Centerra Gold Annual Report 2020

Plain-text annual report

DELIVER OON RESULTS CENTERRA GOLD INC. ANNUAL REPORT 2020 Corporate Profile Centerra Gold (“Centerra”) 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 three mines, the Mount Milligan Mine in British Columbia, Canada, the Kumtor Mine in the Kyrgyz Republic and the Öksüt Mine in Turkey, and is one of the largest Western-based gold producers in Central Asia. In 2020, Centerra produced 824,059 ounces of gold and 82.8 million pounds of copper. Centerra’s objectives are to build shareholder value by maximizing the potential of its current properties, deliver profitable growth through its existing operations, add additional exploration properties and exploration joint ventures and continue to increase its mineral reserves and resources. Centerra’s common 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 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. For a detailed discussion of such risks and other factors, see the Management’s Discussion and Analysis (MD&A) included in this Annual Report, see page 1 of the MD&A, 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. Information is given as of December 31, 2020. DELIVER ON RESULTS 824,059 ounces OUR THREE MINES PRODUCED 824,059 OUNCES OF GOLD IN 2020 AND EXCEEDED ANNUAL GUIDANCE DELIVER (cid:2) COVID-19 – All Sites Maintained Proactive Measures, Strict Hygiene Protocols, and Social Distancing. (cid:2) Safety – Öksüt Achieved Four Million Work Hours Without a Lost Time Injury. (cid:2) Exceeded 2020 Gold Production Guidance, 824,059 Ounces of Gold Produced; Met Copper Production Guidance, 82.8 Million Pounds of Copper Produced. (cid:2) 2020 Gold Production Costs of $419 Per Ounce Sold. (cid:2) 2020 All-In Sustaining Costs1 on a By-product Basis of $729 Per Ounce Sold, Lower Than Guidance. (cid:2) 2020 All-In Costs1 on a By-product Basis of $1,059 Per Ounce Sold. (cid:2) 2021 Production Guidance of 780,000 Ounces of Gold and 75 Million Pounds of Copper (mid-points). Retained Earnings Profile (as at December 31) s n o i l l i m $ S U 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2,000 1,600 1,200 800 400 0 ) z o / $ S U ( e c i r p d l o G 05 04 06 ● Retained Earnings 08 07 09 10 11 12 13 14 15 16 ● Cumulative Dividends 17 18 ● Gold Price 19 20 1) All-in sustaining costs and all-in costs on a by-product basis 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. Centerra Gold Inc. Annual Report 2020 $930 million $604 million IN 2020, CASH PROVIDED BY OPERATIONS OF $930 MILLION AND GENERATED FREE CASH FLOW 1 OF $604 MILLION, RESULTING IN A SOLID BALANCE SHEET WITH NO DEBT OON RESULTS (cid:2) 2020 Net Earnings of $408.5 Million (cid:2) Debt-free Balance Sheet and or $1.39 per Share (basic). (cid:2) Cash Provided by Operations in 2020 of $930 Million (Kumtor $661 Million, Mount Milligan $185 Million, Öksüt $146 Million). (cid:2) 2020 Free Cash Flow1of $604 Million (Kumtor $438 Million, Mount Milligan $150 Million, Öksüt $105 Million). Cash Balance of $545 Million as at December 31, 2020. (cid:2) Quarterly Dividend of C$0.05 per Common Share. (cid:2) Kumtor Technical Report Update, Five-Year Extension to Mine Life Extending Operations to 2031. Gold Production by Mine Site Gold Mineral Reserves 2 (as at December 31) (Millions of contained ounces of gold) 16.0 16.3 14.2 11.1 11.2 Gold Production Outlook 3 (Thousands of ounces) 970 980 824 783 780 ) z o k ( n o i t c u d o r p d l o G 900 750 600 450 300 150 0 20 19 18 17 16 ● Kumtor ● Mount Milligan ● Öksüt 16 17 18 19 20 19 20 21E 22E 23E 1) All-in sustaining costs and all-in costs on a by-product basis per ounce sold and free cash flow are non-GAAP measures and are discussed under “Non-GAAP Measures” in the Management’s Discussion and Analysis accompanying this Annual Report. 2) For further information regarding gold mineral reserves, grades and quantities, see the Company’s news release dated February 24, 2021. 3) 2019 and 2020 actual results; 2021, 2022 and 2023 represent mid-point of guidance ranges. DELIVER ON RESULTS Centerra Gold Inc. Annual Report 2020 CCEO’S MESSAGE 2020 WAS AN EXTRAORDINARY YEAR WITH 161,855 ounces of gold and 82.8 million pounds THE CHALLENGES WE FACED FROM of copper at an all-in sustaining cost on a THE GLOBAL PANDEMIC. We changed the way by-product basis1 of $541 per ounce sold, which we did business to minimize the effect of the was lower than the low end of its all-in sustaining pandemic by establishing strict COVID-19 cost guidance. Our newest mine, Öksüt, achieved protocols at our mine sites to help prevent commercial production on May 31, 2020 and infection and reduce the potential transmission favourably exceeded both its gold production and of COVID-19. We implemented travel restrictions cost guidance, realizing 106,068 ounces of gold and temporarily closed various administration production at an all-in sustaining cost on a ofﬁces including our head ofﬁce in Toronto. by-product basis1 of $494 per ounce sold, which In addition, the operating mine sites continued was lower than the low end of its all-in sustaining to assess the resiliency of their supply chains, cost guidance, making it our lowest cost producer. increasing mine site inventories of key materials and developing and implementing contingency Financially in 2020, Centerra recorded net plans to allow for continued operations. We want earnings of $408.5 million or $1.39 per share to thank every one of our employees for their (basic) and generated on a Company-wide basis efforts during these challenging times and their $930.0 million of cash from operations. In 2020, continued focus on safety as we remain steadfast Company-wide, we generated $603.8 million of in providing a safe workplace where everyone free cash ﬂow1, including $437.9 million of free returns home safely every day. cash ﬂow1 from Kumtor, $150.2 million from Mount Milligan and $105.2 million from Öksüt. Despite the COVID-19 pandemic in 2020, each During the year, the Company repaid its debt of Centerra’s mines delivered solid operating and ended the year with no debt and cash of performances and we favourably exceeded $545.2 million. In January 2021, we completed consolidated gold production and cost guidance the sale of our 50% interest in the Greenstone for the year. In 2020, Mount Milligan achieved its Gold Mines Partnership and received a cash highest level of mill throughput and highest level payment of approximately $210 million (including of concentrate production since the start of adjustments) further adding to our strong operations in 2014 and Öksüt poured ﬁrst gold balance sheet. and achieved commercial production. Our three operations delivered more than 824,000 ounces In 2019, we announced our commitment to of gold at an all-in sustaining cost on a by-product conform to the World Gold Council’s Responsible basis1 of $729 per ounce sold, which was lower Gold Mining Principles. In 2020, we completed all than the low end of our all-in sustaining cost Year 1 requirements, in addition to a Year 3 guidance. Kumtor had another strong year where on-site assurance at the Öksüt Mine, and gold production was at the top end of guidance, published our 2020 RGMP Progress Report. delivering 556,136 ounces of gold at an The RGMP assurance identiﬁed two all-in sustaining cost on a by-product basis1 of non-conformances in the area of human rights. 1) Non-GAAP measure and $741 per ounce sold, which was lower than the In 2020, we already began to develop a Human is discussed under low end of its all-in sustaining cost guidance. Rights Standard, which will ultimately form the “Non-GAAP Measures” in the Management’s Discussion and Analysis accompanying In 2020, Mount Milligan exceeded the upper basis of our Human Rights Policy. In addition, end of its gold production guidance and achieved we will assess the options, including due diligence this Annual Report. its copper production guidance, producing procedures, training, community engagement, DELIVER ON RESULTS Centerra Gold Inc. Annual Report 2020 and social assessments, that will be required a new ESG website which reﬂects our to ensure that our business activities avoid commitment to our people, the communities complicity with or directly causing human rights we operate in and our natural environment. abuses throughout our supply chain and communities. Looking to the future, we ﬁled an updated Kumtor Mine Technical Report in February 2021 Throughout 2020, we also continued work on showcasing an extended mine life for Kumtor. the development of a climate change strategy The new Kumtor life-of-mine adds signiﬁcantly to aligned with the recommendations made by the open pit mineral reserves and has extended the Task Force on Climate-related Financial Kumtor’s mine life by ﬁve years. The new Kumtor Disclosures. As part of this work, we completed mine life is now 11 years and milling operations an initial prioritization of climate-related risks are extended to 2031. The new life-of-mine plan and opportunities and will look to ﬁnalize a has consistent annual gold production averaging Company-wide climate change strategy by 590,000 ounces for ﬁve years commencing in the end of 2021. 2022 at an average life-of-mine all-in sustaining costs on a by-product basis1 of $828 per ounce In addition, in 2020, as part of our continued sold. Furthermore, in February we issued our global focus on diversity, equity and inclusion inaugural three-year outlook, which reﬂects a (DE&I), we became a Silver Partner sponsor of growing gold production proﬁle in 2022 and International Women in Mining, a leading global 2023. This brings Centerra close to expected women’s organization pursuing gender equality annual gold production of approximately one and promoting women’s voices, access to million ounces with an attractive declining cost opportunities and leadership in mining. proﬁle, which is expected to generate signiﬁcant In partnership with the Canadian Centre for diversiﬁed free cash ﬂow from our operations. Diversity and Inclusion, we created an 18-month roadmap and kicked off our DE&I global current For 2021, we are estimating Company-wide state assessment project to gather insights on gold production to be in the range of 740,000 diversity and inclusivity at Centerra, raise to 820,000 ounces and 70 million to 80 million awareness and develop localized DE&I strategies pounds of copper production from Mount and initiatives. As of February 2021, Centerra Milligan. employees have completed more than 800 hours ENVIRONMENT We are committed to protecting the natural environment and minimizing adverse impacts caused by our operations or activities. SOCIAL Our People First vision encompasses health and wellness, safety, diversity and inclusion, and talent management and development. of training on diversity, equity and inclusion, with At Mount Milligan, 2021 production guidance a particular focus on recognizing unconscious assumes achieving an average daily throughput bias. To support these activities, we announced of approximately 60,000 tonnes per calendar day GOVERNANCE the creation of a new Executive DE&I Council for the year with gold and copper production and ﬁve regional DE&I Committees across expected to be slightly back-end weighted. the organization. In 2021, the ﬁrst half of the year represents 45% or more of the 2021 annual metal production total Operating in an ethical and Finally, we are committed to continuously while the second half of the year will represent strengthening our ESG disclosure. In 2020, up to 55% of the 2021 annual metal production we published our inaugural Sustainability total. We plan to continue to work on continuous Accounting Standards Board (SASB)-aligned improvement projects in 2021, including 2019 ESG Report and early in 2021 launched secondary crusher improvements and the transparent manner is critical to maintaining the trust of our employees, business partners and external stakeholders, including communities of interest and our investors. DELIVER ON RESULTS Centerra Gold Inc. Annual Report 2020 75% WE MAXIMIZED THE POTENTIAL OF OUR ASSETS, AND EARNINGS FROM MINE OPERATIONS INCREASED 75% IN 2020 installation of staged ﬂotation reactors, which of Phase 2 of the heap leach facility, where is expected to improve metal recoveries in excavation has been completed and the Company future years. is currently carrying out levelling activities, with clay placement expected to start in May 2021. At Kumtor, gold production in 2021 is expected to rise steadily throughout the year, with the ﬁrst We will continue to invest in our properties in quarter of 2021 contributing approximately 2021. Total capital expenditures excluding 15% of annual gold production due to processing capitalized stripping are estimated to be in the lower average grades from the ore stockpiles. range of $200 to $235 million, which includes Gold production rises to approximately 35% $130 to $150 million of sustaining capital and of the annual production in the fourth quarter of $70 to $85 million of growth capital. Total 2021. Mine operations are expected to increase capitalized stripping costs in 2021 are estimated to a mining rate of approximately 550,000 tonnes to be in the range of $230 to $245 million per day from the average mining rate of 280,000 of that, $220 to $230 million is related to the tonnes per day in 2020, focusing mainly on waste development of the open pit at Kumtor and stripping from cut-back 20 during the ﬁrst half $10 to $15 million for open pit development of 2021, accessing greater amounts of ore in at Öksüt. the second half of the year and accessing the high-grade ore in the fourth quarter. The Kumtor We are committed to global exploration, with mill is scheduling a six-day mill maintenance a robust exploration budget of $50 million in shutdown in the third quarter of the year to 2021. The majority of the spending, $34 million, complete a replacement of the regrind mill motor will be for brownﬁelds exploration at Kumtor and carry out SAG mill and regrind mill relines ($21 million), Mount Milligan ($6 million) and and other maintenance work. Öksüt ($3.5 million) to add to the resource base and convert resources into reserves. Greenﬁelds At Öksüt, 2021 will be the ﬁrst full year of and generative exploration activities will focus operations. Gold production is expected to be on our existing properties and joint ventures in back-end weighted, with the ﬁrst half of the year Canada, Finland, Turkey, United States and to representing 35% or more of the 2021 annual investigate new regions to meet the long-term gold production total while the second half of the growth of Centerra. year will represent up to 65% of the 2021 annual gold production total. Mining will continue at the We look forward to another strong year of Keltepe pit in 2021 while the Güneytepe pit is proﬁtable production, and we thank our expected to be developed from early 2022, employees for their continued commitment to assuming receipt of the forestry permit from the maintaining safety, health and environmental local authorities. The average grade of ore standards at our mines and for safely achieving stacked to the heap leach pad in 2021 is the production goals of the Company. expected to be approximately 1.27 g/t gold, which is lower than the average grade of ore Scott G. Perry stacked in 2020 of approximately 1.40 g/t gold. President and In 2021, Öksüt is expected to achieve a Chief Executive Ofﬁcer project-to-date accumulated heap leach recovery of 75%. The Company continues with construction DELIVER ON RESULTS Centerra Gold Inc. Annual Report 2020 FFINANCIAL & OPERATING HIGHLIGHTS SELECTED ANNUAL INFORMATION ($ millions except as noted) Revenue Production costs Earnings from mine operations Revenue-based taxes Exploration and business development Corporate administration ARO revaluation at non-operating sites Asset impairment – Mount Milligan Net earnings (loss) Earnings (loss) per common share – $ basic Adjusted net earnings(1) Adjusted earnings per common share(1) – $ basic Cash provided by operations Cash ﬂow provided by operations – $ per share Adjusted cash provided by operations(1) Free cash ﬂow (deﬁcit)(1) Adjusted free cash ﬂow (deﬁcit)(1) Cash, cash equivalents and restricted cash Total assets Gold produced – ounces Gold sold – ounces Copper produced – 000’s payable pounds Copper sales – 000’s payable pounds Gold production costs per ounce of gold sold(2) Gold – All-in sustaining costs on a by-product basis – $ per oz sold(1)(2) Gold – All-in costs on a by-product basis – $ per oz sold(1)(2) Gold – All-in sustaining costs on a co-product basis – $ per oz sold(1)(2) Average realized gold price (consolidated) – $ per oz sold(1)(2) 2020 1,689 591 786 138 47 46 53 _ 409 1.39 462 1.57 930 3.14 935 604 609 548 3,136 824,059 828,816 82,816 80,477 419 729 1,059 799 1,670 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 2019 2018 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1,375 677 450 116 46 45 35 231 (94) (0.32) 182 0.62 334 1.14 397 35 97 71 2,702 783,308 780,654 71,146 67,430 465 708 1,126 737 1,309 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1,129 578 343 93 35 30 40 – 108 0.37 118 0.40 218 0.75 222 (68) (64) 179 2,827 729,556 709,330 47,091 44,370 464 754 1,100 750 1,175 (1) Non-GAAP measure and is discussed under “Non-GAAP Measures” in the Management’s Discussion and Analysis accompanying this Annual Report. (2) Combines streamed and unstreamed amounts. DELIVER ON RESULTS Centerra Gold Inc. Annual Report 2020 Management’s Discussion and Analysis For the Period Ended December 31, 2020 This Management Discussion and Analysis (“MD&A”) has been prepared as of February 23, 2021 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, 2020 in comparison with the corresponding periods ended December 31, 2019. This discussion should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2020 prepared in accordance with International Financial Reporting Standards (“IFRS”). The Company’s audited financial statements and the notes thereto for the year ended December 31, 2020, are available at www.centerragold.com and on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com. 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 “Caution Regarding Forward-Looking Information” in this discussion. All dollar amounts are expressed in United States dollars (“USD”), except as otherwise indicated. 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. 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: statements regarding 2021-2023 Outlook and 2021 Guidance, including guidance on production, cost and capital spend in 2021, and the assumptions used in preparing; the impact, if any, of the Kyrgyz Parliamentary election and the aftermath on the Kumtor mine; planned exploration in 2021; possible impacts to its operations relating to COVID-19; the Company’s expectations regarding having sufficient liquidity for 2021; the Company’s expectation regarding having sufficient water at Mount Milligan in the medium term, and its plans for a long term solution; and expectations regarding litigation involving the Company including the HRS litigation impacting the Mount Milligan mine. Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable by Centerra, are inherently subject to significant technical, 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 and assumptions that could cause actual results or events to differ materially from current expectations include, CENTERRA GOLD INC. ANNUAL REPORT 20201among other things: (A) strategic, legal, planning and other risks, including: political risks associated with the Company’s operations in the Kyrgyz Republic, Turkey and Canada; the failure of the Kyrgyz Republic 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 expropriation action against the Kumtor mine; actions by the Kyrgyz Republic 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 unjustified 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 risks related to outstanding litigation affecting the Company; the impact of the delay by relevant government agencies to provide required approvals, expertise and permits; potential impact on the Kumtor Project of investigations by Kyrgyz Republic instrumentalities; the impact of constitutional changes in Turkey; the impact of any sanctions imposed by Canada, the United States or other jurisdictions against various Russian and Turkish individuals and entities; 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 not being able to replace mineral reserves; Indigenous claims and consultative issues relating to the Company’s properties which are in proximity to Indigenous 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 and at Kumtor there is reliance on Kyrgyzaltyn, as Centerra sells all of its gold doré produced from the Kumtor Mine to Kyrgyzaltyn pursuant to the Restated Gold and Silver Sale Agreement; 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 stability of the pit walls at our operations, the movement of the Davidov Glacier, waste and ice movement and continued performance of the buttress at the Kumtor mine; the occurrence of further ground movements at the Kumtor mine and mechanical availability; the risk of having sufficient water to continue operations at the Mount Milligan mine and achieve expected mill throughput; changes to, or delays in, transportation routes, including cessation or disruption in rail and shipping networks whether caused by decisions of third party providers or force majeure events (including COVID-19); 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 and operations may be exposed to CENTERRA GOLD INC. ANNUAL REPORT 20202widespread epidemic including, but not limited to, the COVID-19 pandemic; 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; the ability of the Company to address physical and transition risks from climate change and sufficiently manage stakeholder expectations on climate-related issues; 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; risks associated with the conduct of joint ventures/partnerships; and 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. For additional risk factors, please see section titled “Risks Factors” in the Company’s most recently filed Annual Information Form available on SEDAR at www.sedar.com. 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 23, 2021. 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. CENTERRA GOLD INC. ANNUAL REPORT 20203TABLE OF CONTENTS Overview ...................................................................................................................................................... 5 Consolidated Financial and Operational Highlights ............................................................................... 6 Overview of Consolidated Results ............................................................................................................. 7 Outlook ........................................................................................................................................................ 9 Risks That Can Affect Our Business ....................................................................................................... 17 Financial Performance ............................................................................................................................. 19 Balance Sheet Review ............................................................................................................................... 21 Market Conditions .................................................................................................................................... 23 Financial Instruments ............................................................................................................................... 26 Operating Mines and Facilities ................................................................................................................ 27 Pre-Development Projects ........................................................................................................................ 43 Quarterly Results – Previous Eight Quarters ........................................................................................ 44 Related party transactions ....................................................................................................................... 45 Contingencies............................................................................................................................................. 46 Contractual Obligations ........................................................................................................................... 48 Accounting Estimates, Policies and Changes ......................................................................................... 48 Disclosure Controls and Procedures and Internal Control Over Financial Reporting ...................... 49 Non-GAAP Measures ............................................................................................................................... 49 Qualified Person & QA/QC – Production, Mineral Reserves and Mineral Resources ...................... 54 Mineral Reserves and Mineral Resources .............................................................................................. 55 CENTERRA GOLD INC. ANNUAL REPORT 20204Overview 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, the Mount Milligan Gold-Copper Mine located in British Columbia, Canada, and the Öksüt Gold Mine located in Turkey. The Company has one property in Canada in the pre-development stage, the Kemess Underground Gold Property. The Company sold its interest in the Greenstone Gold Mines Partnership, which included its interest in the Hardrock deposit, effective January 19, 2021, and as a result, treated it as available for sale as at December 31, 2020. The Company owns exploration properties in Canada, the United States of America and Turkey and has options to acquire exploration joint venture properties in Canada, Finland, Turkey, and the United States of America. The Company owns various assets within its Molybdenum Business Unit, particularly the Langeloth metallurgical processing facility in Pennsylvania, United States of America and two primary molybdenum mines currently on care and maintenance, Thompson Creek Mine in Idaho, United States of America, and the Endako Mine (75% ownership) in British Columbia, Canada. As of December 31, 2020, Centerra’s significant subsidiaries are as follows: Entity Property - Location Kumtor Gold Company (“KGC”) Kumtor Mine - Kyrgyz Republic Current Property Status Operation Ownership 100% Thompson Creek Metals Company Inc. Mount Milligan Mine - Canada Operation 100% Öksüt Madencilik A.S. (“OMAS”) Öksüt Mine - Turkey Operation 100% Langeloth Metallurgical Company LLC Langeloth - United States Operation 100% AuRico Metals Inc. Greenstone Gold Mines LP (“Greenstone”) Thompson Creek Mining Co. Kemess Underground Project - Canada Pre-development 100% Greenstone Gold Property - Canada Available for sale(1) 50% Thompson Creek Mine - United States Care and Maintenance Care and Maintenance 100% 75% Thompson Creek Metals Company Inc. Endako Mine - Canada (1) Property divestment completed on January 19th, 2021. Centerra’s common shares are listed for trading on the Toronto Stock Exchange under the symbol CG. As of February 23, 2021, there are 295,856,546 common shares issued and outstanding, options to acquire 3,251,500 common shares outstanding under its stock option plan and 936,947 units outstanding under its restricted share unit plan (exercisable on a 1:1 basis for common shares). 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 impacts reported costs of the Company. CENTERRA GOLD INC. ANNUAL REPORT 20205 Consolidated Financial and Operational Highlights Unaudited ($ millions, except as noted) Three months ended December 31 Twelve months ended December 31 Financial Highlights Revenue Production costs Standby costs Depreciation, depletion and amortization Earnings from mine operations Net earnings (loss) Adjusted net earnings(1) Cash provided by operations Adjusted cash provided by operations(1) Cash provided by operations before changes in working capital Free cash flow (deficit)(1) Adjusted free cash flow(1) Sustaining capital expenditures(2) Non-sustaining capital expenditures(2)(3) Capitalized stripping(2) Total assets Long-term debt and lease obligations Cash, cash equivalents and restricted cash(4) Per Share Data Earnings per common share - $ basic (5) Adjusted net earnings per common share - $ basic (1)(5) Per Ounce Data (except as noted) Average gold spot price ($/oz)(6) Average realized gold price ($/oz sold)(1)(6) Average copper spot price ($/lb)(6) Average realized copper price ($/lb sold)(1)(6) Operating Highlights Gold produced (oz) Gold sold (oz) Copper produced (000's lb) Copper sold (000's lb) 2020 2019 % Change 2020 2019 2018 $ 386.8 $ 312.5 24% $ 1,688.7 $ 1,375.3 1,129.3 138.3 - 65.1 183.4 149.4 9.1 59.3 94.7 (7%) (100%) 10% 94% 590.6 6.7 305.3 786.1 676.6 578.4 9.1 10.8 239.6 196.9 450.1 343.3 $ $ 95.2 $ (12.2) 880% $ 408.5 $ (93.5) 107.5 104.5 $ 22.3 369% $ 461.9 $ 181.5 118.1 182.0 182.0 187.8 76.8 76.8 33.7 20.2 55.3 92.5 92.5 93.0 (0.4) (0.4) 16.7 42.3 28.2 97% 97% 102% 100% 100% 102% (52%) 96% 930.0 935.0 852.7 603.8 608.8 97.7 69.8 154.0 334.1 217.5 396.7 221.9 398.5 341.4 34.7 (68.4) 97.3 (64.0) 74.2 148.9 86.8 97.7 76.5 103.9 $ 3,136.0 $ 2,701.7 16% $ 3,136.0 $ 2,701.7 2,826.7 14.3 547.9 88.3 70.7 (84%) 675% 14.3 547.9 88.3 70.7 183.5 179.2 $ $ 0.32 $ (0.04) 900% $ 1.39 $ (0.32) 0.35 $ 0.08 338% $ 1.57 $ 0.62 0.37 0.40 1,876 1,760 3.27 2.79 1,483 1,403 2.68 2.23 27% 25% 22% 25% 1,772 1,670 2.80 2.22 1,393 1,269 1,309 1,175 2.73 2.09 2.96 2.02 172,446 194,507 169,950 169,892 18,079 20,376 18,975 14,301 (11%) 824,059 783,308 729,556 0% 828,816 780,654 709,330 71,146 47,091 13% 33% 82,816 80,477 67,430 44,370 Unit Costs Gold production costs ($/oz sold)(7) Gold - All-in sustaining costs on a by-product basis ($/oz sold)(1)(7) Gold - All-in costs on a by-product basis ($ /oz sold)(1)(7) Gold - All-in sustaining costs on a co-product basis($/oz sold)(1)(7) Copper production costs ($/lb sold)(7) Copper - All-in sustaining costs on a co-product basis – ($/lb)(1)(7) $ $ $ $ $ $ 474 $ 974 $ 455 799 4% $ 22% $ 419 $ 729 $ 465 708 464 754 1,352 $ 1,331 2% $ 1,059 $ 1,126 1,100 1,073 $ 1.24 $ 1.79 $ 829 1.50 2.28 29% $ 799 $ (17%) $ 1.18 $ (21%) $ 1.47 $ 737 1.46 1.85 750 1.26 1.77 2020 vs 2019 %Change 23% (13%) (26%) 27% 75% 537% 154% 178% 136% 114% 1640% 526% 32% (53%) 101% 16% (84%) 675% 534% 153% 27% 28% 3% 6% 5% 6% 16% 19% (10%) 3% (6%) 8% (19%) (21%) (1) Non-GAAP measure. See discussion under “Non-GAAP Measures”. (2) Capital expenditures are presented on a cash basis. (3) Non-sustaining capital expenditures are distinct projects designed to have a significant increase in the net present value of the mine. In the current year, non-sustaining capital expenditures included construction costs related to the Öksüt mine and additional costs related to cut-back 20 at the Kumtor mine. Includes restricted cash of $2.7 million as at December 31, 2020 (December 31, 2019: $28.0 million and December 31, 2018: $27.5 million). (4) (5) As at December 31 2020, the Company had 295,827,906 common shares issued and outstanding. (6) Average for the period as reported by the London Bullion Market Association (US dollar Gold P.M. Fix Rate) and London Metal Exchange (LME). (7) Combines streamed and unstreamed amounts. CENTERRA GOLD INC. ANNUAL REPORT 20206 Overview of Consolidated Results Fourth Quarter 2020 compared to Fourth Quarter 2019 Net earnings of $95.2 million and adjusted net earningsNG of $104.5 million were recognized in the fourth quarter of 2020, compared to a net loss of $12.2 million and adjusted net earningsNG of $22.3 million in the fourth quarter of 2019. The increase in adjusted net earningsNG was due to contributions from the new Öksüt mine in 2020 with 39,380 gold ounces sold in the fourth quarter, 25% higher average realized prices for both gold and copper and lower production and depreciation costs at Kumtor, partially offset by decreased gold ounces sold at Kumtor and higher depreciation costs at the Mount Milligan mine. Cash provided by operations was $182.0 million in the fourth quarter of 2020, compared to cash provided by operations of $92.5 million in the fourth quarter of 2019. The increase in cash provided by operations was due to increased earnings from mine operations including earnings from the Öksüt mine which began production in 2020 and increased cash from working capital due to the processing of previously built-up stockpiles at the Kumtor mine. Free cash flowNG of $76.8 million was recognized in the fourth quarter of 2020 compared to a free cash flow deficitNG of $0.4 million in the fourth quarter of 2019. The increase in free cash flowNG was due to higher cash provided by operations and lower non-sustaining capital expenditures as construction of the Öksüt mine was completed, partially offset by increased capitalized stripping at Kumtor and greater sustaining capital at the Mount Milligan and Kumtor mines. Year ended December 31, 2020 compared to 2019 Net earnings were $408.5 million and adjusted net earningsNG were $461.9 million in 2020, compared to a net loss of $93.5 million and adjusted net earningsNG of $181.5 million in 2019. The increase in adjusted net earningsNG was due to contributions from the new Öksüt mine, 28% higher realized gold prices, increased copper pounds sold at Mount Milligan and lower production costs at both Kumtor and Mount Milligan. This was partially offset by lower gold ounces sold and an increase in depreciation costs at the Kumtor and Mount Milligan mines. Significant adjusting items to net earnings in 2020 include: • $53.4 million asset retirement obligation (“ARO”) expense at the non-operating sites due to a significant decrease in the risk-free rate assumption, and Significant adjusting items to the net loss in 2019 include: • $230.5 million impairment charge on the assets at the Mount Milligan mine, • $34.5 million ARO expense at the non-operating sites due to a significant change in the risk-free rate assumption, and • $10.0 million charge relating to the completion of the Strategic Agreement with the Kyrgyz Government. Cash provided by operations of $930.0 million and adjusted cash provided by operationsNG of $935.0 million were recognized in 2020, compared to cash provided by operations of $334.1 million and adjusted cash provided by operationsNG of $396.7 million in 2019. The increase in cash provided by operations was due to increased earnings from mine operations in 2020 including contributions from the Öksüt mine, increased cash from working capital from processing of stockpiles at Kumtor and a $22.8 million tax refund CENTERRA GOLD INC. ANNUAL REPORT 20207 collected by the Molybdenum business unit, partially offset by a greater Kyrgyz Republic settlement payment. Free cash flowNG of $603.8 million and adjusted free cash flowNG of $608.8 million was recognized in 2020 compared to free cash flowNG of $34.7 million and adjusted free cash flowNG of $97.3 million in 2019. The increase in adjusted free cash flowNG was due to higher cash provided by operations and lower non- sustaining capital expenditures as construction at the Öksüt mine was completed, partially offset by an increase in capitalized stripping at the Kumtor mine. Safety and Environment During the fourth quarter of 2020, the Öksüt mine achieved four million work hours without a lost time injury. There were nine reportable injuries company-wide in the fourth quarter of 2020, including one lost time injury, six medical aid injuries and two restricted work injuries. During 2020, Centerra incurred thirty-seven reportable injuries, including one fatal injury, ten lost time injuries, eighteen medical aid injuries and eight restricted work injuries. Centerra has implemented a number of proactive measures to prevent infection and reduce the spread of COVID-19 for the health and safety of its employees, contractors, communities and other stakeholders. There were no reportable incidents to the environment in the fourth quarter of 2020. For the year-ended December 31, 2020, there was one reportable incident to the environment as reported in the third quarter of 2020. CENTERRA GOLD INC. ANNUAL REPORT 20208 Outlook 2021 - 2023 Outlook See “Material Assumptions” for material assumptions or factors used to forecast production and costs. The Company’s three-year outlook is set out in the following table: Gold Production Kumtor Mount Milligan(1) Öksüt Consolidated Gold Production Copper Production(1) Gold production costs(3) All-in sustaining costs on a by-product basis(2),(3) All-in sustaining costs on a by-product basis including revenue-based taxes(2),(3),(4) All-in costs on a by-product basis(2),(3) Capital Expenditures Sustaining capital expenditures Non-sustaining capital expenditures(5) Capitalized stripping costs(6) Total Capital Expenditures Outlook Assumptions(7) Units (Koz) (Koz) (Mlb) ($/oz) ($M) ($M) 2020 2021 2022 2023 Actual Guidance Outlook Outlook 556 162 106 824 83 419 729 470 - 510 180 - 200 90 - 110 540 - 590 170 - 190 210 - 240 550 - 600 180 - 210 200 - 220 740 - 820 920 - 1,020 930 - 1,030 70 - 80 90 - 100 70 - 80 475 - 525 850 - 900 390 - 440 630 - 680 385 - 435 700 - 750 897 1,010 - 1,065 775 - 835 855 - 905 1,059 1,175 - 1,230 875 - 935 925 - 975 98 70 194 362 130 - 150 70 - 85 230 - 245 130 - 145 35 - 50 155 - 175 100 - 115 10 - 25 270 - 290 430 - 480 320 - 370 380 - 430 Gold Price Copper Price Canadian Dollar 1,750 3.40 1.25 (1) Mount Milligan 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, from the Mount Milligan mine. Under the Mount Milligan Streaming Arrangement, Royal Gold will pay $435 per ($/oz) ($/lb) (CAD/USD) 1,750 3.36 1.31 1,750 3.40 1.27 ounce of gold delivered and 15% of the spot price per metric tonne of copper delivered. Assuming a market gold price of $1,750 per ounce and a market copper price of $3.36 per pound, Mount Milligan’s average realized gold and copper price would be $1,290 per ounce and $2.82 per pound, respectively. (2) Non-GAAP measure and is discussed under “Non-GAAP Measures”. (3) Figures are for consolidated Centerra Gold. (4) Includes only revenue-based taxes at Kumtor. (5) Non-sustaining capital expenditures are distinct projects designed to have a significant increase the net present value of the mine. (6) Presented capitalized stripping includes a cash and non-cash component. (7) Copper price for 2021 and CAD/USD exchange rates for 2021 and 2022, giving effect to hedges in place as at December 31, 2020. CENTERRA GOLD INC. ANNUAL REPORT 20209 Kumtor Centerra expects an increasing gold production profile at Kumtor over the 2021-2023 period. While the mid-point of gold production in 2021 is expected to be approximately 12% lower than 2020 gold production at the mine, Centerra expects 2022-2023 gold production levels to return to or exceed 2020 levels. Expansion of the mine fleet capacity is expected to allow Kumtor to exceed 2019 mining levels. 