The Kyrgyz Government’s Environmental Authority has issued five claims totalling Can$152 million relating to alleged environmental damage at Centerra Gold’s Kumtor project in central Kyrgyzstan.  1

Centerra’s subsidiary Kumtor Operating Company CJSC has received the claims from the State Inspectorate Office for Environmental and Technical Safety (SEITS) which include a $142 million claim for alleged damages in relation to the placement of waste rock from mining operations since 2000.

A further $4 million claim has been issued for use of water resources during the same period, with a $2.8 million claim made for waste placed in the tailings facility and for emissions between 2009 and 2011. The remaining $2.3 million claim is for alleged damages caused to land resources during the initial construction of the Kumtor facilities.

Centerra says it is studying the claims but believes the allegations are exaggerated or without foundation.

“We believe the Kumtor project complies with Kyrgyz laws, and meets or exceeds Kyrgyz and international environmental, safety, and health standards. The activities raised in the claims, particularly the mining and placement of waste rock on waste dumps, have been approved at all times by appropriate Kyrgyz authorities and are specifically referred to in Kumtor’s annual mine plans, which are submitted and approved annually by Kyrgyz authorities,” says Centerra president Ian Atkinson.

The claims have been referenced by the review of the Kumtor project which was carried out by the Kyrgyz Republic State Commission’s environmental and technical working group. The company is also reviewing an order from SEITS to take actions to correct the various environmental and technical violations alleged in the review.

Centerra says the Kumtor project agreements were re-stated in 2009 and signed by both the company and Kyrgyz Republic, which fully released Kumtor in respect of all prior claims including all environmental matters known by any Krygyz authority.

Systematic audits and investigations have been conducted at Kumtor in previous years by domestic and international experts. The most recent independent site visit and expert review reported in October this year that ‘No major or materially significant environmental issues were identified’.

Centerra says its management team will meet with senior Kyrgyz government officials to discuss the claims, while the State Commission continues its work on schedule to report to parliament in early 2013.

“The company has benefited from a close and constructive dialogue with Kyrgyz authorities over many years and remains committed to continuing to work with them to resolve these issues in accordance with the New Project Agreements, which provide for all disputes to be resolved by international arbitration, if necessary,” says Ian Atkinson.

www.centerragold.com

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