Kyrgyzstan and Centerra reach settlement concerning Kumtor gold project

BISHKEK (TCA) — Centerra Gold Inc., the Canadian-based gold mining company operating Kyrgyzstan’s Kumtor gold mine, on September 11 said that the Company and its Kyrgyz subsidiaries — Kumtor Gold Company (KGC) and Kumtor Operating Company (KOC) — have entered into a comprehensive settlement agreement with the Government of Kyrgyzstan.

The Agreement, among others, provides for full and final resolution of all existing arbitral and environmental claims, disputes, proceedings and court orders, Centerra said.

The existing 2009 agreements governing the Kumtor Project remain in full force and effect, including the tax and fiscal regime.

KGC has agreed to make a one-time 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.

“First and foremost, this agreement is a comprehensive resolution to all of the outstanding matters affecting the Kumtor Project,” Scott Perry, Centerra Gold’s Chief Executive Officer, said after the signing of the agreement in Bishkek. “Our arrangement provides for the lifting of all restrictions on the freedom of movement of KGC employees as well as the restrictions on the ability of Kumtor to distribute funds to Centerra. The agreement also provides business certainty for future mining operations at the Kumtor Project, as it preserves all rights of the Company, KGC and KOC under the Kumtor Project Agreements and, in order to receive full payment, requires continued compliance by the Government with a number of conditions precedent that are designed to protect Centerra, KGC and KOC. Lastly, this agreement represents a symbol of commitment from Centerra and the Kyrgyz Republic Government, a commitment not only to stability for foreign investment in the Kyrgyz Republic but a commitment to the environment, health and wellbeing of the citizens of Kyrgyzstan.”

Sapar Isakov, Prime Minister of the Kyrgyz Republic commented, “We are pleased to have worked together with Kumtor and the Company to reach a solution regarding the Kumtor Project. It is encouraging to see the Company’s commitment to the environment with the establishment and funding of a new Nature Development Fund. This new fund will help finance environmental conservation and nature preservation projects throughout Kyrgyzstan going forward. Additionally, the Company has strengthened its social responsibility by committing to fund a new Cancer Care Support Fund with contributions up to US$10 million and to provide stronger annual contributions to the environment and to Kumtor’s existing reclamation trust fund. With the resolution of all the outstanding matters regarding the Kumtor Project we have established a new beneficial relationship with our country’s largest enterprise and can look forward to a climate of economic stability which will encourage further foreign investment to grow our economy.”

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Times of Central Asia