2021 capital expenditures are forecast to be less than what is reported in the 2021 Kumtor Technical Report due to eight haul truck purchases being deferred to 2022. Mill improvement projects, including a tower mill project for regrinding of flotation tails is expected to allow Kumtor to achieve higher targeted gold production levels. Gold production and all-in sustaining costs on a by-product basisNG over the three-year period are expected to reflect a growing gold production profile with unit costs per ounce fluctuating primarily due to changes in gold production. Mount Milligan Centerra expects strong gold and copper production at Mount Milligan over the 2021-2023 period. The Mount Milligan mill is expected to maintain a stable average daily throughput of approximately 60,000 tonnes per day, the maximum permitted rate. Installation of staged flotation reactors are expected to contribute to achieving targeted gold and copper production levels in 2022 and beyond. All-in sustaining costs on a by-product basisNG is expected to be at or below 2020 levels over the three-year period. Centerra expects to have adequate water inventory levels for targeted throughput and is working with government regulators, its First Nations partners, and other stakeholders to maintain access to its existing water resources and secure a stable long-term water solution. The long-term water solution is expected to require additional infrastructure, the capital for which is not included in the capital expenditure guidance. Mount Milligan’s current water level is in excess of 6 million cubic metres. Öksüt Gold production at Öksüt in 2021 is expected to be approximately the same as 2020 levels, whereas in 2022 and 2023 gold production is expected to benefit from mining and processing higher grade ore from the Güneytepe pit subject to receipt of all required permits. Construction of Phase 2 of the heap leach pad is expected to be completed by the end of 2021, and with the expanded heap leach capacity, it is expected to be sufficient to achieve targeted gold production in 2022 and 2023. As the Güneytepe pit ore becomes available, the average grade of ore stacked to the heap leach pad is estimated to increase to approximately 2.22 g/t gold (Au) during 2022 and 2023 compared to the estimated 1.27 g/t Au in 2021 and the actual stacked grade of 1.40 g/t Au in 2020. Gold production and all-in sustaining costsNG profiles over the three- year period are expected to reflect a growing gold production profile with unit costs per ounce reducing with the increases in gold production. CENTERRA GOLD INC. ANNUAL REPORT 202010 2021 Guidance 2021 Gold Production Guidance Centerra’s 2021 gold production is expected to be between 740,000 to 820,000 ounces. Kumtor Kumtor gold production in 2021 is expected to be in the range of 470,000 to 510,000 ounces and reflects lower average grades in the ore stockpiles available for processing compared to 2020. Gold production is expected to rise steadily throughout the year with the first quarter of 2021 contributing approximately 15% of annual gold production rising to approximately 35% in the fourth quarter of 2021. Total tonnes mined are expected to increase to a rate of approximately 550,000 tonnes per day from the average mining rate of 280,000 tonnes per day in 2020 due to the addition of new mining equipment, a resumption of waste rock dumping at the Lysii waste rock dump and fewer expected restrictions due to COVID-19. Mine operations are expected to be focused mainly on waste stripping from cut-back 20 during the first half of 2021, accessing greater amounts of ore in the second half of the year and accessing the high-grade ore in the fourth quarter. The Kumtor mill is scheduling a 6-day mill maintenance shutdown in the third quarter of the year to complete a replacement of the regrind mill motor and carry out SAG mill and regrind mill relines and other maintenance work. Mount Milligan At Mount Milligan, the Company expects to achieve an average daily throughput of approximately 60,000 tonnes per calendar day. Mill maintenance downtimes are scheduled for the first quarter (5 days) and third quarter (4 days) to complete SAG Mill reline replacements and other maintenance work. Mount Milligan’s total (streamed and unstreamed) gold production is forecast to be in the range of 180,000 to 200,000 ounces. Gold and copper production is expected to be slightly back-end weighted in 2021 with the first half of the year representing 45% or more of the 2021 annual metal production total while the second half of the year will represent up to 55% of the 2021 annual metal production total. The Company plans to continue to work on continuous improvement projects in 2021, including secondary crusher improvements and the installation of staged flotation reactors which is expected to improve metal recoveries in future years. Öksüt At Öksüt, 2021 will be the first full year of operations and gold production is expected to be in the range of 90,000 to 110,000 ounces. Gold production is expected to be back-end weighted in 2021 with the first half of the year representing 35% or more of the 2021 annual gold production total while the second half of the year will represent up to 65% of the 2021 annual gold production total. Mining will continue at the Keltepe pit in 2021 while the Güneytepe pit is expected to be developed from early 2022 assuming receipt of the forestry permit from the local authorities. The average grade of ore stacked to the heap leach pad in 2021 is expected to be approximately 1.27 g/t Au, which is lower than the average grade of ore stacked in 2020 of approximately 1.40 g/t Au. In 2021, Öksüt is expected to achieve a project-to-date accumulated heap leach recovery of 75%. The Company continues with construction of Phase 2 of the heap leach facility, where excavation has been completed and the Company is currently carrying out levelling activities with clay placement expected to start in May 2021. CENTERRA GOLD INC. ANNUAL REPORT 202011 2021 Copper Production Guidance Centerra expects total (streamed and unstreamed) copper production from the Mount Milligan mine to be in the range of 70 to 80 million pounds. Centerra’s 2021 production is currently forecast as follows: Gold Unstreamed Gold Production Streamed Gold Production(1) Total Gold Production(2) Copper Unstreamed Copper Production Streamed Copper Production(1) Total Copper Production(3) Units Kumtor Mount Milligan(1) Öksüt Centerra Consolidated (Koz) (Koz) 470-510 117-130 90-110 677-750 - 63-70 - 63-70 (Koz) 470-510 180-200 90-110 740-820 (Mlb) (Mlb) (Mlb) - - - 57-65 13-15 70-80 - - - 57-65 13-15 70-80 (1) The Mount Milligan Streaming Arrangement entitles Royal Gold to 35% and 18.75% of gold and copper sales, respectively, from the Mount Milligan mine. Under the Mount Milligan Streaming Arrangement, Royal Gold will pay $435 per ounce of gold delivered and 15% of the spot price per metric tonne of copper delivered. (2) Gold production assumes recoveries of 81.9% at Kumtor, 63.9% at Mount Milligan and approximately 75% at Öksüt. (3) Copper production assumes 78.8% recovery for copper at Mount Milligan. CENTERRA GOLD INC. ANNUAL REPORT 202012 2021 Sales, All-in Sustaining and All-in Unit Costs GuidanceNG Centerra’s 2021 sales, all-in sustaining costs per ounceNG calculated on a by-product and co-product basis, and all-in costs per ounceNG calculated on a by-product basis are forecasted as follows: Ounces of gold sold (Koz) 470 - 510 180 - 200 90 - 110 Units Kumtor Mount Milligan Öksüt Centerra Consolidated(2) 740 - 820 Gold production costs All-in sustaining costs on a by-product basis(1) Revenue-based taxes ($/oz) 400 - 450 650 -700 500 - 550 475 - 525 ($/oz) 950 - 1,000 530 - 580 730 - 780 850 - 900 ($/oz) 250 - 255 - - 160 - 165 All-in sustaining costs on a by-product basis, including revenue-based taxes (1), (2), (3) All-in costs on a by-product basis(1),(2),(3) Gold - All-in sustaining costs on a co-product basis(1),(2) Copper production costs Copper - All-in sustaining costs on a co-product basis (1),(2) ($/oz) 1,200 - 1,255 530 - 580 730 - 780 1,010 - 1,065 ($/oz) 1,365 - 1,420 590 - 640 790 - 840 1,175 - 1,230 ($/oz) 950 - 1,000 910 - 1,025 730 - 780 950 - 1,055 ($/lb) ($/lb) - - 1.30-1.45 1.75-1.95 - - 1.30-1.45 1.75-1.95 (1) All-in sustaining costs and all-in costs on a by-product and co-product basis are non-GAAP measures and are discussed under “Non-GAAP Measures”. Gold production cost per ounce is different from the all-in sustaining costs on a by-product basis measure and is considered the nearest GAAP measure. (2) Mount Milligan 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 including revenue-based taxes. Production for copper and gold reflects estimated metallurgical losses resulting from handling of the concentrate and metal deductions, subject to metal content, levied by smelters. (3) Includes revenue-based taxes at Kumtor. Gold production costs are expected to increase to $475 to $525 per ounce range up from 2020 consolidated gold production costs of $419 per ounce due to higher operating costs at Kumtor and Öksüt, lower gold production at Kumtor and lower copper production at Mount Milligan. Consolidated all-in sustaining costs on a by-product basisNG are expected to be in the range of $850 to $900 per ounce. Kumtor’s all-in sustaining costs on a by-product basisNG are expected to increase to $950 to $1,000 per ounce range driven by lower gold production and higher capitalized stripping and mining costs reflecting the expansion of mining activities. Mount Milligan’s all-in sustaining costs on a by-product basisNG are expected to be in line with 2020 levels as higher production costs attributable to increased mill throughput are offset by higher gold production and a higher credit for copper sales. Öksüt’s all-in sustaining costs on a by-product basisNG are expected to increase to a range of $730 to $780 per ounce, reflecting lower ore grades, higher sustaining capital expenditures and capitalized stripping costs compared to 2020. Consolidated all-in costs on a by-product basisNG are expected to be in the range of $1,175 to $1,230 per ounce. Kumtor’s all-in costs on a by-product basisNG are expected to be in the range of $1,365 to $1,420 per ounce due to lower gold production, higher all-in sustaining costs, increases in non-sustaining capital and site exploration expenditures planned for 2021. Mount Milligan’s all-in costs on a by-product basisNG of $590 to $640 per ounce are expected to be in line with 2020. Öksüt’s all-in costs on a by-product basisNG are expected to be between $790 to $840 per ounce reflecting the higher all-in sustaining costs offset by lower non-sustaining capital expenditures planned for 2021. CENTERRA GOLD INC. ANNUAL REPORT 202013 Consolidated cash flow provided by operations and consolidated free cash flow NG are expected to be in the range of $750 to $800 million and the range of $350 to $400 million (assuming US$1,750 gold price), respectively. 2021 Capital Expenditures Projected capital expenditures is currently forecast as follows: Projects ($ millions) Kumtor mine(2) Mount Milligan mine Öksüt mine(2) Other(3) Consolidated Total Capitalized Stripping 220 - 230 - 10 - 15 - 230-245 Capital Sustaining Non-sustaining Capital(1) 60 - 70 5 - 10 55 - 65 65 - 70 5 - 10 5 130-150 5 70-85 Total 335 - 365 70 - 80 15 - 25 10 430-480 1) Non-sustaining capital expenditures are distinct projects designed to increase the net present value of the mine. 2) Capitalized stripping costs include cash components of $185 to $205 million at Kumtor mine, and $10 to $15 million at Öksüt mine. 3) Non-sustaining capital relates to the completion of construction at Öksüt and development activities at Kemess Underground Project. Kumtor Sustaining capital expenditure is projected at $55 to $65 million in 2021 and relates primarily to major overhauls, purchase of mining equipment, replacement of regrind mill motor, and dewatering projects. Non-sustaining capital investment at Kumtor for 2021 is forecast at $60 to $70 million which includes, expansion of the leach circuit, the tower mill project for regrinding of flotation tails to improve future recoveries, and additional capital expenditures for mine life extension related to development of the cut- back 21 and Hockey Stick zones, including mine fleet expansion and raising of the tailings dam. The cash component of capitalized stripping costs related to the development of the open pit is expected to be $185 to $205 million of the $220 to $230 million range for total capitalized stripping costs. Mount Milligan Sustaining capital expenditure in 2021 is forecast to be $65 to $70 million and relate primarily to tailings storage facility costs, major overhauls and water management costs. Non-sustaining capital investment at Mount Milligan for 2021 is forecast at $5 to $10 million for the installation of staged flotation reactors to improve future metal recoveries. Öksüt In 2021 sustaining capital spending is estimated to be $5 to $10 million and relates primarily to the costs for construction of the Phase 2 heap leach expansion, and electric equipment costs. The cash component of capitalized stripping costs related to the development of the open pit is expected to be $10 to $15 million representing 100% of total capitalized stripping costs. CENTERRA GOLD INC. ANNUAL REPORT 202014 Kemess Underground Project In 2021, total spending at the Kemess Underground Project is estimated at approximately $13 to $15 million, including $11 million for care and maintenance activities. Molybdenum Business Unit In 2021, the Langeloth metallurgical roasting facility is expected to generate sufficient operating margins to cover the care and maintenance costs of the Endako mine and the Thompson Creek mine. Care and maintenance expenses related to the Molybdenum unit are currently estimated to be between $14 and $15 million for 2021 and the Company’s assumed molybdenum price is $9.00 per pound. 2021 Exploration Expenditures Planned exploration expenditures for 2021 are expected to be $50 million, including approximately $34 million for brownfields exploration (Kumtor - $21 million, Mount Milligan - $6 million, Öksüt - $3.5 million and Kemess - $3 million) and the balance for greenfields and generative exploration programs. 2021 Corporate Administration Corporate and administration expense for 2021 is forecast to be between $35 million and $40 million (including $8 million to $10 million of stock-based compensation expense). 2021 Depreciation, Depletion and Amortization Consolidated depreciation, depletion, and amortization (DD&A) expense included in costs of sales expense for 2021 is forecasted to be in the range of $240 to $270 million, including Kumtor’s DD&A expense of $150 to $170 million, Mount Milligan’s DD&A expense of $55 million to $65 million, and Öksüt’s DD&A expense of $25 to $35 million. 2021 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% of gross revenue payable to the Issyk-Kul Development Fund. The Mount Milligan operations are subject to corporate income tax and British Columbia mineral tax. The British Columbia mineral tax is forecast to be between $7 and $9 million. At Öksüt, income tax is expected to be between $1 to $2 million. At the Canadian parent company level, corporate income tax for 2021 is forecast to be nil. CENTERRA GOLD INC. ANNUAL REPORT 202015 2021 Sensitivities Centerra’s revenues, earnings, and cash flows for 2021 are sensitive to changes in certain key inputs or currencies. The Company has estimated the impact of any such changes on revenues, net earnings, and cash flows. Impact on ($ millions) Production Costs & Taxes 5.5 - 6.0 0.1 - 0.5 Capital Costs - - Revenues Cash flows Net Earnings (after tax) Impact on ($ per ounce sold) AISC(2)(3) on by-product basis 34.0 - 37.5 28.5 - 31.5 28.5 - 31.5 2.5 - 3.0 3.0 - 5.5 3.0 - 5.0 3.0 - 5.0 6.0 - 7.0 5.5- 7.0 11.5 - 14.0 1.0 - 2.0 - 9.5 - 11.0 1.5 - 2.0 3.0 - 4.0 0.5 - 1.0 - - - - 17.0 - 21.0 5.5 - 7.0 23.0 - 25.5 1.0 - 2.0 1.0 - 2.0 2.0 - 2.5 11.0 - 13.0 9.5 - 11.0 14.5 - 16.0 3.5 - 5.0 3.0 - 4.0 5.5 - 6.0 Gold price Copper price(4) Diesel fuel(3) Kyrgyz som(1) Canadian dollar(1)(3) Turkish lira(1) $50/oz 10% 10% 1 som 10 cents 1 lira (1) 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. (2) Non-GAAP measure. See discussion under “Non-GAAP Measures”. (3) Includes the effect of hedging programs. (4) 2021 copper sales are hedged up to 85%. Production, cost and capital forecasts for 2021 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 “2021 Material Assumptions” and “Caution Regarding Forward- Looking Information” in this document and under the heading “Risks That Can Affect Our Business” in this document and the Company’s most recently filed Annual Information Form. 2021 Material Assumptions Material assumptions or factors used to forecast production and costs for 2021, after giving effect to the hedges in place as at December 31, 2020, include the following: • • • • a market gold price of $1,750 per ounce and an average realized gold price at Mount Milligan of $1,290 per ounce after reflecting the streaming arrangement with Royal Gold (35% of Mount Milligan’s gold at $435 per ounce). a market copper price of $3.36 per pound and an average realized copper price at Mount Milligan of $2.82 per pound after reflecting the streaming arrangement with Royal Gold (18.75% of Mount Milligan’s copper at 15% of the spot price per metric tonne). a molybdenum price of $9.00 per pound. exchange rates: o $1USD:$1.31 Canadian dollar, o $1USD:80.00 Kyrgyz som, o $1USD:7.50 Turkish lira. • diesel fuel price assumption: o $0.44/litre at Kumtor, o $0.69/litre (CAD$0.90/litre) at Mount Milligan. CENTERRA GOLD INC. ANNUAL REPORT 202016 Kumtor Fuel The assumed diesel price of $0.44/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 assumes a price of oil of approximately $53 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. Mount Milligan Streaming Arrangement 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 an arrangement with RGLD Gold AG and Royal Gold, Inc. (together, “Royal Gold”) 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 (the “Mount Milligan Streaming Arrangement”). To satisfy its obligations under the Mount Milligan Streaming Arrangement the Company purchases refined gold and copper warrants and arranges for delivery to Royal Gold. The difference between the cost of the purchases of refined gold and copper warrants, and the corresponding amounts payable to the Company under the Mount Milligan Streaming Arrangement is recorded as a reduction of revenue and not a cost of operating the mine. Other Material Assumptions Other material assumptions used in forecasting production and costs for 2021 can be found under the heading “Caution Regarding Forward-Looking Information” in this document. Production, cost, and capital forecasts for 2021 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 under the heading “Risks That Can Affect Our Business” in the Company’s most recent Annual Information Form. Risks That Can Affect Our Business Overview The Company is subject to risks that can have a material effect on the profitability, future cash flow, financial condition of the Company and its stated mineral reserves. Some of these risks relate to the mining industry in general, and others apply to specific properties, operations or planned operations. The Company has implemented an enterprise risk management (“ERM”) program which applies to all of its operations and corporate offices. The program is based on leading international risk management standards and industry best practice. It employs both a bottom-up and top-down approach to identify and address risks from all sources that threaten the achievement of the Company’s objectives. Centerra’s Vice President, Risk & Insurance is responsible for providing the requisite tools, guidance, and leadership of the ERM program. Each operating site and project are responsible for identifying, assessing, mitigating, and monitoring risk. Efforts are coordinated by appointed “Risk Champions” who facilitate the process and provide regular reporting to Centerra’s Vice President, Risk & Insurance. The risk management program at Centerra considers the full life of mine cycle from exploration through to closure. All aspects of the operation and the Company’s stakeholders are considered when identifying risks. As such, the Company’s risk program encompasses a broad range of risks including technical, financial, commercial, social, reputational, environmental, health and safety, political and human resources related risks. CENTERRA GOLD INC. ANNUAL REPORT 202017 Board and Committee Oversight The Risk Committee of the Board of Directors has oversight responsibilities for the policies, processes and systems for the identification, assessment, and management of the Company’s principal strategic, financial, and operational risks. To ensure consistent communication of risks amongst Board committees, the members of the Risk Committee are comprised of at least one member from each of the other standing committees of the Board. Each of the other Board committees is responsible for overseeing risks related to their area of responsibility and reviewing the policies, standards and actions undertaken to mitigate such risks. Management Oversight The Company’s executive team meets regularly with its Vice President, Risk and Insurance to review the risks facing the organization and to discuss the implementation and effectiveness of mitigation actions. Principal risks The following section describes the risks that are most material to the Company’s business. This is not a complete list of the potential risks the Company faces; there may be others the Company is not aware of, or risks that the Company feels are not material today that could become material in the future. For a more comprehensive discussion about the Company’s risks, see the most recently filed Annual Information Form. Strategic, Legal and Planning Risks Strategic, legal and planning risks include political risks associated with the Company’s operations in the Kyrgyz Republic, Turkey, United States and Canada; resource nationalism; reliance on cash flow from its subsidiaries; the impact of changes in, or more aggressive enforcement of laws, regulations and government practices including with respect to the environment; impact of community activism on laws and regulations; increases in contributory demands or business interruption; delays or refusals to grant required permits and licenses; status of the Company’s relationships with local communities; Indigenous claims and consultation issues relating to the Company’s properties which are in proximity to Indigenous communities; the risks related to outstanding litigation affecting the Company; the impact of any sanctions imposed by Canada, the United States or other jurisdictions against various Russian and Turkish individuals and entities; 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; conflicts of interest among its board members; risks related to anti-corruption legislation; Centerra’s future exploration and development activities not being successful; Centerra not being able to replace mineral reserves and resources; risks related to mineral reserves and resources being imprecise; production and cost estimates may be inaccurate; reputational risks, particularly in light of the increase in social media; inability to identify new opportunities and to grow the business; large fluctuations in the Company’s trading price that are beyond the Company’s control or ability to predict and mitigate; potential risks related to kidnapping or acts of terrorism. Financial Risks The Company is subject to risks related to its financial position and liquidity, 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 and at Kumtor there is reliance on Kyrgyzaltyn, as Centerra sells all of its gold doré produced from the Kumtor Mine to Kyrgyzaltyn pursuant to the Restated Gold and Silver Sale Agreement; use of commodity derivatives; sensitivity to fuel price volatility; the impact of currency CENTERRA GOLD INC. ANNUAL REPORT 202018 fluctuations; global financial conditions; access to future financing including the impact of environmental, social and corporate governance (“ESG”) practices and reporting on the Company’s ability to obtain future financing or accessing capital; the impact of restrictive covenants in the Company’s credit facility which may, among other things, restrict the Company from pursuing certain business activities; 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, which depends on the cash flow of its subsidiaries; ability to obtain adequate insurance coverage; and changes to taxation laws in the jurisdictions where the Company operates. Operational Risks Mining and metals processing involve significant production and operational risks. Some of these risks are outside of the Company’s control or ability to predict and mitigate. Risks include but are not limited to the following: unanticipated ground and water conditions; shortages of water for processing activities; adjacent or adverse land or mineral ownership that results in constraints on current or future mine operations; geological risks, including earthquakes and other natural disasters; metallurgical and other processing risks; 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; changes to, or delays in, transportation routes, including cessation or disruption in rail and shipping networks whether caused by decisions of third party providers or force majeure events (including COVID-19); interruption of energy supply; labour disturbances; the availability of drilling and related equipment in the area where mining operations will be conducted; the failure of equipment or processes to operate in accordance with specifications or expectations; tailings management facilities; exposure of workforce to widespread pandemic (including COVID-19); cyanide use; regulations regarding greenhouse gas emissions and climate change; development and construction costs being over budget; predicting decommissioning and reclamation costs; attracting and retaining qualified personnel; long lead times required for equipment and supplies given the remote location of some of the Company’s operating properties, and the potential that COVID-19 could disrupt such supply chains; reliance on a limited number of suppliers for certain consumables, equipment and components; and security of critical operating systems. Financial Performance Fourth Quarter 2020 compared to Fourth Quarter 2019 Revenue of $387 million was recognized in the fourth quarter of 2020 compared to $313 million in the fourth quarter of 2019. The increase in revenue was due to higher average realized gold and copper prices, increased copper pounds sold at the Mount Milligan mine and 39,380 gold ounces sold at Öksüt in 2020, partially offset by fewer gold ounces sold at the Kumtor mine. Gold production was 172,446 ounces in the fourth quarter of 2020 compared to 194,507 ounces in the fourth quarter of 2019. Gold production in the fourth quarter of 2020 was 90,402 ounces at Kumtor, 42,664 ounces at Mount Milligan and 39,380 ounces at Öksüt, which commenced commercial production on May 31, 2020. At the Kumtor and Mount Milligan mines, the 39% and 7% decreases, respectively, were due to lower grades and recoveries at both sites due to mine plan sequencing. CENTERRA GOLD INC. ANNUAL REPORT 202019 Copper production at the Mount Milligan mine was 20.4 million pounds in the fourth quarter of 2020 compared to 18.1 million pounds in the fourth quarter of 2019. The increase in copper production was due to higher throughput as the process plant achieved an average throughput of 59,762 tonnes per calendar day in the quarter. Gold production costs were $474 per ounce in the fourth quarter of 2020 compared to $455 per ounce in the fourth quarter of 2019. The increase was primarily due to higher gold production costs per ounce at the Kumtor mine, partially offset by the low gold production cost of $350 per ounce at Öksüt in the fourth quarter of 2020. All-in sustaining costs on a by-product basisNG were $974 per ounce in the fourth quarter of 2020 compared to $799 per ounce in the fourth quarter of 2019. The increase was due to higher capitalized stripping costs at Kumtor, higher sustaining capital at both Kumtor and Mount Milligan and lower ounces sold at Kumtor, partially offset by higher copper credits. Consolidated gold ounces sold in the fourth quarter of 2020 was consistent with the fourth quarter of 2019 as the decrease in ounces sold at Kumtor was offset by the addition of the Öksüt mine which recorded all-in sustaining costs on a by-product basisNG of $586 per ounce. All-in costs on a by-product basisNG were $1,352 per ounce in the fourth quarter of 2020 compared to $1,331 per ounce in the fourth quarter of 2019. The increase was due to higher all-in sustaining costs on a by- product basisNG, partially offset by lower non-sustaining expenditures as construction of the Öksüt mine was completed. Exploration expenditures of $13 million were recognized in the fourth quarter of 2020 compared to $9.1 million in the fourth quarter of 2019. The increase was primarily due to additional brownfield exploration activity carried out at the Kumtor and Mount Milligan mines. Financing costs of $5.5 million were recognized in the fourth quarter of 2020 compared to $5.3 million in the fourth quarter of 2019. The increase was primarily due to costs associated with the new corporate revolving credit facility. Corporate administration costs of $17.4 million were recognized in the fourth quarter of 2020 compared to $9.2 million in the fourth quarter of 2019. The increase was primarily due to an increase in share-based compensation, positively impacted by the performance of the Company’s share price relative to the S&P/TSX Global Gold CAD$ Index and an increase in advisory fees associated with the disposal of the Company’s interest in the Greenstone Gold Mines Partnership. Year ended December 31, 2020 compared to 2019 Revenue of $1,689 million was recognized in 2020 compared to $1,375 million in 2019. The increase was primarily due to a 28% higher average realized gold price and 19% more copper pounds sold. Gold production was 824,059 ounces in 2020 compared to 783,308 ounces in 2019. Gold production in 2020 was 556,136 ounces at Kumtor, 161,855 ounces at Mount Milligan and 