Centerra Gold Inc. (“Centerra” or the “Company”) (TSX: CG) (NYSE:
CGAU) today announced that it had initiated proceedings in the
Ontario Superior Court of Justice against Tengiz Bolturuk, a former
member of its Board of Directors, in response to flagrant breaches
of his fiduciary duties to the Company related to the recent
seizure of the Kumtor Mine by the Government of the Kyrgyz
Republic.
Centerra seeks to enjoin Mr. Bolturuk, who was
nominated to the Board by the Kyrgyz state-owned entity and
Centerra shareholder Kyrgyzaltyn JSC, from direct or indirect
involvement in the management of the Kumtor Mine as well as
engaging in further breaches of fiduciary and confidentiality
duties owed to the Company.
As previously announced, the Company is
investigating recent conduct by Kyrgyzaltyn JSC, including Mr.
Bolturuk, its former nominee. Mr. Bolturuk, a dual Canadian and
Kyrgyz citizen, joined the Centerra Board in December 2020 and
resigned on May 17, 2021. Two days after his resignation, the
Kyrgyz authorities announced that the Kyrgyz Government had
appointed Mr. Bolturuk as the “external manager” of Centerra’s
wholly owned subsidiary, Kumtor Gold Company (“KGC”), which
operated the Kumtor Mine until its unjustified seizure.
Based on information available to date, the
Company has learned that, prior to his resignation from Centerra’s
Board, Mr. Bolturuk had been in discussions with the Kyrgyz
Government and others regarding plans to seize control of the
Kumtor Mine in violation of Centerra’s longstanding investment
agreements. Mr. Bolturuk did not disclose this information to
Centerra.
In addition, Centerra has learned that on May
12, 2021, prior to the seizure of the mine, Kyrgyzaltyn JSC
attempted to divert approximately US$29 million to an unauthorized
bank account using a forged payment instruction sent to a third
party. The account was purportedly opened in the name of KGC. This
attempted fraud was identified by the third party and was not
successful.
Scott Perry, President and Chief Executive
Officer of Centerra, said: “We can assure our shareholders that we
are pursuing all avenues available to us in connection with recent
events, including against any persons who violate their obligations
to Centerra and its shareholders. In the meantime, to deflect
attention from their unprecedented and unprovoked seizure of the
Kumtor Mine, Kyrgyz officials and Mr. Bolturuk continue to make
unjustified claims related to environmental and safety conditions
in the past operation of the Kumtor Mine that are entirely
meritless and have no justification under longstanding investment
agreements or applicable law.”
While it was controlled by Centerra, KGC
operated Kumtor to international standards of environmental
management and occupational health and safety and to the mutual
benefit of the Company and the Kyrgyz Republic, where Kumtor is the
largest taxpayer. Shortly before the Kyrgyz Government took control
of the mine, all key safety, monitoring and operational systems
were functioning properly. Centerra did not disable any such
systems, and the mine was operating without incident.
Mr. Perry added: “We remain willing and
available to engage with the Kyrgyz Government in a constructive
dialogue on the matters it considers to be the subject of dispute.
At the same time, the hostile actions of the Government leave us no
choice but to continue to protect the interests of Centerra and its
shareholders through all legal means.”
About Centerra Centerra 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 owns 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
InformationInformation 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: the court proceedings by
the Company against Mr. Bolturuk and the potential for obtaining
injunctive relief or other remedies thereunder; and the Company’s
pursuit of other legal means and the potential for such legal
avenues to protect its and its stakeholders interests.
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 Kumtor
Operating Company (“KOC”) and not take any expropriation action
against the Kumtor mine; actions by the Kyrgyz Republic Government,
any state agency or the General Prosecutor's Office or any
representative thereof, including Mr. Bolturuk, 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 before the Ontario Superior Court of
Justice, in arbitration or in any other forum or to enforce any
favourable order or arbitral judgement awarded against Mr. Bolturuk
and/or the Kyrgyz Republic; or the presence of a significant
shareholder of the Company 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 20, 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.
Pearson Vice President, Investor Relations (416) 204-1953
john.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 https://ml.globenewswire.com/Resource/Download/54ea9af5-4d4a-4c8e-8738-e524759ee314
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