with the Strategic Agreement, the arbitration previously commenced by Centerra, KGC and
KOC against the Government of the Kyrgyz Republic and Kyrgyzaltyn will be suspended until April 20,
2018. During the suspension, the parties will work towards completing the Strategic Agreement and the
resolution of all outstanding matters affecting the Kumtor Project.

Kyrgyz Republic Claims

The following is a summary of the claims in the Kyrgyz Republic against the Kumtor Project, including
those made by Kyrgyz Republic state environmental agencies and the General Prosecutor’s office. As
noted above, the Strategic Agreement provides a pathway to the resolution of all such claims, disputes,
proceedings and court orders, except as noted below.

SAEPF Claims

On September 4, 2017, the Bishkek Inter-District Court terminated a claim made bythe Chui-Bishkek-Talas
Local Fund of Nature Protection and Forestry Development (the “Local Fund”) of the Kyrgyz Republic
State Agency for Environmental Protection and Forestry (“SAEPF”) which sought compensation for
alleged environmental pollution in the amount of 40,340,819 Kyrgyz soms (approximately $580,000 based
on the exchange rate of 69.6105 Kyrgyz soms per US$1.00).

On September 4, 2017, the Bishkek Inter-District Court also terminated the claim made by SAEPF which
had alleged that Kumtor owes additional environmental pollution fees in the amount of approximately $220
million. The court also 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.

SIETS Claims

As previously disclosed, on May 25, 2016, the Bishkek Inter-District Court in the Kyrgyz Republic ruled
against Kumtor Operating Company (“KOC”), Centerra’s wholly-owned subsidiary, on two claims made
by the State Inspectorate Office for Environmental and Technical Safety of the Kyrgyz Republic (“SIETS”)

2017-AR-Combined_MDA+FS.pdf - p37 (March 7, 2018 23:00:47)

37CENTERRA GOLD INC. ANNUAL REPORT 2017in relation to the placement of waste rock at the Kumtor waste dumps and unrecorded wastes from Kumtor’s
effluent and sewage treatment plants. The Inter-District Court awarded damages of 6,698,878,290 Kyrgyz
soms (approximately $94.4 million at current exchange rates) and 663,839 Kyrgyz soms (approximately
$9,300 at current exchange rates), respectively. On June 1, 2016, the Inter-District Court ruled against KOC
on two other claims made by SIETS in relation to alleged land damage and failure to pay for water use. The
Inter-District Court awarded damages of 161,840,109 Kyrgyz soms (approximately $2.3 million) and
188,533,730 Kyrgyz soms (approximately $2.7 million), respectively. Centerra, KOC and KGC strongly
dispute the SIETS claims and have appealed the decisions to the Bishkek City Court and will, if necessary,
appeal to the Kyrgyz Republic Supreme Court. Such claims are expected to be terminated upon completion
of the Strategic Agreement.

Kyrgyz Republic General Prosecutor’s Office Proceedings

The Company is subject to a number of other criminal proceedings commenced by the Kyrgyz Republic
General Prosecutor’s Office and other Kyrgyz Republic state agencies as described below. However, the
Strategic Agreement provides a pathway to the resolution of claims, except as noted below.

Criminal Proceedings Against Unnamed KGC Managers

On May 30, 2016, a criminal case was opened by the Kyrgyz Republic General Prosecutor’s Office
(“GPO”) against unnamed KGC managers alleging that such managers engaged in transactions that
deprived KGC of its assets or otherwise abused their authority, causing damage to the Kyrgyz Republic.
Specifically, the case appears to be focused on the reasonableness of certain of KGC’s commercial
transactions and in particular, the purchase of goods and supplies in the normal course of its business
operations and the expenses relating to the relocation of the Kumtor Project’s camp in 2014 and 2015.
Further to such investigation, the GPO has carried out searches of KGC’s offices and seized documents and
records.

2013 KGC Dividend Civil and Criminal Proceeding

On June 3, 2016, the Inter-District Court renewed a claim previously commenced by the GPO seeking to
unwind the $200 million dividend paid by KGC to Centerra in December 2013 (the “2013 Dividend”). On
September 14, 2017, the Bishkek Inter-District Court determined to leave the claim without review and,
accordingly, the claim has been terminated.

The Company understands that the GPO has also initiated a criminal investigation of executives of the
Company and KGC in respect of the 2013 Dividend but that investigation is currently suspended.

Land Use Claim

As previously noted, KGC had challenged the purported 2012 cancellation of its land use (surface) rights
over the Kumtor concession areas in the Kyrgyz Republic courts as well as in its arbitration claim (described
above). On August 28, 2017, the Bishkek Inter-District Court terminated the proceeding commenced by
the GPO in respect of Kumtor’s land use rights over the Kumtor concession area.

KGC Employee Movement Restrictions

In connection with certain of the foregoing criminal investigations, restrictions had been imposed by the
Kyrgyz Republic on certain KGC managers and employees, which prohibit them from leaving the Kyrgyz
Republic. The Company understands that all such movement restrictions have now been lifted.

2017-AR-Combined_MDA+FS.pdf - p38 (March 7, 2018 23:00:47)

38CENTERRA GOLD INC. ANNUAL REPORT 2017GPO Review of Kumtor Project Agreements

On June 14, 2016, according to reports in the Kyrgyz Republic, the Kyrgyz Republic President instructed
the GPO to investigate the legality of the agreements relating to the Kumtor Project which were entered
into in 2003, 2004 and 2009. The 2009 Restated Investment Agreement governing the Kumtor Project
which was entered into in 2009 superseded entirely the 2003 and 2004 agreements. The 2009 Restated
Investment Agreement was negotiated with the Kyrgyz Republic Government, Kyrgyzaltyn and their
international advisers, and approved by all relevant Kyrgyz Republic state authorities, including the Kyrgyz
Republic Parliament and any disputes under the 2009 Restated Investment Agreement are subject to
resolution by international arbitration. The Company understands that this investigation has been closed
with respect to certain individuals.

Criminal Charges Regarding 2016 Casualty at Kumtor Mill

On June 16, 2016, the Investigator of the Jety-Oguz District Department of Interior Affairs initiated criminal
proceedings against two KGC managers in relation to the previously disclosed death of a KGC employee
due to an industrial accident which occurred in January 2016. On July 11, 2017, the criminal proceedings
were dismissed by the Kyrgyz courts but were later sent for new consideration by the courts upon the
request of the deceased’s family. This claim is not expected to be resolved in connection with the Strategic
Agreement.

Management Assessment of Outstanding Kumtor Matters

As noted above, the Strategic Agreement contained no admission on the part of Centerra or its Kyrgyz
subsidiaries of: (i) any environmental wrongdoing, (ii) any non-compliance with Kyrgyz law or the Kumtor
Project Agreements or (iii) any pre-existing obligation to make additional environmental or Reclamation
Trust Fund payments or environmental remediation efforts. The Company and KGC continue to dispute
all of the allegations noted above.

While the Strategic Agreement provides a pathway for the resolution of all outstanding matters affecting
the Kumtor Project, there are no assurances that all of the conditions precedent to the completion of the
settlement contained in the Strategic Agreement will be satisfied. If the settlement contained in the Strategic
Agreement is not completed, there are no assurances that (i) the Company will be able to successfully
resolve any or all of the outstanding matters affecting the Kumtor Project or that any future discussions
between the Kyrgyz Republic Government and Centerra will result in a mutually acceptable resolution; or
(ii) the Kyrgyz Republic Government and/or Parliament will not take actions that are inconsistent with the
Government’s obligations under the Strategic Agreement or Kumtor Project Agreements, including
adopting a law “denouncing” or purporting to cancel or invalidate the Kumtor Project Agreements or laws
enacted in relation thereto which have the effect of nationalization of the Kumtor Project.

The inability to successfully resolve all such matters, whether through the Strategic Agreement or
otherwise, could lead to suspension of operations of the Kumtor Project and would have a material adverse
impact on the Company’s future cash flows, earnings, results of operations and financial condition.

Furthermore, if all such claims are not resolved as provided for in the Strategic Agreement and despite the
Company’s view that all disputes related to the 2009 Restated Investment Agreement should be determined
in arbitration, there are risks that the arbitrator may (i) reject the Company’s claims; (ii) determine it does
not have jurisdiction; and/or (iii) stay the arbitration pending determination of certain issues by the Kyrgyz
Republic courts. Even if the Company receives an arbitral award in its favour against the Kyrgyz Republic

2017-AR-Combined_MDA+FS.pdf - p39 (March 7, 2018 23:00:47)

39CENTERRA GOLD INC. ANNUAL REPORT 2017and/or Kyrgyzaltyn, there are no assurances that it will be recognized or enforced in the Kyrgyz Republic.
Accordingly, the Company may be obligated to pay part of or the full amounts of, among others, the SIETS
and SAEPF claims regardless of the action taken by the arbitrator. The Company does not have insurance
or litigation reserves to cover these costs. If the Company were obligated to pay these amounts, it would
have a material adverse impact on the Company’s future cash flows, earnings, results of operations and
financial condition.

Kyrgyzaltyn Purchaser Bank

As previously disclosed, beginning in September 2017, Kumtor began to limit shipments to Kyrgyzaltyn
due to concerns about the financial stability at Bank Otkritie Financial (“Bank Otkritie”), which is the bank
that previously purchased Kyrgyzaltyn’s refined gold. In November 2017, Kyrgyzaltyn appointed a new
purchaser for its refined gold, Auramet International LLC (“Auramet”). All gold doré produced at Kumtor
is purchased at the mine site by Kyrgyzaltyn for processing at its refinery in the Kyrgyz Republic pursuant
to the Restated Gold and Silver Sale Agreement dated June 6, 2009 entered into between KGC, Kyrgyzaltyn
and the Kyrgyz Government. Auramet now purchases refined gold from Kyrgyzaltyn and pays Kumtor
directly.

Following the appointment of Auramet as Kyrgyzaltyn’s purchaser bank at the end of November 2017,
KGC resumed full shipments of gold doré to Kyrgyzaltyn and completed the sale of all gold doré
accumulated in inventory due to the concerns about Bank Otkritie’s financial condition.

Mongolia

Gatsuurt – Illegal Mining

CGM and Centerra continue to work with appropriate Mongolian federal and aimag (local) governments,
relevant state bodies and police to clear the Gatsuurt site from artisanal miners and to restrict their access
to the site. Centerra does not condone any violence or use of force by Mongolian authorities and has
communicated to Mongolian authorities that matters are to be resolved in a peaceful manner.

Claim Against the Mongolian Mineral Resources Authority to Annul Certain Administrative Decisions
Related to Gatsuurt Mining Licenses.

In the first quarter of 2016, a non-governmental organization called “Movement to Save Mt. Noyon” filed
a claim in Mongolian court against the Mongolian Mineral Resources Authority (MRAM) requesting that
MRAM annul two administrative decisions related to the mining licenses underlying the Gatsuurt Project.
Centerra Gold Mongolia (“CGM”), the wholly owned subsidiary of Centerra and the holder of these mining
licenses, is involved in the claim as a third party. One administrative decision related to a routine approval
of a change of name of the Gatsuurt license holder. That administrative decision does not affect the validity
of the Gatsuurt licenses. The second decision related to a non-material license. The claimant’s request has
previously been granted twice (in May 2016 and May 2017) by the lower court and overturned both times
on appeal. On July 26, 2017, the Mongolian lower court granted the claimant’s request to suspend the two
administrative acts and that decision has subsequently been upheld by an appellate court. While Centerra
believes that this claim is without merit, there are no assurances that the claim will be resolved in favour of
CGM. Subsequent adverse rulings of the Mongolian courts which may otherwise relate to the Gatsuurt
licenses or delays in the court process may have a material adverse impact on the Company’s future cash
flows, earnings, results of operations or financial condition.

Sale of ATO

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40CENTERRA GOLD INC. ANNUAL REPORT 2017On January 31, 2017, Centerra Gold’s Mongolian subsidiary, CGM entered into definitive agreements to
sell the ATO Project, located in Eastern Mongolia, to Steppe Gold LLC and Steppe Gold Limited for gross
proceed of $20.0 million. CGM received $0.8 million upon signing of the definitive agreements and $9
million at closing, which occurred on September 15, 2017. CGM is to receive additional $5 million cash
payments on each of September 30, 2018 and September 30, 2019.

Accounting Estimates, Policies and Changes

Accounting Estimates

The preparation of consolidated financial statements in accordance with IFRS requires management to
make judgments, estimates and assumptions that affect the application of the Company’s accounting
policies, which are described in note 3 of the consolidated financial statements, the reported amounts of
assets and liabilities and disclosure of commitments and contingent liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the reporting period. The
determination of estimates requires the exercise of judgment based on various assumptions and other factors
such as historical experience, current and expected economic conditions. Actual results could differ from
those estimates.

Management’s estimates and underlying assumptions are reviewed on an ongoing basis. Any changes or
revisions to estimates and underlying assumptions are recognized in the period in which the estimates are
revised and in any future periods affected. Changes to these critical accounting estimates could have a
material impact on the consolidated financial statements.

The key sources of estimation uncertainty and judgment used in the preparation of the consolidated financial
statements that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities and earnings within the next financial year are outlined in detail in note 4 of the December
31, 2017 financial statements.

Recently issued but not adopted accounting guidance

Note 5 in the consolidated financial statements for the year ended December 31, 2017 presents a list of
recently issued accounting standards not yet adopted by the Company, provides a brief description on the
nature of these changes and potential impact on the Company. The recently issued accounting standards
and amendments are as follows: IFRS 15, Revenue from Contracts with Customers and IFRS 16, Leases.

The Company has assessed the impact of adopting IFRS 15 and determined that IFRS 15 does not have an
impact on revenue recognized related to the sales of gold doré, gold and copper concentrate and
molybdenum. The Company is in the process of determining the impact of IFRS 16 on its financial
statements.

Disclosure Controls and Procedures and Internal Control Over Financial Reporting
(“ICFR”)

The Company’s management, including the CEO and CFO, is responsible for the design of disclosure
controls and procedures (“DC&P”) and internal controls over financial reporting (“ICFR”). Centerra
adheres to the Committee of Sponsoring Organizations of the Treadway Commission’s (COSO) revised
2013 Internal Control Framework for the design of its ICFR.

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41CENTERRA GOLD INC. ANNUAL REPORT 2017The evaluation of DC&P and ICFR was carried out under the supervision of and with the participation of
management, including Centerra’s CEO and CFO. Based on these evaluations, the CEO and the CFO
concluded that the design and operation of these DC&P and ICFR were effective throughout 2017.

2018 Outlook

Production, cost and capital forecasts for 2018 are forward-looking information and are based on key
assumptions and subject to material risk factors that could cause actual results to differ materially. These
risks are discussed herein under the headings “Risks That Can Affect Our Business”, “Material
Assumptions & Risks” and “Caution Regarding Forward-Looking Information” in this document. Also
refer to the Company’s most recent Annual Information Form and specifically the section entitled “Risks
That Can Affect Our Business” therein available on SEDAR.

Mount Milligan Update

As noted previously, the mill throughput levels at Mount Milligan reached approximately 30,000 tonnes
per day by mid-February. The Company expects to return to full capacity when additional fresh water
becomes available, restarting the second ball mill once the spring freshet has commenced, typically in
April. Centerra anticipates steadily improving mill throughput, quarter over quarter, during 2018, as water
becomes available and improvements are made to the milling and maintenance processes. In the second
half of 2018, the Company expects to achieve an average daily throughput of approximately 55,000 tonnes
per calendar day.

2018 Gold Production

Centerra’s 2018 gold production is expected to be between 645,000 to 715,000 ounces. Kumtor’s gold
production forecast is expected to be in the range of 450,000 ounces to 500,000 ounces with about 45% of
the production expected to be in the fourth quarter. At Mount Milligan, the Company expects payable gold
production to be in the range of 195,000 to 215,000 ounces.

2018 Copper Production

Payable copper production is expected to be in the range of 47 million pounds to 52 million pounds.

Centerra’s 2018 production is forecast as follows:

2017-AR-Combined_MDA+FS.pdf - p42 (March 7, 2018 23:00:47)

42CENTERRA GOLD INC. ANNUAL REPORT 20172018 Production Guidance

Units

Kumtor

Mount Milligan(1)

Centerra

Gold

Unstreamed Gold Payable Production

Streamed Gold Payable Production(1)

Total Gold Payable Production(2)

(Koz)

450 – 500

127 – 140

577 – 640

–

68 – 75

450 – 500

195 – 215

645 – 715

Copper

Unstreamed Copper Payable Production

Streamed Copper Payable Production(1)

Total Copper Payable Production(3)

(Mlb)

–

38 – 42

9 – 10

47 – 52

38 – 42

9 – 10

47 – 52

1) The Royal Gold Stream Arrangement entitles Royal Gold to 35% and 18.75% of gold and copper sales, respectively,
from the Mount Milligan Mine and Royal Gold will pay $435 per ounce of gold delivered and 15% of the spot price per
metric tonne of copper delivered.

2) Gold production assumes 79% recovery at Kumtor and 61% recovery at Mount Milligan.
3) Copper production assumes 79% recovery for copper at Mount Milligan.

2018 All-in Sustaining Unit Costs NG
Centerra’s 2018 all-in sustaining costs per ounce sold NG are calculated on a by-product basis and are
forecast as follows:

2018 All-in Sustaining Unit Costs NG

Kumtor

Mount Milligan(2)

Centerra(2)

Ounces sold forecast

450,000 – 500,000 195,000 – 215,000

645,000-715,000

All-in sustaining costs on a by-product basis(1), (2)

$733 – $815

$806 – $888

$799 – $885

Revenue-based tax(3) and taxes(3)

171 – 190

19 – 21

125 – 139

All-in sustaining costs on a by-product basis,
including taxes (1), (2), (3)

$904 – $1,005

$825 – $909

$924 – $1,024

Gold - All-in sustaining costs on a co-product basis
($/ounce) (1),(2)

Copper - All-in sustaining costs on a co-product
basis ($/pound) (1),(2)

$733 – $815

$847 – $932

$812 – $900

–

$1.90 – $2.10

1) All-in sustaining costs per ounce sold, all-in sustaining costs per ounce sold on a by-product basis, all-in sustaining costs
on a by-product basis including taxes per ounce sold and all-in sustaining costs on a co-product basis (gold and copper)
on a per unit basis are non-GAAP measures and are discussed under “Non-GAAP Measures”.

2) Mount Milligan payable production and ounces sold are on a 100% basis (the Mount Milligan Streaming Arrangement
entitles Royal Gold to 35% and 18.75% of gold and copper sales, respectively). Unit costs and consolidated unit costs
include a credit for forecasted copper sales treated as by-product for all-in sustaining costs and all-in sustaining costs plus
taxes. The copper sales are based on a copper price assumption of $2.90 per pound sold for Centerra’s 81.25% share of
copper production and the remaining 18.75% of copper revenue at $0.435 per pound (15% of spot price, assuming spot
at $2.90 per pound), representing the Mount Milligan Streaming Arrangement. 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.

2017-AR-Combined_MDA+FS.pdf - p43 (March 7, 2018 23:00:47)

43CENTERRA GOLD INC. ANNUAL REPORT 20173)

Includes revenue-based tax at Kumtor and the British Columbia mineral tax at Mount Milligan based on a forecast gold
price assumption of $1,275 per ounce sold.

Results in chart may not add due to rounding.

2018 Royalty Revenue

Based on the mid-point of the operator’s guidance of the Company’s royalty portfolio, royalty revenue is
estimated for 2018 to be in the range of $11.5 million to $12.7 million.

2018 Exploration Expenditures

Planned exploration expenditures for 2018 are expected to be $16.7 million, including $14.4 million to fund
ongoing projects and $2.3 million for generative and other exploration programs.

2018 Capital Expenditures

Centerra’s projected capital expenditures for 2018, excluding capitalized stripping, are estimated to be $242
million, including $100 million of sustaining capitalNG and $142 million of growth capitalNG.

Projected capital expenditures (excluding capitalized stripping) include:

Projects

Kumtor mine
Mount Milligan mine
Öksüt project
Kemess Underground project
Greenstone Gold property
Other
Endako mine
facility and Corporate)
Consolidated Total

(Thompson Creek mine,
(75%), Langeloth

2018 Sustaining Capital(1)
($ millions)
49
44
-
-

2018 Growth Capital(1)
($ millions)
14
-
82
36

$100

$142

(1) Sustaining capital and growth are non-GAAP measures and are discussed under “Non-GAAP Measures”.

Kumtor

At Kumtor, 2018 total capital expenditures, excluding capitalized stripping, are forecast to be $63 million.
Spending on sustaining capitalNG of $49 million relates primarily to major overhauls and replacements of
the heavy duty mine equipment ($42 million).

Growth capitalNG investment at Kumtor for 2018 is forecast at $14 million primarily related to tailings dam
construction ($9 million).

The cash component of capitalized stripping costs related to the development of the open pit is expected to
be $122 million of the $168 million total capitalized stripping estimated in 2018.

2017-AR-Combined_MDA+FS.pdf - p44 (March 7, 2018 23:00:48)

44CENTERRA GOLD INC. ANNUAL REPORT 2017Mount Milligan

At Mount Milligan, 2018 sustaining capital expenditures are forecast to be $44 million and relates primarily
to tailing dam construction ($17 million), mine equipment rebuilds ($11 million) and water supply
improvement projects ($3 million).

Öksüt Project

On February 22, 2018, Centerra’s Board of Directors approved construction of the Öksüt project. The total
cost of construction is expected to be approximately $220 million (including contingency) to first gold pour
which is anticipated in the first quarter of 2020. Currently 96% of the engineering has been completed for
the project and the Company expects to commence construction in April 2018. Planned spending in 2018
is expected to be approximately $82 million at the Öksüt property which includes initiation of haul road
construction, waste dump preparation, main access road construction, purchase of crusher equipment and
initiation of crusher construction, and various earthworks activities for the heap leach pad, ADR plant,
administration and truck shop campus, and electrical substation. Additional details related to the Öksüt
project can be found in the Technical Report dated September 3, 2015 filed on SEDAR.

Kemess Underground Project

In 2018, spending on pre-construction activities at the Kemess Underground Project (KUG) is estimated at
$36 million. Pre-construction activities include the purchase of a water treatment and water discharge
system. The Company continues to prioritize receipt of all critical permits, and other approvals required in
advance of a potential construction decision later in the year. Additional details related to the KUG project
is described in the technical report dated July 14, 2017 and filed on SEDAR by AuRico Metals Inc.

Greenstone Gold Property

Centerra’s guidance for 2018 expenditures in connection with the Greenstone Gold Property (50-50 joint
venture with Premier Gold) is approximately $20 million (Cdn$25 million), on a 100% basis, which is
forecast to be spent on project de-risking including negotiations for advancing long-term relationship
agreements with local aboriginal groups, permitting, project optimization and project support. The forecast
spending for 2018 will be fully funded by Centerra with 50% of spending accounted for as pre-development
project spending or exploration and expensed through Centerra’s income statement. The remaining 50% of
spending will be capitalized on Centerra’s balance sheet and be accounted for as an acquisition cost of the
Greenstone Gold Property ($10 million).

2018 Corporate Administration

Corporate and administration expense for 2018 is forecast to be $32 million (including $9 million of stock-
based compensation expense).

2018 Depreciation, Depletion and Amortization

Consolidated depreciation, depletion and amortization expense included in costs of sales expense for 2018
is forecasted to be between $188 million and $216 million including Kumtor’s DD&A expense of between
$149 million and $166 million and Mount Milligan’s DD&A expense of between $33 million and $41
million.

2017-AR-Combined_MDA+FS.pdf - p45 (March 7, 2018 23:00:48)

45CENTERRA GOLD INC. ANNUAL REPORT 2017(In millions)

2018 DD&A
Forecast
(Unaudited)

2017 DD&A
Actual

67
(51)
46
2
8
12
62
146

65 – 75
(36) – (46)
129 – 156
3
12
13
(37) – (47)
$ 149 – 166

Kumtor
Mine equipment
Less DD&A capitalized to stripping costs(1)
Capitalized stripping costs amortized
Other mining assets
Mill assets
Administration assets and other
Inventory adjustment (non-cash depreciation)
Subtotal for Kumtor
Mount Milligan
Plant & equipment
Mineral properties
Buildings and other
Tailings storage facility
Inventory adjustment (non-cash depreciation)
Subtotal for Mount Milligan
Langeloth
Plant & equipment
4
Buildings and other
1
Subtotal for Langeloth
5
Consolidated Total
195
(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 2017, $51 million of depreciation costs was allocated to capitalized stripping costs.

17 – 20
5 – 6
5 – 6
2 – 3
4 – 6
33 – 41

5 – 7
1 – 2
$
6 – 9
$ 188 – 216

21
6
7
4
6
44

2018 Taxes

Pursuant to the Restated Investment Agreement, Kumtor’s operations are not subject to corporate income
taxes. Instead, the Restated Investment Agreement imposes a tax of 13% on gross revenue (plus 1% for the
Issyk-Kul Oblast Development Fund).

The Mount Milligan operations are subject to corporate income tax and British Columbia mineral tax.
Corporate income tax for 2018 is forecast to be nil, while British Columbia mineral tax is forecast to be
between $3.5 million and $4.2 million.

Kumtor Settlement Agreement

The Company expects the settlement agreement with the Kyrgyz Government to close in the first quarter
of 2018 at which time the payment of $50 million is expected to be made.

2017-AR-Combined_MDA+FS.pdf - p46 (March 7, 2018 23:00:48)

46CENTERRA GOLD INC. ANNUAL REPORT 2017Sensitivities

Centerra’s revenues, earnings and cash flows for 2018 are sensitive to changes in certain key inputs or
currencies. The Company has estimated the impact of any such changes on revenues, net earnings and cash
from operations.

Impact on
($ millions)

Impact on
($ per ounce sold)

Costs

Revenues Cash flows

Net
Earnings
(after tax)

AISC(3) on by-
product basis

3.2 – 3.7

22.0 – 25.2 18.8 – 21.5 18.8 – 21.5

0 - 1

1.9 – 2.3

6.6 – 7.9

4.7 – 5.6

10 – 11

Change

Gold price(1)

$50/oz

Copper price(1)

Diesel fuel

10%

4.5 - 5.0

Kyrgyz som(2)
Canadian dollar(2) 10 cents 30.0 - 32.0

1 som

1.0 - 2.0

6.0 - 7.0

4.5 - 5.0

1.0 - 2.0

9 – 10

1 - 2

30.0 - 32.0 25.0 - 27.0

35 – 40

(1) Gold and copper price sensitivities include the impact of the hedging program set up in order to mitigate gold and

copper price risks.

(2) Appreciation of currency against the U.S. dollar will result in higher costs and lower cash flow and earnings,
depreciation of currency against the U.S. dollar results in decreased costs and increased cash flow and earnings.
(3) All-in sustaining costs per ounce sold (“AISC”) on a by-product basis is a non-GAAP measure and is discussed

under “Non-GAAP Measures”.

Material Assumptions and Risks

Material assumptions or factors used to forecast production and costs for 2018 include the following:

•
•
•
•

•

a gold price of $1,275 per ounce,
a copper price of $2.90 per pound,
a molybdenum price of $8.25 per pound,
exchange rates:

o $1USD:$1.25 CAD
o $1USD:71.0 Kyrgyz som
o $1USD:3.5 Turkish lira
o $1USD:0.87 Euro
diesel fuel price assumption:
o $0.45/litre at Kumtor
o $0.69/litre at Mount Milligan

The assumed diesel price of $0.45/litre at Kumtor assumes that no Russian export duty will be paid on the
fuel exports from Russia to the Kyrgyz Republic. Diesel fuel for Kumtor is sourced from separate Russian
suppliers. The diesel fuel price assumptions were made when the price of oil was approximately $63 per
barrel. Crude oil is a component of diesel fuel purchased by the Company, such that changes in the price
of Brent crude oil generally impacts diesel fuel prices. The Company established a hedging strategy to
manage changes in diesel fuel prices on the cost of operations at the Kumtor mine. The diesel fuel hedging
program is a 24-month rolling program. The Company targets to hedge up to 50% of crude oil component
of monthly diesel purchases exposure.

2017-AR-Combined_MDA+FS.pdf - p47 (March 7, 2018 23:00:48)

47CENTERRA GOLD INC. ANNUAL REPORT 2017Other material assumptions were used in forecasting production and costs for 2018. These material
assumptions include the following:

• The Company and its applicable subsidiaries throughout the year continue to meet the terms of
their respective credit facilities in order to maintain current borrowings and compliance with the
facilities financial covenants.

• That the positive relationship with the Kyrgyz Republic Government (“Government”) continue and
that the parties continue to work constructively to complete the Kumtor Strategic Agreement, that
the Government does not take any actions that are contrary to the Strategic Agreement and/or the
Kumtor Project Agreement and which have a material adverse impact on the Kumtor operations,
and that the outstanding Kyrgyz proceedings (some of which are currently postponed) are not
reinstated or progressed contrary to the terms of the Strategic Agreement and/or the Kumtor Project
Agreements.

• The mine plans, expertises and related permits and authorizations at Kumtor which have been
received to date for 2018 are not withdrawn and that any further approvals are obtained in a timely
manner from relevant governmental agencies in the Kyrgyz Republic.

• 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 and/or
power to the mine site.

• Any sanctions imposed on Russian entities do not have a negative effect on the costs or availability

of inputs or equipment to the Kumtor Project.

• The movement in the Central Valley Waste Dump at Kumtor, initially referred to in the Annual
Information Form for the year ended December 31, 2013, and in the Lysii and Sarytor Waste
Dumps, does not accelerate and will be managed to ensure continued safe operations, without
impact to gold production.

• The buttress constructed at the bottom of the Davidov glacier continues to function as planned.
• The Company is able to manage the risks associated with the increased height of the pit walls at

Kumtor.

• The dewatering program at Kumtor continues to produce the expected results and the water

management system works as planned.

• The pit walls at Kumtor and Mount Milligan remain stable.
• The resource block model at Kumtor and Mount Milligan reconciles as expected against

production.

• The Mount Milligan processing facility continues to have access to sufficient water supplies to
operate year round at the intended capacity. This includes management’s expectations that we
continue to successfully draw water from existing water wells, identify and access new water wells,
capture water sources from within the existing operations, and that the spring freshet will produce
the expected levels of run-off water which will be captured for our operations. The Company’s
guidance reflects its expectation that the spring freshet will occur in April 2018. Guidance also
assumes that Mount Milligan will pump water from nearby Philip Lake until October 2018, as
currently permitted under an amendment to the Mount Milligan Environmental Assessment
Certificate. Pursuant to the amendment issued in January 2018, the Company has until February
2019 to carry out the necessary studies and to consult with relevant First Nations groups in an effort
to make permanent the amendment to the Environmental Assessment Certificate.

• Grades and recoveries at Kumtor and Mount Milligan remain consistent with the 2018 production

plan to achieve the forecast gold and copper production.

• The Kumtor mill and the Mount Milligan mill continues to operate as expected, including that there
are no unplanned suspension of operations due to (among other things), mechanical or technical
performance issues.

2017-AR-Combined_MDA+FS.pdf - p48 (March 7, 2018 23:00:48)

48CENTERRA GOLD INC. ANNUAL REPORT 2017• The permanent secondary crushing plant at Mount Milligan continues to perform as designed.
• No changes to any existing agreements and relationships with affected First Nations groups which

would materially and adversely impact our operations.

• There are no unfavourable changes to concentrate sales arrangements at Mount Milligan and

roasting arrangements at the Langeloth facility.

• There are no adverse regulatory changes affecting the Kumtor and Mount Milligan operations and

the Company’s molybdenum assets.

• Exchange rates, prices of key consumables, costs of power, water usage fees, and any other cost
assumptions at all operations and projects of the Company are not significantly higher than prices
assumed in planning.

• No unplanned delays in or interruption of scheduled production from our mines, including due to
climate/weather conditions, political or civil unrest, natural phenomena, regulatory or political
disputes, equipment breakdown or other developmental and operational risks.

The Company cannot give any assurances in this regard.

Production, cost and capital forecasts for 2018 are forward-looking information and are based on key
assumptions and subject to material risk factors that could cause actual results to differ materially and which
are discussed herein under the headings “Risks That Can Affect Our Business”, “Material Assumptions &
Risks” and “Caution Regarding Forward-Looking Information” in this document and under the heading
“Risks That Can Affect Our Business” in the Company’s 2017 MD&A and in the Company’s most recent
Annual Information Form.

Non-GAAP Measures

This document contains the following non-GAAP financial measures: all-in sustaining costs per ounce sold
on a by-product basis, all-in sustaining costs per ounce sold on a by-product basis including taxes, and all-
in sustaining costs per ounce sold on a co-product basis. In addition, non-GAAP financial measures include
operating costs (on a sales basis), adjusted operating costs and adjusted operating costs per ounce sold, as
well as capital expenditures (sustaining) and capital expenditures (growth) and cash provided by operations
before changes in working capital. These financial measures do not have any standardized meaning
prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other
issuers, even as compared to other issuers who may be applying the World Gold Council (“WGC”)
guidelines, which can be found at http://www.gold.org.

Management believes that the use of these non-GAAP measures will assist analysts, investors and other
stakeholders of the Company in understanding the costs associated with producing gold, understanding the
economics of gold mining, assessing our operating performance, our ability to generate free cash flow from
current operations and to generate free cash flow on an overall Company basis, and for planning and
forecasting of future periods. However, the measures do have limitations as analytical tools as they may be
influenced by the point in the life cycle of a specific mine and the level of additional exploration or
expenditures a company has to make to fully develop its properties. Accordingly, these non-GAAP
measures should not be considered in isolation, or as a substitute for, analysis of our results as reported
under GAAP.

Definitions
The following is a description of the non-GAAP measures used in this MD&A. The definitions are similar
to the WGC’s Guidance Note on these non-GAAP measures:

2017-AR-Combined_MDA+FS.pdf - p49 (March 7, 2018 23:00:48)

49CENTERRA GOLD INC. ANNUAL REPORT 2017• Production costs represent operating costs associated with the mining, milling and site
administration activities at the Company’s operating sites, excluding costs unrelated to production
such as mine standby and community costs related to current operations.

• Operating costs (on a sales basis) include mine operating costs such as mining, processing, site
support, royalties and operating taxes (except at Kumtor where revenue-based taxes are excluded),
but exclude depreciation, depletion and amortization (DD&A), reclamation costs, financing costs,
capital development and exploration.

• Adjusted operating costs per ounce sold include operating costs (on a sales basis), regional office
administration, mine standby costs, community costs related to current operations, refining fees
and by-product credits.

• All-in sustaining costs on a by-product basis per ounce sold include adjusted operating costs, the
cash component of capitalized stripping costs, corporate general and administrative expenses,
accretion expenses, and sustaining capital, net of copper and silver credits. The measure
incorporates costs related to sustaining production. Copper and silver credits represent the expected
revenue from the sale of these metals.

