Centerra Gold Inc has entered into a global arrangement agreement with Kyrgyzaltyn JSC and the Government of the Kyrgyz Republic to effect a clean separation of the parties, including through the disposition of Centerra’s ownership of the Kumtor gold mine and investment in the Kyrgyz Republic, the elimination of Kyrgyzaltyn’s involvement and interest in the company, and the resolution of their disputes. The Agreement has been approved by the Government of Kyrgyzstan, including both parliament and the cabinet. The Government of Kyrgyzstan, Centerra and Kyrgyzaltyn expect the arrangement to close no later than 90 days following the signing of the agreement.
The Agreement provides for, among other things, Kyrgyzaltyn transferring to Centerra all of its 77.4 million Centerra common shares for cancellation, representing an approximate 26% equity interest in the company, for an aggregate purchase price of approximately C$972 million (based on the closing price of C$12.56 per Centerra common share on the TSX on April 1, 2022). In satisfaction of the purchase price, Kyrgyzaltyn will receive from Centerra a 100% equity interest in the company’s two Kyrgyz subsidiaries and, indirectly, the Kumtor Mine (with Kyrgyzaltyn and the Kyrgyz Republic assuming all responsibility for the Kumtor Mine), plus a cash payment of approximately US$36 million. In connection with the Share Exchange, the Agreement also is conditioned on the full and final release of all claims of the parties, termination of all legal proceedings involving the parties in all jurisdictions with no admissions of liability and payment by Centerra of US$50 million to KGC at closing of the Arrangement on account of an inter–company balance, as well as certain other principal elements.
Scott Perry, President and Chief Executive Officer of Centerra, said: “This arrangement is expected to provide value to Centerra’s stakeholders while allowing Centerra to move forward with a renewed focus on our core operations, including our Mount Milligan and Öksüt mines, where we expect to see continued strong operational performance. To the entire Kumtor team and the people of the Kyrgyz Republic, I want to express how proud I am of all we have achieved together over the past several decades and wish you continued success.”
In a live address to the nation, President Japarov hailed the agreement as “a historic breakthrough” and pledged to use the increased revenue towards achieving the country’s sustainable development goals. He added: “It is no exaggeration to say that today is a true turning point in the history of our country. Today our people have taken responsibility for their fate into 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 dispute, we have maintained that this is not about nationalisation. It is not Kyrgyzstan against foreign companies. It was about the specific issues with the management of Kumtor mine. We have always said that Kyrgyzstan is open for business. We will always welcome investment from those who share our respect for the rule of law, our national assets, and our national interest. This agreement proves that. I want us to now move forward as one people. In spite of all that has happened, we must take decisive strides forward. This is what we as people free in our own sovereign state must do. Our destiny is in our hands now and it is time to take responsibility for our future. Today’s decision on Kumtor mine is just the beginning of many more great accomplishments in the development and growth of our country.”
Kumtor Mine has been under interim external management since May 2021. In January, the mine posted successful results for 2021, including US$856 million in revenue – of which US$621 million was generated under the interim management. 2021 also saw the mine reduce its overall extraction costs by US$220 per ounce.
