THE RULING OF THE LENINSKY DISTRICT COURT OF BISHKEK DATED JULY 6, 2021 ON GRANTING THE INJUNCTIVE RELIEF MEASURES TO PROTECT THE ACTION FOR ANNULMENT OF THE WRITTEN RESOLUTIONS OF THE EXTRAORDINARY SHAREHOLDERS’ MEETING OF KUMTOR GOLD COMPANY CJSC DATED MAY 31, 2021 (ADOPTED BY CENTERRA GOLD INC., THE SOLE SHAREHOLDER OF KGC)

published: 11 July 2021

This court ruling has:

– waived the written resolutions of the Extraordinary Shareholders’ Meeting of Kumtor Gold Company CJSC dated May 31, 2021, adopted by Centerra Gold Inc., as a sole shareholder of Kumtor Gold Company CJSC (on the basis of which the bankruptcy procedure of KGC in New York was initiated);

-forbidden the Designated Persons specified in the Written Resolutions of the Extraordinary Shareholders’ Meeting of Kumtor Gold Company CJSC dated May 31, 2021, to act on behalf of Kumtor Gold Company CJSC to carry out the intent and purpose of the foregoing resolutions adopted, as well as to perform any actions directly or indirectly related to execution of Written Resolutions of the Extraordinary Shareholders’ Meeting of Kumtor Gold Company CJSC dated May 31, 2021.

GD-3358/21B1

RULING

July 6, 2021                                                                                                                            Bishkek

Judge of the Leninsky District Court of Bishkek M. A. Joldoshova, having considered the application of the Center for Judicial Representation of the Government of the Kyrgyz Republic, Closed Joint Stock Company Kumtor Gold Company on granting of injunctive relief,

HAS ESTABLISHED:

The Center for Judicial Representation of the Government of the Kyrgyz Republic, the Closed Joint Stock Company Kumtor Gold Company applied to the court to bring an action against Centerra Gold Inc. for annulment of Written Resolutions of Extraordinary Shareholders’ Meeting Kumtor Gold Company CJSC of May 31, 2021.

Together with the action, the plaintiffs filed an application for granting of injunctive relief to secure the claim, in support of which they had indicated that on June 7, 2021, the plaintiffs became aware of the existence of Written Resolutions of the Extraordinary Meeting of Shareholders of Kumtor Gold Company CJSC (KGC) of May 31, 2021 (hereinafter referred to as the “Shareholder’s Resolutions”), pursuant to it the sole shareholder of KGC – Centerra Gold Inc.- decided to commence the Chapter 11 Case for KGC (as indicated in the contested resolutions of the Extraordinary Shareholders’  Meeting of KGC) and apply to the United States Bankruptcy Court for the Southern District of New York. As can be seen from the Shareholder’s Resolutions, the defendant initiated the Chapter 11 Case (as defined in the Shareholder’s Resolutions) by applying to the the United States Bankruptcy Court for the Southern District of New York, including the KGC’s restructuring proceeding. The plaintiffs consider this Shareholder’s Resolutions to be illegal and contrary to the legislation of the Kyrgyz Republic, according to which the KGC was established and has been operating, the Law of the Kyrgyz Republic “On Joint Stock Companies”, the Charter of the KGC, and therefore resolutions shall be declared null and void, in this connection the plaintiffs bring to the Leninsky District Court of Bishkek an action for annulment of the Written Resolutions of the Extraordinary Shareholders’ Meeting of Kumtor Gold Company CJSC dated May 31, 2021. Based on the content of the Shareholder’s Resolutions, it is believed that there is a high probability that on the basis of an illegally adopted Shareholder’s Resolutions the above-mentioned Bankruptcy Court may pass a decision that could negatively affect the KGC operations and may lead to shutdown of the Kumtor mine being developed by the plaintiff. In accordance with Article 7.1 (b) of the Restated Investment Agreement between the Kyrgyz Republic Government on behalf of the Kyrgyz Republic, Centerra Gold Inc., Kumtor Gold Company CJSC and Kumtor Operating Company CJSC, signed on June 6, 2009, the KGC and Kumtor Project shall not be subject to suspension. In order to avoid negative consequences, suspension of the KGC and Kumtor mine operations, which will negatively affect the economy of the Kyrgyz Republic (since KGC is a budget forming enterprise), the Shareholder’s Resolutions shall be suspended immediately until the Leninsky District Court of Bishkek issues a judgement and it enters into force. In accordance with Article 142 of the KR Civil Procedure Code, at the request of the persons participating in the case, the court may take measures to impose injunctive relief. Relief measures are allowed only after the court has accepted the claim for processing at any stage of the case, if the failure to take such measures may complicate or make it impossible to execute the court decision. On the basis of the above, with reference to the norms of Articles 142, 144 of the Civil Procedure Code of the Kyrgyz Republic, they request to suspend the Written Resolutions of the Extraordinary Shareholders’ Meeting of Kumtor Gold Company CJSC dated May 31, 2021 until a ruling is passed and entered into force on the plaintiffs’ action for annulment of the Written Resolutions of the Extraordinary Shareholders’ Meeting of Kumtor Gold Company CJSC dated May 31, 2021.