• All-in sustaining costs on a by-product basis per ounce sold including taxes, include revenue-based

tax at Kumtor and taxes (mining and income) at Mount Milligan.

• All-in sustaining costs on a co-product basis per ounce of gold sold or per pound of copper sold,
operating costs are allocated between copper and gold based on production. To calculate the
allocation of operating costs, copper production has been converted to ounces of gold equivalent
using the copper production for the periods presented, as well as an average of the futures prices
during the quotational pricing period for copper and gold sold from Mount Milligan. For the twelve
months ended December 31, 2017, 449 pounds of copper was equivalent to one ounce of gold.
• Adjusted earnings is calculated by adjusting net earnings (loss) as recorded in the condensed
interim consolidated statements of income (loss) and comprehensive income (loss) for non-
recurring items.

• Capital expenditure (Sustaining) is a capital expenditure necessary to maintain existing levels of
production. The sustaining capital expenditures maintain the existing mine fleet, mill and other
facilities so that they function at levels consistent from year to year.

• Capital expenditure (Growth) is capital expended to expand the business or operations by

increasing productive capacity beyond current levels of performance.

• Growth projects are defined as projects that are beyond the exploration stage but are pre-
operational. For 2017, growth projects include Öksüt, Gatsuurt and the Greenstone Gold Property.
• Average realized gold price is calculated by dividing revenue (including third party sales and the
fixed amount received under the Mount Milligan Streaming Arrangement) derived from gold sales
by the number of ounces sold.

• Average realized copper price is calculated by dividing revenue (including third party sales and the
fixed amount received under the Mount Milligan Streaming Arrangement) derived from copper
sales by the number of pounds sold.

• Free cash flow (unlevered) is calculated as cash provided by operations less additions to property,

plant and equipment.

• Cash provided by operations before changes in working capital starts with cash provided by
operations and removes the changes in working capital as presented in the Company’s Statement
of Cash Flows.

2017-AR-Combined_MDA+FS.pdf - p50 (March 7, 2018 23:00:48)

50CENTERRA GOLD INC. ANNUAL REPORT 2017,
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51CENTERRA GOLD INC. ANNUAL REPORT 2017

Adjusted earnings can be reconciled as follows:

Adjusted earnings is intended to provide investors with information about the Company’s continuing
income generating capabilities. Hence, this measure adjusts for the earnings impact of non-recurring items.

($ millions, except as noted)

2017

2016

2017

2016

Three months ended December 31,

Year ended December 31,

Net earnings (loss)

130.0 $

63.6 $

209.5 $

151.5

Adjust for non-recurring items:

Impairment of Mongolia CGU (net of tax)

Kyrgyz Republic settlement

Gain on sale of ATO (net of tax)

Thompson Creek Metals acquisition expenses

Income tax benefit from US tax reform

(21.3)

5.0

39.7

60.0

(6.9)

(21.3)

9.4

Adjusted net earnings

Net earnings (loss) per share - basic

Net earnings (loss) per share - diluted

Adjusted net earnings per share - basic

Adjusted net earnings per share - diluted

108.7 $

68.6 $

281.0 $

160.9

0.45 $

0.43 $

0.37 $

0.36 $

0.23 $

0.24 $

0.72 $

0.96 $

0.60

0.64

Free cash flow (unlevered) is calculated as follows:

($ millions, except as noted)

2017

2016

2017

2016

Three months ended December 31,

Year ended December 31,

Cash provided by operations (1)

170.4 $

500.9 $

371.4

Adjust for:

Additions to property, plant and equipment (1)

(63.1)

(81.8)

(266.9)

(212.8)

Free cash flow

107.3 $

88.6 $

234.0 $

158.6

(1) as presented in the Company's Consolidated Statements of Cash Flows.

2017-AR-Combined_MDA+FS.pdf - p52 (March 7, 2018 23:00:49)

52CENTERRA GOLD INC. ANNUAL REPORT 2017Sustaining capital, growth capital and capitalized stripping presented in the All-in Sustaining
cost measures can be reconciled as follows:

Three months ended December 31,

Kumtor

Mount
Milligan

Turkey Mongolia All other Consolidated

(Unaudited)

($ millions)
2017
Capitalized stripping –cash
Sustaining capital - cash
Growth capital - cash
Gatsuurt project development capital cash
Greenstone Gold Property pre-development capital cash
Öksüt project development capital - cash
Molybdenum business capital - cash
Adjustment for changes in accruals and other non-cash items
included in additions to PP&E
Greenstone Gold Property translation adjustment
Total - Additions to PP&E (1)
2016
($ millions)
Capitalized stripping –cash
Sustaining capital - cash
Growth capital - cash
Gatsuurt project development capital cash
Greenstone Gold Property pre-development capital cash
Öksüt project development capital - cash
Molybdenum business capital - cash
Adjustment for changes in accruals and other non-cash items
included in additions to PP&E
Total - Additions to PP&E (1)

(Unaudited)

24.4
16.5
7.1
-
-
-
-

3.2

-
51.2

42.9
11.5
1.4
-
-
-
-

11.0

66.8

-
11.9
-
-
-
-
-

(4.8)

-
7.1

-
3.4
3.1
-
-
-
-

6.5

-
-
-
-
-
2.4
-

0.3

-
2.7

-
-
-
-
-
2.1
-

2.1

-
-
-
-
-
-
-

-
-

-
-
-
-
-
-
-

-
0.5
-
-
1.2
-
0.4

(0.1)

0.1
2.1

-
0.1

2.4
3.6
-
0.3

6.4

24.4
28.9
7.1
-
1.2
2.4
0.4

(1.4)

0.1
63.1

42.9
15.0
4.5
2.4
3.6
2.1
0.3

11.0

81.8

Year ended December 31,

Kumtor

Mount
Milligan

Turkey Mongolia All other Consolidated

(Unaudited)

149.4
60.6
18.1
-
-
-
-

-
228.1

100.5
61.0
14.8
-
-
-
-

(1.3)

175.0

-
30.0
-
-
-
-
-

(6.8)

-
23.2

-
3.4
3.1
-
-
-
-

6.5

-
-
-
-
-
9.0
-

-
-
-
1.8
-
-
-

-
0.7
-
-
5.0
-
0.9

(1.5)

(0.3)

(0.1)

-
7.5

-
-
-
-
-
12.0
-

12.0

-
1.5

-
-
-
-
-
-
-

0.1
6.6

-
0.4
-
7.2
11.4
-
0.3

19.3

149.4
91.3
18.1
1.8
5.0
9.0
0.9

(8.7)

0.1
266.9

100.5
64.8
17.9
7.2
11.4
12.0
0.3

(1.3)

212.8

2017-AR-Combined_MDA+FS.pdf - p53 (March 7, 2018 23:00:49)

53CENTERRA GOLD INC. ANNUAL REPORT 2017Reconciliation of Cash Provided by Operations Before Changes in Working Capital:

Three months ended December 31, 2017

Kumtor

Mount Milligan Molybdenum

Other

Consolidated

Cash provided by (used in) operations

150,952

29,183

(148)

(9,603)

170,384

Add back (deduct):

Change in operating working capital
Net cash provided by (used in) operations before
changes in working capital

(5,908)

145,044

1,079

30,262

721

573

(6,405)

(10,513)

(16,008)

159,871

Cash provided by (used in) operations

193,810

92,251

(2,185)

(113,479)

170,397

Three months ended December 31, 2016

Kumtor

Mount Milligan Molybdenum

Other

Consolidated

Add back (deduct):

Change in operating working capital
Net cash provided by (used in) operations before
changes in working capital

(42,504)

(47,010)

1,172

51,320

(37,022)

151,306

45,241

(1,013)

(62,159)

133,375

Year ended December 31, 2017

Kumtor

Mount Milligan Molybdenum

Other

Consolidated

Cash provided by (used in) operations

416,082

150,567

(8,281)

(57,472)

500,896

Add back (deduct):

Change in operating working capital
Net cash provided by (used in) operations before
changes in working capital

8,209

(11,973)

9,310

6,147

11,693

424,291

138,594

1,029

(51,325)

512,589

Year ended December 31, 2016

Kumtor

Mount Milligan Molybdenum

Other

Consolidated

Cash provided by (used in) operations

416,355

92,251

(2,185)

(134,977)

371,444

Add back (deduct):

Change in operating working capital
Net cash provided by (used in) operations before
changes in working capital

(21,697)

(47,010)

1,172

34,877

(32,658)

394,658

45,241

(1,013)

(100,100)

338,786

2017-AR-Combined_MDA+FS.pdf - p54 (March 7, 2018 23:00:49)

54CENTERRA GOLD INC. ANNUAL REPORT 2017Average realized sales price for gold

The average realized gold price per ounce sold is calculated by dividing gold sales revenue, gross together
with the final pricing adjustments and mark-to-market adjustments by the ounces sold, as shown in the table
below:

Average realized sales price for gold

Gold sales reconciliation ($ millions)
Gold sales - Kumtor

Gold sales - Mt. Milligan

Gold sales related to cash portion of Royal Gold stream
Mark-to-market adjustments on sales to Royal Gold
Final adjustments on sales to Royal Gold

Total gold sales under Royal Gold stream

Gold sales to third party customers
Mark-to-market adjustments
Final pricing adjustments

Total gold sales to third party customers
Gold sales, net of adjustments
Refining and treatment costs
Total gold sales

Three months ended December 31,
2016

2017

Year ended December 31,
2016
2017

228.1

231.3

685.2

683.4

9.3
(1.1)
(0.2)
8.0

48.8
4.1
1.3
54.1
62.1
(0.3)
61.8

5.3
3.7
0.9
9.9

25.7
1.3
(7.3)
19.7
29.6
(0.2)
29.4

37.0
(1.4)
(0.2)
35.4

199.9
2.7
6.1
208.6
244.0
(1.1)
242.9

928.1

5.3
3.7
0.9
9.9

25.7
1.3
(7.3)
19.7
29.6
(0.2)
29.4

712.8

546,342
12,249
(711)
22,616

Total gold revenue - Consolidated

289.9

260.7

Ounces of gold sold
Gold ounces sold - Kumtor
Ounces sold to Royal Gold - Mt. Milligan
Ounces sold to Royal Gold - Mt. Milligan - Final adjustments
Ounces sold to third party customers - Mt. Milligan

180,703
21,266
-
40,258

191,842
12,249
(711)
22,616

550,134
85,059
(7,556)
164,828

Total ounces sold - Consolidated

242,228

225,996

792,466

580,496

Average realized sales price for gold on a per ounce basis
Average realized sales price - Kumtor

Average realized gold price - Royal Gold
Average realized gold price - Mark-to-market adjustments
Average realized gold price - Final pricing adjustments
Average realized gold price - Mt. Milligan - Royal Gold

Average realized gold price - Third party
Average realized gold price - Mark-to-market adjustments
Average realized gold price - Final pricing adjustments
Average realized gold price - Mt. Milligan - Third party
Average realized gold price - Mt. Milligan - Combined

Average realized sales price for gold - Consolidated

1,262

1,206

1,245

1,251

435
(54)
(8)
374

1,211
102
32
1,345
1,005

1,197

435
316
76
827

1,136
58
(323)
872
861

1,154

435
(18)
(3)
414

1,212
17
37
1,266
1,003

1,171

435
316
76
827

1,136
58
(323)
872
861

1,228

2017-AR-Combined_MDA+FS.pdf - p55 (March 7, 2018 23:00:49)

55CENTERRA GOLD INC. ANNUAL REPORT 2017Average realized sales price for Copper - Mount Milligan

The average realized copper price per pound is calculated by dividing copper sales revenue, gross together
with the final pricing adjustments and mark-to-market adjustments per pound, as shown in the table below:

Average realized sales price for Copper - Mount Milligan

Three months ended December 31,
2016

2017

Year ended December 31,
2016
2017

Copper sales reconciliation ($ millions)

Copper sales related to cash portion of Royal Gold stream
Mark-to-market adjustments on Royal Gold stream
Final adjustments on sales to Royal Gold
Total copper sales under Royal Gold stream

Copper sales to third party customers
Mark-to-market adjustments
Final price adjustments

Total copper sales to third party customers
Copper sales, net of adjustments
Refining and treatment costs
Copper sales

Pounds of copper sold (000's lbs)

Pounds sold to Royal Gold
Pounds sold to third party customers

Total pounds sold

Average realized sales price for copper on a per pound basis
Copper sales related to cash portion of Royal Gold stream
Mark-to-market adjustments on Royal Gold stream
Final pricing adjustments on Royal Gold stream

Average realized copper price - Royal Gold

Average realized copper price - Third party
Average realized copper price - Mark-to-market adjustments
Average realized copper price - Final pricing adjustments

Average realized copper price - Third party

Average realized copper price - Combined

Qualified Person & QA/QC

1.3
0.2
0.2
1.8

31.2
(2.0)
2.1
31.3
33.1
(3.9)
29.2

2,506
10,599
13,105

0.53
0.08
0.09
0.71

2.94
(0.19)
0.20
2.95

2.23

0.7
0.1
-
0.8

19.6
1.3
7.0
27.9
28.7
(2.7)
26.0

1,775
7,693
9,468

0.38
0.05
-
0.43

2.55
0.17
0.90
3.63

2.74

5.0
(0.5)
0.7
5.2

133.9
(1.5)
5.7
138.1
143.3
(17.4)
125.9

11,232
48,487
59,719

0.45
(0.05)
0.06
0.46

2.76
(0.03)
0.12
2.85

2.11

0.7
0.1
-
0.8

19.6
1.3
7.0
27.9
28.7
(2.7)
26.0

1,775
7,693
9,468

0.38
0.05
-
0.43

2.55
0.17
0.90
3.63

2.74

The scientific and technical information in this document, including the production estimates 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
prepared, reviewed, verified and compiled by Centerra’s geological and mining staff under the supervision
of Mr. 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 are done consistent with industry standards and independent certified assay labs are used.

The Kumtor deposit is described in Centerra’s most recently filed Annual Information Form and a technical
report dated March 20, 2015 (with an effective date of December 31, 2014), which are both filed on SEDAR
at www.sedar.com. The technical report is prepared in accordance with NI 43-101 and 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.

2017-AR-Combined_MDA+FS.pdf - p56 (March 7, 2018 23:00:49)

56CENTERRA GOLD INC. ANNUAL REPORT 2017The Mount Milligan deposit is described in Centerra’s most recently filed Annual Information Form and a
technical report dated March 22, 2017 (with an effective date of December 31, 2016) prepared in accordance
win NI 43-101, both of which are available on SEDAR at www.sedar.com. The technical report describes
the exploration history, geology and style of gold mineralization at the Mount Milligan deposit. 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.

The Boroo deposit is described in Centerra’s most recently filed Annual Information Form and a technical
report dated December 17, 2009 prepared in accordance with NI 43-101, both of which are 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 most recently filed Annual Information Form and a technical
report dated December 22, 2017 (with an effective date of October 31, 2017) prepared in accordance with
NI 43-101 both of which are available 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.

The Öksüt deposit is described in Centerra’s most recently filed Annual Information Form and in a technical
report dated September 3, 2015 (with an effective date of June 30, 2015) prepared in accordance with NI
43-101 both of which are available on SEDAR at www.sedar.com. The technical report describes the
exploration history, geology and style of gold mineralization at the Öksüt deposit. Sample preparation,
analytical techniques, laboratories used and quality assurance-quality control protocols used during the
drilling programs at the Öksüt Project are the same as, or similar to, those described in the technical report.

The Hardrock deposit is described in a technical report dated December 21, 2016 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 Hardrock deposit. Sample
preparation, analytical techniques, laboratories used and quality assurance-quality control protocols used
during the drilling programs at the Hardrock Project are the same as, or similar to, those described in the
technical report.

The Kemess project is described in a technical report dated July 14, 2017 prepared in accordance with NI
43-101. The technical report has been filed on SEDAR at www.sedar.com by AuRico Metals Inc. The
technical report describes the exploration history, geology and style of gold mineralization at the Kemess
Underground deposit and the Kemess East project. Sample preparation, analytical techniques, laboratories
used and quality assurance-quality control protocols used during the drilling programs at the Kemess
Project are the same as, or similar to, those described in the technical report.

Risks That Can Affect Our Business

Below are the risk factors that Centerra believes can have a material effect on the profitability, future cash
flows, earnings, results of operations, stated mineral reserves and mineral resources and financial condition
of the Company. If any event arising from these risks occurs, the Company’s business, prospects, financial

2017-AR-Combined_MDA+FS.pdf - p57 (March 7, 2018 23:00:49)

57CENTERRA GOLD INC. ANNUAL REPORT 2017condition, results of operations or cash flows could be adversely affected, the trading price of Centerra’s
common shares could decline and all or part of any investment in Centerra may be lost. You should note
that the following is not however a complete list of the potential risks we face. 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.

Strategic Risks

Country, Political & Regulatory

Centerra’s operations and mineral resources are subject to country political and regulatory risks

Centerra’s mining operations and exploration activities are affected in varying degrees by the political
stability and government regulations relating to investment, corporate activity, and the mining business in
the countries in which it operates, explores and develops properties. Operations may also be affected in
varying degrees by terrorism; military conflict or repression; crime; populism; activism; labour unrest;
attempts to renegotiate or nullify existing concessions, licenses, permits and contracts; unstable or
unreliable legal systems; changes in fiscal regimes including taxation, and other risks arising out of
sovereignty issues.

Relevant governments have entered into contracts with Centerra and/or granted mining claims, permits,
licenses or concessions that enable us to conduct operations or exploration and development activities.
Notwithstanding these arrangements, Centerra’s ability to conduct operations, exploration and/or
development activities at any of its properties is subject to obtaining and/or renewing permits or
concessions, changes in laws or government regulations or shifts in political attitudes beyond its control.

A significant portion of the Company’s gold production and its mineral reserves and mineral resources are
derived from assets located in the Kyrgyz Republic and Turkey, countries that have experienced political
difficulties in recent years. There continues to be a risk of future political instability in these jurisdictions.

The Company does not currently carry political risk insurance covering its investments in any of the
countries where it operates. From time to time, it assesses the costs and benefits of obtaining and
maintaining such insurance. There can be no assurance that, if the Company chose to obtain it, political
risk insurance would be available to it, or that particular losses the Company may suffer with respect to its
foreign investments will be covered by any insurance that we may obtain in the future. Any such losses
could have an adverse impact on the Company’s future business operations, prospects, financial condition,
results of operations and cash flows.

Resource nationalism could adversely impact Centerra’s business

Companies in the mining and metals sector continue to be targeted to raise government revenue,
particularly as governments struggle with deficits and concerns over the effects of depressed
economies. Many governments are continually assessing the fiscal terms of the economic rent for mining
companies to exploit resources in their countries. Numerous countries, including the Kyrgyz Republic,
Mongolia and Turkey have in the past introduced changes to their respective mining regimes that
reflect increased government control or participation in the mining sector, including, but not limited to,
changes of laws or governmental regulations affecting foreign ownership, mandatory government
participation, taxation and royalties, labour mine safety, exchange rates, exchange controls, permitting
and licensing of exploration, development and production, land use restrictions, annual fees to maintain
import duties,
mineral properties in good standing, price controls, export controls, export and
restrictions on repatriation of income or return of capital, requirements for local processing of
mineral products, environmental protection, as well as requirements for employment of local staff or
contractors, and contributions to infrastructure and social support systems.

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58CENTERRA GOLD INC. ANNUAL REPORT 2017The Company’s operations may be affected in varying degrees by such laws and government regulations.

There can be no assurance that industries deemed of national or strategic importance like mineral production
will not be nationalized. Government policy may change to discourage foreign investment;
renationalization of mining industries may occur; or other government limitations, restrictions or
requirements not currently foreseen may be implemented. There can be no assurance that the Company’s
assets will not be subject to nationalization, expropriation or confiscation, whether legitimate or not, by any
authority or body. While there are often provisions for compensation and reimbursement of losses to
investors under such circumstances, there is no assurance that such provisions would effectively restore the
value of the Company’s original investment or that such restoration would occur within a reasonable
timeframe. There also can be no assurance that the laws in these countries protecting foreign investments
will not be amended or abolished or that these existing laws will be enforced or interpreted to provide
adequate protection against any or all of the risks described above. Furthermore, there can be no assurance
that the agreements the Company has with the governments of these countries will prove to be enforceable
or provide adequate protection against any or all of the risks described above.

Centerra’s ability to make payments depends on the cash flows of its subsidiaries.

Centerra conducts substantially all of its operations through subsidiaries, some of which are incorporated
outside North America. The Company has no direct operations and no significant assets other than the
shares of its subsidiaries. Therefore, the Company is dependent on the cash flows of its subsidiaries to meet
its obligations, including payment of dividends, principal and interest on any debt it incurs. The ability of
Centerra’s subsidiaries to provide the parent company with payments may be constrained by the following
factors: (i) the cash flows generated by operations, investment activities and financing activities; (ii) the
level of taxation, particularly corporate profits and withholding taxes, in the jurisdiction in which they
operate and in Canada; and (iii) the introduction of exchange controls, repatriation restrictions (including
those that may be ordered by courts) or the availability of hard currency to be repatriated.

Changes in, or more aggressive enforcement of, laws, regulations and government practices could
adversely impact Centerra’s business.

Mining operations, development activities, and exploration activities are subject to extensive laws and
regulations, both in the countries where mining operations and exploration and development activities are
conducted and in the mining company’s home jurisdiction. Centerra’s lenders may also impose similar
requirements to Centerra’s operations. These regulations relate to production, development, exploration,
exports, imports, taxes and royalties, labour standards, suppliers and contractors, occupational health, waste
disposal, protection and remediation of the environment, mine decommissioning and reclamation, mine
safety, toxic substances, transportation safety and emergency response, social responsibilities and
sustainability, and other matters.

Compliance with these laws, regulations and lender requirements increases the costs of exploring, drilling,
developing, constructing, operating and closing mines and other facilities. It is possible that the costs,
delays, access to land, water, and power, and other effects associated with these laws and regulations may
impact the Company’s decision as to whether to continue with operating its existing mines, ore processing
and other facilities, or whether to proceed with exploration or development of properties. Since legal
requirements change frequently, are subject to interpretation and may be enforced to varying degrees in
practice, the Company is unable to predict the ultimate cost of compliance with these requirements or their
effect on operations.

In particular, globally there has been an increasing level of local community concerns in respect of the
environmental footprint of mining operations as well as concerns over the management of water resources,
and the mine closure plans. This may lead to governments and lenders becoming increasing rigorous in
their laws, regulations or lender’s requirements.

2017-AR-Combined_MDA+FS.pdf - p59 (March 7, 2018 23:00:50)

59CENTERRA GOLD INC. ANNUAL REPORT 2017If the laws, regulations or lender requirements relating to the Company’s operations were to change, or the
enforcement of such requirements were to become more rigorous, the Company could be required to incur
significant capital and operating expenditures to comply, which could have a material adverse effect on its
financial position and its ability to achieve operating and development targets. Changes to laws and
regulations may also impact the value of the Company’s reserves.

Community activism may influence laws and regulations, result in increased contributory demands,
or in business interruption or delay

Slow economic development in some of the countries in which the Company operates has resulted in an
increase in community activism and expectations by local governments for resource companies to increase
their contributions to local communities. For example, Kumtor has experienced a number of roadblocks in
the past resulting from the discontent of various community groups. Similarly, in Mongolia, community
groups and NGOs have vigorously campaigned against foreign mining companies. Heightened global
concern for the environment and water in particular, as a result of both climate change impacts as well as
following certain significant industrial accidents, has led to increased scrutiny of mining operations, review
of laws aimed at environmental protection, and delays in the issuance of required permits and licenses for
development and operation activities. There can be no assurance that the Company’s operations will not
be disrupted by civil action or be subject to restrictions or imposed demands that will impact future cash
flows, earnings, results of operation, financial condition, and reputation.

There is a risk that the Strategic Agreement with the Government of the Kyrgyz Republic will not be
successfully completed

The Company entered into the Strategic Agreement with the Government of the Kyrgyz Republic on
September 11, 2017 which sets out the pathway for the resolution of substantially all the outstanding claims,
disputes, court proceedings and court orders affecting the Kumtor Project. A fulsome discussion of the
Strategic Agreement is found elsewhere in this document. Completion of the Strategic Agreement is subject
to various conditions precedents which are expected to be completed by the deadline of April 20, 2018.
While the Company has been working closely with the Government of the Kyrgyz Republic to
expeditiously satisfy the remaining conditions precedents, there are no assurances that all of the conditions
precedent to the completion of the settlement contained in the Strategic Agreement will be satisfied. If the
settlement contained in the Strategic Agreement is not completed, there are no assurances that (i) the
Company will be able to successfully resolve any or all of the outstanding matters affecting the Kumtor
Mine or that any future discussions between us and the Kyrgyz Republic Government will result in a
mutually acceptable resolution; or (ii) the Kyrgyz Republic Government and/or Parliament will not take
actions that are inconsistent with the Government’s obligations under the Strategic Agreement or Kumtor
Project Agreements, including adopting a law “denouncing” or purporting to cancel or invalidate the
Kumtor Project Agreements or laws enacted in relation thereto which have the effect of nationalization of
the Kumtor Project. Furthermore, if all such claims are not resolved as provided for in the Strategic
Agreement and despite the Company’s view that all disputes related to the 2009 Restated Investment
Agreement should be determined in arbitration, there are risks that the arbitrator may (i) reject the
Company’s claims; (ii) determine it does not have jurisdiction; and/or (iii) stay the arbitration pending
determination of certain issues by the Kyrgyz Republic courts. Even if the Company receives an arbitral
award in its favour against the Kyrgyz Republic and/or Kyrgyzaltyn, there are no assurances that it will be
recognized or enforced in the Kyrgyz Republic. Accordingly, the Company may be obligated to pay part
of or the full amounts of such claims regardless of the action taken by the arbitrator. The Company does
not have insurance or litigation reserves to cover these costs. If the Company were obligated to pay these
amounts, it would have a material adverse impact on the Company’s future cash flows, earnings, results of
operations and financial condition.

2017-AR-Combined_MDA+FS.pdf - p60 (March 7, 2018 23:00:50)

60CENTERRA GOLD INC. ANNUAL REPORT 2017The Company’s planned activities are dependent upon receipt and/or renewal of numerous permits
and licenses

A number of approvals, licenses and permits are required for various aspects of exploration, mine
development, and operations. This includes licenses and permits, which include or cover without limitation
air quality, water quality, water rights, dam safety, emergency preparedness, hazardous materials (including
the transportation thereof), waste rock management, solid waste disposal and tailings operations. Changes
in a mine's design, production rates, quality of material mined, milling processes or circuits, and many other
matters often require submission of the proposed changes for agency approval prior to implementation
(including consultations with First Nations), and these may not be obtained. In addition, changes in
operating conditions beyond our control, changes in agency policy and federal, provincial and state laws,
litigation or community opposition could further affect the successful permitting of operations.

Obtaining and maintaining the various permits for the Company’s exploration, mine development, and
operations is complex, time-consuming and expensive. The Company has in place processes and personnel
designed to obtain all necessary permits and licenses. However, its efforts are contingent upon many
variables outside of its control. The Company cannot be certain that all necessary permits and licenses will
be maintained or obtained on acceptable terms or in a timely manner. Any failure to obtain or maintain
permits or licenses, even if inadvertent, could result in the interruption of production, exploration or
development, or material fines, penalties or other liabilities. Any inability to obtain and maintain required
approvals, licenses and permits could have an adverse effect on the Company’s future cash flows, earnings,
results of operations and financial condition.

The Company’s relationships with local communities may affect our existing operations and
development projects

Having positive and constructive relationship with the communities in which the Company operates is
critical to ensure the future success of its existing operations and the construction and development of our
development projects. There is an increasing level of public concern relating to the real and perceived effect
of mining activities on the environment and on communities impacted by such activities. Adverse publicity
relating to the mining industry or the Company could have an adverse effect on the Company’s reputation
or financial condition and may impact its relationship with the communities in which it operates. Reputation
loss may also result in decreased investor confidence, increased challenges in developing and maintaining
community relations and serve as an impediment to the Company’s overall ability to advance its projects,
which could have a material adverse impact on the Company’s results of operations, financial condition
and prospects. While the Company is committed to operating in a socially responsible manner, there is no
guarantee that its efforts in this regard will mitigate this potential risk.

The inability of the Company to maintain positive relationships with local communities may also result in
additional obstacles to permitting, increased legal challenges, or other disruptive operational issues at any
of its operating mines, and could have a significant adverse impact on the Company’s ability to generate
cash flow, with a corresponding adverse impact to our share price and financial condition.

Centerra may not be able to successfully negotiate an investment agreement, a deposit development
agreement, and/or a community development agreement for Gatsuurt

There can be no assurance that Centerra will be able to successfully negotiate with the Government of
Mongolia a mutually acceptable investment agreement, deposit development agreement, and/or community
development agreement, in all cases for the development and operation of the Gatsuurt project. The
Company is in discussions with the Government of Mongolia regarding these potential agreements.
Furthermore, even if these agreements are successfully concluded with the Government of Mongolia for
the Gatsuurt project, there are no assurances that the Government will not later seek to re-negotiate its terms
and conditions.

2017-AR-Combined_MDA+FS.pdf - p61 (March 7, 2018 23:00:50)

61CENTERRA GOLD INC. ANNUAL REPORT 2017Aboriginal Claims and Consultation Issues

Certain of Centerra’s properties are subject to rights or the asserted rights of various community
stakeholders, including First Nations and other Indigenous groups. These interests of such community
stakeholders and rights as well as related consultation issues may impact the Company’s ability to pursue
exploration, development and mining at certain of its properties. Governments in many jurisdictions must
consult with, or require the Company to consult with, affected First Nations and other indigenous groups
with respect to grants of mineral rights, the issuance or amendment of project authorizations, and the grant
of necessary licenses and permits. Consultation and other rights of First Nations and indigenous groups
may require accommodation including undertakings regarding employment, royalty payments and other
matters. This may affect the Company’s ability to acquire within a reasonable time frame effective mineral
titles, permits or licenses in these jurisdictions in which title or other rights are claimed by First Nations
and other indigenous peoples, and may affect the timetable and costs of development and operation of
mineral properties in these jurisdictions, particularly if the Company is required to, or chooses to, enter into
community development, impact benefits agreements, or other similar agreements with affected
communities. These legal requirements may also affect the Company’s ability to expand or transfer existing
operations or to develop new projects.

Any failure to comply with applicable laws and regulations or licences and permits, even if inadvertent,
could result in interruption or closure of exploration, development or mining operations or material fines,
penalties or other liabilities.

Legal and Other

Current and future litigation may impact the revenue and profits of the Company

The Company is from time to time involved in or subject to legal proceedings related to its business. These
claims can be based on allegations of breach of contract, negligence, breach of statutory duty, public
nuisance or private nuisance or otherwise in connection with our operations or investigations relating
thereto. Such legal proceedings can be complex, costly, and highly disruptive to business operations by
diverting the attention and energies of management and other key personnel. The assessment of the outcome
of legal proceedings, including its potential liability, if any, is a highly subjective process that requires
judgments about future events that are not within our control. The outcome of litigation, arbitration or other
legal proceedings, including amounts ultimately received or paid upon judgment or settlement, may differ
materially from management's outlook or estimates, including any amounts accrued in the financial
statements. Actual outcomes, including judgments, awards, settlements or orders, could have a material
adverse effect on our business, financial condition, operating results, or cash flows.

Centerra’s properties may be subject to defects in title

Centerra has investigated its rights to explore and exploit all of its material properties, and, except as
described below, to the best of its knowledge, those rights are in good standing. However, no assurance can
be given that such rights will not be revoked or significantly altered to its detriment. There can also be no
assurance that the Company’s rights will not be challenged or impugned by third parties, including local
governments and Aboriginal groups. As a result, the Company may be constrained in its ability to operate
its properties or unable to enforce its rights with respect to its properties. An impairment to, or defect in,
title to its properties could have a material adverse effect on the Company’s business, financial condition
or results of operations.

On July 5, 2012, the Kyrgyz Government cancelled Government Decree #168, which provided Kumtor
with land use (surface) rights over the Kumtor Concession Area for the duration of the Restated Concession
Agreement. At the same time, the related land use certificate issued by the local land office was also
cancelled. In addition, in November 2013, the Company received a claim from the Kyrgyz Republic

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62CENTERRA GOLD INC. ANNUAL REPORT 2017General Prosecutor’s Office requesting the Inter-District Court of the Issyk-Kul Province to invalidate the
Company’s land use certificate and seize certain lands within the Kumtor concession area. Based on advice
from Kyrgyz legal counsel, the Company believes that the purported cancellation of Kumtor’s land use
rights is invalid. The court proceedings commenced by the GPO were terminated by the GPO in August
2017 as part of the Strategic Agreement. The matter of Kumtor’s land use certificate is expected to be
resolved as part of the Strategic Agreement which is scheduled to close by April 20, 2018.

On December 6, 2006, Gatsuurt LLC commenced arbitration before the Mongolian National Arbitration
Court (MNAC) alleging non-compliance by its subsidiary, CGM, with its obligation to complete a
feasibility study on the Gatsuurt property by December 31, 2005 and seeking the return of the license. CGM
believed that Gatsuurt LLC’s position was without merit. CGM challenged the MNAC’s jurisdiction and
the independence and impartiality of the Gatsuurt LLC nominee to the arbitration panel. CGM later reached
an agreement with Gatsuurt LLC to terminate arbitration proceedings. Further to that agreement CGM paid
$1.5 million to Gatsuurt LLC. On signing of a definitive agreement, but subject to CGM having entered
into an investment agreement with the Government of Mongolia in respect of the development of the
Gatsuurt project, CGM will make a further non-refundable payment to Gatsuurt LLC in the amount of $1.5
million. Final settlement with Gatsuurt LLC is subject to the negotiation and signing of a definitive
settlement agreement.

In the first quarter of 2016, a non-governmental organization called “Movement to Save Mt. Noyon” filed
a claim against the Mongolian Mineral Resources Authority (MRAM) requesting that MRAM revoke the
two principal mining licenses underlying the Gatsuurt Project. CGM, the holder of these two mining
licenses, is involved in the claim as a third party. Centerra believes that such claims are without merit,
however, such proceedings are ongoing.

Although the Company is not currently aware of any existing title uncertainties with respect to any of its
properties except as discussed in the preceding paragraphs, there is no assurance that such uncertainties will
not result in future losses or additional expenditures, which could have an adverse impact on the Company’s
future cash flows, earnings, results of operations and financial condition.

