TORONTO, ONTARIO -- (Marketwire) -- 02/21/13 -- This news release contains forward-looking information that is subject to the risk factors and assumptions set out on page 3 under the heading, "Cautionary Note Regarding Forward-looking Information".
All figures are in United States dollars.
Centerra Gold Inc. (TSX: CG) reports on two matters relating to its Kumtor mine in the Kyrgyz Republic. Further to the Company's news release of February 20, 2013, Centerra understands from Kyrgyz media reports that the Kyrgyz Republic Parliament has adopted a decree (resolution), in respect of the previously reported State Commission report that recommends negotiations with Centerra within the next three months to revise the project agreements signed in 2009 that govern the Kumtor Project (collectively, the "Kumtor Project Agreement"). In addition, Centerra's operating subsidiary in the Kyrgyz Republic, Kumtor Operating Company CJSC received today a claim from the State Agency for Environmental Protection and Forestry under the Government of the Kyrgyz Republic for approximately $315 million relating to alleged environmental damages at the Kumtor Project.
In connection with its consideration of the report from the Kyrgyz Government State Commission established to inspect and review Kumtor's compliance with Kyrgyz operational and environmental laws and regulations and community standards, Centerra understands that the Kyrgyz Republic Parliament adopted a decree (the "Decree") on February 21, 2013 regarding the Kumtor Project. The Decree recommends that the Kyrgyz Republic Government ensure the continuous operation of the Kumtor mine, and within three months of the date of the Decree, conduct negotiations with Centerra with a view to revising the Kumtor Project Agreements to return to conditions that existed prior to the restructuring of the project in 2003, but subject to the application of current Kyrgyz legislation, and to enter into new agreements on these terms. Centerra expects to continue its discussions with relevant Kyrgyz authorities to, among other things, clarify the meaning of the Decree's recommendations with respect to returning to pre-2003 conditions.
If the parties cannot agree on mutually acceptable terms within such three month time period, the Parliament instructs the Government to take certain actions with respect to the Kumtor Project, including among other things, to:
i. invalidate the legislation enacted by Parliament in 2009 approving the Kumtor Project Agreements, and to unilaterally terminate the Kumtor Project Agreements;ii. invalidate the legislation enacted by Parliament in 2009 amending the Kyrgyz Republic Tax Code (which provides for the tax regime set out in the Kumtor Project Agreements);iii.confiscate land plots in connection with the adoption of Government Decree, "On abolition of the Government Decree on allocation of lands to Kumtor Gold Company CJSC dated March 25, 2010", approved by the Government Decree dated July 5, 2012. (This March 25, 2010 Decree granted Kumtor surface rights in relation to the Kumtor Project. See Centerra's news release dated July 6, 2012.); andiv. authorize the State Inspectorate Office for Environmental and Technical Safety ("SIETS") to take measures to have Kumtor Operating Company pay fines and other charges for violations of environmental, mining and geological and subsoil legislation. (See Centerra's new release dated December 14, 2012 and February 20, 2013 for information on significant claims received from SIETS on alleged environmental violations for an aggregate total of approximately $152 million.)