The Kyrgyz Republic Prime Minister TA Sariyev has advised Centerra Gold that the government wishes to begin new consultations regarding the further efficient implementation of the Kumtor Gold Project.
Centerra says on December 22 it received notice from the PM notifying it of the government’s intention to withdraw from further negotiations regarding implementation of the non-binding heads of agreement (HOA) dated January 18, 2014. The HOA contemplated restructuring the Kumtor project under which Kyrgyzaltyn JSC would receive a 50% interest in a joint venture company that would own the project in exchange for its 32.7% interest in Centerra.
In his letter PM Sariyev also states, “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 (among other things) a fixed tax and payments regime for the project.
The Kumtor Project Agreements were approved by all relevant Kyrgyz Republic government authorities in 2009, including the Kyrgyz Republic government and parliament, and 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.
Any discussion regarding the Kumtor project will take into account such legal obligations under the Kumtor Project Agreements. Any negotiations must result in an outcome that is fair to all Centerra’s shareholders. In accordance with the Kumtor Project Agreements, any disputes regarding the project are subject to international arbitration.
Centerra will continue to engage constructively and in good faith with the government of the Kyrgyz Republic to resolve all outstanding matters affecting the project in accordance with the Kumtor Project Agreements.
While Centerra has a long record of resolving matters with the Kyrgyz Republic government, there are no assurances that continued discussions between the government and Centerra will result in a mutually acceptable solution regarding the project, that any agreed upon proposal would receive the necessary approvals under Kyrgyz and Canadian laws or that the Kyrgyz Republic government and/or parliament will not take actions that are inconsistent with the government’s obligations under the Kumtor Project Agreements.