Government of Kyrgyzstan to take full management and ownership of the Kumtor gold mine
Centerra to pay $50 million with the aim of preserving and protecting the natural resources of the Republic of Kyrgyzstan
President Sadyr Japarov announces deal during live address to the nation
BISHKEK, Kyrgyzstan, April 4, 2022 /PRNewswire/ — President of the Kyrgyz Republic Sadyr Japarov today announced the signing of an agreement between his government and Centerra Gold Inc. resolving their disputes over ownership and management of the Kumtor Gold Company (KGC).
In a live address to the nation, President Japarov hailed the deal as “a historic breakthrough” and pledged to use the revenue increase to achieve the country’s sustainable development goals.
The agreement provides for a clear separation and settlement of all disputes between the Government of Kyrgyzstan, Centerra and Kyrgyzaltyn, the Kyrgyz state-owned gold mining company, which is one of Centerra’s major shareholders. The terms of the agreement include:
the Republic of Kyrgyzstan and Kyrgyzaltyn will assume full responsibility for the Kumtor mine and retain revenue from the mine after May 15, 2021.
Centerra will make a cash payment of $50 million with the aim of preserving and protecting the natural resources of the Republic of Kyrgyzstanwhich will satisfy its obligation to repay an outstanding loan to KGC.
Centerra will make another cash payment of approximately $36.6 million in Kyrgyzaltyn, of which about $25.5 million will be remitted to the Canadian tax authorities and the balance of approximately US$11.1 million will be paid to Kyrgyzaltyn.
Besides, $53 million the reclamation trust fund will be returned to the Republic of Kyrgyzstan.
Kyrgyzaltyn and Centerra will exchange shares, with Kyrgyzaltyn returning its shares in Centerra and receiving 100% ownership from KGC.
The agreement also provides for the full and final release of all claims of the parties, the termination of all legal proceedings involving the parties in all jurisdictions without any admission of liability.
The agreement was approved by the government of Kyrgyzstan, including parliament and cabinet. The government of KyrgyzstanCenterra and Kyrgyzaltyn expect the arrangement to be completed no later than 90 days after the signing of the agreement, but further steps will need to be successfully completed for the agreement to take full effect.
President Japarov further stated: “It is no exaggeration to say that today is a real turning point in the history of our country. Today, our people have taken responsibility for their destiny in their own hands. Our national assets are now exactly what ‘they should be – in our own hands.. This proves that we are on the path of development and growth.
“Throughout this conflict, we have maintained that this is not about nationalization. It is not Kyrgyzstan against foreign companies. These were specific issues related to the management of the Kumtor mine. We have always said that Kyrgyzstan is open for business. We will always welcome investments from those who share our respect for the rule of law, our national assets and our national interest. This deal proves it.”
“I want us to move forward now as one people. Despite all that has happened, we must take decisive steps forward. That is what we, as free people in our own sovereign state, must do. “Our destiny is in our hands now and it’s time to take responsibility for our future. Today’s decision on the Kumtor mine is just the start of many other great achievements in the development and growth of our country.
The Kumtor mine has been under interim external management since May 2021. In January, the mine posted good results for 2021, including US$856 million in turnover – of which US$621 million was generated as part of interim management. 2021 has also seen the mine reduce its overall mining costs by $220 per ounce.
NOTES TO EDITORS:
Kumtor Gold Company is the country’s greatest economic asset. It is responsible for 12% of from Kyrgyzstan GDP and 23% of its industrial production. More than 4,000 people work at the complex, and the majority are Kyrgyz citizens. Kumtor is one of the largest gold mines in the world and is located at very high altitude next to glaciers.
Since the takeover of the mine by the government in May 2021 following concerns about breached environmental claims, the two parties were engaged in international arbitration and other disputes in Kyrgyzstan and abroad. The overall arrangement agreement is intended to effect a full and orderly separation from Centerra and to ensure that going forward, the economic benefits of the Kumtor mine remain in Kyrgyzstan and that the mine can be operated in compliance with all environmental, tax and other laws of the Republic of Kyrgyzstan.
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SOURCE Government of Kyrgyzstan