Centerra Gold Inc. (“Centerra”) (TSX: CG) (NYSE: CGAU) issued the
following statement today in response to the adoption of a
resolution by the Parliament of the Kyrgyz Republic, instructing
the Government to install “external management” at the Kumtor Mine
and Centerra’s Kyrgyz subsidiary, Kumtor Gold Company (“KGC”), and
associated developments. The Company understands that the
Parliament purported to act under a new law, applicable only to
Centerra and KGC, that it passed in a single day on May 6, 2021.
“Today’s action by the Parliament of
the Kyrgyz Republic is a clear violation of Centerra’s and KGC’s
rights in the Kumtor Mine as well as the Government’s obligations
to Centerra and KGC under longstanding investment agreements. This
and other recent actions have no justification whatsoever under
those agreements or applicable law.
The Kyrgyz Government effectively
seized control of the Kumtor Mine over the weekend of May 15 and
16, 2021 by sending Government authorities to the mine, KGC’s
office in Bishkek and the homes of several KGC employees.
Consequently, Centerra is no longer in control of the Kumtor Mine
and can no longer ensure the safety of the mine’s employees or
operations. Shortly before the Government took control, all key
safety, monitoring and operational systems at the mine were
functioning properly. Centerra did not disable any such systems,
and the mine was operating without incident. Due to the
Government’s unprecedented actions, Centerra has suspended access
of all local KGC employees in the Kyrgyz Republic to Centerra’s
global IT systems to prevent any unauthorized intrusions into those
systems. None of those systems are required to safely operate the
mine. The Company urges the Kyrgyz Government to take all measures
necessary to ensure the safety of Kumtor’s employees and the mine
and to desist from further hostile acts, including document and
computer seizures and the intimidation of senior KGC personnel who
have been subjected to visits by the security services to their
homes and threatened with unjustified criminal action.
We remain willing and available to
engage with the Government in a constructive dialogue on the
matters it considers to be the subject of dispute. At the same
time, the unjustified actions of the Government leave Centerra no
choice but to continue to protect its interests and those of its
shareholders and KGC through all legal means, including binding
international arbitration and otherwise.
Centerra is concerned that these
latest actions not only undermine the fundamental basis upon which
the Kumtor Mine has been operated, but also put at risk the
livelihoods of more than 2,700 employees, 99% of whom are Kyrgyz
citizens, and the businesses of hundreds of local suppliers who
support KGC operations. The actions risk destroying significant
value that the Kyrgyz Republic derives from KGC’s position as the
country’s largest private employer and taxpayer and put in question
plans Centerra announced this year to provide US$2.0 billion in
additional capital investments to extend the life of the mine by
five years to 2031.
In light of today’s resolution by the
Kyrgyz Parliament, and in view of the fact that Centerra is no
longer in control of the Kumtor Mine as a result of the Kyrgyz
Government’s actions, the Company is suspending its previously
issued 2021 guidance and three-year outlook relating to the
mine.”
As noted previously, the recent actions by the
Government of the Kyrgyz Republic violate the 2009 restated Kumtor
project agreements and the 2009 Kyrgyz Republic laws which
confirmed such agreements. Those agreements were re-affirmed by the
Kyrgyz Republic Government in 2017 when it entered into the
Strategic Agreement on Environmental Protection and Investment
Promotion, which was completed and became effective in 2019. As
stipulated on numerous occasions, KGC’s operations and activities
have always carefully adhered to those agreements and applicable
laws, including with regard to the environment, safety and
taxation.
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 ongoing 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; 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 17,
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/94cbd134-0a2e-4258-8bd5-f7c076ac09d6
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