Subsequently, the plaintiffs filed an updated action for imposing the injunctive relief measures for annulment of the Written Resolutions of the Extraordinary Shareholders’ Meeting of Kumtor Gold Company CJSC dated May 31, 2021, under which an updated action is submitted instead of the first one, with regard to the need to clarify the arguments of the initial action and to extend the interim measures. As stated in the action statement, the Resolutions of the Shareholder (Centerra Gold Inc.) are illegal and shall be subject to annulment as they are contrary to  the Kyrgyz Republic legislation requirements. In the disputed Written Resolutions of the Shareholder, Centerra Gold Inc. adopts the resolutions No. 1, 2, 3, 4, 5, 6, 7 on filing the Petitions and the Initial Filings to the United States Bankruptcy Court for the Southern District of New York, and empowers the persons named ‘Designated Persons’ to execute and verify the Petition and the Initial Filings as well as other ancillary documents, with full power and authority in the name, place and stead of KGC, including, but not limited to: execute, acknowledge, deliver and file any schedules, lists motions, applications and other papers and documents, that KGC deems necessary or appropriate to enable KGC to carry out the intent and to accomplish the purpose of the adopted resolutions (to initiate and support the bankruptcy of KGC). Acting in this way through Designated Persons, Centerra Gold Inc. on behalf of KGC filed a petition with the US Bankruptcy Court, which resulted in adoption of the automatic stay order that affected the KGC operations through refusal of suppliers to supply and deliver the stocks already purchased by KGC. Thus, substantial damage was caused to KGC. However, according to the Kyrgyz Republic legislation requirements, a shareholder shall not have the right on behalf of the legal entity to confirm and vest in the third parties any powers, as well as to act on behalf of a legal entity. In addition, named in resolution No.3, Part I of the Shareholder’s Resolutions Daniel R. Desjardins, Darren Millman, Dennis Kwong have neither permissions and authorizations, nor powers granted by KGC. According to Article 38 of the Law of the Kyrgyz Republic “On Joint Stock Companies”, the general meeting of shareholders is not entitled to make decisions on issues referred by this law to the competence of other management bodies of the company. The competence of the management bodies is determined by the KGC Charter, which, in accordance with Article 11 of the KR Law “On Joint Stock Companies”, is the constituent document of the company, the requirements of which are mandatory for all bodies of the company, including the shareholder. According to Article 11.2 of the KGC Charter, only the President, who has the right to act on behalf of KGC, represent the interests of KGC, conclude transactions, etc., without a power of attorney and pursuant to Article 10.2.1 of the Charter is the executive management body of KGC, whose competence includes, among other things, to address all current operational issues. It is the President of KGC who executes the current management, orders and  instructions that are mandatory for execution. As you know, by the Order of the Cabinet of Ministers of the Kyrgyz Republic dated May 17, 2021, a temporary external management was introduced in the KGC. According to clause 6 of the Procedure for Appointing a temporary external manager, approved by Decree No.7 of the KR Cabinet of Ministers of May 17, 2021, since the appointment of a temporary external manager, the powers of the company’s executive body shall be suspended for the period of temporary external management.The temporary external manager shall be delegated full powers and authorities of the company’s executive body. Thus, only a temporary external manager is vested with the competence of the KGC President and pursuant to Article 7.1, 11.2 of the KGC Charter currently can act on behalf of KGC without a power of attorney, represent the interests of KGC, conclude transactions, resolve any other current operational issues of KGC, including appointing authorized