106,068 ounces at Öksüt. At Kumtor, the 7% decrease in gold production was due to processing stockpiled ore with lower grades and recoveries in the fourth quarter of 2020. At Mount Milligan, the 12% decrease in gold production was due to lower grades and lower recoveries, partially offset by higher throughput. Öksüt commenced production in 2020, achieving commercial production on May 31, 2020. CENTERRA GOLD INC. ANNUAL REPORT 202020 Copper production at Mount Milligan was 82.8 million pounds in 2020 compared to 71.1 million in 2019. The increase was due to higher throughput, partially offset by lower recoveries. Gold production costs were $419 per ounce in 2020 compared to $465 per ounce in 2019. The decrease in 2020 was due to an increase in ounces sold. The increase in consolidated gold ounces sold was due to the ounces sold at Öksüt which recorded production costs of $356 per ounce sold. All-in sustaining costs on a by-product basisNG were $729 per ounce in 2020 compared to $708 per ounce in 2019. The increase was due to higher capitalized stripping costs at the Kumtor mine and higher sustaining capital at both the Kumtor and Mount Milligan mines, partially offset by higher copper credits and greater gold ounces sold as a result of the addition of the Öksüt mine. All-in sustaining costs on a by-product basisNG at Öksüt were $494. All-in costs on a by-product basisNG were $1,059 per ounce in 2020 compared to $1,126 per ounce in 2019. The decrease was due to lower non-sustaining capital expenditures as construction of the Öksüt mine was completed, partially offset by higher all-in sustaining costs on a by-product basisNG. Exploration expenditures of $39.2 million were recognized in 2020 compared to $28 million in 2019. The increase was due to additional brownfield exploration activity at the Kumtor and Mount Milligan mines. Financing costs of $14.9 million were recognized in 2020 compared to $16.3 million in 2019. The spending in 2020 included $2.4 million of costs associated with the new corporate revolving credit facility. Corporate administration costs were $45.7 million in 2020, consistent with the prior year of $45.3 million. Balance Sheet Review $ millions Consolidated: Cash Inventories Assets-held-for-sale Other current assets Property, plant and equipment Other non-current assets Total Assets Other current liabilities Non-current debt Provision for reclamation Other non-current liabilities Total Liabilities Total Equity Total Liabilities and Equity As at December 31, 2020 December 31, 2019 %Change 545.2 580.6 140.0 107.0 1,686.1 77.1 3,136.0 256.7 - 352.2 61.1 670.0 2,466.0 3,136.0 42.7 774.1 - 115.9 1,669.5 99.5 2,701.7 244.6 70.0 265.2 56.1 635.9 2,065.8 2,701.7 1177% (25%) 100% (8%) 1% (23%) 16% 5% (100%) 33% 9% 5% 19% 16% CENTERRA GOLD INC. ANNUAL REPORT 202021 Cash as at December 31, 2020 was $545.2 million compared to $42.7 million as at December 31, 2019. The increase was due to free cash flowNG of $603.8 million in 2020 and the release of a $25 million cash deposit previously restricted by the Öksüt project financing facility. This was partially offset by the repayment in full of the Öksüt project financing facility of $77.4 million. Total inventory as at December 31, 2020 was $580.6 million compared to $774.1 million as at December 31, 2019. Total inventory includes stockpiles of ore, gold in-circuit, gold doré, copper and gold concentrate and molybdenum inventory (collectively “Product Inventory”) of $373.1 million and supplies inventory of $207.5 million, compared to $564.7 million and $209.4 million, respectively, as at December 31, 2019. The decrease in Product Inventory was primarily attributable to Kumtor’s 2020 gold production coming from ore stockpiles. As at December 31, 2020, the Product Inventory balance consisted of 487,268 contained gold ounces on surface at Kumtor, of which roughly 60% is expected to be processed in 2021, 80,552 contained gold ounces and 19.5 million contained pounds of copper in stockpiles at Mount Milligan, of which roughly 15% is expected to be processed in 2021 and 27,065 contained gold ounces on surface, stacked and in-circuit at the Öksüt mine, which is expected to be processed in 2021. The book value of property, plant and equipment as at December 31, 2020 was $1.69 billion compared to $1.67 billion as at December 31, 2019. The increase in 2020 was related to increased capitalized stripping at Kumtor, partially offset by the reclassification of the Greenstone Gold Mines Partnership as assets held for sale. Asset retirement obligations as at December 31, 2020 were $352.2 million compared to $265.2 million as at December 31, 2019. The increase was primarily due to a reduction in the risk-free interest rate used to calculate the present value of reclamation costs at the Company’s various sites and the disturbance to date at the new Öksüt mine for its reclamation obligation. In 1998, a reclamation trust fund was established to cover the future costs of reclamation at the Kumtor mine. As at December 31, 2020, this fund had a balance of $47 million and is shown as long-term asset on the balance sheet. On December 31, 2020, the Company entered into a new $400 million four-year revolving credit facility with a $200 million accordion feature (the “2020 Corporate Facility”). The interest rate payable on any outstanding borrowings under the 2020 Corporate Facility is LIBOR plus 2.25% to 3.25% and the maturity date of the facility is December 31, 2024. The 2020 Corporate Facility replaced the Company’s previous $500 million revolving credit facility. Total bank debt as at December 31, 2020 was nil compared to $70.0 million as at December 31, 2019. The decrease was due to the repayment and subsequent cancellation of the Company’s Öksüt project financing facility during 2020, which resulted in the release of $25 million in restricted cash. The Company’s corporate revolving credit facilities were undrawn as at December 31, 2020 and December 31, 2019. The Company’s total liquidity position is $945.2 million, representing a cash balance of $545.2 million and $400 million available as part of the 2020 Corporate Facility. The strong liquidity position and forecasted robust free cash flows from the Company’s Kumtor, Mount Milligan and Öksüt operations will be sufficient CENTERRA GOLD INC. ANNUAL REPORT 202022 to satisfy working capital needs, fund its development and exploration activities and meet other liquidity requirements through to the end of 2021. See “Caution Regarding Forward-Looking Information”. Market Conditions Commodity prices The Company's profitability is materially affected by the market price of metals. Metal prices fluctuate widely and are affected by numerous factors beyond the Company's control. Three months ended December 31 Twelve months ended December 31 December 31, December 31, Average spot price Period end spot price Metal 2020 2019 % Change 2020 2019 % Change 2020 2019 % Change Gold (per oz) $ 1,876 $ 1,483 27% $ 1,772 $ Copper (per lb) Molybdenum (per lb) 3.27 9.01 2.68 9.65 22% (7%) 2.80 8.68 1,393 2.73 11.35 27% $ 1,886 $ 3% (24%) 3.03 10.02 1,517 2.80 9.20 24% 8% 9% Foreign Exchange The Company receives its revenue through the sale of gold, copper and molybdenum in U.S. dollars. The Company has operations in Canada, including its corporate head office, the Kyrgyz Republic, Turkey and the United States. During 2020, approximately 40% of the Company’s combined expenditures (including capital costs and lease payments) was in currencies other than the U.S. dollar, including the Canadian dollar (“CAD”), Kyrgyz som (“SOM”) and the Turkish lira (“TRY”), consistent with 2019. The percentage of Centerra’s non-U.S. Dollar costs by currency in 2020, consistent with 2019, was as follows: CENTERRA GOLD INC. ANNUAL REPORT 202023A significant cost driver of Centerra is the performance of key currencies relative to the U.S. dollar. The performance of these currencies over a 24-month period and at key reporting dates was as follows: Key Currencies vs. the US Dollar (source: Bloomberg) 10% 0% -10% -20% -30% -40% -50% -60% Canadian Dollar Canadian Dollar Kyrgyz Som Turkish Lira 9 1 - n a J 9 1 - b e F 9 1 - r a M 9 1 - r p A 9 1 - y a M 9 1 - n u J 9 1 - l u J 9 1 - g u A 9 1 - p e S 9 1 - t c O 9 1 - v o N 9 1 - c e D 0 2 - n a J 0 2 - b e F 0 2 - r a M 0 2 - r p A 0 2 - y a M 0 2 - n u J 0 2 - l u J 0 2 - g u A 0 2 - p e S 0 2 - t c O 0 2 - v o N 0 2 - c e D Three months ended December 31 Twelve months ended December 31 December 31, December 31, Average exchange rate Period end exchange rate Currency 2020 2019 % Change 2020 2019 % Change 2020 2019 % Change USD-CAD $ 1.30 $ USD-Kyrgyz Som USD-Turkish Lira 82.6 7.9 1.32 71.3 5.8 (2%) $ 1.34 $ 16% 36% 77.4 7.0 1.33 70.4 5.7 1% $ 1.27 $ 10% 23% 84.0 7.4 1.30 69.8 6.0 (2%) 20% 23% The Company utilizes its foreign exchange hedging program in order to manage its exposure to adverse fluctuations in the Canadian dollar, relative to the U.S dollar, see “Financial Instruments”. The Company does not currently hedge the Kyrgyz som or Turkish lira. CENTERRA GOLD INC. ANNUAL REPORT 202024Diesel Fuel Prices Fuel costs represent a significant cost component for Centerra’s mining operations, representing 11% of production costs. Prices for Kumtor’s diesel fuel generally reflect the price movements of Brent crude oil. Kumtor sources its fuel from Russia either directly or through Kyrgyz distributors and prices include additional costs such as seasonal premiums for winterizing fuel and transportation costs from the Russian refineries. The prices for Mount Milligan’s diesel fuel are based on a supply agreement for weekly deliveries and priced at the Prince George Rack rate. The Prince George Rack rate reflects general benchmark movements, plus additional costs such as seasonal premiums for winterizing, costs to meet regulatory requirements and transportation costs. Mining operations at Öksüt are outsourced, and the fuel operating cost is included in the outsourcing contract costs, based on the published local retail diesel market price. Average spot price Period end spot price Three months ended December 31 Twelve months ended December 31 December 31, December 31, 2020 2019 % Change 2020 2019 % Change 2020 2019 % Change $ 0.40 $ 53.89 45.26 0.50 81.69 62.42 (20%) $ (34%) (27%) 0.40 $ 52.49 43.21 0.51 81.47 64.16 (22%) $ (36%) (33%) 0.41 $ 62.00 51.80 0.49 85.19 66.00 (16%) (27%) (22%) Commodity Kumtor Diesel (per ltr) ULSD (per bbl) Brent (per bbl) The Company utilizes its diesel hedging program in order to manage its exposure to adverse fluctuations in diesel fuel prices, see “Financial Instruments”. CENTERRA GOLD INC. ANNUAL REPORT 202025 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. The hedge positions for each of these programs as at December 31, 2020 are summarized as follows: Instrument Unit Type 2021 2022 2021 2022 Total position (4) Fair value($'000's) Average Strike Price Settlements (% of exposure hedged) As at December 31, 2020 FX Hedges USD/CAD zero-cost collars(3) USD/CAD forward contracts(2) Total CAD Fixed $1.33/$1.40 $1.32/$1.38 $217.8 million (39%) $149.0 million (28%) $366.8 million $148.0 million $102.0 million (19%) $46.0 million (9%) $1.38 $1.32 CAD Fixed $1.35 $1.32 $319.8 million (58%) $195 million (37%) $514.8 million Fuel Hedges Brent Crude Oil zero-cost collars(1) Barrels Fixed $40/$46 Brent Crude Oil swap contracts(2) Barrels Fixed $42 $44/$51 79,712 (10%) 96,966 (10%) $47 206,485 (25%) 44,850 (5%) ULSD zero-cost collars(1) ULSD swap contracts(2) Barrels Fixed $53/$59 $54/$64 59,404 (7%) 125,066 (13%) Barrels Fixed $55 $59 231,655 (28%) 70,850 (7%) Total Copper Hedges (Strategic hedges): 577,256 (70%) 337,732 (35%) 176,678 251,335 184,470 302,505 914,988 13,458 7,159 20,617 688 1,937 748 2,500 5,873 Copper forward contracts(2) Pounds Fixed $3.37 N/A 59.8 million (91%) N/A 59.8 million (9,480) Gold/Copper Hedges (Royal Gold deliverables): Gold forward contracts(2) Copper forward contracts(2) Ounces Float Pounds Float N/A N/A N/A N/A 17,570 4.2 million N/A N/A 17,570 4.2 million 219 1,192 (1) Under the fuel zero-cost collars, the Company retains the right to buy fuel barrels at the contract’s ‘ceiling’ price if the market price was to exceed this price upon contract expiration, while requiring the Company to buy fuel barrels at the ‘floor’ price if the market price fell below this price upon expiration. At the end of each contract there is no exchange of the underlying item and the contract is financially settled. (2) Under the swap and forward contracts, the Company ‘buys’ or ‘sells’ metals, currencies and commodities, at a specified price at a certain future date. (3) Under the currency zero-cost collars, the Company retains the right to buy foreign currency at the contract’s ‘floor’ price if the market price was to fall below this price upon contract expiration, while requiring it to sell foreign currency at the ‘ceiling’ price if the market price was to exceed this price upon expiration. (4) Royal Gold hedging program with a market price determined on closing of the contract. In the fourth quarter and year-ended December 31, 2020, Centerra’s Canadian dollar hedging program resulted in a $2.7 million realized gain and $1.1 million realized gain, respectively, compared to no loss or gain in either the fourth quarter or year-ended December 31, 2019. In the fourth quarter of 2020, Centerra’s diesel hedging program resulted in a $3.0 million realized loss compared to nil in the fourth quarter of 2019. For the year-ended December 31, 2020, Centerra’s diesel hedging program resulted in a $6.5 million realized loss compared to a $0.7 million realized gain in 2019. In the fourth quarter of 2020, the Company commenced a copper hedging program, entering into forward contracts to lock in the copper price for the majority of Mount Milligan’s copper sales from December 2020 to the end of 2021. In the fourth quarter and year-end of December 31, 2020, Centerra’s copper hedging program resulted in a $1.4 million realized loss. As at December 31, 2020, Centerra has not entered into any off-balance sheet arrangements with special purpose entities, nor does it have any unconsolidated affiliates. CENTERRA GOLD INC. ANNUAL REPORT 202026 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. It has been in production since 1997 and has produced over 13.2 million ounces of gold to December 31, 2020. 2021 Kumtor Technical Report Update In February 2021, the Company issued a new technical report for the Kumtor mine, as at July 1, 2020 (the “2021 Kumtor Technical Report”), extending its mine life by 5 years to 2031 and increasing its reserves 107%(1) to 6.3 million contained ounces of gold (73.3 million tonnes at an average gold grade of 2.66 grams per tonne gold (g/t Au) using a gold price of $1,350 per ounce). All-in sustaining costs on a by-product basisNG is estimated to be $828 per ounce and all-in costs on a by-product basisNG is estimated to be $1,044 per ounce for the life of mine. Gold production is expected to average 590,000 ounces at an average all-in sustaining cost on a by-product basisNG of $782 per ounce, for five years commencing in 2022. The 2021 Kumtor Technical Report provides an update of the 2015 technical report, including a mineral resource model update based on extensive in-fill and expansion drilling in recent years. The 2021 Kumtor Technical Report also revised the gold price assumptions, pit slope angles, capital and operating cost estimates and metallurgical recovery estimates based on process plant improvements, all of which has resulted in updated mineral resource and mineral reserve estimates, a revised ultimate pit design and an updated mining plan. The technical report was prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and filed on SEDAR on February 24, 2021 with an effective date of July 1, 2020. (1) Reserve increase calculated by comparing the new 2021 Kumtor Technical Report effective as at July 1, 2020 compared to the December 31, 2019 reserve statement (less mine depletion from January 1, 2020 to June 30, 2020). Kyrgyz Republic Political and social disruptions followed the Parliamentary election held during the first week of October 2020 and resulted in an interim government led by Prime Minister Sadyr Japarov following the resignation of former President Sooronbai Jeenbekov. An early presidential election was held on January 10, 2021 and Mr. Japarov was elected President. Centerra and Kumtor will continue to cooperate and work with the Kyrgyz Government and state agencies to ensure uninterrupted operation of the mine. COVID-19 update Kumtor continues to implement mitigation controls and health & safety precautions at the mine site to contain the spread of COVID-19. As previously disclosed, open pit mining was operating at below capacity in July, returned to full capacity in September and continued at full capacity through the fourth quarter. Mill processing operated at full capacity throughout the year. CENTERRA GOLD INC. ANNUAL REPORT 202027 Lysii waste dump update In July 2020, Kumtor received a permit to utilize the Lysii Valley for dumping waste rock going forward. Lysii Valley is expected to be the main mine waste rock dump for the next two years as it is closest to cut- back 20. According to the new waste dumping plan in the Lysii Valley, waste rock will be placed at the base of the valley initially and the waste rock dump will be developed up the valley creating slightly longer haulage distances in the near-term. Kumtor Operating Results Unaudited ($ millions, except as noted) Financial Highlights: Revenue Production costs Depreciation, depletion and amortization Standby costs Earnings from mine operations Revenue-based taxes Exploration and development costs Other operating expenses Earnings from operations Cash provided by mine operations Cash provided by mine operations before changes in working capital Free cash flow from mine operations (1) Operating Highlights: Tonnes mined (000's) Tonnes ore mined (000's) Average mining grade (g/t) Tonnes processed (000's) Process plant head grade (g/t) Recovery (%)(2) Mining costs ($/t mined material) Processing costs ($/t processed material) Gold produced (oz) Gold sold (oz) Average realized gold price ($/oz sold)(1) Sustaining capital expenditures(3) Non-sustaining capital expenditures(3)(4) Capitalized stripping - cash Capitalized stripping - non-cash Capital expenditures - total Unit Costs: Three months ended December 31, Twelve months ended December 31, 2020 2019 % Change 2020 2019 % Change $ 178.1 $ 200.5 (11%) $ 981.6 $ 42.4 38.5 - $ 97.2 $ 25.2 5.5 2.8 49.6 46.6 9.1 95.2 28.3 4.3 7.6 (15%) (17%) 100% 194.8 209.5 6.7 2% $ 570.6 $ (11%) 28% (63%) 138.5 15.9 21.8 827.5 228.6 181.3 9.1 408.5 116.4 11.3 23.9 $ 63.7 $ 55.0 16% $ 394.4 $ 256.9 (35%) (4%) (73%) 50% (93%) (74%) 18% (44%) (13%) (18%) (19%) 660.6 609.3 437.9 376.3 385.1 240.1 103,735 705 156,439 10,970 6.64 6,323 3.27 2.91 5,968 3.69 81.4% 83.5% 1.52 10.97 1.26 12.00 (39%) (29%) 26% 556,136 569,213 1,725 600,201 600,231 1,379 94% 224% 71% 49% 81% 58.0 16.8 142.5 40.0 257.3 38.6 16.0 76.5 20.7 151.8 97.6 102.6 28.1 149.1 107.1 104.3 42,733 28,565 115 1.43 1,563 2.11 1,716 5.50 1,322 3.79 74.2% 85.3% 1.23 10.87 1.50 13.48 90,402 96,641 1,843 148,523 136,568 1,468 15.2 9.4 48.1 10.3 83.0 7.8 2.9 28.2 6.9 45.8 363 657 916 19% (15%) 16% 100% 40% 19% 41% (9%) 54% 76% 58% 82% (34%) (94%) 128% 6% (11%) (3%) 20% (9%) (7%) (5%) 25% 50% 5% 86% 94% 70% Gold production costs ($/oz sold) Gold - All-in sustaining costs on a by-product basis ($/oz sold)(1) Gold - All-in costs on a by-product basis ($ /oz sold)(1) $ $ $ 439 $ 1,131 $ 1,545 $ 21% $ 72% $ 69% $ 342 $ 741 $ 1,042 $ 381 598 838 (10%) 24% 24% (1) Non-GAAP measure. See discussion under “Non-GAAP Measures”. (2) Metallurgical recoveries are based on recovered gold, not produced gold. (3) Capital expenditures are presented on a cash basis. (4) Non-sustaining capital expenditures are distinct projects designed to have a significant increase in the net present value of the mine. In the current year, non-sustaining capital expenditures included additional costs related to cut-back 20. CENTERRA GOLD INC. ANNUAL REPORT 202028 Fourth Quarter 2020 compared to Fourth Quarter 2019 Earnings from mine operations of $97.2 million were recognized in the fourth quarter of 2020 compared to earnings from mine operations of $95.2 million in the fourth quarter of 2019. The increase was primarily due to a 26% higher average realized gold price and lower production and depreciation costs, offset by 29% fewer gold ounces sold. Kumtor Q4 cash provided by mine operations ($ millions) 36.1 5.1 3.0 126.2 36.5 149.1 97.6 Cash provided by mine operations of $97.6 million was recognized in the fourth quarter of 2020 compared to $149.1 million in the fourth quarter of 2019. The decrease was primarily due to the lower gold sales, partially offset by higher gold prices and increased cash from working capital due to production being exclusively from stockpiles. Free cash flow from mine operationsNG of $28.1 million was recognized in the fourth quarter of 2020 compared to $104.3 million in the fourth quarter of 2019. The decrease was due to lower cash provided by mine operations, a 71% increase in capitalized stripping costs as Kumtor mined cut-back 20 during the fourth quarter of 2020 and an increase in capital expenditure related to the timing of equipment overhauls and the delivery of additional haul trucks to increase mining capacity. During the fourth quarter of 2020, Kumtor continued mining cut-back 20. Tonnes mined were 42.7 million in the fourth quarter of 2020 compared to 28.6 million tonnes in the fourth quarter of 2019. The increase was due to the suspension of mining operations in December 2019 due to the Lysii waste rock dump incident. The 42.7 million tonnes mined in the fourth quarter of 2020 were capitalized as waste stripping for the benefit of future production from cut-back 20. Mining costs were $1.23 per tonne in the fourth quarter of 2020 compared to $1.50 per tonne in the fourth quarter of 2019. The decrease was primarily due to greater tonnes mined and lower diesel fuel prices. Total mining costs were $52.4 million of which $48.1 million was capitalized in the fourth quarter of 2020, compared to $42.8 million in mining costs of which $28.2 million was capitalized in the fourth quarter of 2019. Gold production was 90,402 ounces from on-surface stockpiled ore in the fourth quarter of 2020 compared to 148,523 ounces of gold produced in the fourth quarter of 2019. The decrease was primarily due to lower average process plant head grades and lower gold recovery. During the fourth quarter of 2020, Kumtor’s average process plant head grade was 2.11 g/t with a recovery of 74.2% compared to 3.79 g/t and a recovery of 85.3% in the fourth quarter of 2019. CENTERRA GOLD INC. ANNUAL REPORT 202029 Processing costs were $10.87 per tonne in the fourth quarter of 2020 compared to $13.48 per tonne in the fourth quarter of 2019. The decrease was primarily due to 18% greater tonnes processed and lower maintenance costs. Gold production costs were $439 per ounce in the fourth quarter of 2020, compared to $363 per ounce in the fourth quarter of 2019. The increase was primarily due to lower ounces sold. Kumtor Q4 All-in sustaining costs on a by-product basis per ounceNG ($) 146 54 48 1,131 322 657 All-in sustaining costs on a by-product basisNG, which excludes revenue-based tax, were $1,131 per ounce in the fourth quarter of 2020 compared to $657 per ounce in the fourth quarter of 2019. The increase was primarily due to fewer ounces sold, an elevated level of capitalized stripping costs as mining activities were concentrated on stripping cut-back 20 and greater sustaining capital costs relating to rebuilds and haul truck fleet expansion, partially offset by lower production costs. All-in costs on a by-product basisNG were $1,545 per ounce in the fourth quarter of 2020 compared to $916 per ounce in the fourth quarter of 2019. The increase was due to an increase in all-in sustaining costs on a by-product basisNG and the purchase of haul trucks to support the mine expansion. Year-ended December 31, 2020 compared to 2019 Earnings from mine operations of $570.6 million were recognized in 2020 compared to $408.5 million in 2019. The increase was primarily due to 25% higher average realized gold prices and lower production costs, partially offset by fewer ounces sold and higher depreciation charges which largely represents capitalized stripping costs being amortized into earnings as stockpiled inventories were processed through the mill during the year. CENTERRA GOLD INC. ANNUAL REPORT 202030 Kumtor YTD cash provided by mine operations ($ millions) 109.0 44.9 26.9 43.4 660.6 200.7 376.3 Cash provided by mine operations of $660.6 million was recognized in 2020 compared to $376.3 million in 2019. The increase was due to higher earnings from mine operations, an increase in cash generated from working capital as the plant processed ore from on surface stockpiles and lower Strategic Agreement payments. Free cash flow from mine operationsNG of $437.9 million was recognized in 2020 compared to $240.1 million in 2019. The increase was due to an increase in cash provided by mine operations, partially offset by higher capitalized expenditures as the mining fleet was expanded, and higher capitalized stripping costs as Kumtor mined waste material from cut-back 20 throughout the year. In 2020, Kumtor finished mining cut-back 19 and continued stripping and managing the ice from cut-back 20. Tonnes mined were 103.7 million tonnes in 2020 compared to 156.4 million tonnes in 2019. The decrease was primarily due to the suspension of mining operations from December 2019 to mid-January 2020, longer haulage distances as a result of the change in the waste dump location from the Lysii Valley to the Central Valley for the first half of the year and lower equipment utilization due to workforce availability (primarily COVID-19 related). Of the 103.7 million tonnes mined in 2020, 101.6 million tonnes were capitalized as waste stripping for benefit of future production from cut-back 20. Mining costs were $1.52 per tonne in 2020 compared to $1.26 per tonne in 2019. The increase was primarily due to lower tonnes mined, and longer haulage distances, partially offset by lower diesel fuel prices, lower maintenance costs and a favourable foreign currency exchange rate movement. Gold production was 556,136 ounces of gold in 2020 from previously mined on-surface stockpiled ore, compared to 600,201 ounces of gold produced in 2019. The decrease in 2020 was primarily due to lower process plant head grade and lower gold recovery coming from the stockpiled ore. During 2020, Kumtor’s average process plant head grade was 3.27 g/t with a recovery of 81.4% compared to 3.69 g/t and a recovery of 83.5% in 2019. Processing costs were $10.97 per tonne in 2020 compared to $12.00 per tonne in 2019. The decrease was primarily due to increased tonnes processed and lower maintenance costs as a result of less maintenance activities performed due to COVID-19. CENTERRA GOLD INC. ANNUAL REPORT 202031 Gold production costs were $342 per ounce in 2020 compared to $381 per ounce in 2019. The decrease was primarily due to increased tonnes processed, partially offset by lower grades and recovery. Kumtor YTD All-in sustaining costs on a by-product basis per ounceNG ($) 32 38 19 56 741 110 598 All-in sustaining costs on a by-product basisNG, which excludes revenue-based tax were, $741 per ounce in 2020 compared to $598 per ounce in 2019. The increase was mainly due to higher capitalized stripping costs, fewer ounces sold, higher sustaining capital representing the purchase of eleven haulage trucks to increase mining capacity and higher Strategic Agreement contributions to the various regional funds in the Kyrgyz Republic. This was partially offset by lower production costs. All-in costs on a by-product basisNG were $1,042 per ounce in 2020 compared to $838 per ounce in 2019. The increase was due to an increase in all-in sustaining costs on a by-product basisNG and greater revenue- based taxes paid as a result of higher gold prices. 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 an arrangement with RGLD Gold AG and Royal Gold, Inc. (together, “Royal Gold”) 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. To satisfy its obligations under the Mount Milligan Streaming Arrangement the Company purchases refined gold and copper warrants and arranges for delivery to Royal Gold. The difference between the cost of the purchases of refined gold and copper warrants, and the corresponding amounts payable to the Company under the Mount Milligan Streaming Arrangement is recorded as a reduction of revenue and not a cost of operating the mine. CENTERRA GOLD INC. ANNUAL REPORT 202032 Water Update Stored water inventory at Mount Milligan is critical to the ability to process ore through the mill on a sustainable basis. Stored water was in excess of 6 million cubic metres as at December 31, 2020. In addition to accessing water from surface water sources throughout 2020, Mount Milligan continued to access ground water from the Lower Rainbow Valley wellfield as well as other groundwater wells near the tailings storage facility during the year. Exploration activities continue to focus on extending the groundwater capacity in the vicinity of the existing infrastructure. The Company continues to pursue a longer-term solution to its water requirements at Mount Milligan and is in discussions with regulators, its First Nations partners and other stakeholders. The Company does not expect any interruptions to Mount Milligan operations in the medium term when considering currently available water sources and inventory. See “Caution Regarding Forward-Looking Information”. Water Inventory ) 3 m M ( e m u l o V 9 8 7 6 5 4 3 2 1 0 7 1 0 2 - n a J 7 1 0 2 - b e F 7 1 0 2 - r a M 7 1 0 2 - r p A 7 1 0 2 - y a M 7 1 0 2 - n u J 7 1 0 2 - l u J 7 1 0 2 - g u A 7 1 0 2 - p e S 7 1 0 2 - t c O 7 1 0 2 - v o N 7 1 0 2 - c e D 8 1 0 2 - n a J 8 1 0 2 - b e F 8 1 0 2 - r a M 8 1 0 2 - r p A 8 1 0 2 - y a M 8 1 0 2 - n u J 8 1 0 2 - l u J 8 1 0 2 - g u A 8 1 0 2 - p e S 8 1 0 2 - t c O 8 1 0 2 - v o N 8 1 0 2 - c e D 9 1 0 2 - n a J 9 1 0 2 - b e F 9 1 0 2 - r a M 9 1 0 2 - r p A 9 1 0 2 - y a M 9 1 0 2 - n u J 9 1 0 2 - l u J 9 1 0 2 - g u A 9 1 0 2 - p e S 9 1 0 2 - t c O 9 1 0 2 - v o N 9 1 0 2 - c e D 0 2 0 2 - n a J 0 2 0 2 - b e F 0 2 0 2 - r a M 0 2 0 2 - r p A 0 2 0 2 - y a M 0 2 0 2 - n u J 0 2 0 2 - l u J 0 2 0 2 - g u A 0 2 0 2 - p e S 0 2 0 2 - t c O 0 2 0 2 - v o N 0 2 0 2 - c e D COVID-19 Mount Milligan continues to monitor controls that have been put in place to manage the exposure of its workforce to COVID-19 and has added to these controls as required. Mining and processing activities are currently operating without any material disruption. CENTERRA GOLD INC. ANNUAL REPORT 202033 Mount Milligan Operating Results Unaudited ($ millions, except as noted) Financial Highlights: Gold revenue Copper revenue Total Revenues Production costs Depreciation, depletion and amortization Earnings from mine operations Exploration and development costs Impairment Other operating expenses Earnings (loss) from operations Cash provided by (used in) mine operations Cash provided by mine operations before changes in working capital Free cash flow (deficit) from mine operations(1) Operating Highlights: Tonnes mined (000's) Tonnes ore mined (000's) Tonnes processed (000's) Process plant head grade gold (g/t) Process plant head grade copper (%) Gold recovery (%) Copper recovery (%) Mining costs ($/t mined material) Processing costs - total ($/t processed material) Concentrate produced (dmt) Gold produced (oz) (2) Copper produced (000's lb) (2) Gold sold (oz)(2) Copper sold (000's lb)(2) Average realized gold price - combined ($/oz sold )(1)(2) Average realized copper price - combined ($/lb sold) (1)(2) Sustaining capital expenditures(3) Unit Costs: Three months ended December 31, Twelve months ended December 31, 2019 % Change 194.2 6% 2020 46.7 53.0 $ 99.7 $ $ $ 47.8 17.7 34.2 $ 3.0 - 2.7 28.4 $ 44.0 44.2 30.7 10,935 5,350 5,498 0.40 0.24% 61.2% 73.4% 2.07 3.98 45,943 42,664 20,376 33,929 18,975 1,376 2.79 16.6 2019 % Change 37.9 23% 31.9 69.8 49.1 11.0 9.7 1.3 - 2.4 6.0 (18.8) 16.2 (27.7) 9,577 3,812 3,919 0.56 0.28% 67.1% 80.3% 2.43 7.43 41,688 45,984 18,079 33,324 14,301 1,137 2.23 8.9 66% 43% $ (3%) 60% 253% $ 126% 0% 14% 377% $ 334% 173% 211% 14% 40% 40% (28%) (12%) (9%) (9%) (15%) (46%) 10% (7%) 13% 2% 33% 21% 25% 87% 2020 205.0 178.6 383.6 $ 209.4 73.1 101.1 $ 7.5 - 9.7 83.9 $ 185.3 147.9 150.2 41,238 19,196 20,067 0.41 0.26% 62.9% 77.4% 1.80 140.8 335.0 232.7 53.3 49.0 4.0 214.4 8.0 (177.4) 62.2 85.7 26.5 39,466 15,736 16,350 0.53 0.26% 67.4% 81.3% 2.19 4.88 184,915 161,855 82,816 7.10 159,517 183,107 71,146 154,100 80,477 180,423 67,430 1,330 2.22 37.8 744 $ 541 $ 590 $ 934 $ 1.18 $ 1.47 $ 1,077 2.09 35.6 746 828 849 950 1.46 1.85 27% 15% (10%) 37% 106% 88% 21% (147%) 198% 73% 467% 4% 22% 23% (23%) (0%) (7%) (5%) (18%) (31%) 16% (12%) 16% (15%) 19% 23% 6% 6% (0%) (35%) (31%) (2%) (19%) (21%) Gold production costs ($/oz sold) Gold - All-in sustaining costs on a by-product basis ($/oz sold) (1) Gold - All-in costs on a by-product basis ($ /oz sold)(1) Gold - All-in sustaining costs on a co-product basis ($/oz sold) (1) Copper production costs ($/lb sold) Copper - All-in Sustaining costs on a co-product basis ($/lb sold) (1) $ $ $ $ $ $ 716 $ 831 469 $ 558 $ 1,033 $ 1.24 $ 1,114 1,155 1,269 1.50 (14%) $ (58%) $ (52%) $ (19%) $ (17%) $ 1.79 $ 2.28 (21%) $ (1) Non-GAAP measure. See discussion under “Non-GAAP Measures”. (2) Mount Milligan production and sales are presented on a 100% basis. Under the Mount Milligan Streaming Arrangement, Royal Gold is entitled to 35% of gold ounces and 18.75% of copper. Royal Gold pays $435 per ounce of gold delivered and 15% of the spot price per metric tonne of copper delivered. (3) Capital expenditures are presented on a cash basis. Fourth Quarter 2020 compared to Fourth Quarter 2019 Earnings from mine operations of $34.2 million were recognized in the fourth quarter of 2020 compared to $9.7 million in the fourth quarter of 2019. The increase was primarily due to higher average realized gold and copper prices, higher copper sales and lower production costs, partially offset by an increase in depreciation due to the revised mine life which was published in early 2020. CENTERRA GOLD INC. ANNUAL REPORT 202034 Mount Milligan QTD cash provided by mine operations ($ millions) 8.1 2.0 0.7 44.0 10.4 10.7 30.9 (18.8) Cash provided by mine operations of $44.0 million was recognized in the fourth quarter of 2020 compared to a deficit of $18.8 million in the fourth quarter of 2019. The