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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK
In re: Chapter 11
Kumtor Gold Company CJSC and Kumtor Case No. 21-11051 (LGB) Operating Company CJSC,1 (Jointly Administered) Debtors.
DECLARATION OF BENJAMIN MINTZ IN SUPPORT OF THE MOTION OF THE KYRGYZ REPUBLIC TO DISMISS CHAPTER 11 BANKRUPTCY CASES
I, Benjamin Mintz, under penalty of perjury, hereby declare as follows:
1. I am admitted to practice law in the State of New York and the Southern District of
New York. I am a partner with the law firm of Arnold & Porter Kaye Scholer LLP, counsel to the
Kyrgyz Republic, which maintains an office at 250 West 55th Street, New York, NY 10019-9710.
I respectfully submit this Declaration (this “Declaration”) to the Court in support of the Motion of the Kyrgyz Republic to Dismiss Chapter 11 Bankruptcy Cases, filed contemporaneously herewith.
2. Attached hereto as Exhibit A is a true and correct copy of the March 12, 2021,
KGC News Release with respect to the 2020 Fourth Quarter and 2020 Year-end Results.
3. Attached hereto as Exhibit B is a true and correct copy of the Centerra Gold 2020
Annual Information Form, dated March 15, 2021.
4. Attached hereto as Exhibit C is a true and correct copy of a Notice of Arbitration letter sent from Sullivan and Cromwell LLP to the Government of the Kyrgyz Republic, dated
May 14, 2021.
1 The Debtors’ corporate headquarters is located at 24 Ibraimova Street, 720001, Bishkek, the Kyrgyz Republic.
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5. Attached hereto as Exhibit D is a true and correct copy of a First Amended Notice of Arbitration letter sent from Sullivan and Cromwell LLP to the Government of the Kyrgyz
Republic, Kyrgyzaltyn OJSC, and Arnold & Porter Kaye Scholer LLP, dated June 16, 2021.
6. Attached hereto as Exhibit E is a true and correct copy of a letter from the
Permanent Court of Arbitration sent to Sullivan and Cromwell LLP, the Kyrgyz Republic,
Kyrgyzaltyn, and Arnold & Porter Kaye Scholer LLP, dated July 12, 2021.
7. Attached hereto as Exhibit F is a true and correct copy of a Centerra Gold News
Release regarding proceedings against former board director Tengiz Bolturuk, dated May 20,
2021.
8. Attached hereto as Exhibit G is a true and correct copy of the transcript of the hearing held before this Court on June 8, 2021, with respect to the above captioned matter.
9. Attached hereto as Exhibit H is a true and correct copy of the transcript of the 341
Meeting of Creditors held on July 8, 2021, with respect to the above captioned matter.
10. Attached hereto as Exhibit I is a true and correct copy of the Order Granting
Motions to Dismiss [Docket No. 740] entered on May 11, 2021 in In re National Rifle Association of America and Sea Girt LLC, Case No. 21 30085 (HDH) (Bankr. N.D. Tex. May 11, 2021).
Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury that the foregoing is true and correct to the best of my knowledge, information, and belief.
Dated: July 18, 2021 New York, New York
Respectfully submitted,
/s/ Benjamin Mintz Benjamin Mintz
US 170106188
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Exhibit A
KGC 2020 Annual Report 21-11051-lgb Doc 92-1 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit A Pg 2 of 8 News Release from March 12, 2021 Kyrgyz Republic, Bishkek, Kumtor Gold Company CJSC
2020 Fourth Quarter and 2020 Year-end Results
Basic Operating and Financial Results In 2020, Kumtor's gold production was 556,136 ounces¹ or 17,297.76 kg of gold from previously mined on-surface stockpiled ore, compared to 600,201 ounces or 18,668.35 kg of gold produced in 2019. The decrease in gold production in 2020 was primarily due to lower process plant head grade and lower gold recovery coming from the stockpiled ore. During 2020, Kumtor’s average process plant head grade was 3.27 g/t with a recovery of 81.4% compared to 3.69 g/t and a recovery of 83.5% in 2019. During the fourth quarter of 2020, Kumtor’s gold production was 90,402 ounces from on-surface stockpiled ore compared to 148,523 ounces of gold produced in the fourth quarter of 2019. The decrease was primarily due to lower average process plant head grades and lower gold recovery. During the fourth quarter of 2020, Kumtor’s average process plant head grade was 2.11 g/t with a recovery of 74.2% compared to 3.79 g/t and a recovery of 85.3% in the fourth quarter of 2019. Contribution to the national budget in taxes and mandatory payments in 2020 is 14.5 billion soms. The Dore bars produced by the Kumtor mine are purchased by Kyrgyzaltyn JSC for processing at the Kara- Balta refinery pursuant to the Restated Gold and Silver Sales Agreement, dated June 6, 2009 between KGC, Kyrgyzaltyn and the Government of the Kyrgyz Republic. Kyrgyzaltyn JSC enjoys the exclusive right to sell refined gold and silver both within and outside the Kyrgyz Republic.
COVID-19 update Kumtor continues to implement mitigation controls and health & safety precautions at the mine site to contain the spread of COVID-19. As previously disclosed, open pit mining was operating at below capacity in July, returned to full capacity in September and continued at full capacity through the fourth quarter. Mill processing operated at full capacity throughout the year. Lysii waste dump update In July 2020, Kumtor received a permit to utilize the Lysii Valley for dumping waste rock going forward. Lysii Valley is expected to be the main mine waste rock dump for the next two years as it is closest to cutback 20. According to the new waste dumping plan in the Lysii Valley, waste rock will be placed at the base of the valley initially and the waste rock dump will be developed up the valley creating slightly longer haulage distances in the near-term.
2021 Kumtor Technical Report Update In February 2021, the Company issued a new technical report for the Kumtor mine, as at July 1, 2020 (the “2021 Kumtor Technical Report”), extending its mine life by 5 years to 2031 and increasing its reserves 107% (1) to 6.3 million contained ounces of gold (73.3 million tonnes at an average gold grade of 2.66 grams per tonne gold (g/t Au) using a gold price of US$1,350 per ounce). The 2021 Kumtor Technical Report provides an update of the 2015 technical report, including a mineral resource model update based on extensive in-fill and expansion drilling in recent years. The 2021 Kumtor Technical Report also revised the gold price assumptions, pit slope angles, capital and operating cost estimates and metallurgical recovery estimates based on process plant improvements, all of which has resulted in updated mineral resource and mineral reserve estimates, a revised
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ultimate pit design and an updated mining plan. The technical report was prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and filed on SEDAR on February 24, 2021 with an effective date of July 1, 2020. (1) Reserve increase calculated by comparing the new 2021 Kumtor Technical Report effective as at July 1, 2020 compared to the December 31, 2019 reserve statement (less mine depletion from January 1, 2020 to June 30, 2020).
The table below displays Kumtor's basic operating and financial results5:
Three months Twelve months Unaudited ($ millions, except as noted)3 ended December 31 ended December 31 Financial Highlights: 2020 2019 % Change 2020 2019 % Change Revenue $ 178.1 $ 200.5 (11%) $ 981.6 $ 827.5 19% Production costs 42.4 49.6 (15%) 194.8 228.6 (15%) Depreciation, depletion and amortization 38.5 46.6 (17%) 209.5 181.3 16% Standby costs - 9.1 100% 6.7 9.1 100% Earnings from mine operations $ 97.2 $ 95.2 2% $ 570.6 $ 408.5 40% Revenue-based taxes 25.2 28.3 (11%) 138.5 116.4 19% Exploration and development costs 5.5 4.3 28% 15.9 11.3 41% Other operating expenses 2.8 7.6 (63%) 21.8 23.9 (9%) Earnings from operations $ 63.7 $ 55.0 16% $ 394.4 $ 256.9 54%
Cash provided by mine operations 97.6 149.1 (35%) 660.6 376.3 76% Cash provided by mine operations before changes in working capital 102.6 107.1 (4%) 609.3 385.1 58% Free cash flow from mine operations4 28.1 104.3 (73%) 437.9 240.1 82%
Operating Highlights: Tonnes mined (000's) 42,733 28,565 50% 103,735 156,439 (34%) Tonnes ore mined (000's) 115 1,716 (93%) 705 10,970 (94% Average mining grade (g/t) 1.43 5.50 (74%) 6.64 2.91 128% Tonnes processed (000's) 1,563 1,322 18% 6,323 5,968 6% Process plant head grade (g/t) 2.11 3.79 (44%) 3.27 3.69 (11%) Recovery (%)6 74.2% 85.3% (13%) 81.4% 83.5% (3%) Mining costs ($/t mined material) 1.23 1.50 (18%) 1.52 1.26 20% Processing costs ($/t processed material) 10.87 13.48 (19%) 10.97 12.00 (9%)
Gold produced (oz) 90,402 148,523 (39%) 556,136 600,201 (7%) Gold produced (tonnes) 2.81 4.62 (39%) 17.30 18.67 (7%) Gold sold (oz) 96,641 136,568 (29%) 569,213 600,231 (5%) Gold sold (tonnes) 3.01 4.25 (29%) 17.70 18.67 (5%) Average realized gold price ($/oz sold) 4 1,843 1,468 26% 1,725 1,379 25%
Sustaining capital expenditures 7 15.2 7.8 94% 58.0 38.6 50% Non-sustaining capital expenditures 7, 8 9.4 2.9 224% 16.8 16.0 5% Capitalized stripping - cash 48.1 28.2 71% 142.5 76.5 86% Capitalized stripping - non-cash 10.3 6.9 49% 40.0 20.7 94% Capital expenditures - total 83.0 45.8 81% 257.3 151.8 70%
Unit Costs: Gold production costs ($/oz sold) $ 439 $ 363 21% $ 342 $ 381 (10%) Gold - All-in sustaining costs on a by-product basis ($/oz sold) 4 $ 1,131 $ 657 72% $ 741 $ 598 24% Gold - All-in costs on a by-product basis ($/oz sold) 4 $ 1,545 $ 916 69% $ 1,042 $ 838 24% 1 - One Troy ounce equals to 31.10348 grammes. 2 - Unless specified otherwise, all dollar figures in this news release are in US dollars. 2
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3 - Numbers may not add up due to rounding 4 - Non-GAAP measure. See discussion under “Non-GAAP Measures” in Centerra’s news release dated February 24, 2021. 5 - Financial data extracted from Centerra’s news release dated February 24, 2021. 6 - Metallurgical recoveries are based on recovered gold, not produced gold. 7 - Capital expenditures are presented on a cash basis. 8 - Non-sustaining capital expenditures are distinct projects designed to have a significant increase in the net present value of the mine. In the current year, non-sustaining capital expenditures included additional costs related to cut- back 20.
Production In 2020, Kumtor finished mining cut-back 19 and continued stripping and managing the ice from cut-back 20. Tonnes mined were 103.7 million tonnes in 2020 compared to 156.4 million tonnes in 2019. The decrease was primarily due to the suspension of mining operations from December 2019 to mid-January 2020, longer haulage distances as a result of the change in the waste dump location from the Lysii Valley to the Central Valley for the first half of the year and lower equipment utilization due to workforce availability (primarily COVID-19 related). Of the 103.7 million tonnes mined in 2020, 101.6 million tonnes were capitalized as waste stripping for benefit of future production from cut-back 20. During the fourth quarter of 2020, Kumtor continued mining cut-back 20. Tonnes mined were 42.7 million in the fourth quarter of 2020 compared to 28.6 million tonnes in the fourth quarter of 2019. The increase was due to the suspension of mining operations in December 2019 due to the Lysii waste rock dump incident. The 42.7 million tonnes mined in the fourth quarter of 2020 were capitalized as waste stripping for the benefit of future production from cut-back 20.
Gold production costs in 2020 were $342 per ounce compared to $381 per ounce in 2019. The decrease was primarily due to increased tonnes processed, partially offset by lower grades and recovery.
In the fourth quarter of 2020, gold production costs were $439 per ounce, compared to $363 per ounce in the fourth quarter of 2019. The increase was primarily due to lower ounces sold.
Mining Costs During 2020, mining costs were $1.52 per tonne compared to $1.26 per tonne in 2019. The increase was primarily due to lower tonnes mined, and longer haulage distances, partially offset by lower diesel fuel prices, lower maintenance costs and a favourable foreign currency exchange rate movement.
Mining costs in the fourth quarter of 2020 were $1.23 per tonne compared to $1.50 per tonne in the fourth quarter of 2019. The decrease was primarily due to greater tonnes mined and lower diesel fuel prices. Total mining costs were $52.4 million of which $48.1 million was capitalized in the fourth quarter of 2020, compared to $42.8 million in mining costs of which $28.2 million was capitalized in the fourth quarter of 2019.
Processing costs per tonne
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Processing costs were $10.97 per tonne in 2020 compared to $12.00 per tonne in 2019. The decrease was primarily due to increased tonnes processed and lower maintenance costs as a result of less maintenance activities performed due to COVID-19.
Processing costs were $10.87 per tonne in the fourth quarter of 2020 compared to $13.48 per tonne in the fourth quarter of 2019. The decrease was primarily due to 18% greater tonnes processed and lower maintenance costs.
All-in Sustaining and All-in Costs4 During 2020, all-in sustaining costs on a by-product basis, which excludes revenue-based tax were, $741 per ounce compared to $598 per ounce in 2019. The increase was mainly due to higher capitalized stripping costs, fewer ounces sold, higher sustaining capital representing the purchase of eleven haulage trucks to increase mining capacity and higher Strategic Agreement contributions to the various regional funds in the Kyrgyz Republic. This was partially offset by lower production costs. All-in costs on a by-product basis were $1,042 per ounce in 2020 compared to $838 per ounce in 2019. The increase was due to an increase in all-in sustaining costs on a by-product basis and greater revenue-based taxes paid as a result of higher gold prices. All-in sustaining costs on a by-product basis, which excludes revenue-based tax, were $1,131 per ounce in the fourth quarter of 2020 compared to $657 per ounce in the fourth quarter of 2019. The increase was primarily due to fewer ounces sold, an elevated level of capitalized stripping costs as mining activities were concentrated on stripping cut-back 20 and greater sustaining capital costs relating to rebuilds and haul truck fleet expansion, partially offset by lower production costs. All-in costs on a by-product basis were $1,545 per ounce in the fourth quarter of 2020 compared to $916 per ounce in the fourth quarter of 2019. The increase was due to an increase in all-in sustaining costs on a by-product basis and the purchase of haul trucks to support the mine expansion.
Kumtor’s Contributions in Taxes and Mandatory Payments for the Twelve Months of 2020
Type of payment (US dollars) Q1 Q2 Q3 Q4 Total Gross Proceeds Tax 16,181,004 37,600,713 33,802,415 36,465,976 124,050,109
Contribution to Issyk-Kul 2,279,527 2,892,363 2,600,186 2,340,780 10,112,856 Development Fund Contribution to Nature - - - 3,700,000 3,700,000 Development Fund Contribution to Regional Social 9,911,811 1,156,945 6,040,074 936,312 18,045,142 Partnership Fund Contribution to Cancer Care 3,000,000 3,000,000 Support Fund Pollution Charge 310,000 - - - 310,000
Total 28,682,342 41,650,021 42,442,675 46,443,068 159,218,106
US$ official exchange rate to the Kyrgyz Soms at the end of 80.8100 75.9887 79.6000 82.6498 the quarter 4
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Equivalent of payments 2,317,820.07 3,164,930.9 3,378,436.9 3,838,510.3 12,699,698.22 effected in mln. Kyrgyz Soms Notes: Under the Agreement on New Terms dated as of April 24, 2009, the revenue-based tax and contributions to the Issyk-Kul Region Development Fund are estimated based on actual cash revenues from sales during the period under review. Contribution to Nature Development Fund and Contribution to Regional Social Partnership Fund are made under the Strategic Agreement among the Government, Centerra Gold Inc. and KGC of September 7, 2017, and in accordance with Additional Contributions of July 8, 2019.
Type of payment Q1 Q2 Q3 Q4 Total (Kyrgyz soms) Personal Income tax 80,421,670 80,754,907 61,070,684 71,178,160 293,425,421
State Social 1,394,272,625 Insurance 395,248,617 363,157,719 287,528,714 348,337,575 Contribution Customs Fees 6,262,000 6,306,000 7,498,678 4,516,000 24,582,678
Tax on nonresident 6,161,109 16,178,339 3,326,086 6,289,938 31,955,472 companies Other taxes and 12,614,470 11,787,319 14,343,685 16,791,561 55,537,036 mandatory payments Total 500,707,866 478,184,284 373,767,847 447,113,234 1,799,773.231
Payments within the Kyrgyz Republic Contributions made within the Kyrgyz Republic in 2020 (including taxes, refining, domestic suppliers, infrastructure, charities, etc.) have exceeded US $ 344.680 million2. In all, contributions made within the Kyrgyz Republic between 1994 and 2020 have exceeded US $ 4.48 billion.
In USD millions 2020 1994 - 2020 Taxes, customs & other mandatory payments 132.986 1,440.667 Social Insurance Fund 18.091 249.771 Issyk-Kul Development Fund 10.113 88.543 Licenses & permits 0.399 5.051 Pollution tax and payments to the Environment Protection 0.310 6.229 Agency Payments to Kyrgyzaltyn 0.389 14.441 Refinery 5.879 71.094 Revenue from the sale of Centerra shares - 86.000 Dividends paid by Centerra 9.927 103.242 Purchases in the Kyrgyz Republic: - supplies & services 61.054 952.650 - foods 3.518 81.559 Kyrgyz-infrastructure-related payments: - electricity 11.645 217.260 - roads outside the mine site 1.316 49.021 - Tamga-Kumtor power-transmission line - 41.612
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KGC employees' net wage 66.043 907.109 Sanatoria treatment - 0.744 Education, scholarships & training 0.020 6.836 Sponsorships & sustainable development projects 2.289 34.926 Government contributions - 31.000 Contribution to Nature Development Fund 3.700 64.800 Settlements 17.000 29.000 Payments to communities - 4.400 Total 344.680 4,485.95
Kumtor's Impact on the Macroeconomic Performance of the Kyrgyz Republic According to preliminary reports of the Kyrgyz Republic National Statistics Committee,
Kumtor's share in Kyrgyz Republic’s GDP in 2020 was 12.5%; Kumtor's share in the aggregate industrial output was 23.3%.
Commentary Scott Perry, President and Chief Executive Officer of Centerra stated, “Kumtor had another strong year where gold production was at the top end of guidance delivering 556,136 ounces of gold at an all-in-sustaining cost on a by-product basis of $741 per ounce sold, which was lower than the low-end of its all-in-sustaining cost guidance.” “During the year, the Company repaid its debt and ended the year with no debt and cash of $545.2 million. In January 2021, we completed the sale of our 50% interest in the Greenstone Gold Mines Partnership and received a cash payment of approximately $210 million (including adjustments) adding to our strong balance sheet.” “Based on the Company’s financial position, recent strong operating results and cash flows, the Board approved a quarterly dividend to CAD$0.05 per share on February 23, 2021.” “The updated Kumtor Mine Technical Report was filed on SEDAR on February 24, 2021, showcasing an extended mine life for Kumtor. The new Kumtor life-of-mine adds significantly to the open pit reserves and has extended Kumtor’s mine life by 5 years. The new mine life is 11 years and milling operations are extended to 2031. The new life of mine plan has consistent annual gold production averaging 590,000 ounces for 5 years commencing in 2022 at an average life of mine all- in sustaining costs on a by-product basis of $828 per ounce sold.”
The Kumtor open pit mine, located in the Kyrgyz Republic, is one of the largest gold mines in Central Asia operated by a Western-based gold producer. It has been in production since 1997 and has produced over 13.2 million ounces of gold to December 31, 2020.
Kumtor Gold Company is the operator of the Kumtor Project responsible for the entire production cycle.
Centerra Gold Inc. is a Canadian-based gold mining company focused on operating, developing, exploring and acquiring gold properties in North America, Asia and other markets worldwide and is one of the largest Western-based gold producers in Central Asia. Centerra operates three mines, the Kumtor mine in the Kyrgyz Republic, the Mount Milligan mine in British Columbia, Canada and 6
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The Kyrgyz Republic, via Kyrgyzaltyn JSC, is Centerra Gold's largest shareholder owning 77,401,766 common shares. As of March 12, 2021, Kyrgyzstan's interests were estimated at $ 772 million.
Additional information on Centerra Gold Inc. and the full text of the news release on the 2020 Fourth Quarter and 2020 Year-end Results are available on SEDAR at www.sedar.com and the corporate websites at www.centerragold.com and www.kumtor.kg. ______For further information, please contact Media Relations, KGC.mediа@centerragold.com Tel: (312) 90-07-07; 90-08-08; fax: (312) 90-07-28 - End -
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Exhibit B
Centerra 2020 Annual Information Form 21-11051-lgb Doc 92-2 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit B Pg 2 of 116
2020 Annual Information Form
March 15, 2021
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TABLE OF CONTENTS
1. Important Information about this Document ...... 4 1.1 Reporting Currency ...... 4 1.2 Historic Metals Prices ...... 4 1.3 Technical Information ...... 4 1.4 Forward-Looking Information ...... 6 2. About Centerra ...... 10 2.1 Our Properties ...... 10 2.2 Inter-Corporate Relationships ...... 11 2.3 Recent Developments ...... 12 Kumtor Mine ...... 12 Mount Milligan Mine ...... 13 Öksüt Mine ...... 13 Mongolia – Boroo and Gatsuurt Projects ...... 14 Greenstone Gold Property ...... 14 Corporate ...... 14 COVID-19 Update ...... 15 2.4 Other Disclosure Relating to Ontario Securities Commission Requirements for Companies Operating in Emerging Markets ...... 15 Controls Relating to Corporate Structure Risk ...... 15 Procedures of the Board of Directors of the Company ...... 17 2.5 Centerra’s Business ...... 18 Business Objectives ...... 18 Business Operations ...... 19 Marketing and Distribution ...... 19 Gold Doré Produced at Kumtor Mine ...... 20 Gold Doré Produced at Öksüt Mine ...... 20 Copper/Gold Concentrate Produced at Mount Milligan Mine ...... 20 Molybdenum Industry ...... 21 2020 and 2019 Production and Revenue ...... 21 Competitive Conditions ...... 22 Mineral Reserves and Resources ...... 22 Sources, Pricing and Availability of Materials, Parts and Equipment ...... 28 Financial and Operational Effects of Environmental Protection Requirements ...... 28 2.6 Responsible Mining ...... 31 Our Approach ...... 31 Governance ...... 32 Our Employees ...... 33 Social Performance ...... 34 3. Centerra’s Properties ...... 38 3.1 Operating Mines ...... 38 Kumtor Mine ...... 38 Mount Milligan Mine ...... 55 Öksüt Mine ...... 65 3.2 Other Properties ...... 73 Kemess Project ...... 73 3.3 Molybdenum...... 79 Endako Mine ...... 79 Thompson Creek Mine ...... 79 Langeloth Metallurgical Facility ...... 79 3.4 Other Properties (Exploration) ...... 80 Canada – Berg ...... 80 Canada – Chuchi Property ...... 80 Canada – Max Property ...... 80 USA – Oakley Property ...... 80 USA – Vermillion Properties...... 81 USA – Cherry Creek Property ...... 81 Turkey – Çavdaruşağı Property ...... 81 Other ...... 81
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4. Governance ...... 82 4.1 Directors and Officers ...... 82 Directors ...... 82 Executive Officers...... 84 Other Information About Our Directors and Officers ...... 84 4.2 Committees ...... 85 Audit Committee ...... 86 Audit Committee Charter ...... 86 Composition of the Audit Committee ...... 86 External Audit Pre-Approval Procedures ...... 87 Fees Paid to External Auditors ...... 87 4.3 Interest of Management and Others in Material Transactions...... 87 5. Risk Factors ...... 88 5.1 Strategic Risks ...... 88 Country, Political & Regulatory ...... 88 Legal and Other ...... 90 Strategy and Planning ...... 92 Natural Phenomena ...... 94 Competition ...... 95 5.2 Financial Risks ...... 95 Commodity Market ...... 95 Economy, Credit and Liquidity ...... 97 Insurance ...... 98 Tax and Royalties ...... 98 Counterparty ...... 99 5.3 Operational Risks ...... 99 Health, Safety and Environment ...... 99 Asset Management ...... 103 Human Resources ...... 103 Supply Chain ...... 104 Information Technology Systems ...... 104 6. Investor information ...... 105 6.1 Description of Share Capital ...... 105 Common Shares...... 105 Class A Non-Voting Shares ...... 105 Preference Shares ...... 105 6.2 Market for Our Securities ...... 106 Trading Price and Volume ...... 106 Registrar and Transfer Agent ...... 106 6.3 Dividend Policy ...... 106 6.4 Material Contracts ...... 106 Mount Milligan Streaming Arrangement ...... 106 Restated Investment Agreement ...... 107 Restated Shareholders Agreement ...... 107 Restated Concession Agreement ...... 107 6.5 Legal Proceedings and Regulatory Actions ...... 107 6.6 Interests of Experts ...... 107 7. Glossary of Geological and Mining Terms ...... 108
Schedule A - Audit Committee Charter ...... 113
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1. IMPORTANT INFORMATION ABOUT THIS DOCUMENT This annual information form (“AIF”) provides important information about Centerra Gold Inc. It describes our history, our markets, our operations and Throughout this document, the terms we, us, projects, our mineral reserves and resources, sustainability, our regulatory our, Centerra and the Company mean environment, the risks we face in our business and the market for our shares, Centerra Gold Inc. and its direct and indirect among other things. Unless otherwise indicated, information in this AIF is subsidiaries. provided as of December 31, 2020.
1.1 Reporting Currency All dollar amounts in this AIF are expressed in United States dollars except as otherwise indicated. References to $ or dollars are to United States dollars and references to C$ are to Canadian dollars. For reporting purposes, we prepare our financial statements in United States dollars and in conformity with accounting principles generally accepted in Canada, being International Financial Reporting Standards, as issued by the International Accounting Standards Board. The average exchange rate in 2020 for U.S. dollars to Canadian dollars, based on the Bank of Canada exchange rate for the 12 months ending December 31, 2020 (the last business day), was one U.S. dollar per C$1.3415. With respect to legal and regulatory claims or decisions made by certain governmental agencies or courts and described in this AIF, the amounts of the claims or decisions are reported in the U.S. dollar equivalent as at of the date of such claim or decision.
1.2 Historic Metals Prices The price of gold, copper and molybdenum fluctuates. The following table shows the average annual price for gold, copper and molybdenum from 2011 to 2020, and for the period up to March 1, 2021:
2021 up 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 to March 1, 2021 Average Gold 1,572 1,669 1,411 1,266 1,160 1,251 1,258 1,268 1,393 1,770 1,838 Price ($/oz)(1) Average Copper Price 4.00 3.61 3.32 3.11 2.49 2.21 2.80 2.96 2.72 2.80 3.73 ($/lb.)(2) Average Molybdenum 15.49 12.74 10.30 11.38 6.63 6.50 8.19 11.93 11.35 8.68 11.07 Oxide Price ($/lb.)(3) (1) London Bullion Market annual average daily afternoon gold price fixing. (2) London Metal Exchange Copper Cash-Settlement. (3) Platts Metals Week. 1.3 Technical Information The disclosure in this AIF of a scientific or technical nature for our Kumtor Mine, Mount Milligan Mine, Öksüt Mine, and Kemess Project is based on technical reports prepared for these properties in accordance with National Instrument 43- 101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) of the Canadian Securities Administrators. The technical information has been updated with current information where applicable. Information regarding qualified persons is as of the effective date of the relevant technical report. • The technical report on the Kumtor Mine with an effective date of July 1, 2020 (filed on February 24, 2021), (the “Kumtor Technical Report”) was prepared by Slobodan Jankovic, Boris Kotlyar, Kevin P.C.J. D’Souza, Anna Malevich, Catherine A. Taylor, Mei Shelp, Luiz Castro from Golder Associates Ltd., Esteban Hormazabal of SRK Consulting Chile SpA, and Hamish Weatherly, Kumar Sriskandakumar, and Lukas Arenson, each of whom are from BGC Engineering Inc. Each of these persons was a qualified person for purposes of NI 43-101. None of the authors are independent of Centerra, except for Messrs. Castro, Hormazabal, Weatherly, Sriskandakumar, and Arenson.
