Intrinsic value of Centerra Gold Inc. - CG

Previous Close

$7.10

  Intrinsic Value

$21.63

stock screener

  Rating & Target

str. buy

+205%

Previous close

$7.10

 
Intrinsic value

$21.63

 
Up/down potential

+205%

 
Rating

str. buy

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CG stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  21.95
  26.00
  23.90
  22.01
  20.31
  18.78
  17.40
  16.16
  15.04
  14.04
  13.14
  12.32
  11.59
  10.93
  10.34
  9.80
  9.32
  8.89
  8.50
  8.15
  7.84
  7.55
  7.30
  7.07
  6.86
  6.68
  6.51
  6.36
  6.22
  6.10
  5.99
Revenue, $m
  1,028
  1,295
  1,605
  1,958
  2,356
  2,798
  3,285
  3,816
  4,390
  5,006
  5,664
  6,362
  7,099
  7,875
  8,689
  9,541
  10,431
  11,358
  12,324
  13,329
  14,373
  15,459
  16,587
  17,759
  18,978
  20,244
  21,562
  22,932
  24,359
  25,845
  27,393
Variable operating expenses, $m
 
  238
  294
  358
  431
  511
  600
  696
  801
  913
  1,032
  1,157
  1,291
  1,432
  1,580
  1,735
  1,897
  2,066
  2,241
  2,424
  2,614
  2,811
  3,016
  3,230
  3,451
  3,682
  3,921
  4,171
  4,430
  4,700
  4,982
Fixed operating expenses, $m
 
  653
  669
  686
  703
  721
  739
  757
  776
  796
  815
  836
  857
  878
  900
  923
  946
  969
  994
  1,018
  1,044
  1,070
  1,097
  1,124
  1,152
  1,181
  1,210
  1,241
  1,272
  1,304
  1,336
Total operating expenses, $m
  802
  891
  963
  1,044
  1,134
  1,232
  1,339
  1,453
  1,577
  1,709
  1,847
  1,993
  2,148
  2,310
  2,480
  2,658
  2,843
  3,035
  3,235
  3,442
  3,658
  3,881
  4,113
  4,354
  4,603
  4,863
  5,131
  5,412
  5,702
  6,004
  6,318
Operating income, $m
  226
  405
  642
  914
  1,222
  1,566
  1,947
  2,363
  2,813
  3,298
  3,816
  4,369
  4,951
  5,565
  6,209
  6,883
  7,588
  8,323
  9,089
  9,886
  10,715
  11,577
  12,474
  13,405
  14,374
  15,382
  16,430
  17,521
  18,657
  19,841
  21,075
EBITDA, $m
  503
  756
  1,077
  1,444
  1,860
  2,324
  2,835
  3,394
  4,000
  4,651
  5,347
  6,086
  6,867
  7,690
  8,553
  9,458
  10,403
  11,388
  12,414
  13,483
  14,593
  15,748
  16,949
  18,197
  19,495
  20,844
  22,248
  23,709
  25,230
  26,815
  28,466
Interest expense (income), $m
  0
  20
  29
  40
  52
  66
  81
  98
  117
  137
  158
  181
  205
  231
  258
  286
  316
  347
  379
  413
  448
  484
  522
  561
  602
  644
  688
  734
  782
  831
  883
Earnings before tax, $m
  211
  385
  612
  874
  1,170
  1,500
  1,865
  2,264
  2,696
  3,161
  3,658
  4,188
  4,746
  5,334
  5,951
  6,597
  7,272
  7,976
  8,710
  9,474
  10,268
  11,094
  11,952
  12,845
  13,773
  14,738
  15,742
  16,787
  17,876
  19,010
  20,192
Tax expense, $m
  6
  104
  165
  236
  316
  405
  504
  611
  728
  854
  988
  1,131
  1,281
  1,440
  1,607
  1,781
  1,964
  2,154
  2,352
  2,558
  2,772
  2,995
  3,227
  3,468
  3,719
  3,979
  4,250
  4,533
  4,826
  5,133
  5,452
Net income, $m
  205
  281
  447
  638
  854
  1,095
  1,362
  1,653
  1,968
  2,308
  2,670
  3,057
  3,465
  3,894
  4,344
  4,816
  5,309
  5,823
  6,358
  6,916
  7,495
  8,098
  8,725
  9,377
  10,054
  10,759
  11,492
  12,255
  13,049
  13,877
  14,740

