In the Decree, the Parliament also requests that the Government develop and submit to the Parliament for consideration certain matters, including the following:
i. draft amendments to existing legislation or draft new legislation relating to biosphere territories, the protection and preservation of glaciers, and prohibiting the placement of pollutants on glaciers;ii. provide for the obligation of Kumtor to develop a technical plan on reclamation of the Kumtor Project in accordance with Kyrgyz legislation and to determine funding for reclamation based on such plan and to enforce this obligation;iii.for the entire period of the Kumtor Project, to invoice Kumtor for the use of water and make Kumtor pay for changes in the glacial regime and disposal of waste; andiv. when negotiating with Centerra and Kumtor Operating Company, to require that goods and services be purchased for the Kumtor Project in the domestic market.
The Decree instructs the General Prosecutor's Office and the National Security Committee to investigate allegations that Kumtor deliberately understated reserves, including silver and tellurium.
The Decree calls on the Government, General Prosecutor's Office and the National Security Committee to report on the implementation of the instructions set out in the Decree by June 1, 2013.
While Centerra has not yet reviewed an official version of the Decree, it continues to believe that the Kumtor Project Agreements are legal, valid and enforceable obligations. The Kumtor Project Agreements were reviewed and approved by the Kyrgyz Republic Government and the Parliament, and were the subject of a positive decision of the Kyrgyz Republic Constitutional Courts and a legal opinion by the Kyrgyz Republic Ministry of Justice. Furthermore, the Company notes that the Kumtor Project Agreements provide for all disputes to be resolved by international arbitration, if necessary. The Company will continue to hold discussions with the Government and other regulatory officials regarding the State Commission report and the Decree, with the objective of resolving these matters through constructive dialogue. However, there can be no assurances that the Company will be able to successfully resolve any of these matters currently affecting the Kumtor Project. There can also be no assurance that the Kyrgyz Republic Government and/or the Parliament will not take actions that are inconsistent with the Kyrgyz Republic's obligations under the Kumtor Project Agreements or cancel government decrees, orders or licenses under which Kumtor currently operates. Any such actions could have a material adverse impact on the Company's future cash flows, earnings, results of operations and financial conditions. For further information regarding the Kyrgyz Republic State Commission, please see the Company's news release of February 20, 2013.
New Environmental Claim Received by the Kumtor Project
Centerra's operating subsidiary, Kumtor Operating Company CJSC, received today a new claim from the State Agency for Environmental Protection and Forestry under the Government of the Kyrgyz Republic ("SAEF") relating to alleged environmental damages at the Kumtor Project. This claim is in addition to the five environmental claims that Kumtor received in December 2012 for an aggregate amount of $152 million (see the Company's news releases dated December 14, 2012 and February 20, 2013 for information on these five claims). The claim issued by SAEF is for approximately $315 million for alleged damage in relation to waste placed in the tailings management facility, waste rock dumps, and for the generation, management and treatment of other types of wastes. The claim covers the period from 1996 to 2011. Similar to the five claims received by the Kumtor Project in December 2012, the claim by SAEF references the review of the Kumtor Project carried out by the environmental and technical working group of the Kyrgyz Republic State Commission.