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• The technical report for the Mount Milligan Mine, with an effective date of December 31, 2019 (filed on March 26, 2020), (the “Mount Milligan Technical Report”) was prepared by John Fitzgerald, C. Paul Jago, Berge Simonian, Slobodan Jankovic, Catherine A. Taylor, and Bruno Borntraeger. Each of these persons is a qualified person for purposes of NI 43-101. None of the authors were independent of Centerra at the time of filing, except for Mr. Borntraeger, who is a Specialist Geotechnical Engineer with Knight Piésold Ltd. • The technical report for the Öksüt Mine, Turkey with an effective date of June 30, 2015 (filed on September 3, 2015) (the “Öksüt Technical Report”) was prepared by Gordon D. Reid, Peter Woodhouse, Malcolm Stallman, Mustafa Cihan, Pierre Landry, Tyler Hilkewich, Tommaso Roberto Raponi, Kevin D’Souza and Chris Sharpe. At the time of the filing of the Öksüt Technical Report, each of these persons was a qualified person for the purposes of NI 43-101, and none of these individuals were independent of Centerra at the time of the Öksüt Technical Report. • The technical report for the Kemess underground project and Kemess east project, British Columbia, Canada prepared for AuRico Metals Inc. (“AuRico”) with an effective date (and filing date) of July 14, 2017 (the “Kemess Technical Report”) was prepared by Serge Chevrier, Marianne Rosted, Stephen Rice, and Don Kidd, all from AMEC Foster Wheeler, Andrew Jennings, of Conveyer Dynamics, Chad Yuhasz, Iouri Iakovlev, and Jarek Jakubec, all from SRK Consulting (Canada) Inc., Chris Struthers, of Struthers Technical Solutions, Dan Stinnette of Mine Ventilation Services, David Kratochvil, of BioteQ Environmental Technologies; Kenneth Major. of KWM Consulting Inc., Rolf Schmitt, of ERM Consultants Canada, and Ross Hammett, and Alva Kuestermeyer, both from Golder Associates, Inc. Each of these persons is a qualified person for the purposes of NI 43-101. All individuals were independent of AuRico at the time of filing of the Kemess Technical Report. The technical reports have been filed on SEDAR at www.sedar.com. In the case of the Kemess Technical Report, this technical report was prepared for AuRico (prior to our acquisition which closed on January 8, 2018). The Kemess Technical Report can be found under the AuRico Metals Inc. profile on www.sedar.com. To the best of our knowledge, information and belief, there is no new material scientific or technical information that would make the disclosure of the mineral resources or mineral reserve on the Kemess Project inaccurate or misleading. Scientific and technical information relating to costs (operating and capital costs) and metallurgical recovery (except as it may relate to our exploration program) in this AIF was prepared, reviewed, verified and compiled by Centerra’s geological and technical staff under the supervision of Anna Malevich, Professional Engineer, and the Director, Process Engineering for Centerra. Ms. Malevich is a qualified person for the purposes of NI 43-101. All exploration information and related scientific and technical information in this AIF regarding Centerra’s Kumtor exploration program was prepared, reviewed, verified and compiled by our geological and mining staff under the supervision of Boris Kotlyar, a member with the American Institute of Professional Geologists (AIPG), Centerra’s Chief Geologist, Global Exploration, who is a qualified person for the purpose of NI 43-101. Sample preparation, analytical techniques, laboratories used, and quality assurance-quality control protocols used during the exploration drilling programs are done as described in the Kumtor Technical Report dated February 24, 2021 (with an effective date of July 1, 2020). All exploration information and related scientific and technical information in this AIF regarding Centerra’s Mount Milligan and Kemess Project exploration programs were prepared, reviewed, verified and compiled by C. Paul Jago, a member of the Engineers & Geoscientists British Columbia, Exploration Manager at Centerra’s Mount Milligan Mine., who is a qualified person for the purpose of NI 43-101. Sample preparation, analytical techniques, laboratories used, and quality assurance quality control protocols used during the exploration drilling programs are done consistent with industry standards and independent certified assay labs are used. All exploration information and related scientific and technical information in this AIF regarding Centerra’s Öksüt exploration program was prepared, reviewed, verified and compiled by our geological and mining staff under the supervision of Mustafa Cihan, member of the Australian Institute of Geoscientist (AIG), Centerra’s Exploration Manager - Turkey at Centerra Madencilik A.Ş ,one of Centerra’s Turkish subsidiaries. Mr. Cihan is a qualified person for the purpose of NI 43-101. Sample preparation, analytical techniques, laboratories used, and quality assurance-quality control protocols used during the exploration drilling programs are done consistent with industry standards and independent certified assay labs are used.
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All other scientific and technical information in this AIF, including without limitation mineral reserves and resources, mine production (historical and guidance), grades and mill throughput were prepared, reviewed, verified and compiled by Centerra’s geological and mining staff under the supervision of Slobodan (Bob) Jankovic, Professional Geoscientist, member of the Association of Professional Geoscientists of Ontario (APGO) and Centerra’s Senior Director, Technical Services. Mr. Jankovic is a qualified person for the purpose of NI 43-101. All scientific and technical information in this AIF is prepared in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) and NI 43-101 (where relevant). A glossary of geological and mining terms has been included at the end of this AIF for ease of reference.
1.4 Forward-Looking Information This AIF and the documents incorporated by reference into this AIF contain statements and information about our expectations for the future. When we discuss our strategy, plans, proposed exploration and development activities and future financial and operating performance, or other things that have not yet taken place, we are making statements considered to be forward-looking information under Canadian securities laws. Key things to understand about the forward-looking information in this AIF: • It typically includes words and phrases about the future, such as plans, expects or does not expect, budget, forecasts, projections, anticipate or does not anticipate, believe, intend, potential, strategy, schedule, estimates, contemplates, targets, and similar expressions or statements that certain actions, events or results may, could, would, might or will be taken, occur or be achieved. • It is based on a number of material assumptions, including but not limited to those we have listed below, which may prove to be incorrect. • Actual results and events may be significantly different from what we currently expect, because of the risks associated with our business. We list a number of these material risks below. We recommend you also review other parts of this document, including “Risk Factors” starting on page 88, which include a more detailed discussion of other material risks that could cause our actual results to differ from current expectations. Forward-looking information is designed to help you understand management’s current views of our near and longer- term prospects. It may not be appropriate for other purposes. We will not necessarily update this forward-looking information unless we are required to by securities laws. Examples of forward looking information in this AIF include, without limitation: expectations as to the future business and political environment in the jurisdictions where we operate; exploration plans for 2021; expectations regarding pit wall stability at our Kumtor and Öksüt Mines; the continued success of the buttress at Kumtor Mine, and the results of the dewatering program at Kumtor Mine; expectations regarding ice and waste rock dump movement at Kumtor Mine and our ability to continue managing them. having adequate water inventory levels at Mount Milligan to operate at the targeted throughput level of 60,000 tonnes per calendar day; expectations regarding capital projects, including those intended to increase recovery or processing at our sites; expectations regarding future growth, results of operations and financial performance; our business prospects; the ability to deliver our Mount Milligan concentrate to port in a timely manner; no labour disruptions at our mines or in our delivery pipeline; our expectations regarding successfully obtaining additional permits for the Öksüt Mine and the plans for further mining the Keltepe and Güneytepe pits.
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Material Assumptions Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable by Centerra, are inherently subject to significant technical, political, business, economic and competitive uncertainties and contingencies. Assumptions used in the forward looking statements in this AIF include the following: • There are no material disruptions in Centerra’s • The dewatering program at Kumtor Mine continues operations as a result of the COVID19 pandemic, to produce the expected results and the water including illness in workforce, no shutdown of management system works as planned. mining, processing and other operations, no • adverse disruption on supply chains and The pit walls at our operations remain stable. transportation networks used to deliver products to • The water levels in the central pit at the Kumtor customers; Mine can be successfully managed to ensure • Centerra and our applicable subsidiaries continued access to the pit bottom. throughout the year continue to meet the terms of • Kyrgyzaltyn JSC (“Kyrgyzaltyn”), the local gold our corporate credit facility in order to maintain refinery in the Kyrgyz Republic will continue to compliance with the financial covenants contained process and purchase the gold produced at the therein. Kumtor mine in accordance with the Restated Gold • That our positive working relationship with the and Silver Sale Agreement and there is no Kyrgyz Republic Government (the “Kyrgyz interruption in the Company’s receipt of the Government”) continues. proceeds from such sales. • • The Kyrgyz Republic State Commission formed in The resource block models at our operating sites February 2021 does not give rise to any material reconciles as expected against production. adverse conclusions which impact the ownership, • The Mount Milligan mill (processing facility) operations, personnel or economic returns of the continues to have access to sufficient water Kumtor Mine. supplies to operate year-round at the intended • The mine plans, expertise and related permits and capacity. authorizations at the Kumtor Mine which have • The Öksüt Mine’s local mining contractor, Çiftay been received to date for 2021 are not withdrawn İnşaat Taahhüt ve Ticaret A.Ş will continue to and that any further approvals are obtained in a operate uninterrupted in accordance with its timely manner from relevant Kyrgyz Governmental mining contract. agencies. • Grades and recoveries at our operating properties • No unplanned delays in, or interruption of, remain consistent with the 2021 production plan to scheduled production from our mines, including achieve the forecast gold and copper production. due to climate/weather conditions, pandemics, political or civil unrest, natural phenomena, • Mineral processing facilities at our operations regulatory or political disputes, equipment operate as expected, including that there is no breakdown or other developmental and unplanned suspension of operations due to operational risks. (among other things), mechanical or technical performance issues. • Any sanctions imposed on Russian or Turkish entities do not have a negative effect on the costs • There are no changes to any existing agreements or availability of inputs or equipment to the Kumtor or relationships with potentially impacted Mine and Öksüt Mine, respectively. Indigenous groups which would materially and adversely impact our operations, and no demands • The movement in the Kumtor waste rock dumps do are received from such groups to enter into new not accelerate and will be managed to ensure agreements which would materially and adversely continued safe operations, without impact to gold impact our operations. production. • There are no significant unfavourable changes to • The buttress constructed at the bottom of the concentrate sales arrangements at Mount Milligan Davidov glacier at the Kumtor Mine continues to Mine and the roasting arrangements at the function as planned. Langeloth facility. • The Company is able to manage the risks • There are no adverse changes or disturbances in associated with the increased height of the pit walls the transportation and logistics involved in the sale at Kumtor Mine. of our gold dore bars and/or concentrate produced
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by our mine sites, or the molybdenum products • Tax rates, foreign currency exchange rates, and from our Langeloth facility. interest rates will be as expected. • There are no adverse regulatory changes affecting • Our non-sustaining (growth) capital, sustaining any of our operations. capital, decommissioning and reclamation estimates are accurate. • Exchange rates, prices of key consumables, costs of power, labour, material costs, supplies and • Our mineral reserve and resource estimates, and services (including transport), water usage fees, the assumptions upon which they are based are and any other cost assumptions at all operations accurate. and projects of the Company are not significantly higher than prices assumed in planning. • No labour related disruptions occur at any of our operations. • Spot and realized prices for gold, copper and molybdenum will be as expected. • Our counterparties in any of our sales contracts for gold doré bars, copper/gold concentrate, or molybdenum products meet their contractual obligations to us.
Material Risks The following is a list of risks that can affect our business. This is not a complete list of the potential risks that the Company faces; there may be others that we are no not aware of, or risks that we feel are not material today that could become material in the future. These risks are described in greater detail in the Section of the AIF called “Risk Factors” starting on page 88.
Strategic, Legal and Planning Risks Strategic, legal and planning risks include political risks associated with our operations in the Kyrgyz Republic, Turkey, United States and Canada; resource nationalism; reliance on cash flow from its subsidiaries; the impact of changes in, or more aggressive enforcement of laws, regulations and government practices including with respect to the environment; impact of community activism on laws and regulations; increases in contributory demands or business interruption; delays or refusals to grant required permits and licenses; status of our relationships with local communities; Indigenous claims and consultation issues relating to the Company’s properties which are in proximity to Indigenous communities; the risks related to outstanding litigation affecting the Company; the impact of any sanctions imposed by Canada, the United States or other jurisdictions against various Russian and Turkish individuals and entities; potential defects of title in the Company’s properties that are not known as of the date hereof; the inability of the Company and its subsidiaries to enforce their legal rights in certain circumstances; the presence of a significant shareholder that is a state-owned company of the Kyrgyz Republic; conflicts of interest among our board members; risks related to anti- corruption legislation; Centerra’s future exploration and development activities not being successful; Centerra not being able to replace mineral reserves and resources; risks related to mineral reserves and resources being imprecise; production and cost estimates may be inaccurate; reputational risks, particularly in light of the increase in social media; inability to identify new opportunities and to grow the business; large fluctuations in our trading price that are beyond our control or ability to predict and mitigate; potential risks related to kidnapping or acts of terrorism. Financial Risks We are subject to risks related to our financial position and liquidity, including sensitivity of our business to the volatility of gold, copper and other mineral prices; the use of provisionally-priced sales contracts for production at Mount Milligan; reliance on a few key customers for the gold-copper concentrate at Mount Milligan, and at Kumtor there is reliance on Kyrgyzaltyn as Centerra sells all of its gold doré produced from the Kumtor Mine to Kyrgyzaltyn pursuant to the Restated Gold and Silver Sale Agreement; use of commodity derivatives; sensitivity to fuel price volatility; the impact of currency fluctuations; global financial conditions; access to future financing including the impact of environmental, social and corporate governance (“ESG”) practices and reporting on the Company’s ability to obtain future financing or accessing capital; the impact of restrictive covenants in our corporate credit facility which may, among other things, restrict the Company from pursuing certain business activities; the effect of market conditions on our short-term investments; our ability to make payments including any payments of principal and interest on our debt facilities, which depends on the cash flow of our subsidiaries; ability to obtain adequate insurance coverage; and changes to taxation laws in the jurisdictions where we operate.
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Operational Risks Mining and metals processing involve significant production and operational risks. Some of these risks are outside of our control or ability to predict and mitigate. Risks include but are not limited to the following: unanticipated ground and water conditions; shortages of water for processing activities; adjacent or adverse land or mineral ownership that results in constraints on current or future mine operations; geological risks, including earthquakes and other natural disasters; metallurgical and other processing risks; unusual or unexpected mineralogy or rock formations; ground or slope failures; pit flooding; tailings design or operational issues, including dam breaches or failures; structural cave-ins, wall failures or rock-slides; flooding or fires; equipment failures or performance problems; periodic interruptions due to inclement or hazardous weather conditions or operating conditions and other force majeure events; lower than expected ore grades or recovery rates; accidents; changes to, or delays in, transportation routes, including cessation or disruption in rail and shipping networks whether caused by decisions of third party providers or force majeure events (including COVID-19); interruption of energy supply; labour disturbances; the availability of drilling and related equipment in the area where mining operations will be conducted; the failure of equipment or processes to operate in accordance with specifications or expectations; tailings management facilities; exposure of workforce to widespread pandemic (including COVID-19); cyanide use; regulations regarding greenhouse gas emissions and climate change; development and construction costs being over budget; predicting decommissioning and reclamation costs; attracting and retaining qualified personnel; long lead times required for equipment and supplies given the remote location of some of our operating properties, and the potential that COVID-19 could disrupt such supply chains; reliance on a limited number of suppliers for certain consumables, equipment and components; and security of critical operating systems.
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2. ABOUT CENTERRA We are a Canadian-based gold mining company focused on operating, developing, exploring and acquiring gold properties in North America, Asia and other markets worldwide. Centerra is one of the largest western-based gold producers in Central Asia. Centerra Gold Inc. 1 University Avenue Our head office is in Toronto, Ontario (Canada). We also Suite 1500 have offices in other locations such as in Bishkek, Kyrgyz Toronto, Ontario Republic; Prince George, British Columbia (Canada); Canada M5J 2P1 Ankara, Turkey; Langeloth, Pennsylvania (USA); and Challis, Idaho (USA). Telephone: 416-204-1953 Website: www.centerragold.com We have approximately 3,820 employees. We are publicly listed on the Toronto Stock Exchange (“TSX”) under the symbol CG.
2.1 Our Properties The table below sets out our properties as of the date of this AIF. We have three producing properties – the Kumtor Mine in the Kyrgyz Republic, the Mount Milligan Mine in British Columbia, Canada and the Öksüt Mine in Turkey. We own a 100% interest in each of the following properties except for (i) the Endako Mine in which we own a 75% joint venture interest (the remaining 25% is held by Sojitz Moly Resources, Inc., a subsidiary of Sojitz Corporation) (the “Endako Mine Joint Venture”), and (ii) optioned interests in various exploration projects which we are still in the process of earning.
Property Name Location Metal
Kumtor (the “Kumtor Mine”) Kyrgyz Republic Gold
Operating Mines Mount Milligan Canada Gold/Copper (the “Mount Milligan Mine”)
Öksüt (the “Öksüt Mine”) Turkey Gold
Pre-Development Projects Kemess (the “Kemess Project”) Canada Gold/Copper/Silver
Berg(1) Canada Copper/Molybdenum
Kizilkaya and Sivritepe Properties (in Turkey Gold Exploration Projects various stages of exploration)
Various options to earn interest on Turkey, Canada, Gold/Copper projects owned by third parties. U.S. and Finland
Care and Thompson Creek Mine (the “TC Mine”) United States Molybdenum Maintenance/Stand-by Projects Endako Mine (the “Endako Mine”) Canada Molybdenum
(1) Our Berg property is subject to an option agreement pursuant to which a third-party has the right to earn-in to a 70% interest in the property. Effective as of January 19, 2021, we completed the sale of our 50% interest in the Greenstone Gold Mine Partnership to an affiliate of Orion Mine Finance Group. See “Recent Developments – Greenstone Gold Property”. We also own 100% of the Langeloth Metallurgical Facility which is located in Langeloth, Pennsylvania and processes molybdenum concentrate for third party producers.
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2.2 Inter-Corporate Relationships Our principal subsidiaries, along with their jurisdiction of incorporation, continuation or organization, are set out below as at December 31, 2020. Each of our principal subsidiaries are 100% owned, unless otherwise noted.
(1) Centerra was incorporated under the Canada Business Corporations Act by articles of incorporation dated November 7, 2002 under the name 4122216 Canada Limited. Centerra changed its name on December 13, 2002 to Kumtor Mountain Holdings Corporation, and on December 5, 2003 to Centerra Gold Inc. (2) On January 19, 2021, Centerra completed to the sale of its 50% interest in Greenstone Gold Mines LP, which owns the Hardrock Mine Project near Geraldton, Ontario, to the Orion Mine Finance Group. For further information see “Recent Developments – Greenstone Gold Property”. (3) Centerra owns an indirect 75% joint venture interest in the Endako Mine. (4) Other subsidiaries, including those through which we hold our interest in exploration properties (including those in which we are earning an optioned interest), have not been included in the above chart because (i) their respective assets represent less than 10% of the consolidated assets of Centerra, and less than 10% of the consolidated sales and operating revenue of Centerra; and (ii) the consolidated assets and revenues of such excluded subsidiaries are less than 20% of the consolidated assets and consolidated revenue of Centerra, respectively. These subsidiaries are wholly owned, directly or indirectly, by Centerra.
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2.3 Recent Developments The following is a summary of key developments over the past three years that have influenced the general development of our business. For further information regarding the developments, see the applicable section of this document dealing with the property. Kumtor Mine • In August 2019, we announced that all conditions precedent to the completion of the Kumtor Strategic Agreement had been satisfied or waived and that accordingly, the Kumtor Strategic Agreement and the obligations thereunder became effective. The Kumtor Strategic Agreement was a comprehensive settlement agreement entered into with the Kyrgyz Government which provided a resolution of substantially all existing arbitral and environmental claims, disputes, proceedings and court orders affecting the Kumtor Mine, and releases Centerra and our Kyrgyz Republic subsidiaries from future claims covering the same subject matter as the certain environmental claims. For further information, see “Centerra’s Properties –Operating Mines – Kumtor Mine – Kumtor Strategic Agreement”. • In December 2019, the Kumtor Mine experienced a significant waste rock movement at the Lysii waste rock dump resulting in two employee fatalities. Open pit mining operations were halted and a search and rescue operation were commenced immediately to recover the Company’s employees. In January 2020, after an extensive search and in consultation with the families of the deceased Kumtor Mine employees, search efforts were terminated. Following the incident, Kumtor’s annual mine plans were re-evaluated and after significant consultation with Kyrgyz Republic state authorities, Kumtor re-commenced mining operations in late January 2020. In July 2020, the Kumtor Mine received a permit to utilize the Lysii waste rock dump for dumping waste going forward. The Company and Kyrgyz state authorities have completed their investigations into this incident. Kyrgyz state authorities’ final reports concluded that there were no violations of Kyrgyz laws in connection with the incident. A criminal investigation, which is required in the Kyrgyz Republic any time there is a fatality at a workplace, was completed in the third quarter of 2020. • On February 18, 2020, the Company announced that a fatal accident occurred at the Kumtor Mine when an excavator slipped down into a water filled basin while operating near Petrov Lake. The Company and Kyrgyz state authorities have completed their investigations into the accident. A criminal investigation into the accident was completed in the third quarter of 2020. • During 2020, the Company observed an effect on the availability of Kumtor’s workforce due to a greater rate of COVID-19 infections and other illnesses in the Kyrgyz Republic. As a result, open pit mining began operating at less than full capacity but returned to full capacity in September 2020. Mill processing operations continued to work at full capacity throughout the period. Since the fall of 2020, there has been a significant increase in reported COVID-19 cases in the Kyrgyz Republic that may result in changes to operational plans. Kumtor continues to implement mitigation controls and health & safety precautions at the mine site to contain the spread of COVID-19. • In February 2021, Centerra announced the results of an updated technical report for the Kumtor Mine. The 2021 Kumtor Technical Report provides an update of the 2015 Technical Report, including a mineral resource model update based on extensive in-fill and expansion drilling in recent years, gold price assumption, pit slope angles, capital and operating cost estimates and metallurgical recovery estimates based on process plant improvements, resulting in updated mineral resource and mineral reserve estimates and updated ultimate pit designs and mining-processing schedule. See “Centerra’s Properties – Operating Mines – Kumtor Mine”. • As previously disclosed, the Kyrgyz Parliamentary elections held in early October 2020 resulted in a period of political and social disruption in the Kyrgyz Republic, eventually leading to the cancellation of the Parliamentary election results and the resignation of the then Kyrgyz Prime Minister and President. Presidential elections were held in the Kyrgyz Republic on January 10, 2021, with Mr. Sadyr Japarov being elected President. A non-binding referendum on the Kyrgyz Republic’s form of government was also held on January 10, 2021 and the Company expects a process of constitutional reform to unfold in the coming months leading to a presidential form of government. • In February 2021, a State Commission was formed by the Kyrgyz Republic Parliament to review the performance of the Kumtor Mine and to oversee the implementation of a previous Kyrgyz Parliamentary resolution which established a State Commission in July 2012. The Company has received a number of inquiries from the State Commission as well as related inquiries from other state agencies and bodies, including Kyrgyzaltyn, and is in the process of responding to all such inquiries. It has also received several audit requests
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from tax authorities. The 2012 State Commission was created to “check and review Kumtor Operating Company’s compliance with the standards and requirements related to the rational use of mineral resources, environmental protection, operational process safety, social protection of local communities”. It made several allegations relating to the Kumtor Mine’s operations, management and prior transactions going back to 1993 and a series of recommendations. It also resulted in a number of legal claims and investigations affecting the Kumtor Mine. For further information relating to the legal matters arising out the 2012 State Commission, see “Centerra’s Properties –Operating Mines – Kumtor Mine – Kumtor Strategic Agreement” and our Annual Information Form for the year ended December 31, 2019. As noted above, the Strategic Agreement was a comprehensive settlement completed in 2019 that resolved all of the then outstanding issues relating to the Kumtor Mine. • On January 19, 2021, the Kyrgyz Republic Supreme Court dismissed the Company’s appeal of a lower court decision relating to a claim commenced in April 2009 by certain residents of the Djety Oguz district. The claimants alleged they sustained damages as a result of a solidum cyanide spill that occurred on May 20, 1998 involving a truck owned by Kumtor Operating Company. The lower court decision compels the Company to pay a total of 6,800,000 Kyrgyz Soms (approx. $80,000) to the claimants. Pursuant to an agreement between the Government of the Kyrgyz Republic and Kumtor Operating Company of Issues Related to the Compensation of Damages (the “Settlement Agreement), the Kyrgyz Government agreed to (among other things) indemnify the Company against these damages and to allow the Company the right to set-off of all indemnified amounts against taxes payable on production from the Kumtor Mine. This Settlement Agreement was reconfirmed by the Kyrgyz Government in the 2009 Restated Investment Agreement. Mount Milligan Mine • Starting in late December 2017, the Mount Milligan Mine experienced a lack of sufficient water resources which resulted in a reduction and temporary suspension of processing operations. The reduction in processing continued until the second quarter of 2020 when water levels increased significant following a successful water pumping plan and a robust spring runoff. As at December 31, 2020, the Mount Milligan Mine has in excess of 6 million cubic metres of water in inventory. In 2021, the Company does not expect any water constraints and expects to achieve an average daily throughput of approximately 60,000 tonnes per calendar day for the full year. • Mount Milligan was granted temporary approvals and amendments to its Environmental Assessment Certificate during 2018 to 2019, which approved pumping from Philip Lake, Meadows Creek and Rainbow Creak during open water season commencing in 2019 until November 30, 2021, and to pump from groundwater sources within a radius of approximately 6 kilometres of the Mount Milligan Mine tailings storage facility (“TSF”) for the life of the mine. • The Company is undertaking the necessary studies and working with its First Nations partners and other stakeholders toward a longer-term water solution for the Mount Milligan Mine. • In the third quarter of 2019, the Company recorded an impairment charge of $230.5 million on the Mount Milligan Mine reflecting the impact of a higher cost profile which the Company expects will continue in the short to medium term, and anticipated reduction in gold recoveries. A new technical report for the Mount Milligan was filed on March 26, 2020 with an effective date of December 31, 2019. • In early 2020, Thompson Creek Metals Company Inc., the owner of the Mount Milligan Mine, received a notice of civil claims from H.R.S. Resources Corp. (“HRS”), the holder of a 2% production royalty at Mount Milligan. HRS claims that since November 2016 (when the royalty became payable) the Company has incorrectly calculated amounts payable under the production royalty agreement and has therefore underpaid amounts owing to HRS. The Company disputes the claim and believes it has calculated the royalty payments in accordance with the agreement. The Company believes that the potential exposure in relation to this claim, over what the Company has accrued, is not material. Öksüt Mine • On January 30, 2020, our Turkish subsidiary that owns the Öksüt Mine repaid and cancelled its Öksüt Project financing facility, which resulted in the release of $25 million in restricted cash. • The Öksüt Mine achieved first gold pour on January 31, 2020 and declared commercial production effective on May 31, 2020.
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• Except during a two-week period in April 2020 when Öksüt Mine operated with a skeleton staff due to COVID- 19 restrictions, COVID-19 has not materially affected operations at the Öksüt Mine and operations have continued normally. The Öksüt Mine is maintaining active measures to prevent a COVID-19 outbreak at site. • During the third quarter of 2020, the Öksüt Mine obtained an amendment to its environmental impact assessment (“EIA”) certificate from the Minister of Environment and Urbanization. The amendment is to accommodate changes to the Öksüt Mine’s open pit mine design and pit optimization. Due to the delay in receiving the amendment from the EIA and further potential delays in obtaining the related forestry permit, the Öksüt mine plan and design is currently being further adjusted. Mongolia – Boroo and Gatsuurt Projects • On October 12, 2018, the Company completed the sale of its Mongolian business unit, including Boroo Gold LLC (which owned the Boroo Mine and related processing facility) and Centerra Gold Mongolia LLC (which owned the Gatsuurt Gold Project) to OZD ASIA PTE Ltd. for net proceeds of $35 million. Greenstone Gold Property • In December 2019, the Company, through its wholly owned subsidiary, AuRico Canadian Royalty Holdings Inc. (“AuRico Holdings”) filed with the Ontario Superior Court of Justice a statement of claim against Greenstone Gold Mines G.P. Inc. (the “Greenstone Managing Partner”), Premier Gold Mines Hardrock Inc., a subsidiary of Premier Gold Mines Limited (“Premier”), and Premier’s nominees to the Greenstone Managing Partner’s board of directors (the “Greenstone Board”). In connection with the completion of the sale of the Partnership interest (see below), this litigation, including counterclaims, was dismissed. • On January 19, 2021, the Company completed the sale of its 50% interest in the Greenstone Gold Mines Partnership (the “Partnership”) to the Orion Mine Finance Group (“Orion”) for an upfront cash payment on closing of approximately $210 million(including adjustments) and conditional consideration of up to approximately $75 million (assuming $1,500 gold price) payable in cash or refined gold upon the Partnership’s Hardrock Mine Project meeting certain construction and production milestones. The obligations of Orion regarding payment of the conditional consideration have been guaranteed by the Partnership and secured against the Hardrock Mine Project. Corporate • On January 8, 2018, we completed the acquisition of all of the issued and outstanding common shares of AuRico Metals Inc. for C$1.80 cash consideration per share, for an aggregate transaction value of approximately C$310 million. With this acquisition, we acquired 100% ownership in the Kemess Project and a portfolio of royalties, including a 1.5% NSR on the Young-Davidson Mine located in Canada owned by Alamos Gold Inc., and a 2.0% NSR on the Fosterville Mine located in Australia owned by Kirkland Lake Gold Ltd. (collectively, the “Royalty Portfolio”). • On February 1, 2018, we announced that we had entered into a $500 million four-year secured revolving credit facility (the “2018 Corporate Facility”) with a lending syndicate led by The Bank of Nova Scotia and National Bank of Canada. The Corporate Facility is for general corporate purposes, including working capital, investments, acquisitions and capital expenditures. The 2018 Corporate Facility was subsequently amended and restated in 2020 (see below). In connection with entering into the 2018 Corporate Facility, Centerra repaid and subsequently terminated its then existing credit facility with the European Bank for Reconstruction and Development. • On June 27, 2018, we announced the completion of the sale of our Royalty Portfolio to a subsidiary of Triple Flag Mining Finance Bermuda Ltd. (“Triple Flag”) for an up-front cash payment of $155 million, subject to customary adjustments, including an economic effective date of April 1, 2018. At the same time, the Company and Triple Flag entered into a $45 million silver stream on the Kemess Project. Under the silver stream agreement, the Company has agreed to sell 100% of the silver production from the Kemess Project in exchange for advance payments for silver payable in tranches of $10 million, $10 million, $12.5 million and $12.5 million. The payments would be due upon public announcement of a construction decision for the Kemess underground development project and the three succeeding anniversaries of such date. In addition, Triple Flag will make ongoing payments of 10% of the then current market price for each ounce of silver delivered. • Effective as of December 31, 2020, we entered into a new $400 million four-year revolving credit facility plus a $200 million accordion feature with a lending syndicate led by The Bank of Nova Scotia, National Bank Financial Markets and HSBC Canada Bank and including a syndicate of international financial institutions (the
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“2020 Corporate Facility”). The 2020 Corporate Facility is for general corporate purposes, including working capital, investments, acquisitions and capital expenditures. There are several post-closing conditions subsequent in the 2020 Corporate Facility which we expect to complete within the time periods provided. The 2020 Corporate Facility replaced the Company’s 2018 Corporate Facility. COVID-19 Update We continue to prioritize the health, safety and well-being of our employees, contractors, communities, and other stakeholders during the current outbreak of COVID-19 and to take steps to minimize the effect of the pandemic on our business. The Company has established strict COVID-19 protocols at its mine sites to help prevent infection and reduce the potential transmission of COVID-19, implemented travel restrictions, and has temporarily closed various administration offices including its head office in Toronto. In addition, operating mine sites continue to assess the resiliency of their supply chains, increase mine site inventories of key materials and develop and implement contingency plans to allow for continued operations. COVID-19 has not materially negatively affected Centerra’s operations. Employee absences due to COVID-19 and other illnesses have so far been successfully managed. The Company notes that the effects of COVID-19 on its business continue to change rapidly. The measures enacted to date reflect the Company’s best assessment at this time but will remain flexible and be revised as necessary or advisable and/or as recommended by the public health and governmental authorities.
