Centerra Gold received notice from Kyrgyz Republic Prime Minister T.A. Sariyev notifying it of the government’s intention to withdraw from further negotiations regarding the implementation of the nonbinding heads of agreement (HoA) dated January 18, 2014. The HoA contemplated a restructuring of the Kumtor project under which Kyrgyzaltyn JSC would receive a 50% interest in a joint venture company that would own the Kumtor project in exchange for its 32.7% interest in Centerra.
In his letter, Prime Minister Sariyev indicates the government’s desire to begin new consultations with Centerra regarding the further efficient implementation of the Kumtor project. The prime minister also said, “the government of the Kyrgyz Republic is still deeply interested in ensuring uninterrupted operations of the Kumtor mine and achieving mutual agreements which would allow further efficient implementation of the Kumtor project in accordance with the best world practice, standards and requirements of the mining industry transparency initiative.”
The Kumtor project is governed by an investment agreement and related agreements dated June 6, 2009, which provides for a fixed tax and payments regime for the Kumtor project. The Kumtor project agreements were approved by all relevant Kyrgyz Republic government authorities in 2009, including the Kyrgyz Republic government and parliament, are the subject matter of a legal opinion issued by the Kyrgyz Republic Ministry of Justice and a positive decision by the Kyrgyz Republic Constitutional Court.
Centerra said it will continue to engage constructively and in good faith with the government of the Kyrgyz Republic to resolve all outstanding matters affecting the Kumtor project in accordance with the Kumtor project agreements, but there are no assurances that continued discussions will result in a mutually acceptable solution.