Centerra Gold Secures Mount Milligan Permit Extension and Expansion, Addressing Growth Concerns but Valuation Remains Elevated

What happened

Centerra Gold has received amended environmental permits for its Mount Milligan mine, extending operations through 2035 with a 10% throughput expansion starting in 2028 and increased stockpile capacity. This development, expedited by the Province of British Columbia, directly addresses the DeepValue report's watch item on asset life and growth visibility at one of its two core mines. However, the company's shares have rallied approximately 133% over the past year, trading at a rich P/E of ~38x and nearly double a conservative DCF estimate of ~US$7.21 per share. While the permit extension reduces regulatory uncertainty and enhances cash flow visibility from a Tier-1 jurisdiction asset, it does not materially alter the overvalued stock position highlighted in the report. Investors should view this as a positive operational step but insufficient to offset the lack of margin of safety given volatile cash flows and high valuation multiples.

Implication

First, the extended mine life and expansion plans improve Centerra's cash flow stability from Mount Milligan, a key asset in a stable jurisdiction. Second, this reduces the risk of finite reserve life, a core concern identified in the DeepValue report, and supports future production flexibility. Third, however, the stock's significant premium, with a 94% overvaluation relative to DCF, already prices in much of this optimism, leaving little upside for new investors. Fourth, investors should continue monitoring for additional low-risk growth or a price pullback towards the DCF anchor to find a margin of safety. Fifth, overall, while operationally positive, this news underscores the need for disciplined valuation assessment before considering an entry in a cyclical mining stock.

Thesis delta

The permit amendments partially address the 'Asset life and growth visibility' watch item, offering modest upside to long-term cash flow projections. However, they do not shift the core valuation-based thesis, as the stock remains richly priced with limited margin of safety for a two-mine, commodity-sensitive miner. The 'WAIT' recommendation stands, pending clearer evidence of sustainable growth or a more attractive entry point.