increase was primarily due to higher net earnings from mine operations and an increase in cash generated from working capital. Free cash flow from mine operationsNG of $30.7 million was recognized in the fourth quarter of 2020 compared to a deficit $27.7 million in the fourth quarter of 2019, due to an increase in cash provided by mine operations, partially offset by an increase in capital expenditure related to the tailing storage facility. During the fourth quarter of 2020, mining activities were in phases 4, 5 and 8 of the open pit. Total tonnes mined were 10.9 million tonnes and total material moved was 11.9 million tonnes in the fourth quarter of 2020. In the comparative quarter of 2019, total tonnes mined were 9.6 million tonnes and total material moved was 10.8 million tonnes. Mining costs were $2.07 per tonne in the fourth quarter of 2020 compared to $2.43 per tonne in the fourth quarter of 2019. The decrease was due to higher tonnage mined as a result of improved mining efficiencies, lower diesel fuel prices, a reduction in contract service costs associated with the in-pit drilling program, lower labour costs and a favourable foreign currency exchange rate. This was partially offset by increased maintenance costs associated with major planned repairs of ancillary equipment. Total mill throughput was 5.5 million tonnes, averaging 59,762 tonnes per calendar day in the fourth quarter of 2020, approaching the permitted limit of 60,000 tonnes per calendar day, compared to 3.9 million tonnes, averaging 42,599 tonnes per calendar day in the fourth quarter of 2019. Higher throughput was a result of improved milling efficiencies and greater mechanical availability. Gold production was 42,664 ounces in the fourth quarter of 2020 compared to 45,984 ounces in the fourth quarter of 2019. The decrease was due to lower grades and recoveries, partially offset by increased throughput. During the fourth quarter of 2020, Mount Milligan’s average process plant gold head grade was 0.40 g/t compared to 0.56 g/t in the fourth quarter of 2019. Total copper production was 20.4 million pounds in the fourth quarter of 2020 compared to 18.1 million pounds in the fourth quarter of 2019. The increase was due to increased throughput, partially offset by lower grades and recoveries. CENTERRA GOLD INC. ANNUAL REPORT 202035 Processing costs were $3.98 per tonne in the fourth quarter of 2020 compared to $7.43 per tonne in the fourth quarter of 2019. The decrease was due to 40% higher tonnage, the timing of mill liner change-out, lower water sourcing costs and a favourable foreign currency exchange rate movement. Gold production costs were $716 per ounce in the fourth quarter of 2020 compared to $831 per ounce in fourth quarter of 2019. The decrease was due to lower mining costs per tonne and lower processing costs per tonne. Copper production costs were $1.24 per pound in the fourth quarter of 2020 compared to $1.50 per pound in the fourth quarter of 2019. The decrease was primarily due to lower mining costs per tonne and lower processing costs per tonne. Mount Milligan Q4 All-in sustaining costs on a by-product basis per ounceNG ($) 1,114 30 8 33 634 469 All-in sustaining costs on a by-product basisNG were $469 per ounce in the fourth quarter of 2020 compared to $1,114 per ounce in the fourth quarter of 2019. The decrease was primarily due to increased copper credits due to higher realized copper prices and lower production costs, partially offset by higher sustaining capital related to the tailings storage facility. All-in costs on a by-product basisNG were $558 per ounce in the fourth quarter of 2020 compared to $1,155 per ounce in the fourth quarter of 2019. The decrease was due to a decrease in all-in sustaining costs on a by-product basisNG, partially offset by higher exploration and development costs. Year-ended December 31, 2020 compared to 2019 Earnings from mine operations of $101.1 million were recognized in 2020 compared to $49.0 million in 2019. The increase was due to 23% higher average realized gold prices, higher copper pounds sold and lower production costs. The increase was partially offset by higher depreciation, as a result of the change in the mine life in 2020. CENTERRA GOLD INC. ANNUAL REPORT 202036 Mount Milligan YTD cash provided by mine operations ($ millions) 20.8 10.6 28.3 185.3 27.2 39.2 53.6 62.2 Cash provided by mine operations of $185.3 million was recognized in 2020 compared to $62.2 million in 2019. The increase was due to greater earnings from mine operations and a reduction in working capital. Free cash flow from mine operationsNG of $150.2 million was recognized in 2020 compared to $26.5 million in 2019, due to an increase in cash provided by mine operations. During 2020, mining activities were in phases 3, 4, 5 and 8 of the open pit. Total tonnes mined in 2020 were 41.2 million tonnes and total material moved was 45.1 million tonnes. In the comparative period of 2019, total tonnes mined were 39.5 million tonnes and total material moved was 43.2 million tonnes. Mining costs were $1.80 per tonne in 2020 compared to $2.19 per tonne in 2019. The decrease was due to lower diesel fuel price, lower contract service costs associated with the in-pit drilling program, a favorable foreign currency exchange rate and higher tonnage mined due to improved efficiencies. Mount Milligan reported record mill throughput in 2020, processing 20.1 million tonnes, averaging 54,827 tonnes per calendar day in 2020 compared to 16.4 million tonnes, averaging 44,795 tonnes per calendar day in 2019. The increase in throughput is primarily due to the increased availability of water, continuous improvement to mill operations and greater availability. In 2020, Mount Milligan recorded its highest level of concentrate tonnes produced since the start of operations in 2014. Gold production was 161,855 ounces in 2020 compared to 183,107 ounces in 2019. The decrease was due to lower grades and recoveries, partially offset by higher throughput. During 2020, Mount Milligan’s average process plant gold head grade was 0.41 g/t with a recovery of 63% compared to 0.53 g/t with a recovery of 67% in 2019. Total copper production was 82.8 million pounds in 2020 compared to 71.1 million pounds in 2019. The increase was primarily due to higher throughput, partially offset by lower copper recoveries. Processing costs were $4.88 per tonne in 2020 compared to $7.10 per tonne in 2019. The per tonne decrease was due to the higher throughput, decreased water sourcing costs, lower labour costs, a favorable foreign exchange currency rate, and lower electricity costs. This was partially offset by higher mill consumables costs due to the higher throughput. CENTERRA GOLD INC. ANNUAL REPORT 202037 Gold production costs were $744 per ounce in 2020 consistent with $746 per ounce in 2019. The lower production costs were offset by the lower gold ounces sold. Copper production costs were $1.18 per pound in 2020 compared to $1.46 per pound in 2019, primarily as a result of increased copper pounds sold and lower production costs. Mount Milligan YTD All-in sustaining costs on a by-product basis per ounceNG ($) 79 30 126 828 210 541 All-in sustaining costs on a by-product basisNG were $541 per ounce for 2020 compared to $828 per ounce in 2019. The decrease was primarily due to increased copper credits, lower production costs including decreased water sourcing activities and lower diesel costs, partially offset by lower gold ounces sold. All-in costs on a by-product basisNG were $590 per ounce in 2020 compared to $849 per ounce in 2019. The decrease was due to a decrease in all-in sustaining costs on a by-product basisNG, partially offset by higher exploration and development costs. 38 CENTERRA GOLD INC. ANNUAL REPORT 2020 Öksüt Mine The Öksüt mine is situated in Turkey approximately 300 kilometres southeast of Ankara and 48 kilometres south of Kayseri, the provincial capital. The nearest administrative centre is at Develi, located approximately 10 kilometres north of the mine site. The Öksüt mine achieved first gold pour on January 31, 2020 and achieved commercial production on May 31, 2020. Commercial production was declared after the operation completed its testing phase and the constructed assets were operating in the manner intended by management. Up to the point of achieving commercial production, gold revenue and the associated costs of production were capitalized. During the fourth quarter of 2020, the construction of the Öksüt mine was finalized, with the completion of leach pad phase 1C, a new overflow pond, and crusher modification. Additionally, during the quarter, the Phase 2 expansion of the heap leach pad commenced with completion expected in 2021. In early February 2021, there was a temporary disruption in mining activity at the Öksüt mine due to a labour dispute between the Company’s local mining contractor, Çiftay İnşaat Taahhüt ve Ticaret A.Ş (“Çiftay”) and its employees. The Company worked closely with Çiftay management, as well as with local government and other officials and the matter has been resolved. During the third quarter of 2020, the Öksüt mine obtained an amendment to its environmental impact assessment (“EIA”) certificate from the Minister of Environment and Urbanization. The amendment is to accommodate changes to the Öksüt mine’s open pit mine design and pit optimization. Due to the delay in receiving the amendment from the EIA and further potential delays in obtaining the related forestry permit, the Öksüt mine plan and design is currently being further revised with the expectation that the high-grade ore of the Güneytepe deposit will be accessed in 2022. COVID-19 Öksüt continues to maintain active measures to prevent a COVID-19 outbreak at the site. Open pit mining was suspended during the first quarter due to Turkish Government initiatives aimed at reducing the spread of COVID-19 and resumed normal operations in April. Placement of ore on the heap leach pad from stockpiles, ore irrigation, and the Adsorption-Desorption-Recovery plant continued to operate with limited impact on production. CENTERRA GOLD INC. ANNUAL REPORT 202039 Öksüt Operating Results ($ millions, except as noted) Financial Highlights: Revenue Production costs Depreciation, depletion and amortization Earnings from mine operations Exploration and development costs Other operating expenses Earnings from operations Cash provided by mine operations Cash provided by mine operations before changes in working capital Free cash flow from mine operations (1) Operating Highlights: Tonnes mined (000's) Tonnes ore mined (000's) Ore mined - grade (g/t) Ore crushed (000's) Tonnes stacked (000's) Heap leach grade (g/t) Heap leach contained ounces stacked Mining costs ($/t mined material) Processing costs ($/t processed material) Gold produced (oz) Gold sold (oz)(2) Average realized gold price ($/oz sold)(1) Sustaining capital expenditures(3) Non-sustaining capital expenditures(3)(4) Capitalized stripping(3) Capital expenditures - total Unit Costs: Gold production costs ($/oz sold)(5) Gold - All-in sustaining costs on a by-product basis ($/oz sold)(1)(5) Gold - All-in costs on a by-product basis ($ /oz sold)(1)(5) Three months ended December 31, Twelve months ended December 31, 2020 2020 $ $ $ $ $ $ 74.3 $ 13.8 7.1 53.4 $ 1.0 0.1 52.3 $ 61.8 58.1 46.5 4,440 115 1.91 637 952 0.78 23,950 1.71 5.22 39,380 39,380 1,887 1.9 6.2 7.2 15.3 350 $ 586 $ 769 $ 186.5 35.2 16.0 135.3 1.7 0.1 133.5 146.1 146.8 105.2 15,115 2,578 1.68 3,428 3,445 1.40 154,948 1.77 5.34 106,068 105,503 1,887 1.9 30.4 11.5 43.8 356 494 819 Includes 6,654 ounces sold before the mine was in commercial production. (1) Non-GAAP measure. See discussion under “Non-GAAP Measures”. (2) (3) Capital expenditures are presented on a cash basis. (4) Non-sustaining capital expenditures are distinct projects designed to have a significant increase in the net present value of the mine. In the current year, non-sustaining capital expenditures included construction costs. (5) Calculated starting from June 1, 2020, after Öksüt achieved commercial production effective May 31, 2020. Fourth Quarter 2020 Earnings from mine operations were $53.4 million in the fourth quarter of 2020. Cash provided by mine operations was $61.8 million and free cash flow from mine operationsNG was $46.5 million in the fourth quarter of 2020. During the fourth quarter of 2020, the Company spent $6.2 million on construction and development activities at Öksüt compared to $28.8 million in the fourth quarter of 2019. Total ounces of gold sold were 39,380 in the fourth quarter of 2020 at an average realized price of $1,887 per ounce, resulting in revenue recognized of $74.3 million for the quarter. CENTERRA GOLD INC. ANNUAL REPORT 202040 Mining in the fourth quarter of 2020 was focused on the development of phase 3 and phase 4 of the Keltepe pit, with total tonnes mined of 4.4 million tonnes. Mining costs were $1.71 per tonne in the fourth quarter of 2020. Processing in the fourth quarter of 2020 was focused on the preparation, stacking and irrigation of the heap leach pad, with tonnes stacked of 0.95 million at a grade of 0.78 g/t. Processing costs, including crushing costs were $5.22 per tonne. Gold production costs were $350 per ounce, all-in sustaining costs on a by-product basisNG were $586 per ounce and all-in costs on a by-product basisNG were $769 per ounce for the fourth quarter of 2020. Year-ended December 31, 2020 Earnings from mine operations were $135.3 million in 2020, representing earnings while in commercial production. Cash provided by mine operations was $146.1 million and free cash flow from mine operationsNG of $105.2 million were recognized in 2020, as capital costs associated with the project continued to be incurred. During 2020, the Company spent $30.4 million on construction and development activities at Öksüt compared to $86.5 million in 2019. Total ounces of gold sold in 2020 was 105,503 ounces including 98,849 ounces while in commercial production. The sale of gold was recorded as revenue starting on June 1, 2020, after Öksüt achieved commercial production. Previously, revenue and costs of gold sales during the testing stage were capitalized against construction costs. Öksüt mined 15.1 million tonnes in 2020 at a cost of $1.77 per tonne. At the end of December 2020, 3.47 million tonnes of ore averaging 1.41 g/t gold had been placed onto the heap leach pad and was under leach with an estimated accumulated recovery to date of 76.2% which includes estimated gold in process inventory. Processing costs were $5.34 per tonne and total gold produced was 106,068 ounces in 2020. Gold production costs per were $356 per ounce, all-in sustaining costs on a by-product basisNG were $494 per ounce and all-in costs on a by-product basisNG were $819 per ounce in 2020 (post commercial production). Molybdenum Business Unit The molybdenum business includes two North American primary molybdenum mines that are currently on care and maintenance: the Thompson Creek mine (mine and process plant) in Idaho and the 75%-owned Endako mine (mine, process plant and roaster) in British Columbia. The molybdenum business also includes the Langeloth metallurgical roasting facility (the "Langeloth Facility") in Pennsylvania. The Thompson Creek mine (the “TC mine”) operates a molybdenum beneficiation circuit to treat molybdenum concentrates to supplement the concentrate feed sourced directly for the Langeloth Facility. This beneficiation process allows the Company to process high copper content molybdenum concentrate purchased from third parties, which is then transported from TC mine to the Langeloth Facility for further processing. The molybdenum business provides tolling treatment services for customers by converting molybdenum concentrates to molybdenum oxide powder, briquettes and ferromolybdenum products. Additionally, molybdenum concentrates are purchased to convert to upgraded products which are then sold in the metallurgical and chemical markets. CENTERRA GOLD INC. ANNUAL REPORT 202041 COVID-19 At the end of the fourth quarter of 2020, the molybdenum business remained COVID-19 free. ($ millions, except as noted) Financial Highlights: Molybdenum (Mo) revenue Tolling, calcining and other revenue Total revenues Production costs Depreciation, depletion and amortization Loss from mine operations Exploration and development costs Care and Maintenance costs - Molybdenum mines Reclamation expense Other operating expenses Net loss from operations Cash (used in) provided by operations Free cash flow (deficit) from operations (1) Operating Highlights (000's lbs): Mo purchased Mo roasted Mo sold Toll roasted and upgraded Mo Average Mo spot price ($/lb) Total capital expenditure Three months ended December 31, Twelve months ended December 31, 2019 % Change 2019 % Change 2020 2020 33.7 0.9 $ 34.6 $ 34.3 1.7 40.7 1.5 42.2 50.8 1.7 $ (1.3) $ (10.2) - 3.1 9.3 0.4 0.1 3.3 34.5 0.6 $ (14.1) $ (48.7) (17%) (40%) (18%) $ (33%) 0% (87%) $ (100%) (6%) (73%) (37%) (71%) $ 132.3 4.7 204.7 8.1 137.0 $ 212.8 151.2 6.7 (20.9) $ - 12.9 53.4 2.1 215.2 5.0 (7.4) 0.1 13.4 34.5 2.7 (89.3) $ (58.1) (3.8) (6.2) (12.9) (14.1) 71% 56% 11.4 5.6 (20.2) (25.0) 2,924 2,712 3,610 385 9.01 2.3 4,723 3,235 3,578 773 9.65 1.1 (38%) (16%) 1% (50%) (7%) 110% 13,577 13,760 13,667 2,383 8.68 5.8 17,779 17,384 16,035 5,059 11.35 5.4 (35%) (42%) (36%) (30%) 34% 182% (100%) (4%) 55% (22%) 54% (156%) 122% (24%) (21%) (15%) (53%) (24%) 8% (1) Non-GAAP measure. See discussion under “Non-GAAP Measures”. Fourth Quarter 2020 compared to Fourth Quarter 2019 A loss from operations of $14.1 million was recognized in the fourth quarter of 2020 compared to a loss of $48.7 million in the fourth quarter of 2019. The decrease was due to lower reclamation expense related to the change in the asset retirement obligation and a higher gross margin on material sold. Cash used in operations of $3.8 million was recognized in the fourth quarter of 2020, compared to $12.9 million in the fourth quarter of 2019. The decrease was due to a reduced loss from operations excluding the non-cash movement in reclamation expense at the non-operating sites. A free cash flow deficit from operationsNG of $6.2 million was recognized in the fourth quarter of 2020 compared to a free cash flow deficit from operationsNG of $14.1 million in the fourth quarter of 2019, due to a decrease in cash used by operations. Molybdenum roasted was 2.7 million pounds in the fourth quarter of 2020 compared to 3.2 million pounds in the fourth quarter of 2019. The decrease was the result of the decline in availability of feed for roasting. CENTERRA GOLD INC. ANNUAL REPORT 202042 Moly Oxide Weekly Pricing (Jan 1, 2020 – December 31, 2020) $USD/lb d n u o p r e p D S U $ $14.00 $13.00 $12.00 $11.00 $10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 1 2 3 4 5 6 7 8 9 10 1112 1 2 3 4 5 6 7 8 9 10 1112 1 2 3 4 5 6 7 8 9 10 1112 1 2 3 4 5 6 7 8 9 10 1112 2017 2018 2019 2020 Year-ended December 31, 2020 compared to 2019 A loss from operations of $89.3 million was recognized in 2020 compared to a loss of $58.1 million in 2019. The loss recorded in 2020 included a $53.4 million reclamation charge for an increase in the asset retirement obligation, as a result of a decrease in the risk-free interest rate used for discounting the liability, compared to a $34.5 million reclamation charge in 2019. The loss recorded in 2020 also included a $13.6 million non-cash write down in product inventory as a result of the continuing decline in the molybdenum price compared to $8.4 million in 2019. Cash provided by operations was $11.4 million in 2020 compared to cash used by operations of $20.2 million in 2019. The increase was due to a $22.8 million United States tax refund received in the current year as a result of a change in income tax laws affecting prior year tax filings and an increase in cash generated from working capital. In 2020, 13.8 million pounds of molybdenum were roasted, including 2.4 million pounds from tolling arrangements, which represented a 21% and 53% decrease over 2019, respectively. The decrease was primarily due to the decline in demand for industrial products that use molybdenum which was adversely affected by the demand disruption created by the COVID-19 pandemic. Pre-Development Projects Kemess Underground Project: The Kemess Project (“Kemess”) is located in north-central British Columbia, Canada, approximately 250 kilometres north of Smithers, 430 kilometres northwest of Prince George and 209 kilometres from the Mount Milligan mine. The Kemess site includes infrastructure from the past producing Kemess South mine. There are currently no mining activities at the Kemess site and on-site activities consist of care and maintenance work and pre-development activities for the proposed Kemess Underground Project. COVID-19 The Kemess Project continues to monitor controls that have been put in place to manage the exposure of its workforce to COVID-19 and has added to these controls as required. These measures have resulted in a COVID-19 free environment. 43 CENTERRA GOLD INC. ANNUAL REPORT 2020 Fourth Quarter 2020 compared to Fourth Quarter 2019 Care and maintenance costs of $4.2 million were recognized in the fourth quarter of 2020, compared to $5.2 million recognized in the fourth quarter of 2019. Capital expenditures of $2.2 million were recognized in the fourth quarter of 2020, compared to $7.1 million in the fourth quarter of 2019. The capital expenditures in the fourth quarter of 2020 included costs for technical engineering studies and the installation and commissioning of site generators. The capital expenditures in the fourth quarter of 2019 included the construction of a water treatment plant and water distribution system. Year-ended December 31, 2020 compared to 2019 Care and maintenance costs of $16.1 million were recognized in 2020, compared to $14.9 million recognized in 2019. Capital expenditures of $12.9 million were recognized in 2020, compared to $32.7 million in 2019. The capital expenditures in 2020 included costs for technical engineering studies, water treatment plant performance testing, completion of the southern collection system pond construction and the installation and commissioning of site generators. The capital expenditures in 2019 included expenditures for the water treatment plant, camp refurbishment and mobile equipment purchases. Greenstone Gold Property: The Greenstone Gold property is located in northern Ontario, Canada approximately 275 kilometres northeast of Thunder Bay and includes the Hardrock deposit. On December 15, 2020, the Company entered into an agreement with an affiliate of the Orion Mine Finance Group (“Orion”) and Premier Gold Mines Limited to sell the Company’s 50% interest in the Greenstone Partnership to Orion for cash consideration of $225 million, subject to certain adjustments and contingent consideration of approximately $75 million, assuming a gold price of $1,500 per ounce, based on the successful construction and operation of the mine, which will be recorded on achieving the applicable milestones. On January 19, 2021, the Company completed the sale of its 50% interest in the Greenstone Gold Mines Partnership with final cash consideration received of $210 million, net of adjustments. As a result of the closing of this transaction, the Company expects to recognize a gain of approximately $72 million in the first quarter of 2021 Quarterly Results – Previous Eight Quarters Over the last eight quarters, Centerra’s results reflect the impact of increasing gold sales during a period of rising gold prices. Production costs have also benefited from decreasing diesel fuel costs and depreciating Kyrgyz and Turkish currencies over the last eight quarters. Gold sold on a quarterly basis steadily increased from the first quarter of 2019 to the third quarter of 2019, followed by a slight decline in the fourth quarter of 2019 and increasing again in the first nine months of 2020 as the Öksüt mine reached commercial production, with a decline in the fourth quarter of 2020 due to lower ounces sold at Kumtor. The third quarter of 2019 reflects the impairment of $230.5 million recorded on the Mount Milligan mine and a $10 million Kyrgyz Republic settlement expense. A non-cash reclamation expense was recognized in the fourth quarters of 2019 and 2020 of $31.4 million and $53.4 million, respectively, as a result of a change in the interest rate used to discount the reclamation costs at the two molybdenum mine sites which are not in operation. The quarterly financial results for the last eight quarters are shown below: CENTERRA GOLD INC. ANNUAL REPORT 202044 $ million, except per share data Quarterly data unaudited Revenue Net earnings (loss) Basic earnings (loss) per share Diluted earnings (loss) per share Related party transactions 2020 2019 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 387 95 0.32 0.32 515 206 0.70 0.68 413 88 0.30 0.29 374 20 0.07 0.06 313 (12) (0.04) (0.04) 388 (165) (0.56) (0.56) 341 33 0.11 0.11 334 50 0.17 0.17 Kyrgyzaltyn The sole customer of gold doré from the Kumtor mine, Kyrgyzaltyn JSC (“Kyrgyzaltyn”), is a shareholder of the Company and is a state-owned entity of the Kyrgyz Republic. 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 Restated Gold and Silver Sales Agreement (“Sales Agreement”), dated June 6, 2009 between KGC, Kyrgyzaltyn and the Government of the Kyrgyz Republic. 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 the Company owned by Kyrgyzaltyn. Revenues from the Kumtor mine are subject to a management fee of $1.00 per ounce based on sales volumes, payable to Kyrgyzaltyn. The breakdown of the sales transactions and expenses with Kyrgyzaltyn, and the management fees paid and accrued by KGC to Kyrgyzaltyn according to the terms of the Sales Agreement are as follows: 2020 2019 Sales: Gross gold and silver sales to Kyrgyzaltyn(1) Deduct: refinery and financing charges Net sales revenue received from Kyrgyzaltyn Expenses: Contracting services provided by Kyrgyzaltyn(2) Management fees payable to Kyrgyzaltyn Expenses paid to Kyrgyzaltyn $ $ $ $ $ $ 995,111 (6,164) 988,947 658 569 1,227 836,689 (5,141) 831,548 1,146 600 1,746 $ (1) As at December 31, 2020, there is no amount receivable from Kyrgyzaltyn from gold sales (December 31, 2019 - $0.1 million). (2) As at December 31, 2020, there is $0.9 million payable to Kyrgyzaltyn (December 31, 2019 - $1.2 million). $ Transactions with directors and key management The Company transacts with key management personnel and directors, who have authority and responsibility to plan, direct and control the activities of the Company, for services rendered in their capacity as directors and employees. Key management personnel are defined as the executive officers of the Company including the President and Chief Executive Officer, Vice President and Chief Financial Officer, Vice President and Chief Operating Officer, Vice President and General Counsel, Vice President Business Development & Exploration, and Vice President and Chief Human Resources Officer who joined the Company in February 2020. CENTERRA GOLD INC. ANNUAL REPORT 202045 The increase in compensation for key management personnel salaries and benefits is a combination of increase in executive officers from five to six together an increase in short-term incentives. The share-based compensation is driven by performance of the Company’s share price relative to the S&P/TSX Global Gold Index Total Return Index Value. During the years ended December 31, 2020 and 2019, remuneration to directors and key management personnel were as follows: Compensation of directors Fees earned and other compensation Share-based compensation Total expense Compensation of key management personnel Salaries and benefits Share-based compensation Total expense $ $ $ $ 2020 820 3,011 3,831 $ $ 2020 6,354 9,264 15,618 $ $ 2019 1,259 2,465 3,724 2019 4,311 7,756 12,067 In 2020, the Company incurred an amount of $94 for services rendered by a family member of one of Centerra’s key management personnel. This person was acting as a consultant. Contingencies The following is a summary of contingencies with respect to matters affecting the Company and its subsidiaries. Readers are cautioned 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 most recently filed Annual Information Form and specifically the section therein entitled “Risks that can affect our business” 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 The Kyrgyz Parliamentary elections held in early October 2020 resulted in a period of political and social disruption in the Kyrgyz Republic, eventually leading to the cancellation of the Parliamentary election results and the resignation of the then Kyrgyz Prime Minister and President. Presidential elections were held in the Kyrgyz Republic on January 10, 2021, with Mr. Sadyr Japarov being elected President. A non- binding referendum on the Kyrgyz Republic’s form of government was also held on January 10, 2021 and the Company expects a process of constitutional reform to unfold in the coming months leading to a presidential form of government. The Company understands that a parliamentary commission has been formed by the Kyrgyz Republic Parliament in February 2021, to review the effectiveness of the Kumtor Mine’s activities. The Company CENTERRA GOLD INC. ANNUAL REPORT 202046 will review the mandate for the parliamentary commission when it becomes available to determine the precise scope of the commission’s proposed review and its response to the inquiries, if necessary. Despite the changes to the political landscape in the Kyrgyz Republic and the uncertainty of the Parliamentary elections, the Kumtor operations have continued uninterrupted. The Company continues to monitor the situation with the objective of ensuring that the Kumtor mine continues its operation uninterrupted in accordance with its project agreements. Canada Mount Milligan Mine As previously disclosed, in the first quarter of 2020, the Company received a notice of civil claim from H.R.S. Resources Corp. (“H.R.S.”), the holder of a 2% production royalty at Mount Milligan. H.R.S. claims that since November 2016 (when the royalty became payable) the Company has incorrectly calculated amounts payable under the production royalty agreement and has therefore underpaid amounts owing to H.R.S. The Company disputes the claim and believes it has correctly calculated the royalty payments in accordance with the agreement. The Company believes that the potential exposure in relation to this claim, over what the Company has accrued, is not material. Other The Company operates in multiple countries around the world and accordingly is subject to, and pays, taxes under the various regimes in those jurisdictions in which it operates. These tax regimes are determined under general taxation and other laws of the respective jurisdiction. The Company has historically filed, and continues to file, all required tax returns and to pay the taxes reasonably determined to be due. The tax rules and regulations in many countries are complex and subject to interpretation. From time to time the Company’s tax filings are subject to review and in connection with such reviews, disputes can arise with the taxing authorities over the Company’s interpretation of the country’s tax laws. The Company records provisions for future tax assessments considered to be probable. As at December 31, 2020, the Company did not have any material provision for claims or taxation assessments. CENTERRA GOLD INC. ANNUAL REPORT 202047 Contractual Obligations The following table summarizes Centerra’s contractual obligations as of December 31, 2020, 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 Leases Öksüt Capital equipment (2) Operational supplies Leases Kemess Project Project development Corporate and other Leases Total Due in Less than One Year Due in 1 to 3 Years Due in 4 to 5 Years Due After 5 Years $ $ 22.0 27.3 24.1 6.0 27.3 24.1 $ 16.0 - - 1.0 13.9 3.0 0.5 0.7 - 5.9 1.0 4.3 2.3 0.5 0.4 - 0.7 - 7.7 0.7 - 0.3 - 1.7 - - - 1.9 - - - - 3.5 5.4 $ - - - - - - - - - - - Total contractual obligations (2) $ 98.4 $ 66.6 $ 26.4 $ (1) Centerra’s future estimated decommissioning and reclamation costs for the Kumtor mine are present-valued at $56.5 million to be incurred beyond 2031. The settlement agreement with the Kyrgyz Republic Government requires this restricted cash to be funded at a rate of $6.0 million per year until the Reclamation Trust Fund reaches the total estimated reclamation cost for the Kumtor Project (no less than $69.0 million). 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 ($69.0 million). On December 31, 2020 the balance in the Reclamation Trust Fund was $47.0 million (2019 - $40.9 million), with the remaining $22.0 million to be funded over the life of the mine. Excludes trade payables and accrued liabilities. (2) 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 CENTERRA GOLD INC. ANNUAL REPORT 202048 and liabilities and earnings within the next financial year are outlined in detail in note 4 of the December 31, 2020 financial statements. Disclosure Controls and Procedures and Internal Control Over Financial Reporting 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. There was no material change to the Company’s internal controls over financial reporting that occurred during 2020 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting. The 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 2020. Non-GAAP Measures In the fourth quarter of 2020, the Company elected to present the World Gold Council’s (“WGC”) financial measure all-in costs on a by-product basis per ounce (“AIC”), which incorporates non-sustaining capital expenditures and certain development and overhead costs in addition to the sustaining costs that are included in the all-in sustaining costs on a by-product basis metric. Management believes the AIC metric will assist stakeholders in understanding the costs associated with producing gold over the entire lifecycle of the mine. This document contains the following non-GAAP financial measures: all-in sustaining costs per ounce on a by-product basis, all-in sustaining costs per ounce on a by-product basis including revenue-based taxes, all-in sustaining costs per ounce on a co-product basis and all-in costs on a by-product basis per ounce. In addition, non-GAAP financial measures include adjusted net earnings, adjusted net earnings per common share (basic and diluted), average realized gold price, average realized copper price, adjusted cash provided by operations, free cash flow from operations and adjusted free cash flow from operations. 