Official Statement

Official Statement

published: 04 November 2011

At the meeting of the Ata-Meken faction on November 2, 2011, Member of Parliament Karganbek Samakov cast doubt on the actual gold production statistics at Kumtor. Thus, according to the MP, “the waste rock at Kumtor today is 160,000 cubic meters. One cubic meter of ore yields at least 5 grammes of gold or over 30 grammes at best. An elementary estimate shows Kumtor to produce about 70-80 tonnes of gold annually while Centerra Management reports a mere 22 tonnes.” In this context, Kumtor Operating Company deems it necessary to provide the following explanations.

Mining operations, which include removal of waste rock and extraction of ore in the Central Pit area of Kumtor, are carried out round the year in accordance with the Mining Development Plans that are annually agreed upon with the Natural Resources Ministry of the Kyrgyz Republic. The rock mass includes barren rock, which contains no gold, and precious metal ore, which contains gold and which resources are subject to approval by the National Commission for Natural Resources of the Kyrgyz Republic. By gold grade, gold content in ore is meant, not the one in rock mass. The gold grade unit is gramme per tonne, not gramme per cubic meter.

In 2010, a total of 116.5 million tonnes (or 52.4 million cubic meters) of rock mass was mined, including 5,765 million tonnes of ore containing gold. The amounts of ore mined and processed at the gold mill are approximately the same year-over-year with mill throughput being 16,000 tonnes of ore daily. With repair and maintenance period taken into consideration, the mill processes 5.5 to 5.7 million tonnes of ore annually. The mill equipment is designed to process ore averaging 3 to 4 g/t Au. To make the gold production process efficient and the equipment operation normal, the average mill feed grade should be as stated above. For this purpose, ore whose gold grade is above the optimal is mixed with low-grade ore.

To produce 70 to 80 tonnes of gold per year, mentioned by K.Samakov, it would be necessary to additionally employ three similar mills of the same throughput.

Just for reference: in 2010, the gold mill of Kumtor Operating Company processed 5,594 million tonnes of ore averaging 4.02 g/t while the Kumtor mine produced 567,802 ounces or 17.66 tonnes of gold with an average recovery of 79.5%.

The mill’s final product is the Dore bar containing up to 80% of gold as well as admixtures of silver and other metals. In accordance with the existing agreements signed by the Company, Kyrgyzaltyn JSC and the Government of the Kyrgyz Republic, all gold thus produced is sold by the Company to Kyrgyzaltyn Open Joint-Stock Company, which, in turn, refines it (purifies to meet the 9999 standard) and then sells it on its own behalf. The Company being not licensed for precious metal export, it is impossible for the Company to take precious metals out of the Kyrgyz Republic.

Based on the aforesaid, actual gold production at the Kumtor mine being concealed, as alleged by the MP, is untrue and detrimental to the business reputation of the Company.

Kumtor Operating Company was among the first in the Kyrgyz Republic to join the Extractive Industries Transparency Initiative and provides detailed quarterly reports for the broad public with regard to its production activities and payments to the national budget. Kumtor Operating Company has always abided and abides by the law of the Kyrgyz Republic and international business rules.

For further information please contact Media Relations, KOC

Tel: (312) 90-07-07; 90-08-08; Fax: (312) 90-07-28