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  223
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  3,587
  4,233
  5,245
  6,399
  7,699
  9,144
  10,735
  12,470
  14,346
  16,360
  18,509
  20,790
  23,200
  25,736
  28,396
  31,180
  34,087
  37,118
  40,274
  43,557
  46,971
  50,518
  54,205
  58,036
  62,018
  66,158
  70,464
  74,943
  79,605
  84,460
  89,519
Adjusted assets (=assets-cash), $m
  3,364
  4,233
  5,245
  6,399
  7,699
  9,144
  10,735
  12,470
  14,346
  16,360
  18,509
  20,790
  23,200
  25,736
  28,396
  31,180
  34,087
  37,118
  40,274
  43,557
  46,971
  50,518
  54,205
  58,036
  62,018
  66,158
  70,464
  74,943
  79,605
  84,460
  89,519
Revenue / Adjusted assets
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
Average production assets, $m
  1,526
  1,922
  2,382
  2,906
  3,496
  4,152
  4,875
  5,663
  6,515
  7,429
  8,405
  9,441
  10,535
  11,687
  12,895
  14,159
  15,479
  16,856
  18,289
  19,780
  21,330
  22,941
  24,615
  26,355
  28,163
  30,043
  31,998
  34,032
  36,149
  38,354
  40,651
Working capital, $m
  1,066
  648
  802
  979
  1,178
  1,399
  1,642
  1,908
  2,195
  2,503
  2,832
  3,181
  3,550
  3,938
  4,345
  4,771
  5,215
  5,679
  6,162
  6,664
  7,187
  7,729
  8,293
  8,880
  9,489
  10,122
  10,781
  11,466
  12,180
  12,922
  13,696
Total debt, $m
  669
  834
  1,141
  1,492
  1,887
  2,327
  2,811
  3,338
  3,908
  4,521
  5,174
  5,867
  6,600
  7,371
  8,179
  9,026
  9,910
  10,831
  11,790
  12,788
  13,826
  14,905
  16,025
  17,190
  18,401
  19,659
  20,968
  22,330
  23,747
  25,223
  26,761
Total liabilities, $m
  1,122
  1,287
  1,594
  1,945
  2,340
  2,780
  3,264
  3,791
  4,361
  4,974
  5,627
  6,320
  7,053
  7,824
  8,632
  9,479
  10,363
  11,284
  12,243
  13,241
  14,279
  15,358
  16,478
  17,643
  18,854
  20,112
  21,421
  22,783
  24,200
  25,676
  27,214
Total equity, $m
  2,465
  2,946
  3,650
  4,454
  5,358
  6,364
  7,472
  8,679
  9,985
  11,387
  12,883
  14,470
  16,147
  17,912
  19,764
  21,701
  23,725
  25,834
  28,031
  30,316
  32,692
  35,161
  37,727
  40,393
  43,165
  46,046
  49,043
  52,160
  55,405
  58,784
  62,305
Total liabilities and equity, $m
  3,587
  4,233
  5,244
  6,399
  7,698
  9,144
  10,736
  12,470
  14,346
  16,361
  18,510
  20,790
  23,200
  25,736
  28,396
  31,180
  34,088
  37,118
  40,274
  43,557
  46,971
  50,519
  54,205
  58,036
  62,019
  66,158
  70,464
  74,943
  79,605
  84,460
  89,519
Debt-to-equity ratio
  0.271
  0.280
  0.310
  0.340
  0.350
  0.370
  0.380
  0.380
  0.390
  0.400
  0.400
  0.410
  0.410
  0.410
  0.410
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
Adjusted equity ratio
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  205
  281
  447
  638
  854
  1,095
  1,362
  1,653
  1,968
  2,308
  2,670
  3,057
  3,465
  3,894
  4,344
  4,816
  5,309
  5,823
  6,358
  6,916
  7,495
  8,098
  8,725
  9,377
  10,054
  10,759
  11,492
  12,255
  13,049
  13,877
  14,740
Depreciation, amort., depletion, $m
  277
  352
  435
  531
  638
  757
  889
  1,032
  1,187
  1,353
  1,530
  1,717
  1,915
  2,125
  2,345
  2,574
  2,814
  3,065
  3,325
