Centerra Gold and Cameco Corp have reached binding agreements with the Government of the Kyrgyz Republic that provide for the Government’s full commitment to and support for Centerra’s continuing long-term development of the Kumtor gold project. The agreements also enlarge the Company’s existing concession area by over 25,000 ha to include all territory covered by the current exploration license and establish a simplified, stable and predictable tax regime for the Kumtor operations.
The company and the government have agreed to replace Kumtor’s current tax regime with a simplified new tax rate for Kumtor applied to gross revenue at the rate of 11% in 2008, 12% in 2009 and 13% thereafter. At current gold prices the revised tax regime is slightly beneficial to the project.
After final agreements are signed, there will be some share transfers and after completion of the transactions, the Kyrgyz Government will own 29.3% of Centerra, Cameco will own 40.5% and the balance, 30.2%, will be held by the remaining shareholders.
“We have always enjoyed a cooperative and mutually supportive relationship with the Kyrgyz Republic. This framework agreement further demonstrates the Government’s commitment to Centerra and secures the Company’s long-term presence in the country. The Government’s increased shareholding in the Company further aligns our interests and provides continued assurance for the stable and economically attractive operational environment for Kumtor, which is the company’s and the Kyrgyz Republic’s largest gold asset” commented Len Homeniuk, Centerra Gold’s President and CEO.
Kumtor is located about 350 km southeast of the capital Bishkek and about 60 km north of the border with China. It is the largest gold mine operated in Central Asia by a Western-based company, having produced more than 5.5 Moz of gold between 1997 and the end of 2005. The Kumtor deposit is located in the southern Tien Shan Metallogenic Belt, a major suture that traverses Central Asia, from Uzbekistan in the west through Tajikistan and the Kyrgyz Republic into northwestern China, a distance of more than 1,500 km. A number of important mesothermal-type gold deposits occur along this belt including Muruntau, Zarmitan, Jilau and Kumtor.