2.4 Other Disclosure Relating to Ontario Securities Commission Requirements for Companies Operating in Emerging Markets Controls Relating to Corporate Structure Risk We have implemented a system of corporate governance, internal controls over financial reporting, and disclosure controls and procedures that apply at all levels of the Company and its subsidiaries. These systems are overseen by the Company’s board of directors (the “Board”) and implemented by the Company’s senior management. The relevant features of these systems include: Control Over Subsidiaries Centerra’s corporate structure has been designed to ensure that the Company controls or has a measure of direct oversight over the operations of its subsidiaries. All of our subsidiaries are directly or indirectly wholly-owned by the Company with the exception of shareholdings in other publicly traded and privately held companies which represent less than 10% of the consolidated assets of Centerra, and less than 10% of the consolidated sales and operating revenue of Centerra. Centerra controls the appointments of all directors and officers of its wholly owned subsidiaries, except for Kumtor Gold Company (“KGC”) which, as a matter of practice, accepts one nominee of Kyrgyzaltyn JSC (“Kyrgyzaltyn”) to the board of directors of KGC (where the Kyrgyzaltyn nominee is usually chair) and to each of the KGC management committee and the KGC auditing committee. The directors of Centerra’s wholly-owned subsidiaries are ultimately accountable to Centerra as the shareholder appointing him or her, and to Centerra’s Board and senior management. As well, the annual budget, capital investment and exploration program in respect of the Company’s mineral properties are established by the Company and approved by the Board. Members of management of all subsidiaries are also subject to written delegation of financial authority rules (adopted by the board of directors of each subsidiary) which limit their ability to bind such company. Our internal audit group also regularly conducts examinations of Centerra’s operating sites and subsidiaries and reports directly to the Audit Committee on compliance with various matters. We have a 75% interest in the Endako Mine Joint Venture which was formed on June 12, 1997 pursuant to the terms of the Exploration, Development and Mine Operating Agreement between Thompson Creek Metals Company Inc. (“Thompson Creek”) and Sojitz Moly Resources, Inc. (“Sojitz”), as amended (the “Endako Mine Joint Venture Agreement”). Sojitz owns the remaining 25% interest in the Endako Mine Joint Venture. Our 75% interest in the contractual joint venture is held through our wholly owned subsidiary, Thompson Creek Metals Company Inc. (“Thompson Creek”). We appoint all officers and directors of Thompson Creek. We are the manager of the Endako Mine Joint Venture with overall management responsibility for operations. As manager, we prepare annual budgets and production plans and submit them to Sojitz for approval. Oversight is provided by a joint venture committee whose members are appointed by Thompson Creek and Sojitz.
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Signing officers for subsidiary foreign bank accounts (of our wholly owned subsidiaries) are either employees of Centerra or directors of the subsidiaries. In accordance with the Company’s internal policies, all subsidiaries must notify the Company’s corporate treasury department of any changes in their local bank accounts including requests for changes to authority over the subsidiaries’ foreign bank accounts. Monetary limits are established internally by the Company as well as with the respective banking institution. Annually, authorizations over bank accounts are reviewed and revised as necessary. Changes are communicated to the banking institution by the Company and the applicable subsidiary to ensure appropriate individuals are identified as having authority over the bank accounts. Strategic Direction Centerra’s Board is responsible for the overall stewardship of the Company and, as such, supervises the management of the business and affairs of the Company. More specifically, the Board is responsible for reviewing the strategic business plans and corporate objectives, and approving acquisitions, dispositions, investments, capital expenditures, financings. and other transactions and matters that are material to the Company including those of its material subsidiaries. Internal Control Over Financial Reporting The Company prepares its consolidated financial statements and managements’ discussion and analysis (“MD&A”) on a quarterly and annual basis, using IFRS as issued by the International Accounting Standards Board, which require financial information and disclosures from its subsidiaries. The Company implements internal controls over the preparation of its financial statements and other financial disclosures to provide reasonable assurance that its financial reporting is reliable and that the quarterly and annual financial statements and MD&A are being prepared in accordance with IFRS and relevant securities laws. These internal controls include the following: (i) The Company has established a monthly and quarterly reporting package relating to its subsidiaries that standardizes the information required from the subsidiaries in order to complete the consolidated financial statements and MD&A. Management of the Company has direct access to relevant financial management of its subsidiaries in order to verify and clarify all information required.
(ii) All public documents and statements relating to the Company and its subsidiaries containing material information (including financial information) are reviewed by members of the in-house legal department and our internal disclosure committee comprised of the President & Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), Chief Operating Officer, General Counsel, and Vice President, Investor Relations before such material information is disclosed, to make sure that all material information has been considered by management of the Company and properly disclosed. Where appropriate, the disclosure committee will also convene a subset of other employees to ensure that our public documents and statements do not contain any misrepresentations, as such term is defined in applicable Canadian securities laws.
(iii) As more fully described below, the Company’s Audit Committee obtains confirmation from the CEO and CFO as to the matters addressed in the quarterly and annual certifications required under National Instrument 52-109 – Certification of Disclosure in the Company’s Annual and Interim Filings (“NI 52-109”), including its review of internal controls over financial reporting and disclosure controls and procedures.
(iv) The Company’s Audit Committee reviews and approves the Company’s quarterly and annual financial statements and MD&A and recommends their approval to the Board for approval prior to their publication or release.
(v) The Company’s Audit Committee assesses and evaluates the adequacy of the procedures in place for the review of the Company’s public disclosure of financial information extracted or derived from the Company’s financial statements by way of reports from management and its internal and external auditor.
(vi) Although not specifically a management control, the Company engages its external auditor to perform reviews of the Company’s quarterly financial statements and an audit of the annual consolidated financial statements in accordance with Canadian generally accepted auditing standards.
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Disclosure Controls and Procedures. The responsibilities of the Company’s Audit Committee include oversight of the Company’s internal control systems and disclosure controls and procedures including those systems to identify, monitor and mitigate business risks as well as compliance with legal, ethical and regulatory requirements. CEO and CFO Certifications. In order for the Company’s President & CEO and CFO to be in a position to attest to the matters addressed in the quarterly and annual certifications required by NI 52-109, the Company has developed internal procedures and responsibilities throughout the organization for its regular periodic and timely reporting. These processes are designed to provide assurances that information that may constitute material information will reach the appropriate individuals who draft and/or review public documents and statements relating to the Company. Annually, we engage an external accounting firm to carry out a review of our internal controls over financial reporting. These systems of corporate governance, internal control over financial reporting and disclosure controls and procedures are designed to ensure that, among other things, the Company has access to all material information about its subsidiaries. Procedures of the Board of Directors of the Company Oversight of the Company’s Risks We have implemented an enterprise risk management program which applies to all of our operations, projects and corporate offices. The program is based on leading international risk management standards and industry best practice. It employs both a “bottom-up” and “top-down” approach to identify and address risks from all sources that threaten the achievement of our objectives. The risk management program at Centerra considers the full life of mine cycle from exploration through to closure. All aspects of the operation and our stakeholders are considered when identifying risks. As such, our risk program encompasses a broad range of risks including technical, financial, commercial, social, reputational, environmental, health and safety, political and human resources related risks. Our executive team meets regularly with our Vice President, Risk and Insurance to review the risks facing the organization and each site and to review mitigation actions. The Risk Committee of the Board has oversight responsibilities for the policies, processes and systems for the identification, assessment and management of the Company’s principal strategic, financial, and operational risks. The members of the Risk Committee must include at least one member from each of the other standing committees of the Board, and the majority of members must be independent of the Company. Fund Transfers from the Company’s Subsidiaries to Centerra Funds are transferred by the Company’s subsidiaries to the Company by way of wire transfer for a variety of purposes, including chargeback of costs undertaken on behalf of the subsidiaries via intercompany invoices by the Company; repayment of loans related to project funding; and dividend declaration/payment by the subsidiaries. The method of transfer is dependent on the funding arrangement established between the Company and the subsidiary. In some cases, loan agreements are established with corresponding terms and conditions. In other cases, dividends are declared and paid based on the profitability and available liquidity of the applicable subsidiary. Records Management of the Company’s Subsidiaries The original minute books, corporate seal and corporate records of each of the Company’s subsidiaries are kept at each subsidiary’s respective registered office. All material documents are available in the local language of the subsidiary and in English. Approval of Related Party Transactions The Board has established a Special Committee comprised entirely of independent directors, Bruce Walter (Chair), Richard Connor and Sheryl Pressler to, among other things, oversee, review, evaluate and consider transactions and matters pertaining to transactions involving related parties, including Kyrgyzaltyn, Centerra’s largest shareholder and a corporation owned by the Government of the Kyrgyz Republic. One of the Company’s material properties, the Kumtor Mine, is located in the Kyrgyz Republic.
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2.5 Centerra’s Business We are a Canadian-based gold mining company focused on operating, developing, exploring and acquiring gold properties in For more information North America, Asia, and other markets worldwide. We are one of You can find more information about Centerra on the largest Western-based gold producers in Central Asia. SEDAR at www.sedar.com . We have three operating properties: the Kumtor Mine in the See our 2020 financial statements and MD&A for Kyrgyz Republic, the Mount Milligan Mine in British Columbia, additional financial information. Canada and the Öksüt Mine in Turkey. The Öksüt Mine achieved See our most recent management information circular its first gold pour in January 2020 and declared commercial for additional information, including how our directors production as of May 31, 2020. We also have a pre-development and officers are compensated and any loans to them, project in British Columbia (Kemess Project). principal holders of our securities, and securities authorized for issuance under our equity compensation We own a molybdenum business which includes our Thompson plans. Creek Mine (“TC Mine”) in Idaho, United States, and the Endako Mine (we own a 75% interest) in British Columbia, Canada. Both the TC Mine and the Endako Mine are currently on care and maintenance. We also operate the Langeloth Metallurgical Processing Facility in Pennsylvania, United States. We have exploration interests in Canada, the United States and Turkey, which are owned (directly or indirectly) by Centerra, and properties in Canada, Finland, Turkey and the United States in which we are earning interests pursuant to option agreements with the respective property owners. Effective as of January 19, 2021, we completed the sale of our 50% interest in the Greenstone Gold Mine Partnership to an affiliate of Orion Mine Finance Group. See “Recent Developments – Greenstone Gold Property”. Business Objectives Our vision statement is to build a team-based culture of excellence that responsibly delivers sustainable value and growth. Centerra will create Sustainable Value and Growth through; • Attracting diverse skilled talent, investing in our people through continuous learning and development programs, and creating a safe, fair, respectful, and inclusive culture. • Continuous improvements at our existing operations, encouraging innovation in everything we do. • Evaluating our development properties with a view to build and diversify on our existing operational platform or divest depending on financial returns and strategic alignment. • Exploration efforts at existing operations (Brownfields) and appropriate risk-reward based Greenfields exploration efforts with a bias to areas and operations where we are seen to have some form of competitive advantage. • Merger & Acquisition opportunities, focusing in areas and opportunities where we have demonstrated expertise or unique attributes.
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Business Operations Our principal business operations of gold/copper production span the six major stages of the mining cycle, from early- stage exploration to mine closure and reclamation.
Exploration Our exploration programs are focused on increasing our mineral reserves and resources. These programs include: drilling at, or in, the immediate vicinity of our operating mine(s) to replace mined mineral reserves, drilling programs on advanced stage projects where gold mineralization has been identified, and grassroots exploration on projects where gold and/or copper mineralization has not been identified. Our exploration and business development teams actively pursue new project opportunities worldwide.
Development and If our exploration programs are successful in identifying a mineral resource, the Construction prospects for economic extraction of the resource will be analyzed through a series of technical studies. These may include metallurgical studies, scoping studies, environmental studies, mine and processing design, preliminary assessment studies, pre-feasibility studies and feasibility studies. Pre-feasibility and feasibility studies may be undertaken concurrently with permitting for the project. Once feasibility and permitting are concluded, project financing may be arranged followed by detailed engineering and construction of the mine site and processing facilities.
Mining Ore and waste rock are removed from deposits by open pit or underground methods – all three operating mines currently use only an open pit method. The ore is then transported to a processing facility/mill to extract gold and/or copper (depending on the mine). The waste rock is placed on an engineered waste rock dump for subsequent rehabilitation or used in the construction of the tailings management facility.
Processing Mined ore is processed using different methods depending on its characteristics. This may include heap leaching, crushing, milling, flotation, roasting, and CIL or CIP methods for gold and copper extraction. After having extracted the gold and/or copper, the remaining processed waste materials are placed in a tailings facility (except in the case of heap leach processing).
Refining and Gold Sales At our Kumtor and Öksüt mines, recovered gold is processed at our mill (processing facility) into doré bars which are then sold and delivered to a refinery for further refining to market delivery standards.
At our Mount Milligan Mine, we produce a copper/gold concentrate which is sold to third parties including smelters and traders for further refining.
Closure and Reclamation As a responsible mining company, we plan how we are going to reclaim the areas we mine before we start construction. In some cases, we reclaim at the same time as we extract to expedite the process. In other cases, it is not possible to reclaim during the extraction process and therefore, efforts are deferred until after mining is completed. After mining has permanently ceased, we reclaim or continue to reclaim (as applicable) and monitor the land. We also regularly update our final closure plans to reflect any changes in operations. Our high standards for reclamation comply with both local and international standards.
Marketing and Distribution Our principal products are gold, copper, and to a lesser extent, molybdenum and ferromolybdenum products. Our Kumtor Mine and Öksüt Mine produce gold doré bars. Our Mount Milligan Mine produces a copper-gold concentrate, and our Langeloth Metallurgical Processing Facility provides tolling roasting services for customers and also purchases molybdenum concentrates from third parties to convert to upgraded products which are then sold into the metallurgical and chemical markets.
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Gold Industry The two principal uses of gold are bullion investment and product fabrication. A broad range of end uses is included within the fabrication category, the most significant of which is the production of jewelry. Other fabrication uses include official coins, electronics, miscellaneous industrial and decorative uses, medals and medallions. Copper Industry Copper is an excellent conductor of electricity and heat and these properties result in the principal applications for copper consumption. Refined copper is used in the generation and transmission of electricity as well as industrial machinery and consumer products that have electrical and electronic applications. Gold Doré Produced at Kumtor Mine All gold doré produced at the Kumtor Mine is purchased at the mine site by Kyrgyzaltyn for processing at its refinery in the Kyrgyz Republic pursuant to the Restated Gold and Silver Sale Agreement dated June 6, 2009 entered into between KGC”, Kyrgyzaltyn and the Kyrgyz Government. Under these arrangements, Kyrgyzaltyn is required to pay for all gold delivered to it, based on the afternoon fixing of the price of gold on the London Bullion Market by the 12th calendar day following delivery of gold doré to it. Kyrgyzaltyn has in place arrangements with a specified off-taker (purchaser) of the refined gold, and Kyrgyzaltyn directs the offtaker to pay KGC for the gold by the end of the 12 day calendar period referred to above. The obligations of Kyrgyzaltyn are partially secured by a pledge of 2,850,000 of Centerra shares owned by Kyrgyzaltyn. All gold doré produced by the mine to date has been purchased by Kyrgyzaltyn pursuant to these arrangements (or its predecessor arrangements) without incident. Kyrgyzaltyn owns approximately 26.2% of our issued and outstanding Common Shares and is the Company’s largest shareholder. Gold Doré Produced at Öksüt Mine On January 31, 2020, the Öksüt Mine achieved its first gold pour and declared commercial production as of May 31, 2020. All gold doré produced at the Öksüt Mine is processed at refining facilities within Turkey. Under Turkish legislation, the Central Bank of the Republic of Turkey has a first right to purchase gold produced by mining operations in Turkey. The sales price is fixed based on the gold spot price. If the gold doré is not purchased by the Central Bank of the Republic of Turkey, it is sold on the Borsa Istanbul (stock exchange) at spot prices. Copper/Gold Concentrate Produced at Mount Milligan Mine Concentrate Sales Copper-gold concentrate produced by the Mount Milligan Mine in Canada is sold to various smelters and off-take purchasers. We are currently party to four multi-year concentrate sales agreements for the sale of copper-gold concentrate produced at Mount Milligan Mine. Pursuant to these agreements, we have agreed to sell an aggregate of approximately 120,000 tonnes in 2021, and 40,000 tonnes in each of 2022 and 2023. Pricing under these concentrate sales agreements is determined by reference to specified published reference prices during the applicable quotation periods. Payment for the concentrate is based on the price for the agreed copper and gold content of the parcels delivered, less smelting and refining charges and certain other deductions, if applicable. The copper smelting and refining charges are negotiated in good faith and agreed by the parties for each contract year based on terms generally acknowledged as industry benchmark terms. The gold refining charges are as specified in the agreements. We intend to either extend our current multi-year agreements as the terms expire, or we may enter into additional multi- year sales agreements. To the extent that production is expected to exceed the volume committed under these agreements, we will sell the additional volume under short-term contracts or on a spot basis. Mount Milligan Streaming Arrangement We are subject to a streaming arrangement with RGLD Gold AG and Royal Gold Inc. (collectively, “Royal Gold”) pursuant to which Royal Gold is entitled to receive 35% of the gold produced and 18.75% of the copper production at our Mount Milligan Mine in exchange for $435 per ounce of gold delivered and 15% of the spot price per metric tonne of copper delivered (the “Mount Milligan Stream Arrangement”). The Mount Milligan Stream Arrangement was first put in place in 2010 and was subsequently amended, including in connection with Centerra’s acquisition of Thompson Creek in October 2016. The original streaming arrangement required Royal Gold to make upfront payments totaling $781.5 million from 2010 to 2013 to Thompson Creek for the rights to receive future gold production. The arrangement was renegotiated by Centerra in conjunction with its acquisition of Thompson Creek. To satisfy our obligations under the Mount Milligan Stream Arrangement, in connection with copper and gold concentrate sale from the Mount Milligan Mine,
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we purchase gold and copper in the market for delivery to Royal Gold based on a portion of the gold ounces and pounds of copper sold. Molybdenum Industry Our principal molybdenum products are molybdic oxide (also known as roasted molybdenum concentrate) and ferromolybdenum. Other products we produce include high soluble technical oxide, pure molybdenum trioxide and high purity molybdenum disulfide. Molybdenum is an industrial metal principally used for metallurgical applications as a ferro-alloy in steels where high strength, temperature-resistant or corrosion-resistant properties are sought. The addition of molybdenum enhances the strength, toughness and wear and corrosion-resistance in steels when added as an alloy. Molybdenum is used in major industries including chemical and petro-chemical processing, oil and gas for drilling and pipelines, power generation, automotive and aerospace. Molybdenum is also widely used in non-metallurgical applications such as petroleum refining catalysts, lubricants, flame-retardants in plastics, water treatment and as a pigment. 2020 and 2019 Production and Revenue 2020 2019 Total Gold sold (oz) 828,816 780,654 Payable copper sold (‘000 lbs.) 80,477 67,430 Revenue ($ millions) 1,668.7 1,375.3 Kumtor Mine – Gold Gold sold (oz) 569,213 600,231 Gold Sales ($ millions) 981.6 827.5 Mount Milligan Mine (1) Payable Gold Sold (oz) 154,100 180,423 Payable Copper Sold (‘000 lbs.) 80,477 67,430 Gold Sales ($ millions) 205.0 194.2 Copper Sales ($ millions) 178.6 140.8 Öksüt Mine – Gold(2) Gold sold (oz) 105,503 - Gold Sales ($ millions) 186.5 - Langeloth – Molybdenum Molybdenum sold (‘000 lbs.) 13,667 16,035 Toll roasted and upgraded molybdenum (‘000 lbs.) 2,383 5,059 Sales from Molybdenum ($ millions) 132.3 204.7 Sales from Tolling and upgraded molybdenum ($ millions) 4.7 8.1
(1) Mount Milligan sales are presented on a 100% basis. Under the Mount Milligan Streaming Arrangement, Royal Gold is entitled to 35% of payable Gold ounces and 18.75% of payable copper. Royal Gold pays $435 per ounce of gold delivered and 15% of the spot price per metric tonne of copper delivered.
(2) Reflects full year production which includes figures before commercial production.
Our revenues from the sale of our products are dependent on the world market price of gold, copper and molybdenum. World market prices for our products have fluctuated historically and are affected by numerous factors beyond our control. See the sections of this AIF entitled “Historic Metal Prices” and “Risks Factors” for additional information.
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Competitive Conditions The mining industry is intensely competitive, particularly in the acquisition of mineral reserves and resources. In comparison with diversified mining companies, our competitive position is subject to unique competitive advantages and disadvantages related to the price of gold and copper. Mineral Reserves and Resources Our mineral reserves and resources are fundamental to the Company and serve as the foundation for our future production and project development. We have interests in a number of properties. The tables in this section show our estimates of the proven and probable reserves, measured and indicated resources and inferred resources at those properties. We estimate and disclose mineral reserves and resources in five categories, using the definitions adopted by the Canadian Institute of Mining, Metallurgy and Petroleum, and in accordance with NI 43-101. You can find out more about these categories at www.cim.org. See the “Glossary of Geological and Mining Terms” for complete definitions of mineral reserves and mineral resources. For a further discussion of the key assumptions, methodologies and parameters used in the estimation of mineral reserves and mineral resources, see the section of this AIF entitled “Centerra’s Properties”. About Mineral Resources Mineral resources are not mineral reserves and do not have demonstrated economic viability, but do have reasonable prospect for economic extraction. They fall into three categories: measured, indicated, and inferred. Our reported mineral resources do not include mineral reserves. Measured and indicated mineral resources are sufficiently well- defined to allow geological and grade continuity to be reasonably assumed, and permit the application of technical and economic parameters in assessing the economic viability of the mineral resource. Inferred mineral resources are estimated on limited information not sufficient to verify geological and grade continuity or to allow technical and economic parameters to be applied. Inferred mineral resources are too speculative geologically to have economic considerations applied to them. There is no certainty that mineral resources of any category will be upgraded to mineral reserves. Important Information About Mineral Reserve and Resource Estimates Although we have carefully prepared and verified the mineral reserve and resource figures in this AIF, the figures are estimates based in part on forward-looking information. Estimates are based on our knowledge, mining experience, analysis of drilling results, the quality of available data and management’s best judgment. They are, however, imprecise by nature, may change over time, and include many variables and assumptions including geological interpretation, commodity prices and currency exchange rates, recovery rates, and operating and capital costs. There is no assurance that the indicated levels of metal will be produced, and we may have to re-estimate our mineral reserves based on actual production experience. Changes in the metal price, production costs or recovery rates could make it unprofitable for us to operate or develop a particular site or sites for a period of time. See the sections of this AIF entitled “Forward-looking Information” and “Risk Factors”.
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Table 1 Centerra Gold –Inc. - 2020 Year-End Mineral Reserve and Mineral Resource Summary – Gold (1)(5) (as of December 31, 2020) (see additional footnotes page 26)
Proven and Probable Gold Mineral Reserves Proven Probable Total Proven and Probable Property Tonnes Grade Contained Tonnes Grade Contained Tonnes Grade Contained (kt) (g/t) Gold (koz) (kt) (g/t) Gold (koz) (kt) (g/t) Gold (koz) Mount Milligan (4) 125,179 0.40 1,613 45,397 0.37 535 170,576 0.39 2,148 Kumtor - Open Pit 10,693 1.42 487 59,613 2.88 5,525 70,306 2.66 6,013 Öksüt 110 0.19 1 26,203 1.35 1,135 26,313 1.34 1,136 Kemess Underground - - - 107,381 0.50 1,868 107,381 0.50 1,868 Total 135,982 0.48 2,101 238,594 1.18 9,065 374,576 0.93 11,166
Measured and Indicated Gold Mineral Resources (2) Measured Indicated Total Measured and Indicated Property Tonnes Grade Contained Tonnes Grade Contained Tonnes Grade Contained (kt) (g/t) Gold (koz) (kt) (g/t) Gold (koz) (kt) (g/t) Gold (koz) Mount Milligan (4) 61,673 0.37 737 63,430 0.32 659 125,103 0.35 1,396 Kumtor - Open Pit 9,478 3.44 1,048 16,054 2.39 1,232 25,532 2.78 2,280 Öksüt 5,813 0.58 109 4,943 0.76 120 10,756 0.66 230 Kemess Underground - - - 173,719 0.31 1,737 173,719 0.31 1,737 Kemess East - - - 177,500 0.40 2,305 177,500 0.40 2,305 Total 76,964 0.77 1,894 435,646 0.43 6,053 512,610 0.48 7,948
Inferred Gold Mineral Resources (2)( (3) Property Tonnes Grade Contained (kt) (g/t) Gold (koz) Mount Milligan (4) 7,872 0.31 78 Kumtor - Open Pit 20,864 1.97 1,324 Kumtor - Underground 13,100 7.46 3,141 Öksüt 1,114 0.66 23 Kemess Underground 47,700 0.34 529 Kemess East 29,300 0.30 283 Total 119,950 1.39 5,379
(1) Centerra’s equity interests as of the date of annual information form are as follows: Mount Milligan 100%, Kumtor 100%, Öksüt 100%, Kemess Underground and Kemess East 100%. (2) Mineral resources are in addition to mineral reserves. Mineral resources do not have demonstrated economic viability. (3) Inferred mineral resources have a great amount of uncertainty as to their existence and as to whether they can be mined economically. It cannot be assumed that all or part of the inferred mineral resources will ever be upgraded to a higher category. (4) Production at Mount Milligan is subject to a streaming agreement with RGLD Gold AG and Royal Gold, Inc. (collectively, “Royal Gold”) which entitles Royal Gold to 35% of gold sales from the Mount Milligan Mine. Under the stream arrangement, Royal Gold will pay $435 per ounce of gold delivered. Mineral reserves for the Mount Milligan property are presented on a 100% basis. (5) Numbers may not add up due to rounding.
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Table 2 Centerra Gold Inc. - 2020 Year-End Mineral Reserve and Mineral Resource Summary - Other Metals (1) (6) (as of December 31, 2020) (see additional footnotes page 26)
Copper Contained Molybdenum Contained Silver Contained Tonnes Property Grade Copper Grade Molybdenum Grade Silver (kt) (%) (Mlbs) (%) (Mlbs) (g/t) (koz) Proven Mineral Reserves Mount Milligan (4) 125,179 0.23 624 - - - - Probable Mineral Reserves Mount Milligan (4) 45,397 0.21 213 - - - - Kemess Underground 107,381 0.27 630 - - 1.99 6,878
Total Proven and Probable Mineral Reserves Mount Milligan (4) 170,576 0.22 837 - - - - Kemess Underground 107,381 0.27 630 - - 1.99 6,878 Total Copper and Silver 277,957 0.24 1,467 - - 0.77 6,878
Measured Mineral Resources (2) Mount Milligan (4) 61,673 0.18 238 - - - - Berg (5) 176,384 0.36 1,391 0.03 132 3.02 17,152 Kemess Underground ------Kemess East ------Thompson Creek 57,645 - - 0.07 92 - - Endako 47,100 - - 0.05 48 - -
Indicated Mineral Resources (2) Mount Milligan (4) 63,430 0.20 283 - - - - Berg (5) 220,284 0.27 1,311 0.03 161 3.08 21,799 Kemess Underground 173,719 0.18 697 - - 1.55 8,632 Kemess East 177,500 0.36 1,410 - - 1.97 11,240 Thompson Creek 59,498 - - 0.07 85 - - Endako 122,175 - - 0.04 118 - -
Total Measured and Indicated Mineral Resources (2) Mount Milligan (4) 125,103 0.19 521 - - - - Berg (5) 396,668 0.31 2,702 0.03 293 3.05 38,951 Kemess Underground 173,719 0.18 697 - - 1.55 8,632 Kemess East 177,500 0.36 1,410 - - 1.97 11,240 Total Copper and Silver 872,990 0.21 5,329 0.02 636 1.58 58,823 Thompson Creek 117,143 - - 0.07 177 - - Endako 169,275 - - 0.04 166 - -
Inferred Mineral Resources (2)(3) Mount Milligan (4) 7,872 0.16 28 - - - - Berg (5) 13,982 0.26 79 0.02 5 4.39 1,971 Kemess Underground 47,700 0.20 210 - - 1.65 2,530 Kemess East 29,300 0.31 203 - - 2.00 1,880 Total Copper and Silver 98,854 0.16 520 0.02 50 1.35 6,381 Thompson Creek 806 - - 0.04 1 - - Endako 47,325 - - 0.04 44 - -
(1) Centerra’s equity interests as of the date of annual information form are as follows: Mount Milligan 100%, Kemess Underground 100%, Kemess East 100%, Berg 100%, Thompson Creek 100%, and Endako 75%. (2) Mineral resources are in addition to mineral reserves. Mineral resources do not have demonstrated economic viability. (3) Inferred mineral resources have a great amount of uncertainty as to their existence and as to whether they can be mined economically. It cannot be assumed that all or part of the inferred mineral resources will ever be upgraded to a higher category. (4) Production at Mount Milligan is subject to a streaming agreement which entitles Royal Gold to 18.75% of copper sales from the Mount Milligan Mine. Under the stream arrangement, Royal Gold will pay 15% of the spot price per metric tonne of copper delivered. Mineral resources for the Mount Milligan property are presented on a 100% basis. (5) In December 2020, the Berg property was optioned and the optionee has the right to acquire a 70% interest in the property over a period of up to five years. (6) Numbers may not add up due to rounding.
