Stopping short of voting to nationalise the Kumtor mine, lawmakers instead directed the government to revise the contract, which gives Kyrgyzstan a 33% stake in the company while Centerra retains full ownership of the mine and its output.

The resolution calls for the creation of a state commission to conduct a comprehensive and impartial examination of the parliamentary report and its conclusions, and to initiate revisions to the 2009 agreements governing the project (the New Agreements) that would impact the relevant concession area, tax regime, local operating company management structure and other matters, although the resolution does not contain any specifics regarding any such proposals. The resolution also calls upon the Government (or relevant state agency) to revoke government decrees and licenses in relation to the project. The Parliament voted to reject an alternative resolution that called for the Government to take steps toward nationalization of the Kumtor project.

Centerra believes the resolution is not legally binding on the Kyrgyz Government and that the Government (and relevant state agency) cannot revoke its decrees and licenses without meeting the relevant criteria for revocation set out under applicable law.

Centerra’s President and CEO, Ian Atkinson, commented:

As I have stated previously, Centerra believes that the parliamentary report’s findings are without merit. Kumtor has operated in full compliance with Kyrgyz and international standards and this has been proven over the years in systematic audits by Kyrgyz and international experts. We also have a long history of constructive dialogue with the Government and look forward to continuing that dialogue to resolve any outstanding concerns. We believe, however, that any discussion of the Kumtor project must take into account existing legal obligations and binding commitments. In particular, the Kyrgyz Government undertook a number of legal obligations and binding commitments in the New Agreements, which were approved by all relevant Kyrgyz governmental authorities, including the Kyrgyz Parliament and the Constitutional Court. These agreements form a solid foundation for the successful operation of the project, and enabled Centerra to make significant new investments in Kumtor. Centerra has confidence in the continuing validity of the New Agreements, which provide as well for disputes concerning the project to be resolved by international arbitration, if necessary.

A special commission will come together by July 10, drawing members from the government, parliament, the presidential administration and independent consultants. It is due to work out a revised contract with Centerra by Oct. 1.