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 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. CENTERRA GOLD INC. ANNUAL REPORT 202049 Definitions The following is a description of the non-GAAP measures used in this MD&A: • All-in sustaining costs on a by-product basis per ounce 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. When calculating all-in sustaining costs on a by-product basis, all revenue received from the sale of copper from the Mount Milligan mine, as reduced by the effect of the copper stream, is treated as a reduction of costs incurred. All-in sustaining costs on a by- product basis per ounce excludes revenue-based taxes. • All-in sustaining costs on a by-product basis per ounce including revenue-based taxes, include revenue-based taxes at Kumtor. • All-in sustaining costs on a co-product basis per ounce of gold or per pound of copper, are based on an allocation of production costs between copper and gold based on the conversion of copper production to ounces of gold equivalent. For the fourth quarter and year-end of 2020, 576 and 633 pounds of copper, respectively, were equivalent to one ounce of gold. All-in sustaining costs on a co-product basis per ounce of gold or per pound of copper excludes revenue-based taxes. • All-in costs on a by-product basis per ounce include all-in sustaining costs on a by-product basis including revenue-based taxes, exploration and study costs, non-sustaining capital expenditures, care and maintenance and pre-development costs. • Non-sustaining capital expenditures are costs incurred at new operations and costs related to major projects at existing operations where these projects will materially benefit the operation. • Adjusted net earnings is calculated by adjusting net earnings (loss) as recorded in the consolidated statements of income (loss) and comprehensive income (loss) for items not associated with ongoing operations. • Adjusted cash provided by operations is calculated by adjusting cash provided by operations as recorded in the condensed consolidated interim statements of statements of cash flows for items not associated with ongoing operations. • Average realized gold price is calculated by dividing the different components of gold sales (including third party sales, mark to market adjustments, final pricing adjustments and the fixed amount received under the Mount Milligan Streaming Arrangement(1)) by the number of ounces sold. • Average realized copper price is calculated by dividing the different components of copper sales (including third party sales, mark to market adjustments, final pricing adjustments and the fixed amount received under the Mount Milligan Streaming Arrangement(1)) by the number of pounds sold. • Free cash flow is calculated as cash provided by operations less additions to property, plant and equipment. • Free cash flow from mine operations is calculated as cash provided by mine operations less additions to property, plant and equipment. • Adjusted free cash flow from operations is calculated as free cash flow adjusted for items not associated with ongoing operations. (1) Realized revenue for the gold and copper concentrate produced at the Mount Milligan mine reflects the actual price received from customers upon final settlement for both the contained gold and copper, less the difference between the cost of the purchased refined gold and copper warrants to satisfy the Company’s obligations under the Mount Milligan Streaming Arrangement and the amount the Company receives under that arrangement. CENTERRA GOLD INC. ANNUAL REPORT 202050 2 . 5 3 - 2 . 5 3 - - - - - 2 . 5 3 5 . 1 1 9 . 1 2 . 0 8 . 8 4 - - 7 . 1 8 . 8 4 4 . 0 3 9 . 0 8 8 . 8 9 6 5 3 4 9 4 4 9 4 9 1 8 4 9 4 a / n a / n , 1 3 r e b m e c e D d e d n e s h t n o m e v l e w T , 1 3 r e b m e c e D d e d n e s h t n o m e e r h T 0 2 0 2 9 1 0 2 0 2 0 2 9 1 0 2 0 2 0 2 9 1 0 2 0 2 0 2 0 2 0 2 9 1 0 2 0 2 0 2 9 1 0 2 0 2 0 2 9 1 0 2 0 2 0 2 t ü s k Ö n a g i l l i M t n u o M r o t m u K d e t a d i l o s n o C t ü s k Ö n a g i l l i M t n u o M r o t m u K d e t a d i l o s n o C ) d e i f i c e p s e s i w r e h t o s s e l n u , s n o i l l i m $ - d e t i d u a n U ( e c n u o r e p ) s e x a t d e s a b - e u n e v e r g n i d u l c x e d n a g n i d u l c n i ( s i s a b t c u d o r p - y b a n o s t s o c g n i n i a t s u s n i - l l a g n i d u l c n i , s t s o c t i n u n i a t r e C : s w o l l o f s a d e l i c n o c e r e b n a c d n a s e r u s a e m P A A G - n o n e r a 5 . 4 3 1 2 . 8 9 7 . 2 3 2 7 . 4 1 1 7 . 4 9 4 . 9 0 2 6 . 8 2 2 8 . 4 9 1 - - 6 . 8 2 2 8 . 4 9 1 1 . 3 6 3 2 . 8 9 3 . 1 6 4 7 . 4 4 3 7 . 4 9 4 . 9 3 4 8 . 3 1 - 8 . 3 1 7 . 7 2 4 . 1 2 1 . 9 4 3 . 4 2 5 . 3 2 8 . 7 4 6 . 9 4 4 . 2 4 - - 6 . 9 4 4 . 2 4 3 . 7 7 4 . 1 2 7 . 8 9 5 . 0 8 5 . 3 2 0 . 4 0 1 d e t r o p e r s a , t n e m g e s m u n e d b y l o m g n i d u l c x e s t s o c n o i t c u d o r p l a t o T r e p p o c o t e l b a t u b i r t t a s t s o c n o i t c u d o r P d l o g o t e l b a t u b i r t t a s t s o c n o i t c u d o r P 7 . 8 4 . 2 4 2 3 . 9 1 3 . 0 2 2 7 . 8 2 . 3 4 3 ) 8 . 0 4 1 ( ) 6 . 8 7 1 ( - 9 . 8 8 . 8 1 . 5 - 2 . 6 0 . 4 1 0 . 5 1 ) 8 . 0 4 1 ( ) 6 . 8 7 1 ( ) 9 . 1 3 ( ) 0 . 3 5 ( - 5 . 2 5 . 2 3 . 1 - 5 . 0 - - 8 . 0 0 1 - 6 . 5 3 4 . 2 1 3 . 9 4 1 0 . 4 3 . 9 4 1 - - - - - 2 . 1 6 . 9 3 - 8 . 4 8 . 7 3 4 . 3 8 5 . 7 4 . 3 8 - - 3 . 3 5 1 4 . 0 8 1 9 . 0 9 1 . 4 5 1 6 4 7 8 2 8 8 2 8 9 4 8 0 5 9 6 4 . 1 5 8 . 1 4 4 7 1 4 5 1 4 5 0 9 5 4 3 9 8 1 . 1 7 4 . 1 - - 4 . 1 5 . 6 7 6 . 8 3 9 . 8 5 3 4 . 6 1 1 3 . 5 7 4 3 . 1 1 0 . 6 1 - 6 . 2 0 5 2 . 0 0 6 1 8 3 8 9 5 2 9 7 8 3 8 8 9 5 a / n a / n - 0 . 1 - 0 . 8 5 5 . 2 4 1 8 . 1 2 4 5 . 8 3 1 3 . 0 6 5 9 . 5 1 8 . 6 1 - 0 . 3 9 5 2 . 9 6 5 2 4 3 1 4 7 4 8 9 2 4 0 , 1 1 4 7 a / n a / n 9 . 1 6 . 4 4 5 . 6 7 2 . 4 7 4 . 2 1 8 . 2 5 5 4 . 6 1 1 2 . 9 6 6 0 . 8 2 7 . 2 3 9 . 8 4 1 8 . 8 7 8 6 . 0 8 7 5 6 4 8 0 7 7 5 8 3 . 9 1 1 . 5 9 2 0 . 1 1 . 6 4 0 . 4 5 1 0 . 5 7 . 7 9 0 . 9 9 5 5 . 8 3 1 5 . 7 3 7 2 . 9 3 8 . 9 6 3 . 4 2 8 . 0 7 8 1 . 2 2 8 9 1 4 9 2 7 7 9 8 7 3 7 6 4 . 1 5 8 . 1 9 9 7 8 1 . 1 7 4 . 1 6 2 1 , 1 9 5 0 , 1 - - - - - 8 . 3 1 2 . 7 9 . 1 2 . 0 - 1 . 3 2 1 . 3 2 0 . 1 2 . 6 - 3 . 0 3 4 . 9 3 - 0 5 3 6 8 5 6 8 5 9 6 7 6 8 5 a / n a / n - 7 . 9 1 - 1 . 0 - 9 . 8 4 . 8 - 1 . 7 3 3 . 1 1 . 7 3 - - 4 . 8 3 3 . 3 3 3 . 4 1 1 3 8 4 1 1 , 1 4 1 1 , 1 5 5 1 , 1 9 6 2 , 1 0 5 . 1 8 2 . 2 - 3 . 0 ) 7 . 2 ( - - - 7 . 1 6 . 6 1 9 . 5 1 0 . 3 9 . 5 1 - - 9 . 8 1 9 . 3 3 0 . 9 1 6 1 7 9 6 4 9 6 4 8 5 5 4 2 . 1 9 7 . 1 3 3 0 , 1 - 4 . 2 3 . 3 5 - 4 . 0 2 . 8 2 8 . 7 - 1 . 1 2 . 2 7 . 5 4 - - 3 . 0 1 . 8 4 2 . 5 1 7 . 9 8 3 . 8 2 0 . 8 1 1 2 . 5 2 3 . 9 0 1 5 . 4 3 1 3 . 4 9 . 2 - 2 . 5 2 1 6 . 6 3 1 - 3 6 3 7 5 6 4 6 8 6 1 9 7 5 6 a / n a / n 5 . 5 4 . 9 - 6 . 6 9 4 . 9 4 1 - 9 3 4 1 3 1 , 1 1 9 3 , 1 5 4 5 , 1 1 3 1 , 1 a / n a / n 8 . 3 6 . 3 ) 9 . 1 3 ( ) 0 . 3 5 ( 4 . 2 0 . 3 7 0 . 9 5 . 0 2 . 8 2 7 . 6 1 4 . 8 3 . 8 2 8 . 5 3 1 1 . 4 6 1 0 . 9 3 . 2 4 8 . 0 1 2 . 6 2 2 9 . 9 6 1 3 . 4 1 5 5 4 9 9 7 6 6 9 1 3 3 , 1 9 2 8 0 5 . 1 8 2 . 2 2 . 2 8 . 6 5 6 . 7 1 3 . 0 3 . 5 5 7 . 3 3 9 . 1 2 . 5 2 6 . 5 6 1 8 . 0 9 1 0 . 3 1 2 . 0 2 8 . 5 8 . 9 2 2 9 . 9 6 1 0 . 9 1 4 7 4 4 7 9 2 2 1 , 1 2 5 3 , 1 3 7 0 , 1 4 2 . 1 9 7 . 1 ) s e x a t d e s a b - e u n e v e r g n i d u l c n i ( s i s a b t c u d o r p - y b a n o s t s o c g n i n i a t s u s n i - l l A s t s o c t n e m p o l e v e d - e r p d n a s t s o c e c n a n e t n i a m d n a e r a C ) 2 ( ) 1 ( s e r u t i d n e p x e l a t i p a c g n i n i a t s u s - n o N s t s o c y d u t s d n a n o i t a r o l p x E s i s a b t c u d o r p - y b a n o s t s o c n i - l l A ' ) s 0 0 0 ( d l o s s e c n u O ) s e t i s g n i t a r e p o ( n o i t e r c c a - n o i t a i d e m e r d n a n o i t a m a l c e R s t s o c r e h t o d n a e v i t a r t s i n i m d a l a r e n e g e t a r o p r o C s t s o c t r o p s n a r t d n a g n i n i f e r , g n i t l e m s y t r a p d r i h T s n o i t a r e p o t n e r r u c o t d e t a l e r s t s o c y t i n u m m o C s t i d e r c t c u d o r p - o c d n a t c u d o r p - y B s t s o c n o i t c u d o r p d e t s u j d A : r o f t s u j d A s i s a b t c u d o r p - y b a n o s t s o c g n i n i a t s u s n i - l l A s e x a t d e s a b - e u n e v e R ) 1 ( s e r u t i d n e p x e l a t i p a c g n i n i a t s u S ) 1 ( g n i p p i r t s d e z i l a t i p a C s e s a e l g n i n i a t s u S d e s a b - e u n e v e r g n i d u l c n i , s i s a b t c u d o r p - y b a n o s t s o c g n i n i a t s u s n i - l l A ) d l o s z o / $ ( s i s a b t c u d o r p - y b a n o s t s o c g n i n i a t s u s n i - l l A - - d l o G d l o G ) d l o s z o / $ ( s t s o c n o i t c u d o r p d l o G ) d l o s z o / $ ( s e x a t ) d l o s d n u o p / $ ( s i s a b t c u d o r p - o c a n o s t s o c g n i n i a t s u s n i - l l A - r e p p o C ) d l o s z o / $ ( s i s a b t c u d o r p - o c a n o s t s o c g n i n i a t s u s n i - l l A ) d l o s z o / $ ( s i s a b t c u d o r p - y b a n o s t s o c n i - l l A - - d l o G d l o G ) d l o s d n u o p / $ ( s t s o c n o i t c u d o r p r e p p o C ) s n o i l l i m ( d l o s s d n u o P s t s o c n o i t c u r t s n o c d e d u l c n i s e r u t i d n e p x e l a t i p a c g n i n i a t s u s - n o n , r a e y t n e r r u c e h t n I . e n i m e h t f o e u l a v t n e s e r p t e n e h t n i e s a e r c n i t n a c i f i n g i s a e v a h o t d e n g i s e d s t c e j o r p t c n i t s i d e r a s e r u t i d n e p x e l a t i p a c g n i n i a t s u s - n o N . e n i m r o t m u K e h t t a 0 2 k c a b - t u c o t d e t a l e r s t s o c l a n o i t i d d a d n a e n i m t ü s k Ö e h t o t d e t a l e r . s i s a b h s a c a n o d e t n e s e r p e r a s e r u t i d n e p x e l a t i p a C ) 1 ( ) 2 ( CENTERRA GOLD INC. ANNUAL REPORT 2020 51 Adjusted net earnings can be reconciled as follows: Adjusted net earnings is intended to provide investors with information about the Company’s continuing income generating capabilities. This measure adjusts for the earnings impact of items not associated with ongoing operations. ($ millions, except as noted) Net earnings Adjust for items not associated with ongoing operations: Kyrgyz Republic settlement Asset Impairment - Mount Milligan ARO revaluation at sites on care and maintenance 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 Three months ended December 31, Twelve months ended December 31, 2019 2019 2020 2020 $ 95.2 $ (12.2) $ 408.5 $ (93.5) - - 9.3 104.5 $ 0.32 $ 0.32 $ 0.35 $ 0.35 $ - - 34.5 22.3 $ (0.04) $ (0.04) $ 0.08 $ 0.08 $ - - 53.4 461.9 $ 1.39 $ 1.37 $ 1.57 $ 1.55 $ 10.0 230.5 34.5 181.5 (0.32) (0.32) 0.62 0.62 $ $ $ $ $ Adjusted cash provided by operations can be reconciled as follows: Three months ended December 31 Twelve months ended December 31 ($ millions, except as noted) Cash provided by operations Adjust for items not associated with ongoing operations: Kyrgyz Republic settlement payment Adjusted cash provided by operations $ $ 2020 2019 2020 182.0 $ 92.5 $ 930.0 $ - - 5.0 182.0 $ 92.5 $ 935.0 $ 2019 334.1 62.6 396.7 Free cash flow and Adjusted free cash flow are calculated as follows: ($ millions, except as noted) Cash provided by operations (1) Adjust for: Additions to property, plant and equipment (1) Free cash flow (deficit) Adjust for: Kyrgyz Republic settlement payment Adjusted Free cash flow (deficit) Three months ended December 31 Twelve months ended December 31 2020 2019 2020 182.0 $ 92.5 $ 930.0 $ 2019 334.1 (105.2) (92.9) (326.2) (299.4) 76.8 $ (0.4) $ 603.8 $ 34.7 - - 5.0 76.8 $ (0.4) $ 608.8 $ 62.6 97.3 $ $ $ (1) As presented in the Company’s Consolidated Statement of Cash Flows. CENTERRA GOLD INC. ANNUAL REPORT 202052 Average realized sales price for gold The average realized gold price per ounce sold is calculated by dividing gold sales revenue, 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 - Öksüt 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 Final metal 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, Twelve months ended December 31, 2020 2019 2020 2019 178.1 74.3 5.1 0.2 (0.4) 4.9 41.2 2.4 (1.9) 0.3 42.0 46.9 (0.2) 46.7 200.5 - 5.1 0.7 (0.9) 4.9 32.8 2.7 (1.6) (0.7) 33.2 38.1 (0.2) 37.9 981.6 186.5 23.5 6.3 (10.7) 19.1 175.0 4.0 9.0 (1.4) 186.6 205.7 (0.7) 205.0 827.5 - 27.4 1.7 (4.0) 25.1 164.3 (2.7) 8.6 (0.2) 170.0 195.1 (0.9) 194.2 Total gold revenue - Consolidated 299.2 238.4 1,373.1 1,021.7 Ounces of gold sold Gold ounces sold - Kumtor Gold ounces sold - Öksüt Ounces sold to Royal Gold - Mt. Milligan Ounces sold to third party customers - Mt. Milligan Total ounces sold - Consolidated(1) Average realized sales price for gold on a per ounce basis Average realized sales price - Kumtor Average realized sales price - Öksüt 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 - Final metal adjustments Average realized gold price - Mt. Milligan - Third party Average realized gold price - Mt. Milligan - Combined 96,641 39,380 11,842 22,087 136,568 - 11,577 21,747 569,213 98,849 53,684 100,416 600,231 - 62,800 117,623 169,950 169,892 822,162 780,654 1,843 1,887 435 15 (31) 419 1,866 108 (88) 13 1,899 1,376 1,468 - 435 43 (80) 398 1,510 126 (71) (30) 1,535 1,137 1,725 1,887 435 118 (199) 354 1,743 40 90 (14) 1,859 1,330 1,379 - 435 27 (64) 398 1,397 (23) 73 (2) 1,445 1,077 Average realized sales price for gold - Consolidated 1,760 1,403 1,670 1,309 (1) Includes ounces sold at Öksüt from June 1, 2020, after Öksüt achieved commercial production on May 31, 2020. CENTERRA GOLD INC. ANNUAL REPORT 202053 Average realized sales price for Copper - Mount Milligan The average realized copper price per pound is calculated by dividing copper sales revenue, 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, Twelve months ended December 31, 2020 2019 2020 2019 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 pricing adjustments Final metal 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 - Metal pricing adjustments Average realized copper price - Third party Average realized copper price - Combined 1.7 0.4 (1.3) 0.8 49.1 3.2 3.5 (0.2) 55.6 56.4 (3.4) 53.0 3,563 15,412 18,975 0.48 0.11 (0.37) 0.22 3.19 0.21 0.23 (0.01) 3.62 2.79 1.0 (0.6) (0.2) 0.2 30.0 5.4 1.1 (1.0) 35.5 35.7 (3.8) 31.9 2,684 11,617 14,301 0.38 (0.21) (0.07) 0.10 2.58 0.45 0.10 (0.09) 3.04 2.23 6.2 2.1 (3.5) 4.8 179.6 5.4 6.8 (2.8) 189.0 193.8 (15.2) 178.6 15,124 65,353 80,477 0.41 0.14 (0.23) 0.32 2.75 0.08 0.10 (0.04) 2.89 2.22 5.2 (0.9) (0.1) 4.2 147.0 8.1 0.6 (2.0) 153.7 157.9 (17.1) 140.8 12,682 54,748 67,430 0.41 (0.07) (0.01) 0.33 2.68 0.15 0.01 (0.04) 2.80 2.09 Qualified Person & QA/QC – Production, Mineral Reserves and Mineral Resources The production information and other scientific and technical information presented in this document, including the production estimates were prepared in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum and NI 43-101 and were prepared, reviewed, verified, and compiled by Centerra’s geological and mining staff under the supervision of Slobodan (Bob) Jankovic, Professional Geoscientist, member of the Association of Professional Geoscientists of Ontario (APGO) and Centerra’s Senior Director, Technical Services, who is a qualified person for the purpose of NI 43-101. Unless otherwise noted below, 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 a NI 43-101 technical report dated February 24, 2021 and filed on SEDAR at www.sedar.com. The technical report describes the exploration history, geology, and style of gold mineralization at the Kumtor deposit. Sample preparation, analytical techniques, laboratories used, and quality assurance-quality control protocols used are described in the technical report. CENTERRA GOLD INC. ANNUAL REPORT 202054 The Mount Milligan deposit is described in a NI 43-101 technical report dated March 26, 2020 and filed 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 Öksüt deposit is described in a NI 43-101 technical report dated September 3, 2015 and filed 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 exploration drilling programs are done consistent with industry standards and independent certified assay labs. Mineral Reserves and Mineral Resources On February 24, 2021, the Company released the results of the updated mineral reserve and mineral resource estimates for the Kumtor Mine, the Mount Milligan Mine, the Öksüt Mine, and the Kemess Property, all as of December 31, 2020. The 2020 mineral reserves and resources estimate excludes the Greenstone property (Hardrock), the sale of which was announced December 15, 2020. For additional details, please see the news release “Centerra Gold 2020 Year-End Mineral Reserves and Resources, Kumtor Technical Report and Fourth Quarter Exploration Update” filed on SEDAR and posted on the Company’s website on February 24, 2021. 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 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. Total gold mineral reserves and resources Gold (000s attributable ounces contained) (1)(4) Total proven and probable mineral reserves Total measured and indicated mineral resources (2) Total inferred mineral resources(2)(3) 6,722 (1) Centerra’s equity interests as at December 31, 2020, are as follows: Mount Milligan 100%, Kumtor 100%, Öksüt 100% and Kemess Underground and 5,379 Kemess East 100%. 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 35% of gold sales from the Mount Milligan Mine. Under the stream arrangement, Royal Gold will pay $435 per ounce of gold delivered. Mineral resources for the Mount Milligan property are presented on a 100% basis. 2020 11,166 2019 11,086 7,948 13,347 CENTERRA GOLD INC. ANNUAL REPORT 202055 2020 1,467 5,329 2019 1,589 5,327 Total copper mineral reserves and resources Copper (million pounds contained) (1)(4) Total proven and probable mineral reserves Total measured and indicated mineral resources (2) Total inferred mineral resources(2)(3) 502 (1) Centerra’s equity interests as at December 31, 2020, are as follows: Mount Milligan 100%, Kemess Underground 100%, Kemess East 100% and Berg 520 100%. (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. Total molybdenum mineral reserves and resources Molybdenum (million pounds contained) (1)(3)(4) Total proven and probable mineral reserves Total measured and indicated mineral resources(2) Total inferred mineral resources(3) 2020 - 636 50 2019 - 636 50 (1) Centerra’s equity interests are 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. (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) Molybdenum mineral resources at Berg, Thompson Creek and Endako were estimated using a molybdenum price of $14.00 per pound. The exchange rate used at Berg and Endako was 1USD:1.25CAD Material assumptions used to determine mineral reserves and mineral resources are as follows: Gold price Gold mineral reserves ($/oz) Gold mineral resources ($/oz) Copper price Copper mineral reserves ($/lb) Copper mineral resources ($/lb) Foreign exchange rates 1 USD : Cdn dollar 1 USD : Kyrgyz som 1 USD : Turkish Lira 2020 2019 1,250-1,350 1,500-1,550 1,250 1,500 3.00 3.50 1.25 70 5.50 3.00 3.50 1.25 65 5.50 CENTERRA GOLD INC. ANNUAL REPORT 202056 Centerra Gold Inc. Consolidated Financial Statements For the Years Ended December 31, 2020 and 2019 (Expressed in thousands of United States Dollars) CENTERRA GOLD INC. ANNUAL REPORT 202057Report of Management’s Accountability The accompanying audited consolidated financial statements of Centerra Gold Inc. were prepared by management in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. Management acknowledges responsibility for significant accounting judgments and audited annual consolidated financial statements, including responsibility for significant accounting judgments and estimates and the choice of accounting principles and methods that are appropriate to the Company’s circumstances. The Board of Directors is responsible for reviewing and approving the audited annual consolidated financial statements together with other financial information of the Company and for ensuring that management fulfills its financial reporting responsibilities. The Board of Directors carries out this responsibility principally through its Audit Committee. The Audit Committee is appointed by the Board of Directors and all of its members are non-management directors. The Audit Committee reviews the consolidated financial statements, management’s discussion and analysis and the external auditors’ report; examines the fees and expenses for audit services; and considers the engagement or reappointment of the external auditors. The Audit Committee reports its findings to the Board of Directors for its consideration when approving the consolidated financial statements for issuance to the shareholders. KPMG LLP, the external auditors, have full and free access to the Audit Committee. Original signed by: Scott G. Perry President and Chief Executive Officer February 23, 2021 Original signed by: Darren J. Millman Vice President and Chief Financial Officer CENTERRA GOLD INC. ANNUAL REPORT 202058 KPMG LLP Bay Adelaide Centre 333 Bay Street, Suite 4600 Toronto, ON M5H 2S5 Canada Tel 416-777-8500 Fax 416-777-8818 INDEPENDENT AUDITORS’ REPORT To the Shareholders of Centerra Gold Inc. Opinion We have audited the consolidated financial statements of Centerra Gold Inc. (the Entity), which comprise:     the consolidated statements of financial position as at December 31, 2020 and December 31, 2019 the consolidated statements of earnings (loss) and other comprehensive income (loss) for the years then ended December 31, 2020 and December 31, 2019 the consolidated statements of Shareholders’ equity for the years then ended December 31, 2020 and December 31, 2019 the consolidated statements of cash flows for the years then ended December 31, 2020 and December 2019 and notes to the consolidated financial statements, including a summary of significant  accounting policies (Hereinafter referred to as the “financial statements”). In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity as at December 31, 2020 and December 31, 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRS). Basis for Opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the “Auditors’ Responsibilities for the Audit of the Financial Statements” section of our auditors’ report. We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. CENTERRA GOLD INC. ANNUAL REPORT 202059KPMG LLP Bay Adelaide Centre 333 Bay Street, Suite 4600 Toronto, ON M5H 2S5 Canada Tel 416-777-8500 Fax 416-777-8818 We have determined the matters described below to be the key audit matters to be communicated in our auditors’ report. Evaluation of indicators of impairment and reversal of impairment for long-lived assets Description of the matter We draw attention to Note 3(j), Note 4(i) and Note 9 to the financial statements. Long-lived assets, including goodwill, are reviewed for impairment indicators at each reporting period. If an indicator of impairment exists, the Company calculates the recoverable amount of the asset to determine if any impairment loss is required. CGUs with previous impairment charges to long-lived assets, other than goodwill, are monitored for potential indicators of impairment reversal. A cash-generating unit (“CGU”) is identified as the smallest identifiable group of assets that generates cash inflows, which are largely independent of the cash flows from other assets. Long-lived assets are $1.7 billion. Significant judgment is required in assessing indicators of impairment or reversal of impairment. The Entity completes an evaluation at each reporting period of potential impairment indicators or reversal of impairment, considering both external and internal sources of information. Why the matter is a key audit matter We identified the evaluation of indicators of impairment and reversal of impairment for long-lived assets as a key audit matter. Long-lived assets are material to the financial statements. Significant auditor judgment is required to evaluate the results of our audit procedures and assess the Entity’s determination of whether the internal and external factors, individually and in the aggregate, result in indicators of impairment or reversal of impairment. How the matter was addressed in the audit The following are the primary procedures we performed to address this key audit matter. We evaluated the Entity’s analysis of internal and external factors within their impairment and reversal of impairment indicators memorandum by considering whether quantitative and qualitative information in the analysis was consistent with other evidence in other areas of the audit. This included:   Other evidence obtained in other areas of the audit, including estimates of mineral reserves and Information included in Entity’s press releases and management’s discussion and analysis resources and internal communications to management and the Board of Directors. To assess the Entity’s ability to accurately forecast:  We compared for certain CGUs the Entity’s operating and capital cost estimates to actual results  We compared by CGU the Entity’s production estimates to actual production. To search for significant changes in the external environment we:  Inspected publicly available market data for changes in the price of gold, copper, molybdenum prices, discount rates and foreign exchange rates  Compared the Entity’s market capitalization to the carrying value of its net assets. CENTERRA GOLD INC. ANNUAL REPORT 202060KPMG LLP Bay Adelaide Centre 333 Bay Street, Suite 4600 Toronto, ON M5H 2S5 Canada Tel 416-777-8500 Fax 416-777-8818 Other Information Management is responsible for the other information. Other information comprises:  the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions. the information, other than the financial statements and the auditors’ report thereon, included in the “Annual Report”  Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for indications that the other information appears to be materially misstated. We obtained the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions as at the date of this auditors’ report. If, based on the work we have performed on this information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditors’ report. We have nothing to report in this regard. The information, other than the financial statements and the auditors’ report thereon, included in the “Annual Report” is expected to be made available to us after the date of this auditors’ report. If, based on the work we will perform on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact to those charged with governance. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards (IFRS), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Entity’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or have no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Entity‘s financial reporting process. Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in CENTERRA GOLD INC. ANNUAL REPORT 202061KPMG LLP Bay Adelaide Centre 333 Bay Street, Suite 4600 Toronto, ON M5H 2S5 Canada Tel 416-777-8500 Fax 416-777-8818 accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.  Obtain an understanding of internal control relevant to the audit 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.  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.  Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Entity to cease to continue as a going concern.  Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.  Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.  Provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. CENTERRA GOLD INC. ANNUAL REPORT 202062KPMG LLP Bay Adelaide Centre 333 Bay Street, Suite 4600 Toronto, ON M5H 2S5 Canada Tel 416-777-8500 Fax 416-777-8818  Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group Entity to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.  Determine, from the matters communicated with those charged with governance, those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditors’ report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Chartered Professional Accountants, Licensed Public Accountants The engagement partner on the audit resulting in this auditor's report is Daniel Gordon Ricica. Toronto, Canada February 23, 2021 CENTERRA GOLD INC. ANNUAL REPORT 202063Centerra Gold Inc. Consolidated Statements of Financial Position (Expressed in thousands of United States Dollars) December 31, 2020 December 31, 2019 Assets Current assets Cash and cash equivalents Amounts receivable Inventories Assets held-for-sale Other current assets Property, plant and equipment Reclamation deposits Other assets Total assets Liabilities and Shareholders' equity Current liabilities Accounts payable and accrued liabilities Revenue-based tax payable Income tax payable Liabilities held-for-sale Other current liabilities Long-term debt Deferred income tax liability Provision for reclamation Other liabilities Shareholders' equity Share capital Contributed surplus Accumulated other comprehensive income (loss) Retained earnings Total liabilities and Shareholders' equity Commitments and contingencies (note 25) Subsequent events (notes 5 and 23d) Notes 6 7 5 8 9 13 10 $ $ 11 $ 5 8 12 22 13 10 23 $ 545,180 $ 66,108 580,587 140,005 40,961 1,372,841 1,686,067 47,083 30,018 1,763,168 3,136,009 $ 232,704 $ 5,073 2,474 2,255 15,322 257,828 - 39,473 351,149 21,541 412,163 975,122 30,601 11,600 1,448,695 2,466,018 3,136,009 $ 42,717 79,022 774,060 - 36,869 932,668 1,669,516 40,999 58,470 1,768,985 2,701,653 238,339 744 1,034 - 4,692 244,809 70,007 33,733 265,049 22,211 391,000 960,404 26,278 (752) 1,079,914 2,065,844 2,701,653 The accompanying notes form an integral part of these consolidated financial statements. Approved by the Board of Directors Original signed by: Michael S. Parrett Richard W. Connor CENTERRA GOLD INC. ANNUAL REPORT 202064Centerra Gold Inc. Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) For the years ended December 31, (Expressed in thousands of United States Dollars) (except per share amounts) 2020 2019 Revenue Cost of sales Production costs Depreciation, depletion and amortization Standby costs Earnings from mine operations Revenue-based taxes Exploration and development costs Corporate administration Care and maintenance expense Impairment Other operating expenses Earnings (loss) from operations Other expense (income), net Finance costs Earnings (loss) before income tax Income tax expense (recovery) Net earnings (loss) Other Comprehensive Income (Loss) Items that may be subsequently reclassified to earnings: Net gain on translation of foreign operation Net unrealized gain (loss) on derivative instruments Post-retirement benefit Other comprehensive income ("OCI") Total comprehensive income (loss) Basic earnings (loss) per share Diluted earnings (loss) per share Notes 15 $ 1,688,675 $ 1,375,328 16 17 22a 18 19 20 21 22 28 23 23 $ $ $ $ $ 590,624 305,286 6,728 786,037 138,493 47,442 45,674 29,117 - 87,095 438,216 7,028 14,941 416,247 7,709 408,538 839 11,513 - 12,352 420,890 1.39 1.37 $ $ $ $ $ 676,632 239,511 9,100 450,085 116,417 45,958 45,265 28,529 230,500 69,113 (85,697) (1,450) 16,337 (100,584) (7,071) (93,513) 1,753 (395) (22) 1,336 (92,177) (0.32) (0.32) The accompanying notes form an integral part of these consolidated financial statements. CENTERRA GOLD INC. ANNUAL REPORT 202065Centerra Gold Inc. Consolidated Statements of Cash Flows For the years ended December 31, (Expressed in thousands of United States Dollars) 2020 2019 Operating activities Earnings (loss) from operations Notes $ 408,538 $ (93,513) Adjustments for the following items: Depreciation, depletion and amortization Finance costs Share-based compensation expense Reclamation expense Asset impairment Other Cash provided by operations before changes in working capital Changes in working capital Cash provided by operations Investing activities Property, plant and equipment additions Decrease (increase) in restricted cash Increase in other assets Cash used in investing Financing activities Debt drawdown Debt repayment Payment of borrowing costs Lease payments Proceeds from common shares issued Dividends declared and paid Cash used in financing Increase (decrease) in cash during the year Cash at beginning of the year Reclassified to assets held-for-sale Cash at end of the year 21 19 24b 24a 12 12 14 23d 5 $ 314,947 14,941 20,348 53,135 - 40,747 852,656 77,359 930,015 (326,240) 25,246 (2,382) (303,376) 250,000 (327,472) (8,515) (6,037) 7,793 (39,757) (123,988) 502,651 42,717 (188) 545,180 $ 245,746 16,337 19,773 34,439 230,500 (54,819) 398,463 (64,314) 334,149 (299,443) (481) (9,725) (309,649) 302,804 (417,986) (9,293) (16,962) 7,949 - (133,488) (108,988) 151,705 - 42,717 The accompanying notes form an integral part of these consolidated financial statements. CENTERRA GOLD INC. ANNUAL REPORT 202066Centerra Gold Inc. Consolidated Statements of Shareholders' Equity (Expressed in thousands of United States Dollars, except share information) Number of Common Shares 291,999,949 1,505,768 169,890 14,849 293,690,456 Accumulated Other Share Capital Amount $ 949,328 $ - - Contributed Comprehensive (Loss) Income (2,088) - 1,336 Surplus 27,364 - - $ Retained Earnings $ 1,173,427 $ (93,513) - Total 2,148,031 (93,513) 1,336 - 9,960 1,015 1,940 (3,026) - - - - - - - 1,940 6,934 1,015 101 $ 960,404 $ - - - 26,278 - - $ - (752) - 12,352 - $ 1,079,914 $ 408,538 - 101 2,065,844 408,538 12,352 1,490,465 - 10,641 10,564 (3,291) 520,165 1,096 - - - - - - - 10,564 7,350 1,096 Balance at January 1, 2019 Net loss Other comprehensive income Transactions with owners: Share-based compensation expense Issued on exercise of stock options Issued under the employee share purchase plan Issued on redemption of restricted share units Balance at December 31, 2019 Net earnings Other comprehensive income Transactions with owners: Share-based compensation expense Issued on exercise of stock options Issued under the employee share purchase plan Issued on redemption of restricted share units Dividend declared and paid Balance at December 31, 2020 126,820 - 295,827,906 2,981 - $ 975,122 $ (2,950) - 30,601 $ - - 11,600 - (39,757) $ 1,448,695 $ 31 (39,757) 2,466,018 The accompanying notes form an integral part of these consolidated financial statements. CENTERRA GOLD INC. ANNUAL REPORT 202067Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (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. 