Centerra Gold Inc. (CGAU) Cash Flow Statement

The gap between net income and operating cash flow in 2026Q2 appears driven by a $41.5M working capital outflow, likely reflecting inventory build-up or receivable timing. Over the last four quarters, OCF/NI has averaged below 1.0, indicating that reported profitability may be temporarily inflated by non-cash items or timing differences. Investors should monitor whether this conversion gap narrows as Öksüt's gold-in-circuit stockpile is cleared.

The FCF trajectory appears highly volatile, driven by lumpy capex and working capital changes. In 2026Q2, capex surged to $89.1M, likely for sustaining and growth projects, while working capital absorbed $41.5M. Despite strong net income, FCF turned negative, suggesting that reported earnings are not yet translating into distributable cash. The company's fortress balance sheet, with $527M cash, provides a buffer, but investors should expect continued FCF variability.

The capex-to-revenue ratio has more than tripled over the past two years, suggesting a phase of heavy investment, possibly for mine development or expansion at Mount Milligan and Öksüt. While this may support future production growth, it also implies that current FCF is being sacrificed for long-term capacity. The elevated capex, combined with depreciation of $34.7M, suggests that sustaining capital requirements are rising, which could limit future cash generation if gold prices plateau.

The consistent negative working capital adjustments over the last two quarters suggest that the company is building inventory or facing slower collections, possibly due to concentrate shipments timing. This pattern is unusual for a miner with rising revenue and may indicate operational bottlenecks or deliberate stockpiling. If working capital continues to drain cash, it could offset gains from higher gold prices, warranting close monitoring of inventory levels and receivable days.

Capital deployment appears balanced, with consistent dividends of $10M per quarter and increasing buybacks, which totaled $49.7M in 2026Q2. This suggests management confidence in cash generation despite negative FCF, likely funded by existing cash reserves. The fortress balance sheet provides ample flexibility for future acquisitions or increased returns, but the sustainability of buybacks depends on FCF improvement.

The near-parity between cumulative net income and operating cash flow suggests that, over time, earnings have largely converted to cash, but quarterly volatility is high. The gap widened in 2026Q2 due to working capital outflows, but the historical trend shows that cash generation has generally tracked profitability. However, the elevated net margins in late 2025, likely from non-recurring gains, may not be sustainable, and investors should adjust for those when assessing long-term cash conversion.