Centerra Gold Inc. (“Centerra”) (TSX: CG) (NYSE: CGAU) announced
today that it has initiated binding arbitration against the
Government of the Kyrgyz Republic to enforce its rights under
longstanding investment agreements with the Government. Centerra
seeks to enjoin the Government from taking further steps to
implement recently adopted legislation or to pursue recently
procured fines and tax claims against the Kumtor Gold Company
(“KGC”), all of which violate the Government’s investment
agreements with respect to the Kumtor Mine. Centerra also intends
to hold the Government accountable in the arbitration for any and
all losses and damage that result from its recent actions against
KGC and the Kumtor Mine if no resolution is reached.
Scott Perry, President & Chief Executive
Officer of Centerra, said: “The leadership of the Kyrgyz Republic
has acted with astonishing speed since the beginning of this year
to undermine the basis on which the Kumtor Mine has been operated
and has refused to engage with us on any matters it considers to be
the subject of dispute. The Government’s actions have left Centerra
no choice but to exercise our legal rights, through the
pursuit of arbitration and otherwise, to protect the interests of
KGC, Centerra and our shareholders. In the event the Government
wishes to engage in a constructive dialogue, we remain willing and
available to do so.”
The wrongful and illegal actions of the Kyrgyz
Republic include:
- The passage by the Kyrgyz Republic
Parliament in a single day on May 6 of a new law which enables the
Government to impose an “external manager” to take control of the
Kumtor Mine if the Government deems that KGC’s activities pose a
risk to human safety and the environment;
- A Government-supported and hastily
issued decision of a Kyrgyz Republic court on May 7 to impose a $3
billion fine against KGC on the basis of private civil
environmental claims;
- The intimidation of KGC’s personnel
by the Kyrgyz Republic State Commission and other Kyrgyz Republic
state and law enforcement authorities, including police visits to
the homes of several senior KGC managers and a raid of KGC’s office
in Bishkek on May 15; and
- Numerous tax claims brought by the
Government in the Kyrgyz courts regarding matters that were
resolved fully and finally in previous project agreements and
Kyrgyz court rulings, and expressly precluded by the Government’s
agreements with KGC and Centerra.
This and other recent conduct by the Government
undermines the fundamental investment protections guaranteed to
Centerra and its Kyrgyz Republic subsidiaries under the 2009
Restated Project Agreements governing the Kumtor Mine. Under the
2009 Restated Investment Agreement and the 2017 Strategic Agreement
on Environmental Protection and Investment Promotion (the
“Strategic Agreement”), Centerra’s claims will be adjudicated by a
single arbitrator in arbitration proceedings to be held at
Stockholm, Sweden and conducted under the rules of the United
Nations Commission on International Trade Law (“UNCITRAL”). The
parties have 28 days during which to agree on an arbitrator,
failing which Centerra will ask the Permanent Court of Arbitration
at The Hague to appoint an arbitrator. Under the agreements, the
governing law is the law of the State of New York.
The Kumtor Mine is the largest private sector
employer and taxpayer in the Kyrgyz Republic and the largest
foreign investment in the country. Mine operations at Kumtor
contributed 12.5% of Kyrgyz Gross Domestic Product in 2020, and
some 99% of KGC’s 2,750 employees are Kyrgyz citizens. Earlier this
year, Centerra announced a new life of mine plan that would extend
the life of the Kumtor Mine by five years to 2031 and add more than
three million ounces (85 tonnes) of contained gold at an estimated
capital investment of US$2.0 billion.
“Centerra and its predecessors have operated the
Kumtor Mine to the mutual benefit of the Company and the Kyrgyz
Republic since the 1990s,” Mr. Perry said. “During that time, we
have invested billions of dollars in the project, operated to the
highest environmental and social standards and created enormous
economic value, including thousands of good, well-paying jobs for
Kyrgyz citizens, procurement opportunities for local suppliers and
deep relationships with local communities through social and other
projects.”
No assurances can be given that any of the
current or future legal claims and other disputes that have arisen
in relation to KGC or the Kumtor Mine can be resolved without a
material impact on the Company or potentially the loss of
Centerra’s entire investment in the Kumtor Mine.