2. Basis of presentation a. Statement of Compliance 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 (the “Board”) on February 23, 2021. b. Basis of Presentation Overview These consolidated financial statements have been prepared on a going concern basis under the historical cost basis, except for certain financial assets and liabilities which are measured at fair value. The consolidated financial statements are presented in United States dollars with all amounts rounded to the nearest thousand, except where otherwise noted. Subsidiaries These consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All intercompany balances, transactions, income and expenses and gains or losses have been eliminated on consolidation. Subsidiaries consist of entities from which the Company is exposed, 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. The Company reassesses whether or not it controls a subsidiary if facts and circumstances indicate that there are changes to one or more of the elements of control. CENTERRA GOLD INC. ANNUAL REPORT 202068Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) Joint Arrangements A joint arrangement is defined as an arrangement in which two or more parties have joint control. Joint control is the contractually agreed sharing of control over an arrangement between two or more parties. This exists only when the decisions about the relevant activities that significantly affect the returns of the arrangement require the unanimous consent of the parties sharing control. A joint operation is a joint arrangement whereby the parties have joint control of the arrangement and have rights to the assets and obligations for the liabilities relating to the arrangement. These consolidated financial statements include the Company’s interests in the assets, liabilities, revenues and expenses of the joint operations, from the date that joint control commenced. The Company’s 50% interest in the Greenstone Partnership and 75% interest in the Endako Mine have been accounted for as joint operations. Centerra’s significant subsidiaries are as follows: Property - Location Kumtor Gold Company ("KGC") Kumtor Mine - Kyrgyz Entity Current status Operation Entity Type Subsidiary Basis of Accounting Consolidation Property Ownership 100% Thompson Creek Metals Company Inc. Mount Milligan Mine - Canada Republic Operation Subsidiary Consolidation 100% Langeloth Metallurgical Company LLC ("Langeloth") Molybdenum Processing Facility Öksüt Madencilik A.S. ("OMAS") Langeloth - United States Operation Subsidiary Consolidation 100% Öksüt Mine - Turkey Operation Subsidiary Consolidation 100% Greenstone Gold Mines LP ("Greenstone Partnership") Greenstone Gold Property - Canada Available for sale(a) Joint operation Proportionate consolidation 50% AuRico Metals Inc. Thompson Creek Mining Company Thompson Creek Metals Company Inc. Kemess Project - Canada ("Kemess") Thompson Creek Mine - United States Endako Mine - Canada Pre-development Subsidiary Consolidation 100% Care and Maintenance Care and Maintenance Subsidiary Consolidation 100% Joint operation Proportionate consolidation 75% (a) Property divestment completed on January 19, 2021 (note 5). As at December 31, 2020 the Company owns exploration properties in Canada, the United States of America and Turkey and has options to acquire exploration joint venture properties in Canada, Finland, Turkey, and the United States of America. CENTERRA GOLD INC. ANNUAL REPORT 202069Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) 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. Business combinations The Company uses the acquisition method of accounting for business combinations, whereby the purchase consideration transferred in the acquisition is allocated to the identifiable net assets acquired on the basis of fair value. Certain fair values may be estimated at the acquisition date pending confirmation or completion of the valuation process, within a measurement period not to exceed one year from the acquisition date. 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. The excess of the consideration transferred over the fair value of the net assets acquired is recorded as goodwill. A gain is recorded through the Statement of Earnings and Comprehensive Income (“Statement of Earnings”) if the cost of the acquisition is less than the fair values of the identifiable net assets acquired. b. Non-current assets and disposal groups held-for-sale Non-current assets or disposal groups are classified as assets held-for-sale (“HFS”) if it is highly probable that they will be sold in their current condition within one year from the date of classification. Assets and disposal groups that meet the criteria to be classified as HFS are recorded at the lower of carrying amount and fair value less cost of disposal. Impairment losses on initial classification as HFS and subsequent gains and losses on remeasurement are recognized in the Statement of Earnings. Once classified as HFS, property, plant and equipment are no longer depreciated. The assets and disposal groups classified as HFS are presented separately in the Consolidated Statement of Financial Position (“Statement of Financial Position”). c. Foreign currency The functional currency of the Company, including its subsidiaries and joint operations is the currency of the primary economic environment in which it operates. The functional currency of the Company’s operations is the United States dollar (“USD”), except for the Greenstone Partnership, which has a functional currency of the Canadian dollar (“Cdn$”). This results in translation gains (losses) being recorded as part of Other Comprehensive Income in the Statement of Earnings. CENTERRA GOLD INC. ANNUAL REPORT 202070Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) Foreign currency transactions are translated into an entity’s functional currency as follows: - Non-monetary items that are measured at historical cost are translated at the historical exchange rates prevailing at each transaction date. Non-monetary items that are measured at fair value are translated at the exchange rate in effect at the date the fair value was measured. - Monetary items are translated at the closing rate in effect at the Statement of Financial Position date. - Revenue and expense items are translated using the average exchange rate during the period. 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. 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. f. Inventories Metal inventories, including heap leach ore, 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 net realizable value (“NRV”). The cost of inventories is determined on a weighted-average basis and includes all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Costs of inventories include 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. NRV is calculated as the estimated price in the ordinary course of business, less costs to be incurred in converting the relevant inventories to saleable product and delivering it to a customer. Any write-down of inventories to NRV or reversals of previous write-downs are recognized in the Statement of Earnings in the period that the write-down or reversal occurs. CENTERRA GOLD INC. ANNUAL REPORT 202071Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) Supplies inventory and spare parts is valued at weighted average cost. Provisions are recorded to reduce supplies inventory to NRV, which is generally calculated by reference to its salvage or scrap value, when it is determined that the supplies are obsolete. g. Property, plant and equipment Buildings, plant and equipment Buildings, plant and equipment are recorded at cost, including all expenditures incurred to prepare an asset for its intended use. An item of buildings, 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 Statement of Earnings in the year the asset is de-recognized. Buildings, plant and equipment are depreciated according to either the units-of-production method or on a straight-line basis over their expected useful life, according to the pattern in which the asset’s future economic benefits are expected to be consumed. Depreciation commences when the assets are considered available for use. Once buildings, plant and equipment are considered available for use, they are measured at cost less accumulated depreciation and applicable impairment losses. Where an item of building, plant and equipment comprises major components with different useful lives, the components are depreciated separately but are grouped for disclosure purposes as building, plant and equipment. Major overhaul expenditures and the cost of replacement of a major component are depreciated over the average expected period between major overhauls. Management annually reviews the estimated useful lives, residual values and depreciation methods of the Company’s building, 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. The following table sets out the useful lives of certain assets: Buildings, plant and equipment Mobile equipment Light vehicles and other mobile equipment Furniture, computer and office equipment Useful Life 2 to 20 years 2 to 10 years 2 to 10 years 2 to 5 years CENTERRA GOLD INC. ANNUAL REPORT 202072Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) Construction-in-progress Assets under construction are capitalized as construction-in-progress until the asset is available for use. The cost of construction-in-progress comprises its purchase price and any costs directly attributable to bringing it into working condition for its intended use. Directly attributable costs are capitalized until the asset is in a location and condition necessary for operation as intended by management. These costs include: the purchase price, installation costs, site preparation costs, survey costs, freight charges, transportation insurance costs, duties, testing and preparation charges and estimated costs of dismantling and removing the item and restoring the site on which it is located. Costs incurred on properties in the development stage are included in the carrying amount of the development project in construction-in-progress. A property is classified as a development property when a mine plan has been prepared and a decision is made to commercially develop the property. Development stage expenditures are costs incurred to obtain access to proven and probable mineral reserves or mineral resources and provide facilities for extracting, treating, gathering, transporting, and storing the minerals. All expenditures incurred from the time the development decision is made until when the asset is ready for its intended use are capitalized. Proceeds from mineral sales are offset against costs capitalized prior to a mine being capable of operating at levels intended by management and is not included in revenue from mining operations. Borrowing costs are capitalized to qualifying assets and are included in construction-in-progress. Qualifying assets are assets that take a substantial period of time to prepare for the Company’s intended use, which includes projects that are in the exploration and evaluation, pre-development and development stages. Borrowing costs attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets until such time as the assets are substantially ready for their intended use. All other borrowing costs are expensed as finance costs in the period in which they are incurred. Where the funds used to finance a qualifying asset form part of a general borrowing, the amount capitalized is calculated using a weighted average of rates applicable to the relevant borrowings during the period. Construction-in-progress is not depreciated. When an asset becomes available for use, its costs are transferred from construction-in-progress into the appropriate asset classification such as mineral properties, building, plant and equipment. Depreciation commences once the asset is complete and available for use. Mineral properties The cost of mineral properties includes the fair value attributable to proven and probable mineral reserves and mineral resources acquired, development costs, capitalized exploration and evaluation costs and capitalized borrowing costs. These costs incurred are directly attributable to CENTERRA GOLD INC. ANNUAL REPORT 202073Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) bringing a mineral property to the state where it is capable of operating in the manner intended by management (“commercial production”). In determining whether a mine has achieved commercial production, the criteria considered include the following: Substantial completion of the construction activities; - - Ability to produce minerals in saleable form (within specifications); - Completion of a reasonable period of testing of mine plant and equipment; and - Ability to sustain ongoing production of minerals. After a mine property has been brought into commercial production, costs are expensed as incurred or capitalized to inventory. Once in commercial production, sales are recognized as revenues and production costs as a component of cost of sales, instead of being deducted from or added to the capitalized construction cost of the mine and amortization of capitalized costs in property, plant and equipment commences. Mineral properties are depreciated on a units-of-production basis over the estimated economic life of the mine to which they relate. Deferred stripping costs In open pit mining operations, it is necessary to remove overburden and other waste materials to access ore from which minerals can be extracted economically. The process of mining overburden and waste materials to access ore from which minerals can be extracted economically is referred to as stripping. Stripping costs incurred in the production phase are accounted for as costs of the inventory produced during the period that the stripping costs are incurred, unless these costs are expected to provide a future economic benefit to an identifiable component of the ore body. Components of the ore body are based on the distinct development phases identified by the mine planning engineers when determining the optimal development plan for the open pit. Stripping costs incurred in the production phase provide a future economic benefit when: - 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. Where a mine operates several open pits that are regarded as separate operations for the purpose of mine planning, stripping costs are accounted for separately by reference to the ore from each separate pit. A “component” is a specific section of the ore body that is made more accessible by the stripping activity and is typically a subset of the larger ore body that is distinguished by a separate useful economic life. CENTERRA GOLD INC. ANNUAL REPORT 202074Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) When the costs of the stripping activity asset and the inventory produced are not separately identifiable, the Company allocates the production stripping costs between the inventory produced and the stripping activity asset by using an allocation basis that is based on a relevant production measure. This production measure is calculated for the identified component of the ore body and is used as a benchmark to identify the extent to which the additional activity of creating a future benefit has taken place. The benchmark used divides the total tonnage mined (ore and waste) for the component or pit for the period by the quantity of minerals contained in the ore mined for the component or pit. Capitalized stripping costs are depleted on a units-of-production basis over the proven and probable reserves that become more accessible as a result of the stripping activity. h. Leases At inception of a contract, the Company assesses whether a contract is, or contains, a lease by assessing if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company uses the following criteria to assess whether a contract conveys the right to control the use of an identified asset: - The contract involves the use of an explicitly or implicitly identified lease; - The Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and - The Company has the right to direct the use of the asset. If a contract is assessed to contain a lease, a lease liability and right-of-use (“ROU”) asset is recognized at the commencement date of the lease (i.e. the date the underlying asset is available for use). ROU assets are measured at cost less any accumulated depreciation and impairment losses and adjusted for any remeasurements of the lease liability. Such costs include the initial amount of lease obligations recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the ROU assets are depreciated on a straight-line basis over the shorter of the estimated useful life and the lease term. ROU assets are subject to impairment. At the commencement date, the lease liability is measured at the present value of lease payments to settle the lease contract, discounted using the interest rate implicit in the lease agreement or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate. The lease payments include fixed payments, variable lease payments that depend on an index or a rate, amounts expected to CENTERRA GOLD INC. ANNUAL REPORT 202075Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) be paid under residual value guarantees and the exercise price of a purchase option reasonably certain to be exercised by the Company. After the commencement date, the lease liability is increased by the interest cost on the lease liability and decreased by lease payments made. It is remeasured if there is a modification, a change in the lease term, a change in the fixed lease payments, changes based on an index or rate or a change in the assessment to purchase the underlying asset. i. Goodwill Goodwill represents the difference between the cost of a business acquisition and the fair value of the identifiable net assets acquired. Upon acquisition, goodwill 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. Subsequent to initial measurement, goodwill is measured at cost less accumulated impairment losses and is not amortized. The Company evaluates, on at least an annual basis on September 1, the carrying amount of a CGU to which goodwill is allocated, for potential impairment. In addition, the Company assesses for indicators of impairment at each reporting period end and, if an indicator of impairment is identified, goodwill is tested for impairment at that time. If the carrying value of the CGU to which goodwill is assigned exceeds its recoverable amount, an impairment loss is recognized. Goodwill impairment losses are recorded in the Statement of Earnings and are not subsequently reversed. j. Impairment Long-lived assets, including goodwill, are reviewed for impairment indicators at each reporting period. If an indicator of impairment exists, the Company calculates the recoverable amount of the asset to determine if any impairment loss is required. The recoverable amount is the greater of value-in-use (“VIU”) and fair value less costs of disposal (“FVLCD”) of an asset or CGU. An impairment loss is recognized for any excess of the carrying amount of the CGU over its recoverable amount. Impairment losses are recorded in the Statement of Earnings in the period in which they occur. If the CGU includes goodwill, the Company first applies the impairment loss to reduce goodwill and then any further excess is applied to the CGU’s other long-lived assets based on their carrying amounts on a pro-rata basis. 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. CENTERRA GOLD INC. ANNUAL REPORT 202076Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) 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. CGUs with previous impairment charges to long-lived assets, other than goodwill, are monitored for potential indicators of impairment reversal. Any impairment charge that is taken on a long- lived asset, other than goodwill, is reversed if there are subsequent changes in the estimates or significant assumptions that were used to recognize the impairment loss that result in an increase in the recoverable amount of the CGU. If an indicator of impairment reversal has been identified, the recoverable amount of the long-lived asset is calculated in order to determine if any impairment reversal is required. This reversal is recognized in earnings and is limited to the carrying value that would have been determined, net of any depreciation, depletion and amortization, where applicable, had no impairment charge been recognized in prior years. Impairment reversals are recorded in the Statement of Earnings in the period in which they occur. k. Provision for reclamation Provisions for reclamation arise from the acquisition, development and construction of mining properties and plant and equipment that are subject to government controls and regulations that protect the environment on the closure and reclamation of mining properties. Provisions for reclamation are recognized at the time that an environmental disturbance occurs or a new legal or constructive obligation is determined. The major parts of the carrying amount of provisions relate to tailings facilities and heap leach pad closure and rehabilitation, demolition of buildings and mine facilities, ongoing water treatment and ongoing care and maintenance of closed mines. Costs included in the provision encompass all closure and rehabilitation activity expected to occur progressively over the life of the operation at the time of closure and post-closure in connection with disturbances as at the reporting date. Estimated costs included in the determination of the provision reflect the risks and probabilities of alternative estimates of cash flows required to settle the obligation at each particular operation. Provisions for reclamation are measured at the expected value of future cash flows, which exclude the effect of inflation, discounted to their present value using a pre-tax risk-free discount rate. Each reporting period, provisions for reclamation are remeasured to reflect any changes to significant assumptions, including changes in discount rates, foreign exchange rates and the timing or amounts of the costs to be incurred. For operating sites, when the provision for reclamation is recognized or adjusted for an operating asset, the corresponding cost is capitalized to the related item of property, plant and equipment, 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 in the Statement of Earnings. Reclamation provisions that result from CENTERRA GOLD INC. ANNUAL REPORT 202077Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) disturbance in the land to extract ore in the current period are included in the cost of inventories. When the provision for reclamation is recognized or adjusted for closed sites, the cost is included in other operating expenses in the Statement of Earnings. The provisions are adjusted each period to reflect the passage of time and are recorded in finance costs in the period incurred. Upon settlement of the provision for reclamation, the Company records a gain or loss if the actual cost differs from the carrying amount of the provision. Settlement gains or losses are recorded in the Statement of Earnings. l. Litigation and other 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. The increase in provision due to the passage of time is recognized as a finance cost in the Statement of Earnings. Contingent liabilities may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. In assessing loss contingencies, the Company, with assistance from its legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. If the assessment of a contingency suggests that a loss is probable, and the amount can be reliably estimated, then a loss is recorded. When a contingent loss is not probable, but is reasonably possible, or is probable but the amount of loss cannot be reliably estimated, then details of the contingent loss are disclosed. Loss contingencies considered remote are generally not disclosed. Legal fees incurred in connection with pending legal proceedings are expensed as incurred. m. Debt Debt is initially recognized at fair value, net of financing costs incurred. Debt is subsequently measured at amortized cost. Any difference between the amounts received and the redemption value of the debt is recognized in the Statement of Earnings over the period to maturity using the effective interest method. CENTERRA GOLD INC. ANNUAL REPORT 202078Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) n. Share-based compensation 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. Performance Share Unit Plan Under Centerra’s Performance Share Unit (“PSU”) Plan, PSUs can be granted to employees and officers of the Company. A PSU represents the right to receive the cash equivalent of a common share or, at the Company’s option, a common share purchased on the open market. PSUs are accounted for under the liability method using the Monte Carlo simulation option pricing model and vest over three years whereby 50% vest on December 31 of the year following the grant year (“end of year 2”) and the remaining 50% vest on December 31 of the subsequent year (“end of year 3”). Under this method, the fair value of the PSUs is recognized over the vesting period. 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 on exercise of these PSUs is recorded as a reduction of the accrued obligation. 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 relative to the total return index value (“TRIV”) from the S&P/TSX Global Gold CAD$ Index during the applicable period. Should Centerra’s performance compared to TRIV fall below an adjustment factor of 0.75, payout under this plan is at the discretion of the Board of Directors. For PSUs granted in 2018 and prior, the fair value of the units is determined using the sixty-one trading days volume weighted average share price. For PSUs granted in 2019 and subsequently, the total return performance and fair value are calculated based on the five-trading day volume weighted average share price preceding the vesting date. Deferred Share Unit Plan Centerra has a Deferred Share Unit (“DSU”) Plan for directors of the Company to receive all or a portion of their annual compensation as deferred share units. DSUs are settled in cash and are accounted for under the liability method. The DSUs cannot be converted to shares by the unit CENTERRA GOLD INC. ANNUAL REPORT 202079Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) holder or by the Company. The DSUs vest immediately upon granting and can be redeemed only after a director no longer holds any position with the Company, but no later than December 15 of the following year in which the director ceased to hold all positions in the Company. A liability is recorded at grant date equal to the fair value of the DSUs. 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 on exercise of these deferred share units is recorded as a reduction of the accrued obligation. Restricted Share Unit Plan There are three types of Restricted Share Units (“RSUs”): the Executive RSUs, the Director RSUs, and the Discretionary RSUs. Executive RSUs are equity-settled share-based compensation awards. Effective in 2017, prior to the end of the first quarter of any fiscal year (or for U.S. persons, prior to the commencement of the fiscal year), Executive RSU holders may elect to receive a portion of their annual incentive payments for that year as Executive RSUs. The Company will match 50% of the Executive RSUs granted to Executive RSU holders. Executive RSUs vest 50% as of the first anniversary of their grant dates and the remaining 50% vest as of the second anniversary of their grant dates. The fair value of the Executive RSUs at the grant date is the portion of the annual incentive payment elected by these employees to be received as RSUs, plus the 50% of the RSUs granted to such individuals that is matched by the Company. Compensation expense is recognized over the vesting period based on the number of units to vest. The expense is recognized as share-based compensation expense with a corresponding increase in contributed surplus. When the Executive RSUs are exercised (at the executive’s election any time following the vesting period), the proceeds received by the Company are reclassed from contributed surplus to common shares. The Director RSUs can be settled in cash or equity at the option of the holders. The Director 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 Director RSUs granted are accounted for under the liability method whereby a liability is recorded at grant date equal to the fair value of the Director RSU. The Discretionary RSUs can be settled in cash or equity at the option of the holders and are granted by the Board of Directors to certain employees of the Company. Discretionary RSUs vest 25% as of the second anniversary of their grant dates, and 75% as of the third anniversary of their grant dates. The Discretionary RSUs are accounted for under the liability method whereby a liability is recorded at grant date equal to the fair value of the Discretionary RSU. Under this method, the fair value of the Discretionary RSUs are recognized over the vesting period. 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. CENTERRA GOLD INC. ANNUAL REPORT 202080Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) Employee Share Purchase Plan Centerra has an Employee Share Purchase Plan (“ESPP”) for employees of the Company. Under the ESPP, employees may elect to purchase the Company’s shares through a payroll deduction. Each year, employees may elect to 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. Dividends When dividends are paid, participants under the PSU, DSU and RSU plans are allocated additional units equal in value to the dividend paid per common share based on the number of units held by the participant on the record date. For PSUs issued prior to 2019, the number of units issued is based on the sixty-one trading day volume weighted average share price. o. Revenue recognition The Company sells its products pursuant to sales contracts entered into with its customers. Revenue associated with the sale of finished gold, concentrates and molybdenum products is recognized when control is transferred to the customer. For finished gold and molybdenum products sales, typically, the transfer of control occurs when the customer has taken delivery and the consideration is received, or to be received. For concentrate sales, the transfer of control is based on terms of the sales contracts, generally upon the loading of the ocean vessel or based on negotiated terms which allows for the transfer of control to happen earlier in the sale process. Revenues from finished gold sales from Kumtor are based on the London Bullion Market Association (“LBMA”) PM spot price less discounts stipulated in the agreement with Kyrgyzaltyn JSC (“Kyrgyzaltyn”). Payment is due within 12 days from the date of shipment, when control of the finished gold is transferred to the customer. Revenues from finished gold sales from the Öksüt Mine are based on the LBMA AM spot price stipulated in the agreement with The Central Bank of the Republic of Turkey (“Central Bank”). Gold dore is sent to the refinery and control is transferred to the customer when gold bars are poured. The Central Bank has the right of first refusal on the purchase of the gold produced. If Central Bank exercises this right, the finished gold is delivered and held at the Central Bank and sold to third party customers through the Central Bank. In both cases, payment is received on the same day of the sale, when control of the finished gold is transferred to the Central Bank. Revenues from the Company’s concentrate sales are based on a provisional forward sales price, which is subject to adjustments at the time of final pricing. Revenues from concentrate sales are CENTERRA GOLD INC. ANNUAL REPORT 202081Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) recorded net of treatment and refining charges and the impact of derivative contracts accounted for as hedges of the contained metal. In 2016, in connection with the acquisition of Thompson Creek Metals Inc., the Company assumed the streaming arrangement with Royal Gold Inc. (“Royal Gold”) associated with the Mount Milligan Mine. Under the terms of the streaming agreement with the Mount Milligan Mine, the Company delivers to Royal Gold 35% of gold ounces produced and 18.75% of copper produced. Royal Gold pays US$435 per ounce of gold delivered and 15% of the spot price per metric tonne of copper delivered, which is recorded to revenue. Royal Gold also has a security interest over all of the Mount Milligan Mine assets. 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 recorded at fair value each period. To satisfy its obligations under the Gold and Copper Stream Arrangement the Company purchases refined gold and London Metal Exchange (“LME”) copper warrants and arranges for delivery to Royal Gold. Revenue from 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 exposure under the Gold and Copper Stream Arrangement are netted and recorded to revenue. Provisional prices are finalized in a specified future month (generally one to four months after delivery to the customer) based on spot copper prices on the LME or spot gold prices on the LBMA. The Company receives market prices based on prices in the specified future month, which results in mark-to-market price fluctuations on the related receivable. 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 the estimated forward prices at the date of final pricing. For changes in metal quantities upon receipt of final assay, the provisional sales quantities are adjusted as well. Any such adjustments generally are not material to the transaction price. The Company's molybdenum sales contracts specify the point in the delivery process at which time control 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. Exploration, evaluation and pre-development expenditures Exploration and evaluation expenditures are the costs incurred on the initial search for mineral deposits with economic potential or in the process of obtaining more information about existing mineral deposits. Evaluation expenditures are the costs incurred to establish the technical and CENTERRA GOLD INC. ANNUAL REPORT 202082Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) commercial viability of developing mineral deposits identified through exploration activities or by acquisition. All exploration and evaluation expenditures of the Company within an area of interest are expensed until management and the 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 cost as exploration rights within property, plant and equipment. q. Earnings per share Basic earnings per share is computed by dividing the net earnings for a given period by the weighted average number of common shares outstanding during that same period. Diluted earnings per share reflects the potential dilution that could occur if holders with rights to convert instruments to common shares exercise these rights. The weighted average number of common shares used to determine diluted earnings per share includes an adjustment, using the treasury stock method, for stock options outstanding. Under the treasury stock method: - The exercise of stock options and restricted share units is assumed to occur at the beginning of the period; - The proceeds from the exercise of stock options and restricted share units plus the future period compensation expense on units granted are assumed to be used to purchase common shares of the Company at the average market price during the period; and - 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. r. Income taxes Tax expense is comprised of 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 to items recognized directly in equity or in other comprehensive income. CENTERRA GOLD INC. ANNUAL REPORT 202083Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) 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 tax bases of such assets and liabilities measured using tax rates and laws that are substantively enacted at the reporting date and effective for the reporting period when the temporary differences are expected to reverse. The measurement of deferred tax reflects the tax consequences that would result the way 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 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 such temporary differences will not reverse in the foreseeable future; and - Taxable temporary differences arising on the initial recognition of goodwill. 