Centerra Updates on Kyrgyz Republic Parliamentary Decree and New Environmental Claim for Kumtor Project

Centerra Updates on Kyrgyz Republic Parliamentary Decree and New Environmental 
Claim for Kumtor Project 
TORONTO, ONTARIO -- (Marketwire) -- 02/21/13 --  
This news release contains forward-looking information that is
subject to the risk factors and assumptions set out on page 3 under
the heading, "Cautionary Note Regarding Forward-looking Information". 
All figures are in United States dollars. 
Centerra Gold Inc. (TSX:CG) reports on two matters relating to its
Kumtor mine in the Kyrgyz Republic. Further to the Company's news
release of February 20, 2013, Centerra understands from Kyrgyz media
reports that the Kyrgyz Republic Parliament has adopted a decree
(resolution), in respect of the previously reported State Commission
report that recommends negotiations with Centerra within the next
three months to revise the project agreements signed in 2009 that
govern the Kumtor Project (collectively, the "Kumtor Project
Agreement"). In addition, Centerra's operating subsidiary in the
Kyrgyz Republic, Kumtor Operating Company CJSC received today a claim
from the State Agency for Environmental Protection and Forestry under
the Government of the Kyrgyz Republic for approximately $315 million
relating to alleged environmental damages at the Kumtor Project. 
Parliamentary Decree  
In connection with its consideration of the report from the Kyrgyz
Government State Commission established to inspect and review
Kumtor's compliance with Kyrgyz operational and environmental laws
and regulations and community standards, Centerra understands that
the Kyrgyz Republic Parliament adopted a decree (the "Decree") on
February 21, 2013 regarding the Kumtor Project. The Decree recommends
that the Kyrgyz Republic Government ensure the continuous operation
of the Kumtor mine, and within three months of the date of the
Decree, conduct negotiations with Centerra with a view to revising
the Kumtor Project Agreements to return to conditions that existed
prior to the restructuring of the project in 2003, but subject to the
application of current Kyrgyz legislation, and to enter into new
agreements on these terms. Centerra expects to continue its
discussions with relevant Kyrgyz authorities to, among other things,
clarify the meaning of the Decree's recommendations with respect to
returning to pre-2003 conditions. 
If the parties cannot agree on mutually acceptable terms within such
three month time period, the Parliament instructs the Government to
take certain actions with respect to the Kumtor Project, including
among other things, to:  


 
i.  invalidate the legislation enacted by Parliament in 2009 approving the
    Kumtor Project Agreements, and to unilaterally terminate the Kumtor
    Project Agreements; 
ii. invalidate the legislation enacted by Parliament in 2009 amending the
    Kyrgyz Republic Tax Code (which provides for the tax regime set out in
    the Kumtor Project Agreements); 
iii.confiscate land plots in connection with the adoption of Government
    Decree, "On abolition of the Government Decree on allocation of lands to
    Kumtor Gold Company CJSC dated March 25, 2010", approved by the
    Government Decree dated July 5, 2012. (This March 25, 2010 Decree
    granted Kumtor surface rights in relation to the Kumtor Project. See
    Centerra's news release dated July 6, 2012.); and 
iv. authorize the State Inspectorate Office for Environmental and Technical
    Safety ("SIETS") to take measures to have Kumtor Operating Company pay
    fines and other charges for violations of environmental, mining and
    geological and subsoil legislation. (See Centerra's new release dated
    December 14, 2012 and February 20, 2013 for information on significant
    claims received from SIETS on alleged environmental violations for an
    aggregate total of approximately $152 million.) 

 
In the Decree, the Parliament also requests that the Government
develop and submit to the Parliament for consideration certain
matters, including the following:  


 
i.  draft amendments to existing legislation or draft new legislation
    relating to biosphere territories, the protection and preservation of
    glaciers, and prohibiting the placement of pollutants on glaciers; 
ii. provide for the obligation of Kumtor to develop a technical plan on
    reclamation of the Kumtor Project in accordance with Kyrgyz legislation
    and to determine funding for reclamation based on such plan and to
    enforce this obligation; 
iii.for the entire period of the Kumtor Project, to invoice Kumtor for the
    use of water and make Kumtor pay for changes in the glacial regime and
    disposal of waste; and 
iv. when negotiating with Centerra and Kumtor Operating Company, to require
    that goods and services be purchased for the Kumtor Project in the
    domestic market. 

