In addition, the Draft Resolution advises the Government to:
i. ensure that the Kumtor mine remains in continuous operation;ii. require Kumtor to develop additional designs for reclamation and determine relevant financial resources required to implement such designs; andiii.ensure that the recommendations of the State Commission (the Report) and Draft Resolution are fulfilled.
The Draft Resolution also recommends that the Government review allegations that Kumtor has understated reserves of silver, tellurium and other elements.
The Draft Resolution calls for the Government to report on the fulfillment of the recommendations contained in the State Commission Report and the Parliamentary resolution by June 1, 2013. While it is not certain that Parliament will pass the Draft Resolution in its current form, Centerra is reviewing the provisions of the Draft Resolution and will respond to any final Parliamentary resolution accordingly. However, as already stated in this news release, Centerra continues to be confident in the continued validity of the Kumtor Project Agreements, which provide for disputes concerning the project to be resolved by international arbitration.
Kyrgyz Republic Social Fund Dispute
As previously disclosed, the Social Fund commenced a claim in the Kyrgyz courts to invalidate documentary acts (assessments) issued by the Social Fund for the years 2004-2009. Preliminary motions regarding jurisdictional matters were argued on August 28, 2012 and subsequently determined in favour of Kumtor. Such decision was appealed by the Social Fund to the Bishkek City Court, which dismissed the appeal of the Social Fund on November 28, 2012. In early February 2013, the Social Fund appealed this decision of the Bishkek City Court to the Kyrgyz Republic Supreme Court.
For a further discussion regarding the Social Fund claim and the dispute for the 2010 taxation year regarding the payment of Social Fund contributions on the high altitude coefficient, please see the Company's Annual Information Form for 2011. There are no assurances that the Company and Kumtor will be able to resolve the outstanding matters relating to the Social Fund without any material impact on the Company's future cash flows, earnings, results of operations and financial condition.
The Company is aware of certain statements made by the Kyrgyz Minister of Health and published on the Ministry's website indicating that Centerra has committed to certain donations related to the improvement of cardiology, cardiac surgery and hemodialysis care in the Kyrgyz Republic. While the Company is reviewing the appropriateness of this donation along with other possible donations in the Kyrgyz Republic, the Company has not yet made a determination thereon.
Gatsuurt and the Impact of the Mongolian Water and Forest Law
Further to information disclosed in Centerra's MD&A for the third quarter 2009 and Centerra's Annual Information Form for 2011, the Mongolian Parliament enacted in July 2009 the Mongolian Law to Prohibit Mineral Exploration and Mining Operations at River Headwaters, Protected Zones of Water Reservoirs and Forested Areas (the "Water and Forest Law") which prohibits mineral prospecting, exploration and mining in water basins and forestry areas in Mongolia. The law provides for a specific exemption for "mineral deposits of strategic importance", which exempts the Boroo hard rock deposit from the application of the law. Centerra's Gatsuurt licenses are currently not exempt. Under the Mineral Laws of Mongolia, Parliament on its own initiative or, on the recommendation of the Mongolian Government, may designate a mineral deposit as strategic. Such designation could result in Mongolia receiving up to a 34% interest in the applicable project.