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 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. s. Derivative instruments and hedge accounting The Company may hold derivative instruments to manage its risk exposure to fluctuations of commodity prices, including the Company’s products (for example, gold or copper) and consumables (for example, diesel fuel) and fluctuations in other currencies compared to the USD. Derivative instruments are recognized initially at fair value. Subsequent to initial recognition, non- derivative financial instruments are classified and measured as described below. CENTERRA GOLD INC. ANNUAL REPORT 202084Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) Hedges The Company applies hedge accounting to the following derivative instruments: - - - Strategic copper contracts which hedge a portion of the copper components of its future concentrate sales, that is not subject to the streaming arrangement with Royal Gold, at the Mount Milligan Mine (“strategic copper contracts”); Fuel hedge contracts to hedge a portion of its estimated future diesel fuel purchases at its Kumtor and Mount Milligan operations (“fuel hedge contracts”); and Foreign exchange contracts to hedge a portion of its future Canadian denominated expenditures (“foreign exchange contracts”). 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. The Company’s strategic copper contracts, fuel hedge contracts and foreign exchange contracts are designated as a cash flow hedging instrument, where the effective portion of changes in fair value are recognized in other comprehensive income. The amounts accumulated in other comprehensive income are reclassified to the Statements of Earnings, consistent with the classification of the underlying hedged transaction, when the underlying hedged transaction, identified at contract inception, is recognized. Any ineffective portion of a hedge relationship is recognized immediately in the Statements of Earnings as other expenses (income). When derivative contracts designated as cash flow hedges are terminated, expired, settled or no longer qualify for hedge accounting, hedge accounting is discontinued prospectively. Amounts historically recorded in other comprehensive income remain in other comprehensive income until the underlying hedged transaction is recognized. 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 expense immediately. Gains or losses arising subsequent to the derivative contracts not qualifying for hedge accounting are recognized in the period in which they arise in the Statements of Earnings as other income, net. Non-hedges All derivative instruments not designated in a hedge relationship are classified as financial instruments at fair value through profit or loss. CENTERRA GOLD INC. ANNUAL REPORT 202085Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) Changes in fair value of non-hedge derivatives at each reporting date are included in other expenses (income) in the Statements of Earnings, while the spot and forward contracts associated with the Royal Gold deliverables are included in revenue. t. Transaction costs 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 liability. The amortization of debt financing fees is calculated on an amortized cost basis over the term of the instrument. 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 amounts reported in the consolidated financial statements and the application of the Company’s accounting policies, which are described in note 3. Management believes that the estimates used in the preparation of the consolidated financial statements are reasonable; however, actual results could differ from those estimates. The key areas of significant judgments, estimates and assumptions are discussed below. i. Impairment Significant judgment is required in assessing indicators of impairment or reversals of impairment. For each long-term asset or CGU (excluding goodwill, which is assessed for impairment annually regardless of indicators and is not eligible for impairment reversals), the Company completes an evaluation at each reporting period of potential indicators of impairment or reversals of impairment. The Company considers both external and internal sources of information in assessing whether there are any indications that long-term assets or CGUs may be impaired. When completing an impairment test, the Company calculates the estimated recoverable amount of CGUs, which requires management to make estimates and assumptions related to items such as future production levels, operating and capital costs, long-term commodity prices, foreign exchange rates, discount rates, proven and probable reserves and resources, exploration potential and closures and environmental rehabilitation costs. Changes in these estimates which decrease the estimated recoverable amount of a CGU could affect the carrying amounts of assets and result in an impairment charge or reversal. While management believes that estimates of future cash flows are reasonable, different assumptions regarding such cash flows could materially affect the recoverable amount of a CGU. CENTERRA GOLD INC. ANNUAL REPORT 202086Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) ii. Provision for reclamation Provisions for reclamation 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 reclamation provision on an annual basis or when new material information becomes available. Adjustments to the estimated amount and timing of future reclamation cash flows are a normal occurrence in light of the significant judgments and estimates involved. The principal factors that can cause expected cash flows to change are the construction of new processing facilities, changes in the quantities of material in reserves and resources with a corresponding change in the life of mine plan, changing ore characteristics that impact required environmental protection measures and related costs, changes in water quality that impact the extent of water treatment required and changes in laws and regulations governing the protection of the environment. Actual costs incurred may differ from those amounts estimated. 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. 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. Such changes will impact earnings as these amounts are depleted and accreted over the life of the mine. iii. 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 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 Statement of Financial Position. The Company does not recognize deferred tax assets where management does not expect such assets to be realized based upon current forecasts. If actual results differ from these estimates, adjustments are made in subsequent periods. CENTERRA GOLD INC. ANNUAL REPORT 202087Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) iv. Mineral reserves and resources estimation The Company estimates its mineral reserves and resources based on information compiled by qualified persons as defined in accordance with the National Instrument 43-101, Standards of Disclosure for Mineral Projects (“NI 43-101”). 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 on future commodity prices, exchange rates, production costs, recovery rates, and in some instances, the renewal of mining licenses. There are numerous uncertainties inherent in estimating mineral reserves and resources and assumptions that are valid at the time of estimation which may change significantly when new information becomes available. Changes in such assumptions and estimates may result in the mineral reserves and resources being revised. Estimates of mineral reserves and 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 charge of assets using the units-of-production method; - Estimate of recoverable value of CGUs for impairment tests of non-current assets; - Estimated timing and costs of reclamation activities; and - Expected future economic benefit of expenditures, including stripping and development activities recognized in the Statement of Financial Position as either part of mine properties or inventories. There are assets that are depleted using the units-of-production method where 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 mineral reserves and resources. v. 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 fuel. 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 28 for a sensitivity analyses based on changes in commodity prices. CENTERRA GOLD INC. ANNUAL REPORT 202088Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) vi. Litigation and contingency On an ongoing basis, the Company is subject to various claims and other legal disputes as described in note 25, 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. 5. Divestitures Greenstone Partnership On December 15, 2020, the Company entered into an agreement with an affiliate of the Orion Mine Finance Group (“Orion”) and Premier Gold Mines Limited (“Premier”) to sell the Company’s 50% interest in the Greenstone Partnership for cash consideration of $210 million (including adjustments). The Company is entitled to receive further contingent payments of up to $75 million (assuming a gold price of $1,500) based on the successful construction and operation of the mine, which will be recorded upon achieving the applicable milestones. On January 19, 2021, the Company completed the sale of its 50% interest in the Greenstone Partnership. As a result of the closing of this transaction, the Company expects to recognize a gain of approximately $72 million in the first quarter of 2021, with no further commitments outstanding. At December 31, 2020, the assets and liabilities held-for-sale include the following: Cash and cash equivalents Amounts receivable Property, plant and equipment Assets held-for-sale Accounts payable and accrued liabilities Lease obligations Liabilities held-for-sale 2020 188 175 139,642 140,005 (2,125) (130) (2,255) $ $ $ $ CENTERRA GOLD INC. ANNUAL REPORT 202089Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) 6. Amounts receivable Gold and copper concentrate sales receivable (a) Molybdenum sales receivable Consumption and income tax receivable (b) Other receivables Total amounts receivable 2019 39,310 28,718 5,124 5,870 79,022 (a) Includes $0.5 million (2019 - $nil) of amounts receivables from final priced gold and copper concentrate sales, and $18.6 million of amounts receivable (December 31, 2019 - $39.3 million) from provisionally priced gold and copper concentrate sales. 2020 22,985 21,606 19,636 1,881 66,108 $ $ $ $ (b) Includes the current portion of value-added tax receivable of $16.1 million (December 31, 2019 - $3 million) at the Öksüt Mine. The long-term portion is included in other assets (note 10). 7. Inventories Stockpiles of ore (a) Gold in-circuit Gold doré Copper and gold concentrate Molybdenum inventory (b) Total inventories (net of provisions) Supplies (net of provision) (c) Total inventories (d) 2019 427,644 20,681 19,814 29,577 67,019 564,735 209,325 774,060 (a) Includes ore in stockpiles not scheduled for processing within the next 12 months, but available on- 2020 239,219 19,450 24,953 32,201 57,238 373,061 207,526 580,587 $ $ $ $ demand of $119.2 million (December 31, 2019 - $188.7 million). (b) Net of an inventory impairment charge of $nil related to the inventory on hand (December 31, 2019 - $4.2 million). (c) Net of a provision for supplies inventory obsolescence of $29.2 million (December 31, 2019 - $23.9 million). (d) Inventories of $882.3 million (December 31, 2019 - $907.9 million) were recognized as an expense during the year and included in cost of sales. CENTERRA GOLD INC. ANNUAL REPORT 202090Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) 8. Other current assets and other current liabilities Other current assets Short-term derivative assets (a) Prepaid insurance expenses Deposits for consumable supplies Marketable securities Alternative Minimum Tax receivable Other Total other current assets Other current liabilities 2020 20,158 $ 8,932 7,976 3,485 - 410 40,961 $ 2019 1,534 7,726 12,557 1,780 11,404 1,868 36,869 $ $ Current portion of lease obligations (note 14) Short-term derivative liabilities (a) Current portion of provision for reclamation (note 13) Other 4,303 192 154 43 4,692 (a) Relates to the diesel, foreign exchange and strategic copper hedging contracts entered into in the 4,575 $ 9,537 1,095 115 15,322 $ Total other current liabilities $ $ period (note 28). CENTERRA GOLD INC. ANNUAL REPORT 202091Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) 9. Property, plant and equipment The following is a summary of the carrying value of property, plant and equipment (“PP&E”): Buildings, Plant and Mineral Equipment (a) Properties (b) Capitalized Stripping Costs Construction in Progress Total $ Cost January 1, 2019 IFRS 16 adoption Additions Disposals Reclassification Balance December 31, 2019 $ Additions Disposal Reclamation revaluation Foreign currency translation Transfers (c) Reclassified to assets held- for-sale (note 5) Balance December 31, 2020 $ 1,628,045 $ 20,381 14,941 (5,476) 82,964 1,740,855 $ 7,866 (6,911) - - 299,232 577,670 $ - 43,598 (449) 6,256 627,075 $ 37,365 - 1,999 831 23,058 486,346 $ - 97,152 - - 583,498 $ 200,498 - - - - 153,818 $ 2,845,879 20,381 - 365,639 209,948 (5,925) - - (89,220) 274,546 $ 3,225,974 396,273 150,544 (6,911) - 1,999 - 831 - - (322,290) (625) 2,040,417 $ (139,436) 550,892 $ - 783,996 $ - (140,061) 102,800 $ 3,478,105 $ Accumulated depreciation and other charges January 1, 2019 693,490 $ IFRS 16 adoption (545) Charge for the year 139,256 Disposals (3,751) Impairment (note 19) 169,451 Balance December 31, 2019 $ 997,901 $ Charge for the year 156,015 Disposals (4,303) Impairment (d) - Reclassified to assets held- for-sale (note 5) Balance December 31, 2020 $ (419) 1,149,194 $ 103,260 $ - 18,030 - 44,979 166,269 $ 24,045 - 7,389 143,615 $ - 248,673 - - 392,288 $ 52,853 - - - 197,703 $ - 445,141 $ 940,365 - $ (545) - 405,959 - - (3,751) 214,430 - - $ 1,556,458 232,913 - (4,303) - 7,389 - (419) - - $ 1,792,038 Net book value Balance January 1, 2020 $ Balance December 31, 2020 $ 742,954 $ 891,223 $ 460,806 $ 353,189 $ 191,210 $ 338,855 $ 274,546 $ 1,669,516 102,800 $ 1,686,067 (a) Includes costs of $26.8 million (December 31, 2019 - $37.8 million) and accumulated depreciation of $8.2 million (December 31, 2019 - $13.1 million) related to mobile equipment and buildings under right-of-use assets. (b) Includes revenue earned from sales at Öksüt net of related costs of $6.9 million for 6,654 ounces of gold sold prior to the mine achieving commercial production on May 31, 2020. CENTERRA GOLD INC. ANNUAL REPORT 202092Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) (c) Relates primarily to the reclass of assets at the Öksüt Mine, once commercial production was achieved and assets were considered available for use. (d) Relates to miscellaneous exploration and evaluation properties that were written down to their recoverable amounts. 10. Other assets and other liabilities Other assets Prepayments for property, plant and equipment Long-term derivative assets (a) Value-added tax receivable (b) Restricted cash (c) Alternative Minimum Tax receivable (d) Other assets Total other assets Other liabilities 2020 8,763 $ 8,339 7,734 2,740 - 2,442 30,018 $ 2019 2,395 - 14,347 27,986 11,404 2,338 58,470 $ $ Long-term portion of lease obligations (note 14) Post-retirement benefits Long-term derivative liabilities (a) 18,336 3,875 - 22,211 (a) Relates to the diesel, foreign exchange and strategic copper hedge contracts entered into in the 14,340 $ 4,060 3,141 21,541 $ Total other liabilities $ $ period (note 28). (b) Relates to the Öksüt Mine. (c) As part of the repayment and cancellation of the OMAS finance facility in January 2020 (note 12), $25 million in restricted cash funds were released. As at December 31, 2020, the remaining restricted cash relates to certain permits at the Öksüt Mine. (d) Current (note 8) and long-term portions were received in the second and third quarters of 2020, respectively. CENTERRA GOLD INC. ANNUAL REPORT 202093Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) 11. Accounts payable and accrued liabilities Trade creditors and accruals Amount due to Royal Gold (a) Liability for share-based compensation (note 23) Provision for Kyrgyz Republic settlement (b) Total accounts payable and accrued liabilities 2019 166,184 38,190 25,965 8,000 238,339 (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. 2020 155,646 48,874 28,184 - 232,704 $ $ $ $ (b) As part of the completion of the Strategic Agreement with the Kyrgyz Government in August 2019, the Company’s obligations included a payment of $5.0 million to a Nature Development Fund for the purpose of financing environmental conservation projects and nature preservation in the Kyrgyz Republic and $3.0 million to a Cancer Care Fund for the purpose of funding cancer treatment, research, support and outreach in the Kyrgyz Republic. Payments to the Nature Development Fund and Cancer Care Fund were made in the third and fourth quarters of 2020, respectively. 12. Debt Principal Balance December 31, 2019 Drawdown Repayment Balance December 31, 2020 Deferred costs Balance December 31, 2019 Amortization Balance December 31, 2020 Debt (net of deferred financing costs) Balance December 31, 2019 Balance December 31, 2020 Corporate Revolving Facility Corporate Revolving Facility OMAS Facility Total $ $ $ $ $ $ - $ 250,000 (250,000) - $ 77,472 $ - (77,472) - $ 77,472 250,000 (327,472) - (1,430) $ 1,430 - $ (6,035) $ 6,035 - $ (7,465) 7,465 - (1,430) $ - $ 71,437 $ - $ 70,007 - On February 1, 2018, the Company entered into a $500 million four-year senior secured revolving credit facility (the “2018 Corporate Facility”) with a lending syndicate led by the Bank of Nova CENTERRA GOLD INC. ANNUAL REPORT 202094Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) Scotia and National Bank of Canada. The credit facility had an interest rate of London Interbank Offered Rate (“LIBOR”), plus a margin that ranges from 2.25% to 3.75%. On December 31, 2020, the Company entered into a new $400 million four-year revolving credit facility with a $200 million accordion feature (the “2020 Corporate Facility”). The interest rate payable on any outstanding borrowings under the 2020 Corporate Facility is LIBOR, plus 2.25% to 3.25% and the maturity date of the facility is December 31, 2024. The 2020 Corporate Facility replaced the Company’s 2018 Corporate Facility. As at December 31, 2020, the 2020 Corporate Facility was undrawn (December 31, 2019 - $nil). As a result of the new facility, the Company expensed $0.9 million of previously capitalized deferred costs associated with the 2018 Corporate Facility, as well as $2.4 million in transaction costs associated with the 2020 Corporate Facility in the Statement of Earnings. OMAS Facility In the first quarter of 2020, the Company repaid and cancelled its $150 million five-year project financing facility with UniCredit Bank AG and European Bank for Reconstruction and Development (the “OMAS Facility”). The purpose of the OMAS Facility was to assist in financing the construction of the Company’s Öksüt Mine. As a condition of the OMAS Facility, the Company deposited $25 million into a restricted account, including $15 million, which was restricted until the Öksüt Project mining lease was extended and $10 million, which was restricted during the construction phase. As part of the repayment and cancellation of the OMAS Facility, the total amount of $25 million in restricted cash funds were released. CENTERRA GOLD INC. ANNUAL REPORT 202095Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) 13. Provision for reclamation The Company completed its regularly scheduled update to its closure costs estimates in December 2020. The following table reconciles the beginning and ending carrying amounts of the Company’s reclamation provision. The settlement of the obligation is estimated to occur through to 2129. Non-operating sites (a) Balance, beginning of year Reclassification of Öksüt Mine Changes in estimate (b) Changes in discount rate (b) Accretion Liabilities settled Foreign exchange revaluation (b) Balance, end of year Operating sites (a) Balance, beginning of year Reclassification of Öksüt Mine Changes in estimate (c) Changes in discount rate Accretion Foreign exchange revaluation Balance, end of year 2020 180,404 $ (2,600) 7,961 46,593 2,252 (245) 2,177 236,542 $ 84,799 $ 2,600 24,433 2,007 1,000 863 115,702 $ 2019 137,900 - 4,385 34,682 2,476 (604) 1,565 180,404 74,545 - 2,961 4,690 1,909 694 84,799 $ $ $ $ Current portion of reclamation provision Long-term portion of reclamation provision Total provision for reclamation 154 265,049 265,203 a) Non-operating sites include Endako, Thompson Creek Mine, and Kemess. Operating sites include Kumtor, Mount Milligan and Öksüt. Öksüt was reclassified to an operating site as of January 1, 2020. 1,095 351,149 352,244 $ $ b) $53.4 million recorded in other operating expenses in the Statement of earnings related to closed sites, Thompson Creek Mine and Endako (note 20). Includes an increase in the cost estimate of $23.1 million at the Öksüt Mine. c) Regulatory authorities in certain jurisdictions require that security be provided to cover the estimated reclamation and remediation obligations. As at December 31, 2020, the Company has provided the regulatory authorities with $160.4 million (December 31, 2019 - $139.3 million) in reclamation bonds and letters of credit for mine closure obligations. In 1998, a Reclamation Trust Fund was established to cover the future costs of reclamation, net of salvage values at the Kumtor Mine. On December 31, 2020, this fund had a balance of $47.1 CENTERRA GOLD INC. ANNUAL REPORT 202096Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) million (December 31, 2019 - $41 million), which includes the accelerated contributions required by the Strategic Agreement. 14. Leases The following table is a maturity analysis of the Company’s contractual undiscounted payments required to meet obligations that have initial or remaining non-cancellable lease terms. Less than one year One to three years More than three years Total undiscounted lease obligations $ $ 2020 5,444 $ 9,850 5,607 20,901 $ 2019 8,434 19,256 4,052 31,742 The following table sets out the lease obligations included in the Statement of Financial Position: Current (a) Non-current (b) Total lease obligations (a) Included in other current liabilities (note 8). (b) Included in other long-term liabilities (note 10). The lease obligations can be reconciled as follows: Balance, beginning of year Lease additions Accretion expense Payments Foreign exchange revaluation Balance, end of year $ $ $ $ 2020 4,575 $ 14,340 18,915 $ 2019 4,303 18,336 22,639 2020 22,639 $ 1,196 915 (6,037) 202 18,915 $ 2019 25,953 11,119 1,189 (16,962) 1,340 22,639 The amounts recognized in the Statement of Earnings related to lease obligations are as follows: Interest on lease liabilities Variable lease payments not included in the measurement of lease liabilities Expenses relating to leases of low-value assets and short-term leases Total recognized in the Statement of Earnings $ $ 2020 915 $ 22,721 3,987 27,623 $ 2019 1,189 127 109 1,425 CENTERRA GOLD INC. ANNUAL REPORT 202097Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) In addition to the above, as at December 31, 2020, there was $7.6 million of variable lease payments (December 31, 2019 - $19.2 million) not included in the measurement of lease liabilities related to the Öksüt Mine that was capitalized to property, plant and equipment prior to achieving commercial production. 15. Revenue Total revenue consists of the following: Gold revenue Copper revenue Molybdenum revenue Total revenue 2020 1,373,124 178,597 136,954 1,688,675 $ $ 2019 1,021,690 140,866 212,772 1,375,328 $ $ The sales quantity and sales pricing adjustments of gold and copper, including the impact of hedge contracts, are as follows: Gold Quantity adjustment Provisional pricing adjustment Copper Quantity adjustment Provisional pricing adjustment Total quantity and price adjustment included in revenue $ $ 2020 $ (1,420) 12,946 (2,798) 12,184 20,913 $ 2019 (219) 3,570 (1,957) 7,694 9,088 CENTERRA GOLD INC. ANNUAL REPORT 202098Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) 16. Production costs December 31, 2020 Direct mining and processing costs Royalties, levies and taxes Changes in inventories Inventory impairment Feed material purchases By-product sales (a) Total production costs December 31, 2019 Direct mining and processing costs Royalties, levies and taxes Changes in inventories Inventory impairment Feed material purchases By-product sales (a) Total production costs $ $ $ $ Gold 283,136 $ 21,891 52,820 - - (13,026) 344,821 $ Gold 393,820 $ 6,707 (29,894) - - (7,535) 363,098 $ Copper Molybdenum Total 91,456 $ 5,851 2,110 - - (4,706) 94,711 $ 41,004 $ 840 (3,622) 13,587 103,265 (3,982) 151,092 $ Copper Molybdenum 44,762 $ 902 (687) 8,351 170,312 (8,283) 215,357 $ 99,410 $ 4,656 (3,317) - - (2,572) 98,177 $ 415,596 28,582 51,308 13,587 103,265 (21,714) 590,624 Total 537,992 12,265 (33,898) 8,351 170,312 (18,390) 676,632 (a) Includes silver, rhenium and sulfuric acid sales. 17. Standby costs As a result of the temporary suspension of mining activities at the Kumtor Gold Mine following the Lysii waste rock dump accident that occurred in December 2019, the Company classified $3.2 million of production costs and $3.5 million of depreciation, depletion and amortization in the first quarter of 2020 as standby costs (in the fourth quarter of 2019 - $4.2 million of production costs and $4.9 million of depreciation, depletion and amortization). 18. Corporate administration Corporate administration Share-based compensation Total corporate administration $ $ 2020 27,203 18,471 45,674 $ $ 2019 26,496 18,769 45,265 CENTERRA GOLD INC. ANNUAL REPORT 202099Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) 19. Impairment Goodwill In October 2016, the Mount Milligan CGU was allocated goodwill of $16.1 million as a result of the Company’s acquisition of Thompson Creek Metals Company. In accordance with its accounting policy, the Company reviews and tests the carrying amounts of goodwill on September 1 of each year and when an indicator of impairment is considered to exist. In the third quarter of 2019, the carrying value of Mount Milligan’s CGU net assets was written down to its net realizable value, which included the write-off of the entire goodwill amount. Impairment testing As part of the Company’s annual budget and life of mine process in 2019, the Company identified in the third quarter of 2019 that recent cost escalation relating to short and long-term water sourcing requirements, higher maintenance costs, higher-than-expected labour requirements, and lower mill throughput estimates, among other things, will continue in the short to medium term. This combined with lower-than-expected long term gold recoveries and the expectation that Mount Milligan’s mineral reserves and resources would be materially reduced resulted in a trigger for an impairment test on Mount Milligan’s long-lived assets. The impairment test was performed effective September 1, 2019, and used the Fair Value Less Costs of Disposal (“FVLCD”) methodology for all long-lived assets. The test concluded that the recoverable amount of the Mount Milligan CGU and higher cost profile was lower than its carrying value as at September 1, 2019. As a result, the Company recorded an impairment charge of $230.5 million in the Statement of Earnings, including the write-down of goodwill of $16.1 million and long-lived assets of $214.4 million. Updated NI 43-101 Technical Report On March 26, 2020, the Company announced the results of the updated NI 43-101 technical report on the Mount Milligan Mine as at December 31, 2019. This resulted in a material reduction in reserves and resources compared to the reserves and resources statement as at December 31, 2018. The decrease in Mount Milligan’s reserves was considered to be a triggering event for impairment testing as at December 31, 2019, however no further impairment charge or reversal of impairment was identified as a result of the test. The impairment test performed effective September 1, 2020 using the FVLCD methodology for all long-lived assets concluded no impairment or reversal of impairment was required. CENTERRA GOLD INC. ANNUAL REPORT 2020100Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) 20. Other operating expenses Reclamation expense (a) Social development contributions (b) Selling and marketing (c) Nature Development Fund contributions Direct costs related to COVID-19 (d) Provision for Kyrgyz Republic Settlement Other Total other operating expenses (a) $ $ 2020 53,381 15,582 10,090 3,700 3,006 - 1,336 87,095 $ $ 2019 34,544 3,009 10,613 5,700 - 10,000 5,247 69,113 (b) (c) (d) Relates to the provision for reclamation at closed sites due to changes in the interest rate used to discount the reclamation costs and changes in the foreign currency exchange rates (note 13). The Company made a $9.0 million contribution to the Regional Development Fund in the first quarter of 2020 for regional development in the Kyrgyz Republic. Primarily includes freight charges associated with the Mount Milligan mine and Langeloth processing facility. Primarily includes incremental costs such as medical services and cleaning costs, incurred to mitigate the spread of COVID-19. For the year ended December 31, 2020, production costs include $1.7 million of compensation expense for employees who were unable to return to site during the COVID-19 pandemic. 21. Finance costs Commitment and transaction fees Interest expense Accretion of provision for reclamation Deferred financing costs amortized Lease financing expense Other financing fees Total finance costs 22. Taxes a. Revenue based taxes - Kumtor $ $ 2020 5,320 3,613 3,253 1,467 921 367 14,941 $ $ 2019 1,886 5,748 4,385 755 1,189 2,374 16,337 Kumtor pays taxes on revenue generated from the Kumtor Mine, 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. CENTERRA GOLD INC. ANNUAL REPORT 2020101Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) b. Income tax expense (recovery) Current tax Deferred tax Total income tax expense (recovery) $ $ 2020 6,228 1,481 7,709 $ $ 2019 3,719 (10,790) (7,071) 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 (loss) before income tax Income tax expense calculated at the combined Canadian and provincial statutory income tax rate of 26.5% Increase (decrease) due to: Difference between Canadian and foreign tax rates Change in unrecognized deductible temporary differences Impact of foreign currency movements Non-deductible costs British Columbia mining tax Impact of tax legislation/rate change Other Income tax expense (recovery) $ $ $ c. Deferred income tax 2020 416,247 110,305 $ $ (121,540) 6,126 11,076 673 2,323 (1,279) 25 7,709 $ 2019 (100,584) (26,655) (66,168) 76,685 359 6,777 1,840 - 91 (7,071) The following are significant components of deferred income tax assets and liabilities: Deferred income tax assets Provisions - asset retirement obligations and other Tax losses Total deferred tax assets Deferred income tax liabilities Property, plant and equipment Investments in subsidiaries Assets held-for-sale Total deferred tax liabilities Net deferred tax liabilities 2020 14,573 50,043 64,616 85,689 10,000 8,400 104,089 39,473 $ $ $ $ $ $ $ $ $ $ 2019 12,957 21,215 34,172 67,905 - - 67,905 33,733 CENTERRA GOLD INC. ANNUAL REPORT 2020102Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) The Company has not recognized deferred tax assets in respect to the following deductible temporary differences: Non-capital losses (expiring 2028 – 2040) Net operating losses restricted due to changes in ownership Deductible temporary differences (a) Capital losses Total deductible temporary differences 2019 464,895 75,909 849,469 138,282 1,528,555 a) The deductible temporary differences consist of $758,530 for Canada, $137,200 for the U.S and 2020 632,128 75,721 921,457 9,480 1,638,786 $ $ $ $ $25,727 for Turkey. The Company also has not recognized deferred tax assets with respect to British Columbia mining tax for deductible temporary differences of $817.2 million (December 31, 2019 - $844.5 million) or mining tax credits of $28.7 million (December 31, 2019 - $23.0 million). 