About CenterraCenterra Gold
Inc. is a Canadian-based gold mining company focused on operating,
developing, exploring and acquiring gold properties in North
America, Asia and other markets worldwide and is one of the largest
Western-based gold producers in Central Asia. Centerra operates
three mines, the Kumtor Mine in the Kyrgyz Republic, the Mount
Milligan Mine in British Columbia, Canada and the Öksüt Mine in
Turkey. Centerra's shares trade on the Toronto Stock Exchange (TSX)
under the symbol CG and on the New York Stock Exchange (NYSE) under
the symbol CGAU. The Company is based in Toronto, Ontario,
Canada.
Caution Regarding Forward-Looking
Information
Information contained in this document which are
not statements of historical facts may be “forward-looking
information” for the purposes of Canadian securities laws and
within the meaning of the United States Private Securities
Litigation Reform Act of 1995. Such forward-looking information
involves risks, uncertainties and other factors that could cause
actual results, performance, prospects and opportunities to differ
materially from those expressed or implied by such forward looking
information. The words “believe”, “expect”, “anticipate”,
“contemplate”, “plan”, “intends”, “continue”, “budget”, “estimate”,
“may”, “will”, “schedule”, “understand” and similar expressions
identify forward-looking information. These forward-looking
statements relate to, among other things: arbitration proceedings
brought by the Company against the Kyrgyz Republic, the claims made
thereunder and the potential success thereof, future discussions
with the Government of the Kyrgyz Republic relating to disputes
that have arisen under the 2009 Restated Project Agreements and /
or the 2017 Strategic Agreement on Environmental Protection and
Investment Promotion, and the potential for any successful
negotiated solution resulting from any such discussions.
Forward-looking information is necessarily based
upon a number of estimates and assumptions that, while considered
reasonable by Centerra, are inherently subject to significant
technical, political, business, economic and competitive
uncertainties and contingencies. Known and unknown factors could
cause actual results to differ materially from those projected in
the forward-looking information. Factors and assumptions that could
cause actual results or events to differ materially from current
expectations include, among other things: political risks
associated with the Company’s operations in the Kyrgyz Republic;
the failure of the Kyrgyz Republic Government to comply with its
continuing obligations under the 2017 Strategic Agreement on
Environmental Protection and Investment Promotion and the 2009
Restated Project Agreements governing the Kumtor Mine to allow for
the continued operation of the Kumtor mine by KGC and KOC and not
take any expropriation action against the Kumtor mine including
through imposition of external management appointed by the Kyrgyz
Republic Government; actions by the Kyrgyz Republic Government or
any state agency or the General Prosecutor's Office that serve to
restrict or otherwise interfere with the payment of funds by KGC
and KOC to Centerra; resource nationalism including the management
of external stakeholder expectations; the impact of changes in, or
to the more aggressive enforcement of, laws, regulations and
government practices, including unjustified civil or criminal
action against the Company, its affiliates or its current or former
employees, including the interaction of claims of harm to the
environment or human health with the new Kyrgyz Republic law that
enabled imposition of external management on the Kumtor Mine by the
Kyrgyz Republic Government; potential impact on the Kumtor mine of
investigations by Kyrgyz Republic instrumentalities; the inability
of the Company and its subsidiaries to enforce their legal rights
in certain circumstances or to collect on any favorable arbitral
judgement awarded against the Kyrgyz Republic; the presence of a
significant shareholder that is a state-owned company of the Kyrgyz
Republic. For additional risk factors, please see section titled
“Risks Factors” in the Company’s most recently filed Annual
Information Form available on SEDAR at www.sedar.com and EDGAR
www.sec.gov/edgar.
There can be no assurances that forward-looking
information and statements will prove to be accurate, as many
factors and future events, both known and unknown could cause
actual results, performance or achievements to vary or differ
materially from the results, performance or achievements that are
or may be expressed or implied by such forward-looking statements
contained herein or incorporated by reference. Accordingly, all
such factors should be considered carefully when making decisions
with respect to Centerra, and prospective investors should not
place undue reliance on forward looking information.
Forward-looking information is as of May 16, 2021. Centerra assumes
no obligation to update or revise forward-looking information to
reflect changes in assumptions, changes in circumstances or any
other events affecting such forward-looking information, except as
required by applicable law.
For more information:John W. PearsonVice
President, Investor Relations(416)
204-1953john.pearson@centerragold.com
Additional information on Centerra is available on the
Company’s web site at www.centerragold.com on
SEDAR at www.sedar.com and on EDGAR at
www.sec.gov/edgar.
A PDF accompanying this announcement is available
at: http://ml.globenewswire.com/Resource/Download/dcf15371-22d4-4611-b9aa-a64a17b88a0b
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