Table 3
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Centerra Gold Inc. - Reconciliation of Mineral Reserves and Mineral Resources (1)-(4) - Gold Contained (koz) (including disposition of Greenstone) (see additional footnotes page 26)
December 31 2020 2020 Addition December 31 2019 (2) Throughput (3) (Deletion) (4) 2020 Proven and Probable Gold Mineral Reserves Mount Milligan 2,407 264 5 2,148 Kumtor - Open Pit (5) 3,214 665 3,464 6,013 Öksüt (6) 1,274 155 18 1,136 Kemess Underground 1,868 - - 1,868 Greenstone (8) 2,324 - (2,324) - Total 11,086 1,084 1,164 11,166 Measured and Indicated Gold Mineral Resources Mount Milligan 1,408 - (12) 1,396 Kumtor - Open Pit (5) 6,275 - (3,995) 2,280 Öksüt (6) 212 - 18 230 Kemess Underground (3) 1,737 - - 1,737 Kemess East (3) 2,305 - - 2,305 Greenstone (8) 1,412 - (1,412) - Total 13,347 - (5,399) 7,948 Inferred Mineral Gold Resources (7) Mount Milligan 55 23 78 Kumtor - Open Pit (5) 1,356 - (33) 1,324 Kumtor - Underground 3,125 - 15 3,141 Öksüt (6) 15 - 8 23 Kemess Underground (3) 529 - - 529 Kemess East (3) 283 - - 283 Greenstone (8) 1,360 - (1,360) - Total 6,722 - (1,344) 5,379
(1) Centerra’s equity interests of the date of annual information form are as follows: Mount Milligan 100%, Kumtor 100%, Öksüt 100%, Kemess Underground and Kemess East 100%. (2) Mineral reserves and mineral resources reported in Centerra’s Annual Information Form filed in March 2020. Centerra reports mineral reserves and mineral resources separately. The amount of reported mineral resources does not include those amounts identified as mineral reserves. Mineral resources do not have demonstrated economic viability. Numbers may not add due to rounding. (3) Corresponds to process plant feed at Mount Milligan, Kumtor and Öksüt. (4) Changes in mineral reserves or mineral resources, as applicable, are attributed to: (i) changes to metal price and foreign exchange assumptions, (ii) information provided by drilling and subsequent reinterpretation and reclassification of mineral resources, and (iii) changes to cost estimates and metallurgical recoveries. (5) Kumtor open pit mineral reserves and mineral resources include the Central Pit and the Southwest and Sarytor Pits. (6) Öksüt open pit mineral reserves and mineral resources include the Keltepe and Guneytepe deposits. (7) Inferred mineral resources have a great amount of uncertainty as to their existence and as to whether they can be mined economically. It cannot be assumed that all or part of the inferred mineral resources will ever be converted to a higher category. (8) Greenstone represents Centerra’s 50% equity interest in the Greenstone Gold properties (Hardrock, Brookbank, Key Lake, Kailey). The Company announced the sale of its interest December 15, 2020.
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Additional Footnotes for Tables 1, 2, 3 General . A conversion factor of 31.1035 grams per troy ounce of gold is used in the mineral reserve and mineral resource estimates.
Kumtor . The mineral reserves have been estimated based on a gold price of $1,350 per ounce, diesel fuel price of $0.50/litre and an exchange rate of 1USD:70KGS. . The open pit mineral reserves are estimated based on a cut-off grade of 0.85 grams of gold per tonne for the Central Pit and 1.0 grams of gold per tonne for the Southwest and Sarytor deposits. . The mineral resources have been estimated based on a gold price of $1,550 per ounce. . Open pit mineral resources are constrained by a pit shell. . The open pit mineral resources are estimated based on a cut-off grade of 0.85 grams of gold per tonne for the Central Pit and 1.0 grams of gold per tonne for the Southwest and Sarytor deposits. . Underground mineral resources occur below the open pit mineral resources shell and are constrained by underground mineable shapes based on a cut-off grade of 4.9 grams of gold per tonne. . Further information concerning the Kumtor deposit, including key assumptions, parameters and methods used to estimate mineral reserves, as well as political, environmental and other risks are described in Centerra’s most recently filed Annual Information Form and the Technical Report on the Kumtor Project, dated February 24, 2021, each of which has been filed on SEDAR.
Mount Milligan • The mineral reserves have been estimated based on a gold price of $1,250 per ounce, copper price of $3.00 per pound and an exchange rate of 1USD:1.25CAD. • The open pit mineral reserves are estimated based on an NSR cut-off of $7.64 per tonne (C$9.55 per tonne) and takes into consideration metallurgical recoveries, concentrate grades, transportation costs, smelter treatment charges and royalty and streaming arrangements in determining economic viability. • The mineral resources have been estimated based on a gold price of $1,500 per ounce, copper price of $3.50 per pound and an exchange rate of 1USD:1.25CAD. • The open pit mineral resources are constrained by a pit shell and are estimated based on an CuEq which was equivalent to NSR cut-off of $7.64 per tonne (C$9.55 per tonne) and takes into consideration metallurgical recoveries, concentrate grades, transportation costs, smelter treatment charges and royalty and streaming arrangements in determining economic viability. • Further information concerning the Mount Milligan deposit, including key assumptions, parameters and methods used to estimate mineral resources and mineral reserves, as well as environmental and other risks are described in Centerra’s most recently filed Annual Information Form and in the Mount Milligan Mine Technical Report, dated March 26, 2020, each of which has been filed on SEDAR.
Öksüt • The mineral reserves have been estimated based on a gold price of $1,250 per ounce and an exchange rate of 1USD:5.5TL. • The open pit mineral reserves are estimated based on 0.25 grams of gold per tonne cut-off grade. • Open pit optimization used a tonne weighted LOM metallurgical recovery of 77% (Keltepe Pit 75%, Guneytepe Pit 85%). • The mineral resources have been estimated based on a gold price of $1,500 per ounce. • Open pit mineral resources are constrained by a pit shell and are estimated based on 0.2 grams of gold per tonne cut-off grade. • Further information concerning the Öksüt deposit, including key assumptions, parameters and methods used to estimate mineral resources and mineral reserves, as well as environmental and other risks are described in Centerra’s most recently filed Annual Information Form and the Technical Report on the Öksüt Project, dated September 3, 2015, each of which has been filed on SEDAR.
Kemess Underground • The mineral reserves have been estimated based on a gold price of $1,250 per ounce, copper price of $3.00 per pound and an exchange rate of 1USD:1.25CAD. • The mineral reserves are estimated based on an NSR cut-off of C$17.30 per tonne and takes into consideration metallurgical recoveries, concentrate grades, transportation costs and smelter treatment charges in determining economic viability. • The mineral resources have been estimated based on a gold price of $1,450 per ounce, copper price of $3.50 per pound and an exchange rate of 1USD:1.25CAD. • The mineral resources are estimated based on an NSR cut-off of C$15.00 per tonne and takes into consideration metallurgical recoveries, concentrate grades, transportation costs and smelter treatment charges. • Further information concerning the Kemess Underground deposit is described in the technical report dated July 14, 2017 and filed on SEDAR at www.sedar.com by AuRico Metals Inc. The technical report describes the exploration history, geology and style of gold mineralization at the Kemess Underground deposit. Sample preparation, analytical techniques, laboratories used and quality assurance-quality control protocols used during the exploration drilling programs are consistent with industry standards and carried out by independent certified assay labs.
Kemess East • The mineral resources have been estimated based on a gold price of $1,450 per ounce, copper price of $3.50 per pound and an exchange rate of 1USD:1.25CAD. • The mineral resources are estimated based on an NSR cut-off of C$17.30 per tonne and takes into consideration metallurgical recoveries, concentrate grades, transportation costs and smelter treatment charges. • Further information concerning the Kemess East project is described in the technical report dated July 14, 2017 and filed on SEDAR at www.sedar.com by AuRico Metals Inc. The technical report describes the exploration history, geology and style of gold mineralization at the Kemess East project. Sample preparation, analytical techniques, laboratories used and quality assurance-quality control protocols used during the exploration drilling programs are consistent with industry standards and carried out by independent certified assay labs.
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Thompson Creek • The mineral resources have been estimated based on a molybdenum price of $14.00 per pound. • The open pit mineral resources are constrained by a pit shell and are estimated based on 0.030% molybdenum cut-off grade.
Endako • The mineral resources have been estimated based on a molybdenum price of $14.00 per pound and an exchange rate of 1USD:1.25CAD. • The open pit mineral resources are constrained by a pit shell and are estimated based on 0.025% molybdenum cut-off grade.
Berg • The mineral resources have been estimated based on a copper price of $3.50 per pound, molybdenum price of $14.00 per pound, silver price of 21.00 per ounce and an exchange rate of 1USD:1.25CAD. • The open pit mineral resources are constrained by a pit shell and are estimated based on 0.25% copper equivalent cut-off grade that takes into consideration metallurgical recoveries, concentrate grades, transportation costs, and smelter treatment charges in determining economic viability.
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Sources, Pricing and Availability of Materials, Parts and Equipment Our operations are affected by the availability of diesel fuel, mining equipment and parts, mill equipment and parts, cyanide (Kumtor Mine and Öksüt Mine) and other reagents used in our processing operations at the Kumtor Mine, Mount Milligan Mine and Öksüt Mine. The Kumtor Mine sources its fuel from Russia either directly or through Kyrgyz Republic distributors. We have established a hedging strategy using derivative instruments to manage the risk associated with changes in diesel fuel prices on the cost of operations at the Kumtor Mine. We use expensive, large mining and milling equipment that is internationally sourced and requires a long lead time to procure, build, and install. Cyanide and other reagents used at our mine sites are sourced locally and internationally based on availability and the required specifications. Pricing for all supplies is based on competitive market pricing. In addition, the Kumtor Mine is located in a remote area and any interruption to our supply of the foregoing materials, parts, and equipment could have an adverse impact on our future cash flows, earnings, results of operations, and financial condition. Access to the Kumtor Mine has been restricted on occasion by illegal roadblocks and labour disruptions. Financial and Operational Effects of Environmental Protection Requirements We are subject to strict environmental regulation in connection with our exploration, development, construction, mining, and reclamation activities in each of the jurisdictions in which we operate. Our policy is to conduct business in a way that safeguards public health and the environment. The financial and operational effects of our environmental protection requirements are significant. Future legislation, regulations, policies, guidance or other events could cause additional operating expenses, capital expenditures, restrictions or delays in the development and continued operation of our properties, the extent of which cannot be predicted with certainty. For further information of risks associated with environmental matters, see the section entitled “Risk Factors”. Reclamation Costs and Financial Assurances All our operations and care & maintenance sites have closure plans or frameworks in place, depending on their current stage of operations. We adopt a strict regime for mine closure including annual mine cost updates and we review our conceptual closure plans on a regular cycle to include both environmental and social impacts of closure. We align with the International Council on Mining and Metals Mine Closure framework. Our conceptual closure plans and related costs will change over time as a result of, among other things, changes in environmental legislation, changes in international best practices, and changes in our understanding of the types of reclamation activities that each site will require. At the Kumtor Mine, a trust fund has been set up for reclamation measures. The reclamation trust fund is restricted for use and controlled by an independent trustee. We annually contribute funds to the Kumtor Mine reclamation trust fund based on projected gold production in the year. As at December 31, 2020, the balance in the fund was $47 million. As part of the 2017 Strategic Agreement entered into with the Kyrgyz Government, the Kumtor Mine agreed to increase the rate of funding of the reclamation trust fund to a minimum of $6 million per year until the fund reaches $69 million. This amount of $69 million was determined by an independent assessment of Kumtor Mine’s current reclamation costs and is broadly in line with our estimated reclamation costs for the Kumtor Mine. See “Centerra’s Properties –Operating Mines – Kumtor Strategic Agreement”. For our operations in North America, as at December 31, 2020, we provide financial assurance (surety bonds) for reclamation costs of approximately C$52.6 million for Mount Milligan Mine, C$56.5 million for Kemess, C$11.5 million at Endako Mine (reflects our 75% interest in the Endako Mine Joint Venture) and $51.9 million at TC Mine As at December 31, 2020, for our Öksüt Mine in Turkey we estimate reclamation costs of approximately $25.7 million. Environmental laws and regulations generally have become more stringent and restrictive over time, including requirements for companies to account for capital expenditures and to provide additional financial security to cover reclamation expenses, even if the reclamation activities may not occur for a significant amount of time. If this trend continues, our reclamation obligations and the related financial assurances we are required to provide may increase. For further information of risks associated with environmental matters, see the section entitled “Risk Factors”.
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General Description of Financial and Operational Effects for Environmental Protection The financial and operational effects for environmental protection relate primarily to the following countries where we have operations: • in the Kyrgyz Republic, where we operate the Kumtor Mine; • in Canada, where we operate the Mount Milligan Mine, own 100% of the Kemess project and own a 75% in the Endako Mine, which is currently on care and maintenance; • in Turkey, where we operate the Öksüt Mine; and • in the USA, where we operate the Langeloth Facility and own the TC Mine, which is currently on care and maintenance. Each of our operations have an Environmental Management System (“EMS”) that generally aligns with ISO 14001 environmental management systems, and an environmental management action plan which sets out the activities needed to fulfill the site’s EMS. They are designed to address the effects of operations on the environment, to monitor compliance with permits and other requirements, and to provide for scheduled monitoring, engineering controls, reporting and audits. All of our operations are different – they present different environmental protection concerns and are subject to differing legislation. As such, the nature of the environmental protection activities and the resulting costs cannot be compared. During the financial year ending December 31, 2020, the approximate expenditures by site on environmental programs were as follows: $4.2 million at Kumtor Mine; $2.88 million at the Mount Milligan Mine; $0.47 million at the Öksüt Mine; $1.19 million at the Endako Mine; $1.09 million at the Kemess Mine and $1.58 million at the TC Mine, which includes environment and reclamation operating expenses. For further information on the environmental program at each of our operations, please see the relevant disclosure under the heading “Centerra’s Properties”. Tailings Storage Facilities Management Overview Tailings are liquid and solid materials, commonly deposited as slurry, that remain after the extraction of metals and minerals from crushed, ground and processed ore. Tailings are a waste by-product of extraction and are stored in specially designed impoundments that retain solid materials and water. Typically, the water is recovered and recycled back to the mill or is treated for release into the environment. Centerra actively manages six tailings storage facilities (“TSFs”). Two facilities are currently active, two are on care and maintenance, one is entering the closure phase and the final one is in the early stages of the closure phase. Centerra’s TSFs are actively managed to maintain structural performance and ensure worker, environmental and public safety. Centerra’s TSFs are designed in accordance with all applicable dam safety regulations and requirements. In addition, operation of the TSFs is informed by, and routinely checked against, guidance from the Canadian Dam Association and the International Commission on Large Dams. Centerra has four types of TSFs: downstream (Kumtor Mine), centreline (Mount Milligan Mine and TC Mine), modified centreline (Kemess South) and upstream (Endako Mine, 2 TSFs). The Öksüt Mine is a heap leach facility and does not have a TSF. Risk Management Process of TSFs Centerra’s TSFs have all been designed by professional engineers and are constructed, operated and monitored under the guidance of an external engineer of record. Each site has an Operations, Maintenance and Surveillance Manual that sets-out clear expectations for the maintenance and ongoing management of the TSFs to ensure they remain safe and perform as designed. All of Centerra’s mine sites follow the Canadian Dam Association’s Consequence Classification which assigns a consequence ranking from low to extreme based upon the environmental, safety and economic effects of a potential dam incident. This system does not assign a risk associated with a given TSF; instead, it is intended to evaluate the consequences in the unlikely event of a dam breach. Formal inundation studies have also been completed for each of Centerra’s sites to identify potential community and environmental impacts, including impacts on nearby bodies of water in the event of a tailings incident. Used together, Centerra’s sites can evaluate potential risks, evaluate design and mitigation strategies and develop appropriate emergency planning and response.
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In light of the recent global events and our commitment to public and environmental safety, in late 2019 Centerra formed a multi-disciplinary TSF Steering Committee. This global steering committee meets quarterly and is comprised of: • senior management from Risk & Insurance, Capital Projects & Technical Services, Sustainability and Environment, and Investor Relations; • General Managers and/or tailings engineers from sites; and, • subject matter experts in areas such as water management. The TSF Steering Committee is mandated to: • strengthen Centerra’s internal and external tailings risk management procedures; and • monitor the development of emerging regulatory requirements and international best practices. In early 2020, the TSF Steering Committee initiated a project to implement a comprehensive risk management framework to document the key components of how we manage risk at our tailings facilities. The initial baseline reports for each site are expected to be completed during the first half of 2021 and will be updated regularly to ensure we are implementing best practice in tailings risk management. Centerra has also developed a 5-step risk mitigation process that is applied and monitored at each site. These systems and procedures are part of Centerra’s proactive approach to tailings management. STEP 1 STEP 2 STEP 3 STEP 4 STEP 5 Independent Third- Site Monitoring Operational Staff Annual Engineer of Independent Tailings Party Dam Safety Systems Inspections Record Inspections Review Boards Reports Centerra’s on-site Trained site personnel Annual safety In all jurisdictions Each site, regardless of teams use monitoring and technical staff inspections are except Idaho, USA, a its facilities life cycle, programs that may perform daily completed by an qualified independent has an ITRB or an include but are not inspections on each external Engineer of tailings reviewer equivalent externally limited to piezometers, active TSF. The Record (“EoR”). The (different from the EoR appointed expert. inclinometers, operations and on-site EoR reviews the and not a member of pressure gauges, teams perform monthly performance of the the Independent An ITRB comprises monitoring prisms, inspections and review facility against the Tailings Review Board independent experts seepage wells, systems data to design criteria and (“ITRB”) or equivalent who work with thermistors and monitor the tailings submits reports to the externally appointed Centerra and the EoR settlement plates to facilities for cracking or site with prioritized expert) periodically by conducting reviews monitor the other signs of potential action items for review conducts an of the design, performance of the instability. More as well as proposes a assessment of the operation, monitoring tailings dams, frequent inspections timeline to complete tailings dam and data, and maintenance abutments, natural are conducted any required actions issues a report that practices to evaluate slopes and water following significant items. evaluates the the performance of the levels. In addition, the precipitation, wind, fire performance of the tailings facilities on-site teams rely on or seismic events. tailings facilities to the against the design seepage flow rate EoR and Centerra. criteria and to provide measurement, guidance and impoundment pool In Idaho, an recommendations monitoring and routine independent review of regarding these visual observation. the Thompson Creek practices. tailings dam is carried out periodically by a panel comprised of regulatory agencies.
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2.6 Responsible Mining Centerra’s life-cycle approach to mining We endeavour to work in a responsible way to meet or exceed our stakeholders’ expectations. At Centerra, integrity and ethics are the Before we open a mine, we plan for every stage of its life cycle. We think about how to minimize the impact of foundation for everything we do. As a team, we are results-focused our operations on the environment at each stage, from and strive for continuous improvement without compromising safety breaking ground to extracting ore and processing gold or the environment. As an international company, we respect the through to final closure and remediation. For example, different needs and values of people and their cultures and operate where possible, we practise progressive remediation – with transparency to promote stakeholder confidence. setting aside topsoil before mining to remediate areas we have cleared and minimizing the amount of natural We strive to: land we disturb. We also work with local stakeholders to generate environmental offsets by planting trees or • Meet our targets by ensuring we run safe, efficient, cost- participating in other local offset programs. At the end of the reclamation process, we plan to return the effective mines and projects. rehabilitated land back to the local government as the • Maximize the value of our existing assets and properties. last step in our responsible mining life cycle. • Lead our peer group in the areas of workplace safety, business ethics, environmental protection, community development, transparency and governance. • Minimize the potential for harmful impacts from our operations to the lowest levels we reasonably can. • Improve our engagement with potentially impacted Indigenous groups and stakeholders to better respond to their needs and concerns. Our Approach We have adopted the World Gold Council’s Responsible Gold Mining Principles (“RGMP”) upon their introduction in September 2019. The RGMP is an important new industry framework that sets out clear expectations for consumers, investors and the downstream gold supply chain as to what constitutes responsible gold mining. The RGMPs consist of 10 umbrella principles and 51 criteria that focus on Environmental, Social and Governance (“ESG”) best practices. The RGMPs were developed by a specific ESG taskforce through a lengthy engagement and consultation process with key industry stakeholders including financiers, investors, non-governmental organizations and civil society. We have been a member of the ESG Taskforce since 2018, offering practical, on-the-ground experience and expertise on a variety of topics, including the development of the external assurance process. In April 2019, Centerra tested the then draft RGMPs at its Kumtor Mine. In 2019, we began the implementation roadmap of the RGMPs across our operating sites. In 2020, Centerra’s corporate office and three operating sites: • commenced company-wide RGMP socialization and training sessions, including nomination of RGMP Champions; and • commenced a self-assessment, against the RGMPs, sub-criteria and the guidance provided by the World Gold Council, to identify conformance and areas for continuous improvement (Year 1 requirements).
In November 2020, the Öksüt Mine completed on-site third-party assurance against the RGMPs. Centerra’s 2020 RGMP Progress Report can be found at Centerra’s website (www.centerragold.com). We have adopted formal policies on health, safety, environment and sustainability which reflects our commitments as an organization. We approach our commitment to responsible mining by engaging with potentially impacted Indigenous groups and all of our stakeholder groups who influence, or are influenced, by our activities or performance. Our key stakeholders include employees, contractors, vendors, communities, shareholders, local and national governments, investors and non-governmental organizations. Putting our corporate responsibility principles into practice at Centerra means: • Being transparent about our mining activities. • Respecting the rights of all potentially impacted Indigenous groups, and stakeholders, including our employees, contractors and local communities. • Operating in a way that minimizes adverse environmental and other impacts. • Continually improving the management of our operations so that we can respond to the economic, environmental and social expectations of our stakeholders and local Indigenous groups. • Assigning clear management responsibilities for environmental, social and health and safety performance. • Providing adequate staffing and resources for sustainable development at each operation.
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• Focusing on distributing benefits such as jobs, contracts, community investments, and infrastructure improvements across potentially impacted parties and stakeholders, and also ensuring accountability for any negative direct and indirect impacts from our operations. • Offering our employees competitive compensation and the opportunity to learn and excel. • Aligning our activities with “Good International Industry Practice” and going beyond regulations and requirements. • Maximizing local procurement by encouraging competitive entrepreneurship among potential local suppliers of goods and services to our sites. • Promoting local hiring and where qualified candidates for available vacancies are equally skilled, giving first priority to those living in the area directly affected by our mining operations. • Engaging in regular, consistent and meaningful interactions with local communities. Governance Board Oversight The Sustainable Operations Committee of our Board reviews performance against our goals, policies and systems to ensure we are fulfilling our objectives relating to safety, health, environmental management, and social responsibility. The Sustainable Operations Committee also oversees the process we adopt for donations, sustainable development, investments, and our monitoring and evaluation measurement. Management Systems We manage safety, health and environmental issues at every site with formal safety, health and environmental management systems that are based on “Good International Industry Practice” (“GIIP”). Managing our risks and mining responsibly require that we plan before we do work, check by monitoring progress against our plan and act on what we have learned through audits and other forms of verification. Assurance Program From time to time, internal and external audits are performed by auditors to make sure our facilities comply with our safety, health and environmental policies, applicable laws and regulations, and generally accepted GIIP. These risk- based programs identify concerns and help us improve our performance. As a part of the RGMP, we will be required to obtain external assurance from a third-party independent assurance provider. Employee Health and Safety We recognize the protection of the health and safety of our employees, contractors, and the public as vital to our vision of building a team-based culture of excellence that responsibly delivers sustainable value and growth.. We are committed to conducting all of our activities including exploration, development, construction, operations and decommissioning in a responsible manner and in alignment with Centerra’s values, providing a safe and healthy environment for our employees, contractors, visitors and to the general public. To prevent injuries and safety incidents, we use proactive measures, such as job hazard identification, training, competency reviews, job task analysis, workplace and field inspections, and safety risk assessments. To avoid recurrence, we investigate all incidents to identify the root causes and proper mitigation efforts. The information is shared among all of our operations and projects. All operations and projects are staffed with skilled and competent emergency personnel and equipped with emergency response equipment. Our collective agreements cover health and safety topics such as preventing injuries and diseases, safety equipment supply and workplace monitoring to ensure employees are protected against hazards. We engage systematically with unions and employees to promote safety everywhere we work. Our approach is the same with our contractors and vendors. Work Safe, Home Safe Program In 2016, we introduced a safety leadership initiative, Work Safe, Home Safe, which forms the foundation of our safety culture at Centerra. The Work Safe, Home Safe program was developed following extensive input from all levels of the organization throughout our global business units, and assistance from third party consultants. The focus of the program is to build a Company-wide culture of safety and safety leadership by providing employees with information which will lead to changes in safety related behaviour, deliver an emotional element to build a commitment to change, and encourage communication to improve operational practices related to health and safety matters. Substantially all of our employees in the organization have undergone our Work Safe, Home Safe training. Starting in 2018, we rolled
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out a second phase of the Work Safe, Home Safe initiative which focused on supervisor leadership development training. We also introduced and implemented key safety leadership field interactions between Centerra’s senior and line management personnel and employees called Visible Felt Leadership. Environmental Protection Environmental stewardship is vitally important to us, local communities and potentially impacted Indigenous groups. We focus on improving our practices so that we prevent, reduce or mitigate damage to the natural habitats that provide essential resources to our employees and surrounding communities.
Spills • We act to prevent spills and ensure that safeguards are in place in order to minimize the environmental impacts associated with any unforeseen incidents. • Through our emergency response plan and our Environmental Management System, we seek to go beyond compliance in identifying risks and hazards so we can prevent foreseeable incidents and emergencies. We also use root cause analysis to identify the causes of incidents when they do occur.
Cyanide • Cyanide is used to recover gold from ore and is an essential part of our Kumtor Mine and Öksüt Mine operations. • Our approach to cyanide management at all of our operations which use cyanide is generally aligned with the International Cyanide Management Code, which is recognized as an international best practice. This code helps protect human health and reduce the potential for environmental impacts.
Water and • To ensure effective water and mine waste management, we measure and monitor water quantity mine waste and quality and mine waste stability. • Our approach to water management takes public safety, community health and environmental protection into consideration. • Our water and mine waste management design, layout and closure plans also consider the risks associated with climate change, including increased storm intensity, drought and receding glaciers.
Air • We monitor air quality at our operations and take actions to control air borne pollutants from mining activities.
Biodiversity • Biodiversity conservation is an important part of our reclamation process management strategy and, in keeping with our zero-harm goal, we look for innovative ways to promote biodiversity wherever we operate.
Waste • We have established industrial waste segregation at our projects. We have introduced organic Management composting at our Kumtor Mine. (non-mining)
Our Employees Employee Rights We strive to be one of the most attractive employers in the regions in which we operate. We pay fair salaries and provide our workers with various benefits; we comply with local legislation and make sure our employees are supplied with high- quality products and safety equipment. We strive to meet and exceed country requirements for working conditions and comply with all relevant International Labour Organization (ILO) requirements. The benefits available to our full-time employees, which while varying in the offerings site by site, are comprehensive and include pension, family benefits, and health care, compensation for job related accidents or occupational diseases, and unemployment insurance. Benefits for full time employees also include scheduled wage increases and, in limited circumstances, short term employee loans. We support collective bargaining with unions to reach collective agreements. Approximately 75 percent of Centerra’s employees are covered by collective bargaining agreements. Centerra has a Respectful Workplace Policy that prohibits discrimination and harassment on any grounds, including a person’s sex, age, race, national or ethnic origin, ancestry, place of origin, citizenship, creed/religion, colour, disability, marital status, family status, sexual orientation, gender identity, gender expression, or conviction for which a pardon has been granted.
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Diversity, Equity and Inclusion Centerra recognizes that not only is it important to have a workforce comprised of the demographics of the communities in which it operates, but also that diversity brings value to the workplace. We have various policies, guidelines, training, procedures and agreements at each of our operations, unique to each region, to bring the most cultural diversity and value to each workplace while respecting the cultures, communities and people within each of the regions we operate. We maintain culturally diverse recruitment practices, training of its workforce on cultural sensitivities in applicable regions, and management practices that reinforce principles of diversity and cultural acceptance. Some of the cultures in which we work, and national legislation, create barriers to achieving greater gender diversity, but we currently have good representation in professional ranks and we will continue to increase representation, where possible, through our global diversity, equity and inclusion (DE&I) program launched in 2020. Centerra recognizes that DE&I is imperative for long term success and that the journey begins at the top. To that end, we have created a Global DE&I Executive Council, sponsored, and chaired by the President and CEO with representation from senior management. Centerra has also created five regional DE&I committees, all sponsored by a regional executive and led by employee members. The Global DE&I Executive Council is responsible for the continued development of the DE&I global strategy, support alignment of regional strategies, make decisions on various DE&I initiatives and oversee the successful implementation of the strategy through the five regional committees. We have also partnered with the Canadian Center for Diversity and Inclusion and will be working with their DE&I experts to develop strategies and initiatives to increase diversity and promote inclusivity across Centerra. In 2020, over 1,200 employees, including all Board members and all senior management received diversity and inclusion fundamentals training and unconscious bias training. We will be offering continued education and awareness to all remaining employees in 2021 including DE&I fundamentals, Unconscious Bias, Men as Allies, Adopting Inclusive Leadership Behaviors, and Creating an Inclusive Environment. Additionally, Centerra has developed a talent management strategy aimed at attracting and retaining diverse talent by specifically focusing on attracting, developing, promoting and supporting employees from underrepresented groups (including gender, ethnicity, age, national origin, persons with disabilities, Indigenous peoples, visible minorities, and sexual orientation). Centerra is committed to increasing diversity and will be reviewing all policies and talent management processes to remove barriers or biases for underrepresented groups. Specifically, we will endeavor to increase the number of diverse talents, in high potential talent pools, review recommended promotions and increase diverse candidates when recruiting. In regard to gender diversity, Centerra continues to support women’s leadership programs (such as Leading from Within – a program aimed to develop female employees across the organization), identification and assessment of high potential female talent and the creation of individual development plans to monitor progression. In 2020, Centerra became a Silver sponsor for International Women in Mining (IWiM). In 2021, we will be participating in several initiatives alongside IWiM including women mentorship programs, inclusive workplace design workshops and posting jobs onto their website to attract women in the workforce and in leadership positions. Employee Training Employee training and career development is integral to maintaining strong and positive employee growth and improving organizational performance. Enhancing the knowledge and skills of a workforce is fundamental to improving the productivity of operations and efficiency of the business. In some instances, equipment or safety training is critical to legislative compliance or maintaining safe and healthy workers and a safe and healthy workplace. Our approach to developing our employees is dependent on the geographical region, location needs, individual employee needs, or training objective to be achieved. We deliver training to satisfy governance requirements (i.e. ethics and insider trading awareness), safety requirements, developmental & career objectives, and technical job training, among other needs. Training needs are identified by direct managers or supervisors, through the performance planning and career development process, by HR or training departments, or as requested directly by employees. Training delivery is accomplished through a combination of external vendors and programs and internal qualified trainers. In 2020, the Company implemented a global talent management system that incorporates a robust learning and development platform to deliver virtual onboarding and orientation, policy and compliance training, and other training and leadership programs. Social Performance We understand that partnering with local communities and Indigenous groups for social and economic development creates value for us and the local areas in which we operate. We work to establish and maintain the trust of local communities and Indigenous groups by acting as a good corporate citizen.
