Centerra digesting law prohibiting activities which affect glaciers
Centerra Gold (TSE:CG) says it is still unclear how a law prohibiting activities which affect glaciers will affect its operations.
The glacier law was passed on Wednesday by the Parliament of the Kyrgyz Republic. It still needs to be signed by the country's president before it takes effect.
The company says it has not received the official version of the law, and its provisions are unclear. The law does require payment of compensation for damages to glaciers. In February Centerra announced that the company had made peace with the country’s parliament after the creation of a joint venture that evenly splits control of the Kumtor gold mine.
Despite the law, Centerra believes it has protection from punitive actions.
"Nevertheless, Centerra believes that the stabilization and non-discrimination provisions contained in the agreements governing the Kumtor project and the law of the Kyrgyz Republic which implemented the Kumtor Project Agreements support the view that the Glacier Law would not apply to Kumtor mining operations," said the company in a statement.
"In addition, Centerra believes that any disagreement in relation to the application of the Glacier Law to Kumtor would be subject to the dispute resolution (international arbitration) provisions of the Kumtor Project Agreements."
Centerra is up 5.66% over the past week to $5.66 a share.
Full news release below.
Kyrgyz Parliament Passes Law on Glaciers
TORONTO, ONTARIO–(Marketwired – April 24, 2014) – Centerra Gold Inc. (TSX:CG) announces that it understands that on Wednesday, April 23, 2014 the Parliament of the Kyrgyz Republic passed a law prohibiting activities which affect glaciers in the Kyrgyz Republic (the "Glacier Law"). The Glacier Law must be signed by the President of the Kyrgyz Republic before it will take effect.
Centerra has not yet received the official version of the Glacier Law and notes that several of its provisions are unclear. The Glacier Law also contains provisions for the payment of compensation for damages to glaciers, at rates to be determined by the Government. Nevertheless, Centerra believes that the stabilization and non-discrimination provisions contained in the agreements governing the Kumtor project (the "Kumtor Project Agreements") and the law of the Kyrgyz Republic which implemented the Kumtor Project Agreements support the view that the Glacier Law would not apply to Kumtor mining operations. In addition, Centerra believes that any disagreement in relation to the application of the Glacier Law to Kumtor would be subject to the dispute resolution (international arbitration) provisions of the Kumtor Project Agreements.
Limited measures to manage glaciers and ice have been a feature of mining operations at Kumtor from the beginning of the project in 1994 and have been the subject of frequent Kyrgyz regulatory oversight and approval as well as review by international technical and environmental experts, including experts retained by the European Bank for Reconstruction and Development in connection with the extension of a credit facility to Centerra. Such measures are necessary to ensure that mine operations can be carried on safely in the open pit. The continuation of mining at Kumtor depends on Centerra's ability to carry on such activities throughout the life of the mine.
In view of the strategic importance of the Kumtor project to the Kyrgyz Republic, we believe that the Glacier Law is unlikely to be enforced in a manner that would require the project to suspend mining activities. We also note that in all our dealings with successive governments of the Kyrgyz Republic, such governments have consistently and emphatically stressed the strategic importance of Kumtor to the Kyrgyz Republic and that mining operations at the project continue uninterrupted, notwithstanding any disagreements that may arise between Centerra and the Government regarding the project. We also note that the President of the Kyrgyz Republic has the discretion to reject the Glacier Law and return it to Parliament for further consideration.
However, there can be no assurances that Kyrgyz regulatory authorities will not enforce the Glacier Law, with the potential for mine operations to be suspended or terminated, or that the Government will not make substantial claims for damages for past or future activities affecting glaciers. Any such enforcement action or claims would have a material adverse impact on the Company's operations, future cash flows, earnings, results of operations and financial condition.
Cautionary Note Regarding Forward-looking Information
Information contained in this news release and the documents referred to herein which are not statements of historical facts, may be "forward-looking information" for the purposes of Canadian securities laws. Such forward looking information involves risks, uncertainties and other factors that could cause actual results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward looking information. The words "believe", "expect", "envision", "target", "intends", "estimate", "may", "will", and similar expressions identify forward-looking information. These forward-looking statements relate to, among other things, the possible effect of the Glacier Law on mining operations at Kumtor and the enforcement thereof by relevant Kyrgyz Government authorities, the legal effect of the Glacier Law given the provisions of the Kumtor Project Agreements and the Kyrgyz law implementing those agreements, the need to continue mining ice throughout the life of the Kumtor mine, statements regarding the Company's plans to discuss outstanding issues relating to the Kumtor project with the Kyrgyz Government and the Company's understanding of the position of the Kyrgyz Government on the importance of continuing mining operations at Kumtor.
Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable by Centerra, are inherently subject to significant political, business, economic and competitive uncertainties and contingencies. There may be factors that cause results, assumptions, performance, achievements, prospects or opportunities in future periods not to be as anticipated, estimated or intended. These factors include Kyrgyz Republic resource nationalism, the impact of changes in, or to the more aggressive enforcement of, laws, regulations and government practices in the Kyrgyz Republic, the impact of any actions taken by the Kyrgyz Republic Government and Parliament as a result of the Kyrgyz State Commission on Kumtor, the impact of the enactment, changes to, or the increased enforcement of, environmental laws and regulations relating to the Company's operations, including the Glacier Law; risks relating to the Company's ability to enforce its legal rights, risks associated with having a significant shareholder, and possible director conflicts of interest. See also "Risks that can affect our business" in the Company's Annual Information Form for the year ended December 31, 2013, available on SEDAR at www.sedar.com.
There can be no assurances that forward-looking information and statements will prove to be accurate, as many factors and future events, both known and unknown could cause actual results, performance or achievements to vary or differ materially, from the results, performance or achievements that are or may be expressed or implied by such forward looking statements contained herein or incorporated by reference. Accordingly, all such factors should be considered carefully when making decisions with respect to Centerra, and prospective investors should not place undue reliance on forward-looking information. Forward looking information is as of April 24, 2014. Centerra assumes no obligation to update or revise forward-looking information to reflect changes in assumptions, changes in circumstances or any other events affecting such forward looking information, except as required by applicable law.
Centerra Gold Inc. is a gold mining company focused on operating, developing, exploring and acquiring gold properties primarily in Asia, the former Soviet Union and other markets worldwide. Centerra is the largest Western-based gold producer in Central Asia. Centerra's shares trade on the Toronto Stock Exchange (TSX) under the symbol CG. The Company is based in Toronto, Ontario, Canada.
Additional information on Centerra is available on the Company's web site at www.centerragold.com and at SEDAR at www.sedar.com.