VANCOUVER (miningweekly.com) – TSX-listed gold producer Centerra Gold has agreed to a month’s extension of the first longstop date of a strategic accord it signed with the Kyrgyz government on September 11, 2017.

The Toronto-based miner said the first longstop date is the date by which all conditions precedent to the completion of the strategic agreement are required to be satisfied. This has now been further extended by agreement of all the parties from May 31, to June 22.

The Republic of Kyrgyzstan on April 20 appointed new Prime Minister Muhammedkaliy Abilgaziyev. Soon after, Centerra met with Abilgaziyev and other government officials regarding the strategic agreement, and despite details being light on the meeting itself, Centerra confirmed that it continues to work with the Kyrgyz government to ensure that all the remaining conditions of the accord are satisfied to complete the strategic agreement, including the termination of certain legal proceedings and receipt of the signed land use certificate for the flagship Kumtor gold mine.

The wide-ranging settlement agreement ends a drawn-out dispute that crippled investor confidence in the impoverished Central Asian country and prevented Centerra from partaking in any profit from its majority-held and majority-operated Kumtor mine, resulting in Centerra filing for international arbitration early this year.

Centerra advised that key terms of the settlement agreement include a comprehensive settlement and release of all outstanding arbitral and environmental claims, disputes, proceedings and court orders, and releases of the company and its Kyrgyz subsidiaries from future claims covering the same subject matter as the existing environmental claims arising from approved mine activities.

The agreement also provides for the termination of the Kyrgyz court order which, among other things, restricted subsidiary Kumtor Gold Company (KGC) to transfer cash to Centerra.

Under the terms of the settlement agreement, the Kyrgyz government also acknowledged that there would be no future restrictions on the ability of KGC to distribute funds to Centerra.

Further, all restrictions are lifted on the free movement of KGC's employees.

The settlement does not reflect an admission on the part of Centerra or its Kyrgyz subsidiaries of any environmental wrongdoing; any noncompliance with Kyrgyz law or the Kumtor project agreements; or any pre-existing obligation to make additional environmental or Reclamation Trust Fund payments or environmental remediation efforts.

The Kyrgyz government also confirmed that the existing 2009 agreements governing the Kumtor project remain in full force, including the tax and fiscal regime thereunder, without any changes to current or planned operations at Kumtor being required.

KGC has agreed to make a one-time lump sum payment totalling $57-million to a new, government-administered Nature Development Fund and to a new, government-administered Cancer Care Support Fund. It has also agreed to a further one-time payment of $3-million to the Cancer Care Support Fund within 12 months of closing. These amounts are expected to be recorded as an expense and liability in the company's third-quarter results.

Further, Centerra will make yearly payments of $2.7-million to the new Nature Development Fund, conditional on the government continuing to comply with its obligations under the strategic agreement. KGC has agreed to accelerate its yearly payments to Kumtor's Reclamation Trust Fund in the amount of $6-million a year until the total amount contributed by KGC reaches the total estimated reclamation cost for the Kumtor project, subject to a minimum total reclamation cost of $69-million.

The agreement also provides for KGC to consider, together with government, other potential investment opportunities in the Kyrgyz Republic and at the Kumtor project.

KGC has also agreed to implement certain specified actions recommended by the government’s environmental consultant, Amec Foster Wheeler, most of which have already been fully implemented.

Centerra advised that the releases of liability and all payments are subject to a range of initial conditions precedent and were initially expected to be completed in the fourth quarter of 2017.

The releases of liability and all payments are subject to a range of initial conditions precedent designed to protect Centerra, KGC and Kumtor Operating Company (KOC), including the approval by government of various outstanding items, including the Kumtor life-of-mine plan, an official reserves report and the tailings dam expansion; compliance by government with its obligations under the Kumtor project agreements; continued operation of the Kumtor mine by KGC and KOC with all necessary permits; no expropriatory action having been taken by the government; and termination of the environmental disputes and the civil and criminal proceedings instigated by the Kyrgyz general prosecutor's office on terms satisfactory to Centerra.