A Mongolian Parliament resolution has set the state ownership interest in Centerra Gold’s Gatsuurt project at 34% and authorised the government to complete negotiations with Centerra on the terms of such ownership.
In October 2015 Centerra and the government agreed to a 3% special royalty in place of the state 34% ownership interest in the project with this royalty being in addition to the existing Mongolian mineral royalty and tax regime. Based on discussions with the government, Centerra understands that the resolution is a mandate to the government to implement such agreement between Centerra and the government.
Centerra’s CEO Scott Perry said, “The parliamentary resolution is a very important next step in advancing the Gatsuurt project. Gatsuurt represents an exciting opportunity to use Centerra’s existing Boroo mill and other infrastructure to develop the 1.6 million ounce deposit with very modest initial capital investment.
“The company will now focus on finalizing the investment agreements with the Government of Mongolia. We look forward to developing Gatsuurt so we can continue to operate in Mongolia for many more years to come.”
The company expects to proceed with negotiating definitive agreements, including a deposit development agreement and an investment agreement, with the Mongolian Government.
Following the successful completion of such agreements, Centerra will undertake economic and technical studies to update the existing studies on the project, which were completed and published in May 2006. As part of such work, the company will undertake a program of exploration drilling, aimed at substantially expanding the Gatsuurt oxide resource, and additional hydrogeological drilling.
Following completion of definitive agreements the company expects to provide an update on the timeline for completion of such studies and drilling and for the start of project development.
The Gatsuurt project is about 55km by road from the company’s Boroo mine and is expected to be developed in accordance with applicable Mongolian environmental regulations and international standards, consistent with the standards adopted by the Boroo mine.
The project’s estimated mineral reserves as at December 31, 2014 were 17.1 million tonnes at an average grade of 2.9 grams/tonne (g/t) containing 1.6 million ounces of gold using a cut-off grade of 1.4 g/t.
The current Gatsuurt plan is to process approximately 3.6 million tonnes of CIP ore (oxides) with an average grade of 2.86 g/t through the existing Boroo facility in the first two and a half operating years of the Gatsuurt project. During this time, a BIOX facility is planned to be added to the existing Boroo facility to be used for processing the remaining sulphide ores totalling approximately 13.5 million tonnes with an average grade of 2.92 g/t.