Centerra may be unable to enforce its legal rights in certain circumstances

In the event of a dispute arising at its foreign operations, the Company may be subject to the exclusive
jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of
courts in Canada or in arbitration. The Company may also be hindered or prevented from enforcing its
rights with respect to a governmental entity or instrumentality because of the doctrine of sovereign
immunity.

The dispute resolution provisions of the Restated Investment Agreement for the Kumtor project stipulate
that any dispute between the parties thereto is to be submitted to international arbitration. However, there
can be no assurance that a particular governmental entity or instrumentality will either comply with the
provisions of these or any other agreements or voluntarily submit to arbitration. The Company’s inability
to enforce its rights could have an adverse effect on its future cash flows, earnings, results of operations
and financial condition.

Centerra’s largest shareholder is a state-owned entity of the Kyrgyz Government

Centerra’s largest shareholder is Kyrgyzaltyn, which is a state-owned entity. Kyrgyzaltyn owns
approximately 27% of the common shares of Centerra. Pursuant to the terms of the Restated Shareholders
Agreement, to which Centerra and Kyrgyzaltyn are parties, Kyrgyzaltyn has two nominees on its board of
directors. In addition, and in light of various considerations including the importance of the Kumtor project

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63CENTERRA GOLD INC. ANNUAL REPORT 2017to Centerra, Centerra included in its proposed nominees for election at the most recent annual general
shareholders’ meeting a third nominee of Kyrgyzaltyn who was elected to the Board.

There can be no assurance that the Kyrgyz Government, through its ownership and control of Kyrgyzaltyn,
will not use its influence to materially change the direction of the Company. This concentration of
ownership may have the effect of delaying or preventing a change in control of Centerra, which may deprive
its shareholders of a control premium that might otherwise be offered in connection with such a change of
control. The Company is aware that Kyrgyzaltyn has in the past received inquiries regarding the potential
acquisition of some or all of its common shares in the Company and the sale by Kyrgyzaltyn of its
shareholdings to a third party could result in a new purchasing shareholder obtaining a considerable interest
in the Company. Should Kyrgyzaltyn sell some or all of its interest in Centerra, there can be no assurance
that an offer would be made to the other shareholders of Centerra or that the interests of such a shareholder
would be consistent with the plans of the Company or that such a sale would not decrease the value of the
common shares.

Artisanal mining is occurring and may continue to occur illegally on the Gatsuurt property

Artisanal mining is widespread in Mongolia and a significant number of artisanal miners have entered into
the Gatsuurt property. The Company is unable to continuously monitor the full extent of the artisanal
miners on the Gatsuurt property however it understands that the numbers have reached up to 200-400
artisanal miners at a single time. In addition to potential health and safety concerns for Centerra’s employee
and of the artisanal miners, the presence of artisanal miners could also lead to project delays and disputes
regarding the development or operation of commercial gold deposits, including disputes with Mongolian
governmental authorities regarding reporting of reserves and mine production. The illegal activities of these
miners could also cause environmental damage (including environmental damage from the use of mercury
by these miners) or other damage to the Company’s property, equipment, personal injury or death, or
conflict with local communities. The Company has advised appropriate Mongolian federal and aimag
(local) governments, relevant state bodies and police of the issues relating to the activities of artisanal
miners and have requested their assistance to clear the Gatsuurt site. Centerra does not support any violence
or use of force in encounters between Mongolian authorities and artisanal miners and have made this
explicitly clear to Mongolian authorities. Centerra will continue to work with relevant authorities in
Mongolia, but to the extent that there are adverse consequences from the presence of these artisanal miners,
the Company could potentially be held responsible and this could have an adverse impact on the Company’s
future cash flows, earnings, results of operations and financial condition.

Centerra’s directors may have conflicts of interest

Certain of Centerra’s directors also serve as directors and/or officers of other companies involved in natural
resource exploration, development and production and consequently there exists the possibility for such
directors to be in a position of conflict.

Centerra is subject to Anti-Corruption Legislation

Centerra is subject to anti-corruption and anti-bribery laws, including Canada’s Corruption of Foreign
Public Officials Act (the “Anti-Corruption Legislation”), which prohibits Centerra or any officer, director,
employee or agent of Centerra or any shareholder of Centerra acting on its behalf from paying, offering to
pay, or authorizing the payment of anything of value to any foreign government official, government staff
member, political party, or political candidate in an attempt to obtain or retain business or to otherwise
influence a person working in an official capacity. The Anti-Corruption Legislation also requires public
companies to make and keep books and records that accurately and fairly reflect their transactions and to
devise and maintain an adequate system of internal accounting controls. Centerra’s international activities
create the risk of unauthorized payments or offers of payments by Centerra’s employees, consultants or

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64CENTERRA GOLD INC. ANNUAL REPORT 2017agents, even though they may not always be subject to Centerra’s control. Centerra prohibits these practices
and provides training and education to its employees and seeks confirmation of compliance from its
consultants and agents. However, Centerra’s existing safeguards may prove to be less than effective, and
Centerra’s employees, consultants and agents may engage in conduct for which Centerra might be held
responsible. Any failure by us to adopt appropriate compliance procedures and ensure that Centerra’s
employees and agents comply with the Anti-Corruption Legislation and applicable laws and regulations in
foreign jurisdictions could result in substantial penalties or restrictions on Centerra’s ability to conduct
business in certain foreign jurisdictions, which may have a material adverse impact on Centerra and its
share price.

Strategy and Planning

Centerra’s future exploration and development activities may not be successful

Exploration for and development of gold properties involve significant financial risks and may be subject
to political risks that even a combination of careful evaluation, experience and knowledge may not
eliminate. While the discovery of an orebody may result in substantial rewards, few properties that are
explored are ultimately developed into producing mines. The economic feasibility of development projects
is based upon many factors, including the accuracy of mineral reserve estimates; metallurgical recoveries;
capital and operating costs; government regulations relating to prices, taxes, royalties, land tenure, land use,
water consumption, importing and exporting, environmental protection; and gold prices, which are highly
volatile. Development projects are also subject to the successful completion of socio-environmental impact
assessments, feasibility studies, issuance of necessary governmental permits and availability of adequate
financing.

The Company’s ability to sustain or increase present levels of gold production is dependent on the
successful acquisition or discovery and development of new orebodies and/or expansion of existing mining
operations. The Company cannot ensure that its current exploration and development programs will result
in profitable commercial mining operations or replacement of current production at existing mining
operations with new mineral reserves. Also, substantial expenses may be incurred on exploration projects
that are subsequently abandoned due to poor exploration results or the inability to define mineral reserves
that can be mined economically.

It is not unusual for new mining operations to experience unexpected problems during the start-up phase
and to require more capital than anticipated. These uncertainties could have an adverse impact on the
Company’s future cash flows, earnings, results of operations and financial condition.

Centerra’s mineral reserves may not be replaced

Centerra has two projects that provide revenue – the Kumtor project located in the Kyrgyz Republic and
the Mount Milligan project located in British Columbia, Canada. Current life-of-mine plans for Kumtor
contemplate mining until 2023 and milling operations until 2026. Based on the current life-of-mine plan
for Mount Milligan, there is approximately 20 years remaining (to 2038)

If the Company’s existing mineral reserves are not replaced either by the development or discovery of
additional reserves and/or extension of the life-of-mine at its operations or through the acquisition or
development of an additional producing mine, this could have an adverse impact on its future cash flows,
earnings, results of operations and financial condition, including as a result of requirements to expend funds
for reclamation and decommissioning. Although the Company is actively engaged in programs to increase
mineral reserves, there can be no assurance that these programs will be successful.

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65CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra may experience difficulties with its partners

As a result of having partners in the exploration, development and operation of the Company’s projects
(Endako, Greenstone, and exploration option arrangements), the Company is subject to the risks normally
associated with any partnership/joint venture arrangements. These risks include disagreement with a partner
on how to explore, develop, operate and finance a project, possible litigation between us and a partner
regarding matters in the agreement, and failure by the Company’s partners to abide by Centerra’s policies
and procedures. This may be particularly the case when the Company is not the operator on the property.
These matters may have an adverse effect on the Company’s ability to pursue the projects subject to the
partner, which could affect its future cash flows, earnings, results of operations and financial condition.

Centerra’s mineral reserve and resource estimates may be imprecise

Mineral reserve and resource figures are estimates and no assurances can be given that the indicated levels
of gold will be produced or economically extracted, or that we will receive the price assumed in determining
its mineral reserves. These estimates are expressions of judgment based on knowledge, mining experience,
analysis of drilling results and industry practices. Valid estimates and the assumptions such estimates rely
on may significantly change when new information becomes available or conditions change. While the
Company believes that the mineral reserve and resource estimates included are well established and reflect
management’s best estimates, by their nature mineral reserve and resource estimates are imprecise and
depend, to a certain extent, upon analysis of drilling results and statistical inferences that may ultimately
prove unreliable.

Furthermore, fluctuations in the market price of gold, copper and other commodities as well as increased
capital or production costs or reduced recovery rates may render mineral reserves uneconomic and may
ultimately result in a reduction of reserves. The extent to which mineral resources may ultimately be
reclassified as proven or probable mineral reserves is dependent upon the demonstration of their profitable
recovery. The evaluation of mineral reserves or resources is always influenced by economic and technical
factors, which may change over time.

No assurances can be given that any mineral resource estimate will ultimately be reclassified as proven or
probable mineral reserves. If the Company’s mineral reserve or mineral resource figures are inaccurate or
are reduced in the future, this could have an adverse impact on the Company’s future cash flows, earnings,
results of operations and financial condition.

Centerra’s production and cost estimates may be inaccurate

Centerra prepares estimates of future production and future production costs for particular operations. No
assurance can be given that production and cost estimates will be achieved. These production and cost
estimates are based on historical costs and productivity experience. Despite this, actual production and
costs may vary from estimates for a variety of reasons, including actual ore mined varying from estimates
of grade, tonnage, dilution and metallurgical and other characteristics; short-term operating factors relating
to the ore reserves, such as the need for sequential development of orebodies and the processing of new or
different ore grades; encountering unusual or unexpected geological conditions; risks and hazards
associated with mining; shortages of principal supplies needed for operations, including explosives, fuel,
chemical reagents, water, equipment parts and lubricants; natural phenomena, such as inclement weather
conditions, floods, earthquakes, ice or ground movements, pit wall failures and cave-ins; equipment
failures; labour issues including unexpected labour shortages or strikes, and the inability to retain or attract
the proper talent and civil action by employees; and insufficient modelling robustness. Costs of production
may also be affected by a variety of factors, including: changing waste-to-ore ratios, ore grade metallurgy,
labour costs, costs of supplies and services (such as, for example, fuel and power), general inflationary
pressures and currency exchange rates. Failure to achieve production estimates or production cost estimates

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66CENTERRA GOLD INC. ANNUAL REPORT 2017could have an adverse impact on the Company’s future cash flows, earnings, results of operations and
financial condition.

As a result of social media and other web-based applications, companies today are at much greater
risk of losing control over how they are perceived.

Damage to the Company’s reputation can be the result of the actual or perceived occurrence of any number
of events, including, without limitation, allegations of fraud or improper conduct, environmental non-
compliance or damage, or the lack of meeting the Company’s objectives or guidance. Any of these events
could result in negative publicity to the Company, regardless of whether the underlying event is true or not.

Although Centerra places a great emphasis on protecting its image and reputation, the Company does not
ultimately have direct control over how it is perceived by others. Reputation loss may lead to increased
challenges in developing and maintaining government and community relations, decreased investor
confidence and act as an impediment to the Company’s overall ability to advance its projects, or to access
equity or debt financing, thereby having a material adverse impact on the Company’s share price, financial
performance, cash flows and growth prospects.

Centerra may be unable to identify opportunities to grow its business or replace depleted reserves,
and it may be unsuccessful in integrating new businesses and assets that we acquire.

As part of Centerra’s business strategy, the Company has sought and will continue to seek new operating,
development and exploration opportunities in the mining industry. In pursuit of such opportunities, the
Company may fail to select appropriate acquisition candidates or negotiate acceptable arrangements,
including arrangements to finance acquisitions or integrate the acquired businesses into its business. The
Company cannot provide assurances that it can complete any acquisition or business arrangement that it
pursues, or is pursuing, on favorable terms, if at all, or that any acquisitions or business arrangements
completed will ultimately benefit its business. Further, any acquisition the Company makes will require a
significant amount of time and attention of the Company’s management, as well as resources that otherwise
could be spent on the operation and development of its existing business.

Any future acquisitions would be accompanied by risks, such as a significant decline in the relevant metal
price after the Company commits to complete an acquisition on certain terms; the quality of the mineral
deposit acquired proving to be lower than expected; the difficulty of assimilating the operations and
personnel of any acquired companies; the potential disruption of its ongoing business; the inability of
management to realize anticipated synergies and maximize its financial and strategic position; the failure
to maintain uniform standards, controls, procedures and policies; and the potential for unknown or
unanticipated liabilities associated with acquired assets and businesses, including tax, environmental or
other liabilities. There can be no assurance that any business or assets acquired in the future will prove to
be profitable, that the Company will be able to integrate the acquired businesses or assets successfully or
that the Company will identify all potential liabilities during the course of due diligence. Any of these
factors could have a material adverse effect on its business, expansion, results of operations and financial
condition.

The trading price of the Company’s common shares may be subject to large fluctuations and may
increase or decrease in response to a number of events and factors.

These factors may include, but are not limited to:

•

The price of gold, copper and other metals;

The impact of exchange rates on our operation costs;

The Company’s operating performance and the performance of competitors and other similar
companies;

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67CENTERRA GOLD INC. ANNUAL REPORT 2017•

•

The public’s reaction to the Company’s press releases, other public announcements and its
filings with the various securities regulatory authorities;

Changes in earnings estimates or recommendations by research analysts who track the
Company’s common shares or the shares of other companies in the resource sector;

Changes in general economic conditions;

The presences or actions of a large shareholder;

The arrival or departure of key personnel; and

Acquisitions, strategic alliances or joint ventures involving the Company or its competitors.

In addition, the market price of the Company’s shares are affected by many variables not directly related to
the Company’s success and are therefore not within its control, including other developments that affect
the market price and volume volatility for all resource sector shares, the breadth of the public market for
the Company’s shares, and the attractiveness of alternative investments. The effect of these and other
factors on the market price of the common shares on the exchanges in which the Company trades has
historically made Centerra’s share price volatile and suggests that the Company’s share price will continue
to be volatile in the future.

Natural Phenomena

Centerra may experience further ground movements at the Kumtor project

From time to time, Kumtor has experienced ground movement in various parts of the Central pit, which
has, in some cases, led to an employee casualty, considerable short falls in the annual gold production,
changes in mining sequences, increased expenditure on depressurization and dewatering programs, the
movement of existing infrastructure and/or the redesign and construction of new infrastructure, reduced
slope angles of the Central Pit, and changes in waste rock dump designs.

Although extensive efforts are employed by Centerra to prevent and anticipate further ground movement,
there is no guarantee that sudden unexpected ground movements will not recur. A future ground movement
could result in a significant interruption of operations. The Company may also experience a loss of mineral
reserves or a material increase in costs, if it is necessary to redesign the open pit or waste rock dumps as a
result of a ground movement. The consequences of a ground movement will depend upon the magnitude,
location and timing of any such movement. If mining operations are interrupted to a significant magnitude
or the mine experiences a significant loss of mineral reserves or materially higher costs of operation, this
would have an adverse impact on the Company’s future cash flows, earnings, results of operations and
financial condition.

Centerra may experience unanticipated waste dump movements at the Kumtor project

We often have to mine a significant amount of waste rock material in order to gain access to the
economically viable ore. At the Kumtor Mine, we place this waste rock material in three areas which have
been permitted by Kyrgyz authorities for such purpose: the Davidov Valley waste dump, Lysii waste dump
and Sarytor waste dump. These waste dumps are continuously monitored to, among other things, ensure
their stability. In 2013, a large section of Kumtor’s principal waste-rock dump, the Davidov Valley waste
dump, experiencing a greater than anticipated rate of movement which required the relocation of certain
mine infrastructure including workshops, administrative facilities and electrical substations. The Company
expedited the relocation of the affected infrastructure to ensure continued safe operations.

Extensive efforts are employed by Kumtor to confirm the stability of the waste dumps and to anticipate
waste dump movement (some minimal movement is naturally expected to occur) including automated

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68CENTERRA GOLD INC. ANNUAL REPORT 2017system monitoring, third parties geotechnical reviews, and revision to the strategies for placing waste rock
on the waste dumps. However, despite these effects, there are no assurances that sudden unexpected waste
dump movements will not recur as they are many factors that are outside of our control that may impact the
stability and movement of the waste dump, including weather conditions. Any unanticipated waste dump
movement could result in interruption of operations. There is also a possibility that waste dump movement
may reach the tailings dam facility, which could have significant effects on the environment (see risk
entitled “Water management and the oversight of our tailings management facilities are subject to
regulation and risks and could result in significant damages to persons and property.”) The consequences
of a waste dump movement will depend upon the magnitude, location and timing of any such movement.
If mining operations are interrupted to a significant magnitude or waste dump reaches the tailings dam
facility, this would have an adverse impact on our future cash flows, earnings, results of operations and
financial condition.

Centerra will experience further ice movement at the Kumtor Project

Continued movement of ice from the South East Ice Wall into the Kumtor Central pit above the high grade
SB Zone section requires the mining of ice and waste to maintain its planned production of ore.

During 2012, a substantial acceleration of ice movement, which was exacerbated by a 10-day illegal strike
which occurred in early February 2012, required us to revise its mine plan to maintain safe access to the
Kumtor Central pit. Under the new mine plan, mining of cut-back 12B, where ore for the second quarter
of 2012 was to be released, was stopped to permit pre-stripping of ice and waste in the southwest portion
of the pit (cut-back 14B) and unloading of ice and waste material from the High Movement Area to provide
access to the southeast section of the Kumtor Central pit. The changes to the mine plan and the delayed
release of ore from cut-back 12B resulted in a seven week shutdown of the Kumtor mill and required us to
revise its 2012 production and cost guidance.

In February 2014, increased movement of the South arm of the Davidov glacier required the
construction of a buttress to ensure continued safe mining in the open pit.

Although the Company is employing extensive efforts to manage further waste and ice movements, there
is no guarantee that such efforts will be successful or that further waste and ice movements will not
adversely affect operations at the Kumtor project. Future movements could result in a significant
interruption of operations, impede access to ore deposits, or require redeployment of mobile equipment
away from mining of ore. The Company may also experience a loss of mineral reserves or a material
increase in costs if it is necessary to redesign the open pit and surrounding infrastructure as a result of waste
and ice movements. The consequences of further ice movement into the Kumtor Central pit will depend
upon the extent, location and timing of any such movement. If mining operations are interrupted to a
significant magnitude or the mine experiences a significant loss of mineral reserves or materially higher
costs of operation, this would have an adverse impact on the Company’s future cash flows, earnings, results
of operations and financial condition.

Centerra’s operations and projects are located in areas of seismic activity

The areas surrounding the Company’s Kumtor, Boroo, Öksüt, Mount Milligan and Thompson Creek
projects are seismically active. While the risks of seismic activity were taken into account when determining
the design criteria for its operations, there can be no assurance that the Company’s operations will not be
adversely affected by this kind of activity, all of which could have an adverse impact on the Company’s
future cash flows, earnings, results of operations and financial condition.

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69CENTERRA GOLD INC. ANNUAL REPORT 2017Competition

Centerra’s future prospects may suffer due to increased competition for mineral acquisition
opportunities

Significant and increasing competition exists for mineral acquisition opportunities throughout the world,
particularly for opportunities in jurisdictions considered politically safer. As a result of this competition,
some of which is with large, better established mining companies with substantial capabilities and greater
financial and technical resources, the Company may be unable to acquire rights to exploit additional
attractive mining properties on terms we consider acceptable. Accordingly, there can be no assurance that
the Company will acquire any interest in additional operations that would yield mineral reserves or result
in commercial mining operations. The Company’s inability to acquire such interests could have an adverse
impact on its future cash flows, earnings, results of operations and financial condition. Even if the Company
does acquire such interests, the resulting business arrangements may not ultimately prove beneficial to its
business.

Financial Risks

Commodity Market

Centerra’s business is sensitive to the volatility of gold and copper prices

The value of the Company’s mineral resources and future operating profit and loss is largely dependent on
the world market price of gold and copper, which are volatile and are affected by numerous factors beyond
its control. A reduction in the price of gold or copper may prevent the Company’s properties from being
economically mined or result in the write-off of assets whose value is impaired as a result of low gold
prices. The price of gold or copper may also have a significant influence on the market price of Centerra’s
common shares. The price of gold and copper are subject to many factors which are beyond the control of
the Company, including global supply and demand; central bank lending, sales and purchases; expectations
for the future rate of inflation; the level of interest rates; the strength of, and confidence in, the U.S. dollar;
market speculative activities; the availability and cost of substitute materials; and global or regional political
and economic events, including the performance of Asia’s economies.

If the market prices fall and remain below production costs of any of the Company’s mining operations for
an extended period, losses would be sustained, and, under certain circumstances, there may be a curtailment
or suspension of some or all of the Company’s mining, development and exploration activities. The
Company would also have to assess the economic impact of any sustained lower metal prices on
recoverability and, therefore, the cut-off grade and level of our mineral reserves and resources. These factors
could have an adverse impact on the Company’s future cash flows, earnings, results of operations, stated
mineral reserves and financial condition.

The Company enters into provisionally-priced sales contracts, which could have a negative impact
on our revenues if prices decline.

At the Company’s Mount Milligan operations, it enters into provisionally-priced sales contracts, whereby
the contracts settle at prices to be determined at a future date. The future pricing mechanism of these
agreements constitutes an embedded derivative, which is bifurcated and separately marked to estimated fair
value at the end of each period. Changes to the fair value of embedded derivatives related to sales
agreements are included in sales revenue in the determination of net income. To the extent final prices are
higher or lower than what was recorded on a provisional basis, an increase or decrease to sales, respectively,
is recorded each reporting period until the date of final pricing. Accordingly, in times of falling commodities

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70CENTERRA GOLD INC. ANNUAL REPORT 2017prices, the Company’s revenues and cash flow are negatively impacted by lower prices received for
contracts priced at current market rates and also from a decrease related to the final pricing of provisionally-
priced sales pursuant to contracts entered into in prior years; in times of rising commodities prices, the
opposite occurs.

The Company relies on a few key customers for its copper-gold concentrate from Mount Milligan
Mine, and the loss of any one key customer could reduce its revenues.

Centerra has entered into three multi-year concentrate sales agreements for the sale of copper-gold
concentrate produced at Mount Milligan Mine. Pursuant to these agreements, the Company has agreed to
sell an aggregate of approximately 140,000 tonnes in 2018, 80,000 tonnes in 2019; and 40,000 tonnes in
2020. A breach of the applicable sales agreement by us or the applicable customer, a significant dispute
with one of these customers, a force majeure event affecting the parties' respective performances under the
agreement, a bankruptcy event experienced by the customer, early termination of the agreement, or any
other event significantly and negatively impacting the contractual relationship with one of these customers
could harm the Company’s financial condition. If, in such an event, the Company is unable to sell the
affected concentrate volume to another customer, or the Company sells the affected concentrate to another
customer on terms less advantageous terms to it, the Company’s revenues could be negatively impacted.

The Company’s commodity hedging activities may reduce the realized prices it otherwise would have
received for copper and gold (as it relates to Mount Milligan), and involve market risk for the fair
value of the derivatives, credit risk that the Company’s counterparties may be unable to satisfy their
obligations to the Company, and financial risk due to fluctuations in the fair value of the derivatives.

In order to manage our cash flow exposure to copper and gold price volatility in selling production from
Mount Milligan Mine, the Company enters into commodity derivatives from time to time for a portion of
our expected production from Mount Milligan. Additionally, the Company receives cash provisional
payments in selling production for Mount Milligan Mine, thus requiring that it purchases gold or copper in
order to satisfy its obligation to pay Royal Gold in gold and copper (as the case may be). The Company
enters into commodity derivatives from time to time in order to manage its gold and copper price risk that
arises when physical purchase and concentrate sales pricing periods do not match. The Company currently
have in place unsecured hedging lines with various banks and trading companies in order to manage these
exposures.

Commodity derivatives may limit the prices the Company actually realizes and therefore could reduce the
Company’s copper and gold revenues in the future. The Company’s commodity hedging activities could
impact its earnings in various ways, including recognition of certain mark- to-market gains and losses on
derivative instruments. The fair value of the Company’s derivative instruments could fluctuate significantly
between periods.

The Company’s commodity derivatives may expose it to significant market risk, which is the risk that the
fair value of a commodity derivative might be adversely affected by a change in underlying commodity
prices or a change in its expected production, which may result in a significant financial loss on the
derivative. The Company mitigates the potential market risk by establishing trading agreements with
counterparties under which the Company is not required to post any collateral or make any margin calls on
our derivatives. The Company’s commodity derivatives also expose it to credit risks that counterparties
may be unable to satisfy their obligations to the Company.

The Company mitigates the potential credit risk by entering into derivatives with a number of
counterparties, limiting the amount of exposure to any one counterparty, and monitoring the financial
condition of the counterparties. If any of the Company’s counterparties were to default on its obligations to

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71CENTERRA GOLD INC. ANNUAL REPORT 2017the Company under the derivative transaction or seek bankruptcy protection, it could result in a larger
percentage of the Company’s future production being subject to commodity price changes which may have
a significant adverse effect on the Company’s cash flow, earnings and financial condition. The risk of
counterparty default is heightened in a poor economic environment.

Centerra’s operations are sensitive to fuel price volatility

The Company is also exposed to price volatility in respect of key inputs, the most significant of which is
fuel. Increases in global fuel prices can materially increase operating costs, erode operating margins and
project investment returns, and potentially reduce viable reserves. Conversely, a significant and sustained
decline in world oil prices may offset other costs and improve returns. While the Company has entered
into hedge arrangements to minimize its risk to fluctuating fuel prices, there are no assurances that such
arrangements will be successful.

The Company’s operations are subject to currency fluctuations that may adversely affect the
financial position of the Company

The Company’s earnings and cash flow may also be affected by fluctuations in the exchange rate between
the U.S. dollar and other currencies, such as the Kyrgyz som, Canadian dollar, Turkish Lira, Mongolian
tugrik, and the Euro. The Company’s consolidated financial statements are expressed in U.S. dollars. The
Company’s sales of gold are denominated in U.S. dollars, while production costs and corporate
administration costs are, in part, denominated in Kyrgyz soms, Canadian dollars, Turkish Lira, Mongolian
tugrik, Euros and other currencies. Fluctuations in exchange rates between the U.S. dollar and other
currencies may give rise to foreign exchange currency exposures, both favourable and unfavourable, which
may materially impact Centerra’s future financial results.

Centerra does not currently use a hedging program to limit the adverse effects of foreign exchange rate
fluctuations largely because we cannot hedge the Kyrgyz Som due to it not being freely traded. As the
Company’s exposure to other currencies increases, including the Turkish Lira with the development of the
Öksüt project, the Company may decide to engage in foreign exchange hedging transactions to reduce the
risks associated with fluctuations in foreign exchange rates (to the extent available), but there are no
assurances that any such hedging program will be successful.

Economy, Credit and Liquidity

Global financial conditions

Global financial conditions are beyond the Company’s control. A significant disruption in the credit and
capital markets could adversely affect our ability to obtain equity or debt financing in the future on
favourable terms and could cause permanent decreases in our asset values, which may result in impairment
losses. These factors could also increase the Company’s exposure to financial counterparty risk, adversely
impact commodity prices, exchange rates, interest rates and impact the trading price of Centerra’s common
shares.

Centerra may experience reduced liquidity and difficulty in obtaining future financing

Centerra may not continue to generate cash flow from operations in the future sufficient to service its debt
and make necessary or planned capital expenditures, including the further development and exploration of
its mineral properties, including the Öksüt project or the Kemess project. If the Company is unable to
generate such cash flow, it may be required to adopt one or more alternatives, such as selling assets,
borrowing additional funds, restructuring debt or obtaining additional equity capital on terms that may be
onerous or highly dilutive, cancelling or deferring capital expenditures and/or suspending or curtailing
operations Such actions may impact production at mining operations and/or the timelines and cost

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72CENTERRA GOLD INC. ANNUAL REPORT 2017associated with development projects, which could have a material adverse effect on the Company’s
prospects, results of operations and financial condition.

The Company’s ability to borrow additional funds or refinance its indebtedness will depend on the capital
markets and its financial condition at such time. The Company may not be able to engage in any of these
activities or engage in these activities on desirable terms, which could result in a default on its debt
obligations.

Many of the Company’s principal operations and development projects are located in under-developed
areas that may have experienced past economic and political difficulties and may be perceived as unstable.
This perceived increased country or political risk may make it more difficult for Centerra to obtain debt or
equity financing. Failure to obtain additional financing on a timely basis may cause us to postpone
development plans, forfeit rights in our properties or reduce or terminate our operations. Reduced liquidity
or difficulty in obtaining future financing could have an adverse impact on the Company’s future cash
flows, earnings, results of operations and financial condition.

In order to finance future operations, Centerra may raise funds through the issuance of shares or the
issuance of debt instruments or other securities convertible into shares.

Centerra cannot predict the potential need or size of future issuances of common shares or the issuance of
debt instruments or other securities convertible into shares or the effect, if any, that this would have on the
market price of our common shares. Any transaction involving the issuance of shares, or securities
convertible into shares, could result in dilution, possibly substantial, to present and prospective security
holders.

Restrictive covenants in Centerra’s credit facilities may impact business activities

Pursuant to Centerra’s credit facilities, the Company must maintain certain financial ratios and satisfy other
non-financial maintenance covenants. Centerra and its material subsidiaries are also subject to other
restrictive and affirmative covenants in respect of the Company’s respective operations. These covenants
include, without limitation, restrictions on our ability to incur additional indebtedness; pay dividends or
make other distributions; make loans or investments; sell, transfer or otherwise dispose of assets; and incur
or permit to exist certain liens.

Compliance with these covenants and financial ratios may impair the Company’s ability to finance its future
operations or capital needs or to take advantage of other favourable business opportunities. The Company’s
ability to comply with these covenants and financial ratios, if left uncured, will depend on its future
performance, which may be affected by events beyond its control. The Company’s failure to comply with
any of these covenants or financial ratios, if left uncured, will result in a default under applicable credit
agreements and may result in the acceleration of the applicable indebtedness and other indebtedness to the
extent there are cross-default provisions. In the event of a default and the Company is unable to repay any
amounts then outstanding, the applicable lender(s), may be entitled to take possession of any collateral
securing the credit facility to the extent required to repay those borrowings.

Tax

The Company is subject to taxation in multiple jurisdictions and adverse changes to the taxation laws
of such jurisdictions could have a material impact on our profitability

Centerra has operations and conducts business in a number of different jurisdictions and are accordingly
subject to the taxation laws of each such jurisdiction, as well as tax reviews and assessments in the ordinary
course. In some jurisdictions, such as Turkey, the Company is eligible for certain investment incentive

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73CENTERRA GOLD INC. ANNUAL REPORT 2017programs which provide tax benefits for companies making investments in the relevant country.
Participation in such programs requires continued oversight and compliance with the applicable program,
which can be time consuming and require the input from third parties including contractors engaged in the
investment.

The Company’s international operations are also subject to the Organization of Economic and Co-operative
Development’s Base Erosion and Profit Shifting Action Plan, which mandates global businesses to conduct
themselves in a manner that ensures taxes are paid in jurisdictions in which income arises.

Taxation laws are complex, subject to interpretation and subject to change. Any such changes in taxation
law or reviews and assessments could result in higher taxes being payable by the Company, which could
adversely affect its profitability. Taxes may also adversely affect the Company’s ability to repatriate
earnings and otherwise deploy our assets.

Counterparty

Short-term investment risks

The Company may, from time to time, invest some excess cash balances in short-term instruments issued
by highly rated global financial institutions. The failure of any such financial institutions could have a
negative effect on the liquidity of the Company’s investments.

Operational Risks

Centerra’s business is subject to production and operational risks that could adversely affect its
business and insurance may not cover these risks and hazards adequately or at all.

Mining and metals processing involve significant production and operational risks, some of which are
outside of our control, including but not limited to the following:

•
•
•
•

unanticipated ground and water conditions;
adverse claims to water rights and shortages of water to which we have rights;
a shortage of water for processing activities;
adjacent or adverse land or mineral ownership that results in constraints on current or future mine
operations;
geological problems, including earthquakes and other natural disasters;

•
• metallurgical and other processing problems;
•
•
•
•
•
•
•
•

unusual or unexpected mineralogy or rock formations;
ground or slope failures;
pit flooding
tailings design or operational issues, including dam breaches or failures;
structural cave-ins, wall failures or rock-slides;
flooding or fires;
equipment failures or performance problems;
periodic interruptions due to inclement or hazardous weather conditions or operating conditions
and other force majeure events;
lower than expected ore grades or recovery rates;
accidents;
delays in the receipt of or failure to receive necessary government permits;
the results of litigation, including appeals of agency decisions;
delays in transportation;

•
•
•
•
•

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74CENTERRA GOLD INC. ANNUAL REPORT 2017•
•
•
•

•

interruption of energy supply;
labour disputes;
inability to obtain satisfactory insurance coverage;
the availability of drilling and related equipment in the area where mining operations will be
conducted; and
the failure of equipment or processes to operate in accordance with specifications or expectations.

These risks could result in damage to, or destruction of, the Company’s mines, mills and roasting facilities,
resulting in partial or complete permanent shutdowns, sterilization of mineral reserves, personal injury or
death, environmental or other damage to our properties or the properties of others, delays in mining, reduced
production, monetary losses and potential legal liability. Milling operations are subject to hazards, such as
equipment failure or failure of retaining dams around tailings disposal areas that may result in personal
injury or death, environmental pollution and consequential liabilities.

The Company’s insurance will not cover all the potential risks associated with our operations. In addition,
although certain risks are insurable, the Company may be unable to maintain insurance to cover these risks
at economically feasible premiums. Moreover, insurance against risks such as environmental pollution or
other hazards as a result of exploration and production is not generally available to the Company or to other
companies in the mining industry on acceptable terms. The Company might also become subject to liability
for pollution or other hazards that may not be insured against or that it may elect not to insure against
because of premium costs or other reasons. Losses from these events may cause the Company to incur
significant costs that could have a material adverse effect upon its business. Furthermore, should the
Company be unable to fund fully the cost of remedying an environmental problem, it might be required to
suspend operations or enter into interim compliance measures pending completion of the required remedy.

