Centerra Gold announced Thursday that the Kyrgyz Parliament has ratified the Agreement on New Terms between Centerra, the Kyrgyz Republic and Cameco.
The President of the Kyrgyz Republic is expected to sign the legislation in the near future.
Closing of the transactions under the Agreement on New Terms require that all Kyrgyz court proceedings pertaining to the Kumtor gold mine--the largest gold mine in Central Asia operated by a western company. All adverse rulings against the mine must also be terminated or vacated.
The transaction is supposed to be closed on or before May 25th.
A prior 2007 Kumtor framework entered into between Centerra, Cameco and the Kyrgyz Government had not been ratified by the Parliament within the agreed timeframe and had therefore expired. The parties then resumed their discussions and negotiations, resulting in the newly ratified agreement.
The new agreement includes the following highlights:
· Provides business certainty for future mining operations at the Kumtor Project and the government's full commitment to and support for Centerra's growth plans;
· Provides for the settlement of all outstanding claims including those in international arbitration;
· Expands Centerra's concession area to include the area of its exploration and development license. The government will also support further exploration activity by Centerra and its affiliates by inviting the Toronto-based gold miner to consider opportunities to acquire additional exploration and mining licenses;
· Provides for a new rate regime with gross revenue will be taxed at a rate of 14%, including a 1% monthly contribution to the Issyk-Kul Oblast Development Fund. The new tax regime replaces income tax, mineral resource tax, emergency fund tax, road tax, withholding taxes, the Issyk-Kul Social Fund tax, all customs duties and certain other taxes;
· Provides that Centerra will pay to the government $22.4 million, which includes an $11 million difference in taxes payable for 2008 between the old and new tax regimes; $1.75 million in satisfaction of all liability or claims against Centerra or its affiliates; and an advance on taxes of $9.65 million due this year.
· Centerra has to issue to the government 18,232,615 common shares and Cameco has agreed to transfer up to 25.3 million Centerra shares to the government upon the satisfaction of certain conditions. The Kyrgyz Government could own up to 33% of Centerra, while Cameco will own 37.8% and the remaining 29.2% will be held by remaining shareholders.
· Provides for an annual payment of 4% of gross revenue against which all capital and exploration expenditures in the Kyrgyz Republic are fully credited. Expenditures not required for credit this year are carried forward for future credit years;
· Centerra's board of directors will be expanded to include an additional independent director nominated by the Kyrgyz Government.