$CG Kyrgyz Republic Takes Steps to Assume Temporary Control of Kumtor Mine

on May 18, 2021 News and Tags: , , , , , , , with 0 comments

Mining Industry Veteran Tengiz Bolturuk Named as General Manager

BISHKEK, Kyrgyzstan, May 18, 2021 /PRNewswire/ - Akylbek Japarov, Member of the Jogorku Kenesh (Parliament) of the Kyrgyz Republic and Chairman of the State Commission created by resolution of the Jogorku Kenesh on February 17, 2021 (the "State Commission"), today announced that the Government of the Kyrgyz Republic (the "Government") has initiated a legal process to enable it to assume control of the operations of Kumtor Mine for a period of three months, effective immediately. Kumtor has been operated by Kumtor Gold Company ("KGC"), a subsidiary of Centerra Gold Inc. ("Centerra") (TSX: CG) (NYSE:CGAU), under an agreement established with the Government in 2009.

The Government has had a number of concerns relating to the operation of Kumtor, including its safety record, waste management and other environmental practices. The Jogorku Kenesh appointed the State Commission to conduct a thorough investigation of these concerns. The State Commission has presented its interim findings to the Jogorku Kenesh, and concluded that a temporary assumption of control of Kumtor was warranted.

In the course of this investigation and related inquiries, the Government recently learned of new issues that require immediate resolution. Specifically, it has been learned that suppliers to Kumtor have been instructed to suspend deliveries of materials essential to the continuing operations of the mine. Of even greater urgency, the Government has learned of the external disabling of critical sensors whose purpose is to monitor the stability of the mine and the movement of nearby glaciers. The shutdown of these sensors creates significant danger to the health and safety of Kumtor employees.

On Sunday, May 16, authorities sent a letter to Centerra seeking clarification on the issues noted above and requesting immediate corrective action, but have not received a response. Urgent attempts to reach the Kumtor Mine management team have been unsuccessful, and it has been learned that they left the country some time ago.

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Given that the actions noted above made continued operation of the mine unsafe, the Government was forced to exercise its legal right to establish temporary control over management of the Kumtor Mine. Accordingly, and consistent with relevant legislation, the Government has appointed a qualified and competent team to assume responsibility for the mine to restore normal operations.

This decision is designed to accomplish the following objectives:

1) Reinstate proper monitoring systems and procedures to protect the life and safety of mine employees;

2) Fill the void that has been left by the departure from Kyrgyzstan of the Kumtor Mine management team; and

3) Return the mine to a state of normal operations which was interrupted by Centerra's actions.

Mr. Tengiz Bolturuk has been appointed as general manager at Kumtor. Mr. Bolturuk is a professional engineer with more than three decades of experience in the mining industry. He has worked on mining projects spanning four continents, including one year as Mill Foreman at Kumtor. He holds a B.Sc. in Mineral Processing and an M.Sc. in Metallurgy. Mr. Bolturuk served as a Director of Centerra beginning in December 2020, until resigning from that role on May 17, 2021.

"We were disappointed to learn of Centerra's abdication of its fundamental duties of care related to operation of Kumtor," said Akylbek Japarov, Chairman of the State Commission. "It was our hope that Centerra would continue to work with us to resolve the longstanding issues at Kumtor. When Centerra declined to respond to our request to return the mine to normal and safe operation, we were forced to take these steps in order to protect the workers and the continuity of Kumtor, which is of strategic importance to the Kyrgyz Republic."

On May 16, 2021, Centerra announced that it has initiated binding arbitration to resolve disputes relating to the operation of Kumtor.

"We were surprised that Centerra has taken the drastic step of initiating an arbitration process, rather than responding to our letter and engaging constructively to resolve our issues in a way that can benefit all parties," said Mr. Japarov. "We look forward to reviewing the arbitration filing to understand what they consider to be the basis for initiating this process."

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SOURCE Akylbek Japarov