23. Shareholders' equity a. Share Capital Centerra is authorized to issue an unlimited number of common shares, class A non-voting shares and preference shares with no par value. Balance at January 1, 2019 Shares issued on exercise of stock options Shares issued on redemption of restricted share units Shares issued under the employee share purchase plan Balance at December 31, 2019 Shares issued on exercise of stock options Shares issued on redemption of restricted share units Shares issued under the employee share purchase plan Balance at December 31, 2020 Number of common shares Amount 291,999,949 $ 1,505,768 14,849 169,890 293,690,456 $ 1,490,465 126,820 520,165 295,827,906 $ 949,328 9,960 101 1,015 960,404 10,641 1,096 2,981 975,122 CENTERRA GOLD INC. ANNUAL REPORT 2020103Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) b. Earnings (loss) per share Basic and diluted earnings per share computation: Net earnings (loss) Basic weighted average number of common shares Dilutive impact of stock options Dilutive impact related to the RSU plan Diluted weighted average number of common shares Basic earnings (loss) per share Diluted earnings (loss) per share 2020 408,538 $ 294,718 1,500 1,193 297,411 1.39 $ 1.37 $ 2019 (93,513) 292,951 1,104 - 294,055 (0.32) (0.32) $ $ $ For the years ended December 31, 2020 and 2019, certain potentially anti-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. Anti-dilutive securities, excluded from the calculation, are summarized below: Stock options Restricted share units c. Share-based compensation 2020 583 - 583 2019 1,699 1,106 2,805 The impact of share-based compensation as of and for the years ended December 31, 2020 and 2019 is summarized as follows: 2020 2019 Expense Liability Expense Liability $ $ 2,078 $ 16,883 1,632 1,380 21,973 $ - $ 22,316 3,780 2,088 28,184 $ 1,940 $ 12,302 1,166 4,497 19,905 $ - 14,444 2,108 9,413 25,965 Stock options Performance share units Deferred share units Restricted share units 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 CENTERRA GOLD INC. ANNUAL REPORT 2020104Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) of grant. Options granted vest over three years and expire after eight years from the date granted. The Black-Scholes model is used to estimate the fair value of stock options granted. Centerra’s stock options transactions during the year ended December 31, 2020 and 2019 were as follows: 2020 2019 Number of Options Weighted Average Exercise Price (Cdn$) Weighted Average Exercise Price (Cdn$) Number of Options 6,090,810 $ 1,309,918 (1,522,480) (1,505,768) Balance, January 1 Granted Forfeited Exercised (a) Balance, December 31 (a) The weighted average market price of shares issued for options exercised in the year ended December 4,372,480 $ 750,642 (297,258) (1,490,465) 7.31 12.41 (7.24) (7.03) 7.97 7.56 6.85 (7.95) (6.06) 7.31 3,335,399 $ 4,372,480 $ 31, 2020 was Cdn$15.00 (December 31, 2019 - Cdn$8.93). The expiry dates on the options outstanding as at December 31, 2020, range between 2021 and 2028. There were 1,377,696 options vested at December 31, 2020 (December 31, 2019 -2,211,986 units). Performance Share Unit plan Centerra’s PSU plan transactions during the years ended December 31, 2020 and 2019 were as follows: Number of units Balance, January 1 Granted Exercised Cancelled Balance, December 31 2020 1,918,784 695,048 (538,752) (212,813) 1,862,267 2019 2,008,200 1,050,801 (1,081,787) (58,430) 1,918,784 As at December 31, 2020, there were 748,579 vested units (December 31, 2019 - 529,477 units) for a total liability of $13.6 million (December 31, 2019 - $10.4 million). CENTERRA GOLD INC. ANNUAL REPORT 2020105Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) Deferred Share Unit plan Centerra’s DSU plan transactions during the years ended December 31, 2020 and 2019 were as follows: Number of units Balance, January 1 Granted Exercised Balance, December 31 2020 276,844 42,902 - 319,746 2019 225,861 50,983 - 276,844 Given that DSUs vest immediately upon granting, all DSUs outstanding as at December 31, 2020 are vested with a liability of $3.8 million (December 31, 2019 - $2.1 million). Restricted Share Unit plan Centerra’s RSU plan transactions during the years ended December 31, 2020 and 2019 were as follows: Number of units Balance, January 1 Granted Redeemed Balance, December 31 2020 1,244,943 351,194 (644,666) 951,471 2019 753,599 627,104 (135,760) 1,244,943 As at December 31, 2020, the number of units outstanding had a related liability of $2.1 million (December 31, 2019 - $9.4 million). d. Dividends Dividends are declared and paid in Canadian dollars. The details of the dividends declared for the year ended December 31, 2020 are as follows: Date Declared Record Date Payment Date March 25, 2020 April 30, 2020 July 30, 2020 April 7, 2020 May 21, 2020 April 22, 2020 June 4, 2020 August 14, 2020 August 28, 2020 November 3, 2020 November 20, 2020 December 4, 2020 Dividend per Share (Cdn$) 0.04 0.04 0.05 0.05 Amount $ 8,285 $ 8,708 $ 11,276 $ 11,488 $ 39,757 CENTERRA GOLD INC. ANNUAL REPORT 2020106Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) Subsequent to year end, on February 23, 2021, the Board approved a quarterly dividend of Cdn$0.05 per common share, payable on April 6, 2021 to shareholders of record on March 16, 2021. 24. Supplemental disclosure a. Changes in working capital Decrease (increase) in amounts receivable Decrease (increase) in inventory - ore and metals Increase in inventory - supplies Decrease in prepaid expenses (Decrease) increase in trade creditors and accruals Increase (decrease) in revenue-based tax payable (Decrease) increase in other taxes payable Changes in working capital $ $ 2020 46,694 56,049 (2,978) 4,835 (5,832) 4,330 (25,739) 77,359 $ $ b. Other adjustments included in cash flow from operations Gain on marketable securities Loss on disposal of equipment Settlement of derivatives Inventory impairment Impairment on miscellaneous properties (note 9) Income tax expense (recovery) Income tax refund (paid) Kyrgyz Republic settlement payment Total other adjustments $ $ 2020 (6,076) $ 3,163 4,484 13,588 7,389 7,709 18,490 (8,000) 40,747 $ 2019 (35,835) (49,103) (18,810) 1,341 38,125 (210) 178 (64,314) 2019 (482) 1,450 (378) 8,352 - (7,071) (4,090) (52,600) (54,819) CENTERRA GOLD INC. ANNUAL REPORT 2020107Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) c. Changes in liabilities arising from financing activities Balance at January 1, 2019 Changes due to: Additions Repayments Amortization of deferred financing costs Interest expense Interest paid Other (b) Debt Lease obligations (a) Interest payable $ 184,266 $ 25,953 $ 593 302,804 (417,987) 924 - - - 70,007 $ $ 11,119 (16,962) - 1,189 - 1,340 22,639 $ - - - 5,748 (7,260) 991 72 Balance at December 31, 2019 Changes due to: Additions Repayments Amortization of deferred financing costs Interest expense Interest paid Other (b) - - - 3,613 (3,685) - - (a) Current portion of lease obligations included in other current liabilities (note 8). Long-term portion 250,000 (327,472) 7,465 - - - - $ 1,196 (6,037) - 915 - 202 18,915 $ Balance at December 31, 2020 $ of lease obligations included in other liabilities (note 10). (b) Includes foreign exchange revaluation and amounts reclassed to liabilities held-for-sale (note 5). 25. Commitments and contingencies Commitments a. Contracts As at December 31, 2020, the Company has entered into contracts to purchase capital equipment and operational supplies totalling $55.9 million (Kumtor - $51.4 million, Öksüt - $3.5 million, and Mount Milligan - $1.0 million). b. Molybdenum purchases In the normal course of operations, the Company enters into agreements for the purchase of molybdenum. As of December 31, 2020, the Company had commitments to purchase approximately 10.9 million pounds of molybdenum as unroasted molybdenum concentrate primarily priced at the time of purchase at a set discount to the market price for roasted molybdenum concentrate. CENTERRA GOLD INC. ANNUAL REPORT 2020108Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) c. Regional Social Fund Contributions In view of, among other things, the urgent need for regional development in the Kyrgyz Republic, Kumtor Gold Company determined that additional contributions to the previously established Kyrgyz Republic Social Partnership for the Regional Fund were appropriate. Accordingly, it made a further $9 million contribution to the Regional Fund in March 2020 and intends to make further contributions of $2.2 million each quarter the mine operates normally, up to a total of $22.0 million. No subsequent contributions were made since March 2020. Contingencies Various legal, tax and environmental 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, 2020 cannot be predicted with certainty, it is management’s opinion that it is more likely than not that these actions will not result in the outflow of resources to settle the obligation; therefore no amounts have been accrued. Canada Mount Milligan Mine As previously disclosed, in the first quarter of 2020, the Company received a notice of civil claim from H.R.S. Resources Corp. (“H.R.S.”), the holder of a 2% production royalty at Mount Milligan. H.R.S. claims that since November 2016 (when the royalty became payable) the Company has incorrectly calculated amounts payable under the production royalty agreement and has therefore underpaid amounts owing to H.R.S. The Company disputes the claim and believes it has correctly calculated the royalty payments in accordance with the agreement. The Company believes that the potential exposure in relation to this claim, over what the Company has accrued, is not material. 26. Related party transactions a. Kyrgyzaltyn The sole customer of gold doré from the Kumtor Mine, Kyrgyzaltyn, is a shareholder of the Company and is a state-owned entity of the Kyrgyz Republic. 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 Restated Gold and Silver Sales Agreement (“Sales Agreement”) between Kumtor Gold Company, Kyrgyzaltyn and the Government of the Kyrgyz Republic. 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 CENTERRA GOLD INC. ANNUAL REPORT 2020109Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) secured by a pledge of 2,850,000 shares of the Company owned by Kyrgyzaltyn. Revenues from the Kumtor Mine are subject to a management fee of $1.00 per ounce based on sales volumes, payable to Kyrgyzaltyn. The breakdown of the sales transactions and expenses with Kyrgyzaltyn, and the management fees paid and accrued by Kumtor to Kyrgyzaltyn according to the terms of the Sales Agreement are as follows: 2020 2019 $ $ 995,111 (6,164) 988,947 $ $ 836,689 (5,141) 831,548 Revenue Gross gold and silver sales to Kyrgyzaltyn (a) Deduct: refinery and financing charges Net revenue received from Kyrgyzaltyn Expenses Contracting services provided by Kyrgyzaltyn (b) Management fees payable to Kyrgyzaltyn Expenses paid to Kyrgyzaltyn 1,146 600 1,746 (a) As at December 31, 2020, there is no amount receivable (December 31, 2019 - $0.1 million) from 658 569 1,227 $ $ $ $ Kyrgyzaltyn from gold sales. (b) As at December 31, 2020, there is $0.9 million (December 31, 2019 - $1.2 million) payable to Kyrgyzaltyn. b. Transactions with directors and key management The Company transacts with key management personnel and directors, who have authority and responsibility to plan, direct and control the activities of the Company, for services rendered in their capacity as directors and employees. Key management personnel are defined as the executive officers of the Company including the President and Chief Executive Officer, Vice President and Chief Financial Officer, Vice President and Chief Operating Officer, Vice President and General Counsel, Vice President Business Development & Exploration, and Vice President and Chief Human Resources Officer. During the years ended December 31, 2020 and 2019, remuneration to directors and key management personnel were as follows: Compensation of directors Fees earned and other compensation Share-based compensation Total compensation $ $ 2020 820 3,011 3,831 $ $ 2019 1,259 2,465 3,724 CENTERRA GOLD INC. ANNUAL REPORT 2020110Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) Compensation of key management personnel Salaries and benefits Share-based compensation Total compensation $ $ 2020 6,354 9,264 15,618 $ $ 2019 4,311 7,756 12,067 In 2020, the Company incurred an amount of $94 for services rendered by a family member of one of Centerra’s key management personnel. This person was acting as a consultant. 27. 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 and satisfy debt repayment requirements and other obligations. The Company’s capital structure consists of debt, lease obligations and shareholders’ equity. 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. 28. 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 (including amounts due to Royal Gold), debt, and revenue-based taxes payable. a. Derivative Instruments The Company uses derivative instruments as part of its risk management program to mitigate exposures to various market risks including commodity prices, foreign exchange rates and the diesel fuel prices. As of December 31, 2020, the Company had five counterparties (December 31, 2019 - five) to its derivative positions. The Company’s derivative counterparties are also syndicate members of the Company’s corporate facility, mitigating credit risk, and on an ongoing basis, the Company monitors its derivative position exposures. CENTERRA GOLD INC. ANNUAL REPORT 2020111Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) Hedges The derivative instruments outstanding as at December 31, 2020 that are accounted for as hedges are summarized below: Instrument Unit 2021 2022 Type Position (a) Average Strike Price Total Fuel hedge contracts Brent Crude Oil zero-cost collars Brent Crude Oil swap contracts ULSD zero-cost collars ULSD swap contracts Foreign exchange contracts Barrels $40/$46 Barrels $42 Barrels $53/$59 Barrels $55 $44/$51 $47 $54/$64 $59 Fixed Fixed Fixed Fixed 176,678 251,335 184,470 302,505 USD/Cdn$ zero cost-collars USD/Cdn$ forward contracts Cdn$ Cdn$ $1.33/$1.40 $1.32/$1.38 Fixed Fixed $1.32 $1.38 366,800,000 148,000,000 Strategic copper contracts Copper forward contracts Pounds $3.37 N/A Fixed 59,800,000 (a) Total amounts expressed in the units identified. Fuel Hedge Contracts The Company applies hedge accounting to derivative instruments which hedge a portion of its estimated future diesel fuel purchases at its Kumtor and Mount Milligan operations to manage the risk associated with changes in diesel fuel prices to the cost of operations at the Kumtor and Mount Milligan mines. The fuel hedge contracts are expected to settle by the end of 2022. Foreign Exchange Contracts The Company also applies hedge accounting to the foreign exchange contracts it entered into after April 1, 2020 to hedge a portion of its future Canadian denominated expenditures. The foreign exchange contracts are expected to settle by the end of 2022. Strategic Copper Contracts In the fourth quarter of 2020, the Company commenced a copper hedging program, entering into forward contracts to secure the copper price for a majority of Mount Milligan’s copper sales until the end of 2021. CENTERRA GOLD INC. ANNUAL REPORT 2020112Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) The table below includes the effective portion of changes in the fair value of these derivatives recognized in OCI and the amounts reclassed to the Statement of Earnings. Effective portion of changes in fair value Reclassified to Statement of Earnings Gain (loss) included in OCI (a) (a) Includes tax of $4.3 million (December 31, 2019 - $nil). Non-Hedges $ $ 2020 9,915 $ 1,598 11,513 $ 2019 363 (758) (395) All derivative instruments not designated in a hedge relationship are classified as financial instruments at fair value through profit or loss, including the gold and copper forward contracts for gold ounces and copper pounds payable to Royal Gold (the “RGLD deliverables”) and foreign exchange contracts that were entered into before April 1, 2020. Changes in fair value of non-hedge derivatives at each reporting date are included in the Statement of Earnings as non-hedge derivative gains or losses, with the exception of spot and forward contracts associated with the RGLD deliverables, which are included in revenue. As at December 31, 2020, all foreign exchange contracts that were entered into before April 1, 2020 were settled. For the RGLD deliverables, 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 third party customers, including offtakers and traders (“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. CENTERRA GOLD INC. ANNUAL REPORT 2020113Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) The non-hedge derivative instruments outstanding as at December 31, 2020 are expected to settle by May 2021. The non-hedge derivative instruments outstanding as at December 31, 2020 are summarized as follows: Instrument Unit RGLD deliverables Average Strike Price Gold forward contracts Copper forward contracts Ounces Pounds (a) Total amounts expressed in the units identified. N/A N/A Type Float Float Total Position (a) 17,570 4,200,000 The following table is a sensitivity analysis of what the fair value gain (loss) would be due to an increase or a decrease of 10% in the price of the derivative instrument: RGLD deliverables Strategic copper contracts Fuel hedge contracts Foreign exchange contracts b. Provisionally-priced contracts Fair value - December 31, 2020 1,411 (9,480) 5,873 20,617 $ $ $ $ $ $ $ $ Increase of 10% 5,311 (30,009) 3,445 57,914 Decrease of 10% (2,863) 12,611 (4,286) (9,646) $ $ $ $ Certain gold-copper 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, 2020 the Company’s trade receivables with embedded derivatives had a fair value of $12.4 million (December 31, 2019 - $33.5 million), representing 13.8 million pounds of copper and 25,672 ounces of gold (December 31, 2019 - 13.3 million pounds of copper and 33,161 ounces of gold). c. Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. All financial instruments for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest-level input that is significant to the fair value measurement as a whole: 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 CENTERRA GOLD INC. ANNUAL REPORT 2020114Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) 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. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. For items that are recognized at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing their classification at the end of each reporting period. At December 31, 2020, there were no financial assets and liabilities measured and recognized at fair value on a non-recurring basis. During the year ended December 31, 2020, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into or out of Level 3 fair value measurements. The fair values of cash, amounts receivable that are not provisionally priced, restricted cash, and accounts payable and accrued liabilities approximate their carrying amounts due to the short term to maturity of these financial instruments. The levels in the fair value hierarchy into which the Company’s financial assets and liabilities that are measured and recognized on the Consolidated Statement of Financial Position at fair value on a recurring basis were categorized as follows: December 31, 2020 Financial assets Provisionally-priced receivables Derivative financial instruments Financial liabilities Derivative financial instruments Share-based compensation liability $ $ $ Level 1 Level 2 Level 3 - - - $ 12,415 28,497 40,912 $ - $ 28,184 28,184 $ 16,494 $ - 16,494 $ Total fair value - - - $ - $ - - $ 12,415 28,497 40,912 16,494 28,184 44,678 CENTERRA GOLD INC. ANNUAL REPORT 2020115 Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) December 31, 2019 Financial assets Provisionally-priced receivables Derivative financial instruments Financial liabilities Debt Derivative financial instruments Share-based compensation liability $ $ $ $ Valuation Techniques Cash and cash equivalents Level 1 Level 2 Level 3 Total fair value - $ - - $ 33,489 $ 1,526 35,015 $ 70,007 $ - 25,965 95,972 $ - $ 183 - 183 $ - $ - - $ - $ - - - $ 33,489 1,526 35,015 70,007 183 25,965 96,155 The fair value of our cash equivalents is classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. Provisionally-priced receivables The fair value of receivables arising from copper and gold sales contracts that contain provisional pricing mechanisms are determined using the appropriate quoted forward price from the exchange that is the principal active market for the particular metal. As such, these receivables, which meet the definition of an embedded derivative are classified within Level 2 of the fair value hierarchy. Derivative financial instruments The fair value of gold, copper, diesel and currency derivative instruments, classified within Level 2, are 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. Other assets and liabilities (including debt) The recorded value of restricted cash and short-term investments, amounts receivable, taxes receivable, long-term receivables, accounts payable and accrued liabilities, lease obligation and debt approximate their relative fair values. In accordance with IFRS 9, Langeloth’s receivables are provided for based on lifetime expected credit losses, which are established by considering historical credit loss experience with each customer. CENTERRA GOLD INC. ANNUAL REPORT 2020116 Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) 29. 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. We manage our financial risks in accordance with our financial risk management policy overseen by the Company’s 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, including the Canadian dollar, Kyrgyz Som, European Euro and Turkish Lira. 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. The Company utilizes hedging strategies to minimize our exposure to the Canadian dollar. Based on Canadian dollar denominated liabilities as at December 31, 2020 and net of the impact of hedging strategies, a 10% strengthening of the U.S. dollar against the Canadian dollar would have resulted in a $2.2 million gain, while a 10% weakening of the U.S. dollar against the Canadian dollar would have resulted in a $0.5 million loss. 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, 2020, the majority of the cash and current and non-current restricted cash and short-term investments were comprised of interest-bearing assets. Based on amounts as at December 31, 2020, a 100-basis point change in interest rates would result in a $5.5 million adjustment to interest income (December 31, 2019 - $0.7 million adjustment to interest income). The Company’s policy limits the investment of excess funds to term deposits, certificates of deposits, commercial paper, treasury bills and sovereign notes issued by government or governmental agencies with an “AA-” rating from Standard & Poor (“S&P”) or greater, and banker’s acceptances issued by financial institutions and corporations with an “A-” rating from S&P or greater. CENTERRA GOLD INC. ANNUAL REPORT 2020117Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) Additionally, no amounts were drawn from the Company’s debt as at December 31, 2020 and as a result, no impact to the changes in interest rates. 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 restricted cash. The Company’s exposure to credit risk, in respect of the Company’s receivables, 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-copper concentrate from Mount Milligan is sold to multi-national off-takers through transactions 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 26). Based on movements in Centerra’s share price and the value of individual or unsettled gold shipments over the course of the year, 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 $70 million (December 31, 2019 - $49.2 million). The Company manages counterparty risk through maintaining diversification limits for its eligible counterparties. Eligible counterparties are eligible provided they meet the minimum credit rating and profile requirements, including but not limited to market capitalization and experience in capital markets. The Company manages its cash holdings amongst these eligible counterparties based on assigned limits to these groups and evaluates the cash balances on a monthly basis to ensure compliance within these limits. 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. CENTERRA GOLD INC. ANNUAL REPORT 2020118Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) As at December 31, 2020, the Company has cash of $545.2 million compared to $42.7 million at December 31, 2019. In addition, the Company has $400 million in undrawn borrowing facilities available at December 31, 2020. 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 at least the end of 2021. 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: Year ended December 31, 2020 (Millions of U.S. Dollars) Accounts payable and accrued liabilities Reclamation trust fund Capital equipment Operational supplies Undiscounted lease liabilities Derivative liabilities Total contractual obligations Year ended December 31, 2019 (Millions of U.S. Dollars) Accounts payable and accrued liabilities Debt Reclamation trust fund Capital equipment Operational supplies Project development Undiscounted lease liabilities Derivative liabilities Total contractual obligations e. Commodity price risk Total Due in <1 Year 1-3 Years 4-5 Years 5 Years Due in Due after Due in $ 232.7 $ 232.7 $ - $ - $ 22.0 30.3 25.6 20.5 11.0 $ 342.1 6.0 29.6 25.6 5.4 8.2 $ 307.5 16.0 0.7 - 9.7 2.8 $ 29.2 $ - - - 5.4 - 5.4 $ - - - - - - - Total Due in Due in Due after <1 Year 1-3 Years 4-5 Years 5 Years Due in $ 238.3 $ 238.3 $ - $ - $ 77.5 28.1 0.4 26.6 13.6 31.7 0.2 416.4 $ - 6.0 0.4 26.6 13.6 8.4 0.2 293.5 $ - 18.0 - - - 19.3 - 37.3 $ 77.5 4.1 - - - 4.0 - 85.6 $ $ - - - - - - - - - The profitability of the Company’s operations and mineral resource properties relates primarily to the market price and outlook of gold and copper. Changes in the price of certain raw materials can also significantly affect the Company’s cash flows. CENTERRA GOLD INC. ANNUAL REPORT 2020119Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (Expressed in thousands of United States Dollars, except where otherwise indicated) 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). To the extent that the price of gold and copper increase over time, the fair value of the Company’s mineral assets increase, 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 hedge contracts to mitigate price risk both for gold and copper price movements on the Royal Gold stream, strategic copper contracts to secure the copper price for a majority of Mount Milligan’s sales not subject to the Royal Gold stream, and fuel hedge contracts to mitigate commodity price risk (see note 28). Based on amounts as at December 31, 2020 and net of the impact of hedges in place, a 10% movement (both increase and decrease) in gold prices would have an impact of $118 million gain/loss on net earnings. Similarly, a 10% movement (both increase and decrease) in copper prices would have an impact of $18.1 million gain/loss on net earnings. 30. Segmented information In accordance with IFRS 8, Operating Segments, the Company’s operations are segmented into three mine sites and one business unit. The remaining operating segments, including development projects and Corporate, have been grouped into an “other” category and are not reported on individually. The three mine sites include the Kumtor Gold Mine, the Mount Milligan Mine and the Öksüt Mine. The business unit consists of the Molybdenum segment, which include the operations of the Langeloth processing facility and care and maintenance activities of the Endako and Thompson Creek mines. The Corporate and other segment includes the head office located in Toronto, the Greenstone Gold Property (ownership in the project was sold in January 2021), the Kemess Project and other international exploration projects. The following table reconciles segment operating profit to the consolidated operating profit in the Statements of Earnings: CENTERRA GOLD INC. ANNUAL REPORT 2020120l a t o T 7 . 8 8 6 , 1 $ 7 . 6 6 . 0 9 5 3 . 5 0 3 1 . 6 8 7 5 . 8 3 1 4 . 7 4 7 . 5 4 1 . 9 2 1 . 7 8 3 . 8 3 4 3 . 6 9 3 $ $ $ - - - - - - - 3 . 2 2 7 . 5 4 2 . 6 1 ) 2 . 4 8 ( 9 . 4 2 $ 0 . 7 3 1 $ 6 . 3 8 3 $ 5 . 6 8 1 $ 6 . 1 8 9 $ e t a r o p r o C r e h t o d n a m u n e d b y l o M t n u o M n a g i l l i M ) c ( t ü s k Ö r o t m u K ) s r a l l o D . . S U f o s n o i l l i M ( s e l a s f o t s o C e u n e v e R - - - ) b ( $ $ 9 . 2 1 5 . 5 5 ) 3 . 9 8 ( 5 . 6 $ $ - - - 5 . 7 7 . 9 9 . 3 8 2 . 7 3 - - - 7 . 1 $ $ 1 . 0 5 . 3 3 1 3 . 9 6 ) a ( 2 . 1 5 1 - 7 . 6 - 1 . 3 7 4 . 9 0 2 - 2 . 5 3 0 . 6 1 $ ) 9 . 0 2 ( $ 1 . 1 0 1 $ 3 . 5 3 1 $ 7 . 6 8 . 4 9 1 5 . 9 0 2 6 . 0 7 5 5 . 8 3 1 9 . 5 1 - - $ $ 8 . 1 2 4 . 4 9 3 4 . 8 5 2 $ $ $ s t s o c t n e m p o l e v e d d n a n o i t a r o l p x E n o i t a r t s i n i m d a e t a r o p r o C e c n a n e t n i a m d n a e r a C s e s n e p x e g n i t a r e p o r e h t O d n a t n a l p , y t r e p o r p o t s n o i t i d d A s n o i t a r e p o m o r f ) s s o l ( i s g n n r a E ) 9 e t o n ( t n e m p u q e i m o r f ) s s o l ( i s g n n r a E s e x a t d e s a b - e u n e v e R s n o i t a r e p o e n m i s t s o c n o i t c u d o r P n o i t a i c e r p e D s t s o c y b d n a t S e h t r o f , o k a d n E d n a e n i M k e e r C n o s p m o h T , s e t i s d e s o l c e h t t a n o i l l i m 4 3 5 $ . f o n o i t a m a l c e r r o f n o i s i v o r p e h t o t t n e m t s u j d a n a s e d u l c n I ) b . ) n o i l l i m 4 . 8 $ - 9 1 0 2 , 1 3 r e b m e c e D ( 0 2 0 2 , 1 3 r e b m e c e D g n i d n e r a e y e h t r o f t i n u s s e n i s u b m u n e d b y l o M e h t o t d e t a l e r n o i l l i m 6 . 3 1 $ f o e g r a h c t n e m r i a p m i y r o t n e v n i n a s e d u l c n I ) a . n o i t p m u s s a e t a r e e r f - k s i r e h t n i n o i t c u d e r a f o t l u s e r a s a ) n o i l l i m 5 4 3 $ . - 9 1 0 2 , 1 3 r e b m e c e D ( 0 2 0 2 , 1 3 r e b m e c e D g n i d n e r a e y . 0 2 0 2 , 1 3 y a M e v i t c e f f e n o i t c u d o r p l a i c r e m m o c d e v e i h c a e n i m e h T . 0 2 0 2 , 1 3 r e b m e c e D o t 0 2 0 2 , 1 e n u J m o r f d o i r e p e h t s e d u l c n I ) c ) d e t a c i d n i e s i w r e h t o e r e h w t p e c x e , s r a l l o D s e t a t S d e t i n U f o s d n a s u o h t n i d e s s e r p x E ( s t n e m e t a t S i l a i c n a n F d e t a d i l o s n o C e h t o t s e t o N 9 1 0 2 d n a 0 2 0 2 d e d n e s r a e y e h t r o F . c n I d l o G a r r e t n e C 0 2 0 2 , 1 3 r e b m e c e D d e d n e r a e Y CENTERRA GOLD INC. ANNUAL REPORT 2020 121 l a t o T 3 . 5 7 3 , 1 $ 1 . 9 5 . 6 7 6 6 . 9 3 2 1 . 0 5 4 4 . 6 1 1 0 . 6 4 3 . 5 4 5 . 8 2 5 . 0 3 2 1 . 9 6 ) 7 . 5 8 ( 0 . 5 8 3 $ $ $ - - - - - - 6 . 0 3 3 . 5 4 1 . 5 1 1 . 6 1 - 4 . 7 2 ) 1 . 7 0 1 ( $ $ - 0 . 5 2 . 5 1 2 - 3 . 3 5 . 7 2 3 2 $ 8 . 2 1 2 $ . 0 5 3 3 $ $ ) 4 . 7 ( $ 0 . 9 4 $ - - 1 . 0 - 4 . 3 1 ) a ( 2 . 7 3 ) 1 . 8 5 ( 4 . 5 - - - 0 . 4 $ $ 0 . 8 . 4 4 1 2 ) 4 . 7 7 1 ( 2 . 9 8 $ $ - - - - - - - - - - - - . 7 9 8 e t a r o p r o C r e h t o d n a m u n e d b y l o M t n u o M n a g i l l i M $ . 5 7 2 8 $ t ü s k Ö r o t m u K ) s r a l l o D . . S U f o s n o i l l i M ( s e l a s f o t s o C e u n e v e R $ $ $ 1 . 9 . 6 8 2 2 . 3 1 8 1 . 5 8 0 4 . 4 6 1 1 . 3 1 1 - - - . 9 3 2 . 9 6 5 2 . 3 3 7 1 $ $ $ s t s o c t n e m p o l e v e d d n a n o i t a r o l p x E n o i t a r t s i n i m d a e t a r o p r o C e c n a n e t n i a m d n a e r a C m o r f ) s s o l ( i s g n n r a E s e x a t d e s a b - e u n e v e R s n o i t a r e p o e n m i s t s o c n o i t c u d o r P n o i t a i c e r p e D s t s o c y b d n a t S ) 9 1 e t o n ( t n e m r i a p m I d n a t n a l p , y t r e p o r p o t s n o i t i d d A s n o i t a r e p o m o r f ) s s o l ( i s g n n r a E s e s n e p x e g n i t a r e p o r e h t O t n e m p u q e i t l u s e r a s a o k a d n E d n a e n i M k e e r C n o s p m o h T , s e t i s d e s o l c e h t t a n o i l l i m 5 4 3 $ . f o n o i t a m a l c e r r o f n o i s i v o r p e h t o t t n e m t s u j d a n a s e d u l c n I ) a ( . n o i t p m u s s a e t a r e e r f - k s i r e h t n i s e g n a h c f o ) d e t a c i d n i e s i w r e h t o e r e h w t p e c x e , s r a l l o D s e t a t S d e t i n U f o s d n a s u o h t n i d e s s e r p x E ( s t n e m e t a t S i l a i c n a n F d e t a d i l o s n o C e h t o t s e t o N 9 1 0 2 d n a 0 2 0 2 d e d n e s r a e y e h t r o F . c n I d l o G a r r e t n e C 9 1 0 2 , 1 3 r e b m e c e D d e d n e r a e Y CENTERRA GOLD INC. ANNUAL REPORT 2020 122 Centerra Gold Inc. Notes to the Consolidated Financial Statements For the years ended 2020 and 2019 (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 its customers and information about the Company’s non-current assets by location of the assets. (Millions of U.S. Dollars) Kyrgyz Republic South Korea Turkey Japan United States India China Philippines Canada Netherlands Other Total Customer Information Revenue Year ended December 31, 2019 827.5 $ 181.0 - 100.4 174.3 - 63.4 - 2.6 22.9 3.2 1,375.3 $ 2020 981.6 $ 233.5 186.5 103.6 78.6 35.4 34.4 17.8 7.9 5.8 3.6 1,688.7 $ $ $ Non-current assets As at December 31, 2020 611.0 $ - 221.7 - 81.7 - - - 841.0 - 7.8 1,763.2 $ 2019 458.7 - 208.4 - 94.8 - - - 998.9 - 8.2 1,769.0 The following table presents sales to the top individual customers for the years ended December 31, 2020 and 2019. The following four customers represent 78% (2019 - 75%) of the Company’s sales revenue: Customer Region 1 2 3 4 Kyrgyz Republic Turkey Asia - Gold-Copper Asia - Gold-Copper 2020 981,621 125,870 125,154 89,810 1,322,455 $ $ 2019 827,538 - 90,504 118,224 1,036,266 $ $ CENTERRA GOLD INC. ANNUAL REPORT 2020123CCORPORATE INFORMATION DIRECTORS MANAGEMENT 1 TRANSFER AGENT AUDITORS KPMG LLP 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 Michael S. Parrett Chair Bruce V. Walter Vice-Chair Tengiz Bolturuk Richard W. Connor Dushen Kasenov Maksat Kobonbaev Jacques Perron Scott G. Perry Sheryl K. Pressler Paul N. Wright Susan L. Yurkovich OFFICERS Scott G. Perry President and Chief Executive Officer Daniel R. Desjardins Vice President and Chief Operating Officer Claudia D’Orazio Vice President and Chief Human Resources Officer Darren J. Millman Vice President and Chief Financial Officer Dennis C. Kwong Vice President, Business Development and Exploration Yousef Rehman Vice President, General Counsel and Corporate Secretary Kevin D’Souza Vice President, Security, Sustainability and Environment For information on common share holdings, lost shares 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 Cam Duquette Vice President, Health and Safety José Nacif-Drah Vice President, Global Information Technology John W. Pearson Vice President, Investor Relations Julie Robertson Vice President, Finance and Capital Projects Malcolm Stallman Vice President, Exploration Cathy Taylor Vice President, Risk and Insurance Mark A. Wilson President, Base Metals Division Deon Badenhorst President, Kumtor Gold Company David A. Bickford Vice President, Operations, Turkey Chuck Hennessey Vice President, Operations, BC Tom Ondrejko Vice President, US Molybdenum Operations Ron Hampton Project Director, Kemess Mine Greg Herbert Site Manager, Endako Mine Jim Kopp Site Manager, Thompson Creek Mine Jason Nonack Operations Manager, 1) As of March 16, 2021. Langeloth Metallurgical Company DELIVER ON RESULTS Centerra Gold Inc. Annual Report 2020 Printed in Canada CENTERRA GOLD INC. Suite 1500 1 University Avenue Toronto, Ontario Canada M5J 2P1 T 416.204.1953 F 416.204.1954 www.centerragold.com

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