Friday, October 31, 2008

Centerra talks continue with Mongolia, Kyrgyz govts

TORONTO ( – Gold-miner Centerra Gold is continuing talks with the governments of Mongolia and Kyrgyzstan, to resolve investment agreements for its operations in the countries, president and CEO Stephen Lang said on Friday.

In Mongolia, where Toronto-based Centerra is trying to secure an investment agreement before moving ahead with the development of its Gatsuurt prospect, the company has met with both the Prime Minister and the new Minister of Mines and Energy, following the elections and formation of a new coalition government in the country.

Both officials have indicated that revisions to Mongolia's mining law would be a “priority” for the Parliament, Lang said on a conference call.

Further, Centerra has also had preliminary talks with the Mines Minister about resuming the negotiations for an investment pact for Gatsuurt.

Mongolia initially accepted a feasibility study Gatsuurt in March, opening the way for the negotiation of an investment agreement for the mine, but discussions have been delayed by political developments in the country.

In Kyrgyzstan, the company is “nearly daily contact” with the group designated by the government to handle an agreement for the Kumtor mine, Lang said.

However, the parties have agreed to keep the discussions confidential, and so he was unable to comment further.

“We are certainly communicating on a more frequent basis than was the cast two months ago,” he added.

The talks resumed in July after Centerra and its 53%-shareholder, uranium giant Cameco, agreed to postpone an arbitration hearing into its dispute with the government.

Centerra had resumed international arbitration against the Kyrgyz government in June, after it failed to ratify an investment agreement for Kumtor before the pact expired.

Cameco, Centerra and the government of Kyrgyzstan negotiated preliminary agreements in August last year, which would give the government an increased share in Centerra, in exchange for an increased concession area and a simplified, fixed-tax regime for its Kumtor gold project.

If all the transactions set out in the agreement had been completed, the Kyrgyz government would own 29,3% of Centerra, Cameco would own 40,5% and the balance, 30,2%, would be held by public shareholders.

After twice requesting more time to study the agreement, Parliament eventually allowed the June 1 deadline to pass without giving its approval.


Centerra reported third-quarter net earnings of $16,9-million on Friday, compared with $4,8-million a year earlier.

Revenue increased to 139,4-million, compared with $98-million in the third quarter of 2007, mainly thanks to a 26% increase in the realised gold price of $860/oz.

Centerra produced 186 145 oz of gold during the three months, at a total cash cost of $498/oz, compared with 136 461 oz a year ago, at a total cash cost of $440/oz.

However, the company revised its full-year production forecast for 2008 to between 740 000 oz and 790 000 oz, from previous guidance of between 770 000 oz and 830 000 oz.

The cut was mainly a result of lower than expected gold production at the Kumtor mine, where initial head grades in a higher-grade zone currently being mines were below expectations.

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