Health, Safety and Environment

Centerra is subject to environmental, health and safety risks

Centerra expends significant financial and managerial resources to comply with a complex set of
environmental, health and safety laws, regulations, guidelines and permitting requirements (for the purpose
of this paragraph, “laws”) drawn from a number of different jurisdictions. The Company believes it is in
material compliance with these laws. The historical trend that the Company observes is toward stricter laws,
and the Company expects this trend to continue. The possibility of more stringent laws or more rigorous
enforcement of existing laws exists in the areas of worker health and safety, the disposition of wastes, the
decommissioning and reclamation of mining sites, restriction of areas where exploration, development and
mining activities may take place, consumption and treatment of water, and other environmental matters,
each of which could have a material adverse effect on the Company’s exploration activities, operations and
the cost or the viability of a particular project.

Water management and the oversight of our tailings management facilities are subject to regulation
and risks and could result in significant damages to persons and property.

The water collection, treatment and disposal operations at the Company’s mines are subject to substantial
regulation and involve significant environmental risks. The extraction process for gold and metals can
produce tailings, which are the sand like materials which remain from the extraction process. Tailings are
stored in engineered facilities which are designed, constructed, operated and closed in conformance with
local requirements and best practices.

If collection or our management systems (including our physical tailings management facilities) were to
fail, overflow or do not operate properly (including through matters beyond our control such as extreme
weather, seismic event, or other incident), untreated water or other contaminants could spill onto nearby

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75CENTERRA GOLD INC. ANNUAL REPORT 2017properties or into nearby streams and rivers, causing damage to persons or property, injury to aquatic life
and economic damages. Environmental and regulatory authorities in the applicable jurisdictions of
operation conduct periodic or annual inspections of the relevant mine. As a result of these inspections, the
Company is from time to time required to modify its water management program, complete additional
monitoring work or take remedial actions with respect to the operations as it pertains to water management.

Liabilities resulting from non-compliance, damage, regulatory orders or demands, or similar, could
adversely and materially affect the Company’s business, results of operations and financial condition.
Moreover, in the event that the Company is deemed liable for any damage caused by overflow, the
Company’s losses or consequences of regulatory action might not be covered by insurance policies.

Centerra’s workforce may be exposed to widespread pandemic

Centerra’s operations are located in areas relatively remote from local towns and villages and represent a
concentration of personnel working and residing in close proximity to one another. Further, the sites receive
frequent visitors from all over the world, and a number of employees travel frequently abroad. Should an
employee or visitor become infected with a serious illness that has the potential to spread rapidly, this could
place Centerra’s workforce at risk. The 2014 outbreak of the Ebola virus in several African countries is
one example of such an illness. The Company takes every precaution to strictly follow industrial hygiene
and occupational health guidelines, and medical services are in place along with pandemic management
protocols. There can be no assurance that this virus or another infectious illness will not impact Centerra
personnel and ultimately its operations.

Centerra’s operations use cyanide

The Kumtor operations employ sodium cyanide, which is a hazardous material, to extract gold from ore.
The Öksüt and Gatsuurt projects, if they proceed to production, will also use gold processing technology in
which cyanide is used. There is inherent risk of unintended discharge of hazardous materials in the
operation of leach pads.

If any spills or discharges of sodium cyanide were to occur (at site or during transport), the Company could
become subject to liability for remediation costs, which could be significant and may not be insured against.
In addition, production could be delayed or halted to allow for remediation, resulting in a reduction or loss
of cash flow. Finally, increased sensitivity in respect to the use of cyanide and the potential and perceived
environmental impacts of cyanide use in mining operations could exacerbate potential reputational damage
to the Company in the event of a cyanide release. While the Company takes appropriate steps to prevent
discharges and accidental releases of sodium cyanide and other hazardous materials into the ground water,
surface water and the downstream environment, there is inherent risk in the operation of gold processing
facilities and there can be no assurance that a release of hazardous materials will not occur.

The Company must remove and reduce impurities and toxic substances naturally occurring in
copper, gold and molybdenum and comply with applicable law relating thereto, which could result
in remedial action and other costs.

Mineral ores and mineral products, including copper, gold and molybdenum ore and products, contain
naturally occurring impurities and toxic substances. Although the Company has implemented procedures
that are designed to identify, isolate and safely remove or reduce such impurities and substances, such
procedures require strict adherence and no assurance can be given that employees, contractors or others
will not be exposed to or be affected by such impurities and toxic substances, which may subject us to
liability. Standard operating procedures may not identify, isolate and safely remove or reduce such
substances.

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76CENTERRA GOLD INC. ANNUAL REPORT 2017Even with careful monitoring and effective control, there is still a risk that the presence of impurities or
toxic substances in the Company’s products may result in such products being rejected by the Company’s
customers, penalties being imposed due to such impurities or the products being barred from certain
markets. Such incidents could require remedial action and could result in curtailment of operations.
Legislation requiring manufacturers, importers and downstream users of chemical substances, including
metals and minerals, to establish that the substances can be handled and used without negatively affecting
health or the environment may impact the Company’s operations and markets. These potential compliance
costs, litigation expenses, regulatory delays, remediation expenses and operational costs could have an
adverse impact on the Company’s future cash flow, earnings, results of operations or financial condition.

There is currently a capacity shortfall of the tailings management facility at Kumtor

The Kumtor tailings dam design is currently approved by the Kyrgyz authorities to an elevation that is
insufficient to store all of the 45 million cubic metres of tailings (68.6 million tonnes of ore) to be processed
in the current life-of-mine plan. The Company received in March 2017 the necessary permits from the
Kyrgyz Republic state authorities to commence a 3-year construction program to raise the tailings dam to
provide adequate tailings storage capacity for Kumtor’s mill tailings deposition from 2021 to 2024.
Furthermore, the Company has also received in January 2018 approval to raise the tailings dam to its final
elevation of 3,677.5 metres, subject to the approval of the final detailed design which is scheduled to be
submitted in 2020. While the Company has received these approvals to date in order to raise the tailings
dam, there are no assurances that such approvals will continue to apply in the future, or that the Company
will receive the further approvals required to raise the tailings dam to its final height. If all necessary
approvals are not maintained or obtained, delays in, or interruptions or cessation of the Company’s
production from the Kumtor project may occur, which may have an adverse impact on the Company’s
future cash flows, earnings, results of operations or financial condition.

The Company’s mining production depends on the availability of sufficient water supplies.

The Company’s operations require significant quantities of water for mining, ore processing and related
support facilities. Continuous production at the Company’s mines depends on its ability to maintain its
water rights and claims. The failure to obtain needed water permits, the loss of some or all water rights for
any of its mines, in whole or in part, or shortages of water to which the Company has rights due to weather,
equipment issues or other factors could require the Company to curtail or close mining production and
could prevent it from pursuing expansion opportunities.

In December 2017, the Mount Milligan mill operations were temporarily suspended due to a lack of
available water for processing. Mount Milligan experienced a drier than normal spring and summer during
2017 with a limited amount of spring snow melt. This resulted in lower than expected reclaim water
volumes in the tailings storage facility (TSF) at Mount Milligan which is used for mill processing
operations. The water shortage has been exacerbated by unanticipated extremely cold temperatures at
Mount Milligan, which has resulted in a greater than expected loss of water volumes in the TSF due to ice
formation. The Company restarted mill operations at Mount Milligan in early February 2018 after
completing a number of steps to increase the flow of water into the TSF, including adding pumps to existing
water wells, increasing pump sizes, to increase the flow rate, and drilling additional wells. The Company
has received an amendment to the Mount Milligan Environmental Assessment Certificate that allows for
limited withdrawal of water from Philip Lake until October 2018. The Company expects to commence
drawing water by the end of February and expects to carry out the necessary studies, and to consult with
affected First Nations groups to work toward a further, longer-term amendment to the Environmental
Assessment Certificate.

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77CENTERRA GOLD INC. ANNUAL REPORT 2017There are no assurances that this long term solution will be successful. The failure to find a long term
solution to the lack of available water resources at Mount Milligan, or the re-occurrence of any water
availability issues at Mount Milligan, including due to drier than expected weather conditions, extreme
temperatures, or for any other reason, could adversely impact on the Company’s future cash flows, earnings,
results of operations and financial condition.

Regulation of greenhouse gas emissions effects and climate change issues may adversely affect the
Company’s operations and markets.

Global climate change continues to attract considerable public, scientific and regulatory attention, and
greenhouse gas emission regulation is becoming more commonplace and stringent. As energy, including
energy produced from the combustion of carbon-based fuels, is a significant input to the Company’s mining
and processing operations, it must also comply with emerging climate change regulatory requirements,
including programs to reduce greenhouse gas emissions. The Company’s principal energy sources are
electricity, purchased petroleum products and natural gas. In addition, the Company’s processing facilities
and mobile mining equipment emit carbon dioxide.

A number of governments or governmental bodies have introduced or are contemplating regulatory changes
in response to the potential impacts of climate change. Where legislation already exists, regulation relating
to emission levels and energy efficiency is becoming more stringent. The changes in legislation and
regulation will likely increase the Company’s compliance costs. The Company also may be subject to
additional and extensive monitoring and reporting requirements.

In addition, the potential physical impacts of climate change on the Company’s operations are highly
uncertain and may be particular to the unique geographic circumstances associated with each of its facilities.
These may include extreme weather events, changes in rainfall patterns, water shortages, and changing
temperatures. These physical impacts could require the Company to curtail or close mining production and
could prevent the Company from pursuing expansion opportunities. These effects may adversely impact
the cost, production and financial performance of the Company’s operations.

Centerra faces substantial decommissioning and reclamation costs

The Company is required to establish at each of its mine sites and development projects a decommissioning
and reclamation plan. Provision must be made for the cost of decommissioning and reclamation for
operating sites. These costs can be significant and are subject to change. Kumtor has established a
reclamation trust fund to pay for these costs (net of forecast salvage value of assets) from the revenues
generated over the life of mine. As required by Canadian provincial and US federal and state laws, the
Company has provided reclamation bonds for mine closure obligations for the Mount Milligan Mine,
Endako Mine and the Thompson Creek Mine.

The Company cannot predict what level of decommissioning and reclamation may be required in the future
by regulators. If the Company is required to comply with significant additional regulations or if the actual
cost of future decommissioning and reclamation is significantly higher than current estimates, this could
have an adverse impact on the Company’s future cash flows, earnings, results of operations and financial
condition.

Centerra is developing the Öksüt mine and this raises risks relating to construction and development

The capital expenditures and time required to develop new mines are considerable and changes in cost or
construction schedules can significantly increase both the time and capital required to build the project.
Construction costs and timelines can be impacted by a wide variety of factors, many of which are beyond

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78CENTERRA GOLD INC. ANNUAL REPORT 2017our control. These include, but are not limited to, weather conditions, ground conditions, performance of
the mining fleet and availability of appropriate rock and other material required for construction, availability
and performance of contractors and suppliers, delivery and installation of equipment, design changes,
accuracy of estimates, global capital cost inflation, local in-country inflation and availability of
accommodations for the workforce. Project development schedules are also dependent on obtaining the
governmental approvals necessary for the operation of a project. The timeline to obtain these government
approvals is often beyond the control of the Company. A delay in start-up or commercial production would
increase capital costs and delay receipt of revenues.

Centerra’s board of directors recently provided approval to commence development of the Öksüt project in
Turkey, subject to the continued availability of the OMAS Facility. While the Company believes that it
has the expertise to develop the project within budget and on schedule, there can be no assurances. Any
increase in the capital costs or delay in the project development timeline may adversely impact the
Company’s future cash flow, earnings, results of operations and financial conditions.

Asset Management

Centerra may experience mechanical breakdowns

The Company’s mines (whether operating or currently on care and maintenance) use expensive, large
mining and processing equipment that requires a long time to procure, build and install. Although the
Company conducts extensive preventive maintenance programs, there can be no assurance that the
Company will not experience mechanical breakdowns of mining and processing equipment. In the past,
the Company has experienced such mechanical breakdowns, which have resulted in unplanned mill
shutdowns and reduced mill capacity. In addition, obtaining replacement components for the equipment
can take considerable time which may also impact production. Any extended breakdown in mining or
processing equipment could have an adverse impact on the Company’s future cash flows, earnings, results
of operations and financial conditions.

Royalty interests may not be honored by operators

The Company’s agreements representing the royalties owned by the Company are contractual in nature.
Parties to contracts do not always honor contractual terms and contracts themselves may be subject to
interpretation or technical defects. To the extent grantors of royalties do not abide by their contractual
obligations, the Company would be forced to take legal action to enforce its contractual rights. Such
litigation may be time consuming and costly and there is no guarantee of success. The Company’s rights to
payment under the royalties must, in most cases, be enforced by contract without the protection of the ability
to liquidate a property. This inhibits the Company’s ability to collect outstanding royalties upon a default.

The operation of the properties in which the Company holds a royalty interest are determined by
third party property owners and operators

The Company has no or limited decision making power as to how the properties it holds royalty interests
are operated, and the operators’ failure to perform could affect the revenues generated by Company. The
revenue derived from the Company’s royalty portfolio is based on production by third party property
owners and operators. The owners and operators generally will have the power to determine the manner in
which the properties are exploited, including decisions to expand, continue or reduce, suspend or
discontinue production from a property, decisions about the marketing of products extracted from the
property and decisions to advance exploration efforts and conduct development of non-producing
properties. The interests of third party owners and operators and those of the Company on the relevant
properties may not always be aligned. The Company may not be entitled to any material compensation if
any of the properties in which it holds a royalty interest shuts down or discontinues their operations on a

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79CENTERRA GOLD INC. ANNUAL REPORT 2017temporary or permanent basis. At any time, any of the operators of the properties in which it holds a royalty
interest or their successors may decide to suspend or discontinue operations.

The Company has limited access to data and disclosure regarding the operation of properties, it has
a royalty interest in which affects the Company’s ability to assess the royalty’s performance

As a royalty holder, the Company has limited access to data on the operations or to the actual properties
themselves. This could affect the Company’s ability to assess the performance of the royalty and/or result
in delays in cash flow from that which is anticipated by the Company. In addition, some royalties may be
subject to confidentiality arrangements which govern the disclosure of information with regard to royalties
and, as such, the Company may not be in a position to publicly disclose non-public information with respect
to certain royalties.

Human Resources

Certain of the Company’s projects are unionized and may be subject to labour disturbances

Production at the Company’s operations depends on the efforts of its employees. The Company has
unionized environments at our Kumtor project, Boroo project, and Langeloth Facility, and therefore
employees are subject to collective agreements which require frequent renegotiations.

Non-management employees at Kumtor and Boroo (including those in head office) are unionized and
subject to collective agreements. At Kumtor, a 2-year collective bargaining agreement was approved and
ratified in January 2017. At Boroo, which has been placed in care and maintenance, the current collective
bargaining agreement is in effect until June 30, 2018.

The Langeloth Facility has certain unionized employees. The labour agreement currently in place with
respect to the unionized employees at the Company’s Langeloth Facility is effective through March 11,
2019.

There can be no assurance that, when such agreements expire, there will not be any delays in the renewal
process, that negotiations will not prove difficult or that Centerra will be able to renegotiate the collective
agreement on satisfactory terms, or at all. The renewal of the collective agreement could result in higher
on-going labor costs, which could have a material adverse impact on Centerra’s future cash flows, earnings,
results of operations and financial condition. Centerra could be subject to labour unrest or other labour
disturbances including strikes as a result of any failure of negotiations which could, while ongoing, have a
material adverse impact on Centerra, including the achievement of any annual production guidelines and
costs estimates. Existing collective agreements may not prevent a strike or work stoppage, and any such
work stoppage could have a material adverse impact on the Company.

There is also a possibility that the Company’s employees at its other projects, including Mount Milligan
Mine, could organize and certify a union in the future.

Centerra’s success depends on its ability to attract and retain qualified personnel

Recruiting and retaining qualified personnel is critical to the Company’s success. The number of persons
skilled in the acquisition, exploration and development of mining properties is limited and competition for
such persons is intense. As the Company’s business activity grows, it will require additional key financial,
administrative and mining personnel as well as additional operations staff. Certain jurisdictions in which
the Company operates may limit the number of foreign nationals that can be employed at the mining site.
For example, the Restated Concession Agreement relating to the Kumtor operations also requires two thirds
of all administrative or technical personnel to be citizens of the Kyrgyz Republic. However, it has been

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80CENTERRA GOLD INC. ANNUAL REPORT 2017necessary to engage expatriate workers for the Company’s operations in the Kyrgyz Republic because of
the shortage locally of trained personnel. Although the Company believes that it will be successful in
attracting, training and retaining qualified personnel, there can be no assurance of such success. If the
Company is not successful in attracting and training qualified personnel, the efficiency of the Company’s
operations could be affected, which could have an adverse impact on its future cash flows, earnings, results
of operations and financial condition.

Supply Chain

Centerra’s properties are located in remote locations and require a long lead time for equipment and
supplies

Some of the Company’s properties are in remote locations and depend on an uninterrupted flow of
materials, supplies and services to those locations. Any interruptions to the procurement of equipment, or
the flow of materials, supplies and services to the Company’s properties could have an adverse impact on
its future cash flows, earnings, results of operations and financial condition.

Centerra’s operations may be impacted by supply chain disruptions

The Company’s operations depend on uninterrupted supply of key consumables, equipment and
components. The Company’s Kyrgyz operations are limited with respect to alternative suppliers of fuel,
and any disruption at supplier facilities could result in curtailment or suspension of operations. In addition,
major equipment and components and certain key consumables are imported. Recent and potential future
economic sanctions imposed on Russia by the U.S. and European Union in 2014 and 2016, may impact
delivery of goods and services to the Kumtor operation. The accession of the Kyrgyz Republic to the
Eurasian Economic Union may also impact Kumtor supply chains. Any disruption in the transportation of
or restriction in the flow of these goods or the imposition of customs clearance requirements may result in
production delays.

Information Technology Systems

Centerra’s critical operating systems may be compromised

Cyber threats have evolved in severity, frequency and sophistication in recent years, and target entities are
no longer primarily from the financial or retail sectors. Individuals engaging in cybercrime may target
corruption of systems or data, or theft of sensitive data. Centerra is dependent on information technology
systems in the conduct of its operations. The Company’s mines and mills are automated and networked
such that Centerra could be adversely affected by network disruptions from a variety of sources, including,
without limitation, computer viruses, security breaches, cyber-attacks, natural disasters and defects in
design. Centerra’s operations also depend on the timely maintenance, upgrade and replacement of networks,
equipment information technology systems and software, as well as pre-emptive expenses to mitigate the
risk of failure.

Given the unpredictability of the timing, nature and scope of information technology disruptions, a
corruption of the Company’s financial or operational data or an operational disruption of its production
infrastructure as a result of any of these or other events could result, among other things, in: (i) production
downtimes; (ii) operational delays; (iii) destruction or corruption of data; (iv) increases in capital
expenditures; (v) loss of production or accidental discharge; (vi) expensive remediation efforts; (vii)
distraction of management; (viii) damage to our reputation or our relationship with customers; or (ix) in
events of noncompliance, which events could lead to regulatory fines or penalties. Any of the foregoing
could have a material adverse effect on the Company’s business, results of operations and financial
condition.

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81CENTERRA GOLD INC. ANNUAL REPORT 2017Insurance

Centerra may not be adequately insured for certain risks

Although the Company maintains insurance to cover some of the operational risks and hazards in amounts
it believes to be reasonable, insurance may not provide adequate coverage or may not be available in all
circumstances. No assurance can be given that insurance will continue to be available at economically
feasible premiums or that it will provide sufficient coverage for losses related to these or other risks and
hazards.

The Company may also be subject to liability or sustain losses in relation to certain risks and hazards against
which the Company cannot insure or for which it may elect not to insure. The occurrence of operational
risks and/or a shortfall or lack of insurance coverage could have an adverse impact on the Company’s future
cash flows, earnings, results of operations and financial condition.

Caution Regarding Forward-Looking Information

Information contained in this document 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”, “plan”, “intends”, “continue”,
“budget”, “estimate”, “may”, “will”, “schedule”, “understand” and similar expressions identify forward-looking
information. These forward-looking statements relate to, among other things: the development activities at the Öksüt
Project and the Kemess Project; further amendments of Mount Milligan’s Environmental Assessment Certificate;
currency movements and hedging transactions; operational plans at Kumtor and Mount Milligan in 2018, including
as to the expected restart of the Mount Milligan mill, the timing and outcomes of projects initiated at the Mount
Milligan mine aimed at improving metal recovery and other opportunities, the availability of water and consultations
with regulatory and First Nations groups; discussions between GGM and First Nations groups regarding impact
benefit agreements; the closing of the Strategic Agreement entered into with the Kyrgyz Republic Government and the
related resolution of various civil and criminal cases in the Kyrgyz Republic which affect the Kumtor Project; the
Company’s cash on hand, working capital, future cash flows and existing credit facilities being sufficient to fund
anticipated operating cash requirements; AMT refund; the resumption of negotiations with the Mongolian
Government related to the Gatsuurt Project; the timing for receipt of proceeds from the sale of the ATO licenses; and
statements found under the heading, “2018 Outlook”, including forecast 2018 production costs, capital and
exploration expenditures and taxes .

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. Factors that could cause actual results or events to differ
materially from current expectations include, among other things: (A) strategic, legal, planning and other risks,
including: political risks associated with the Company’s operations in the Kyrgyz Republic and Canada; risks that
any of the conditions precedent to the Strategic Agreement will not be satisfied in a timely manner or at all,
particularly as the Government may not bind the General Prosecutor’s Office or the Parliament of the Kyrgyz
Republic; a decision by the General Prosecutor’s Office, or its successor the Anti-Corruption Service of the State
Committee for National Security, to re-open at any time civil or criminal proceedings against Centerra, its
subsidiaries or other stakeholders; the failure of the Government to comply with its continuing obligations under the
Strategic Agreement, including the requirement that it comply at all times with its obligations under the Kumtor
Project Agreements, allow for the continued operation of the Kumtor Mine by KGC and KOC and not take any
expropriatory action; actions by the Government or any state agency or the General Prosecutor's Office that serve to
restrict or otherwise interfere with the payment of funds by KGC and KOC to Centerra; resource nationalism
including the management of external stakeholder expectations; the impact of changes in, or to the more aggressive
enforcement of, laws, regulations and government practices, including with respect to the environment, in the
jurisdictions in which the Company operates including any delays or refusals to grant required permits and licenses,

2017-AR-Combined_MDA+FS.pdf - p82 (March 7, 2018 23:00:52)

82CENTERRA GOLD INC. ANNUAL REPORT 2017unjustified civil or criminal action against the Company, its affiliates or its current or former employees; risks that
community activism may result in increased contributory demands or business interruptions; the impact of any actions
taken by the Kyrgyz Republic Government and Parliament relating to the Kumtor Project Agreements which are
inconsistent with the rights of Centerra and KGC under the Kumtor Project Agreements; any impact on the purported
cancellation of Kumtor’s land use rights at the Kumtor Project; the risks related to other outstanding litigation
affecting the Company’s operations in the Kyrgyz Republic and elsewhere; the impact of the delay by relevant
government agencies to provide required approvals, expertises and permits; potential impact on the Kumtor Project
of investigations by Kyrgyz Republic instrumentalities; the terms pursuant to which the Mongolian Government will
participate in, or to take a special royalty rate in, the Gatsuurt Project; the impact of constitutional changes in Turkey;
the impact of any sanctions imposed by Canada, the United States or other jurisdictions against various Russian
individuals and entities; the ability of the Company to successfully negotiate agreements for the development of the
Gatsuurt Project; potential defects of title in the Company’s properties that are not known as of the date hereof; the
inability of the Company and its subsidiaries to enforce their legal rights in certain circumstances; the presence of a
significant shareholder that is a state-owned company of the Kyrgyz Republic; risks related to anti-corruption
legislation; risks related to the concentration of assets in Central Asia; Centerra’s future exploration and development
activities not being successful; Centerra not being able to replace mineral reserves; Aboriginal claims and
consultative issues relating to the Company’s properties which are in proximity to Aboriginal communities; and
potential risks related to kidnapping or acts of terrorism; (B) risks relating to financial matters, including: sensitivity
of the Company’s business to the volatility of gold, copper and other mineral prices, the use of provisionally-priced
sales contracts for production at Mount Milligan, reliance on a few key customers for the gold-copper concentrate at
Mount Milligan, use of commodity derivatives, 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 credit facilities which may, among other things, restrict the Company from
pursuing certain business activities or making distributions from its subsidiaries, 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 (C) risks
related to operational matters and geotechnical issues and the Company’s continued ability to successfully manage
such matters, including the movement of the Davidov Glacier, waste and ice movement and continued performance of
the buttress at the Kumtor Project; the occurrence of further ground movements at the Kumtor Project and
mechanical availability; the ability of the Company to successfully re-start full mill processing operation at Mount
Milligan and achieve expected throughput; the success of the Company’s future exploration and development
activities, including the financial and political risks inherent in carrying out exploration activities; inherent risks
associated with the use of sodium cyanide in the mining operations; the adequacy of the Company’s insurance to
mitigate operational risks; mechanical breakdowns; 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; the risk that Centerra’s workforce may be exposed to widespread epidemic; seismic
activity in the vicinity of the Company’s properties; long lead times required for equipment and supplies given the
remote location of some of the Company’s operating 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/partnerships; the Company’s ability to manage its projects effectively and to mitigate the potential lack of
availability of contractors, budget and timing overruns and project resources. See section titled “Risks that can affect
our business” in the Company’s most recently filed Annual Information Form available on SEDAR at www.sedar.com.

Furthermore, market price fluctuations in gold and copper, 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.

2017-AR-Combined_MDA+FS.pdf - p83 (March 7, 2018 23:00:52)

83CENTERRA GOLD INC. ANNUAL REPORT 2017Mineral 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. Inferred
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 22, 2018. 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..

2017-AR-Combined_MDA+FS.pdf - p84 (March 7, 2018 23:00:52)

84CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.

Consolidated Financial Statements

For the Years Ended December 31, 2017 and 2016

(Expressed in thousands of United States Dollars)

2017-AR-Combined_MDA+FS.pdf - p85 (March 7, 2018 23:00:52)

85CENTERRA GOLD INC. ANNUAL REPORT 2017Report of Management’s Accountability

The Consolidated Financial Statements have been prepared by the management of the Company.
Management is responsible for the integrity, consistency and reliability of all such information presented.
The Consolidated Financial Statements have been prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board.

The preparation of the Consolidated Financial Statements involves the use of estimates and assumptions
based on management's judgment, particularly when transactions affecting the current accounting period
cannot be finalized with certainty until future periods. Estimates and assumptions are based on historical
experience, current conditions and various other assumptions believed to be reasonable in the
circumstances, with critical analysis of the significant accounting policies followed by the Company as
described in Note 3 to the Consolidated Financial Statements. The preparation of the Consolidated Financial
Statements includes information regarding the estimated impact of future events and transactions. Actual
results in the future may differ materially from the present assessment of this information because future
events and circumstances may not occur as expected.

In meeting its responsibility for the reliability of financial information, management maintains and relies
on a comprehensive system of internal controls and checks to see if the controls are operating as designed.
The system of internal controls includes a written corporate conduct policy; implementation of a risk
management framework; effective segregation of duties and delegation of authorities; and sound and
conservative accounting policies that are regularly reviewed. This structure is designed to provide
reasonable assurance that assets are safeguarded and that reliable information is available on a timely basis.
In addition internal controls on financial reporting and disclosure controls have been documented, evaluated
and tested in a manner consistent with National Instrument 52-109.

The Consolidated Financial Statements have been audited by KPMG LLP, independent external auditors
appointed by the Company’s shareholders. The external auditors’ responsibility is to express their opinion
on whether the Consolidated Financial Statements are fairly presented in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board. KPMG LLP’s
report outlines the scope of their examination and their opinion.

The Company’s Board of Directors, through its Audit Committee, are responsible for ensuring that
management fulfills its responsibilities for financial reporting and internal controls. The Audit Committee
met periodically with management, the internal auditors, and the external auditors to satisfy itself that each
group had properly discharged its respective responsibility and to review the Consolidated Financial
Statements before recommending approval by the Board of Directors. The external auditors had direct and
full access to the Audit Committee, with and without the presence of management, to discuss their audit
and their findings as to the integrity of the financial reporting.

The Company's President and Chief Executive Officer and the Company’s Vice President and Chief
Financial Officer have evaluated the design and operating effectiveness of related disclosure controls and
procedures and internal controls over financial reporting based on criteria established in “Internal Control-
Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway
Commission.

Original signed by:
Scott G. Perry
President and Chief Executive Officer

Original signed by:
Darren J. Millman
Vice President and Chief Financial Officer

February 22, 2018

2017-AR-Combined_MDA+FS.pdf - p86 (March 7, 2018 23:00:52)

86CENTERRA GOLD INC. ANNUAL REPORT 2017INDEPENDENT AUDITORS’ REPORT

To the Shareholders of Centerra Gold Inc.
We have audited the accompanying consolidated financial statements of Centerra Gold Inc., which
comprise the consolidated statements of financial position as at December 31, 2017 and December 31,
2016, the consolidated statements of earnings and comprehensive income, Shareholders’ equity and
cash flows for the years then ended, and notes, comprising a summary of significant accounting policies
and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with International Financial Reporting Standards, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with Canadian generally accepted auditing standards.
Those standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements are free from material
misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the consolidated financial statements. The procedures selected depend on our judgment, including
the assessment of the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error. In making those risk assessments, we consider internal control relevant to the
entity’s preparation and fair presentation of the consolidated financial statements in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to
provide a basis for our audit opinion.

Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the
consolidated financial position of Centerra Gold Inc. as at December 31, 2017 and December 31, 2016,
and its consolidated financial performance and its consolidated cash flows for the years then ended in
accordance with International Financial Reporting Standards.

Original Signed by:

KPMG LLP
Chartered Professional Accountants, Licensed Public Accountants
February 22, 2018
Toronto, Canada

2017-AR-Combined_MDA+FS.pdf - p87 (March 7, 2018 23:00:53)

87CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Consolidated Statements of Financial Position

(Expressed in thousands of United States Dollars)

Notes

December 31,
2017

December 31,
2016

Assets
Current assets

Cash and cash equivalents
Restricted cash and restricted short-term investments
Amounts receivable
Inventories
Prepaid expenses and other current assets

Property, plant and equipment
Goodwill
Restricted cash
Reclamation deposits
Other assets

Total assets

Liabilities and Shareholders' equity
Current liabilities

Accounts payable and accrued liabilities
Provision for Kyrgyz Republic settlement
Short-term debt
Current portion of lease obligations
Revenue-based taxes payable
Taxes payable
Current portion of provision for reclamation
Current portion of derivative liabilities
Other current liabilities

Long-term debt
Provision for reclamation
Lease obligations
Deferred income tax liability
Derivative liabilities
Other liabilities

Shareholders' equity

Share capital
Contributed surplus
Accumulated other comprehensive loss
Retained earnings

Total liabilities and Shareholders' equity
Commitments and contingencies (note 26)
Subsequent events (note 32)

7
8
9
10

11
6
7
17
12

13
21
14
15

17
29
12

14
17
15
16
29
12

415,891
-
63,902
506,208
25,933
1,011,934
1,674,444
16,070
687
26,525
42,515
1,760,241
2,772,175

181,829
53,000
48,536
31,986
15,953
2,592
832
16,057
7,021
357,806
211,611
166,174
-
-
7,273
3,882
388,940

160,091
247,844
48,097
540,753
18,418
1,015,203
1,564,891
16,070
824
32,035
25,728
1,639,548
2,654,751

130,342
-
72,281
-
19,202
2,302
918
1,512
51
226,608
392,851
157,498
29,901
1,661
-
21,950
603,861

948,121
25,781
(14,371)
1,065,898
2,025,429
2,772,175

944,633
25,876
(2,592)
856,365
1,824,282
2,654,751

The accompanying notes form an integral part of these consolidated financial statements.

Approved by the Board of Directors
Original signed by:
Stephen Lang

Richard Connor

2017-AR-Combined_MDA+FS.pdf - p88 (March 7, 2018 23:00:53)

88CENTERRA GOLD INC. ANNUAL REPORT 2017
Centerra Gold Inc.
Consolidated Statements of Earnings and Comprehensive Income

For the years ended December 31,
(Expressed in thousands of United States Dollars)
(except per share amounts)

Gold sales
Copper sales
Molybdenum sales
Tolling, calcining and other

Revenue

Cost of sales
Standby costs, net
Regional office administration
Earnings from mine operations

Revenue-based taxes
Other operating expenses
Care and maintenance expense
Pre-development project costs
Exploration expenses and business development
Thompson Creek Metals Inc. acquisition and integration expenses
AuRico Metals Inc. acquisition and integration expenses
Corporate administration
Asset impairment
Kyrgyz Republic settlement

Earnings from operations

Other income, net

Finance costs
Earnings before income tax

Income tax (recovery) expense

Net earnings

Other Comprehensive Income
Items that may be subsequently reclassified to earnings:

Net gain (loss) on translation of foreign operation
Net movement in cashflow hedge, net of tax
Post-retirement benefit, net of tax

Other comprehensive loss
Total comprehensive income

Basic earnings per common share
Diluted earnings per common share

2017

2016

Notes

928,099
125,938
136,760
8,231
1,199,028

19
22
21

23
24

25
25

$
$

682,094
6,400
18,212
492,322

96,729
13,764
13,198
4,794
11,442
2,363
1,552
37,918
41,983
60,000
208,579
(13,315)
30,562
191,332
(18,201)
209,533

2,405
(14,143)
(41)
(11,779)
197,754

0.72
0.72

$
$

712,737
25,951
16,780
2,255
757,723

411,607
259
14,722
331,135

96,293
2,744
1,766
10,687
12,994
12,015
-
27,583
-
-
167,053
(40)
11,053
156,040
4,502
151,538

(2,573)
(387)
148
(2,812)
148,726

0.60
0.60

The accompanying notes form an integral part of these consolidated financial statements.