 
The Decree instructs the General Prosecutor's Office and the National
Security Committee to investigate allegations that Kumtor
deliberately understated reserves, including silver and tellurium.  
The Decree calls on the Government, General Prosecutor's Office and
the National Security Committee to report on the implementation of
the instructions set out in the Decree by June 1, 2013.  
While Centerra has not yet reviewed an official version of the
Decree, it continues to believe that the Kumtor Project Agreements
are legal, valid and enforceable obligations. The Kumtor Project
Agreements were reviewed and approved by the Kyrgyz Republic
Government and the Parliament, and were the subject of a positive
decision of the Kyrgyz Republic Constitutional Courts and a legal
opinion by the Kyrgyz Republic Ministry of Justice. Furthermore, the
Company notes that the Kumtor Project Agreements provide for all
disputes to be resolved by international arbitration, if necessary.
The Company will continue to hold discussions with the Government and
other regulatory officials regarding the State Commission report and
the Decree, with the objective of resolving these matters through
constructive dialogue. However, there can be no assurances that the
Company will be able to successfully resolve any of these matters
currently affecting the Kumtor Project. There can also be no
assurance that the Kyrgyz Republic Government and/or the Parliament
will not take actions that are inconsistent with the Kyrgyz
Republic's obligations under the Kumtor Project Agreements or cancel
government decrees, orders or licenses under which Kumtor currently
operates. Any such actions could have a material adverse impact on
the Company's future cash flows, earnings, results of operations and
financial conditions. For further information regarding the Kyrgyz
Republic State Commission, please see the Company's news release of
February 20, 2013. 
New Environmental Claim Received by the Kumtor Project  
Centerra's operating subsidiary, Kumtor Operating Company CJSC,
received today a new claim from the State Agency for Environmental
Protection and Forestry under the Government of the Kyrgyz Republic
("SAEF") relating to alleged environmental damages at the Kumtor
Project. This claim is in addition to the five environmental claims
that Kumtor received in December 2012 for an aggregate amount of $152
million (see the Company's news releases dated December 14, 2012 and
February 20, 2013 for information on these five claims). The claim
issued by SAEF is for approximately $315 million for alleged damage
in relation to waste placed in the tailings management facility,
waste rock dumps, and for the generation, management and treatment of
other types of wastes. The claim covers the period from 1996 to 2011.
Similar to the five claims received by the Kumtor Project in December
2012, the claim by SAEF references the review of the Kumtor Project
carried out by the environmental and technical working group of the
Kyrgyz Republic State Commission.  
The Company is studying the claim but believes that the allegations
contained in the claim are exaggerated or without merit. Centerra's
Kumtor Project complies with Kyrgyz Republic laws on environmental,
safety and health standards. The Kumtor Project has been the subject
of systematic audits and investigations over many years by Kyrgyz and
international experts. In particular, in August 2012, the Safety,
Health and Environment Committee of the Board of Directors of
Centerra engaged an independent internationally recognized consultant
to carry out a due diligence review of Kumtor's performance on
safety, health and environmental matters. The report issued in
October 2012 concluded that "no major or materially significant
environmental issues were identified" at Kumtor. The review focused
on numerous environmental areas, including waste management and
environmental management systems. The report can be found on the
Kumtor website at http://www.kumtor.kg/en/ under the "Environment"
section.  
The Company notes that the Kumtor Project Agreements provide a
complete listing of all taxes and payments to be made to the Kyrgyz
Republic Government, including a fixed environmental charge.
Accordingly, no other tax, duties, or other obligations are to be
paid to the Kyrgyz Republic, however they may be characterized.
Centerra also notes that, as part of the Kumtor Project Agreements
signed by Centerra and the Kyrgyz Republic in 2009, the Kyrgyz
Republic fully released Kumtor in respect of all prior claims,
including in relation to all environmental matters known by or
reported to any Kyrgyz authority.  
The Company has benefited from a close and constructive dialogue with
the Kyrgyz authorities over many years and remains committed to
continuing to work with them to resolve these issues in accordance
with the Kumtor Project Agreements, which provide for all disputes to
be resolved by international arbitration, if necessary. However, no
assurances can be given that this claim from SAEF can be resolved
without a material impact on the Company. Further claims from Kyrgyz
authorities arising from the State Commission review may also be
forthcoming. For a discussion on the existing environmental claims
