Centerra Gold Inc. announced that all conditions precedent to the completion of the Strategic Agreement entered into with the Kyrgyz Republic Government on September 11, 2017 have been satisfied or waived and all parties have therefore acknowledged that the First Completion Date (as defined in the Strategic Agreement) has occurred.
All parties to the Strategic Agreement are now moving to terminate the remaining legal proceedings affecting the Kumtor Project, in particular, the international arbitration proceeding at the Permanent Court of Arbitration as well as certain civil proceedings. Official website of the company says.
Following the date on which both the arbitration and the civil proceedings are terminated (the second completion date), Centerra’s Kyrgyz Republic subsidiary, Kumtor Gold Company will make payments required under the Strategic Agreement, including to the Kyrgyz Republic Nature Development Fund and Cancer Care Support Fund. The company expects that the second completion date will occur in the third quarter of 2019.
At the request of the Kyrgyz Republic Government, Kumtor Gold Company has committed to certain additional contributions in the Kyrgyz Republic (over and above those required under the Strategic Agreement) to strengthen its social license to operate in Kyrgyz Republic. In particular, Kumtor Gold Company 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 Kumtor Gold Company’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 completion of the Strategic Agreement is a testament to Centerra’s strong relationship with the Government of the Kyrgyz Republic. The deadline for completion of the Strategic Agreement was extended several times while the parties worked together to satisfy all of the conditions to completion and we have reached this stage due to the commitment of the Government to ensure business certainty for Kumtor and its future mining operations,» Scott Perry, Centerra Gold’s President and Chief Executive Officer commented.
As previously noted, the Strategic Agreement provides, among other thing, a comprehensive settlement of matters affecting the Kumtor Project and a positive affirmation from the Kyrgyz Republic Government that the existing 2009 agreements governing the Kumtor Project remain in full force and effect, including the tax and fiscal regime thereunder.