2017-AR-Combined_MDA+FS.pdf - p89 (March 7, 2018 23:00:53)

89CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Consolidated Statements of Cash Flows
For the years ended December 31,
(Expressed in thousands of United States Dollars)
Operating activities
Net earnings

Adjustments for the following items:

Depreciation, depletion and amortization
Finance costs
Loss on disposal of equipment
Compensation expense on stock options
Other share based compensation expense (reversal)
Inventory impairment (reversal)
Income tax (recovery) expense
Asset impairment
Kyrgyz Republic Settlement
Gain on sale of ATO project

Change in operating working capital
Purchase and settlement of derivatives
Payments toward provision for reclamation
Income taxes paid

Cash provided by operations

Investing activities

Additions to property, plant and equipment
Lease payments - Capital equipment
Net purchase of short-term investments
Payment to Thompson Creek Metals Inc. debtholders
Cash received on completion of acquisition
Decrease (increase) in restricted cash
Reclamation deposits payments and change in other assets
Proceeds from the sale of the ATO project
Proceeds from disposition of fixed assets

Cash used in investing

Financing activities
Dividends paid
Debt (repayment) proceeds
Payment of interest and borrowing costs
Proceeds from common shares issued for options exercised
Proceeds from subscription receipts issued

Cash (used in) provided by financing
Increase (decrease) in cash during the year
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year

Cash and cash equivalents consist of:
Cash
Cash equivalents

Notes

11
24

22
21
23

31(a)

31(b)

31(c)
31(c)

2017

2016

209,533 $

151,538

200,702
30,562
954
1,019
6,473
-
(18,201)
41,983
60,000
(9,800)
523,225
(11,693)
(4,135)
(432)
(6,069)
500,896

(266,854)
-
-
-
-
247,981
(1,780)
9,800
226
(10,627)

-
(208,363)
(28,303)
2,197
-
(234,469)
255,800
160,091
415,891 $

205,176
11,053
210
2,456
(668)
(27,216)
4,502
-
-
-
347,051
32,658
(2,099)
(613)
(5,553)
371,444

(212,832)
(3,810)
181,613
(881,018)
98,054
(248,045)
(5,964)
-
-
(1,072,002)

(22,946)
398,363
(18,323)
1,581
141,361
500,036
(200,522)
360,613
160,091

372,753 $
43,138
415,891 $

60,995
99,096
160,091

The accompanying notes form an integral part of these consolidated financial statements.

2017-AR-Combined_MDA+FS.pdf - p90 (March 7, 2018 23:00:53)

90CENTERRA GOLD INC. ANNUAL REPORT 2017

Centerra Gold Inc.
Consolidated Statements of Shareholders' Equity

(Expressed in thousands of United States Dollars, except share information)

Number of
Common
Shares

Share
Capital Contributed Comprehensive Retained
Loss ("AOCI") Earnings
Amount

Surplus

Accumulated
Other

Total

Balance at January 1, 2016
Share-based compensation expense
Shares issued on exercise of stock
options
Shares issued on redemption of
restricted share units
Shares issued to settle obligations
Shares issued to former Thompson
Creek Metal Inc. shareholders
Shares issued in equity offering
Foreign currency translation
Net movement in cashflow hedge,
net of tax (note 29)
Dividends declared
Post retirement benefit, net of tax
Net earnings for the year
Balance at December 31, 2016

Share-based compensation expense
Shares issued on exercise of stock
options
Shares issued on redemption of
restricted share units
Foreign currency translation
Net movement in cashflow hedge,
net of tax (note 29)
Post retirement benefit, net of tax
Net earnings for the year
Balance at December 31, 2017

237,889,274 $ 668,705 $

24,153 $
2,456

220 $
-

727,773 $ 1,420,851
2,456

337,669

2,314

(733)

5,504
4,117,120

28
19,857

22,327,001
26,599,500
-

112,368
141,361
-

-
-
-
-

-
-

-
-
-

-
-
-
-

-
-

-
-
(2,573)

(387)
-
148
-

291,276,068 $ 944,633 $

25,876 $

(2,592) $

-
-

-
-
-

1,581

28
19,857

112,368
141,361
(2,573)

(387)
-
(22,946)
(22,946)
148
-
151,538
151,538
856,365 $ 1,824,282

1,020

480,008

3,313

(1,115)

26,770
-

-
-
-

175
-

-
-
-

-
-

-
-
-

291,782,846 $ 948,121 $

25,781 $

-
2,405

-
-

1,020

2,198

175
2,405

(14,143)
(41)
-

(14,143)
-
(41)
-
209,533
209,533
(14,371) $ 1,065,898 $ 2,025,429

The accompanying notes form an integral part of these consolidated financial statements.

2017-AR-Combined_MDA+FS.pdf - p91 (March 7, 2018 23:00:53)

91CENTERRA GOLD INC. ANNUAL REPORT 2017

Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

1. Nature of operations

Centerra Gold Inc. (“Centerra” or the “Company”) was incorporated under the Canada Business
Corporations Act on November 7, 2002. Centerra’s common shares are listed on the Toronto
Stock Exchange. The Company is domiciled in Canada and its registered office is located at 1
University Avenue, Suite 1500, Toronto, Ontario, M5J 2P1. The Company is primarily focused
on operating, developing, exploring and acquiring gold and copper properties in North America,
Asia and other markets worldwide.

On October 20, 2016, the Company completed the acquisition of Thompson Creek Metals
Company Inc. (“Thompson Creek” or “TCM”) and on January 8, 2018, it completed the
acquisition of AuRico Metals Inc. (“AuRico” or “AMI”). Centerra acquired all of the issued and
outstanding common shares of Thompson Creek and AuRico. See notes 6 and 32, respectively,
for additional details on the transactions.

2. Basis of presentation

The consolidated financial statements of the Company and its subsidiaries are prepared in
accordance with International Financial Reporting Standards (“IFRS”), as issued by the
International Accounting Standards Board (“IASB”). These financial statements were authorized
for issuance by the Board of Directors of the Company on February 22, 2018.

These consolidated financial statements have been prepared under the historical cost basis, except
for cash and cash equivalents, restricted cash and restricted short-term investments, provisionally
priced amounts receivable, derivative instruments, liabilities for cash settled share-based
compensation and post-retirement benefit liability (measured at fair value) and inventories
(measured at the lower of cost or net realizable value (“NRV”)).

These financial statements are presented in United States (“U.S.”) dollars with all amounts rounded
to the nearest thousand, except for share and per share data, or as otherwise noted.

3. Summary of significant accounting policies

The significant accounting policies summarized below have been applied consistently to all
periods presented in these consolidated financial statements.

a. Consolidation principles

These consolidated financial statements include the accounts of Centerra and its subsidiaries.
Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable
returns as well as the ability to affect those returns through the power to direct the relevant
activities of the entity. Subsidiaries are fully consolidated from the date control is transferred to
the Company and are de-consolidated from the date control ceases.

2017-AR-Combined_MDA+FS.pdf - p92 (March 7, 2018 23:00:53)

92CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

Centerra’s significant subsidiaries and joint operations are as follows:

Entity

Kumtor Gold Company ("KGC")

Property - Location
Kumtor Mine - Kyrgyz
Republic

Thompson Creek Metals Company Inc. Mount Milligan Mine - Canada
Langeloth Metallurgical Company LLC
("Langeloth") Molybdenum Processing
Facility

Langeloth - United States

Ownership
Current status 2017 2016
100% 100%

Operation

Operation
Operation

100% 100%
100% 100%

Boroo Gold LLC ("BGC")
Centerra Gold Mongolia LLC
Öksüt Madencilik A.S. ("OMAS")
Greenstone Gold Mines LP ("Greenstone
Partnership")

Thompson Creek Mining Company

Stand-by

Boroo Mine - Mongolia

100% 100%
Gatsuurt Project - Mongolia Pre-development 100% 100%
Pre-development 100% 100%
Pre-development 50% 50%

Öksüt Project - Turkey
Greenstone Gold Property -
Canada

Thompson Creek Mine -
United States

Care and
Maintenance

100% 100%

75% 75%

Thompson Creek Metals Company Inc.

Endako Mine - Canada

As part of the AuRico acquisition (note 32), the Company acquired the Kemess Underground
property, Kemess East property and a royalty portfolio which includes a 1.5% net smelter return
(“NSR”) royalty on the Young-Davidson gold mine in Ontario, Canada and a 2.0% NSR royalty
on the Fosterville mine in Australia.

As at December 31, 2017, the Company had also entered into agreements to earn interests in joint
venture exploration properties located in Sweden, Canada, Mexico and Nicaragua.

Inter-company transactions between subsidiaries are eliminated on consolidation.

b. Business combinations

The Company uses the acquisition method of accounting for business combinations. The
consideration transferred for the acquisition of a subsidiary is the fair value of the assets received
and, the liabilities assumed or the equity interests issued by the Company. The consideration
transferred also includes the fair value of any asset or liability resulting from a contingent
consideration arrangement. Acquisition-related costs are expensed as incurred. Assets acquired
and liabilities assumed in a business combination are measured initially at fair value at the
acquisition date. On an acquisition-by-acquisition basis, the Company recognizes any non-
controlling interest in the acquiree either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net assets.

2017-AR-Combined_MDA+FS.pdf - p93 (March 7, 2018 23:00:53)

93CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

The excess of the consideration transferred, the amount of any non-controlling interest in the
acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the
fair value of the Company’s share of the identifiable net assets acquired is recorded as goodwill.

Certain fair values may be estimated at the acquisition date pending confirmation or completion
of the valuation process. Where provisional values are used in accounting for a business
combination, they may be adjusted retrospectively in subsequent periods. However, the
measurement period will not exceed one year from the acquisition date.

c. Foreign currency

The functional currency of the Company and its subsidiaries is the U.S. dollar (“USD”), which is
also the presentation currency of the consolidated financial statements. The functional and
reporting currency of the Greenstone Partnership is the Canadian dollar (“Cdn$”), which results
in translation gains (losses) being recorded as part of Other Comprehensive Income in the
Consolidated Statements of Earnings and Comprehensive Income (“Statements of Earning”).

Foreign currency transactions are translated into the entity’s functional currency using the
exchange rate prevailing on the dates of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at year-end exchange
rates of monetary assets and liabilities denominated in foreign currencies are recognized in the
Statements of Earnings. Non-monetary assets and liabilities, arising from transactions
denominated in foreign currencies, are translated at the historical exchange rates prevailing at each
transaction date.

d. Cash and cash equivalents

Cash and cash equivalents comprise cash balances and short-term investments with original
maturities of 90 days or less. Cash and cash equivalents are classified as financial instruments
carried at amortized cost.

e. Short-term investments

Short-term investments consist of marketable securities with original maturities of more than 90
days but no longer than 12 months, from the date of purchase. Short-term investments consist
mostly of U.S. federal, Canadian federal and provincial government treasury bills and notes,
agency notes, foreign sovereign issues, term deposits, bankers’ acceptances, bearer deposit notes,
and highly-rated, highly-liquid corporate direct credit. Short-term investments are classified as
financial instruments carried at fair value through profit or loss.

2017-AR-Combined_MDA+FS.pdf - p94 (March 7, 2018 23:00:53)

94CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

f. Restricted cash and restricted short-term investments

Cash and short-term investments which are subject to legal or contractual restrictions on their use
are classified separately as restricted cash and restricted short-term investments.

g. Inventories

Inventories of stockpiled ore, in-circuit gold, gold and copper concentrate, gold doré and
molybdenum inventory are valued at the lower of weighted average production cost and NRV.
Finished gold and copper inventory valuation is based on payable ounces or pounds of the
respective commodity. The production cost of inventories is determined on a weighted-average
basis and includes direct materials, direct labour, transportation, shipping, freight and insurance
costs, mine-site overhead expenses and depreciation, depletion and amortization of mining assets.
Molybdenum inventory additionally includes amounts paid for molybdenum concentrate
purchased from third parties, as well as costs associated with beneficiation and roasting.

Stockpiled ore is ore that has been extracted from the mine and is available for further processing.
Costs are added to the cost of stockpiles based on the current mining cost per unit mined and
removed at the average cost per unit of the stockpiled ore. In-circuit inventories represent materials
that are in the process of being converted to gold doré or concentrate. Variances between actual
and estimated quantities resulting from changes in assumptions and estimates that do not result in
write-downs to NRV are accounted for on a prospective basis.

When inventories are sold, the carrying amount is recognized as an expense in the period in which
the related revenue is recognized. Any write-down of inventories to NRV or reversals of previous
write-downs are recognized in the Statements of Earnings in the period that the write-down or
reversal occurs. NRV is the estimated selling price in the ordinary course of business, less
estimated costs of completion and estimated costs to sell.

Consumable supplies and spare parts are valued at the lower of weighted average cost and NRV,
which approximates replacement cost. Replacement cost includes expenditures incurred to acquire
the inventories and bring them to their existing location and condition. Any provision for
obsolescence is determined by reference to specific stock items identified as obsolete. A regular
and ongoing review is undertaken to establish the extent of surplus items and a provision is made
for any potential loss on their disposal. Consumable supplies for operations in the care and
maintenance stage of the mine life cycle and which are not expected to be used in the next twelve
months are classified as long-term.

2017-AR-Combined_MDA+FS.pdf - p95 (March 7, 2018 23:00:53)

95CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

h. Property, plant and equipment

General

Property, plant and equipment are recorded at cost less accumulated depreciation, depletion
and impairment charges.

Major overhaul expenditures and the cost of replacement of a component of plant and
mobile equipment are capitalized and depreciated over the average expected life between
major overhauls. All other replacement spares and other costs relating to maintenance of
mobile equipment are charged to the cost of production.

Directly attributable costs, including capitalized borrowing costs, incurred for major capital
projects and site preparation are capitalized until the asset is in a location and condition
necessary for operation as intended by management. These costs include dismantling and
site restoration costs to the extent these are recognized as a provision.

Management annually reviews the estimated useful lives, residual values and depreciation
methods of the Company’s property, plant and equipment and also when events and
circumstances indicate that such a review should be undertaken. Changes to estimated
useful lives, residual values or depreciation methods resulting from such reviews are
accounted for prospectively.

An item of property, plant and equipment is de-recognized upon disposal or when no
further future economic benefits are expected from its use or disposal. Any gain or loss
arising on de-recognition of the asset (calculated as the difference between any proceeds
received and the carrying amount of the asset) is included in the Statements of Earnings in
the year the asset is de-recognized.

ii. Exploration, evaluation and pre-development expenditure

All exploration and evaluation expenditures of the Company within an area of interest are
expensed until management and Board of Directors conclude that the technical feasibility
and commercial viability of extracting a mineral resource are demonstrable and that future
economic benefits are probable. In making this determination, the extent of exploration, as
well as the degree of confidence in the mineral resource is considered. Once a project has
been established as commercially viable and technically feasible, and approval is received
from the Board of Directors, further expenditures are capitalized as development costs.

Exploration and evaluation assets acquired are initially recognized at fair value as
exploration rights within property, plant and equipment.

2017-AR-Combined_MDA+FS.pdf - p96 (March 7, 2018 23:00:54)

96CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

iii. Development properties (underground and open pit)

A property, either open pit or underground, is classified as a development property when a
mine plan has been prepared and a decision is made to commercially develop the property.

All expenditures incurred from the time the development decision is made until the
commencement of commercial levels of production from each development property are
capitalized. In addition, capitalized costs are assessed for impairment when there is an
indicator of impairment.

Development properties are not depleted until they are reclassified as mine property assets
following the achievement of commercial levels of production.

iv. Mine properties

All direct costs related to the acquisition of mineral property interests are capitalized at the
date of acquisition.

After a mine property has been brought into commercial production, costs of any additional
mining, in-pit drilling and related work on that property are expensed as incurred. Mine
development costs incurred to expand operating capacity, develop new ore bodies or
develop mine areas in advance of current production, including the stripping of waste
material, are capitalized and then depleted on a unit-of-production basis.

v. Deferred stripping costs

Stripping costs incurred in the production phase of a mining operation are accounted for as
production costs and are included in the costs of inventory produced. Stripping activity that
improves access to ore in future periods is accounted for as an addition to or enhancement
of an existing asset. The Company recognizes stripping activity assets when the following
three criteria are met:



it is probable that the future economic benefit associated with the stripping
activity will flow to the Company;
the Company can identify the component of the ore body for which access has
been improved; and
the costs relating to the stripping activity associated with that component can
be measured reliably by the Company.

Stripping activity assets are depleted on a unit-of-production basis in subsequent periods
over the proven and probable reserves to which they relate.

2017-AR-Combined_MDA+FS.pdf - p97 (March 7, 2018 23:00:54)

97CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

vi. Depreciation and depletion

Buildings, plant and equipment used in production and mineral properties, with the
exception of Langeloth, are depreciated or depleted using the unit-of-production method
over proven and probable ore reserves, or if their estimated useful lives are shorter, on a
straight-line basis over the useful lives of the particular assets. Under this process,
depreciation commences when ore is extracted from the ground. The depreciation charge
is allocated to inventory throughout the production process from the point at which ore is
extracted from the pit until the ore is processed into its final form, gold doré or concentrate.
Where a change in estimated recoverable gold ounces or copper pounds contained in
proven and probable ore reserves is made, adjustments to depreciation are accounted for
prospectively. Langeloth’s property, plant and equipment are depreciated on a straight-line
basis, based on estimated useful lives which range from five to twenty years.

Mobile equipment and other assets, such as offsite roads, buildings, office furniture and
equipment are depreciated using the straight-line method based on estimated useful lives
which range from two to twenty years, but do not exceed the related estimated mine life
based on proven and probable ore reserves.

Where an item of property, plant and equipment comprises major components with
different useful lives, the components are depreciated separately but are grouped for
disclosure purposes as property, plant and equipment.

i. Goodwill

Goodwill represents the difference between the cost of a business acquisition and the fair value of
the identifiable net assets acquired. Subsequent to recording, goodwill is measured at cost less
accumulated impairment losses and is not amortized.

Goodwill, upon acquisition, is allocated to the cash-generating units (“CGU”) expected to benefit
from the related business combination. A CGU, in accordance with IAS 36, Impairment of Assets,
is identified as the smallest identifiable group of assets that generates cash inflows, which are
largely independent of the cash flows from other assets.

The Company evaluates, on at least an annual basis, the carrying amount of a CGU to which
goodwill is allocated, for potential impairment.

Impairment

Long term assets, including goodwill, are reviewed for impairment if an event occurs which leads
to an indication that the carrying amount may be impaired. In addition, goodwill is tested for
impairment annually on September 1.

2017-AR-Combined_MDA+FS.pdf - p98 (March 7, 2018 23:00:54)

98CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

To accomplish this impairment testing, the Company compares the recoverable amount (which is
the greater of value-in-use and fair value less costs of disposal (“FVLCD”) of the CGU) to its
carrying amount. If the carrying amount of a CGU exceeds its recoverable amount, the Company
first applies the difference to reduce goodwill and then any further excess is applied to the CGU’s
other long-lived assets. Assumptions, such as gold price, copper price, molybdenum price,
exchange rates, discount rate, and expenditures underlying the estimate of recoverable value are
subject to risks and uncertainties.

The best evidence of FVLCD is the value obtained from an active market or binding sale
agreement. Where neither exists, FVLCD is based on the best information available to reflect the
amount the Company could receive for the CGU in an arm’s length transaction, which the
Company typically estimates using discounted cash flow methods based on detailed mine and/or
production plans.

k. Income taxes

Tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in
the Statements of Earnings except to the extent that they relate to a business combination, or items
recognized directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year,
using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax
payable in respect of previous years.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognized for:



temporary differences on the initial recognition of assets or liabilities in a transaction
that is not a business combination and that affects neither accounting nor taxable profit
or loss;
temporary differences related to investments in subsidiaries, associates and jointly
controlled entities to the extent that the group is able to control the timing of the reversal
of the temporary differences and it is probable that they will not reverse in the
foreseeable future; and
taxable temporary differences arising on the initial recognition of goodwill.

The measurement of deferred tax reflects the tax consequences that would follow the manner in
which the Company, at the end of the reporting period, intends to recover or settle the carrying
amount of its assets and liabilities.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences
when they reverse, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current
tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same

2017-AR-Combined_MDA+FS.pdf - p99 (March 7, 2018 23:00:54)

99CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets
on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary
differences to the extent that it is probable that future taxable profits will be available against which
they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit will be realized.

l. Provisions

Provisions are recorded when a legal or constructive obligation exists as a result of past events
where it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation, and a reliable estimate of the amount of the obligation can be made. The
amount recognized as a provision is the best estimate of the amount required to settle the present
obligation estimated at the end of each reporting period, taking into account the risks and
uncertainties surrounding the obligation. A provision is measured using the present value of cash
flows estimated to settle the present obligation, discounted using a pre-tax risk-free discount rate
consistent with the time period of expected cash flows.

m. Asset retirement and reclamation obligations

Asset retirement and reclamation costs include the dismantling and demolition of infrastructure
and the removal of residual materials and remediation of disturbed areas. Estimated asset
retirement and reclamation costs are provided in the accounting period when the obligation arising
from the related disturbance occurs based on the net present value of estimated future costs.

Provision for asset retirement and reclamation costs recognized is estimated based on the risk-
adjusted costs required to settle present obligations discounted using a pre-tax risk-free discount
rate consistent with the time period of expected cash flows.

Asset retirement and reclamation obligations relating to operating mines and development projects
are initially recorded with a corresponding increase to the carrying amounts of related mining
properties. Changes to the obligations may arise as a result of the translation of obligations which
are considered monetary assets or changes in discount rates and timing or amounts of the costs to
be incurred. These changes are also accounted for as changes in the carrying amounts of related
mining properties, except where a reduction in the obligation is greater than the amount capitalized,
in which case the capitalized costs are reduced to nil and the remaining adjustment is included as
a reduction in profit or loss in the Statements of Earnings.

If reclamation and restoration costs are incurred as a consequence of the production of inventory,
the costs are recognized as a cost of that inventory. Asset retirement and reclamation obligations
related to inactive and closed mines are included in profit or loss in the Statements of Earnings on
initial recognition and subsequently when re-measured.

2017-AR-Combined_MDA+FS.pdf - p100 (March 7, 2018 23:00:54)

100CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

n. Earnings per share

Basic earnings per share is computed by dividing the net earnings by the weighted average number
of common shares outstanding during the year.

Diluted earnings per share is computed by dividing the net earnings applicable to common shares,
after adjusting for the effect of performance share units as though they were accounted for as an
equity instrument, by the weighted average number of common shares outstanding during the year,
plus the effects of dilutive common share equivalents such as stock options and restricted share
units. Diluted earnings per share is calculated using the treasury method, where the exercise of
stock options and restricted share units are assumed to be at the beginning of the period, the
proceeds from the exercise of stock options and restricted share units and the amount of
compensation expense measured but not yet recognized in profit or loss are assumed to be used to
purchase common shares of the Company at the average market price during the period. The
incremental number of common shares (the difference between the number of shares assumed
issued and the number of shares assumed purchased) is included in the denominator of the diluted
earnings per share computation.

Equity instruments that could potentially be dilutive in the future, but do not currently have a
dilutive effect are excluded from the calculation of diluted earnings per share.

o. Revenue recognition

The Company sells its products pursuant to sales contracts entered into with its customers.
Revenue associated with the sale of gold, concentrates and molybdenum products is recognized
when all significant risks and rewards of ownership are transferred to the customer and the amount
of revenue can be measured reliably. Typically the transfer of risks and rewards associated with
ownership occurs when the customer has taken delivery and the consideration is received, or to be
received. For concentrate sales, the passing of title and risk of loss are based on the terms of the
sales contracts, generally upon the earlier of loading of the shipment at the Port of Vancouver or
payment by the customer.

Revenues from the Company’s concentrate sales are based on a provisional sales price and
recorded upon the transfer of title to the customer, with adjustments made for a final sales price
calculated in accordance with the terms specified in the relevant sales contract. Revenues from
concentrate sales are recorded net of treatment and all refining charges and the impact of derivative
contracts. Treatment and refining charges represent payments or price adjustments that are
contractually negotiated, as typical in the industry. Moreover, because a portion of the metals
contained in concentrate is unrecoverable as a result of the smelting process, the Company's
revenues from concentrate sales are also recorded net of allowances based on the quantity and
value of these unrecoverable metals.

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101CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

The provisional prices are finalized in a specified future month (generally one to four months from
the date of title transfer) based on spot copper prices on the London Metal Exchange ("LME") or
spot gold prices on the London Bullion Market Association ("LBMA"). The Company receives
market prices based on prices in the specified future month, which results in mark-to-market price
fluctuations recorded to revenues until the date of settlement. To the extent final prices are higher
or lower than what was recorded on a provisional basis, an increase or decrease to revenues is
recorded each reporting period reflecting estimated forward prices until the date of final pricing.
For changes in metal quantities upon receipt of final assay, the provisional sales quantities are
adjusted as well.

To satisfy its obligations under the Gold and Copper Stream Arrangement, the Company purchases
refined gold and LME copper warrants and arranges for delivery to RGLD Gold AG and Royal
Gold, Inc (collectively “Royal Gold”). Revenue from Royal Gold and costs for refined physical
gold and LME copper warrants delivered under the Gold and Copper Stream Arrangement and
gains and losses related to the Company's forward commodity contracts to economically hedge the
Company's commodity price exposure under the Gold and Copper Stream Arrangement are netted
and recorded to revenue.

The Company's molybdenum sales contracts specify the point in the delivery process at which title
transfers to the customer (shipping point or destination). Shipping and handling fees are accounted
for on a gross basis under the terms of the contracts. The Company recognizes tolling and calcining
revenue under contractual arrangements as the services are performed on a per-unit basis.

p. Share-based compensation

The Company has five share-based compensation plans: the Stock Option plan, Performance Share
Unit plan, Deferred Share Unit Plan, Restricted Share Unit Plan and Employee Share Purchase
Plan.

Stock Option plan

Stock options are equity-settled share-based compensation awards. The fair value of stock
options at the grant date is estimated using the Black-Scholes option pricing model.
Compensation expense is recognized over the stock option vesting period based on the number
of units estimated to vest. This expense is recognized as share-based compensation expense
with a corresponding increase in contributed surplus. When options are exercised, the proceeds
received by the Company, together with the amount in contributed surplus, are credited to
common shares.

ii.

Performance Share Unit Plan

Units under Centerra’s Performance Share Unit Plan, performance share units can be granted
to employees and officers of the Company. A performance share unit represents the right to

2017-AR-Combined_MDA+FS.pdf - p102 (March 7, 2018 23:00:54)

102CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

receive the cash equivalent of a common share or, at the Company’s option, a common share
purchased on the open market. Performance share units are accounted for under the liability
method using the Monte Carlo simulation option pricing model and vest 50% at the end of the
year after grant and the remaining 50% the following year. Under this method, a portion of the
fair value of the performance share units is recognized at each reporting period based on the
pro-rated number of days the eligible employees are employed by the Company compared to
the vesting period of each series granted. The cash paid to employees on exercise of these
performance share units is recorded as a reduction of the accrued obligation. The Monte Carlo
simulation option pricing model requires the use of subjective assumptions, including expected
stock-price volatility, risk-free rate of return and forfeiture rate. Historical data is considered
in setting the assumptions.

The number of units that vest is determined by multiplying the number of units granted to the
participant by the adjustment factor, which ranges from 0 to 2.0. Therefore, the number of units
that will vest and be paid out may be higher or lower than the number of units originally granted
to a participant. The adjustment factor is based on Centerra’s total return performance (based
on the preceding sixty-one trading days volume weighted average share price) relative to the
S&P/TSX Global Gold Index Total Return Index Value during the applicable period. The fair
value of the fully vested units is determined using the sixty-one trading days volume weighted
average share price.

iii.

Deferred Share Unit Plan

Centerra has a Deferred Share Unit Plan for directors of the Company to receive all or a portion
of their annual retainer as deferred share units. Deferred share units are settled in cash and are
accounted for under the liability method. The deferred share units cannot be converted to shares
by the unit holder or by the Company. The deferred share units vest immediately upon granting.
A liability is recorded at grant date equal to the fair value of the deferred share units. The
liability is adjusted to fair value at each reporting period and any resulting adjustment to the
accrued obligation is recognized as an expense or, if negative, a recovery. The cash paid to
eligible members of the Board of Directors on exercise of these deferred share units, being no
later than December 31 of the calendar year immediately following the calendar year of
termination of service, is recorded as a reduction of the accrued obligation.

iv.

Restricted Share Unit Plan

Centerra has a Restricted Share Unit Plan for non-executive directors, certain executives and
employees of the Company to receive all or a portion of their annual retainer or annual
incentive payments as restricted share units. Restricted share units can be settled in cash or
equity at the option of the holder. Effective for 2017, certain executives and other employees
may elect to receive a portion of their annual incentive payments as restricted share units. The
Company will match 50% of the restricted share units granted to such individuals and all such
restricted share units granted to executives and other employees vest over a two year period

2017-AR-Combined_MDA+FS.pdf - p103 (March 7, 2018 23:00:54)

103CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

(“Executive RSUs”). Restricted share units which are not Executive RSUs vest immediately
upon grant and are redeemed on a date chosen by the participant (subject to certain restrictions
as set out in the plan). The restricted share units granted are accounted for under the liability
method whereby a liability is recorded at grant date equal to the fair value of the restricted
share unit. The liability is adjusted to fair value at each reporting period and any resulting
adjustment to the accrued obligation is recognized as an expense or, if negative, a recovery.
The cash paid or common shares issued on exercise of these restricted share units is recorded
as a reduction of the accrued obligation.

Employee Share Purchase Plan

Centerra has an Employee Share Purchase Plan (“ESPP”) for certain employees of the
Company, which was introduced in 2017. Under the ESPP, employees may elect to purchase
the Company’s shares through a payroll deduction. Each year, employees may contribute up
to 10% of their base salary and the Company will match 25% of the contribution. Such
contributions are then used to acquire Centerra shares on a quarterly basis. Shares purchased
have no vesting requirement and may be issued from treasury or acquired on the open market.
The Company records an expense equal to the match provided.

When dividends are paid, participants under each of the Performance Share Unit Plan, Deferred
Share Unit Plan, and Restricted Share Unit Plan are allocated additional units equal in value to the
dividend paid per common share equal to the number of units held by the participant. For
performance share units, the number of units issued is based on the sixty-one trading day volume
weighted average share price on the date of the dividend.

q. Financial instruments

Non-derivative financial instruments

Non-derivative financial instruments are recognized initially at fair value. Subsequent to initial
recognition, non-derivative financial instruments are classified and measured as described below.

Transaction costs associated with financial instruments carried at fair value through profit or loss,
are expensed as incurred, while transaction costs associated with all other financial instruments
are included in the initial carrying amount of the asset or the liability. The amortization of debt
financing fees is calculated on an amortized cost basis over the term of the instrument.

Financial assets recorded at fair value through profit or loss

Financial assets are classified at fair value if they are acquired for the purpose of selling in the
near term. Gains or losses on these items are recognized in the Statements of Earnings. The
Company’s provisionally-priced receivables are classified as financial assets measured at fair
value through profit or loss.

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104CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

ii.

Amortized cost

Financial assets are recorded at amortized cost if both of the following criteria are met: 1) the
objective of the Company’s business model for these financial assets is to collect their
contractual cash flows; and 2) the asset’s contractual cash flows represent solely payments of
principal and interest.

The Company’s cash and cash equivalents, short-term investments, restricted short-term
investments, amounts receivable (excluding provisionally-priced receivables), taxes receivable
and long-term receivables are recorded at amortized cost as they meet the required criteria. An
allowance is recorded when the estimated recoverable amount of the loan or receivable is lower
than the carrying amount. The carrying values of amounts receivable and long-term receivables
approximate their fair values.

iii.

Non-derivative financial liabilities

Accounts payable and accrued liabilities, lease obligations, debt and revenue-based taxes
payable are accounted for at amortized cost, using the effective interest rate method. The
amortization of debt issue costs is calculated using the effective interest rate method.

The Company’s post-retirement benefit liability are measured at fair value through other
comprehensive income. Provisionally-priced payables to Royal Gold are measured at fair value
through profit or loss.

Derivative financial instruments

The Company may hold derivative financial instruments to manage its risk exposure to fluctuations
of commodity prices, including the Company’s final product (for example, gold or copper) and
consumables (for example, diesel fuel) and other currencies compared to the USD.

Hedges

The Company applies hedge accounting to derivative instruments which hedge a certain
percentage of the gold and copper components of its future concentrate sales at its Mount Milligan
operation. The Company also applies hedge accounting to derivative instruments which hedge a
certain percentage of its future diesel fuel purchases at its Kumtor operations.

The Company formally documents all relationships between hedging instruments and hedged
items, as well as its risk management objectives and strategies for undertaking hedge transactions.
This process includes linking all derivative hedging instruments to forecasted transactions. Hedge
effectiveness is assessed based on the degree to which the cash flows from the derivative contracts
are expected to offset the cash flows of the underlying transaction being hedged.

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105CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

When a derivative is designated as a cash flow hedging instrument, the effective portion of changes
in fair value is recognized in other comprehensive income. The amounts accumulated in other
comprehensive income are reclassified to revenue or to the cost of the purchased asset the
Statements of Earnings when the underlying hedged transaction, identified at contract inception,
is recognized in revenue.

Any ineffective portion of a hedge relationship is recognized immediately in the Statements of
Earnings as other income, net. When derivative contracts designated as cash flow hedges are
terminated, expired, sold or no longer qualify for hedge accounting, hedge accounting is
discontinued prospectively. Any amounts recorded in other comprehensive income up until the
time the contracts do not qualify for hedge accounting remain in other comprehensive income until
the underlying hedged transaction is recognized in revenue at which time such amounts are
reclassified to revenue or to the cost of the purchased asset.

Gains or losses arising subsequent to the derivative contracts not qualifying for hedge accounting
are recognized in the period incurred in the Statements of Earnings as other income, net. If the
forecasted transaction is no longer expected to occur, then the amounts accumulated in other
comprehensive income are reclassified to the Statements of Earnings as other income or expenses
immediately.

Non-hedges

All derivative instruments not designated in a hedge relationship are classified as financial
instruments at fair value through profit or loss.

Changes in fair value of non-hedge derivatives at each reporting date are included in the Statements
of Earnings as non-hedge derivative gains or losses, with the exception of spot and forward
contracts associated with the Royal Gold deliverables, which are included in revenue.

r. Finance leases

The Company is the lessee of equipment with Caterpillar Financial Services Limited (“Caterpillar”
- see note 15).

The assets and liabilities under these capital leases are recorded at the lower of the present value
of the minimum lease payments or the fair value of the asset. Once ready for their intended use,
the assets are depreciated over the lesser of their related lease terms or their estimated productive
lives.

4. Critical accounting estimates and judgments

The preparation of consolidated financial statements in accordance with IFRS requires
management to make judgments, estimates and assumptions that affect the application of the

2017-AR-Combined_MDA+FS.pdf - p106 (March 7, 2018 23:00:54)

106CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

Company’s accounting policies, which are described in note 3, the reported amounts of assets and
liabilities and disclosure of commitments and contingent liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the reporting period. The
determination of estimates requires the exercise of judgment based on various assumptions and
other factors such as historical experience, current and expected economic conditions. Actual
results could differ from those estimates.

The key sources of estimation uncertainty and judgments used in the preparation of these
consolidated financial statements that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities and earnings within the next financial year, are
discussed below:

Impairment

Significant judgement is required in assessing indicators of impairment. For long-term assets,
including development properties the Company completes an evaluation at each reporting period
of potential impairment indicators. The Company considers both external and internal sources of
information in assessing whether there are any indications that long-term assets may be impaired.

External sources of information that the Company considers include changes in the market,
economic, political and legal environment in which the Company operates that are not within its
control and could affect the recoverable amounts of long-term assets and goodwill. Internal sources
of information that the Company considers include the manner in which long-term assets are being
used or are expected to be used, analyses of economic performance of the assets and assessment
of factors that may impact continuing progress toward development.

