On Monday, August 26, Toronto-based miner Centerra Gold announced that its ongoing legal proceedings with the Kyrgyz Republic regarding its Kumtor project have been terminated. This will allow the company to continue its relationship with the government and extend the life of the mine and expand its reserves.
Centerra Gold President and CEO Scott Perry said the agreement reached between the company and the government “marks another turning point in the history of the Kumtor Project.”
All obligations under the strategic agreement, including the settlement and releases of liability as well as the obligations of Kumtor Gold Co. to make contributions to various environmental and social funds of the Kyrgyz Republic Government, have now become effective.
Kumtor Gold Co., a subsidiary of Centerra, will make payments required under the strategic agreement, including to the Kyrgyz Republic Nature Development Fund and Cancer Care Support Fund. The company expects the second completion date to occur in the third quarter of 2019.
It will make a U.S.$5 million lump sum contribution to a new Kyrgyz Republic Social Partnership for Regional Development Fund within five business days of the second completion date; a U.S.$5 million lump sum contribution to the Regional Fund within 12 months of the second completion date; monthly contributions to the Regional Fund equivalent to 0.4% of KGC’s revenues from the Kumtor Project earned after the second completion date; an annual contribution of U.S.$1 million to the Kyrgyz Republic Nature Development Fund; and exploration expenditures of at least U.S.$16 million at the Kumtor Project over a two-year period. The company expects to have invested this amount by the end of 2019.
All such payments and expenditures are conditional upon the Kyrgyz Republic Government continuing to comply with the conditions precedent under the strategic agreement.
The deadline for completion of the agreement was extended several times while the parties worked together to satisfy all of the conditions.