persons, etc. Centerra Gold Inc. does not have any powers invested in Temporary External Manager and, accordingly, it has no power to make decisions on issues referred by the KR Law “On Joint Stock Companies” to the competence of other management bodies of the company. In addition, Part 2, Article 65 of the KR Law “On Joint Stock Companies” forbids a shareholder and the board members to interfere in the day-to-day management of the company. Part II of the Shareholder’s Resolutions adopts the Resolution No.1 on negotiating a DIP Financing (extension of credit) by Designated Persons on behalf of KGC, which would be used to pay fees and expenses in connection with the KGC bankruptcy case. Centerra Gold Inc authorized the Designated persons to solicit and negotiate a financing for KGC, including for payment of the consultants, agents services, and to cover the cost codes related to the bankruptcy filings, as well as to receive such financing for KGC and indicated that such financing can be secured by almost all of KGC’s assets. Execution of such a resolution by persons who do not have powers registered properly under the KR legislation will pose a risk to the KGC operations, as well as jeopardize the interests of the Kyrgyz Republic interested in the non-stop operation of the Kumtor mine. Part III of the Shareholder’s Resolutions adopts Resolutions No.1 and 2, where Centerra Gold Inc. authorizes Daniel R. Desjardins, Darren Millman, Dennis Kwong to take all such actions and to execute, deliver and file all such certificates, instruments, and documents as they or any of them may conider necessary or appropriate to enable KGC to carry out the intent and purpose of the foregoing resolutions adopted, and confims  all and any actions of the Designated Persons as authorized and valid acts taken on behalf of KGC. As noted above, Centerra Gold Inc. does not have the powers  the temporary external manage is vested with, and accordingly does not have the right to make decisions on issues referred by the KR Law “On Joint Stock Companies” to the competence of other management bodies of the company. Obviously, the execution of the Shareholder’s Resolutions may have irreversible effects on the KGC operations and the economy of the Kyrgyz Republic (since KGC is a budget forming enterprise), which may hinder enforcement of judicial decisions in the event of satisfaction of the action for annulment of the Written Resolutions of the Extraordinary Shareholders’ Meeting of Kumtor Gold Company CJSC dated May 31, 2021. The subsequent appeal of the actions committed by Designated Persons on behalf of the KGC will require considerable time, effort and resources, and should be to the detriment of the KGC interests and operations. Among other things, in accordance with article 7.1 (b) of the Restated Investment Agreement between the Kyrgyz Republic Government on behalf of the Kyrgyz Republic, Centerra Gold Inc., Kumtor Gold Company CJSC and Kumtor Operating Company CJSC, signed on June 6, 2009, the KGC and Kumtor Project shall not be subject to suspension.  In order to avoid negative effects of suspension of the KGC and Kumtor Mine operations, in the view of the foregoing and being guided by Articles 142 and 144 of the KR Civil Procedure Code, the plaintiffs request to waive the Written Resolutions of the Extraordinary Shareholders’ Meeting of Kumtor Gold Company CJSC dated May 31, 2021, adopted by Centerra Gold Inc. as the sole shareholder of Kumtor Gold Company CJSC; forbid the Designated Persons specified in Resolutions No. 3, 4, 5, 6.7 of Part 1 and Resolutions No. 1, 2 of Part III of the Written Resolutions of the Extraordinary Shareholders’ Meeting of Kumtor Gold Company CJSC dated May 31, 2021: Daniel R. Desjardins, Darren Millman, Dennis Kwong, Sallivan&Cromwell LLP (“S&C”), Stikeman Elliot LLP (“Stikeman”) to act on behalf of Kumtor Gold Company CJSC to carry out the intent and purpose of the foregoing resolutions adopted, as well as to perform any actions directly or indirectly related to execution of Written Resolutions of the Extraordinary Shareholders’ Meeting of Kumtor Gold Company CJSC dated May 31, 2021.