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We have a grievance management and resolution process for each of our operations and development projects. We believe this is a powerful mechanism to improve communication with local communities and Indigenous groups. Community Engagement, Development and Social Investment We adopt an International Finance Corporation (“IFC”) Guideline approach to strategic community investment and economic development wherever possible, with annual budgets based on both impact mitigation needs and benefit sharing (sustainable development opportunities to minimize dependency). We believe it is important to provide assistance to local communities and Indigenous groups in reaching their goals to develop the local economy, and for the well-being of local residents. Taking into account that mine closure will have a direct impact on the region’s economy, it is a priority to have a structured and planned approach in community investment projects. The following describes how the Company engages in the communities in which it operates, and its approach to development and social investments at each site. The investments discussed below are in addition to the millions of dollars paid by the Company pursuant to the revenue-based tax paid in respect of the Kumtor Mine, taxes at the Mount Milligan Mine and the Öksüt Mine, local procurement and employment at each operation, and payments and other benefits made pursuant to formal agreements with potentially impacted Indigenous groups. Kumtor Mine The Kumtor Mine’s local engagement is maintained through two regional information centres, established in the Jeti- Oguz and Ton districts. The main objective of these centres is to provide information about the Kumtor Mine to local residents. This includes information relating to Kumtor Mine’s hiring procedures, human resources policies, job vacancy information, as well as the donations policy, social investments and sustainable development projects. Regional sustainable development officers attend local community events, monitor the implementation of development projects funded by Kumtor Gold Company (“KGC”), and act as a point of first contact for members of local communities. In addition to these structured activities, other types of formal and informal engagements occur on a regular basis across the local communities, with a range of other stakeholders such as community leaders, community organizations, local small businesses, and farmers. To ensure partnerships based on consensus we initiated the establishment of regional committees in Jeti-Oguz, Ton and Balykchy. Committee members are local authorities, heads of village councils, representatives of civil society organizations, members of different unions. In these meetings, KGC management raise issues about operations and define plans for social investment projects in liaison with local communities. Decisions are made together with the representatives of each committee so that KGC's social investments meet the expectations and needs of communities. On a regular basis, we host one-day visits to the Kumtor Mine for interested parties, including representatives of state bodies, local authorities, partner organizations, and teachers and students from various educational institutions. The Kumtor Mine’s contributions to the community and social investments take a variety of forms. For example, the Kumtor Mine contributes 1% of its gross annual revenues to the lssyk-Kul Development Fund. This fund is governed by an oversight and steering committee (independent of KGC), which includes local government representatives and non- governmental organizations. The fund is designed to develop the socioeconomic infrastructure of the lssyk-Kul Region in accordance with local and regional government priorities. Since the creation of the fund in 2009, KGC has invested more than $88.5 million into projects as diverse as kindergartens, schools, sports clubs, and irrigation infrastructure across the lssyk-Kul region. KGC has the right to coordinate 50% of overall funds to ensure a transparent and fair spending of the selected projects in the interests of social and economic development of the lssyk-Kul region, especially of communities located on the southern coast of Lake lssyk Kul. Centerra and its Kyrgyz subsidiaries entered into the Strategic Agreement on Environmental Protection and Investment Promotion dated September 11, 2017 with the Government of the Kyrgyz Republic (the “Strategic Agreement”). As part of the Strategic Agreement, KGC agreed to make annual payments of $2.7 million to the Kyrgyz Nature Development Fund, conditional on the Kyrgyz Government continuing to comply with the terms and conditions of the Strategic Agreement. In addition, and at the request of the Kyrgyz Government, KGC has also committed to make monthly contributions to the Kyrgyz Regional Fund equivalent to 0.4% of KGC’s revenues from the Kumtor Mine, and an annual contribution of $1 million to the Kyrgyz Republic Nature Development Fund. These contributions are in addition to certain one-time payments agreed to by KGC as set out in the Strategic Agreement or elsewhere, which are more fully discussed elsewhere in this document. In addition, the Kumtor Mine carries out its own community investment projects, which is focused on providing support in the following main areas: (i) business growth and diversification, particularly small businesses and entrepreneurs; (ii) providing support to development of the agricultural sector; (iii) youth and educational projects; and (iv) environmental
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protection. Occasionally, the Kumtor Mine partners with international and local organizations to maximize the impact of our community investments. The Kumtor Mine also provides one-off donations, usually in the form of in-kind equipment or services and requests for support from across the country. It has established a Kumtor Mine donations committee to review and approve donations. KGC conducts follow up monitoring visits on a regular basis to ensure that the donations are used for the intended purposes. Most of the donations are provided for the purchase of furniture for schools and kindergartens, food baskets for identified vulnerable groups, support of sports tournaments, purchase of books and other materials for schools, strollers for disabled people and costumes for culture houses in the region. In response to the COVID-19 pandemic, in 2020 KGC provided $1 million in financial assistance to the Kyrgyz Government for use towards COVID relief efforts including equipping healthcare facilities with medical equipment. Mount Milligan Mine Ensuring the participation of our local communities in our decisions to promote meaningful and tangible socio-economic benefits for the region is the approach Mount Milligan takes to creating a lasting legacy within the area in which we operate. To facilitate community input on Mount Milligan Mine’s activities, including community programs, the Mount Milligan Community Sustainability Committee (“CSC”) has been operating since 2008. The CSC is comprised of representatives from the communities and Indigenous groups of McLeod Lake Indian Band, Nak’azdli Whut’en, Mackenzie, Fort St. James, Vanderhoof and Prince George. The CSC meets 3-4 times each year, including an annual summer meeting held at the mine site. In addition to providing input on mine activities and updates on community developments, a primary responsibility of the CSC since 2016 has been allocating the funding provided through the Mount Milligan Community Project Fund (“CPF”). This fund is a component of the Mount Milligan Legacy Program, which was set up in 2014. The CPF provides financial support to local organizations working to build capacity at the community level in one or more of the following priority areas: education and training, health, environment, community (including economic development), and literacy. To further community investment, Mount Milligan Mine also runs a regional donation program to facilitate the Company’s support of local non-profit organizations and community events. In 2020, the Company provided funding in excess of $45,000 in donations and sponsorships to support youth sports teams, arts organizations, health and education-focused initiatives and recreation clubs in our local communities. We have also donated over $80,000 across the region to COVID-19 relief efforts. In May 2020, the Mining for Good campaign was launched as part of our COVID- 19 relief efforts to recognize local heroes. Over 50 local hero nominations were received, and gratitude gifts worth a total of $25,000 have been delivered to deserving community members in our neighboring communities. In addition to these program and initiatives, each year Mount Milligan Mine sponsors a number of community education and training programs through the local community college, such as First Aid certification and computer skills upgrading classes. Mount Milligan Mine is committed to supporting education across the region. Since 2015, the Company has run a Mining Education Program each spring. This program consists of educational mine tours for local elementary and high school students as well as classroom presentations made by mine employees. To increase access to post-secondary education for local students. Mount Milligan launched in 2019 a Mining Experience (MiningX) pilot program for local high school students. The program consists of a mining education component that focuses on mining awareness and builds relevant skills such as safety, leadership, and interpersonal skills, followed by a summer work placement at the mine or a post- secondary bursary. The objectives of the program are to increase awareness of, and interest in, employment opportunities in mining, specifically at Mount Milligan, amongst local high school students and provide transferable skills to other industries. Mount Milligan Mine also provides several academic bursaries each year to high school graduates from the mine’s local communities. In 2018, Mount Milligan made a 3-year, $45,000 commitment to support a Water Stewardship and Ecosystem Health Program run by the local school district. Each summer, Mount Milligan Mine hosts free mine tours for members of our local communities. Participants see the multiple aspects of the mine’s operations up close and learn about the Company’s employment and training initiatives, environmental management, health & safety programs, and community partnerships. On the tour, community members have an opportunity to speak with mine employees from a number of different departments and ask questions about the mine and the Company’s activities. In 2019, we ran 6 community tours that saw over 80 visitors to the mine site. Unfortunately, due to COVID-19, we were unable to offer community site tours in 2020. In 2015, we entered into a partnership with the local community college to run Community Offices in Fort St. James and Mackenzie. At the two college campuses, information on our operations and activities in British Columbia is available, including community programs and current job postings. Front desk staff receive training so that they can field questions
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or concerns by phone, email or in-person, as well as assist community members with online employment applications. Contact information for Centerra Gold’s regional Sustainability Department is also available for those who wish to contact the Company directly with questions or concerns. Öksüt Mine Construction activities began in March 2018 at the Öksüt Project and continued into 2020. In 2020, we continued to focus on consistent and transparent stakeholder engagement to help us with our sustainable development and capacity building programs, although face-to- face meetings were restricted due to COVID-19. In 2020, some plans and projects were revised due to the COVID-19 pandemic and the programs shifted to support local efforts in combatting COVID-19. While community health projects were given priority during 2020, support for education and sports activities, infrastructure improvement and cultural projects continued. In addition, within the scope of the Livelihood Restoration Plan, projects to improve agriculture and livestock activities were implemented. Indigenous Relations Our Mount Milligan, Endako, and Kemess properties are located in close proximity to multiple Indigenous communities. Our objective is to have mutually respectful and meaningful relationships with all Indigenous groups impacted by our operations and activities. Mount Milligan Mine Mount Milligan Mine has strong relationships with the Indigenous groups surrounding the mine site, built on trust and open dialogue. Formal agreements are in place with two Indigenous groups, McLeod Lake Indian Band and Nak’azdli Whut’en, that outline provisions concerning employment & training, environmental management and business opportunities. Both agreements include financial payments to be made by Mount Milligan Mine and outline provisions for agreement implementation committees, composed of Company and Indigenous representatives. In addition to implementation committees, both Indigenous groups have created liaison positions to facilitate their close working relationship with the Company. These liaisons visit the mine site on a monthly basis to provide support to Indigenous employees and meet with the human resources team to discuss training and recruitment initiatives. Representatives from McLeod Lake Indian Band (MLIB) and Nak’azdli Whut’en also sit on the Mount Milligan Community Sustainability Committee. To advance Indigenous employment at Mount Milligan Mine and build capacity within our local communities, Centerra, MLIB and Nak’azdli Whut’en worked together along with the local community college to develop and run a customized pre-employment training program for members of both bands. The program’s curriculum was developed based upon the specific skills and core competencies required for employment at the mine as well as components important to Nak’azdli Whut’en and MLIB, such as communication skills, mental health awareness, and resume and interview skills. Upon completion of the program, students have the opportunity to apply for dedicated contract positions at the mine. The program ran successfully in 2017 and 2018 and started again in 2020. From 2017 to 2018, five graduates of the program received full-time job offers at the Mount Milligan Mine. Across the region, Mount Milligan Mine regularly participates in career fairs and seminars hosted by Indigenous groups and provides academic bursaries to graduating high school students from McLeod Lake and Nak’azdli Whut’en every year. To support cross-cultural understanding and relationship-building, Mount Milligan Mine participates in community- based cultural celebrations, and also hosts cultural events at the mine site each year. Kemess Underground Project Indigenous relations remain a primary focus for the Kemess underground project. In 2017, an Impact Benefit Agreement was signed with Tsay Keh Dene, Takla Lake First Nation and Kwadacha Nation, together referred to as Tse Keh Nay (“TKN”).
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3. CENTERRA’S PROPERTIES
3.1 Operating Mines Our producing gold mines are Kumtor Mine, Mount Milligan Mine and Öksüt Mine. Kumtor Mine Quick Facts The Kumtor Mine, located in the Kyrgyz Republic, is one of the largest gold mines in the former Soviet Union operated by a non- domestic producer. The Kumtor Mine has been in operation since 1997. In 23 years, Kumtor Mine has produced approximately 13.2 million ounces of gold.
Location Kyrgyz Republic
Ownership 100%
Business Structure Our wholly-owned subsidiary, Kumtor Gold Company CJSC (defined above as KGC), is the holder of the rights to the Kumtor Mine
End Product Gold doré
Mine Type Open pit
Estimated Mineral Reserves 6,013 koz of contained gold (proven and probable) (as at December 31, 2020) average grade – 2.66 g/t tonnage – 70,306 k tonnes
Estimated Mineral Resources 2,280 koz of contained gold (measured and indicated) – (as at December 31, 2020) open pit average grade – 2.78 g/t Mineral resources are in addition to reserves. tonnage – 25,532 k tonnes Mineral resources do not have demonstrated economic viability. Inferred mineral resources have a great amount of 1,324 koz of contained gold (inferred) – open pit uncertainty as to their existence and as to whether average grade – 1.97 g/t they can be mined economically. It cannot be tonnage – 20,846 k tonnes assumed that all or part of the inferred resources 3,141 koz of contained gold (inferred) –Underground will ever be upgraded to a higher category. average grade – 7.46 g/t tonnage – 13,100 k tonnes
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Processing Method Milling, flotation, ultrafine grinding and CIL
Total Production to December 31, 2020 13.2 million ounces of gold
2020 Production 556,136 ounces of gold
Estimated Mine Life 2031
Employees (excluding long term contractors) 2,792
Technical Report The Kumtor Technical Report, with an effective date of July 1, 2020 was filed on February 24, 2021 on www.sedar.com. Overview Restated Investment Agreement The Restated Investment Agreement with the Kyrgyz Republic dated as of June 6, 2009 provides the following guarantees with respect to the Kumtor Mine operations: • such access to the Kumtor Mine, including all necessary surface lands, together with access to water, power and other infrastructure, as is necessary or convenient for the operation of the Kumtor Mine; • that the Kyrgyz Government will support further and additional exploration activity by us in the Kyrgyz Republic by inviting us to consider opportunities to acquire additional exploration and mining licenses; and • all licenses, consents, permits and approvals of the Kyrgyz Government necessary for the operation of the Kumtor Mine. Significance to the Kyrgyz Republic The Kumtor Mine plays a particularly important role in the economic and political life of the Kyrgyz Republic. It is one of the largest private sector employers of Kyrgyz Republic citizens, is the largest foreign investment in the country and represents a significant portion of the country’s gross domestic product, export earnings and total industrial production. The importance of Kumtor Mine to the Kyrgyz Republic economy means that it has a very high profile within the country. Accordingly, Kumtor Mine continues to be at the centre of political and public attention in the Kyrgyz Republic. Disputes and Threats of Nationalization The Kumtor Mine has been the subject of numerous disputes in the past, including lawsuits and legislation that challenged the validity of the decrees, agreements and licenses that govern the title, operation and taxation of Kumtor Mine, and calls for nationalization of the Kumtor Mine. See the “Risk Factors” section of this AIF. Labour and Employment Matters As of December 31, 2020, the Kumtor Mine had 2,792 permanent employees (excluding long-term contractors), of which approximately 98.5% are Kyrgyz Republic citizens. The Kumtor Mine is unionized and all of our national employees in the Kyrgyz Republic (including at the regional head office) are subject to our collective agreement with the Trade Union Committee. The current collective bargaining agreement, which was ratified in December 2020, expires on December 31, 2022. A prolonged work stoppage at any time could have a significant impact on Kumtor Mine achieving its forecasted production. See the “Risk Factors” section of this AIF. 2021 Kyrgyz Republic State Commission In February 2021, a State Commission was formed by the Kyrgyz Republic Parliament to review the performance of the Kumtor Mine and to oversee the implementation of a previous Kyrgyz Parliamentary resolution which established a State Commission in July 2012. The Company has received a number of inquiries from the State Commission as well as related inquiries from other state agencies and bodies, including Kyrgyzaltyn, and is in the process of responding to all such inquiries. It has also received several audit requests from tax authorities. The 2012 State Commission was created to “check and review Kumtor Operating Company’s compliance with the standards and requirements related to the rational use of mineral resources, environmental protection, operational process safety, social protection of local communities”. It made several allegations relating to the Kumtor Mine’s operations, management and prior transactions going back to 1993 and a series of recommendations. It also resulted in a number of legal claims and investigations affecting the Kumtor Mine. For further information relating to the legal matters arising out the 2012
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State Commission, see “ – Kumtor Strategic Agreement” below and our Annual Information Form for the year ended December 31, 2019. As noted elsewhere in this AIF, the Strategic Agreement was a comprehensive settlement completed in 2019 that resolved all of the then outstanding issues relating to the Kumtor Mine. Property Description, Location and Access The Kumtor Mine is located in the Tien Shan Mountains, some 350 km to the southeast of the national capital Bishkek and about 60 km to the north of the international boundary with the People’s Republic of China, at 41°52’ North and 78°11’ East. The Kumtor Mine and its adjoining mill complex is situated in alpine terrain at an elevation of approximately 4,016 m, while the highest waste and glacial mining excavations are present above an elevation of 4,400 m. The main camp, administration and maintenance facilities are at about 3,600 m. As the area is seismically active, all facilities at the Kumtor Mine, including the process plant and tailings storage dam, have been designed in accordance with recommended seismic standards for the area. Access to the Kumtor Mine is by a main road that runs between Bishkek and Balykchy, on the western shore of Lake Issyk-Kul, a distance of 180 km. A secondary road running along the south shore of the lake leads to the town of Barskaun for another 140 km, and a final 100 km must be traversed on a narrow, winding road leading into the Tien Shan Mountains that climbs to an elevation of 3,700 metres (“m”) through 32 switch backs to reach the Kumtor Mine. The Kumtor Mine has completed considerable work to maintain this access road and, despite occasional avalanches and movements of gravel and till down steep slopes during heavy rains, there has not been any extended period during which the road has been out of service. Most employees work two-week rotations and are transported to the mine site from Bishkek and the Issyk-Kul region using a company-owned commuter bus service. Supplies are transported by rail to the Kumtor Mine marshalling yard in Balykchy at the west-end of Lake Issyk-Kul and then trucked 250 km to the mine site. A helicopter pad is available at the mine site. Under our Restated Concession Agreement with the Kyrgyz Republic, effective June 6, 2009 (the “Restated Concession Agreement”), we were granted a concession with exclusive rights to all minerals within an area of approximately 26,000 hectares (“ha”) centered on the Kumtor Mine gold deposit (the “Concession Area”) and with an expiration date of December 4, 2042. As of June 6, 2009, when the Restated Concession Agreement came into effect, all prior existing mining and exploration licenses and associated agreements held by us terminated and were superseded by the Restated Concession Agreement. Other than taxes and fees described below under the heading “Mining operations – Taxes”, there are no royalties, payments or other agreements or encumbrances related to the Kumtor Mine. The Kumtor Mine gold deposit is comprised of the Central, Sarytor, Southwest and Northeast deposits. All of the mineral deposits, the tailings management facility, waste dumps and the processing plant are located within the Concession Area.
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Concession Area
History Intermittent exploration in the general Kumtor Mine area dates back to the late 1930s.
1930s • Central Asian Geologic Expedition completed first recon mapping and prospecting
1958 • State Kyrgyz Geologic Agency resumed regional and district scale mapping and exploration programs
1978 • Discovery of the Kumtor deposit by a geophysical expedition of the State Kyrgyz Geologic Agency during grab sampling from the frontal moraine of the Sarytor Glacier. • Gold bearing altered rocks of what is now called the Central Deposit were found during follow- up prospecting.
1979 to 1989 • A systematic and comprehensive exploration program targeting the area now known as the Central deposit, and to a lesser extent the Southwest deposit, is carried out. Program consisted of several rounds of trenching, geologic mapping, diamond drilling and three levels of adits completing a resource and reserve delineation in the central part of the Kumtor deposit (Central Deposit).
1990 • An initial reserve statement is issued by the Soviet Union State Committee on Reserves.
1991 • Soviet Union breaks up and Kyrgyz Republic emerges as an independent country. • Cameco Corporation (“Cameco”), Centerra’s former parent company becomes aware of the project.
1992 • Cameco concludes an agreement with the Kyrgyz Republic regarding the project, and retains a third-party consultant to undertake a feasibility study of the project.
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1992-1993 • The Kumtor Mine feasibility study is completed. The feasibility work program included data verification (by re-sampling parts of the underground openings and re-assaying of original sample rejects), additional and definitive metallurgical test work, and a re-estimation of mineral resources and reserves using geostatistical methods, a block model and pit optimization software.
1994 • An update to the Kumtor Mine feasibility study is completed.
1994 • A project development agreement is finalized with the Kyrgyz Government. Pursuant to this agreement, Cameco Gold Inc. (“Cameco Gold”), through its wholly-owned subsidiary Kumtor Mountain Corporation, held a one-third interest in KGC, a Kyrgyz Republic joint stock company that owned the concession giving it exclusive rights to develop the Kumtor Mine. Kyrgyzaltyn held the remaining two-thirds interest in KGC. KOC, then a wholly-owned subsidiary of Cameco Gold, acted as operator of the Kumtor Mine. We are the successor to substantially all of the gold business previously carried on by Cameco Gold, which was a wholly owned subsidiary of Cameco.
1995 • A further update to the Kumtor Mine Feasibility Study is completed.
1995 • Financing arrangements for the Kumtor Mine are concluded.
1996 • Project construction is completed.
1997 • After capital expenditures of approximately $452 million, mining of the Central pit commences, and commercial production is achieved.
2004 • Kyrgyzaltyn and Cameco Gold sells us all of their shares in KGC (and KOC) effective June 22, 2004 in exchange for, among other consideration, common shares in Centerra. Accordingly, the Company acquired a 100% interest in the Kumtor Mine.
2006 • Ore deliveries from the Southwest deposit commence.
2009 • The Kyrgyz Government, Cameco and Centerra, among others, entered into an Agreement on New Terms (ANT) for the Kumtor Mine to settle certain outstanding disputes related to the Kumtor Mine. • Project agreements from 2004 are amended and restated. • The ANT is approved by the Kyrgyz Republic Parliament.
2012 • Kyrgyz Parliamentary and State commissions formed, made several negative conclusions and assertions regarding the operation of the Kumtor Mine and recommended the Kumtor Mine Agreements be re-negotiated.
2012 • Numerous legal claims launched against the Kumtor Mine by Kyrgyz regulatory authorities alleging among other things, environmental damage, mismanagement of assets and non- compliance with corporate laws relating to dividends. Kyrgyz Republic authorities also commenced a number of criminal investigations relating to the Kumtor Mine, KGC and KOC.
2017 • Kumtor Strategic Agreement to resolve outstanding issues affecting the Kumtor Mine signed (September 2017), including the legal claims described above.
2019 • Kumtor Strategic Agreement completed (August 2019), resolving outstanding disputes.
2021 • Kyrgyz State commission formed to oversee the implementation of a previous Kyrgyz Parliamentary resolution which established a State Commission in July 2012.
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Geological Setting, Mineralization and Deposit Types Geology The Kumtor Mine gold deposit is confined to structures of the Middle Tien Shan collision zone along a roughly east-west trending belt, which includes a number of individual collision zones with numerous world-class orogenic deposits. These deposits include Muruntau and Daugiztau in Uzbekistan and the Bakyrchik Deposit in Kazakhstan. The length of the belt within the Kyrgyz Republic is 470 km and the width is 10 km to 20 km. The northern boundary of the collisional belt coincides with the regionally extensive Nikolaev Fault. The southern boundary is less well defined but controlled by terranes of ancient metamorphic rocks and structures along the Atbashi-Inylchek Fault. Mine geology is dominated by several major thrust slices and fault zones which strike north-easterly and dip to the southeast at varying but moderate angles. Each thrust sheet contains older rocks than the sheet it structurally overlies. The slice hosting most gold mineralization is composed of meta-sediments of Vendian age (youngest Proterozoic or oldest Paleozoic) that are strongly folded and schistose. In most areas, the Kumtor Fault Zone (“KFZ”), a dark-grey to black, graphitic gouge and schist zone forms the footwall of this structural segment. The KFZ has a width of up to several hundred metres. The adjacent rocks in its hanging wall are strongly affected by folding, shearing and faulting for a distance of up to several hundred metres. The rocks in the structural footwall of the KFZ are Cambro-Ordovician limestone and phyllite, thrust over Tertiary sediments of possible continental derivation which in turn rests, with apparent unconformity, on Carboniferous clastic sediments. Given its location astride a major fault of regional importance and owing to the strong association of gold mineralization with a multi-phased metasomatic system at relatively high temperatures, the Kumtor Mine gold deposit is a member of the class of structurally controlled meso-thermal gold replacement deposits i.e. orogenic gold deposits. Mineralization Within the Kumtor concession, the tectono-stratigraphic column of rocks has been assembled into successive structural packages, bounded by several documented and predictable district-scale thrust faults. Four individual packages of rock are bounded by these thrusts, stacked upwards from the Kumtor Lower Thrust to the Sarychatskiy Thrust. The packages of rock are designated Unit 0 through Unit 3. Gold mineralization occurs primarily in Unit 2 but also in Units 0 and 1. Gold mineralization is distributed with varying intensity over 12 km along the trend, and it is most intensely concentrated in the Central Deposit and less so in the Southwest and Sarytor Deposits, where limited gold mining took place between 2006 and 2016. Other mineralized units are present in the Northeast Deposit and the Bordoo prospect. Only a preliminary resource assessment has been completed for the Northeast Deposit. The Central Deposit Within the Central Deposit, three general sectors of gold mineralization have been delineated. For the purposes of resource modelling, these sectors have been sub-divided into separate zones and domains based on mineralization and alteration characteristics. The three general sectors are described below. • Two parallel zones of faulting and gold mineralization are well defined, extending to the northeast with dips to the southeast at angles of 45° to 60°. There is a layer of unmineralized rock or poorly mineralized rock between them. The southern mineralization segment, with a strike length of 700 to 1,000 m and a horizontal width of 40 to 80 m, is relatively well mineralized along its entire length having an average gold grade between 3 to 4 grams of gold per tonne. The northern segment is somewhat longer, but with the same width and is characterized by less consistent gold grades. Its mineralization is comprised of a series of separate lenses of mineralized rock, in which average gold grade varies from 2 to 3.5 grams of gold per tonne. • In the north-eastern part of the area, the northern and southern segments merge into the Stockwork Zone, where high gold grades are present. The dimensions of the Stockwork Zone in the upper part of the Central Deposit are from 400 to 500 m in length and from 50 to 200 m in width, and the average grade is from 5 to 6 grams of gold per tonne. The Stockwork Zone plunges to the northeast at an angle of 40-50° and significantly decreases in size below an elevation of 3,700 m. It is located quite close to the northeast high pit wall thus greatly affecting overall stripping ratios in the pit. Along the plunge of the Stockwork Zone, exploration discovered mineralized rock below the bottom of the planned open pit that is now recognized as the North Blob (NB Zone) body with a gold grade of 1 -7 grams of gold per tonne. • In the southwestern part of the Central Deposit, the South Blob Zone (SB Zone) crops put at an elevation of 3,900 m, below which depth it expands considerably. It was the discovery of the SB Zone that allowed for a significant increase in Central Deposit reserves in 2005. Drilling conducted from 2008 onwards extended the SB Zone along strike to the southwest, increasing its known strike length as much as 1,000 m, and its vertical
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dimension as much as 650 m, and its width from 6 to 75 m, at an overall contained gold grade of 5 grams of gold per tonne. At some distance to the southwest, where a steeply dipping fault appears to have reverse offsets, a mineralized body was discovered (Hockey Stick Zone) that is similar to the SB Zone. The Hockey Stick Zone has been traced towards the Southwest Deposit for about 720 m with plunge and thickness as much as 67.1 m. • The Saddle Zone, which is located in between Stockwork and SB zones, hosts the same trend and characteristics of gold mineralization, but with weaker gold distribution. The Southwest and Sarytor Deposits The Southwest Deposit is located southwest of the Kumtor process plant at elevations of 4,000 m to 4,100 m above sea level. Gold mineralization in the Southwest Deposit primarily is limited to formations assigned to Unit 2 in the hanging wall of the Kumtor Upper Thrust. Boundaries of the mineralized rock are marked by a tectonic crush zone of black clay gouge at a contact with surrounding barren phyllite. A number of mineralized rocks can be distinguished by gold grade, fabrics and intensity of alteration in the Southwest Deposit. The most productive is feldspar-quartz altered rock including both massive and brecciated fabrics, together with carbonates. In some areas, these rocks include barite-ankerite veinlets. Overall, the degree of alteration of host phyllite is quite intense and relicts of original host rocks are barely recognizable. Pyrite content is more than 10 volume percent and gold grades are 5 grams of gold per tonne or more. Weaker altered mineralized rock is altered sericite phyllite with disseminated, vein-like mineralization. Typical veinlets include quartz, ankerite, and additional carbonate minerals, as well as feldspar with pyrite. Pyrite makes up as much as 10 volume percent, and gold grade ranges from 1 to 5 grams of gold per tonne. The Sarytor Deposit is located on the eastern slope of a ridge between the Sarytor Glacier and the Bordoo Glacier and it constitutes part of the southwest segment of the Kumtor Lower Thrust, which is one of the general mineralization controls along the entire Kumtor Trend. Distance from the Kumtor process plant to the Sarytor Deposit is 4 km, and road distance is 9.5 km. The Sarytor Deposit structure is characterized by thrust faults of various ages. A thick thrust zone (100 to 250 m) extends through the entire deposit from east to west and has a southeast-sub-latitudinal orientation (50°/145° and 45°/180°). Gold mineralization in the Sarytor Deposit is controlled strictly by the above-mentioned thrust zone system, whose identified gold mineralization has variable intensity but, in all, constitutes the mineralized zone of the Sarytor Deposit. The deposit has been traced by exploration holes for a strike distance of 800 m and to 150 m to 300 m depths. Thickness of mineralized rock varies from 100 m to 200 m. No pinching of the mineralized rock has been detected at depth. Mineralized rock includes a number of variable mineral assemblages, generally similar to those in the Central Deposit. Oxide mineralized rock is characterized by small lenses of oxide-altered rock in an area of tectonic mélange along the Kumtor Lower Thrust, especially in its subsurface parts. Length of lenses and altered boudins composed of gold-bearing rock vary from a few tens of metres to 160 m, with thicknesses as much as 20 m. Mineralized rock generally contains limonite, hematite and pyrite typically partially or completely oxidized, as oxidation is generally incomplete. Gold mineralization is associated with clasts of pyrite-carbonate-quartz and K feldspar-pyrite-quartz-carbonate assemblages. Gold grade in this zone is clearly linked to composition and intensity of alteration affecting separate boudins and lenses and ranges from 1.5-2 grams of gold per tonne to 13-17.2 grams of gold per tonne. Northeast Deposit The Northeast Deposit is located approximately 2.5 km northeast of the Central Deposit (Figure 7.10) where surface trenching, diamond drilling, and underground (adit) sampling first were undertaken in the 1980s. A few rounds of diamond drilling also were carried out at the Northeast Deposit in later years. Geologic structure of the southwest end of the Northeast Deposit is similar to the geologic structure at the northeast margin of the Central Deposit. The Northeast Deposit includes several steeply dipping, narrow tabular mineralized bodies confined largely to Units 0 and 1 in the footwall of the Lysii Thrust. The deposit includes both sulphide and oxide mineralization, the latter was known historically on the surface and was encountered at depth by recent drilling.
