Kyrgyz Republic no Venezuela as Centerra Gold seeks Kumtor ratification
Despite an extension in negotiations involving changes to the Kumtor Project agreement between the Kyrgyz Republic, government officials have done their best to assure Centerra Gold that a happier outcome awaits the Toronto-based company.

Author: Dorothy Kosich
Posted: Friday , 02 May 2008

RENO, NV -

Centerra Gold President and CEO Len Homeniuk Thursday assured metals analysts that the Kumtor Project negotiations with the Kyrgyz Government will not follow the same treacherous path as mining company permitting in Venezuela.

In fact, Homeniuk said the company's Prime Minister specifically pointed out to him that Kyrgyz Republic is not like Venezuela, which has all but destroyed two major gold mining projects this week with a sudden shift in mining policy near a protected forest region.

A Kyrgyz Republic Parliamentary Committee has asked that the government provide definitive agreements with Centerra and Cameco Corporation for the committee's review; asked that the government provide additional financial and technical information and documents relating to the Kumtor Project, Centerra's non-Kyrgyz assets and other matters; and set a deadline for parliamentary ratification of the proposed transactions with Centerra and Cameco. The deadline for completion of the transactions is June 1, 2008.

Although the Kyrgyz Parliament doesn't reconvene until May 29th, Homeniuk said he has been assured by the Prime Minister that they will meet the June 1st deadline for ratification of the Kumtor agreement.

Gold production at the Kumtor mine was reported to be 74,730 ounces in the first quarter of 2008, a 13% increase from the same quarter of 2007, due to higher ore grades and increased recovery. This was partially offset with a 19% reduction in throughput due to a shutdown of the ball mill during the month of March for repairs.

At the Borro mine in Mongolia, production was 45,665 ounces of gold in the first quarter, lower than anticipated due to a delay in the startup of the heap leach facility. On April 29th, Borro received a temporary six-month permit to start heap leach production. Final permits and approvals of the heap leach reserves and feasibility study have yet to be granted.

OUTLOOK

For the full year of 2008, Centerra anticipates total gold production of 770,000 to 830,000 ounces of gold, a 40% increase over 2007 production. Total cash costs are expected to be $360 to $400 per ounce.

Gold production at the Kumtor mine for full year 2008 is forecast to be between 580,000 to 620,000 ounces with total cash cost of between $380 to $420 per ounce this year.

At Boroo, the company expects gold production of 190,000 to 210,000 ounces in 2008 with total cash costs forecast to be $380 to $420 per ounce.

Capex for this year is forecast for $78 million, including $40 million of maintenance capital. Capex has increased from the company's prior guidance of $65 million.

FINANCIALS

The company reported $19.3 million (9-cents per share) in net earnings for the first quarter of 2008, up 227% from the $5.9 million (3-cents/sh) in net earnings for the first quarter of 2007. Total cash cost for the first-quarter 2008 was reported at $610/oz, up from $410/oz for the same period a year ago.

Net earnings before unusual items for the quarter were $23.7 million after tax or 11-cents per share, compared to $5.9 million or 3-cents per share for the same period in 2007. The company entered into an agreement with parent Cameco, which requires the issuance of 10 million treasury shares to Cameco. The re-evaluation resulted in an additional expense of $4.5 million in the first quarter of this year.