For CGU’s where value cannot be obtained from an active market: expected gold, copper and
molybdenum prices, and production levels, which comprise proven and probable reserves and an
estimated recoverable amount of resources if deemed appropriate, are used to estimate expected
future cash flows. Management also estimates future operating and capital costs based on the most
recently approved life of mine plan. The discount rate applied is reviewed for each assessment.
Changes in these estimates which decrease the estimated recoverable amount of the CGU could
affect the carrying amounts of assets and result in an impairment charge.

While management believes that estimates of future cash flows are reasonable, different
assumptions regarding such cash flows could materially affect the recoverable amount of the CGU.

2017-AR-Combined_MDA+FS.pdf - p107 (March 7, 2018 23:00:55)

107CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

ii. Materials inventory

Management makes estimates of recoverable quantities of gold and copper in stockpiled ore, ore
in-process and molybdenum work-in-process to determine the average costs of finished goods sold
during the period and the value of inventories in the Statements of Financial Position. NRV tests
are performed at each reporting period based on the estimated future sales price of the gold doré,
gold and copper concentrate, molybdenum and other products based on prevailing market prices,
less estimated costs to complete production and bring the materials to selling condition.

The recoverable quantity of ore on stockpiles is estimated based on tonnage added and removed
from the stockpiles, the amount of contained gold ounces and copper pounds based on assay data,
and the estimated recovery percentage based on the historical recoveries obtained in the expected
processing method. Stockpiled ore tonnage is verified by periodic surveys.

Although the quantities of recoverable metal are reconciled by comparing the grades of ore to the
quantities actually recovered, the nature of the process inherently limits the ability to precisely
monitor recoverability levels. As a result, the metallurgical reconciliation process is constantly
monitored and engineering estimates are refined based on actual results over time.

iii. Asset retirement obligations

Amounts recorded for asset retirement obligations and the related accretion expense require the
use of estimates of the future costs the Company will incur to complete the reclamation and
remediation work required to comply with existing laws and regulations at each mine site, as well
as the timing of the reclamation activities and estimated discount rate. The Company assesses and
revises its asset retirement obligations on an annual basis or when new material information
becomes available. Actual costs incurred may differ from those amounts estimated. Also, future
changes to environmental laws and regulations could increase the extent of reclamation and
remediation work required to be performed by the Company. Increases in future costs could
materially impact the amounts charged to operations for reclamation and remediation. The
provision represents management’s best estimate of the present value of the future reclamation and
remediation costs based on environmental disturbances as at the reporting date.

A change in any or a combination of the key assumptions used to determine the provisions could
have a material impact on the carrying value of the provisions (note 17). Changes to the estimated
future reclamation costs for operating sites are recognized in the Statements of Financial Position
by adjusting both the retirement asset and provision, and will impact earnings as these amounts
are depleted and accreted over the life of the mine.

iv. Deferred income taxes

The Company operates in a number of tax jurisdictions and is therefore required to estimate its
income taxes in each of these tax jurisdictions in preparing its financial statements. In calculating

2017-AR-Combined_MDA+FS.pdf - p108 (March 7, 2018 23:00:55)

108CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

the income taxes, the Company considers factors such as tax rates in the different jurisdictions,
non-deductible expenses, changes in tax law and management’s expectations of future results. The
Company estimates deferred income taxes based on temporary differences between the income
and losses reported in its financial statements and its taxable income and losses as determined
under the applicable tax laws. The tax effects of these temporary differences are recorded as
deferred tax assets or liabilities in the financial statements.

The Company does not recognize deferred tax assets where management does not expect such
assets to be realized based upon current forecasts. In the event that actual results differ from these
estimates, adjustments are made in subsequent periods. See note 16 for additional information on
the basis for recognizing deferred tax assets.

v. Depreciation, depletion and amortization of property plant and equipment

All mining assets (except for mobile equipment) are depleted using the units-of-production method
where the mine operating plan calls for production from well-defined ore reserves over proven and
probable reserves. For mobile and other equipment, the straight-line method is applied over the
estimated useful life of the asset which does not exceed the estimated mine life based on proven
and probable ore reserves as the useful lives of these assets are considered to be limited to the life
of the relevant mine.

The calculation of the units-of-production rate of property, plant and equipment to be depleted
could be impacted to the extent that actual production in the future is different from current forecast
production based on proven and probable ore reserves. This would generally arise when there are
significant changes in any of the factors or assumptions used in estimating ore reserves.

Changes to these estimates, which can be significant, could be caused by a variety of factors,
including future production differing from current forecasts, expansion of mineral reserves through
exploration activities, differences between estimated and actual costs of mining and other factors
impacting mineral reserves or the expected life of the mining operation.

vi. Mineral reserve and resources estimation

The Company estimates its mineral reserves and mineral resources based on information compiled
by qualified persons as defined in accordance with the National Instrument 43-101, Standards of
Disclosure for Mineral Projects. The estimation of mineral reserves requires judgment to interpret
available geological data, select an appropriate mining method and establish an extraction
schedule. It also requires assumptions about future commodity prices, exchange rates, production
costs, recovery rates and discount rates and, in some instances, the renewal of mining licenses.
There are numerous uncertainties inherent in estimating mineral reserves and assumptions that are
valid at the time of estimation and may change significantly when new information becomes
available. New geological data as well as changes in the above assumptions may change the

2017-AR-Combined_MDA+FS.pdf - p109 (March 7, 2018 23:00:55)

109CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

economic status of mineral reserves and may, ultimately, result in the mineral reserves being
revised.

Estimates of mineral reserves and mineral resources impact the following items in the financial
statements:

• Useful lives of assets depreciated on a straight-line basis, where those lives are

limited to the life of the mine.

• Depreciation and depletion of assets using the units-of-production method.
• Estimate of recoverable value of CGUs.
• Estimated timing of reclamation activities.
• Expected future economic benefit of expenditures, including stripping and

development activities.

vii. Derivative financial instruments

Judgment is required to determine if an effective hedging relationship exists throughout the
financial reporting period for derivative financial instruments classified as either a fair value or
cash flow hedge.

Management assesses the relationships on an ongoing basis to determine if hedge accounting is
appropriate. The Company monitors on a regular basis its hedge position for its risk exposure to
fluctuations in commodity prices, including prices for gold, copper and oil. For derivative
contracts, valuations are based on forward rates considering the market price, rate of interest and
volatility, and take into account the credit risk of the financial instrument. Refer to note 29 for a
sensitivity analyses based on changes in commodity prices.

viii.

Litigation and contingency

On an ongoing basis, the Company is subject to various claims and other legal disputes described
in note 26, the outcomes of which cannot be assessed with a high degree of certainty. A provision
is recognized where, based on the Company’s legal views and advice, it is considered probable
that an outflow of resources will be required to settle a present obligation that can be measured
reliably.

By their nature, these provisions and contingencies will only be resolved when one or more future
events occur or fail to occur. The assessment of such provisions and contingencies inherently
involves the exercise of significant judgment of the potential outcome of future events. Disclosure
of other contingent liabilities is made unless the possibility that a loss may occur is considered
remote.

2017-AR-Combined_MDA+FS.pdf - p110 (March 7, 2018 23:00:55)

110CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

5. Changes in accounting policies

Recently adopted accounting policies are as follows:

Amendments to IAS 7, Statements of Cash Flows (“IAS 7”). The amendments require disclosures
that enable users of financial statements to evaluate changes in liabilities arising from financing
activities, including both changes arising from cash flow and non-cash changes. The Company
adopted the amendments to IAS 7 on a prospective basis in its financial statements on January 1,
2017. The adoption of these amendments did not have a material impact on the Company’s
financial statements, but did result in additional supplemental cash flow disclosure (note 31(c)).

Amendments to IAS 12, Income Taxes (“IAS 12”). The amendments clarify that the existence of
a deductible temporary difference is not affected by possible future changes in the carrying amount
or expected manner of recovery of the asset and also clarify the methodology to determine the
future taxable profits used for assessing the utilization of deductible temporary differences. The
Company adopted the amendments to IAS 12 in its financial statements on January 1, 2017. The
adoption of these amendments did not have a material impact on the Company’s financial
statements.

Recently issued but not adopted accounting guidance are as follows:

In May 2014, the IASB issued IFRS 15, Revenue from Contracts with Customers (“IFRS 15”).
IFRS 15 establishes principles for reporting the nature, amount, timing, and uncertainty of revenue
and cash flows arising from an entity’s contract with customers. This standard is effective for
annual periods beginning on or after January 1, 2018, and permits early adoption. The Company
has assessed the impact of adopting IFRS 15 and has determined IFRS 15 will not have an impact
on revenue recognized related to the sales of gold doré, gold and copper concentrate and
molybdenum.

In January 2016, the IASB issued IFRS 16, Leases (“IFRS 16”). IFRS 16 revises the definition of
leases and requires companies to bring most leases on the balance sheet, recognizing new assets
and liabilities. The objective of this change is to increase the transparency and comparability of a
company’s financial statements. IFRS 16 is effective for annual periods beginning on or after
January 1, 2019, and permits early adoption provided IFRS 15 has been applied or is applied at
the same date as IFRS 16. The Company has initiated a project to identify all leasing contracts that
may be impacted by IFRS 16. The Company is in the process of determining the impact of IFRS
16 on its financial statements.

In June 2017, the IASB issued IFRIC 23, Uncertainty over Income Tax Treatments (“IFRIC 23”).
IFRIC 23 clarifies the determination of taxable profit (tax loss), tax bases, unused tax losses,
unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS
12 and requires an entity to consider whether it is probable that the relevant authority will accept
each tax treatment, or group of tax treatments, that it uses or plans to use in its income tax filing.

2017-AR-Combined_MDA+FS.pdf - p111 (March 7, 2018 23:00:55)

111CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

IFRIC 23 is effective for annual periods beginning on or after January 1, 2019, and permits early
adoption. The Company is in the process of determining the impact of IFRIC 23 on its financial
statements.

6. Acquisition of Thompson Creek

On October 20, 2016, the Company completed the acquisition of all of the outstanding shares of
Thompson Creek. Thompson Creek was a North American-based mining company with gold,
copper and molybdenum mining, milling, processing and marketing operations in Canada and the
United States.

The purchase price allocation recognized in 2016 was based on a preliminary assessment of fair
value while the Company finalized an independent valuation. The valuation was finalized in 2017,
resulting in no adjustments to the preliminary purchase price allocation.

The following table summarizes the fair value of the identified assets acquired and liabilities
assumed from Thompson Creek.

2017-AR-Combined_MDA+FS.pdf - p112 (March 7, 2018 23:00:55)

112CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

Total consideration
Cash paid to debtholders
Common share issuance (exchange for Thompson Creek shares)
Capital leases assumed

Assets acquired
Current assets

Cash and cash equivalents
Amounts receivable
Inventories
Prepaid expenses and other assets

Non-current assets

Reclamation deposits and restricted cash
Property, plant and equipment
Other assets

Total assets

Liabilities assumed

Accounts payable and accrued liabilities
Asset retirement obligations
Other liabilities
Total liabilities
Net assets acquired
Goodwill

October 20,
2016

$
$

881,018
112,368
33,712
1,027,098

98,054
29,577
119,454
6,687
253,772

10,084
905,575
13,951
929,610
1,183,382

60,347
81,766
30,241
172,354
1,011,028
16,070

The goodwill generated from the acquisition was allocated to the North America Gold-Copper
CGU.

2017-AR-Combined_MDA+FS.pdf - p113 (March 7, 2018 23:00:55)

113CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

7. Restricted cash and restricted short-term investments

Current
Cash deposits held subject to court order (a)

2017

2016

247,844

Non-current
Öksüt Project
Other

550
274
824
248,668
Total restricted cash and restricted short-term investments $
(a) As part of the settlement with the Government of the Kyrgyz Republic discussed in note 21, a
Kyrgyz Republic court order restricting the distribution of cash to Centerra was terminated
effective September 15, 2017. As a result, cash held by Kumtor Gold Company was classified
as cash and cash equivalents as at December 31, 2017 (December 31, 2016 - $247.8 million
disclosed as restricted cash).

386
301
687
687

8. Amounts receivable

Gold sales receivable from related party (note 27)
Gold and copper concentrate sales receivable
Molybdenum sales receivable
Provisionally priced gold and copper concentrate sales
Consumption tax receivable
Other receivables
Total amounts receivable
Less: Provision for credit losses
Total amounts receivable (net of provision)

2017
20
13,650
22,999
20,890
3,817
2,526
63,902
-
63,902

The aging of amounts receivable at each reporting date was as follows:

Less than one month
One to three months
Three to six months
Over six months
Total amounts receivable
Less: Provision for credit losses
Total amounts receivable (net of provision)

2017
33,113
12,230
17,636
923
63,902
-
63,902

2016
11,611
9,704
14,439
4,148
4,854
3,475
48,231
(134)
48,097

2016
32,195
4,874
10,516
646
48,231
(134)
48,097

2017-AR-Combined_MDA+FS.pdf - p114 (March 7, 2018 23:00:55)

114CENTERRA GOLD INC. ANNUAL REPORT 2017
Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

As at December 31, 2017, provisionally priced amounts receivable from gold and copper
concentrate sales of $11.4 million, $5.5 million and $4.0 million were included within less than
one month, one to three months and three to six months, respectively (December 31, 2016 - $2.7
million, $1.4 million and nil were included within less than one month, one to three months and
three to six months, respectively). These sales are provisionally priced and settle at prices
determined at a future date pursuant to various off-take agreements. No provision for credit losses
has been made for gold and copper concentrate sales.

9. Inventories

2017

2016

Stockpiles of ore (a)
Gold in-circuit
Gold doré
Copper and gold concentrate
Molybdenum inventory

252,357
20,304
7,710
29,113
28,923
338,407
Supplies (net of provision)
204,092
Total inventories (net of provisions)
542,499
Less: Long-term supplies inventory (note 12)
(1,746)
540,753
Total inventories - current portion
(a) As at December 31, 2017, the amount of ore not scheduled for processing within the next 12
months, but is available on-demand, is $111.8 million (December 31, 2016 – $151.2 million).

212,114
23,595
15,023
6,745
41,427
298,904
209,032
507,936
(1,728)
506,208

The amount of inventories recognized as an expense during the year ended December 31, 2017
was $684.3 million (year ended December 31, 2016 - $414.9 million). The Company has recorded
a provision for supplies obsolescence of $30.9 million as at December 31, 2017 (December 31,
2016 - $26.6 million).

During the year ended December 31, 2017, no impairment charge or reversal was recognized
against gold inventories at Kumtor (year ended December 31, 2016 - reversal of $27.2 million in
impairment charges recorded against gold inventories at Kumtor).

Molybdenum inventory of $41.4 million as at December 31, 2017 (December 31, 2016 - $28.9
million) included work-in-process inventory of $21.4 million (December 31, 2016 - $16.3 million)
and finished goods inventory of $20.0 million (December 31, 2016 - $12.6 million).

2017-AR-Combined_MDA+FS.pdf - p115 (March 7, 2018 23:00:55)

115CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

10. Prepaid expenses and other current assets

Insurance
OMAS credit facility financing fees (note 14)
Deposits for consumable supplies
Derivative assets
Other
Total

11. Property, plant and equipment

2017
6,193
4,770
5,330
1,963
7,677
25,933

2016
6,593
4,203
5,119
750
1,753
18,418

The following is a summary of the carrying value of property, plant and equipment (“PP&E”):

Buildings,
Plant and
Equipment

Mineral
Properties

Capitalized
Stripping
Costs

Mobile
Equipment

Construction
In Progress

Total

Cost
January 1, 2016
Acquisition of Thompson Creek (note 6)
Additions
Disposals
Fully depreciated assets

445,980 $
598,072
740
(2,355)
(80)

289,657 $
205,019
21,039
(146)
-

1,118,167 $

-
136,690
-
(1,073,133)

455,069 $
74,221
164
(1,803)
(42,974)

49,808 $
28,263
101,390
-
-

2,358,681
905,575
260,023
(4,304)
(1,116,187)

Reclassification

41,554

1,680

53,261

(96,495)

Balance December 31, 2016

1,083,911 $

517,249 $

181,724 $

537,938 $

82,966 $

2,403,788

Additions
Disposals
Fully depreciated assets
Reclassification

386
(868)
(3,591)
24,107

12,645
(2,003)
-
2,350

200,223
-
(34,375)
-

1,596
(7,271)
(38,300)
55,890

119,296
-
-
(82,347)

334,146
(10,142)
(76,266)
-

Balance December 31, 2017

1,103,945 $

530,241 $

347,572 $

549,853 $

119,915 $

2,651,526

Accumulated depreciation and
impairment
January 1, 2016
Charge for the period
Disposals
Fully depreciated assets

Balance December 31, 2016
Charge for the period
Disposals
Impairment (note 22)
Fully depreciated assets

266,048 $
25,153
(2,312)
(80)
288,809 $
52,524
(1,386)
25,000
(3,591)

153,224 $
5,791
-
-

159,015 $
12,409
(1,882)
1,952
-

905,223 $
194,507

(1,073,133)

26,597 $
46,489
-
-
(34,375)

341,170 $
68,061
(1,781)
(42,974)

364,476 $
70,692
(5,695)
-
(38,300)

Balance December 31, 2017

361,356 $

171,494 $

38,711 $

391,173 $

- $
-
-
-

1,665,665
293,512
(4,093)
(1,116,187)

- $
-
-
14,348
-

14,348 $

838,897
182,114
(8,963)
41,300
(76,266)

977,082

2017-AR-Combined_MDA+FS.pdf - p116 (March 7, 2018 23:00:55)

116CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

Buildings,
Plant and
Equipment

Mineral
Properties

Capitalized
Stripping
Costs

Mobile
Equipment

Construction
In Progress

Total

Net book value

Balance December 31, 2016

Balance December 31, 2017

795,102 $

358,234 $

155,127 $

173,462 $

82,966 $

1,564,891

742,589 $

358,747 $

308,861 $

158,680 $

105,567 $

1,674,444

The following is an analysis of the depreciation, depletion and amortization charge recorded in
the Statements of Financial Position and Statements of Earnings:

Amount recorded in cost of sales (note 18)
Amount recorded in corporate administration (note 19)
Amount recorded in standby costs, net
Amount recorded in care & maintenance expense
Total included in Statements of Earnings
Inventories movement (note 31(a))
Amount capitalized in PP&E (note 31(b))
Depreciation, depletion and amortization charge for the year $

12. Other assets and Other liabilities

Other assets:

Alternative Minimum Tax receivable (a)
Long term deposits and receivables (b)
Long term inventories (note 9)
Prepayments for equipment spares (c)
Derivative assets (note 29)
Prepayments for property, plant and equipment (d)
Other assets

Total other assets

Other liabilities:

Deferred vendor payables (e)
Post-retirement benefits
Liabilities for unrecognized tax benefits
Other liabilities

Total other liabilities
Current portion of other liabilities
Non-current portion of other liabilities

2017
195,036
248
2,126
3,292
200,702
(69,644)
51,056
182,114

2016
205,912
409
(1,175)
30
205,176
52,076
36,260
293,512

2017

21,302
2,649
1,728
9,161
545
6,927
203
42,515

6,930
3,880
-
93
10,903
(7,021)
3,882

2016

-
6,326
1,746
7,959
904
4,299
4,494
25,728

14,291
3,541
4,109
60
22,001
(51)
21,950

2017-AR-Combined_MDA+FS.pdf - p117 (March 7, 2018 23:00:56)

117CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

a) For the year ended December 31, 2017, the Company has accrued a $21.3 million tax benefit
due to enactment of The Tax Cuts and Jobs Act (the “Act”) on December 22, 2017. In addition
to reducing the U.S. corporate tax rate from 35 percent to 21 percent, the Act makes other
large changes to the U.S. tax code affecting the molybdenum business acquired in the
Thompson Creek acquisition. Amongst the more impactful provisions to the Company, the
Alternative Minimum Tax (“AMT”) has been repealed. No deferred tax assets were
recognized in prior years with respect to these AMT credits as it was not probable that future
taxable profit will be available against which unused tax credits could be utilized. With the
repeal of the AMT, the $22.8 million of AMT paid in prior years is expected to be refunded
over the course of 2019 to 2022, less the impact of a 6.6% sequestration rate in the U.S ($1.5
million).

b) Represents $2.6 million (December 31, 2016 - $2.5 million) of British Columbia Mineral Tax
receivable. The December 31, 2016 balance also included a $2.6 million security deposit for
the Company’s leased assets (note 15), $0.7 million of consumption tax receivable and $0.5
million of cash collateral for a bond with a utility company.

c) Prepayments for equipment spares represents capitalized Component Operating Cost Program
(“COCP”) payments. Under the COCP, the Company is required to make regular payments for
ongoing repair and replacement of material equipment components of assets held under finance
leases (note 15). The portion of payments attributable to the replacement of equipment
components that extend the useful life of the equipment has been capitalized.

d) Prepayments for property, plant and equipment represents vendor advances of $4.5 million
(December 31, 2016 - $2.4 million) and $2.4 million (December 31, 2016 - $1.9 million) for
fixed asset purchases for the Öksüt Project and Kumtor mine, respectively.

e) Deferred vendor payables represent amounts due to BC Hydro and Power Authority. In
February 2016, a deferred energy program was announced to provide relief to mining
operations located in British Columbia, Canada. Under the program, mines would be able to
defer up to 75 per cent of their electricity bills for up to 24 months, with repayment over five
years. Repayment for deferred energy costs is dependent on average monthly copper prices
and the average monthly Cdn$/USD exchange rate. If the average monthly copper price
converted to Canadian dollars exceeds Cdn$3.40/pound, then a portion of the deferred energy
liability will be due and payable in the subsequent month.

2017-AR-Combined_MDA+FS.pdf - p118 (March 7, 2018 23:00:56)

118CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

13. Accounts payable and accrued liabilities

2016
Trade creditors and accruals
92,715
Amount due to Royal Gold (a)
29,170
Liability for share-based compensation (note 25)
8,457
130,342
Total
(a) Royal Gold holds a streaming interest in the production at the Mount Milligan mine. As a
result, when a trade receivable is recorded in relation to a third party customer gold and copper
concentrate delivery, a corresponding liability to Royal Gold is recorded.

2017
122,101
50,650
9,078
181,829

14. Debt

Centerra B.C. Holdings Credit Facility
Term Facility
Revolving Facility
Less: deferred financing fees

Less: current portion (net of deferred financing fees)

EBRD Facility
EBRD revolving credit facility
Less: deferred financing fees

Less: current portion (net of deferred financing fees)

Short-term debt
Long-term debt
Total debt

2017

2016

190,000
-
(4,241)
185,759
(48,536)
137,223

76,000
(1,612)
74,388
-
74,388

48,536
211,611
260,147

250,000
74,363
(6,528)
317,835
(47,943)
269,892

150,000
(2,703)
147,297
(24,338)
122,959

72,281
392,851
465,132

2017-AR-Combined_MDA+FS.pdf - p119 (March 7, 2018 23:00:56)

119CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

Centerra B.C. Holdings Credit Facility

In connection with the 2016 acquisition of Thompson Creek Metals Inc., B.C. Holdings Inc.,
entered into a five-year term facility with a lending syndicate with an aggregate principal amount
of $325 million consisting of a $75 million senior secured revolving credit facility (the “Revolving
Facility”) and a $250 million senior secured non-revolving term credit facility (the “Term
Facility”, collectively, the “Credit Facility”). Finance fees for the facility are deferred and
amortized over the term of the facility.

B.C. Holdings’ obligations under the Credit Facility are guaranteed by its material subsidiaries and
secured by the material assets acquired, which includes the Mount Milligan mine, the Endako mine
and the Langeloth facility.

In July 2017, the Company entered into an amendment of the Credit Facility to increase the
maximum principal amount available under the Revolving Facility from $75 million to $125
million until June 30, 2019, after which time it will revert back to $75 million. The amendment
also included terms permitting distributions from B.C. Holdings to Centerra and was effective
upon the satisfaction of a number of conditions precedent, including the execution of specific
hedges for the next two years covering production at Mount Milligan.

The Company was in compliance with the revised covenants as of and for the year ended December
31, 2017.

The principal amount of the Term Facility is to be repaid in $12.5 million quarterly increments
commencing March 31, 2017, while the Revolving Facility is to be repaid at the end of the five-
year term. During the year ended December 31, 2017, the Company repaid principal amounts of
$50 million on the Term Facility. In addition, on June 30, 2017, the Company made a mandatory
prepayment of $10 million as a result of a distribution paid from B.C Holdings to Centerra.

On September 29, 2017, the Company repaid the entire outstanding principal amount of $74.4
million on the Revolving Facility.

On February 1, 2018, the Company entered into a new senior secured facility which replaced the
Credit Facility (refer to note 32).

2017-AR-Combined_MDA+FS.pdf - p120 (March 7, 2018 23:00:56)

120CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

2017

2016

Centerra B.C. Holdings Credit Facility
Undrawn amount (millions)
Term Facility - Interest rate - three month LIBOR plus (a)
Revolving Facility - Interest rate - three month LIBOR plus
( )
(a) The interest rate applied is dependent on an indebtedness ratio calculation and is paid and re-
assessed quarterly. The margin interest rate ranges from 2.75% to 3.75%. Accrued interest is
included in the Statements of Financial Position as part of 'Accounts payable and accrued
liabilities'.

125,000 $

3.75%

3.25%

3.75%

0.6

EBRD Revolving Credit Facility

In 2016, the Company entered into a five-year $150 million revolving credit facility with European
Bank for Reconstruction and Development (the “EBRD Facility”). Of the EBRD Facility, $50
million must be used for the purposes of funding direct and indirect costs associated with the
Gatsuurt Project.

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

In February 2017, EBRD agreed to amend the collateral coverage ratio contained in the EBRD
Facility and the Company was required to repay $25 million of the facility in the first quarter of
2017. On September 29, 2017, the Company repaid the remaining $25 million associated with the
Gatsuurt Project.

On December 29, 2017 Company elected to repay a further $24 million of the EBRD Facility.

The terms of the EBRD Facility require the Company to pledge certain mobile equipment from
the Kumtor mine as security with a book value of $164.6 million as at December 31, 2017
(December 31, 2016 - $110.7 million), and maintain compliance with specified covenants
(including financial covenants). The Company was in compliance with all covenants for the year
ended December 31, 2017.

On February 1, 2018, the Company entered into a new senior secured facility which replaced the
EBRD Facility (refer to note 32).

2017-AR-Combined_MDA+FS.pdf - p121 (March 7, 2018 23:00:56)

121CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

2017

2016

EBRD Facility

Undrawn amount of the facility (a)

74,000

Interest rate - six month LIBOR plus (b)
First tranche - $100 million
Second tranche - $50 million
(a) $50 million of the undrawn amount can only be used for the Gatsuurt Project.
(b) Interest is payable at the end of the term.

3.0%
5.0%

OMAS Facility

In 2016, OMAS, a wholly-owned subsidiary of the Company, entered into a $150 million five-
year revolving credit facility (the “OMAS Facility”) that expires on December 30, 2021. The
purpose of the OMAS Facility is to assist in financing the construction of the Company’s Öksüt
Project.

As at December 31, 2017, $4.8 million (December 31, 2016 - $4.2 million) of OMAS Facility
deferred financing fees were included in prepaid expenses (note 10) as the Company has yet to
draw from the facility. The deferred financing fees are being amortized over the term of the OMAS
Facility. The OMAS Facility is secured by Öksüt assets and is non-recourse to the Company.

2017

2016

OMAS Facility
Undrawn amount of the facility
Interest rate - LIBOR plus (a)
(a) The interest rate applied is dependent on the timing of the completion of the Öksüt Project

2.65% - 2.95%

150,000

construction.

2017-AR-Combined_MDA+FS.pdf - p122 (March 7, 2018 23:00:56)

122CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

15. Leases

Equipment Facility leases

2017
31,986

2016
29,901

As part of the Thompson Creek acquisition (note 6), the Company assumed Thompson Creek’s
capital equipment lease obligations owed to Caterpillar Financial Services Limited (“Caterpillar”)
for the mobile fleet equipment at the Mount Milligan mine.

In January 2017, the Company entered into a re-finance commitment to consolidate and
re-finance the Company’s finance leases whereby the Company would purchase the assets held
under finance leases through a loan (“Promissory Note”) repayable to Caterpillar, due to be repaid
on February 28, 2018.

In December 2017, the maturity date of the Promissory Note was amended to December 25, 2018.

Interest on the Promissory Note is at three-month LIBOR + 4.93% paid quarterly in arrears. The
Promissory Note is secured by assets previously held under the finance leases and contains certain
non-financial covenants.

16. Taxes

a. Revenue based taxes - Kumtor

Kumtor pays taxes on revenue, at a rate of 13% of gross revenue, with an additional contribution
of 1% of gross revenue payable to the Issyk-Kul Oblast Development Fund.

During the year ended December 31, 2017, the 13% revenue-based tax expense recorded by
Kumtor was $89.8 million (December 31, 2016 - $89.4 million), while the Issyk-Kul Oblast
Development Fund contribution of 1% of gross revenue totalled $6.9 million (December 31, 2016
- $6.9 million).

b. Income tax (recovery) expense

Current tax
Deferred tax
Total income tax (recovery) expense

2017
(16,543)
(1,658)
(18,201)

2016
5,365
(863)
4,502

Mongolia, Netherlands, Canada and the United States recorded an income tax expense (recovery)
during the years ended December 31, 2017 and December 31, 2016.

2017-AR-Combined_MDA+FS.pdf - p123 (March 7, 2018 23:00:56)

123CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

Income tax expense (recovery) differs from the amount that would arise from applying the
Canadian federal and provincial statutory income tax rates to earnings before income tax as
follows:

Earnings before income tax
Income tax expense calculated at the combined Canadian

2017
191,332

2016
156,040

and provincial statutory income tax rate of 26.5%

50,703

41,350

Increase (decrease) due to:

Difference between Canadian federal and provincial

tax rates and foreign tax rates applicable to subsidiaries in
other countries

Change in unrecognized deductible temporary differences
Expiry of Foreign Tax Credits
Impact of foreign currency movements
Non-deductible employee costs
Mongolian withholding tax on dividends
Mongolian tax on sale of assets
British Columbia ("B.C.") mining tax
Impact of tax legislation/rate change
Other non-deductible expenses or non-taxable items

(58,138)
(27,663)
43,190
(27,843)
313
-
2,939
4,694
(9,531)
3,135
(18,201)

(51,641)
(757)
-
10,066
3,033
3,250
-
633
-
(1,432)
4,502

For the year ended December 31, 2017, due to enactment of the Act in the United States on
December 22, 2017, the Company has recognized a net tax benefit of $21.3 million, which is a
component of the line “Impact of tax legislation/rate change” shown above. The final impact of
the Act may differ, possibly materially, due to changes in interpretations of the Act or due to any
legislative action taken to address questions that arise because of the Act. As a result, the benefit
as recorded could be adversely impacted in future periods.

2017-AR-Combined_MDA+FS.pdf - p124 (March 7, 2018 23:00:56)

124CENTERRA GOLD INC. ANNUAL REPORT 2017

Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

c. Deferred income tax

The following are significant components of deferred income tax assets and liabilities:

Deferred income tax assets:
Provisions - asset retirement obligations and other
Total deferred tax assets

Deferred income tax liabilities:
Property, plant and equipment
Other
Total deferred tax liabilities

Net deferred tax liabilities

2017

1,185
1,185

(1,336)
151
(1,185)

$
$

2016

5,681
5,681

(7,493)
151
(7,342)

(1,661)

$
$

The Company has not recognized deferred tax assets in respect to the following deductible
temporary differences:

Natural resources deductions
Asset retirement obligations
Property, plant and equipment
Other
Total

2017
75,490
77,003
140,892
68,344
361,729

2016
101,747
50,252
181,256
64,526
397,781

The Company has not recognized deferred tax assets with respect to deductible temporary
differences related to B.C. mining tax of $679.4 million (December 31, 2016 - $684.4 million).

Tax losses and credits for which no deferred tax assets were recognized expire as follows:

Expiring within
one year

Expiring within
one to five years

Expiring after
five years (a)

No expiry date
obligation

Total

Losses:

Income
Capital

December 31, 2017

Credits:

Foreign Tax
Investment Tax
B.C. Mining Tax
Other

December 31, 2017

1,014 $
-

1,014 $

2,727 $
-
-
-
2,727 $

29,825 $

823,470 $

29,825 $

823,470 $

- $
-
-
-
- $

- $

16,649
-
-

16,649 $

- $

58,279
58,279 $

- $
-
17,200
30
17,230 $

854,309
58,279
912,588

2,727
16,649
17,200
30
36,606

2017-AR-Combined_MDA+FS.pdf - p125 (March 7, 2018 23:00:56)

125CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

Expiring within
one year

Expiring within
one to five years

Expiring after
five years (a)

No expiry date
obligation

Total

4,064 $
-
4,064 $

14,399 $

679,739 $

14,399 $

679,739 $

- $

38,527
38,527 $

698,202
38,527
736,729

Income
Capital

December 31, 2016

Losses:

Credits:

- $

Alternative Minimum Tax
Foreign Tax
Investment Tax
B.C. Mining Tax
Other

25,578
2,727
45,917
-
14,932
-
11,641
-
30
December 31, 2016
2,727 $
98,098
(a) The utilization of United States net operating loss carryforwards of $74.7 million will be

-
-
11,641
30
37,249 $

- $
-
14,932
-
-

43,190
-
-
-

25,578 $

43,190 $

14,932 $

- $

limited in any year as a result of a change in ownership in 2016.

At December 31, 2017, no deferred tax liabilities have been recognized in respect of the aggregate
amount of $868 million (December 31, 2016 - $1,133 million) of taxable temporary differences
associated with investments in subsidiaries. The Company controls the timing and circumstances
of the reversal of these differences, and the differences are not anticipated to reverse in the
foreseeable future.