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Exploration, Development, and Production Exploration The principal exploration data acquisition method at the Kumtor Mine is diamond drilling. There is a large historical drill hole database (augmented by underground exploration results) dating back to Soviet times. To a large extent, this information is no longer relevant to current mineral reserve estimates, since the upper parts of the Central Deposit, to which the historical information pertained, have now been mined out. Models for the Southwest and Sarytor Deposits use very little historical Soviet era data. There are only small areas in the current mineral reserves that rely on Soviet data, and this old data has gradually been verified by in-fill or replacement drilling. As a result of the lack of sufficiently detailed information in the Central Deposit below an elevation of 3,950 m, about 28% of the Kumtor Feasibility Study open-pit mineral reserves, which contain one-quarter of the total gold to be mined, had been substantially less well documented than the upper part of the deposit. To fill this information gap, and to explore for extensions to known mineralization, Kumtor Mine undertook a large in-fill diamond drill program in the years 1998 to 2019, comprised of 1,116 holes in the Central Deposit totaling 370,368 m and 731 holes on other targets totaling 149,477 m. Drilling was undertaken from various pit benches and setups outside of the pit, including setups on the waste piles. Drilling has increased the density of the drill pattern in the lower part of the deposit to equal to or better than that available at the time of the Kumtor Feasibility Study for the mineralized rock above the 3,950 m elevation. Cut-off grade utilized in the Central Deposit is 0.85 g/t Au and 1.0 g/t Au for the Southwest and Sarytor Deposits. In the Central, Southwest, and Sarytor Deposits, the drill holes are now generally spaced 30 m to 40 m along strike and 40 m to 80 m down-dip in geologically complex areas, and at 80 m along strike and 60 m to 80 m down-dip in other areas. The majority of the Kumtor Mine diamond drill holes are steeply inclined HQ-size core, except when ground conditions necessitate a reduction in core size to NQ. For all holes, drill collars are surveyed, and down-hole deviations are measured at intervals of 20 m to 30 m using a reflex single shot camera. Limitations on drill site set-ups dictate that a certain number of off-section holes are drilled. Drill cores are logged for geological and geotechnical information, and are photographed prior to sampling. Drill-collar coordinates, down-hole trajectories, assay results, and information on lithology, alteration and mineralization are recorded in the mine or exploration drilling database. Drill core recovery typically varies from 80% to 100%, averaging greater than 95%. In certain cases where core recovery from mineralized intervals is low, the hole is stopped and re-drilled to achieve better core recovery. There is no evidence that core recovery issues impact reliability of gold assay data used for mineral resource and reserve estimation. The angle of intersections between the drill holes and the mineralization is generally such that the true width of the mineralization is equivalent to 70% to 95% of the length of mineralized drill-hole intervals. In 2020, $15.884 million was spent on exploration drilling programs in the Central, Southwest and Sarytor pits, Northeast and Bordoo Targets, Muzdusuu, Hope, Deep Oxide and Koshuluu Zones. A total of 50,044.4 m in 196 drill holes were completed in 2020. Underground Mining Mineral resources for the Kumtor Mine underground have been updated based on the completion of the 2020 resource update to 3.141koz at end-2020 from 3,125koz at the end of 2019 as a result of the 2019 and 2020 exploration drilling. Centerra is planning to update the mineral resources and reserves for the underground portion of the mine. No major changes were made to the Kumtor Mine underground project in 2020 other than the resource update reflecting the expanded Central Pit resource. Production For production information for the Kumtor Mine in 2020, see “2020 and 2019 Production and Revenue”. Sample Preparation, Analysis and Data Verification A standard core logging and sample collection process exists at Kumtor Mine. Average sample length of drill core is 1.5 m in non-mineralized material, and 1.0 m in mineralized zones. Samples do not cross lithological or alteration contacts. The Quality Assurance /Quality Control (“QA/QC”) process requires insertion of one quality control sample per every 20 samples, either a blank or standard reference material. Drill core is cut into two halves, one is kept in the core box and stored, while the other it sent to the SAEL laboratory (Stewart Assay and Environmental Laboratories LLC) in Kara-Balta, Kyrgyz Republic for assaying.
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From 1998 to 2012, sample collection, preparation, and analysis were all carried out by Kumtor Mine personnel at the Kumtor Mine-owned site laboratory, which was not certified but was subject to periodic calibration and operational checks by the Kyrgyz National Accreditation Agency. From 2013 to the present, exploration drill hole samples were assayed at the SAEL laboratory located in Kara Balta town, Kyrgyz Republic. SAEL is accredited to ISO 17025:2008 by UKAS. The quality management system is certified to ISO 9001:2005 by BVC. Quality control procedures have evolved over time. In late 2012, an audit of the Kumtor Mine laboratory and QA/QC procedures was conducted by Lynda Bloom of Analytical Solutions Laboratory (ASL), Canada. Based on recommendations of this independent audit, QA/QC protocols were modified, and primary exploration drill sample analysis was moved from the mine site to the SAEL Laboratory in Kara-Balta under the supervision of ALS Geochemistry. Lynda Bloom of ASL was again contracted in 2020 to conduct a performance review of both the Kumtor and SAEL laboratories. The focus of this performance audit was to review Kumtor’s protocols on sampling (grade control and core sampling), QA/QC protocols and procedures, and to provide comments on the accuracy of the assay results that were recorded after 2017 for use in the 2020 estimation of mineral resources. ASL concluded that the Kumtor Mine maintains a rigorous assay quality control program and the SAEL laboratory uses well-recognized analytical procedures having a quality control system in place that operates to international standards. Furthermore, ASL concluded that the SAEL Laboratory provides accurate gold assay results. The current QA/QC program requires insertion of either one blank or one reference material every 20 samples on an alternating basis. Presently, 10 Geostats reference materials are used to cover the expected range of gold grades by the Kumtor Mine laboratory. The assay method used by SAEL Laboratory was fire assay with atomic absorption finish. Gold grades over 100 ppm were re-analyzed by fire assay with ICP MS. Currently, Kumtor Mine is actively looking for a means to submit samples to external laboratories as a further check of the SAEL laboratory assay results. According to currently available data, there is no laboratory in the Kyrgyz Republic suitable for the requisite levels of certification of SAEL laboratory assay so sending samples to an international certified laboratory outside the Kyrgyz Republic is being considered. There are no drilling, sampling or recovery factors that could have a material impact on the accuracy or reliability of the current mineral reserve and resource estimate. Mineral Processing and Metallurgical Testing For a discussion on “Mineral Processing and Metallurgical Testing” by Centerra, see “ – Mining Operations” below. Kumtor Mine Mineral Resource and Reserve Estimates For information on the Kumtor Mine mineral reserves and mineral resources, see “Mineral Reserves and Resources” starting on page 22. Mining Operations Mining Mining operations at the Kumtor Mine use conventional open pit mining methods. Mining in the Central Pit is done on 10 m benches. Blast holes are drilled using three diesel-powered Sandvik DR-460 rigs and five Drilltech D55SP rotary-percussion drill rigs, with a hole diameter of 200 mm. Charging the holes is undertaken by special bulk explosives trucks delivering either ammonium nitrate with fuel oil, or emulsion explosives for wet holes. Explosives consumption is about 0.21 kg per tonne of ore or waste. Milling The current Kumtor Mine mill flowsheet reflects the fine-grained nature of the gold and its intimate association with pyrite. The mill flowsheet consists of crushing, grinding, pyrite flotation and re-grinding of the flotation concentrate. Two separate carbon-in-leach circuits recover the gold from the re-ground concentrate and from the flotation tailings, with final gold recovery accomplished by carbon stripping, electrowinning and refining. The mill throughput in 2020 was approximately 6.3 million tonnes. Ore to be milled is managed through a number of stockpiles that receive ore with different metallurgical characteristics and of different grade ranges as determined by grade-control data. This allows blending of the mill feed for optimum gold recovery. A gyratory crusher reduces run-of-mine ore to minus 200 mm. The ore is then fed to a coarse ore stockpile
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from which it is reclaimed for grinding. The grinding circuit is comprised of a semi-autogenous (“SAG”) mill followed by a ball mill, which together reduce the grain size to 80% passing 150 microns. A bulk sulphide concentrate representing 7% to 11% of the original mill feed is then produced with a grade of between 30 to 50 grams of gold per tonne and a gold recovery of 87% to 92% into the concentrate. Flotation concentrate is re-ground in a ball mill to approximately 90% passing 20 microns. The reground concentrate is then classified. The cyclone overflow is thickened to 50% solids. The cyclone underflow is re-ground to 95% to 98% passing 20 microns in an ultra-fine grinding mill (“IsaMill”). The IsaMill was commissioned in October 2005 and provides additional incremental liberation of the fine gold (2-5 microns) enclosed in pyrite. The combined thickener underflow and IsaMill discharge is diluted to 45% solids, pre-aerated for 40 hours in a pre-aeration tank and then leached for 80 hours in the concentrate CIL circuit consisting of five agitated tanks in series. Flotation tailings are thickened to approximately 50% solids in the flotation tailings thickener and leached in the flotation tailings CIL circuit, which consists of three agitated tanks in series. Two additional leach tanks are currently being constructed and will be brought on-line in 2021 to increase the leaching time and improve overall gold recovery. Cyanide additions and carbon concentrations are lower in the tailings CIL circuit compared to the concentrate CIL circuit. To further increase recovery, a flotation tailings regrind circuit is planned to be installed in 2021. This circuit will be used to regrind flotation tailings to approximately 80% passing 75 microns prior to leaching in the flotation tailings CIL circuit. Overflow from a total of four thickeners located throughout the process plant is collected and recycled to the process as process or recycle water. Carbon in both CIL circuits is moved forward counter-current to the slurry flow, and the loaded carbon from the first flotation tailings CIL tank is pumped to the third concentrate CIL tank to continue loading. Loaded carbon from the first concentrate CIL tank is pumped to the gold recovery plant. The loaded carbon is stripped, and the gold subsequently recovered by electro-winning. Gold flake is washed from the cathodes, dried and smelted in an induction furnace and cast into doré bars. Gold recovery is affected by the preg-robbing properties of some ore due to organic carbon. This negative effect is moderated by adding diesel fuel, as a masking agent, to the SAG and the re-grind mills, and through blending to control the percentage of ore with preg-robbing characteristics in the Mill feed. Historically, overall Mill recovery is 78% to 80%, averaging 79.4%. Based on the experience to date, future annual recoveries can be expected to range from 71.6% to 87.1%, averaging 82.9% depending on the head grade, ore source, and ore characteristics. Concentrate CIL tailings and flotation CIL tailings are combined and discharged by gravity to the tailings disposal area through a slurry pipeline system. Starting in 2019, Kumtor has been recovering gold from tailings supernatant solution, pumped from the tailings pond, using carbon adsorption. The solution in contact with deposited tailings in the tailings pond contain dissolved gold which, when contacted with activated carbon, is recovered from solution via carbon adsorption. There are 5 tanks used for contacting and gold recovery. The loaded carbon is then transferred to the Kumtor Mill for gold recovery. In 2020, Kumtor recovered approximating 8,750 oz of gold. In addition, Kumtor Mine has recovered gold from stockpiled historic “carbon fines”. In the production process at the Kumtor Mill, loaded carbon is used to absorb gold. The carbon is subject to abrasion in the process generating carbon fines. These carbon fines are removed from the process. Kumtor Mine processes these carbon fines to recover residual gold. A furnace is used to produce a gold bearing ash. The final ash concentrate is then returned to the mill process for final gold recovery. In 2020, approximately 6,333 oz of gold was recovered. Processing and Recovery Operations For “Processing and Recovery Operations”, see “ – Mining Operations” above. Infrastructure, Permitting and Compliance Activities For information regarding the general infrastructure of the Kumtor Mine, see “ – Property Description, Location and Access” above. The Kumtor Mine consists waste rock dumps, a mill complex, camp facility, the TSF with related water treatment facilities, upper fuel farm, heavy duty maintenance shop, and other associated mine infrastructure
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Tailings Storage Facility The tailings storage facility (TSF) is located in the Kumtor River valley and consists of twin tailings pipelines (each approximately 6.5 km in length, one is a back-up standby line), a downstream tailings dam, an effluent treatment plant and two diversion channels around the area to divert runoff and natural watercourses from entering the tailings basin. These facilities received approval from the Kyrgyz Government in 1999 to be constructed to an ultimate dam crest elevation of 3,670.5 m, and in 2017, up to an ultimate crest elevation of 3,677.5 m. The existing facility will reach its permitted capacity (1.5 m freeboard at a dam elevation of 3,677.5 m) in 2027. Kumtor Mine is currently considering raising the dam to an ultimate crest elevation of 3682.0 m (i.e. 4.5 m above the currently approved ultimate crest elevation of 3677.5 m) as an option to increase the TSF storage capacity. Kumtor Mine is currently considering several options to achieve this expansion. KGC retained an independent consultant to lead an independent tailings review board (ITRB) in August 2019. The purpose of the ITRB was to review critical aspects of the TSF including geotechnical, hydrological, hydrogeological, environmental, operational, management and closure. This assignment was carried out through a review of relevant site documentation provided by KGC a two-day site visit by two representatives from the consultant, on-site discussions with KGC and the Engineer of Record (EoR). The consultant led ITRB concluded with no major concerns of the design and operation of the facility; however, several recommendations were provided. Since the time of its construction, the dam foundation has experienced horizontal deformations, with the Kyrgyz Republic Institute of Rock Mechanics initially raising concerns in 1999. A shear key and toe berm were added to the TSF and have been effective in controlling the rate of horizontal deformations. The dams and appurtenances are regularly inspected by KGC personnel during routine work at the facility and have been visually inspected on an annual basis since 2007 by independent geotechnical consultants. The consultants reported the dam appurtenances to be in good condition and functioning as required. Geotechnical Issues Affecting the Kumtor Open Pit Pit Wall General description The Central, Southwest, and Sarytor open pit rock masses are structurally complex with many faults and relatively weak rock mass particularly those in the Central Pit. Coupled with adjacent glaciers, this causes complexities in mining requiring continuous geotechnical and related water management. Geotechnical assessment and modelling are key requirements for ensuring pit wall stability for safe and efficient mining operations. Handling of water from glacier meltwater is also a key requirement for ensuring pit wall stability and suitable conditions for mining operations. Previous Significant Ground Instabilities In the past, operations at Central Pit have been negatively affected because of two substantial failures of the bedrock highwall that forms the north-eastern limit of Central Pit in the Stockwork Zone. While less severe deformations have occurred in other parts of the open pits these two failures that occurred in 2002 and 2006 are the most significant. The most recent pit wall geotechnical event is a localized wall deformation that was observed in cutback #19 in early 2019. The deformation process was stopped by implementing remedial measures such as leaving a 50m wide step-out at the toe of the deformation, building loading buttress and amending pit wall configuration to recommended parameters. Kumtor Mine has retained a number of consultants to help assess settlement of the processing plant’s foundation and develop potential options to mitigate the displacements of the underlying ground that were induced by permafrost degradation and water infiltration. As a result, a series of remedial measures that include ground improvement techniques were developed and are being implemented now. Waste Rock Dumps The LOM plan requires waste rock to be deposited in waste rock dumps located in the Davidov, Sarytor, and Lysii Valleys. Waste rock from the Central Pit was deposited on the Davidov Glacier until late-2007 with limited waste rock being placed in the Lysii Valley, northeast of the processing facility. In 2009, operations expanded into the SB Zone (in the Central Pit) and a waste rock storage facility (“WRSF”) was established in the Davidov Valley west of the pit rim. Since 2009, three WRSFs have been constructed, being the Davidov Valley (currently the largest of the three WRSFs), Lysii Valley and Sarytor Valley.
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The slopes and valley floor of the Davidov and Sarytor valleys are underlain by ice-rich, fine-grained permafrost soils. The Lysii Valley is also underlain by permafrost soils, with the available geotechnical drilling indicating that the ground ice content is lower and less susceptible to load-induced creep deformations of the foundation. Due to the poor foundations, a construction approach balanced across the complete length of each WRSF is currently in the process of being implemented, where required. WRSF monitoring and safe operating procedures are continually being reviewed and updated. In 2019, Centerra suspended open pit mining operations at Kumtor after it experienced a significant failure at the Lysii Valley WRSF. Open pit mining operations were temporarily halted for approximately one month because of the need to focus on search and rescue efforts. In 2020, after implementing a series of recommendations to ensure stability of the Lysii Valley WRSF, the Kumtor Mine received all the necessary approvals and permits to re-commence open pit mining operations and to continue ore processing activity. Safe operations and monitoring have been established to ensure WRSF construction is carried out safely. Kumtor retained a third-party consultant to investigate the Lysii Valley WRSF failure mechanism and to further increase understanding of the factors contributing to its movement by means of additional site investigation, laboratory testwork, stability assessments, and ongoing monitoring and review. The Company expects to put in place at each WRSF further dewatering and drainage systems (at their toes) and improved real-time condition monitoring systems. Petrov Lake Petrov Lake is a natural, proglacial lake (formed in contact with melting glacier and associated moraine) that has formed between a natural terminal moraine from the Little Ice Age and the current snout of Petrov Glacier, and is located approximately 5 km upstream of the tailings dam. The lake formed due to glacier meltwaters being dammed by a natural terminal moraine which is mostly frozen and likely contains buried glacier ice. Thawing of the moraine dam, to an extent that it allows for piping or overtopping of the dam, may lead to a dam breach and the uncontrolled release of lake water that can potentially erode a section of the tailings dam and damage other downstream facilities. KGC considers any damage to the tailings dam a serious threat. The dominant failure mechanism was identified as progressive warming occurs, which would lead to thawing of interstitial ice in the moraine dam, thereby lowering the available freeboard and allowing for seepage through the seasonally unfrozen top layer (active layer). While the risk of an uncontrolled release occurring during the life of the mining operation is considered low, this is a future event that needs to be considered for mine closure. An early warning system has been installed to determine structural changes in flow and possible acceleration in seepage through the moraine dam. The water level behind the moraine dam is being managed to a historically low level substantially reducing the possibility of an uncontrolled release of water. In addition to that, the Company is filling the so-called Blue Bay with inert waste rock material to strengthen the natural moraine dam and decrease the rate of permafrost and ice lenses thawing. Environmental Conditions The Kumtor Mine has a formal EMS in place as well as an EMAP which are designed to address the Kumtor Mine’s environmental related legal requirements. The Kumtor Mine EMS aligns with the ISO-14001 standards for determining and managing environmental aspects associated with its activities. The Kumtor Mine EMS addresses impacts of the operation on the environment and monitors compliance with the various permits issued by the Kyrgyz Republic authorities. The system provides scheduled monitoring, engineering controls and reporting on the following areas: • effluent treatment plant • hazardous materials handling • mill site and mine waste rock dumps runoff • environmental impact monitoring • tailings management facility • planning for site decommissioning and rehabilitation • acid generation potential testing and • potable water treatment system recommendations • dust control • sewage treatment • spill incidents on site and off site • landfill operation and waste inventory
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The EMAP outlines Kumtor Mine’s environmental and safety commitments, including the regulations applicable to the Kumtor Mine. Under the EMAP, Kumtor Mine is obligated to comply with the most stringent of the following standards on any particular environmental aspect: • Environmental Legislation of the Kyrgyz Republic • Occupational health and safety legislation of the Kyrgyz Republic • World Bank environmental guidelines • Saskatchewan (Canada) environmental laws • International “good practices” including the International Cyanide Management Code (ICMC) and the new World Gold Council Responsible Gold Mining Principles (RGMP)
In addition to internal auditing and monitoring, external audits of environmental aspects are conducted on a regular basis; the results and recommendations (if any) of which are reviewed and implemented where possible. Each Kyrgyz Republic enterprise with activities that have a potential negative impact on the environment must develop and maintain an ecological passport (“Ecological Passport”) providing for the basic levels of impact on the environment, including the level of maximum allowable emission (“MAE”) and maximum allowable discharge (“MAD”). The Ecological Passport is developed every five years and must be approved by the Kyrgyz Government authority responsible for environment protection (currently Kyrgyz Republic State Agency for Environmental Protection and Forestry (“SAEPF”)). The Ecological Passport identifies some of the permits and approvals required by Kumtor Mine for its operations, with annual permits required for MAE norms, MAD norms and water usage limits. The MAE norms and permits define the release of emissions into the air. There are two MAD norms and two permits regulating the discharge of treated effluents into surface water bodies, one to operate the tailings area treatment plant and the other to operate the sewage treatment plant. There are also water usage limits for the Kumtor Mine and for the Balykchy marshalling yard. The MAE and MAD norms and permits are designed to ensure that the water quality standards for communal use streams are met at the mixing zone in the Kumtor River just outside the mine site. The Kumtor Mine obtained its MAE, MADs and permits for discharges and emissions in 2021 in a timely manner. The license to use groundwater for the needs of the Balykchy marshalling yard was obtained in 2019, the license is valid until 2029. The Ecological Passport for the Kumtor Mine was obtained in October 2020 and is valid until October 2025. Kumtor Ecological Passport for the Balykchy marshalling yard was updated in July 2019. A number of other certificates, permits and licenses are required by various departments of the Kyrgyz Government with respect to the use of potentially toxic chemicals, transportation of dangerous goods, importing of blasting materials and sodium cyanide. All such approvals are currently valid and in good standing. See the section of this AIF entitled “Risk Factors”. Emergency Response Plan and Handling of Hazardous Materials The Kumtor Mine has an Emergency Response Plan (the “Kumtor ERP”) and hazardous material transportation procedures. We conduct quarterly mock exercises to test different aspects of the Kumtor ERP, including response time, effective communications and the skills of the emergency response team and we have updated the Kumtor ERP to ensure notification protocols remain valid and improvements from the mock exercises are incorporated in the plan. The update remains valid and meets all Kyrgyz Republic legal requirements and follows international standards. The Kumtor Mine’s cyanide transportation operation from the Balykchy Marshalling Yard to the Kumtor Mine was initially certified in compliance with the Cyanide Code in April 2012, recertified again in September 2015, and most recently again in December 2018. Re-certification is required by the International Cyanide Management Cyanide Code every three years. In November 2011, and again in September 2015, the Kumtor Mine operations (with respect to transportation of cyanide) were audited against the International Cyanide Management Code for the Manufacture, Transport and Use of Cyanide in the Production of Gold. The audit was conducted by an independent consultant and on both occasions the operation was deemed to be in substantial compliance with the Code. Decommissioning and Reclamation We update Kumtor Mine’s conceptual closure plan (“CCP”) every three years. The CCP was last updated by an independent consultant in 2019. This approach of reviewing the CCP every three years allows for the development and adaptation of the CCP and provides a period for testing and monitoring of several years to evaluate the various options contemplated by the CCP. The CCP will be reviewed again in 2022. The CCP will be followed by the development of a
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final closure plan closer to the end of mine life that will consider the reasonable comments of the relevant regulatory authorities of the Kyrgyz Republic and results of monitoring as well as a variety of changes to the environmental, regulatory and social aspects of the project that may have occurred over the life of the mine. Under the Restated Investment Agreement, all immovable infrastructure items will become the property of the Kyrgyz Government at the end of the mine life. This includes roads, buildings including the mill building, accommodations and any other related facilities but not the operating machinery. The CCP covers all aspects of the Kumtor operations, including (but not limited to) the Central pit (which will become a lake), mill complex and surrounding area, tailings basin, stockpiles and other surface facilities. Equipment, building and other structures will be salvaged to the maximum extent possible. The data presented in the CCP indicates that the acid rock drainage potential of both waste dumps and tailings is very low and is unlikely to be a concern in the long term. The CCP makes recommendations for further data collection and monitoring of the various aspects important for the closure plan. A trust fund has been set up for final reclamation measures. The reclamation trust fund is restricted for use and controlled by an independent trustee. As at December 31, 2020, the balance in the fund was $47 million. Historically, we have contributed funds annually to the reclamation trust fund based on annual gold production in the previous year. As part of the Kumtor Strategic Agreement, KGC agreed, on the terms and subject to the conditions contained in the Kumtor Strategic Agreement, to increase the rate of funding of the reclamation trust fund to a minimum of $6 million per year until the fund reaches $69 million. This amount of $69 million was determined by an independent assessment of Kumtor Mine’s current reclamation costs and is broadly in line with estimated reclamation costs for the Kumtor Mine. Social and Community Factors For information on Social and Community factors relating to the Kumtor Mine, see “Responsible Mining” and “Kumtor Strategic Agreement”. Capital and Operating Costs Total operating and capital costs over the LOM are estimated at $4,517 million, including $2,366 million for mining costs, $868 million for processing costs, $602 million for administrative (G&A) costs and total capital expenditures are estimated at $681 million. Taxes The Restated Investment Agreement establishes a comprehensive tax regime for the Kumtor Mine effective January 1, 2008 and continuing until the termination of the Restated Concession Agreement. Except for the payments set out below, the Kumtor Mine is exempt from all other present and future taxes. Except as expressly provided in the Restated Investment Agreement, the rates, amounts and other terms of any taxes or other payments are not subject to any future change in legislation or treaty provisions which would be more burdensome to the Kumtor Mine or Centerra. The Kumtor Mine and Centerra are entitled to benefit from any generally applicable future change in legislation or treaty provisions with respect to taxes or other payments payable under (b), (g), (h), (j) and (k) below which is beneficial to any of them. To the extent any rates that are capped by the provisions of (b), (g), (h), (j) and (k) below are decreased due to a change in legislation, such rates can be increased by a future change in legislation, provided that any such increased rates from time to time shall not exceed the rates in effect on April 24, 2009. The taxes provided for in the Restated Investment Agreement are as follows: (a) a tax on gross revenue of 13%, payable monthly (the “Gross Proceeds Tax”); (b) customs administration fees at generally applicable rates, which are not to exceed those rates in effect on April 24, 2009; (c) a contribution of 1% of gross revenue to the Issyk-Kul Oblast Development Fund (the “Issyk-Kul Contribution”); (d) an annual payment of 4% of gross revenue against which all capital and exploration expenditures in the Kyrgyz Republic are fully credited, with expenditures not required for credit in any particular year carried forward for credit in future years; (e) an environmental pollution charge of $310,000 per year;
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(f) a land use and access fee of $1,250,000 per quarter, against which the Gross Proceeds Tax and Issyk-Kul Contribution are credited in full; (g) sales tax at generally applicable rates on goods and services purchased in relation to the Kumtor Mine; (h) value added tax at generally applicable rates on goods and services purchased by KGC and KOC, except for goods and services imported in relation to the Kumtor Mine; (i) generally applicable fees for licenses, registrations, travel visas and other fees for discrete government services, provided that such fees shall not exceed those in effect on April 24, 2009; (j) payroll deductions for all employees subject to Kyrgyz Republic income tax and contributions to the Social Fund of the Kyrgyz Republic in respect of employees who are Kyrgyz Republic citizens, in each case at generally applicable rates; and (k) excise taxes at generally applicable rates except on goods imported in relation to the Kumtor Mine. In addition, the Restated Investment Agreement provides that the Kumtor Mine is exempt from certain other obligations, including: (a) all withholding obligations with respect to payments to third parties, but such third parties are not exempt from the relevant taxes to which the withholding would otherwise relate, subject to the benefits provided to such third parties in any applicable international treaties; (b) paying taxes with respect to intra-group transactions, including for services, dividends, interest and other distributions or transactions; and (c) customs duties in relation to goods imported into the Kyrgyz Republic. Effective June 6, 2009, a management fee fixed at $1 per ounce of gold sold, inclusive of any taxes, is payable by Centerra to Kyrgyzaltyn. In September 2011, KGC signed a protocol with the State Tax Service pursuant to which KGC agreed to voluntarily administer withholding taxes as provided in the Tax Code of the Kyrgyz Republic (as modified by applicable tax treaties) with respect to payments made by KGC to its foreign service providers who are domiciled in countries that do not have a tax treaty with the Kyrgyz Republic. In addition, KGC voluntarily agreed to pay an amount of $0.7 million in 2011, being the amount not withheld since the effective date of the Restated Investment Agreement to September 2011. KGC has also agreed to make certain recurring social contributions to the Kyrgyz Government for its Regional Fund and its Nature Development Fund. While these are not taxes, they represent regular ongoing obligations of KGC which are conditional upon the continued compliance by the Kyrgyz Government of its obligations under the Kumtor Strategic Agreement. For further information, see “- Kumtor Strategic Agreement”. Kumtor Strategic Agreement This section summarizes the history of certain legal and regulatory matters which impacted the Kumtor Mine and which were resolved or terminated as part of the completion of the Strategic Agreement on Environmental Protection and Investment Promotion dated September 11, 2017 which the Company entered into with the Government of the Kyrgyz Republic and Kyrgyzaltyn (the “Strategic Agreement”), without any admission of liability on the part of KGC and Centerra. These matters began with the formation of the Kyrgyz Parliamentary Commission in 2012, followed by the formation of the State Commission, which ultimately led to the Kyrgyz Parliament requesting that the Kyrgyz Government renegotiate the agreements by which the Kumtor Mine operates. During this period, regulatory and court claims alleging significant environmental damages and criminal investigations relating to, among other things, routine commercial transactions, were commenced against the Company and its employees. All such outstanding, matters were resolved by the Strategic Agreement in 2017 which was completed in August 2019. On August 7, 2019, we announced that all conditions precedent to the completion of the Strategic Agreement were satisfied or waived and that all parties acknowledged that the First Completion Date (as defined in the Kumtor Strategic Agreement) had occurred. Furthermore, we announced on August 26, 2019 that the Second Completion Date was achieved under the Kumtor Strategic Agreement. As a result, all obligations under the Kumtor Strategic Agreement, including the settlement and releases of liability as well as the obligations of KGC to make contributions to various environmental and social funds of the Kyrgyz Government set out above, became effective.
