Centerra confident of gold mining outlook with Kyrgyz Republic and Mongolia governments

Toronto’s Centerra Gold is so confident of its mining future in Kyrgyzstan and Mongolia, the company has hired new executives and plans to open an office in Beijing to explore opportunities in China.

New Centerra Gold President and CEO Steve Lang said his company and the Kyrgyz government may delay a September 29^th international arbitration hearing concerning issues stemming from the taxation of the Kumtor gold mine in Kyrgyzstan.

In a presentation to the Denver Gold Group Tuesday, Lang also stressed that top Mongolian officials, including the prime minister, have stressed to Centerra that "mining law reform would be their top priority" with both major Mongolian political parties "very supportive of mining law reform."

Despite the disagreements between the mining company and the government over taxation and other issues, Lang stressed that the "Kyrgyz have been very, very careful not to interrupt the operations and the production at the mine. That's continued through the very worst of it."

The "worst" has included the cancellation by a court of exploration licenses, the expiration of a new deal would have doubled government ownership in the mine after Parliament failed to ratify the agreement, and substantial proposed increases in taxes. However, Lang noted that the arbitration has not impacted the immediate operation of Kumtor.

When asked by an analyst as to what "leverage" Centerra holds over the Kyrgyz government, Lang responded that a valid agreement between the two parties, along with a desire by the republic to attract another western investment, could be viewed as substantial leverage in the current of discussions and negotiations.

Lang explained that Kumtor is one of the largest businesses in the Kyrgyz Republic with the mining operation spending over $770 million since 1992 for a medical clinic, school repairs, a water system and growth capital. He also noted that Centerra has enjoyed "a track record of good relations with the government in resolving issues."

Centerra officials have held several formal meetings with the government working group and a technical committee examining the operation and taxation of Kumtor. Lang called the meetings "very professional." Meanwhile, discussions among the groups are nearly continuous, he added.

Centerra is moving ahead with plans for underground production at Kumtor.

Meanwhile, the company is also improving and expanding facilities at the Boroo gold mine in Mongolia, as well as developing the Gatsuurt project.

Lang has hired new executives to prepare the company for its growth in the Kyrgyz Republic and Mongolia, including a vice president for business development, and the appointment of a regional exploration officer in Beijing to explore projects in China. In his presentation Lang highlighted the exploration potential in Central Asia, which he called "one of the least explored areas" of the world.

The company is also getting involved in a Russian prospect in the Tyva Republic near the border with Mongolia, as well as a joint venture project in Nevada.