HispanicBusiness

During the fourth quarter of 2012, the Company recorded a one-time charge of $180.7 million for the de-recognition of the underground assets at Kumtor following the decision to expand the open pit. The larger open pit will partially consume the declines rendering them unusable for future mining activities.

Other operating expenses were incurred in the fourth quarter for the closure of the underground operation at Kumtor in the amount of $2.9 million. Kumtor will incur further closure costs for the underground during the first quarter of 2013.

Boroo

At the Boroo mine in the fourth quarter of 2012, gold production was 29,878 ounces, compared to 12,866 ounces in the same period of 2011. The production increase of 12,614 ounces is a result of processing higher grade ore from Pit 6 with an average mill head grade of 2.07 g/t compared to 0.86 g/t last year and the addition of 7,486 ounces of production from the heap leap operation which resumed in October 2012.

Operating costs at Boroo were up $3.8 million quarter-over-quarter primarily due to increased costs for mining ($0.4 million), heap leaching ($1.9 million) and royalties ($1.8 million), partially offset by a decrease in milling costs ($0.2 million). Heap leaching costs were higher due to stacking, crushing and processing activities which commenced in the fourth quarter in 2012. Royalties increased in 2012 due to the additional 24,618 ounces sold in the 2012 fourth quarter. Milling cost decreased mainly due to lower consumption of consumables.

Operating cash costs per ounce produced in the fourth quarter 2012 was $479 compared to $849 per ounce for 2011. The decrease in the unit cash cost is a result of the higher production partially offset by higher operating cost incurred for heap leach operations in the fourth quarter of 2012. Operating cash costs per ounce produced is a non-GAAP measure and is discussed under "Non-GAAP Measures".

Boroo's all-in cash costs per ounce produced for the fourth quarter of 2012 is $502 and includes all costs directly related to gold production except for income tax paid in Mongolia. The same all-in cash costs measure for 2011 was $940 per ounce produced. The decrease in all-in cash costs is due to the 21% increase in production partially offset by higher costs at Boroo year-over-year. All-in cash costs per ounce produced is a non-GAAP measure and is discussed under "Non-GAAP Measures".

During the fourth quarter of 2012 exploration expenditures in Mongolia decreased to $3.0 million from $4.2 million in the same period in 2011. The majority of the exploration work in the fourth quarter 2012 was conducted at the ATO property in eastern Mongolia.

During the fourth quarter of 2012, capital expenditures at Boroo were $0.7 million, $0.4 million of sustaining capital and $0.4 million of growth capital.

Other Corporate Developments

The following is a summary of corporate developments with respect to matters affecting the Company and its subsidiaries in the Kyrgyz Republic, Mongolia and Canada:

Kyrgyz Republic

Since the Company's most recent quarterly news release dated November 7, 2012, there have been several developments with respect to the state commission established by the Kyrgyz Government for the purpose of inspecting and reviewing Kumtor's compliance with Kyrgyz operational and environmental laws and regulations and community standards (the "State Commission"). In particular, the following developments have occurred, each of which will be discussed below in greater detail: (a) The State Commission released its final report (the "State Commission Report") on December 25, 2012; (b) Kumtor received five claims from the State Inspectorate Office for Environmental and Technical Safety under the Government of the Kyrgyz Republic ("SIETS") for an aggregate of $152 million for alleged environmental violations, which was previously disclosed in a news release of the Company on December 14, 2012; (c) The Kyrgyz Republic Government received the State Commission Report on January 24, 2013 and created a working group to hold discussions with Centerra on revising the terms under which the Kumtor Project operates; and (d) the Kyrgyz Republic Parliament received the State Commission Report on February 20, 2013 and is considering a draft Parliamentary resolution. Such draft Parliamentary resolution calls on the Government to hold negotiations with Centerra with a view to revising the Kumtor Project Agreements (as defined below) in the interest of the Kyrgyz Republic and recommends that, if mutually advantageous terms cannot be agreed, the Government take a number of steps including, without limitation, the repeal of the 2009 laws approving the Kumtor Project Agreements and the termination of the Kumtor Project Agreements; and(e) the Kyrgyz Republic Social Fund (the "Social Fund") has appealed to the Supreme Court a lower court ruling that dismissed the Social Fund's request to invalidate documentary acts (assessments) of the Social Fund against Kumtor for the years 2004 to 2009.