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The Kumtor Strategic Agreement included, among other things the following: • Full and final reciprocal releases and resolution of all arbitral and environmental claims, disputes, proceedings and court orders, and releases of the Company and its Kyrgyz Republic subsidiaries from future claims covering the same subject matter as the environmental claims arising from approved mine activities; • Termination of the Kyrgyz Republic interim court order which, among other things, restricted KGC’s ability to transfer cash to Centerra. On September 4, 2017, the Bishkek Inter-District Court lifted the interim court order and, as a result, KGC transferred cash balances over and above its ordinary working capital requirements to Centerra on September 15, 2017, when the lifting of the interim court order became effective; • An acknowledgement that there will be no restrictions on the ability of KGC to distribute funds to Centerra in the future; • All restrictions are lifted on the free movement of KGC’s employees; • No admission on the part of Centerra or its Kyrgyz Republic subsidiaries of: (i) any environmental wrongdoing, (ii) any non-compliance with Kyrgyz Republic law or the Kumtor Project Agreements (as defined below) or (iii) any pre-existing obligation to make additional environmental or Reclamation Trust Fund payments or environmental remediation efforts; • Existing 2009 agreements governing the Kumtor Mine (the “Kumtor Project Agreements”) remain in full force and effect, including the tax and fiscal regime thereunder; • No changes to current or planned operations at the Kumtor Mine are required; • KGC agreed to make a one-time lump sum payment totaling US$57 million to a new, government-administered Nature Development Fund (US$50 million) following closing (paid on August 28, 2019) and to a new, government-administered Cancer Care Support Fund (US$7 million; paid in 2017) and within 12 months of closing make a further one-time payment of US$3 million to the Cancer Care Support Fund; • Annual payments of US$2.7 million to the new Nature Development Fund, conditional on the Kyrgyz Government continuing to comply with its obligations under the Kumtor Strategic Agreement; • KGC has agreed to accelerate its annual payments to Kumtor Mine’s Reclamation Trust Fund in the amount of US$6 million a year until the total amount contributed by KGC reaches the total estimated reclamation cost for the Kumtor Mine (representing the independent assessment of Kumtor Mine’s current reclamation costs) subject to a minimum total reclamation cost of US$69 million (which is broadly in line with KGC’s current estimated reclamation cost for the Kumtor Mine); and • KGC would consider, together with the Kyrgyz Government, other potential investment opportunities in the Kyrgyz Republic and at the Kumtor Mine. In connection with the completion of the Strategic Agreement and at the request of the Kyrgyz Government, KGC agreed to certain additional contributions (as further described below) over and above those in the Kumtor Strategic Agreement to strengthen its social license to operate in the Kyrgyz Republic. The additional contributions are as follows:
o U.S.$5 million lump sum contribution to a new Kyrgyz Republic Social Partnership for Regional Development Fund (the “Regional Fund”) which was paid within five business days of the Second Completion Date (paid on August 28, 2019);
o U.S.$5 million lump sum contribution to the Regional Fund to be paid within 12 months of the Second Completion Date;
o monthly contributions to the Regional Fund equivalent to 0.4% of KGC’s revenues from the Kumtor Project earned after the Second Completion Date;
o annual contribution of U.S.$1 million to the Kyrgyz Republic Nature Development Fund; and o exploration expenditures of at least U.S.$16 million at the Kumtor Project over a two-year period, which was achieved by December 31, 2019. All such payments and expenditures are conditional upon the Kyrgyz Government continuing to comply with the conditions precedent under the Strategic Agreement.
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In March 2020, in view of the urgent need for regional development in the Kyrgyz Republic, KGC further determined that additional contributions to the Regional Fund were appropriate. Accordingly, it made a further $9 million contribution to the Regional Fund and plans to make further contributions of $22 million over the next 30 months. For further information relating to the previous legal and regulatory matters that affected the Kumtor Mine beginning in 2012 until their resolution pursuant to the Strategic Agreement, please see our Annual Information Form for the year ended December 31, 2019. These legal and regulatory matters include (without limitation) the creation of a Kyrgyz Parliamentary Commission and a Kyrgyz State Commission to review the Kumtor Mine operations and the project agreements governing the Kumtor Mine; various environmental claims commenced by Kyrgyz regulatory authorities and state agencies totalling over $465 million (using exchange rates applicable at that time) and other claims and proceedings commenced in the Kyrgyz Republic, including criminal investigations into current and former Company employees. An international arbitration was commenced by Centerra in July 2016 relating to these outstanding disputes, but the proceedings were terminated in August 2019 in connection with the completion of the Kumtor Strategic Agreement.
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Mount Milligan Mine Quick Facts Centerra acquired the Mount Milligan Mine in October 2016. The Mount Milligan Mine has been in commercial production since 2014. To date, it has produced approximately 1.2 million oz of gold and 389 million lbs. of copper.
Location British Columbia, Canada
Ownership 100%
Business Structure Our wholly owned subsidiary, Centerra B.C. Holdings Inc., directly owns 100% of Thompson Creek Metals Company Inc., the holder of the rights to the Mount Milligan Mine.
End Product Copper-gold concentrate
Mine Type Open pit
Estimated Mineral Reserves Gold (as at December 31, 2020) 2,148 koz of contained gold (proven and probable) average gold grade – 0.39 g/t See “Mount Milligan Streaming Arrangement” below. tonnage – 170,576 k tonnes Copper 837 Mlbs of contained copper (proven and probable) average copper grade – 0.22% tonnage – 170,576 k tonnes Estimated Mineral Resources Gold (as at December 31, 2020) 1,396 k oz of contained gold (measured and indicated) See “Mount Milligan Streaming Arrangement” below. average grade – 0.35g/t tonnage – 125,103 k tonnes Mineral resources are in addition to reserves. Mineral resources do not have demonstrated economic viability. Copper 521 M lbs. of contained copper (measured and indicated) average copper grade – 0.19% tonnage – 125,103 k tonnes Inferred mineral resources have a great amount of Gold uncertainty as to their existence and as to whether they 78 k oz contained gold (inferred) can be mined economically. It cannot be assumed that average grade – 0.31 g/t tonnage – 7,872 k tonnes
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all or part of the inferred resources will ever be Copper upgraded to a higher category. 28 M lbs. of contained copper (inferred) average copper grade – 0.16% tonnage – 7,872 k tonnes
Processing Method Crushing, grinding, flotation, gravity circuit
2020 Production 161,855 oz of payable gold production 82.8 million pounds of payable copper
Mount Milligan Streaming Arrangement The Mount Milligan Mine in Canada is subject to a streaming arrangement whereby Royal Gold is entitled to receive 35% of the gold produced and 18.75% of the copper production. Royal Gold will pay Centerra $435 per ounce of gold delivered and will pay 15% of the spot price per metric tonne of copper delivered.
Estimated Mine Life 2029
Employees 504
Technical Report The Mount Milligan Technical Report, with an effective date of December 31, 2019 was filed on March 26, 2020 on www.sedar.com.
Project Description, Location and Access The Mount Milligan Mine is a conventional truck-shovel open-pit copper and gold mine and process plant. The Mount Milligan Mine is currently permitted by the Province of British Columbia to operate at an average of 60,000 tpd over a calendar year. The Mount Milligan Mine is located within the Omenica Mining Division in North Central British Columbia, Canada, approximately 155 km northwest of Prince George (population approximately 79,000). Mount Milligan Mine includes 119 claims and one mining lease (120 total mineral titles) with a combined area of 58,847.5 ha. The mining claims and leases are all held in the name of Thompson Creek Metals Company Inc. The single mining lease expires on September 9, 2029 and requires a lease payment of approximately $102,760, due annually on September 9. Mineral claims are subject to exploration expenditure obligations, or payment of annual fees to the Province of British Columbia in lieu of exploration expenditures. All mineral claims are in good standing with expiry dates from 2021 to 2025. We expect to renew such mineral claims in the ordinary course of exploration. A 2% net smelter return royalty is payable to a previous owner of the property, HRS Resources Inc., (successor in interest to Richard Haslinger)(“HRS”), which royalty payments commenced in 2016, the third year of commercial operations at the Mount Milligan Mine. The Company has received a notice of civil claims from HRS alleging that since 2016, the Company has incorrectly calculated amounts payable under the production royalty agreement and has therefore underpaid amounts owing to HRS. The Company disputes the claim and believes it has calculated the royalty payments in accordance with the agreement. The Company believes that the potential exposure in relation to this claim, over what the Company has accrued, is not material. We have also agreed to make certain payments to the McLeod Lake Indian Band and Nak’azdli Whut’en band over the life of the mine. The terms of the agreements under which we make these payments are confidential. As described herein, we have entered into the Mount Milligan Streaming Arrangement with Royal Gold which provides that 35% of the gold and 18.75% of the copper production at the Mount Milligan Mine will be sold to Royal Gold and that Royal Gold will pay $435 per ounce of gold delivered and will pay 15% of the spot price per metric tonne of copper delivered.
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The Mount Milligan Mine is accessible by commercial air carrier to Prince George, British Columbia, then by vehicle from the east via Mackenzie on the Finlay Philip Forest Service Road and the North Philip Forest Service Road, and from the west via Fort St. James on the North Road and Rainbow Forest Service Road. Road travel to the Mount Milligan Mine is 770 km from Prince Rupert and 253 km from Prince George. The communities of Mackenzie and Fort St. James are within daily commuting distance of the Mount Milligan Mine, and both communities are serviced by rail. The infrastructure at the Mount Milligan Mine includes a process plant, a TSF and reclaim water ponds, an administrative building and change house, a truck shop/warehouse, a permanent operations residence, a first aid station, an emergency vehicle storage, a laboratory and sewage and water treatment facilities. The power supply is provided by B.C. Hydro via a 91 km power line. Concentrate is transported by truck from the mine site to Mackenzie, then transferred onto railcars of the Canadian National Railway to existing port storage facilities of Vancouver Wharves in North Vancouver and loaded as lots into bulk ore carriers. Concentrate is then shipped to customers via ocean transport. History Limited exploration activity on Mount Milligan Mine was first recorded in 1937. In 1984, prospector Richard Haslinger and BP Resources Canada Limited located claims on the site. In 1986, Lincoln Resources Inc. (“Lincoln”) optioned the claims and in 1987 completed a diamond drilling program that led to the discovery of significant copper-gold mineralization. In the late 1980s, Lincoln reorganized, amalgamated with Continental Gold Corp. (“Continental”) and continued ongoing drilling in a joint-venture with BP Resources. In 1991, Placer Development Ltd. (which became Placer Dome Inc.) (“Placer”) acquired Lincoln’s interest in the Mount Milligan Mine property, resumed exploration drilling, completed a pre-feasibility study and applied for provincial and federal approvals to develop the project. These approvals expired in 2003. Barrick Gold Corporation purchased Placer in 2006 and sold its Canadian assets to Goldcorp Inc., which then in turn sold its interest in the Mount Milligan Mine to Atlas Cromwell. Atlas Cromwell then changed its name to Terrane Metals Corp. (“Terrane”) and initiated a comprehensive work program. In October 2010, Thompson Creek acquired Terrane and the Mount Milligan Mine and entered into the Mount Milligan Streaming Arrangement with Royal Gold. On February 18, 2014, the Mount Milligan Mine reached commercial production, which is defined as operation of the mill at 60% of design capacity mill throughput for 30 days. We acquired the Mount Milligan Mine effective October 20, 2016 through the acquisition of all the issued and outstanding shares of Thompson Creek. The total consideration paid for the acquisition was $1.03 billion. In addition to the Mount Milligan Mine, we also acquired interests in several molybdenum assets held by Thompson Creek. As part of the acquisition, Terrane was amalgamated with Thompson Creek effective October 18, 2016. In the third quarter of 2019, we recorded an impairment charge of $230.5 million on the Mount Milligan Mine reflecting the impact of a higher cost profile which we expect will continue in the short to medium term, and an anticipated reduction in gold recoveries. On March 26, 2020, we filed the Mount Milligan Technical Report with an effective date of December 31, 2019. Geological Setting, Mineralization and Deposit Types The Mount Milligan Mine deposit is within Quesnel Terrane, part of the Intermontane Belt, a composite of low metamorphic grade magmatic arc segments of mixed oceanic and continental affinities, and oceanic plates, which accreted onto North America in the Early Jurassic Period. The Mount Milligan Mine property is mostly underlain by Upper Triassic volcanic rocks of the Witch Lake succession. The Witch Lake succession is moderately-to-steeply east-northeast dipping and characterized by augite-phyric volcaniclastic and lesser coherent basaltic andesite to andesite, with subordinate epiclastic beds. In the northwestern part of the Mount Milligan Mine property, volcanic rocks are intruded by Early Jurassic to Cretaceous rocks of the Mount Milligan Mine intrusive complex. The Early Jurassic component of the intrusive complex comprises monzonitic rocks with minor dioritic-monzodioritic and gabbroic-monzogabbroic rocks. Mineralization at the Mount Milligan Mine deposit consists of two styles, early-stage porphyry gold-copper (Au-Cu) and late-stage high-gold-low-copper (“HGLC”, or subepithermal). The early-stage porphyry Au-Cu mineralization comprises mainly chalcopyrite and pyrite, occurs with potassic alteration and early-stage vein types, and is spatially associated with composite monzonite porphyry stocks (especially at their hanging-wall and footwall margins), hydrothermal breccia, and narrow dyke and breccia complexes. Late-stage, structurally controlled pyritic HGLC style mineralization is associated with carbonate-phyllic alteration and intermediate- to late-stage vein types, and is spatially associated with faults, fault breccias and faulted lithological contacts (i.e. faulted monzonite porphyry dyke margins). It crosscuts and overprints the earlier stage porphyry Au-Cu mineralization.
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Porphyry style Au-Cu mineralization occurs in the hanging-wall and footwall zones of the MBX, Saddle, Southern Star, and Goldmark stocks. Disseminated and vein/veinlet-hosted mineralization is associated with the composite monzonite stocks, their brecciated margins and variably altered volcanic host rocks. Core zones of auriferous chalcopyrite-pyrite mineralization with magnetite rich potassic alteration transition laterally and vertically to pyrite rich HGLC zones within the inner propylitic (albitic) and carbonate-phyllic alteration shells; the latter appear to be late stage and exhibit strong structural control. Copper iron sulphide (chalcopyrite) is associated with potassic alteration at the contact margin between volcanic and intrusive rocks. It occurs as fine-grained disseminations and fracture fillings, and less commonly as veinlets and in veinlet selvages. Adjacent to the MBX stock, chalcopyrite may be accompanied by iron sulphide pyrite to form coarse sulphide aggregates. Chalcopyrite-bearing veins contain pyrite and magnetite in a gangue of potassium feldspar, quartz, and calcite. Pyrite content increases with distance from the MBX and Southern Star stocks and is most abundant in propylitically altered rocks. Pyrite occurs as disseminations, veinlets, large clots, patches, and as replacements of mafic minerals. Gold mineralization in the 66 zone is associated with 10-20% pyrite. Cross-cutting vein relationships indicate several generations of pyrite mineralization. Gold occurs as grains from 1 to 100 μm in size, as observed in process samples. Grains occur as microfracture fillings and are attached to pyrite or chalcopyrite. Gold also forms inclusions within pyrite, chalcopyrite, and magnetite grains. SEM work indicates electrum throughout the deposit with varying gold to silver ratios. The Mount Milligan Mine deposits are categorized as silica-saturated alkalic Cu-Au porphyry deposits associated with alkaline monzodioritic-to-syenitic igneous rocks and are recognized in only a few mineral provinces worldwide. Porphyry copper ± gold deposits commonly consist of vein stockworks, vein sets, veinlets, and disseminations of pyrite, chalcopyrite ± bornite that occur in large zones of economic bulk-mineable mineralization within porphyritic igneous intrusions, their contact margins, and adjoining host rocks. The mineralization is spatially, temporally, and genetically associated with hydrothermal alteration of the intrusive bodies and host rocks. Examples of alkalic Cu-Au porphyry deposits in British Columbia include Galore Creek, Mount Polley, Copper Mountain, New Afton, Mount Milligan and Lorraine. British Columbia deposits occur in both the Quesnel and Stikine island arc terranes and range in age from Late Triassic to Early Jurassic. Global examples include Ok Tedi in Papua New Guinea as well as Northparkes and Cadia in Australia. Exploration and Drilling; Development and Production Historically, five exploration target zones were identified in the brownfield (in-pit) resource area (DWBX, WBX, MBX, 66 and Southern Star); three in the more distal brownfield area within the mine lease (North Slope, Goldmark and South Boundary); and three in the greenfield area outside the mine lease (Heidi, Mitzi and Snell). Exploration since 2017 has continued to test most of these zones and refine understanding of their geological relationships and mineral potential. In addition, new target zones have been developed and continue to be tested. In total, since 2017 we have completed nearly 112,000 metres of resource and exploration diamond drilling in over 240 drill holes at Mount Milligan as outlined in the tables below. Total Resource Expansion and Exploration drilling metres completed at Mount Milligan from 2017-2020 Program 2017 2018 2019 2020 2017-2020 Total (m) (m) (m) (m) (m) In-pit Resource 7,692.25 18,656.89 26,803.21 15,584.73 68,737.08 Brownfield 0.00 6,668.73 14,655.72 14,927.83 36,252.28 Greenfield 0.00 5,616.85 1,361.69 0.00 6,978.54 Program Total 7,692.25 30,942.47 42,820.62 30,512.56 111,967.90
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Total Resource Expansion and Exploration drill holes completed at Mount Milligan from 2017-2020 Program 2017 2018 2019 2020 2017-2020 Total (#) (#) (#) (#) (#) In-pit Resource 21 26 72 34 153 Brownfield 0 12 31 28 71 Greenfield 0 13 4 0 17 Program Total 21 51 107 62 241
The total line-kilometres of geophysical survey completed by Centerra since 2017 has been over 2000 for airborne and 400 for ground-based as outlined in the table below. Total line-kilometres of geophysical surveys completed at Mount Milligan from 2017-2020 Program 2017 2018 2019 2020 2017-2020 Total (km) (km) (km) (km) (km) Brownfield ground 0 15.5 16.7 26.0 58.2 Brownfield airborne 0 0 525.4 0 525.4 Greenfield ground 376.6 0 0 0 376.6 Greenfield airborne 0 0 1,542.6 0 1,542.6 Program Total 376.6 15.5 2,084.7 26.0 2,502.8
Current resource expansion exploration efforts target the two main mineralization types – early stage porphyry Au-Cu mineralization and late-stage, structurally controlled HGLC mineralization. Numerous drilling programs have been conducted since the deposit was first drilled in 1987. Except for early programs, the majority of core drilled has been of NQ size. In total, there have been 1,280 diamond drill holes drilled at Mount Milligan Mine, recovering over 350 km of drill core. Geotechnical information has been routinely recorded for all diamond drilling programs including core recovery, rock quality, hardness or compressive strength (CS), degree of breakage, degree of weathering or oxidation, fracture and joint frequency, and specific gravity (SG). Core recovery routinely exceeds 90% and averages 96%. In 2021, Centerra has budgeted approximately $6 million to carry out additional drilling, largely within the current mining claims and leases. For production information for the Mount Milligan Mine in 2020, see “2020 and 2019 Production and Revenue”. Sampling, Analysis, and Data Verification All Mount Milligan Mine Assay Laboratory procedures are accompanied by appropriate, industry standard instrument calibration and QA/QC (Quality Assurance/Quality Control) measures, including quarterly third-party analysis checks. Ore and acid-base accounting analyses Standard Operating Procedure includes steps to confirm on-site laboratory method accuracy, precision, contamination control, sample tracking, and recordkeeping. The assay laboratory also receives blind duplicate samples from the Ore Control Geologist/Technician which are compared against daily sample analysis. This is managed as part of the Mount Milligan Assay Laboratory Quality Management System. Most samples analyzed for the Mount Milligan Mine deposits have been collected from NQ-sized core. Cores were either split (early programs) or sawn along the long axis with one-half sampled for assayed and the other half retained in core boxes and the core library. A formal QA/QC program, including the insertion of standard, blank and duplicate samples for assay, was introduced after 1992. Prior to that date, external check assays were commissioned from independent laboratories. Slobodan Jankovic, qualified person for the mineral resource estimate, conducted a site visit at Mount Milligan Mine from April 8 to 11, 2019. The site visit included a review of site facilities, logging and sampling procedures, and the lithology and alteration domain controls used in resource estimation. No significant issues were identified with respect to the assay sampling procedures, chain of custody or the geological data collection.
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Validation of the mapping co-ordinates, elevations, assay quality control/quality assurance program and the DDH database has been completed by Centerra and predecessor owners of Mount Milligan Mine. Throughout 2019, additional validations and verifications of the database were conducted during the migration to the AcQuire data systems management software. These included: • Review of the 2007 Allnorth transformation to confirm pre-2007 drill holes originally surveyed in the local mine grid were transformed to NAD83 UTM Zone 10 consistently, • Verification of downhole survey data from raw data files where available for 2004 to 2019 drill holes, • Correction of downhole survey data to NAD83 UTM Zone 10 north for 2006 to 2019 (previous compilations recorded downhole survey data to True North and the UTM convergence at Mount Milligan Mine is approximately -0.85°), • Verification of all copper and gold assay values from the previous database compared to original assay certificates for drill holes from 2004 to 2019, • Compilation of missing 2004, 2006-2007, and 2011-2016 QA/QC data to the database, and • Compilation of 2004-2019 laboratory QA/QC data to the database from original assay certificates. The data reviews found the assay data acceptable and any errors or omissions were minor. Centerra considers the final 2019 database to be robust and verified. The qualified person, Mr. Slobodan Jankovic concluded that the database is adequate for the estimation of Mineral Resources according to CIM Estimation of Mineral Resources and Mineral Reserves best practice guidelines. Mineral Processing and Metallurgical Testing Mount Milligan Mine is a copper-gold porphyry deposit, consisting of two principal zones, the Main Zone and the Southern Star (SS) Zone. The Main Zone includes four contiguous sub-zones: MBX, WBX, DWBX and 66 (low-copper and high-gold grades, southeast of the MBX sub-zone). These geologic zones are the basis for the metallurgical test work. The Mount Milligan Mine deposit is being mined using conventional open-pit equipment, with the ore being processed through a gyratory crusher, secondary crushing and a SAG-ball mill-pebble crusher combination together with a rougher and cleaner flotation plant, producing a marketable gold-rich copper concentrate. Metallurgical investigations conducted by various research laboratories prior to commencement of operations conclusively showed that froth flotation is the optimum process for the recovery of copper and gold; with this processing approach being adopted. These investigations were the basis of the performance models used in previous resource modelling. The previous Mount Milligan technical report with an effective date of December 31, 2016 and a filing date of March 2, 2017 (the “2017 Technical Report”) addressed previous assumptions in the copper and gold recovery models together with identified issues in the plant to produce new performance equations. Since disclosure of the 2017 Technical Report, further investigations and projects have been undertaken to improve the recovery process and update the accuracy of the copper and gold recovery models. Using these new performance models, the LOM average recoveries are estimated at 80.6% for copper and 61.8% for gold, targeting a concentrate grade with a LOM average of 21.5% copper. Test results indicated that impurity element contents in the concentrate were below the penalty levels normally imposed by most smelters; therefore, no significant penalties are expected. Further improvements to metallurgical recovery are being assessed including the use of alternative flotation equipment such as staged flotation reactors or direct flotation reactors. An initial assessment for the Mount Milligan Mine flowsheet and ore has shown potential to increase both gold and copper recoveries using this flotation equipment with on-site piloting in progress at the time of writing. Mineral Resource and Mineral Reserve Estimates For information on the Mount Milligan Mine mineral reserves and mineral resources, see “Mineral Reserves and Resources” starting on page 22. Mining Operations Mining The mining operation is a conventional shovel and truck open pit mine feeding a 60,000 tpd (permitted throughput) processing plant. The planned mine life is until 2029 The pit has been planned as a series of discrete pushbacks and scheduled to maximize the production of ore. Total ore and waste will be mined at an average rate of 46.8 Mtpa in 2021
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and 50.8 Mtpa in 2023 through 2027, decreasing to 21.6 Mt/a in 2028 yielding an overall LOM waste:ore strip ratio of 1.24:1.0. The mining sequence has been developed to allow for provision of suitable waste material for annual TSF construction requirements. The mine currently employs 45 pieces of mobile production equipment comprised of three blasthole drills, two rope shovels, two rubber-tired front-end loaders, 15 haul trucks and various other dozers, loaders, graders and excavators. Over the remaining mine life, it is estimated that the peak haul truck fleet will need to increase to 20 units. Mount Milligan Mill - Water Management Since late December 2017 to date, the Mount Milligan Mine has experienced a lack of sufficient water resources which have resulted at various times in 2018 through early 2020 in a short temporary suspension of processing operations, operating using only one ball-mill, and with reduced throughput. Stored water inventor is critical to the ability to process ore through the mill on a sustainable basis. On December 27, 2017, we announced that due to a lack of sufficient water resources, mill processing operations at the Mount Milligan Mine in British Columbia, Canada had been temporarily suspended. In January 2018, we received an amendment to Mount Milligan Mine’s environmental assessment certificate that allowed for a limited withdrawal of water from Philip Lake until October 2018. We restarted operations at partial capacity on February 5, 2018 using only one ball mill to minimize water requirements. We restarted the second ball mill on March 23, 2018 as a result of building up sufficient water resources in our tailings storage facility (“TSF”). On September 14, 2018, we announced that, Mount Milligan Mine received approval to access certain short-term water sources, namely to (i) pump from groundwater wells within Mount Milligan Mine’s TSF (as well as from a single groundwater well outside of the TSF for the entire LOM) and (ii) pump up to 15% of the base flow from Philip Lake until November 15, 2018. In November 2018, we were granted a further approval to pump water from Philip Lake until April 30, 2019. Throughout the winter of 2018/2019, the Company slowed its production at Mount Milligan Mine to conserve water. On February 27, 2019 we announced that the British Columbia Environmental Assessment Office approved an amendment to Mount Milligan Mine’s environmental assessment certificate to permit access to additional sources of surface water and groundwater. Subject to the receipt of the relevant water licenses, the Company would be permitted to obtain water for use in Mount Milligan Mine’s milling operation from Philip Lake 1, Rainbow Creek and Meadows Creek until November 30, 2021 at rates that are protective of the environment. The Company would also be permitted to access water from groundwater sources within a radius of six km of the Mount Milligan Mine for the life of the mine. During 2020, spring water pumping began in April and continued through to July 12, 2020. Additional water was pumped from Philip Lake during the quarter. Substantial snowpack and a wet spring led to volumes pumped during the spring freshet that exceeded those of the entire 2019 pumping season. In addition, during the second quarter of 2020, Mount Milligan continued to access ground water from the Lower Rainbow Valley wellfield as well as other groundwater wells near the tailings storage facility (TSF). As at December 31, 2020, the Mount Milligan Mine has in excess of 6 million cubic metres in inventory. The Company does not expect a curtailment in production in 2021 as there is expected to be sufficient water in the tailing storage facility to run at full capacity throughout the year. Exploration activities continue to focus on extending the groundwater capacity in the vicinity of the existing infrastructure. The Company continues to pursue a longer-term solution to its water requirements at Mount Milligan and is in discussions with regulators, its First Nations partners and other stakeholders. Processing and Recovery Operations The LOM average process plant feed grade of 0.23% Cu is delivered at an average daily permitted rate of 60,000 tonnes to yield a marketable 21.5% Cu concentrate. Process plant ore feed quality is maintained to honour metallurgical constraints such as ORE/HGLC ratio, Py:Cpy ratio and mercury (Hg) content. Average recovery to concentrate projected to be achieved during the LOM period is 80.6% for copper and 61.8% for gold. The Mount Milligan Mine process plant is designed to process ore at a nominal rate of 60,000 tpd, producing a marketable concentrate containing copper, gold, and silver. Key process equipment consists of:
• Primary crushing plant with a 1.525 m x 2.794 m gyratory crusher; • Secondary crushing plant with two cone crushers prior to the grinding circuit, each powered by one 1,000 kW motor; • SAG/ball mill/crusher grinding circuit comprised of one SAG mill, two ball mills and two cone crushers;
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• A flotation circuit comprised of a total of 19 rougher, scavenger and cleaner cells; and • Regrinding and gravity concentration circuits comprised of one tower mill, two IsaMills™ and one centrifugal gold concentrator.
Infrastructure, Permitting and Compliance Activities The infrastructure at Mount Milligan Mine includes a process plant (mill), a TSF and reclaim water ponds, an administrative building and change house, a truck shop/warehouse, a permanent operations residence, a first aid station, an emergency vehicle storage, a laboratory, and sewage and water treatment facilities. The power supply is provided by B.C. Hydro via a 91 km hydroelectric power line.
Concentrate is transported by truck from the Mine site to Mackenzie, transferred onto railcars of the Canadian National Railway to existing port storage facilities of Vancouver Wharves in North Vancouver and loaded as lots into bulk ore carriers. Concentrate is then shipped to customers via ocean transport. There are no assurances that the service providers involved in the transportation of concentrate will continue to be available on terms acceptable to the Company. See “Risk Factors”.