17. Provision for reclamation

Kumtor gold mine
Boroo gold mine
Mount Milligan mine
Thompson Creek mine
Endako mine
Gatsuurt Project
Total provision for reclamation
Less: current portion

December 31,
2017

December 31,
2016

53,565
21,644
28,148
35,618
26,714
1,317
167,006
(832)
166,174

51,593
23,044
24,211
31,744
26,046
1,778
158,416
(918)
157,498

2017-AR-Combined_MDA+FS.pdf - p126 (March 7, 2018 23:00:56)

126CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

Centerra’s estimates of future asset for reclamation obligations are based on standards that meet
regulatory requirements. The Company estimates its total undiscounted future decommissioning
and reclamation costs to be $232.8 million at December 31, 2017 (December 31, 2016 - $221.9
million):

Undiscounted costs
(millions)

December 31, 2017
December 31, 2016

Total
$232.8
$221.9

Kumtor
$66.2
$65.7

Boroo Gatsuurt
$31.2
$31.0

$1.8
$2.3

Mount
Milligan Endako
$45.9
$40.9

$38.3
$36.1

Thompson
Creek
$49.4
$45.9

The carrying amount of the asset retirement obligations and the expected timing of payment of the
cash flows are based on the life of mine plans with the following key assumptions:

Start date
Risk-free discount rate
(2017)
Risk-free discount rate
(2016)

Kumtor
2026

Boroo
Ongoing

Gatsuurt
2028

Mount
Milligan
2038

Endako
2028

Thompson
Creek
2031

2.38%

2.56%

2.44%

2.23%

2.1%

2.5%

2.45%

2.59%

2.48%

2.30%

1.84%

2.62%

The Company completed its regularly scheduled update to its closure costs estimates at Boroo,
Mount Milligan, Endako and Thompson Creek Mine in December 2017. Kumtor completed its
regularly scheduled update to its closure estimates in December 2016.

The following is a reconciliation of the provision for the reclamation liability amount:

2017

2016

Balance at January 1
Obligations assumed as a result of the TCM acquisition (note 6)
Liabilities paid
Change in estimates (a)
Accretion expense (note 24)
Total provision for reclamation
Less: current portion
Balance at December 31
(a)

66,149
81,766
(613)
9,238
1,876
158,416
(918)
157,498
In the year ended December 31, 2017, the discounted change in estimates includes: increases
in Kumtor, Mount Milligan, Thompson Creek Mine and Endako of $0.7 million, $3.3
million, $3.1 million and $0.1 million, respectively, and decreases in Boroo and Gatsuurt of
$1.4 million and $0.5 million, respectively.

158,416
-
(432)
5,329
3,693
167,006
(832)
166,174

In 1998, a Reclamation Trust Fund was established to cover the future costs of reclamation, net of
salvage values, at the Kumtor gold mine. This restricted cash is funded based on the estimated

2017-AR-Combined_MDA+FS.pdf - p127 (March 7, 2018 23:00:57)

127CENTERRA GOLD INC. ANNUAL REPORT 2017

Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

yearly production, annually in arrears, over the life of the mine. As part of the settlement reached
with the Government of the Kyrgyz Republic (note 21), the Company agreed, on the terms and
subject to the conditions contained in the Strategic Agreement, to increase the rate of funding of
the Reclamation Trust Fund to a minimum of $6 million per year until the fund reaches $69 million.
On December 31, 2017, this fund had a balance of $26.4 million (December 31, 2016 - $22.0
million).

The Company is required by U.S. federal and state laws and Canadian provincial laws to provide
financial assurance sufficient to allow a third party to implement approved closure and reclamation
plans at Mount Milligan, Endako and Thompson Creek mine if the Company is unable to do so.
These laws are complex and vary from jurisdiction to jurisdiction. The laws govern the
determination of the scope, cost of the closure, reclamation obligation and the amount and forms
of financial assurance. As of December 31, 2017, the Company has provided the appropriate
regulatory authorities in the U.S. and Canada with $81.0 million (December 31, 2016 - $73.4
million) in reclamation bonds for mine closure obligations.

December 31, 2017 -
Reclamation bonds

Total (millions)
Cash collateral (millions)

December 31, 2016 -
Reclamation bonds

Total (millions)
Cash collateral (millions)

Total
$81.0
Nil

Total
$73.4
$10.0

Mount
Milligan
$28.5
Nil

Mount
Milligan
$22.5
Nil

Endako
$9.2
Nil

Endako
$8.6
Nil

Thompson
Creek
$43.3
Nil

Thompson
Creek
$42.3
$10.0

The following is a reconciliation of the reclamation deposits asset amount:

Kumtor reclamation trust fund
Thompson Creek Mine
Other
Total

2017
26,436
-
89
26,525

2016
21,953
10,000
82
32,035

2017-AR-Combined_MDA+FS.pdf - p128 (March 7, 2018 23:00:57)

128CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

18. Cost of sales

Operating costs:
Salaries and benefits
Consumables and maintenance charges
Third party services
Other operating costs
Royalties, levies and production taxes
By-product sales (a)
Changes in inventories

Supplies inventory obsolescence charge (note 9)
Inventory impairment reversal
Depreciation, depletion and amortization (note 11)

(a) By-product sales includes silver, rhenium and sulfuric acid sales.

19. Corporate administration

Administration and office costs
Professional fees
Salaries and benefits
Share-based compensation
Depreciation and amortization

20. Other operating expenses

2017
5,689
8,907
16,263
6,811
248
37,918

113,086
218,989
29,915
42,036
13,251
(19,042)
85,675
483,910
3,148
-
195,036
682,094

2017

2016

67,584
146,440
7,742
10,489
378
(6,715)
3,093
229,011
3,900
(27,216)
205,912
411,607

2016
4,850
4,330
13,718
4,276
409
27,583

Social development contributions
Gatsuurt Project care and maintenance
Selling and marketing (a)
Nature Development Fund contributions (note 21)
Mill optimization studies - Mount Milligan

2016
1,075
580
1,089
-
-
2,744
(a) Selling and marketing costs primarily comprise of freight charges associated with the Mount

2017
1,051
897
6,901
2,700
2,215
13,764

Milligan mine and Langeloth processing facility.

2017-AR-Combined_MDA+FS.pdf - p129 (March 7, 2018 23:00:57)

129CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

21. Kyrgyz Republic Settlement

On September 11, 2017, the Company reached a comprehensive settlement agreement (“Strategic
Agreement”) with the Government of the Kyrgyz Republic to resolve all of the outstanding matters
affecting the Kumtor Project. The Company’s financial obligations as a result of signing the
Strategic Agreement are as follows:

a $50 million lump sum payment to a new Kyrgyz Republic government-administered
Nature Development Fund established for the purpose of financing environmental
conservation projects and nature preservation in the Kyrgyz Republic and lump sum
payments in the aggregate amount of $10 million ($7 million prior to closing plus $3
million within 12 months of closing) to a new, Kyrgyz Republic government-administered
Cancer Care Fund established for the purpose of funding cancer treatment, research,
support and outreach in the Kyrgyz Republic (the “Lump Sum Payments”).

- $2.7 million on-going annual payments to the Nature Development Fund (the “On-Going

Payments”).

a minimum of $6 million in annual contributions to Kumtor’s reclamation trust fund (note
17) until the fund reaches $69 million.

For the year ended December, 31, 2017, the Company recognized an expense of $62.7 million in
the Statements of Earnings for the Lump Sum Payments ($60 million) and On-Going Payments
($2.7 million).

On October 18, 2017, the Company paid $7 million in relation to the Lump Sum Payments and as
at December 31, 2017, the provision remaining was $53 million.

Kyrgyz Republic Legal Proceedings

The Strategic Agreement provided a pathway to the resolution of all outstanding matters affecting
the Kumtor Project. Among other things, the Strategic Agreement will settle matters relating to
decisions of the Bishkek Inter-District Court in the Kyrgyz Republic which ruled against Kumtor
Operating Company, Centerra’s wholly-owned subsidiary, on claims made by the State
Inspectorate Office for Environmental and Technical Safety of the Kyrgyz Republic. Such court
decisions were appealed by the Company and proceedings have been postponed pending the
resolution of the Strategic Agreement. The court decisions awarded damages in relation to claims
which were still outstanding as at December 31, 2017 for:

The placement of waste rock at the Kumtor waste dumps (6,698,878,290 Kyrgyz soms or
approximately $96.2 million);

2017-AR-Combined_MDA+FS.pdf - p130 (March 7, 2018 23:00:57)

130CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

ii.

iii.

iv.

Unrecorded wastes from Kumtor’s effluent and sewage treatment plants (663,839 Kyrgyz
soms or approximately $9,500);

Alleged land damage (161,840,109 Kyrgyz soms or approximately $2.3 million); and

Failure to pay for water use (188,533,730 Kyrgyz soms or approximately $2.7 million).

In connection with the Strategic Agreement, the arbitration previously commenced by the
Company against the Government of the Kyrgyz Republic and Kyrgyzaltyn has been suspended
until February 28, 2018. During the suspension, the parties will work towards completing the
Strategic Agreement and the resolution of all outstanding matters affecting the Kumtor Project.

22. Impairment of Mongolian Assets

The Company assesses at the end of each reporting period whether there is any indication from
external and internal sources of information, that an asset may be impaired.

In the second quarter of 2017, after receipt of the preliminary results from the technical and
economic studies (incorporating updated capital and operating costs) related to the Gatsuurt
Project under the current Mongolian tax and royalty regime, the Company determined that it could
no longer support the carrying value of the Mongolian segment CGU and that it would recognize
an impairment charge. The amount of the charge was determined as the excess of the carrying
value over the fair value less cost of disposal (estimated to be $25 per resource ounce) based on
comparable market transactions.

Based on this estimate, management determined that the carrying amount of $101.3 million
exceeded the recoverable amount of $60 million (net of costs to sell), resulting in an impairment
charge of $41.3 million. The impairment was allocated to property, plant and equipment, mineral
properties and construction in progress within property, plant and equipment for the Mongolian
segment.

The fair value of the Mongolian segment CGU and associated impairment charge was determined
using significant unobservable (level 2) inputs.

2017-AR-Combined_MDA+FS.pdf - p131 (March 7, 2018 23:00:57)

131CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

23. Other income, net

Interest income
Foreign exchange (gain) loss
Provision for credit losses (note 8)
Change in fair value of hedge financial instruments (note 29)
Change in fair value of non-hedge financial instruments

2017
(3,028)
(3,108)
-
4,274

2016
(2,490)
1,087
134
-

(note 29)

Ineffective portion of hedging financial instruments
Gain on sale of ATO Project (a)
Other (income) expense

524
4
-
701
(40)
(a) On January 31, 2017, the Company entered into a definitive agreement to sell the Altan
Tsagaan Ovoo Project (“ATO Project”), located in Eastern Mongolia for gross proceeds of
$19.8 million. The Company received $9.8 million upon closing in September 2017. The
remaining balance is scheduled to be received in payments of $5 million on each of
September 30, 2018 and September 30, 2019.

(1,562)
-
(9,800)
(91)
(13,315)

24. Finance costs

Interest expense
Financing costs amortized
Commitment fees
Accretion of provision for reclamation (note 17)
Other financing fees

25. Shareholders’ equity

a. Share capital

2017
20,362
4,274
180
3,693
2,053
30,562

2016
7,117
863
283
1,876
914
11,053

Centerra is authorized to issue an unlimited number of common shares, class A non-voting shares
and preference shares with no par value.

2017-AR-Combined_MDA+FS.pdf - p132 (March 7, 2018 23:00:57)

132CENTERRA GOLD INC. ANNUAL REPORT 2017
Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

Balance at January 1, 2016
Shares issued on exercise of stock options
Shares issued on redemption of restricted share units
Shares issued to settle obligations
Shares issued to former Thompson Creek shareholders
Shares issued in equity offering
Equity offering issuance costs
Balance at December 31, 2016
Shares issued on exercise of stock options
Shares issued on redemption of restricted share units
Balance at December 31, 2017

b. Earnings per share

Basic and diluted earnings per share computation:

Number of
common
shares

237,889,274
337,669
5,504
4,117,120
22,327,001
26,599,500
-
291,276,068
480,008
26,770
291,782,846

Amount

668,705
2,314
28
19,857
112,368
149,082
(7,721)
944,633
3,313
175
948,121

Net earnings attributable to shareholders
Adjustment to earnings:
Impact of performance share units accounted for as
equity-settled

Impact of restricted share units treated as equity-settled
Net earnings for the purposes of diluted earnings per share

(Thousands of common shares)
Basic weighted average number of common shares

outstanding

Effect of potentially dilutive securities:
Stock options
Restricted share units
Diluted weighted average number of common shares
outstanding

2017
209,533

2016
151,538

-
(286)
209,247

(553)
(207)
150,778

291,409

251,458

638
175

494
127

292,222

252,079

Basic earnings per common share
Diluted earnings per common share

$
$

0.72
0.72

$
$

0.60
0.60

2017-AR-Combined_MDA+FS.pdf - p133 (March 7, 2018 23:00:57)

133CENTERRA GOLD INC. ANNUAL REPORT 2017
Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

For the years ended December 31, 2017 and 2016, certain potentially dilutive securities, including
stock options were excluded from the calculation of diluted earnings per share due to the exercise
prices being greater than the average market price of the Company’s common shares for the period.

Potentially dilutive securities, excluded from the calculation, are summarized below:

(Thousands of units)

Stock options

c. Dividends

2017

1,030

2016

2,023

Dividends are declared and paid in Canadian dollars. The details of dividends declared in
December 31, 2017 and 2016 are as follows:

Dividends declared (U.S. dollars)

Dividends declared (Canadian Dollars per share amount)

d. Share-based compensation

2017

2016

22,946

0.12

The impact of share-based compensation as of and for the years ended December 31, 2017 and
2016 is summarized as follows:

Number
outstanding
Dec 31, 2017

(Millions of U.S. dollars except as indicated)
Liability

Expense
2017

2016 Dec 31, 2017 Dec 31, 2016

(i) Stock options

(ii) Performance share units

(iii) Deferred share units

(iv) Restricted share units

4,817,452 $

2,222,380

242,695

289,648

1.0 $

4.8

0.3

1.0

7.1 $

2.5 $
1.5

0.6
4.6 $

- $

6.2

1.3

1.6

9.1 $

6.8

1.0

0.7

8.5

2017-AR-Combined_MDA+FS.pdf - p134 (March 7, 2018 23:00:57)

134CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

(i) Stock options

Under the Company’s Stock Option plan, options to purchase common shares of the Company
may be granted to officers and employees. The exercise price of options granted under this plan
is not less than the weighted average common share price for the five trading days prior to the date
of grant. Options granted vest over three years and expire after eight years from the date granted.

Centerra’s stock options transactions during the year ended December 31, 2017 and 2016 were as
follows:

2017

2016

Weighted
Average
Exercise
Price (Cdn$)

Number of
Options

Weighted
Average
Exercise
Price (Cdn$)

7.75
Balance, January 1
9.15
Granted
(10.03)
Forfeited
(6.10)
Exercised (a)
Balance, December 31
8.03
(a) The weighted average market price of shares issued for options exercised in the year ended

5,363,755 $
77,374
(143,669)
(480,008)
4,817,452 $

4,793,592
1,281,329
(373,497)
(337,669)
5,363,755

8.03
7.56
(23.18)
(5.67)
7.81

December 31, 2017 was Cdn$9.01 (year ended December 31, 2016 - Cdn$7.52).

The Black-Scholes model was used to estimate the fair value of stock options granted. The
following assumptions were used for the options granted in the years ended December 31 2017,
and 2016:

Grant date
November 16, 2017

Number of

Grant

options price (Cdn$)

Expected Share price Dividend Risk free Fair value
yield

rate

life

77,374

7.56 3.3 years

0.00%

1.56%

volatility (a)
54.91%

price (Cdn$)
2.95

Number of

Grant

Expected Share price Dividend Risk free Fair value
yield

rate

Grant date
March 7, 2016
March 30, 2016
May 31, 2016
October 20, 2016
November 16, 2016

price (Cdn$)
2.95
2.46
2.71
0.22
2.54
2.68
(a) Expected volatility is measured as the annualized daily standard deviation of share price
returns, based on the historical movement in the price of the Company’s common shares.

options price (Cdn$)
7.32
1,066,307
5.99
71,044
3,256
6.86
111,341
29,381
1,281,329

life
3 years
1 year
3 years
29.38 2.1 years
6.84
3 years
9.15 2.8 years

volatility (a)
67.37%
68.36%
67.69%
59.75%
62.65%
66.66%

2.67%
2.67%
2.33%
2.39%
2.33%
2.64%

0.56%
0.55%
0.65%
0.55%
0.74%
0.56%

2017-AR-Combined_MDA+FS.pdf - p135 (March 7, 2018 23:00:57)

135CENTERRA GOLD INC. ANNUAL REPORT 2017
Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

As at December 31, 2017, there were 4,817,452 options outstanding to acquire common shares
with exercise prices ranging from Cdn$3.82 to Cdn$22.28 per share, and expiry dates ranging
between 2018 and 2024. There were 3,657,522 options vested as at December 31, 2017.

(ii) Performance Share Unit plan

Centerra’s Performance Share Unit plan transactions during the year ended December 31, 2017
and 2016 were as follows:

Number of units
Balance, January 1
Granted
Exercised
Cancelled
Balance, December 31

2017
1,652,792
1,562,859
(820,794)
(172,477)
2,222,380

2016
2,177,233
663,799
(871,887)
(316,353)
1,652,792

In determining the fair value of these units, the principal assumptions used in applying the Monte
Carlo simulated option pricing model were as follows:

Share price (Canadian dollars)
S&P/TSX Global Gold Index
Expected life (years)
Expected volatility- Centerra’s share price
Expected volatility- S&P/TSX Global Gold Index
Risk-free rate of return
Forfeiture rate
Weighted adjustment factor

2017
$
6.44
$ 227.16
1.41
42.0 %
31.0 %
1.93 %
4.16 %
0.72

2016
6.29
$
$ 224.13
1.31
57.7 %
46.4 %
1.2 %
5.7 %
2.0

The vested number of units outstanding as at December 31, 2017 are 765,299 (December 31, 2016
– 762,613). The December 31, 2017 Performance Share Unit liability balance of $6.2 million
includes $3.6 million attributable to the vested units (December 31, 2016 – liability of $6.8 million,
of which $5.4 million was vested).

2017-AR-Combined_MDA+FS.pdf - p136 (March 7, 2018 23:00:57)

136CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

(iii) Deferred Share Unit plan

Centerra’s Deferred Share Unit plan transactions during the year were as follows:

Number of units
Balance, January 1
Granted
Exercised
Balance, December 31

(iv) Restricted Share Unit plan

2017
216,542
27,234
(1,081)
242,695

2016
205,645
10,897
-
216,542

Centerra’s Restricted Share Unit plan transactions during the period were as follows:

Number of units
Balance, January 1
Granted
Redeemed
Balance, December 31

26. Commitments and contingencies

Commitments

(a) Contracts

2017
147,064
288,530
(145,946)
289,648

2016
107,291
166,690
(126,917)
147,064

As at December 31, 2017, the Company had entered into contracts to purchase capital equipment
and operational supplies totalling $102.7 million (Öksüt Project $48.9 million, Kumtor - $37.2
million, Mount Milligan - $15.2 million, Greenstone Gold Property - $1.0 million, and other - $0.4
million). Öksüt Project commitments include $27.9 million of contracts that will be settled over
the next two to three years, while a majority of all other contracts are expected to be settled over
the next twelve months.

(b) Greenstone Partnership

As consideration for the Company’s initial 50% partnership interest in Greenstone Gold Mines
LP, the Company agreed to commit up to an additional Cdn$185 million to fund the project, subject
to certain feasibility and project advancement criteria. In the event that the project is put under
care and maintenance as a result of feasibility study or project criteria not being met, the Company
will be required to make contributions towards the costs associated with the care and maintenance
of the project for a period of two years or until the Cdn$185 million is spent (if such event occurs
first), after which time the partners would fund such costs on a pro rata basis. Any such costs will
form part of the Cdn$185 million development contributions commitment of the Company. As at

2017-AR-Combined_MDA+FS.pdf - p137 (March 7, 2018 23:00:58)

137CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

December 31, 2017, the Company has funded a total of Cdn$67.2 million ($51.6 million) of its
commitment since the inception of the partnership.

In the normal course of operations, the Company enters into agreements for the purchase of
molybdenum. As of December 31, 2017, the Company had commitments to purchase
approximately 18.2 million pounds of molybdenum as unroasted molybdenum concentrate from
2018 to 2020 primarily priced at the time of purchase at a set discount to the market price for
roasted molybdenum concentrate.

(d) Leases

The Company enters into operating leases in the ordinary course of business, primarily for its
various offices and facilities around the world. Payments under these leases represent contractual
obligations as scheduled in each agreement. The significant operating lease payments, including
operating costs, are for its corporate offices and storage facilities in North America, which
amounted to $2.5 million in the year ended December 31, 2017 (year ended December 31, 2016 -
$1.1 million). The future aggregate minimum lease payments for the non-cancellable operating
lease are as follows:

2017
2018
2019
2020
2021 to 2024

Contingencies

2017
-
788
531
506
1,428
3,253

2016
1,747
924
575
400
400
4,046

Various legal and tax matters are outstanding from time to time due to the nature of the Company’s
operations. While the final outcome with respect to actions outstanding or pending at December
31, 2017 cannot be predicted with certainty, it is management’s opinion that it is not, except as
noted below, more likely than not that these actions will result in the outflow of resources to settle
the obligation; therefore no amounts have been accrued.

Corporate

Ontario Court Proceedings Involving the Kyrgyz Republic and Kyrgyzaltyn

Since 2011, there have been four applications commenced in the Ontario courts by different
applicants against the Kyrgyz Republic and Kyrgyzaltyn, each seeking to enforce in Ontario

2017-AR-Combined_MDA+FS.pdf - p138 (March 7, 2018 23:00:58)

138CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

international arbitral awards against the Kyrgyz Republic. None of these disputes relate directly to
Centerra or the Kumtor Project. In each of these cases, the applicants have argued that the Kyrgyz
Republic has an interest in the Centerra common shares held by Kyrgyzaltyn, a state controlled
entity, and therefore that such applicant(s) are entitled to seize such number of common shares
and/or such amount of dividends as necessary to satisfy their respective arbitral awards against the
Kyrgyz Republic. On July 11, 2016, the Ontario Superior Court of Justice released a decision on
the common issue in these four applications - whether the Kyrgyz Republic has an exigible
ownership interest in the Centerra common shares held by Kyrgyzaltyn. The Ontario Superior
Court of Justice determined that the Kyrgyz Republic does not have any equitable or other right,
property, interest or equity of redemption in the common shares held by Kyrgyzaltyn. As a result,
on July 20, 2016, the Ontario Superior Court of Justice set aside previous injunctions which
prevented Centerra from, among other things, paying any dividends to Kyrgyzaltyn. Accordingly,
Centerra released to Kyrgyzaltyn approximately Cdn$18.9 million which was previously held in
trust for the benefit of two Ontario court proceedings.

Three of the applicants appealed the decision to the Ontario Court of Appeal which heard the case
on December 4, 2016. The court issued its decision on January 3, 2017 which upheld the trial
judge’s decision. Two of the applicants applied to the Supreme Court of Canada for leave to appeal
this decision, which application was refused on June 15, 2017.

27. Related party transactions

a. Kyrgyzaltyn

Revenues from the Kumtor gold mine are subject to a management fee of $1.00 per ounce based
on sales volumes, payable to Kyrgyzaltyn, a shareholder of the Company and a state-owned entity
of the Kyrgyz Republic.

The table below summarizes the management fees paid and accrued by KGC to Kyrgyzaltyn and
the amounts paid and accrued by Kyrgyzaltyn to KGC according to the terms of a Restated Gold
and Silver Sale Agreement (“Sales Agreement”) between KGC, Kyrgyzaltyn and the Government
of the Kyrgyz Republic dated June 6, 2009.

2017-AR-Combined_MDA+FS.pdf - p139 (March 7, 2018 23:00:58)

139CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

The breakdown of the sales transactions and expenses with Kyrgyzaltyn are as follows:

Sales:
Gross gold and silver sales to Kyrgyzaltyn
Deduct: refinery and financing charges
Net sales revenue received from Kyrgyzaltyn
Expenses:
Contracting services provided by Kyrgyzaltyn
Management fees payable to Kyrgyzaltyn
Expenses paid to Kyrgyzaltyn
Dividends:
Dividends declared to Kyrgyzaltyn
Withholding taxes
Net dividends payable to Kyrgyzaltyn

Related party balances

2017

2016

695,288
(4,364)
690,924

1,250
550
1,800

-
-
-

691,630
(3,825)
687,805

1,543
546
2,089

7,097
(355)
6,742

The assets and liabilities of the Company include the following amounts receivable from and
payable to Kyrgyzaltyn:

Amounts receivable (a)

11,611

2017

2016

Amount payable
1,218
(a) Subsequent to December 31, 2017, the balance receivable from Kyrgyzaltyn was paid in full.

1,160

Gold produced by the Kumtor mine is purchased at the mine site by Kyrgyzaltyn for processing at
its refinery in the Kyrgyz Republic pursuant to the Sales Agreement. Amounts receivable from
Kyrgyzaltyn arise from the sale of gold to Kyrgyzaltyn. Kyrgyzaltyn is required to pay for gold
delivered within 12 days from the date of shipment. Default interest is accrued on any unpaid
balance after the permitted payment period of 12 days. The obligations of Kyrgyzaltyn are partially
secured by a pledge of 2,850,000 shares of Centerra owned by Kyrgyzaltyn.

b. Transactions with directors and key management

2017-AR-Combined_MDA+FS.pdf - p140 (March 7, 2018 23:00:58)

140CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

(director fees, including share-based payments) and as employees of the Company (salaries,
benefits and share-based payments).

Key management personnel are defined as the executive officers of the Company including the
Chief Executive Officer, President, Vice President and Chief Financial Officer, Vice President and
Chief Operating Officer, and Vice President Business Development & Exploration.

During the years ended December 31, 2017 and 2016, remuneration to directors and key
management personnel were as follows:

Compensation of directors

Fees earned and other compensation
Share-based compensation
Total expense

Fees earned and other compensation

2017
1,047
1,138
2,185

2016
861
619
1,480

Represent fees earned by the non-executive chairman and the non-executive directors during the
financial year.

Share-based compensation

A portion of the directors’ compensation is in the form of participation in the Company’s share-
based payment plans (Deferred Share Unit plan and Restricted Share Unit plan) according to the
election of each of the directors.

Compensation of key management personnel

Compensation of key management personnel includes:

Salaries and benefits
Share-based compensation
Total expense

Salaries and benefits

2017
5,460
2,599
8,059

2016
5,064
2,114
7,178

Represent salary, supplementary executive retirement plan contributions, and benefits earned
during the year, plus cash bonuses awarded for the year.

2017-AR-Combined_MDA+FS.pdf - p141 (March 7, 2018 23:00:58)

141CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

Share-based compensation

A portion of the senior management’s compensation is in the form of participation in the
Company’s share-based payment plans (Stock Option plan, Restricted Share Unit plan and
Performance Share Unit plan).

28. Capital management

The Company’s primary objective with respect to its capital management is to provide returns for
shareholders by ensuring that it has sufficient cash resources to maintain its ongoing operations,
pursue and support growth opportunities, continue the development and exploration of its mineral
properties, satisfying debt repayment requirements and other obligations, and certain benefits for
other stakeholders.

The Company manages its capital structure and makes adjustments in light of changes in its
economic and operating environment and the risk characteristics of the Company’s assets. For
effective capital management, the Company implemented planning, budgeting and forecasting
processes to help determine the funds required to ensure the Company has the appropriate liquidity
to meet its operating and growth objectives. The Company ensures that there is access to sufficient
funds to meet its short-term business, operating and financing requirements, taking into account
its anticipated cash flows from operations and its holdings of cash and cash equivalents and short
term investments.
At December 31, 2017, the Company expects its capital resources and projected future cash flows
from operations to support its normal operating requirements on an ongoing basis. Refer to the
liquidity risk section of note 30 for further discussion of the availability of funds to the Company.

The Company’s capital structure consists of short-term and long-term debt (net of cash and cash
equivalents, restricted cash and restricted short-term investments), lease obligations, and
shareholders’ equity, comprising issued common shares, contributed surplus, AOCI, and retained
earnings as shown below:

Shareholders' equity
Long-term debt
Short-term debt
Lease obligations

Less:

Restricted cash and restricted short-term investments

(note 7)

Cash and cash equivalents

Total invested capital

2017
2,025,429
211,611
48,536
31,986
2,317,562

2016
1,824,282
392,851
72,281
29,901
2,319,315

(687)
(415,891)
1,900,984

(248,668)
(160,091)
1,910,556

2017-AR-Combined_MDA+FS.pdf - p142 (March 7, 2018 23:00:58)

142CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

29. Financial Instruments

The Company’s financial instruments include cash and cash equivalents, short-term investments,
restricted cash and short-term investments, amounts receivable (including embedded derivatives),
derivative instruments, long-term receivables, tax receivables, accounts payable and accrued
liabilities, debt, and revenue-based taxes payable.

Derivative Instruments

The Company uses derivative instruments as part of its risk management program to mitigate
exposures to various market risks including commodity prices, currency exchange rates and the
cost of fuel.

The Company designates certain derivatives as cash flow hedging instruments (“Gold, copper and
fuel hedge contracts”). The effective portion of changes in the fair value of these derivatives is
recognized in other comprehensive income and accumulated in OCI. Any ineffective portion of
changes in the fair value of these derivatives is recognized immediately in the Statements of
Earnings. Amounts previously recognized in other comprehensive income and accumulated in OCI
are reclassified to the Statements of Earnings in the periods when the hedged item is recognized
in earnings. These amounts are included within the same line of the Statements of Earnings as the
hedged item.
Hedges that are expected to be highly effective in achieving offsetting changes in cash flows are
assessed on an ongoing basis to determine that they actually have been highly effective throughout
the financial reporting periods for which they were designated.

On December 27, 2017 the Company announced that due to a lack of water resources, mill
processing operations at the Mount Milligan mine had been temporarily suspended and were
expected to recommence by the end of January 2018. As a result, the Company anticipated no
concentrate shipments in the months of January and February 2018. In accordance with the
Company’s hedging policy and IFRS 9, if a hedged forecast transaction is no longer expected to
occur within the original time period, then hedge accounting is terminated for the associated
derivative instrument. As a result, a $4.3 million accumulated unrealized loss on these hedging
instruments that was recognized in AOCI was reclassified to the Statements of Earnings.

The Company uses a selection of derivative instruments that are effective in achieving its risk
management objectives, but are not designated under the hedge accounting criteria (“Non-hedge
gold, copper and currency contracts”). Changes in fair value of these derivatives are recognized
immediately in the Statements of Earnings.

As of December 31, 2017, the Company had nine counterparties (December 31, 2016 – four) to its
derivative positions. On an ongoing basis, the Company monitors its exposures and ensures that
the counterparties with which it holds outstanding contracts will continue to meet the credit rating
requirements of the Company’s risk management policy.

2017-AR-Combined_MDA+FS.pdf - p143 (March 7, 2018 23:00:58)

143CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

Gold, copper and fuel hedge contracts

The Company’s hedging strategy for which hedge accounting is applied consists of the following:

Gold and copper contracts

The Company established a hedging strategy to manage cash flow streams by protecting against
declining copper or gold prices. The Company hedged 75% of expected copper production and
50% of expected gold production at the Mount Milligan mine for a period of two years, ending on
June 30, 2019.

The Company has designated fixed price forward sales contracts and zero-cost collars as cash flow
hedges for the copper and gold component of its highly probable forecasted copper and gold sales.
These derivatives meet the hedge effectiveness criteria and are designated in a hedge accounting
relationship as a result of the following factors:

• Economic relationship exists between the hedged item (monthly gold and copper sales)
and hedging instrument (derivatives), as notional amounts match and both the hedged item
and hedging instrument fair values move in response to the same average price.

• The hedge ratio is 1.0 for this hedging relationship, as the hedged item and the hedging

instrument are the same quantity.

• Credit risk is not dominant in the fair value of the hedging instrument.

The Company has identified two sources of potential ineffectiveness; 1) the timing of cash flow
differences between the settlement of the concentrate sale and the related derivative and 2) the
inclusion of credit risk in the fair value of the derivative not replicated in the hedged item. The
Company expects the impact of these sources of hedge ineffectiveness to be minimal. The timing
of hedge settlements and settlement of the concentrate sale are closely aligned, as they are expected
to occur within 30 days of each other. As noted above, credit risk is not a material component of
the fair value of the Company’s hedging instruments, as all counterparties are reputable banking
institutions and are highly rated.

As at December 31, 2017, the Company has in place derivatives for 33,021 metric tonnes (72.8
million pounds) of copper designated as cash flow hedges against forecasted production at the
Company’s Mount Milligan mine of which 3,039 metric tonnes are fixed price forwards and
29,982 metric tonnes are zero-cost collars. In addition, as at December 31, 2017, the Company has
in place derivatives for 123,802 ounces of gold designated as cash flow hedges against forecasted
production at the Company’s Mount Milligan mine of which 39,097 ounces are fixed price
forwards and 84,705 ounces are zero-cost collars.

2017-AR-Combined_MDA+FS.pdf - p144 (March 7, 2018 23:00:58)

144CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

Fuel hedge contracts

For the price risk relating to the consumption of diesel fuel, the Company believes that crude oil
futures contracts are an appropriate way of managing the price risk of the cost of diesel fuel.

Crude oil is a component of diesel fuel purchased by the Company, such that changes in the price
of Brent crude oil generally impacts diesel fuel prices. The Company established a hedging
strategy to mitigate changes in diesel fuel prices on the cost of operations at the Kumtor mine. The
diesel fuel hedging program is a 24-month rolling program and the Company targets to hedge up
to 50% of monthly diesel purchases.

The Company has designated call options and collars as cash flow hedges for the crude oil
component of its highly probable forecasted diesel fuel purchases. These derivatives meet the
hedge effectiveness criteria and are designated in a hedge accounting relationship as a result of the
following factors:

• Economic relationship exists between the hedged item and hedging instrument, as notional
amounts match and both the hedged item and hedging instrument fair values move in
response to the same price risk (crude oil). A comprehensive qualitative and quantitative
analysis was performed in order to conclude that crude oil is a separately identifiable and
reliably measurable risk component of the diesel purchases for the Kumtor mine. In
considering the economic relationship qualitatively, the Company considered the Russian
oil market and the approach to purchasing diesel fuel for the Kumtor mine. Quantitatively,
the Company performed historical correlation analysis between prices of diesel fuel
purchased at Kumtor and Brent crude oil prices.

• The hedge ratio is 1.0 for this hedging relationship, as the hedged item is the specific crude

oil risk component of the diesel purchases and matches the hedging instrument.

• Credit risk is not dominant in the fair value of the hedging instrument.

The Company has identified two sources of potential ineffectiveness; 1) the timing of cash flow
differences between the diesel fuel purchases and the related derivative and 2) the inclusion of
credit risk in the fair value of the derivative not replicated in the hedged item. The Company
expects the impact of these sources of hedge ineffectiveness to be minimal. The timing of hedge
settlements and purchases of diesel fuel are closely aligned, as they are expected to occur within
30 days of each other. As noted above, credit risk is not a material component of the fair value of
the Company’s hedging instruments, as all counterparties are reputable banking institutions and
are highly rated.