issued by Kyrgyz Republic regulatory authorities in December 2012,
see the Company's news releases of February 20, 2013 and December 14,
2012.  
Cautionary Note Regarding Forward-looking Information  
Information contained in this news release which are not statements
of historical facts, and the documents incorporated by reference
herein, may be "forward looking information" for the purposes of
Canadian securities laws. Such forward looking information involves
risks, uncertainties and other factors that could cause actual
results, performance, prospects and opportunities to differ
materially from those expressed or implied by such forward looking
information. The words "believe", "expect", "anticipate",
"contemplate", "target", "plan", "intends", "continue", "budget",
"estimate", "may", "will", "schedule" and similar expressions
identify forward-looking information.  
These forward-looking statements relate to, among other things, the
successful resolution of matters discussed in the Decree and matters
relating to the State Commission report, including discussions with
the Government on the Kumtor Project Agreements and the Kyrgyz
Parliament and Government not taking any unilateral actions that are
inconsistent with the Kyrgyz Republic obligation sunder the Kumtor
Project Agreements, the successful resolution of the environmental
claim issued by SAEF in the amount of $315 million, and the
previously issued environmental claims for an aggregate amount of
approximately $152 million.  
Although the forward-looking information in this news release
reflects Centerra's current beliefs as of the date of this news
release based on information currently available to management and
based upon what management believes to be reasonable assumptions,
Centerra cannot be certain that actual results, performance,
achievements, prospects and opportunities, either expressed or
implied will be consistent with such forward-looking information.
Forward-looking information is necessarily based upon a number of
estimates and assumptions that, while considered reasonable by
Centerra, are inherently subject to significant political, business,
economic and competitive uncertainties and contingencies. Known and
unknown factors could cause actual results to differ materially from
those projected in the forward-looking information. 
Factors that could cause actual results or events to differ
materially from current expectations include, among other things,
political and regulatory risks, including the political risks
associated with the Company's principal operations in the Kyrgyz
Republic, resource nationalism, the impact of changes in, or to the
more aggressive enforcement of, laws, regulations and government
practices in the jurisdictions in which the Company operates, the
impact of any actions taken by the Kyrgyz Republic Government and
Parliament as a result of the Kyrgyz State Commission on Kumtor, any
impact on the purported cancellation of Kumtor's land use rights at
the Kumtor Project, the impact of changes to, or the increased
enforcement of, environmental laws and regulations relating to the
Company's operations; risks relating to the Company's ability to
enforce its legal rights, risks associated with having a significant
shareholder, and possible director conflicts of interest. There may
be other factors that cause results, assumptions, performance,
achievements, prospects or opportunities in future periods not to be
as anticipated, estimated or intended. See "Risk Factors" in the
Company's Annual Management's Discussion and Analysis for the year
ended December 31, 2012 available on SEDAR at www.sedar.com.  
There can be no assurances that forward looking information and
statements will prove to be accurate, as many factors and future
events, both known and unknown could cause actual results,
performance
 or achievements to vary or differ materially, from the
results, performance or achievements that are or may be expressed or
implied by such forward looking statements contained herein or
incorporated by reference. Accordingly, all such factors should be
considered carefully when making decisions with respect to Centerra,
and prospective investors should not place undue reliance on forward
looking information. Forward looking information is as of February
21, 2013. Centerra assumes no obligation to update or revise forward
looking information to reflect changes in assumptions, changes in
circumstances or any other events affecting such forward looking
information, except as required by applicable law. 
About Centerra  
Centerra Gold Inc. is a gold mining company focused on operating,
developing, exploring and acquiring gold properties primarily in
Asia, the former Soviet Union and other emerging markets worldwide.
Centerra is the largest Western-based gold producer in Central Asia.
Centerra's shares trade on the Toronto Stock Exchange (TSX) under the
symbol CG. The Company is based in Toronto, Ontario, Canada. 
Additional information on Centerra is available on the Company's web
site at www.centerragold.com and at SEDAR at www.sedar.com.
Contacts:
Centerra Gold Inc.
John W. Pearson
Vice President, Investor Relations
(416) 204-1241
john.pearson@centerragold.com
www.centerragold.com