The judge, having studied the action, comes to the following.

In accordance with part I of Article 142 of the Civil Procedure Code of the Kyrgyz Republic, at the request of the persons participating in the case, the court may impose injunctive relief measures. Relief measures are allowed only after the court has accepted the claim for processing at any stage of the case, if the failure to take such measures may hinder execution of judgement or make it impossible to execute the court order.

By virtue of part 2 of Article 144 of the Civil Procedure Code of the Kyrgyz Republic, the court (judge) may take other measures to secure the claim that meet the goals set out in Article 142 of this Code, where appropriate. The court may impose various types of injunctive relief measures to protect a claim.

Based on provisions of the foregoing articles regulating the application of interim measures, the law defines the circumstances that constitute the subject of proof for resolving the claim protection issue, existence of a real threat of non-enforcement of the judgement related to the actions of the defendant or third parties, the injunctive relief measures shall be proportional to the claim made by the plaintiff.

As presented in the action, the plaintiffs request to waive the Written Resolutions of the Extraordinary Shareholders’ Meeting of Kumtor Gold Company CJSC dated May 31, 2021, adopted by Centerra Gold Inc. as the sole shareholder of Kumtor Gold Company CJSC, which issued the resolutions, including filing a petition on bankruptcy of Kumtor Gold Company CJSC in the United States Bankruptcy Court for the Southern District of New York, authorize designated persons to act on behalf of Kumtor Gold Company CJSC, and to facilitate extension of credit to Kumtor Gold Company CJSC.

When considering the injunctive relief issue, the court will consider the subject and cause of action, and a possible court judgement concerning the claim, taking into account that if the claim is satisfied, the failure to impose injunctive relief will hinder or make it impossible to execute the court judgement, also with a view of preventing sustainable damage to the applicants, the judge believes it is possible to satisfy the action on imposing injunctive relief.

On the basis of the above, guided by Articles 142, 144-145, part 1 of Article 146, Articles 224-225 of the Civil Procedure Code of the Kyrgyz Republic, the Judge

RULED TO:

Satisfy the action of the Center for Judicial Representation of the Government of the Kyrgyz Republic, Closed Joint Stock Company “Kumtor Gold Company” on taking measures on granting of injunctive relief.

Waive the Written Resolutions of the Extraordinary Shareholders’ Meeting of Kumtor Gold Company CJSC dated May 31, 2021, adopted by Centerra Gold Inc. as the sole shareholder of Kumtor Gold Company CJSC.

Forbid the Designated Persons specified in Resolutions No. 3, 4, 5, 6.7 of Part 1 and Resolutions No.1, 2 of Part III of the Written Resolutions of the Extraordinary Shareholders’ Meeting of Kumtor Gold Company CJSC dated May 31, 2021: Daniel R. Desjardins, Darren Millman, Dennis Kwong, Sallivan&Cromwell LLP (“S&C”), Stikeman Elliop LLP (“Stikeman”) to act on behalf of Kumtor Gold Company CJSC to carry out the intent and purpose of the foregoing resolutions adopted, as well as to perform any actions directly or indirectly related to execution of Written Resolutions of the Extraordinary Shareholders’ Meeting of Kumtor Gold Company CJSC dated May 31, 2021.

A copy of the Ruling shall be sent to Centerra Gold Inc. and Kumtor Operating Company CJSC for execution.

The Ruling shall be executed immediately.

A private complaint against the ruling may be filed with the Bishkek City Court within ten days.

Judge                                                                M. A. Joldoshova