Centerra Gold Provides Update on Strategic Agreement With Kyrgyz Republic
Centerra recently met with Prime Minister Muhammedkaliy Abilgaziyev, who was appointed on April 20, and other Kyrgyz Republic officials regarding the strategic agreement. The company said it will continue to work with the government of the Kyrgyz Republic to ensure the satisfaction of the remaining conditions precedent to completion of the strategic agreement, including the termination of certain legal proceedings and receipt of the signed land use certificate.
The key terms of the proposed settlement with the government include the comprehensive settlement of all outstanding disputes and court and other proceedings affecting the Kumtor Project; an affirmation that the existing 2009 agreements governing the Kumtor Project remain in full force and effect, including the tax and fiscal regime thereunder; no admission on the part of Centerra or its Kyrgyz subsidiaries of environmental wrongdoings, non-compliance with Kyrgyz law or the Kumtor Project Agreements or any pre-existing obligation to make additional environmental or Reclamation Trust Fund payments or environmental remediation efforts; the companyís Kyrgyz subsidiary, Kumtor Gold Co. (KGC) would make a onetime lump sum payment totaling US$57 million to a new government administered Nature Development Fund (US$50 million) and to a new government administered Cancer Care Support Fund (US$7 million) and within 12 months of closing make a further one-time payment of US$3 million to the Cancer Care Support Fund; annual payments of US$2.7 million to the new Nature Development Fund, conditional on the government continuing to comply with its obligations under the settlement agreement; KGC would accelerate its annual payments to the Kumtorís Reclamation Trust Fund in the amount of US$6 million a year until the total amount contributed by KGC reaches the total estimated reclamation cost for the Kumtor Project (representing the independent assessment of Kumtorís current reclamation costs, subject to a minimum total reclamation cost of US$69 million). That is broadly in line with KGCís current estimated reclamation cost for the Kumtor Project; KGC would take certain specified actions in respect of the recommendations previously made by the Governmentís environmental consultant, Amec Foster Wheeler, most of which have already been fully implemented; and KGC would consider, together with the government, other potential investment opportunities in the Kyrgyz Republic and at the Kumtor Project.
All obligations under any definitive agreement would be subject to a range of initial conditions precedent, including that certain key permits and approvals for the Kumtor Project shall have been received. In other news, in March, Centerra received an unsolicited, non-binding proposal from Chaarat concerning the Kumtor mine located in the Kyrgyz Republic. Centerra said it had no interest in the offer. In recent meetings with the Kyrgyz Republic Government, senior Kyrgyz Republic officials have confirmed to Centerra that the government is also not interested in pursuing the transaction proposed by Chaarat.