Centerra Gold Inc. (TSX: CG) announces that despite its efforts to obtain approval from Kyrgyz Republic authorities for the 2014 Kumtor mine plan and related permits, such approval and permits have not been issued. Therefore, absent the issuance of such approval and permits by June 13, 2014, Centerra intends to begin an orderly shutdown of operations at the Kumtor project.Prior to such date, Centerra will continue to work and cooperate with relevant authorities in an attempt to facilitate the
issuance of such approval and permits.
As previously disclosed, the Company’s subsidiary in the Kyrgyz Republic, Kumtor Gold Company (“KGC”), has been working since late 2013 with the relevant government agencies to obtain approval of its 2014 annual mine plan and related operating permits. Unfortunately, this year, despite repeated submissions and discussions with senior officials, such approvals and permits have not been provided. The continuing absence of such approval and permits creates significant uncertainty and risks for Centerra and its employees.
KGC has consistently operated the Kumtor project to high environmental, safety and technical standards. Throughout Kumtor’s history, we have engaged constructively and in good faith with relevant authorities to obtain approval of mine plans and designs. We also note that the 2009 Restated Investment Agreement between the Kyrgyz Republic, Centerra and KGC requires that government agencies be reasonable in their review of mining plans and also provides certain assurances and guarantees to Centerra regarding the issuance of required permits.
The shutdown plan provides for the shutdown of all mine and mill operations on the close of business June 13, 2014. KGC would retain sufficient staff to provide essential environmental and safety monitoring, security and essential maintenance of the mill and mine equipment.
The impact of the potential shutdown on future operations will depend in part on the duration of the shutdown. The Company has begun an analysis of possible impacts and would expect to make a statement in this regard if the shutdown proceeds and after it has completed the necessary analysis. The Kumtor mine operation is complex and the Kumtor open pit is subject to significant geo-technical and other challenges, including in-flow of water, ice movement from the Davydov glacier toward the open pit and pit-wall instability. An extended shutdown without active monitoring and management of such challenges would likely have a material adverse impact on the Kumtor mine and the Company’s operations, future cash flows, earnings, results of operations and financial condition.
Centerra notes that all disputes in relation to the Kumtor project are subject to international arbitration in accordance with the agreements governing the project.
Centerra is a gold mining company focused on operating, developing, exploring and acquiring gold properties primarily in Asia, the former Soviet Union and other markets worldwide. Centerra is a leading North American-based gold producer and is the largest Western-based gold producer in Central Asia. Centerra’s shares trade on the Toronto Stock Exchange (TSX) under the symbol CG. The Company is headquartered in Toronto, Ontario, Canada.
Additional information on Centerra is available on the Company’s web site at www.centerragold.com and at SEDAR at www.sedar.com.