  3,596
  3,878
  4,171
  4,475
  4,792
  5,121
  5,462
  5,818
  6,188
  6,573
  6,973
  7,391
Funds from operations, $m
  -131
  632
  882
  1,168
  1,492
  1,852
  2,250
  2,685
  3,155
  3,661
  4,201
  4,774
  5,380
  6,019
  6,689
  7,390
  8,123
  8,887
  9,684
  10,512
  11,374
  12,269
  13,200
  14,168
  15,174
  16,221
  17,309
  18,442
  19,622
  20,851
  22,131
Change in working capital, $m
  -298
  134
  155
  177
  199
  221
  243
  265
  287
  308
  329
  349
  369
  388
  407
  426
  445
  464
  483
  502
  522
  543
  564
  586
  609
  633
  659
  685
  713
  743
  774
Cash from operations, $m
  167
  499
  727
  992
  1,293
  1,631
  2,007
  2,419
  2,868
  3,353
  3,872
  4,425
  5,011
  5,631
  6,282
  6,964
  7,678
  8,424
  9,201
  10,010
  10,851
  11,726
  12,636
  13,582
  14,565
  15,588
  16,651
  17,757
  18,909
  20,108
  21,357
Maintenance CAPEX, $m
  0
  -277
  -349
  -433
  -528
  -636
  -755
  -886
  -1,030
  -1,184
  -1,351
  -1,528
  -1,717
  -1,915
  -2,125
  -2,345
  -2,574
  -2,814
  -3,065
  -3,325
  -3,596
  -3,878
  -4,171
  -4,475
  -4,792
  -5,121
  -5,462
  -5,818
  -6,188
  -6,573
  -6,973
New CAPEX, $m
  -293
  -396
  -459
  -524
  -590
  -656
  -723
  -788
  -852
  -915
  -976
  -1,036
  -1,094
  -1,152
  -1,208
  -1,264
  -1,320
  -1,376
  -1,433
  -1,491
  -1,550
  -1,611
  -1,674
  -1,740
  -1,808
  -1,880
  -1,955
  -2,034
  -2,117
  -2,205
  -2,297
Cash from investing activities, $m
  -1,114
  -673
  -808
  -957
  -1,118
  -1,292
  -1,478
  -1,674
  -1,882
  -2,099
  -2,327
  -2,564
  -2,811
  -3,067
  -3,333
  -3,609
  -3,894
  -4,190
  -4,498
  -4,816
  -5,146
  -5,489
  -5,845
  -6,215
  -6,600
  -7,001
  -7,417
  -7,852
  -8,305
  -8,778
  -9,270
Free cash flow, $m
  -947
  -175
  -81
  35
  174
  339
  529
  745
  987
  1,253
  1,545
  1,861
  2,201
  2,563
  2,949
  3,356
  3,784
  4,233
  4,703
  5,194
  5,705
  6,237
  6,791
  7,367
  7,965
  8,587
  9,233
  9,905
  10,604
  11,331
  12,087
Issuance/(repayment) of debt, $m
  538
  263
  308
  351
  395
  439
  484
  527
  570
  612
  653
  693
  733
  771
  809
  846
  884
  921
  959
  998
  1,038
  1,079
  1,121
  1,165
  1,211
  1,258
  1,309
  1,362
  1,417
  1,476
  1,538
Issuance/(repurchase) of shares, $m
  193
  325
  257
  166
  51
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  707
  588
  565
  517
  446
  439
  484
  527
  570
  612
  653
  693
  733
  771
  809
  846
  884
  921
  959
  998
  1,038
  1,079
  1,121
  1,165
  1,211
  1,258
  1,309
  1,362
  1,417
  1,476
  1,538
Total cash flow (excl. dividends), $m
  -240
  413
  483
  551
  620
  779
  1,013
  1,272
  1,557
  1,866
  2,199
  2,554
  2,933
  3,334
  3,757
  4,202
  4,668
  5,154
  5,662
  6,192
  6,743
  7,316
  7,912
  8,532
  9,176
  9,846
  10,542
  11,267
  12,021
  12,807
  13,625
Retained Cash Flow (-), $m
  -545
  -606
  -704
  -803
  -904
  -1,006
  -1,107
  -1,207
  -1,306
  -1,402
  -1,496
  -1,587
  -1,677
  -1,765
  -1,852
  -1,938
  -2,023
  -2,109
  -2,196
  -2,285
  -2,376
  -2,469
  -2,566
  -2,667
  -2,771
  -2,881
  -2,996
  -3,118
  -3,245
  -3,379
  -3,521
Prev. year cash balance distribution, $m
 