2017-AR-Combined_MDA+FS.pdf - p145 (March 7, 2018 23:00:58)

145CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

Non-hedge gold, copper and currency contracts

The Company must satisfy its obligation under the streaming arrangement with Royal Gold by
delivering gold and copper to Royal Gold after receiving payment from third-party customers,
including offtakers and traders, which purchase concentrate from the Mount Milligan mine
("MTM Customers"). The Company delivers physical gold and copper warrants to Royal Gold
based on a percentage of the gold ounces and copper pounds included in each final sale of
concentrate to MTM Customers within two days of receiving a final payment. If the final payment
from a MTM Customer is not received within five months of the provisional payment date, then
the Company will deliver an estimated amount of gold ounces and copper warrants based on
information that is available from the MTM Customer at that time.

The Company receives payment from MTM Customers in cash, thus requiring the purchase of
physical gold and copper warrants in order to satisfy the obligation to pay Royal Gold. In order to
hedge its gold and copper 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
purchase and sales contracts pursuant to which it purchases gold and copper at an average price
during a quotational period and sells gold and copper at a spot price. These contracts are treated as
derivatives not designated as hedging instruments. The Company records its forward commodity
contracts at fair value using a market approach based on observable quoted market prices and
contracted prices.

As at December 31, 2017, the Company had forward contracts outstanding for 31,940 ounces of
gold (December 31, 2016 – 35,000 ounces). As at December 31, 2017, the Company had forward
contracts outstanding for 2,404 metric tonnes (5.3 million pounds) of copper (December 31, 2016
– nil).

Non-hedge foreign currency contracts are used to mitigate the variability of non-US dollar
denominated exposures and do not meet the strict hedge effectiveness criteria.

Provisionally-priced contracts

Certain copper-gold concentrate sales contracts provide for provisional pricing. These sales
contain an embedded derivative related to the provisional pricing mechanism and are marked to
market at the end of each reporting period. As at December 31, 2017, the Company’s trade
receivables with embedded derivatives had a fair value of $20.9 million (December 31, 2016 -
$4.1 million), representing 17.6 million pounds of copper and 78,578 ounces of gold (December
31, 2016 – 6.5 million pounds of copper and 61,693 ounces of gold).

2017-AR-Combined_MDA+FS.pdf - p146 (March 7, 2018 23:00:59)

146CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

The hedge positions outstanding for each of the type of commodity contracts as at December 31,
2017 are summarized as follows:

Settlement

As at
December 31,
2017

Instrument

Unit

Crude oil options (a) Barrels

Zero-cost collars (c) Barrels

Average strike
price
$64.60
$46/$59

Forward contracts (b) Pounds

$2.90

Type
Fixed

Fixed

2018
288,000

2019

72,000

23,000

Total position
360,000

23,000

6.7 million

Zero-cost collars (c) Pounds $2.47/$3.22

Fixed 38.6 million 27.5 million

66.1 million

Forward contracts (b) Ounces

$1,285

Fixed

Zero-cost collars (c) Ounces $1,247/$1,363 Fixed

39,097

47,906

36,799

39,097

84,705

Contract
Fuel

Fuel

Copper

Gold

Royal Gold
deliverables

Non-hedge gold Forward contracts (d) Ounces

Float

31,940

Non-hedge copper Forward contracts (d) Pounds
ND = Contracts with floating terms, that are not defined as at December 31, 2017.
(a) Under the option contract, the Company has the option buy or sell specified assets, typically

5.3 million

Float

metals or currency, at a specified price at a certain future date.

(b) Under the forward contract, the Company will buy or sell specified assets, typically metals

or currency, at a specified price to be settled at a certain future date.

(c) Under the zero-cost collar, the Company can put the number of gold ounces and copper
pounds to the counterparty at the minimum price, if the price were to fall below the
minimum, and the counterparty has the option to require the Company to sell to it the number
of gold ounces and copper pounds at the maximum price, if the price were to rise above the
maximum. Under the zero-cost collar for fuel, the Company can call the number of crude oil
barrels from the counterparty at the maximum price, if the price were to increase above the
maximum, and the counterparty has the option to require the Company to buy the number of
crude oil barrels at the minimum price, if the price were to fall below the minimum.
(d) Regarding sales to Royal Gold, the Company has entered into forward gold and copper
contracts pursuant to which it purchases gold copper at an average price during a quotational
period and sells gold or copper at the spot price. These derivative contracts are not
designated as hedging instruments.

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.

2017-AR-Combined_MDA+FS.pdf - p147 (March 7, 2018 23:00:59)

147CENTERRA GOLD INC. ANNUAL REPORT 2017
Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

The following table is an analysis of the derivative instruments recorded in the Statements of
Earnings:

2017

2016

Cash flow hedges
Gold, copper and fuel contracts

Cash flow hedges - effective portion of changes in fair value $
Cash flow hedges - reclassified to Statement of Earnings
Net loss included in AOCI, net of tax (a)

Cash flow hedges - reclassified from AOCI (b)
Loss recognized on derivative instruments (c)
Total loss included in Statements of Earnings

(25,356)
11,213
(14,143)

(11,213)
(2,120)
(13,333)

(428)
41
(387)

-
-
-

Non-hedge derivatives
Non-hedge gold, non-hedge copper and currency contracts

Total gain included in revenue

4,063

(2,011)

Total gain (loss) included in other income, net
(a) Includes tax for the year ended December 31, 2017 of nil (December 31, 2016 – nil).
(b) Includes $4.3 million loss recognized in other income, net (note 23).
(c) Represents the total fair value movement of certain gold and copper derivative instruments

1,562

524

reclassified to the Statements of Earnings that no longer qualify for hedge accounting.

2017-AR-Combined_MDA+FS.pdf - p148 (March 7, 2018 23:00:59)

148CENTERRA GOLD INC. ANNUAL REPORT 2017

Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

The following table is an analysis of where derivative instruments are recorded in the Statements
of Financial Position:

Cash flow hedge
Gold, copper and fuel contracts

Prepaid expenses and other current assets
Other non-current assets
Current portion of derivative liabilities
Non-current derivative liabilities

Non-hedge derivatives
Non-hedge gold, non-hedge copper and currency contracts

Prepaid expenses and other current assets
Current portion of derivative liabilities

2017

2016

908
545
(15,870)
(7,273)
(21,690)

1,055
(187)
868

750
904

-
1,654

-
(1,512)
(1,512)

The following table is a sensitivity analysis of the impact on the Statements of Earnings of an
increase or a decrease of 10% of the price of the hedged item:

Sensitivity table

Fuel contracts
Gold (Hedge)
Copper (Hedge)
Gold and Copper (Non-hedge)
Currency contracts (Non-hedge)

Fair value measurement

Fair value as at
December 31, 2017
1,452
(2,810)
(20,332)
1,035
(167)

Increase of
10%
3,076
(11,629)
(28,230)
6,671
1,902

Decrease of
10%
494
10,834
(2,013)
(4,603)
(1,276)

All financial instruments measured at fair value are categorized into one of three hierarchy levels
for which the financial instruments must be grouped based on whether the inputs to those valuation
techniques are observable or unobservable. Observable inputs reflect market data obtained from
independent sources, while unobservable inputs reflect the Company’s assumptions. These two
types of inputs create the following fair value hierarchy:

2017-AR-Combined_MDA+FS.pdf - p149 (March 7, 2018 23:00:59)

149CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

Level 1: observable inputs such as quoted prices in active markets;

Level 2: inputs, other than the quoted market prices in active markets, which are observable,
either directly and/or indirectly; and

Level 3: unobservable inputs for the asset or liability in which little or no market data exists,
which therefore require an entity to develop its own assumptions.

Classification and the fair value measurement by level of the financial assets and liabilities in the
Statements of Financial Position were as follows:

December 31, 2017

Assets/liabilities
at fair value
through
earnings

Assets/liabilities
at fair value
through
OCI

Amortized
cost

Financial assets
Cash and cash equivalents
Restricted cash
Amounts receivable
Provisionally-priced receivables - Level 2
Taxes receivable
Long-term receivables
Derivative assets - Level 2

415,891 $
687
43,012
-
21,302
2,649
-

483,541 $

Financial liabilities
Trade creditors and accruals
Amount due to Royal Gold - Level 2
Lease obligations
Debt
Revenue-based taxes payable
Derivative liabilities - Level 2

122,101 $

-
31,986
260,147
15,953
-

430,187 $

- $
-
-
20,890
-
-
1,055
21,945 $

- $

50,650
-
-
-
187
50,837 $

-
-
-
-
-
-
1,453
1,453

-
-
-
-
-
23,143
23,143

2017-AR-Combined_MDA+FS.pdf - p150 (March 7, 2018 23:00:59)

150CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

December 31, 2016

Assets/liabilities
at fair value
through
earnings

Assets/liabilities
at fair value
through
OCI

Amortized
cost

Financial assets
Cash and cash equivalents
Restricted cash
Amounts receivable
Provisionally-priced receivables - Level 2
Long-term receivables
Fuel derivative assets - Level 2

160,091 $
248,668
43,949
-
6,326
-

459,034 $

Financial liabilities
Trade creditors and accruals
Amount due to Royal Gold - Level 2
Lease obligations
Debt
Revenue-based taxes payable
Commodity derivative liability - Level 2

92,715 $

-
29,901
465,132
19,202
-

606,950 $

- $
-
-
4,148
-
-
4,148 $

- $

29,170
-
-
-
1,512
30,682 $

-
-
-
-
-
1,654
1,654

-
-
-
-
-
-
-

The recorded value of restricted short-term investments, amounts receivable, taxes receivable,
long-term receivables, accounts payable and accrued liabilities, lease obligation, debt and revenue-
based taxes payable approximate their relative fair values.

The fair value of gold, copper, diesel and currency derivative instruments, classified within Level
2, is determined using derivative pricing models that utilize a variety of inputs that are a
combination of quoted prices and market-corroborated inputs. The fair value of the Company’s
derivative contracts includes an adjustment for credit risk.

Forward commodity contracts and provisionally priced contracts, are classified within Level 2
because they are valued using a market-based-approach, other than observable quoted prices
included within Level 1, other inputs from published market prices and contracted prices and
terms.

2017-AR-Combined_MDA+FS.pdf - p151 (March 7, 2018 23:00:59)

151CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

30. Financial risk exposure and risk management

The Company is exposed in varying degrees to certain financial risks by virtue of its activities.
The overall financial risk management program focuses on preservation of capital, and protecting
current and future Company assets and cash flows by reducing exposure to risks posed by the
uncertainties and volatilities of financial markets.

The Board of Directors has a responsibility to ensure that an adequate financial risk management
policy is established. Financial risk management is carried out by the Company’s treasury
department in accordance with the Board of Directors’ approved policy. The treasury department
identifies and evaluates financial risks, establishes controls and procedures to ensure financial risks
are mitigated in accordance with the approved policy and programs, and that risk management
activities comply thereto.

The Company’s Audit Committee oversees management’s compliance with the Company’s
financial risk management policy, approves financial risk management programs, and receives and
reviews reports on management compliance with the policy and programs. The internal audit
department assists in undertaking its oversight of financial risk management controls and
procedures, the results of which are reported to the Audit Committee.

The Company is exposed to the following types of risk and manages them as follows:

a. Currency risk

The Company’s operations are located in various geographic locations, exposing the Company to
potential foreign exchange risk in its financial position and cash flows. As the Company operates
in an international environment, some of the Company’s financial instruments and transactions
are denominated in currencies other than the U.S. dollar. The operating results and financial
position of the Company are reported in U.S. dollars in the Company’s consolidated financial
statements. The fluctuation of the U.S. dollar in relation to other currencies will consequently
have an impact upon the profitability of the Company and may also affect the value of the
Company’s assets.

To mitigate this risk, the Company makes purchases in foreign currencies at the prevailing spot
price to fund corporate activities or enters into short-term forward contracts or zero-cost collar
contracts to purchase foreign currencies. During the year ended December 31, 2017, total
Canadian dollars and Euros purchased were Cdn$521.0 million and €23.9 million, respectively,
(year ended December 31, 2016 - Cdn$130.0 million and €22.2 million), including executed
forward contracts of Cdn$56.6 million (year ended December 31, 2016 - Cdn$11.5 million and
€0.5 million) and exercised zero-cost collar contracts of Cdn$14.0 million (year ended December
31, 2016 - nil).

2017-AR-Combined_MDA+FS.pdf - p152 (March 7, 2018 23:00:59)

152CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

The exposure of the Company’s monetary assets and liabilities to currency risk is as follows:

December 31, 2017

Financial Assets
Cash and cash equivalents
Restricted cash
Amounts receivable
Other assets

Financial Liabilities
Accounts payable and accrued liabilities
Taxes payable
Other liabilities

December 31, 2016

Financial Assets
Cash and cash equivalents
Restricted cash
Amounts receivable
Other assets

Financial Liabilities
Accounts payable and accrued liabilities
Taxes payable
Other liabilities

Kyrgyz Mongolian Canadian European Turkish
Dollar

Tugrik

Euro

Som

Lira

295 $
-
152
-
447 $

204 $ 155,734 $

-
288
-

301
2,355
73

492 $ 158,463 $

1,289 $
-
2
-
1,291 $

63 $
-
2,080
16
2,159 $

12,426 $

6
91
12,523 $

421 $
72
-
493 $

47,846 $
1,376
6,932
56,154 $

1,298 $
1,050
-
2,348 $

330 $
79
-
409 $

Kyrgyz Mongolian Canadian European Turkish
Dollar

Tugrik

Euro

Som

Lira

- $

442
192
-
634 $

1,581 $
-
485
750
2,816 $

16,679 $
639
4,108
2,635
24,061 $

91 $

697
-
-
788 $

52 $

550
1,835
-
2,437 $

8,063 $
929
-
8,992 $

364 $
54
-
418 $

38,175 $
233
14,291
52,699 $

476 $

1,050
-
1,526 $

98 $
23
-
121 $

Other

22
-
33
-
55

657
9
-
666

Other

212
-
5
-
217

112
13
-
125

Based on the above net exposures at December 31, 2017, a 10% devaluation or appreciation of the
above currencies against the U.S. dollar, with all other variables held constant would have led to
additional income or loss before tax of $9.0 million (December 31, 2016 - $3.3 million).

b. Interest rate risk

Interest rate risk is the risk borne by an interest-bearing asset or liability as a result of fluctuations
in interest rates.

Financial assets and financial liabilities with variable interest rates expose the Company to risk of
changes in cash flows. The Company’s cash and cash equivalents include highly liquid
investments that earn interest at market rates. As at December 31, 2017, the majority of the $416.6
million in cash and cash equivalents and current and non-current restricted cash and short-term

2017-AR-Combined_MDA+FS.pdf - p153 (March 7, 2018 23:00:59)

153CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

investments (December 31, 2016 - $408.8 million) were comprised of interest-bearing assets.
Based on amounts as at December 31, 2017, a 100 basis point change in interest rates would result
in a $4.2 million adjustment to interest income (December 31, 2016 - $4.1 million).

Additionally, the interest rates on $292.1 million of debt and lease obligations include a variable
rate component referenced to LIBOR (December 31, 2016 - $465.1 million). Based on the amount
drawn as at December 31, 2017, a 100 basis point change in LIBOR would result in a $3.0 million
adjustment to interest expenses (December 31, 2016 - $1.1 million).

The Company’s policy limits the investment of excess funds to liquid term deposits, treasury bills,
banker’s acceptances, bearer’s deposit notes and corporate direct credit having a single “A” rating
or greater.

c. Credit risk

Credit risk is the risk of a financial loss to the Company if a customer or counterparty to a financial
instrument fails to meet its contractual obligation. Credit risk arises principally from the
Company’s receivables from customers and on cash and cash equivalents and short-term
investments and restricted cash and short-term investments.

The Company’s exposure to credit risk, in respect of gold sales, is influenced mainly by the
individual characteristics of each customer. Kyrgyzaltyn is the sole customer of gold doré from
the Kumtor mine and is a shareholder of Centerra. Gold and copper concentrate from Mount
Milligan are sold to four multi-national off-takers with limited credit risk.

To partially mitigate exposure to potential credit risk related to Kumtor sales, the Company has an
agreement in place whereby Kyrgyzaltyn has pledged 2,850,000 Centerra common shares it owns
as security against unsettled gold shipments, in the event of default on payment (note 27).

Based on movements in Centerra’s share price and the value of individual or unsettled gold
shipments over the course of 2017, the maximum exposure during the year, reflecting the shortfall
in the value of the security as compared to the value of any unsettled shipments, was approximately
$86.6 million (year ended December 31, 2016 - $24.0 million).

Mount Milligan and Langeloth manage their credit risk from accounts receivable through their
collection activities. Mount Milligan’s collection risk is further reduced by the nature of the
concentrate sales contracts, as they are structured for the Company to collect 90% of the
provisional sales price upon shipment. As of December 31, 2017, Mount Milligan’s trade
receivables included two multi-national customers with a combined balance owing of $25.0
million, representing 73% of the mine’s trade receivables (December 31, 2016 - one multi-national
customer with a balance owing of $11.6 million representing 84% of the mine’s trade receivables).
In accordance with IFRS 9, Langeloth’s receivables are provided for based on lifetime expected

2017-AR-Combined_MDA+FS.pdf - p154 (March 7, 2018 23:00:59)

154CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

credit losses, which are established by considering historical credit loss experience with each
customer.

The Company manages counterparty credit risk, in respect of short-term investments, by
maintaining bank accounts with highly-rated U.S. and Canadian banks and investing only in
highly-rated Canadian and U.S. Government bills, term deposits or banker’s acceptances with
highly-rated financial institutions and corporate direct credit issues that can be promptly liquidated.
As at December 31, 2017, the Company’s short-term investments are maintained with Canadian
Schedule I banks with a minimum of an A1/P1 rating.

d. Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they
fall due. The Company finances its operations through a combination of operating cash flows,
short and long-term debt and, from to time, through the issuance of equity. The Company primarily
uses funds generated from operating activities to fund operational expenses, sustaining and
development capital spending, and interest and principal payments on its loans and borrowings.
The Company continuously monitors and reviews its actual and forecasted cash flows and manages
liquidity risk by maintaining adequate cash and cash equivalents, by utilizing debt and by
monitoring developments in the capital markets.

As at December 31, 2017, cash and cash equivalents were $415.9 million compared to $160.1
million at December 31, 2016. At December 31, 2016, $247.8 million of cash held by Kumtor
Gold Company was restricted under a Kyrgyz Republic court order (note 21).

The Company believes its cash on hand, available cash from the Company’s existing credit
facilities, and cash flow from the Company’s operations will be sufficient to fund its anticipated
operating cash requirements and development expenditures through to the end of 2018.

A maturity analysis of the Company’s financial liabilities, contractual obligations, other fixed
operating and capital commitments, excluding asset retirement obligations, is set out below:

2017-AR-Combined_MDA+FS.pdf - p155 (March 7, 2018 23:01:00)

155CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

Year ended December 31, 2017

(Millions of U.S. Dollars)

Total

Due In

Due In Due In

Due
Less Than One to Four to After
Five

Five
Three
Years Years Years

One
Year

- $

Accounts payable and accrued liabilities
Debt
Reclamation trust fund
Capital equipment
Operational supplies
Project development

$ 181.8 $
266.0
42.6
4.4
48.4
49.9

181.8 $
50.0
6.0
4.4
48.4
22.0

Deferred vendor payables (a)
Equipment Promissory Note (principal +

6.9

100.0
18.0
-
-
27.9

116.0
12.0
-
-
-

interest)

Lease of premises
Derivative liability
Total contractual obligations

34.1
3.2
23.3

$ 660.6 $

34.1
-
0.8
1.0
7.3
16.0
370.4 $ 154.2 $ 128.7 $

-
0.7
-

Year ended December 31, 2016

(Millions of U.S. Dollars)

Total

Due In

Due In Due In

Due
Less Than One to Four to After
Five

Three
Five
Years Years Years

One
Year

Accounts payable and accrued liabilities
Debt
Reclamation trust fund
Capital equipment
Operational supplies
Project development

$ 130.3 $
474.4
32.2
4.7
34.5
51.4

Deferred vendor payables (a)
Equipment Promissory Note (principal +

interest)

Lease of premises
Derivative liability
Total contractual obligations

14.3

31.7
4.4
1.5

$ 779.4 $

130.3 $
75.0
4.2
4.7
34.5
15.3

100.0
12.2
-
-
36.1

- $

299.4
9.4
-
-
-

14.3

1.3
1.7
1.5

30.4
1.1
-
268.5 $ 179.8 $ 309.6 $

-
0.8
-

-
0.8
-
21.5

6.6
-
-
-

-
0.7
-
7.3

-
-
6.4
-
-
-

2017-AR-Combined_MDA+FS.pdf - p156 (March 7, 2018 23:01:00)

156CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

(a) Deferred vendor payable represents amounts due to BC Hydro and Power Authority.
Repayment for deferred energy costs is dependent on average monthly copper prices and the
average monthly Cdn$/USD exchange rate. If the average copper price for the month exceeds
C$3.40/pound, then a portion of the deferred energy liability is due and payable in the
subsequent month.

e. Commodity price risk

The profitability of the Company’s operations and mineral resource properties relates primarily to
the market price and outlook of gold and copper. Adverse changes in the price of certain raw
materials can also significantly affect the Company’s cash flows.

Gold and copper prices historically have fluctuated widely and are affected by numerous factors
outside of the Company's control, including, but not limited to, industrial, residential and retail
demand, forward sales by producers and speculators, levels of worldwide production, short-term
changes in supply and demand due to speculative or hedging activities, macro-economic variables,
geopolitical events and certain other factors related specifically to gold (including central bank
reserves management).

Provisional pricing mechanisms embedded within the Company’s Mount Milligan sales contracts
have the character of a commodity derivative and are carried at fair value as part of accounts
receivables. As at December 31, 2017, the Company’s trade receivable balance included four
provisionally priced shipments with a combined carrying value of $20.9 million (December 31,
2016 – three provisionally priced shipments with a combined carrying value of $4.1 million). A
10% change in the forward copper and gold prices used to fair value this provision would have a
$14.8 million impact on the receivable and related revenue recorded at December 31, 2017
(December 31, 2016 - $6.0 million). Additionally, as a result of the Royal Gold stream, when a
gold and copper concentrate receivable is recorded, a corresponding provisionally priced liability
to Royal Gold is generated. As at December 31, 2017, $50.7 million is owed to Royal Gold
(December 31, 2016 - $29.2 million). A 10% change in the forward copper and gold prices used
to fair value this provision would have a $6.9 million impact on the payable and related revenue
recorded at December 31, 2017 (December 31, 2016 - $4.4 million).

To the extent that the price of gold and copper increase over time, the fair value of the Company’s
mineral assets increases and cash flows will improve; conversely, declines in the price of gold will
reduce the fair value of mineral assets and cash flows. A protracted period of depressed prices
could impair the Company’s operations and development opportunities, and significantly erode
shareholder value. To the extent there are adverse changes to the price of certain raw materials
(e.g. diesel fuel), the Company’s profitability and cash flows may be impacted.

The Company enters into hedging arrangements to mitigate commodity price risk (see note 29).

2017-AR-Combined_MDA+FS.pdf - p157 (March 7, 2018 23:01:00)

157CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

31. Supplemental disclosure

a. Changes in operating working capital

(Increase) decrease in amounts receivable
Decrease (increase) in inventory - ore and metal
(Increase) decrease in inventory - supplies
Increase in prepaid expenses
Increase in trade creditors and accruals
(Decrease) increase in revenue-based tax payable
(Decrease) increase in depreciation and amortization
included in inventory (note 11)
Increase in accruals included in additions to PP&E
(Decrease) increase in other taxes payable

b. Investment in PP&E

2017
(14,396)
39,504
(4,935)
(2,265)
44,532
(3,249)

(69,644)
(340)
(900)
(11,693)

Additions to PP&E during the period (note 11)
Greenstone Gold Property translation adjustment
Capitalized parts
Purchase of Teck royalty via share issuance
Impact of revisions to asset retirement obligation included in
PP&E
Depreciation and amortization included in additions to PP&E
(note 11)
Capitalization of OMAS financing costs
Increase in accruals related to additions to PP&E

2017
(334,146)
2,530
6,769
-

5,153

9,238

51,056
1,444
340
(266,854)

36,260
-
1,261
(212,832)

2016
10,971
(63,350)
16,278
(688)
7,634
10,050

52,076
(1,261)
948
32,658

2016
(260,023)
(2,523)
-
2,955

2017-AR-Combined_MDA+FS.pdf - p158 (March 7, 2018 23:01:00)

158CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

c. Changes in liabilities arising from financing activities

Debt(b)
465,132

Opening balance
Changes due to:
Repayments
Financing costs deferred
Amortization of deferred financing costs
Interest expense
Capitalized financing costs and other (c)
Balance at December 31, 2017
(a) Included within "Accounts payable and accrued liabilities".
(b) Includes short term debt ($48,536) and long term debt ($211,611).
(c) Includes costs associated with the Promissory Note and OMAS Facility.

(208,363)
(896)
4,274
-
-
260,147

Interest
payable(a)
4,783

(27,407)
-
-
20,362
3,813
1,551

32. Subsequent events

AuRico Metals Inc. acquisition

On January 8, 2018, the Company completed the acquisition of 100% of the outstanding shares of
AuRico Metals Inc. (“AuRico”) (“the Acquisition”). AuRico was a North American-based mining
development and royalty company with interest in a feasibility stage underground gold-copper
project in British Columbia, Canada.

The Acquisition was completed by way of a Plan of Arrangement under the Business Corporations
Act (Ontario), whereby the Company acquired all of the issued and outstanding AuRico common
shares for Cdn$1.80 per share in cash consideration, representing an aggregate transaction value
of approximately Cdn$307 million ($247 million).

Concurrently with the closing of the Acquisition, the Company entered into a credit facility
(“AuRico Facility”) with The Bank of Nova Scotia, as administrative agent, lead arranger and
lender, providing for a $125 million senior secured non revolving term credit facility to finance a
portion of the Acquisition and to pay certain related costs.

The Company determined that the Acquisition was a business combination in accordance with the
definition in IFRS 3, Business Combinations, and as such has accounted for it in accordance with
this standard, with Centerra being the accounting acquirer on the acquisition date of January 8,
2018.

2017-AR-Combined_MDA+FS.pdf - p159 (March 7, 2018 23:01:00)

159CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

The Company engaged an external third party valuator to assist in the determination of the fair
value of the acquired assets and liabilities.

The following table summarizes the preliminary fair value of the identified assets acquired and
liabilities assumed from AuRico:

Total consideration
Cash paid to shareholders

Assets acquired
Current assets

Cash and cash equivalents
Marketable investments
Amounts receivable
Inventories
Prepaid expenses and other assets

Non-current assets

Property, plant and equipment
Intangible assets (Royalties)

Total assets

Liabilities assumed

Accounts payable and accrued liabilities
Asset retirement obligations
Deferred tax liability

Total liabilities
Net assets acquired
Goodwill

January 8,
2018

246,961
246,961

20,161
2,254
4,005
3,000
375
29,795

171,264
129,223
330,282

5,955
13,795
63,576
83,326
246,956
5

$
$

$
$
$

2017-AR-Combined_MDA+FS.pdf - p160 (March 7, 2018 23:01:00)

160CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

Borrowings

EBRD Facility

On January 29, 2018, the EBRD Facility was repaid in full and subsequently cancelled. All
associated unamortized capitalized deferred financing fees were expensed in the Statements of
Earnings in January 2018.

CGI Credit Facility

On February 1, 2018, the Company entered into a $500 million four-year senior secured revolving
credit facility (the "CGI Credit Facility") with a lending syndicate led by The Bank of Nova Scotia
and National Bank of Canada.

The CGI Credit Facility is held at the corporate level and replaces the Credit Facility, which had
an outstanding balance owed of $190 million and the $125 million AuRico Facility. The Credit
Facility was deemed to be extinguished and all associated unamortized capitalized deferred
financing fees were expensed into the Statements of Earnings in February 2018.

The CGI Credit Facility is for general corporate purposes, including working capital, investments,
acquisitions and capital expenditures.

Öksüt Project

On January 11, 2018, the Company announced it had received approval for the last remaining
outstanding permit (pastureland permit) and construction of the Öksüt Project could proceed upon
receipt of approval from the Company’s Board of Directors.

33. Segmented Information

In accordance with IFRS 8, Operating Segments, the Company’s operations are segmented on a
regional basis and are reported in a manner consistent with the internal reporting provided to the
chief operating decision-maker (“CODM”). The Chief Executive Officer has authority for resource
allocation and assessment of the Company’s performance and is therefore the CODM. Information
presented in the table below is shown at the level at which it is reviewed by the CODM in his
decision making process.

The Company manages its reportable operating segments by a combination of geographic location
and products. The Kyrgyz Republic segment includes the operations of the Kumtor Gold Project.
The Mongolian segment includes the operations of the Boroo Gold Project, activities related to the
Gatsuurt Project and local exploration activities. The Turkish segment represents the development
of the Öksüt Project. The North America Gold-Copper segment represents the operations of the
Mount Milligan Mine. The North America Molybdenum segment includes the operations of the

2017-AR-Combined_MDA+FS.pdf - p161 (March 7, 2018 23:01:00)

161CENTERRA GOLD INC. ANNUAL REPORT 2017Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

Langeloth processing facility and care and maintenance activities of the Endako and Thompson
Creek Mines. The Corporate and other segment include the head office located in Toronto, the
corporate office located in Denver, Colorado, the Greenstone Gold Property and other international
exploration projects. The segments’ accounting policies are consistent with those described in note
3.

Segment Revenues and Results

The following table reconciles segment operating profit to the consolidated operating profit in the
Statements of Earnings:

2017-AR-Combined_MDA+FS.pdf - p162 (March 7, 2018 23:01:00)

162CENTERRA GOLD INC. ANNUAL REPORT 20171
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164CENTERRA GOLD INC. ANNUAL REPORT 2017

Centerra Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended 2017 and 2016
(Expressed in thousands of United States Dollars, except where otherwise indicated)

Geographical Information

The following table details the Company’s revenue by the location of the customers and
information about the Company’s non-current assets by location of the assets.

Revenue
Year ended December 31,
2016
683.3 $
56.0
16.6
0.9
-
-
-
-
0.9
757.7 $

2017
685.2 $
284.8
123.9
59.3
32.1
3.6
-
-
10.1
1,199.0 $

Non-current assets
As at December 31,
2017
2016
471.8
621.9 $
-
122.1
-
-
921.2
93.4
21.1
9.9
1,639.5

-
112.1
-
-
937.9
48.5
31.8
8.0
1,760.2 $

(Millions of U.S. Dollars)
Kyrgyz Republic
South Korea
United States
Japan
China
Canada
Mongolia
Turkey
Other
Total

Customer information

The following table presents sales to individual customers exceeding 10% of annual sales for the
years ended December 31, 2017 and 2016. The following three customers represent 77% (2016 –
98%) of the Company’s sales revenue:

(Millions of U.S. Dollars)
Customer Reporting segment

1
2
3

Kyrgyz Republic
North America - Gold-Copper
North America - Gold-Copper

Total sales to customers exceeding 10% of annual sales

2017
685.2
118.3
115.5
919.0

2016
683.3
27.0
28.9
739.2

2017-AR-Combined_MDA+FS.pdf - p165 (March 7, 2018 23:01:01)

165CENTERRA GOLD INC. ANNUAL REPORT 20175215 SD Centerra AR 2017_OK.qxp_Layout 1 2018-03-19 9:14 PM Page 10

CORPORATE INFORMATION

DIRECTORS

Stephen A. Lang
Chair

Richard W. Connor

Eduard D. Kubatov

Nurlan Kyshtobaev

Michael S. Parrett

Jacques Perron

Scott G. Perry

Sheryl K. Pressler

Terry V. Rogers
Independent Lead Director

Bektur Sagynov

Bruce V. Walter

Vice-Chair

CENTERRA GOLD INC. ANNUAL REPORT 2017

OFFICERS AND MANAGEMENT

MANAGEMENT

Scott G. Perry
Chief Executive Officer

Frank H. Herbert1
President

Darren J. Millman

Vice President and

Chief Financial Officer

Gordon D. Reid

Vice President and

Chief Operating Officer

Dennis C. Kwong

Vice President,

Business Development

and Exploration

Yousef Rehman1
Vice President and General Counsel

1) Mr. Herbert retired from the organization

effective December 31, 2017. As part of

the organization’s succession planning,

Mr. Yousef Rehman was promoted

to Vice President and General Counsel,

effective January 1, 2018 and Mr. Perry

assumed the title of President.

Picklu Datta
Vice President, Finance & Treasurer

Cam Duquette
Vice President, Health and Safety

John Fitzgerald

Vice President, Capital Projects

& Technical Services

John W. Pearson
Vice President, Investor Relations

Claude Plourde
Vice President, Controller

Geoff Ramey

Vice President, Human Resources

and HR Systems

Kevin D’Souza

Vice President, Security,

Sustainability and Environment

Mark A. Wilson

President, Base Metals Division

Daniel R. Desjardins

President,

Kumtor Gold Company

Rod Chanin

Acting General Manager,

Boroo Gold Company

Greg Herbert
Site Manager, Endako Mine

Jim Kopp

Site Manager,

Thompson Creek Mine

Tom Ondrejko

General Manager,

Langeloth Metallurgical Company

Alper Sezener

General Manager,

Öksüt Madencilik A.S.

Phil Welten

General Manager,

Mount Milligan Mine

5215 SD Centerra AR 2017_OK.qxp_Layout 1 2018-03-19 9:14 PM Page 11

TRANSFER AGENT

AUDITORS

For information on common share
holdings, lost share certificates
and address changes, contact:

AST Trust Company (Canada)
P.O. Box 700
Station B
Montreal, QC
Canada H3B 3K3

North America phone toll free:
1.800.387.0825 or
416.682.3860
Fax: 1.888.249.6189
Email:
inquiries@astfinancial.com

KPMG LLP
Suite 4600
Bay Adelaide Centre
333 Bay Street
Suite 4600
Toronto, Ontario
Canada M5H 2S5

STOCK EXCHANGE LISTING

Toronto Stock Exchange

Symbol: CG

INVESTOR RELATIONS CONTACT

John W. Pearson
Vice President Investor Relations
investor@centerragold.com

CORPORATE HEADQUARTERS

Suite 1500
1 University Avenue
Toronto, Ontario
Canada M5J 2P1

T 416.204.1953
F 416.204.1954

www.centerragold.com

CENTERRA GOLD INC. ANNUAL REPORT 2017

Printed in Canada

5215 SD Centerra AR 2017_OK.qxp_Layout 1 2018-03-19 9:14 PM Page 12

CENTERRA GOLD INC.

Suite 1500
1 University Avenue
Toronto, Ontario
Canada M5J 2P1

T 416.204.1953
F 416.204.1954