Centerra Gold Inc (CG.TO) reported a decline in first quarter profit on Tuesday as the price of gold dropped and its cost of sales increased.

The Canadian miner cut its forecast for full-year all-in sustaining costs, a benchmark gold sector cost metric, due to lower operating costs at its Boroo mine in Mongolia. The lower costs are partly due to a weaker local currency and a reduced royalty rate.

First-quarter net earnings were $2.1 million, or 1 cent a share, in the three months to the end of March compared with earnings of $51.4 million, or 22 cents, a year earlier.

Revenue fell to $148 million in the quarter from $192.3 million.

Centerra produced 116,669 ounces of gold in the first quarter, up from 115,220 a year earlier. All-in sustaining costs rose to $1,109 per ounce from $1,068 per ounce.

Analysts, on average, had been expecting a loss of 5 cents a share, according to Thomson Reuters I/B/E/S.

Centerra said its cost of sales increased 20 percent to $109.1 million because of the higher cost of processing ore at its flagship Kumtor mine in Kyrgyzstan. Access to the ore mined required more stripping of ice and waste.

The average price realized for its gold dropped 19 percent to $1,301 per ounce compared to a year ago.

The company did not change its 2014 production forecasts released in February.

However, it lowered its forecast for all-in sustaining costs for the year to between $857 and $929 an ounce. In February it forecast costs of between $989 and $1,074.

Centerra's Kumtor open-pit mine has faced several setbacks since the project started in 1994, including threats of nationalization, riots and more recently a $300 million ecological damages lawsuit. The mine contributes some 10 percent of the impoverished country's GDP.

Centerra said on Tuesday that it has not yet received formal approval for its 2014 Kumtor mine plan from Kyrgyz authorities, something that usually takes place in the first quarter of the year.

Source: Reuters