  125
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -68
  -221
  -252
  -284
  -228
  -95
  65
  251
  464
  703
  967
  1,256
  1,569
  1,906
  2,264
  2,644
  3,045
  3,466
  3,907
  4,367
  4,847
  5,346
  5,865
  6,404
  6,964
  7,546
  8,149
  8,776
  9,427
  10,104
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  -65
  -202
  -220
  -234
  -176
  -69
  44
  157
  266
  368
  459
  536
  597
  640
  665
  672
  663
  638
  602
  555
  501
  444
  384
  326
  271
  220
  175
  136
  103
  76
Current shareholders' claim on cash, %
  100
  85.8
  77.7
  73.7
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8
  72.8

Centerra Gold Inc. is a Canada-based gold mining company focused on operating, developing, exploring and acquiring gold properties in Asia, North America and other markets across the world. The Company's exploration segment includes the operations of Lagares Project in which the activities are related to its subsidiary, Centerra Gold (KB) Inc. Its Kyrgyz segment includes Kumtor Gold Co. (KGC) (Kyrgyz Republic), which operates Kumtor Mine. Its Mongolian segment includes Centerra Gold Mongolia LLC (CGM) (Mongolia), which operates ATO Project and Gatsuurt Project, and Boroo Gold LLC (BGC) (Mongolia), which operates Boroo Mine. Its Turkish segment includes Centerra Luxembourg Holdings S.ar.L (Luxembourg), Centerra Exploration B.V. (CEBV) (The Netherlands), and Oksut Madencilik Sanayi Ve Tkaret A.S. (Turkey), which operates Oksut Project. Its Canadian segment includes Hearts Peak Project and Greenstone Gold Mines (Canada). Its subsidiaries also include Greenstone Gold Mines GP Inc.

FINANCIAL RATIOS  of  Centerra Gold Inc. (CG)

Valuation Ratios
P/E Ratio 10.1
Price to Sales 2
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 12.4
Price to Free Cash Flow -16.4
Growth Rates
Sales Growth Rate 21.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -10.9%
Cap. Spend. - 3 Yr. Gr. Rate -6.8%
Financial Strength
Quick Ratio 2
Current Ratio 1.2
LT Debt to Equity 23.2%
Total Debt to Equity 27.1%
Interest Coverage 0
Management Effectiveness
Return On Assets 7%
Ret/ On Assets - 3 Yr. Avg. 2.3%
Return On Total Capital 8%
Ret/ On T. Cap. - 3 Yr. Avg. 2.6%
Return On Equity 9.4%
Return On Equity - 3 Yr. Avg. 3.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 45.5%
Gross Margin - 3 Yr. Avg. 39.4%
EBITDA Margin 47.5%
EBITDA Margin - 3 Yr. Avg. 39.6%
Operating Margin 22%
Oper. Margin - 3 Yr. Avg. 8.4%
Pre-Tax Margin 20.5%
Pre-Tax Margin - 3 Yr. Avg. 7.3%
Net Profit Margin 19.9%
Net Profit Margin - 3 Yr. Avg. 6.9%
Effective Tax Rate 2.8%
Eff/ Tax Rate - 3 Yr. Avg. -0.8%
Payout Ratio 15.1%

CG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CG stock intrinsic value calculation we used $1028 million for the last fiscal year's total revenue generated by Centerra Gold Inc.. The default revenue input number comes from 2016 income statement of Centerra Gold Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CG stock valuation model: a) initial revenue growth rate of 26% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for CG is calculated based on our internal credit rating of Centerra Gold Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Centerra Gold Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CG stock the variable cost ratio is equal to 18.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $637 million in the base year in the intrinsic value calculation for CG stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Centerra Gold Inc..

Corporate tax rate of 27% is the nominal tax rate for Centerra Gold Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CG stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CG are equal to 148.4%.

Life of production assets of 5.5 years is the average useful life of capital assets used in Centerra Gold Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CG is equal to 50%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2465 million for Centerra Gold Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 291.508 million for Centerra Gold Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Centerra Gold Inc. at the current share price and the inputted number of shares is $2.1 billion.

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Financial statements of CG
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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