Tailings Storage Facility The tailings storage facility (“TSF”) at the Mount Milligan Mine is designed to store tailings solids and potentially acid generating (PAG) and oxide/weathered waste rock materials in designated areas. The TSF embankment is constructed as a centreline dam using open pit overburden and non-acid generating (NAG) waste rock materials. Construction of each of the embankment stages is scheduled to correspond with material availability from the Open Pit and the projected rate of rise. There will be sufficient volume of waste material produced over the LOM to raise the tailings dam to the required final elevation of 1,101 m. From the process plant, two tailing streams — the rougher/scavenger tailings and the first cleaner/scavenger tailings — are deposited and stored in separate tailing storage areas within the TSF. The rougher-scavenger tailings contain mostly non-sulphide gangue minerals, while the cleaner scavenger tailings contain most of the sulphide gangue minerals. The latter is kept in a lined pond and submerged to prevent acid generation from the oxidation of the sulphide minerals. The main TSF embankment is constructed in stages using annual raises throughout the LOM, from low permeability glacial till, overburden and waste rock materials from stripping operations at the open pit and borrow areas within and near the TSF. With the use of overburden and NAG waste rock for downstream TSF embankment construction, the need for conventional waste rock dumps is eliminated. Delivery of PAG and oxide/weathered waste rock to the interior of the TSF and Main Zone pit, once depleted, ensures secure underwater disposal. Tailings from the mill are currently being delivered by gravity to the TSF. Each delivery pipeline has been sized to carry up to 100% of the design scavenger tailing production from the circuit. One of the three delivery pipelines is required for use at all times while allowing for maintenance work to be completed on the other two pipelines. Discharge into the TSF is from valve controlled off-takes along the pipeline. Environmental Conditions Mount Milligan Mine’s environmental permit requirements are implemented in accordance with conditions of the permits and other regulatory approvals. The Mount Milligan Mine was specifically designed as a non-discharging mine with a limited spatial footprint and environmental impacts generally occur within that footprint. Adjustments have been made to the mine boundary through Mines Act amendments to access freshwater sources for mill operations. The Mount Milligan Mine was reviewed under the British Columbia Environmental Assessment Act and initially assessed by the Canadian Environmental Assessment Act. The Canadian Environmental Assessment Act determined that the project would not require formal federal review. An Environmental Assessment Application was filed in July 2008 (the “Application”). Provincial and federal agencies, Indigenous groups and stakeholders participated in a harmonized review of the Application. The provincial Environmental Assessment Certificate (“EAC”) was issued in March 2009 and the federal Environmental Assessment Decision Statement was issued in December 2009. The provincial Environmental Assessment Report and the federal Comprehensive Study Report concluded that, considering the required mitigation measures, the Mount Milligan Mine is not likely to cause significant adverse environmental effects. The provincial EAC has been amended from time to time, most recently in February 2019 to permit obtaining water for use in the Mount Milligan Mine milling operations from Philip Lake 1, Rainbow Creek and Meadows Creek until November 30, 2021 at rates that are protective of the environment.
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Pursuant to the EAC, we have prepared and implemented an Environmental, Health and Safety Management System (“EHSMS”) designed to ensure that we address Mount Milligan Mine’s environmental related legal requirements. The EHSMS is aligned with ISO 14001. The Mount Milligan Mine EHSMS covers topics relating to, among other things, document and operational controls, incident reporting and adaptive management. In compliance with the Mount Milligan Mine EHSMS, environmental and other management plans are updated as necessary and are submitted to applicable regulatory authorities for review and/or approval as part of the adaptive management process. We have implemented Fish Habitat Compensation Plans which are authorized under the Fisheries Act and the Metal Mining Effluent Regulations. All necessary permitting requirements to operate the Mount Milligan Mine have been applied for and approved by the applicable regulatory agencies. Some are temporary in nature (for example the temporary amendment to the EAC to allow for limited withdrawal from Philip Lake), whereas others are for the duration of the mine life. For those permits which are temporary, we expect from time to time to reapply for extensions or permanent amendments as required. There are no assurances that such extensions and/or amendments will be obtained. See “Risk Factors”. Operating permits for the Mount Milligan Mine include an operating permit issued under the British Columbia Mines Act by the Ministry of Energy and Mines; an Effluent Permit, Air Permit and Refuse Permit, all issued by the Ministry of Environment (“MOE”) under the British Columbia Environmental Management Act; several water licences and various Special Use Permits and Road Use Permits issued by the British Columbia Ministry of Forest Lands and Natural Resource Operations. The Mount Milligan Mine includes a comprehensive water management plan for construction activities and operational phases. The site is designed, operated and managed to prevent surface water discharge to enter the receiving environment during mining operations. Water management is a significant part of the reclamation plan for the Mount Milligan Mine. The reclamation plan employs proven practices and is not dependent on long-term active water treatment. Under the Reclamation plan, all mine components will be decommissioned and reclaimed in accordance with best achievable technology, and industry practices, in compliance with federal and provincial regulations. Environmental monitoring has not identified any significant water quality issues outside of the footprint of the mine. There are significant landscape activities in the vicinity of the mine operated by other industries that may influence metals in the water column, benthic macroinvertebrates and perhaps fish that must be further monitored as part of cumulative impacts studies. Emergency Response Plan and Handling of Hazardous Materials The Mount Milligan Mine has an Emergency Response Plan (the “Mount Milligan ERP”) and hazardous material transportation procedures. We conduct quarterly mock exercises to test different aspects of the Mount Milligan ERP, including response time, effective communications and the skills of the emergency response team and we have updated the Mount Milligan ERP to ensure notification protocols remain valid and improvements from the mock exercises are incorporated in the plan. Decommissioning and Reclamation The Mount Milligan Mine submitted a five-year revision to its reclamation plan in 2019 and government review of the plan was initiated in 2020. The five-year reclamation plan for the site outlines the closure goals and activities for the site and minimizes and mitigates long-term environmental impacts resulting from construction and operation of the facility via sound science and contingency planning. An adaptive management process is utilized whereby new knowledge and technology is incorporated into successive management and reclamation plans that consider operational plan updates. This adaptive management approach will aid in negating or minimizing activities such as post- closure water treatment. Social and Community Factors We endeavor to work in a responsible way to meet or exceed expectations of potentially impacted indigenous groups, and stakeholders. See “Responsible Mining – Our Approach” above. Indigenous Groups Maintaining productive relationships with Indigenous groups and ensuring project benefits are shared in accordance with our formal agreements is a priority for all Centerra’s projects and operations in British Columbia. See “Responsible Mining – Our Approach” above.
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Capital and Production Costs Total operating and capital costs over Mount Milligan’s 9-year LOM were estimated in the Mount Milligan Technical Report at $2,839 million, including $828 million for mining, $1,029 million for processing, $333 million for administration (G&A), $140 million for transportation costs, selling and marketing costs of $88 million, treatment and refining charges of $199 million and capital expenditures of $222 million. The LOM capital expenditures required to exploit the Mineral Reserves in the LOM plan is estimated at $222 million, which includes capital equipment and component replacements, planned improvements to crushing equipment, the tailings pumping system, and site facilities, as well as water management, but excludes $125 million TSF construction costs (included in mine operating expenditures). Waste mined at Mount Milligan is used for routine TSF raises, the cost of which is capitalized to the TSF rather than as capitalized stripping. The current mine plan does not contemplate any growth capital.
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Öksüt Mine Quick Facts The Öksüt Mine is situated in Turkey approximately 295 km southeast of Ankara and 48 km south of Kayseri, the provincial capital. We own 100% of the Öksüt Mine. The Öksüt Mine achieved first gold pour on January 31, 2020 and achieved commercial production as of May 31, 2020. In 2020, the Öksüt Mine produced 106,068 ounces of gold.
Location Turkey
Ownership 100%
Business structure Our wholly owned subsidiary (indirectly held), Öksüt Madencilik Sanayi ve Ticaret Anonim Sirketi (“OMAS”), is the holder of the rights to mining and exploration for the Öksüt Mine.
Estimated Mineral Reserves 1,136 koz of contained gold (proven and probable) (as at December 31, 2020) average grade – 1.34 g/t tonnage – 26,313 ktonnes
Estimated Mineral Resources 230 koz of contained gold (measured and indicated) (as at December 31, 2020) average grade – 0.66 g/t tonnage – 10,756 ktonnes Mineral resources are exclusive of reserves. Mineral resources do not have demonstrated economic viability. Inferred mineral resources have a great amount of 23 koz of contained gold (inferred) uncertainty as to their existence and as to whether they can average grade – 0.66 g/t be mined economically. It cannot be assumed that all or tonnage – 1,114 ktonnes part of the inferred resources will ever be upgraded to a higher
Processing Method Heap leach
2020 Production 106,068 ounces of gold
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Estimated Mine Life 2028
Employees 226
Technical Report The Öksüt Technical Report, with an effective date of June 30, 2015 was filed on September 3, 2015 on www.sedar.com. Property Description, Location and Access Location The Öksüt Mine is located in south-central Turkey, 295 km to the southeast of the capital city of Ankara and 48 km directly south of the city of Kayseri which has a population of 1.1 million. The nearest administrative centre is at Develi (population 64,000) located approximately 10 km north of the Project. Ankara and Kayseri have international airports and are serviced by international and domestic airlines. The Project’s co-ordinates are 715000-722100 Easting and 4236500-4249300 Northing (UTM ED 50 zone 36). The Öksüt Mine is located in the Develi Mountains on a north-south trending topographic high. The topographic relief comprises steep-sided V-shaped valleys, and locally, cliffs tens of metres high, capped by flat-lying mesas and plateaus. The Project site is located at an elevation of approximately 1,800 m. The valleys are extensively farmed, with the local population living in a number of small villages including the villages of Öksüt and Zile. Mining Licenses Mining rights and minerals are exclusively owned by the state. The state delegates rights to explore and operate to Turkish individuals or legal entities through set period licenses in return for royalty payments. Mining licensing is regulated by the General Directorate of Mining Affairs, a unit of the Ministry of Energy and Natural Resources. Other institutions of importance are central government ministries, the provincial administration, and local government institutions. Due to changes in Turkish mineral laws, which now permit the issuance of mining licenses for areas greater than 2000 hectares, we obtained in 2017 a new operation license number 85712 which unifies the previous two contiguous operation licenses (numbers IR 82468 and 82469). The unified license has a total area of 3,995.81 ha. According to the Turkish Mining Law, OMAS has the right to explore and develop any mineral resources contained within the operation license, provided fees and taxes are paid in order to keep the license in good standing. The operations license was issued on May 1, 2017 and is currently set to expire on January 16, 2023. We will submit applications to renew the operation licenses in the normal course and in accordance with the time frames permitted under local laws. While OMAS has the right to explore and develop within the area covered by the operation licenses, it requires various permits for the development of the project. In November 2015, we received approval of the environmental impact assessment certificate (“EIA Certificate”) for the Öksüt Mine, which was subsequently amended in the third quarter of 2020 (see below). In 2016, we received various other permits necessary to begin development, including the forestry usage permit on July 14, 2016, the operation permit for the forestry area on August 26, 2016, and the pastureland permit on January 11, 2018. Due to changes in the Öksüt Mine open pit design and pit optimization, OMAS applied for and obtained in the third quarter of 2020 an amendment to the Öksüt EIA Certificate from the Minister of Environment and Urbanization. The amendment is to accommodate changes to the Öksüt mine’s open pit mine design and pit optimization. Due to the delay in receiving the amendment from the EIA and further potential delays in obtaining the related forestry permit, the Öksüt mine plan and design is currently being further adjusted. There are no assurances that we will receive the forestry permit and/or any other permits and approvals when needed, or that the permits and approvals will be on terms acceptable to the Company. See “Risk Factors” elsewhere in this AIF. For information on royalties payable in respect of the Öksüt Mine, see “Taxes and Royalties” below. History The Öksüt Mine was discovered by Stratex International Plc (“Stratex”) in early 2007. Reconnaissance rock chip sampling returned up to 0.113 g/t Au from silica ledges within altered andesitic volcanic rocks at what is now the Güneytepe Deposit. In late 2007, Stratex made applications for tenements to cover the property and obtained a total of nine contiguous exploration licences covering an area of 111.6 km2.
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In 2007 and 2008, Stratex carried out geological mapping, rock chip and channel sampling, soil sampling, a topographical survey, and acquired Quickbird high-resolution satellite imagery for an area of 5.0 km by 4.5 km over the Project. Prior to this, there is no record of any modern exploration for gold conducted on the property. More specific information relating to historical exploration is provided in Section 9 of this Technical Report. In 2009, Stratex and Teck Resources Limited (“Teck”) agreed that Teck would relinquish its rights under a 2004 strategic alliance agreement to acquire interests in projects owned by Stratex. In exchange, Teck received shares of Stratex and a sliding scale royalty on, among others, the Öksüt Mine. The royalty held by Teck was subsequently acquired by Centerra and cancelled in March 2016. Centerra and Stratex subsequently formed a joint venture in 2009, to explore the project. Centerra earned an initial 50% equity in the project by advancing $3M to the joint venture through October 2011 and acquired an additional 20% interest in the project in October of 2012 with an additional contribution of $3M, which brought its equity interest to 70%. In January 2013, Centerra purchased Stratex’s remaining 30% to own 100% of the Öksüt Mine in exchange for a cash payment of $20M and a 1% NSR royalty up to a maximum of $20M. Centerra acquired and cancelled the 1% NSR royalty held by Stratex in December 2015. Geological Setting, Mineralization and Deposit Types The Öksüt Mine is a high-sulphidation epithermal gold deposit within the Central Anatolian Volcanic Province, part of the Tethyan Metallogenic Belt. The belt extends from southeastern Europe across Turkey, the Caucasus, and on into Pakistan and contains a number of important gold and porphyry copper deposits. Magmatic activity and related ore forming processes are the result of the closure of the Tethyan Ocean in response to the collision between the north- moving Arabian Plate with the Eurasian Plate that began in the late Cretaceous period and continues today. The Öksüt Mine gold mineralization is hosted within the Develidağ Volcanic Complex, one of the numerous stratovolcanoes situated along the Central Anatolian Fault Zone. The volcanic complex is composed of Miocene basaltic- andesitic volcanic domes, pyroclastic rocks, and lava flows. Flow-banded Pliocene andesite overlies these sequences and the Öksüt Mine mineralization to the north and east. There are several gold occurrences in the Öksüt Mine area, the most important of which is the Keltepe Deposit. The distribution of the alteration assemblages and the gold grades at the Keltepe Deposit are strongly zoned, with a central massive silica breccia having the highest gold grade. This core is surrounded by quartz-alunite altered volcanic rocks, and as the alteration intensity diminishes outwardly, the gold grade decreases. The Keltepe Deposit has been oxidized to depth, up to 400 m below the surface. The original copper content of the deposit has been completely leached out of the current resources, however, zones of oxide copper enrichment are found deeper within the deposit, below the planned open pit. An irregular zone of supergene enrichment exists below the oxide zone, with some high-grade sulphide copper intersections. It is surmised that the oxidation of the deposit has liberated the gold allowing heap leaching at a relatively coarse crush size. The nearby Güneytepe Deposit is significantly smaller and does not show the more straightforward zonation and continuity of alteration and gold grades as observed on the Keltepe Deposit. Silicification is intense, however, the host rocks are much less porous, and, as a result, oxidation is restricted to the upper 50 m to 75 m of this deposit. Keltepe Deposit The Keltepe Deposit is elongated NNW-SSE and is approximately 600 m long and 350 m wide with a minimum known vertical extent of 450 m. Two principal rock types are present: a texturally diverse variety of polymictic breccias and a texturally uniform porphyritic andesite. The Keltepe Deposit is strongly oxidized to a maximum known depth of up to 400 m below surface. This unusually deep oxidation is attributed to the porous and permeable nature of the siliceous and quartz-alunite altered breccias and to the presence of a deep groundwater table controlled by the NNW-SSE and NE-SW trending fault zones that drain outwards from the topographic high beneath which the Keltepe Deposit is located. Oxidation is not uniformly complete throughout the deposit, with patches of less oxidized or unoxidized rock enclosed by fully oxidized rocks. Gold mineralization is believed to occur as finely disseminated particles as it was not identified during scanning electron microscope analysis. This has been confirmed by a gold deportment study that shows that the major gold mineral identified at Keltepe is native gold with an average fineness of 6.9 μm. This study also indicates that the host minerals for the gold in the sample studied are mainly quartz and other silicates and iron oxide, with minor (2% to 10%) rutile- silicate complexes and trace associations with pyrite.
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Güneytepe Deposit The Güneytepe Deposit is located approximately 600 m to the south-southeast of the Keltepe Deposit. Gold mineralization primarily occurs along NW-SE and NE-SW trending ledges of two compositions: (1) massive to vuggy residual quartz with associated silicification, and (2) quartz-alunite plus quartz-kaolinite alteration. The location of the ledges is controlled by the intersection of NW-SE and NE-SW trending structures. As observed at the Keltepe Deposit, gold mineralization at the Güneytepe Deposit is also considered to be controlled by NW-SE and NE-SW trending faults. The deposit is bounded to the north and south by two NE-SW trending fault zones, which confine the gold mineralization into a NE-SW trending corridor. Oxidation in the ledges rarely exceeds 150 m in depth and averages approximately 50 m to 75 m. Oxidation appears to be deeper in the massive to vuggy quartz and quartz-alunite zones as compared to those composed mainly of quartz- kaolinite. Gold mineralization at Güneytepe is more variable than at Keltepe in both grade and lateral/vertical distribution. Higher sulphur contents are also recorded in the oxide zone due to sulphides, mostly pyrite, being encapsulated within massive silica and also in patchy silica altered rocks. Exploration and Drilling; Development and Production Gold mineralization was discovered at Öksüt in 2007 by Stratex. Prior to this, there is no record of any modern exploration for gold being conducted on the property. Exploration activities had been performed by Stratex staff from 2007 to 2012 (with technical guidance from Centerra from 2009 to 2012) and by OMAS staff from 2013 onwards. The initial drilling was limited to the area of Güneytepe where surface sampling had produced the best results. This program intersected gold mineralization starting at the surface and extending up to 70 m below the surface. After signing the joint venture agreement with Centerra in 2009, Stratex performed further geological mapping, geochemical sampling, ground geophysics, and trenching. The 2010 drill program confirmed the presence of gold mineralization at Keltepe. The majority of drilling and exploration activities since 2010 have focused on delineating the extents of mineralization at Güneytepe and Keltepe as well as defining additional targets with mineralization potential. The Öksüt Mine includes several other exploration targets in addition to the Keltepe and Güneytepe Deposits. All of these (Keltepe NW, Yelibelen, Büyüktepe, Boztepe, Boztepe W, Keltepe E, and Tombak) have received exploratory work since 2008. Except for Keltepe E (waste rock dump area), where condemnation drilling was completed during the feasibility study, exploration for new mineralization at other prospects has been continuing. Drilling programs to date have expanded mineral resources at both Keltepe and Güneytepe. In recent years, more drilling has been done to target oxide gold potential around the known deposits. The Keltepe North Prospect was discovered and named after the 2019 drilling program detected oxide gold mineralization closer to the surface. In 2020, nearly 20,000m of drilling was completed. The drilling program was designed to expand oxide gold resources around the Keltepe and Güneytepe deposits, test the potential of sulphide gold mineralization, and test for deeper porphyry-style Cu-Au mineralization. As a result of this drilling program, two new satellite deposits, Keltepe North and Keltepe Northwest were added to the current resources. In total, there has been 133,700 metres of drilling at the Öksüt Mine in 548 holes, the vast majority of which was diamond drilling. Nearly, 125,000 metres of core samples from 477 diamond holes have been obtained to date. In 2021, the exploration program will continue to primarily target oxide gold mineralization around the Keltepe and Güneytepe deposits to further expand the current resources and to further define the recently discovered Keltepe North and Northwest deposits. The program will also test other prospects, including Yelibelen, Büyüktepe and Boztepe, mainly for oxide gold potential. For production information for the Öksüt Mine in 2020, see “2020 and 2019 Production and Revenue”. Sample Preparation, Analysis and Data Verification From 2007 to 2012, samples from the Öksüt Mine were sent to ALS Chemex in Izmir, Turkey with the actual analyses conducted in the ALS facility in Vancouver, Canada or Roşia Montanӑ, Romania and finally, in Izmir. From September 2012 onwards, preparation and analysis of samples were carried out by SGS Ankara, Turkey. Gold was assayed using standard 50 g fire assay with an atomic absorption (AA) finish, and other elements were determined by multi-acid digestion and inductively coupled plasma (ICP) finish. Both laboratories are independent ISO 9001:2008 registered external commercial assay laboratories. Until early 2013, quality control measures consisted of the routine insertion of prepared standards, blanks and duplicate samples at a rate of three standards, one blank and one duplicate per 100 samples. From 2013, the insertion rates
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one standard per 30 samples and one blank and one duplicate per 50 samples. In addition, routine duplicate assays of pulps were undertaken as part of laboratory QC protocols. A protocol was initiated in 2012 to send 5% of all assayed sample pulps to a second laboratory for analysis. Acme Labs, Ankara, Turkey, was selected to provide external check assays. In May 2013, an audit of the SGS Ankara laboratory and QA/QC procedures was conducted by Lynda Bloom of Analytical Solutions Laboratory. Based on the review of QC data and a site visit to the Öksüt Mine, ASL considered that “there is no evidence of bias within the current database (at May 2013) which would materially impact a mineral resource estimate”. Drill samples continued to be dispatched to SGS in Ankara during 2014, and then again for 2018 and 2019. During 2015, 2017 and 2020, drill samples were dispatched to ALS is Izmir. The quality control measures described above were continued. Öksüt Mine Mineral Reserves and Mineral Resource Estimates For information on the Öksüt Mine mineral reserves and mineral resources, see “Mineral Reserves and Resources” starting on page 22. Mineral Processing and Metallurgical Testing Metallurgical testing has focused on supporting the development of the Öksüt Mine as a heap leach operation. Testing to date has focused on gold recovery at coarse particle sizes. Metallurgical testing was initiated in 2012 using samples from existing exploration diamond drill holes. A second program, completed in 2012, utilized samples from a single large diameter hole to provide the bulk of the sample for this program. The second program included the first column leach tests. In 2013, four large diameter drill holes were drilled (three in the Keltepe Deposit and one in the Güneytepe Deposit) to provide samples for two large scale column leach test programs. A mineralogy program was also completed on the samples from this program. In 2014, a further five large diameter drill holes (one in the Güneytepe Deposit and four in the Keltepe Deposit) were completed to provide samples for additional large-scale column leach tests and further mineralogical analysis. Additional series of column leach tests were completed in 2014, 2018 and 2019. The column leach tests were performed for each deposit and also for each main ore alteration type. The results from all programs show that samples from the Öksüt Mine are amenable to heap leach processing. Leach rates are relatively fast with comparatively high final recoveries. Size by size analysis of the column leach test feed and tails samples shows gold evenly distributed among the size classes, roughly following the mass splits. Since the Keltepe Deposit contains approximately 90% of the contained gold for the Öksüt Mine, the leach characteristics for the Keltepe Deposit will predominate. Güneytepe Deposit leach characteristics are expected to be as good as or better than Keltepe Deposit and are not anticipated to present any issues based on column leach testing to-date. Since operations began in late 2019/early 2020, we observed finer feed particle size with a slightly larger fines fraction than originally expected with ongoing occurrence of clay in the ore. Compacted permeability and bulk mineralogy test work was completed by Kappes, Cassiday & Associates and a review of heap performance and associated gold recovery were performed. No significant impacts were identified to performance or recovery. We will continue to monitor operation ore feed properties and any potential impact (if any) on performance. Mining Operations Mining The Öksüt Mine is a conventional truck and excavator open pit mine. Material is drilled and blasted, before being loaded and hauled to the waste dump, crusher, or the various ore stockpiles depending on the most profitable way to process the material. The two pits of the Öksüt Mine are mined simultaneously – the main Keltepe pit (mining started August 16, 2019) and the small satellite Güneytepe pit (mining started September 3, 2019). A total of approximately 29.4 Mt of ore at a grade of 1.35 g/t Au, containing a total of approximately 1.3 million ounces of gold (as of December 31, 2019), is planned to be mined and stacked over a mine life of eight years from the two open pits. We are using a mining contractor to do all mining using small excavators and 36 tonne trucks. The use of this equipment among mining contractors is common in Turkey. The mining contractor will provide and maintain all equipment, and will perform drill, blast, load, haul, and road and dump maintenance on a unit cost basis. Centerra, through its wholly owned Turkish subsidiary, OMAS will provide oversight of the mining operations, grade control, survey control, mine planning, and other required technical services.
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The Keltepe pit is being developed in three cutbacks to smooth stripping requirements and mine higher grade material earlier in the mine life. The smaller Güneytepe pit will be developed in two cutbacks. Lower grade material will be stockpiled throughout the project for processing at the end of the mine life. Processing The flowsheet for the Öksüt Mine is based on an 11,000 tpd heap leach stacking operation. It includes primary crushing, screening and secondary crushing, heap stacking and cyanide leaching, carbon adsorption, carbon stripping and regeneration, electrowinning and refining. Run-of-mine ore is delivered by 36 tonne haul trucks to the primary crusher. The ore is dumped on the stationary grizzly installed over the truck dump hopper. Oversize rocks are handled by a rock breaker. The ore is withdrawn from the dump hopper via an apron feeder. The feed is delivered to the jaw crusher via a scalper. Scalper oversize feeds the 1.5 m x 2.0 m jaw crusher that reduces the rock size to minus 150 mm prior to being conveyed by a 1.4 m wide x 95.5 m long belt conveyor to the secondary crushing circuit, along with the scalper undersize. A self-cleaning belt magnet has been installed over the conveyor belt feeding the secondary crusher building. A metal detector installed after the belt magnet identifies any remaining piece of metal and the conveyor can be stopped to allow manual removal by an operator. The product from the primary crushing circuit feeds a 2.4 m wide x 6.1 m long double-deck screen. The screen oversize will feed a 600 kW cone crusher while the screen undersize reports with the cone crusher product and is transported by a 1.1 m wide x 50.7 m long belt conveyor to a radial stacker after quicklime has been added to the crushing circuit product. A 10,000 t capacity stockpile is able to be formed by the 1.1 m wide x 39 m long stacker installation. The crushed ore is trucked from the crushing facility to the heap leach pad. The leach pad is being developed in three phases and is designed to accommodate up to 40 Mt crushed ore. The heap is irrigated with a diluted cyanide solution recirculated from the ADR plant, via a network of piping covering the surface area under leach. The barren leach solution is pumped from the barren tank at the ADR plant to the area under heap leach. The cyanide concentration of the barren solution is adjusted prior to pumping, and the pH is controlled so that HCN gas formation is inhibited. The solution is filtered to remove carbon fines prior to distribution over the area under leach to minimize emitter plugging. It is pumped by means of two centrifugal pumps installed in series. The first pump covers operation for the first three years of operation, which is the end of Phase 1, while the second pump will be required from year four. The irrigation distribution piping consists of a 300 mm diameter main header made of carbon steel from the barren pumps discharge to the heap perimeter followed by high-density polyethylene (“HDPE”) ending at the ore panels to be irrigated. Drip emitters are used to provide irrigation. A typical panel piping arrangement includes a 300 mm diameter HDPE header starting from the main header and running for 190 m along the 250 m side of the panel. Four lateral pipes spaced at every 62.5 m branch from the header. Each lateral pipe includes a 150 mm butterfly valve, a pressure gauge, and 75 m of a 150 mm diameter HDPE pipe followed by 75 m of a 100 mm diameter HDPE pipe. Emitter lines branch at every 500 mm on the pipes and emitters are spaced at every 762 mm on the emitter lines. The pregnant leach solution flows by gravity through a network of collection pipes at the base of the heap to the pregnant leach solution pond prior to being pumped to the ADR plant for precious metals recovery. Infrastructure, Permitting and Compliance Activities Infrastructure The infrastructure at the Öksüt Mine includes a processing building which includes a primary and secondary crusher buildings, crushing area electrical room and the ADR Plant; support and administration buildings including a laboratory and cyanide storage; a heap leach pad; and a waste rock dump. There are no tailings generated from the Öksüt Mine. Power to the site is supplied from a 31.5 kV electrical network through a dedicated 28.5 km overhead line coming from the Sendrimeke substation. Environmental Matters During 2016, OMAS completed an Environmental and Social Impact Assessment (“ESIA”) study which is compliant with EBRD Performance Requirements and the Equator Principles. The ESIA also incorporates information developed by OMAS through the Turkish environmental impact assessment (“EIA”). Since 2016, OMAS also completed and/or updated a number of additional environmental and social studies including biodiversity, socioeconomics, land use and livelihoods, ground water and geochemical modelling and cultural heritage/archeology.
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The ESIA, management plans and non-technical summary were subsequently disclosed by OMAS in April 2016 through disclosure meetings open to all stakeholders in the Develi district and villages around the project site. Upon completion of the ESIA, OMAS also commenced additional biodiversity studies, as part of a Biodiversity Action Plan, with international and local experts. Key biodiversity activities to date included an ornithological survey; flora and habitat surveys; construction of a plant nursery; critical species salvaging and seed collection; definition of conservation areas within the mine site; and delivery of the collected seeds to a designated seed bank. OMAS has also implemented an environmental and social management system (“ESMP”) and prepared health, safety, environmental and social management plans and procedures based on Turkish legislation, the EIA, the ESIA and Centerra standards and commitments. The ESMP and the related plans and procedures align with EBRD and IFC (Equator Principles) environmental and sustainability performance standards. In spring 2020, powerline bird surveys and migration inspection and studies were postponed to spring 2021 due to the COVID-19 pandemic. In fall 2020, the autumn bird migration study was completed and related reports were prepared. OMAS’ Biodiversity Offset Management Plan will be updated after the spring 2021 studies are completed. In June 2020, an EIA amendment application regarding project design changes was approved by the Ministry of Energy and Urbanization (“MoEU”). This amendment was due to changes in the Öksüt Mine open pit design and pit optimization. In 2020, the application for the additional new overflow pond and the ADR unit was approved by the MoEU. In October 2020, OMAS completed its updated water management plan, in November 2020, the site obtained its permanent environmental license and in December, OMAS was Zero Waste Certified. OMAS is currently waiting for a forestry permit in respect of the updated open pit design and pit optimization, which led to the amended EIA certificate. OMAS needs this new forestry permit in order to continuing developing the Güneytepe pit as currently planned. There are no assurance that this forest permit will be obtained at all, or on a timely basis. See “Risk Factors”. Decommissioning and Reclamation Mine closure and rehabilitation in Turkey is regulated through the Turkish Regulation on Reclamation of Mine Sites. The regulation requires preparation of a mine closure report as part of the EIA permit. The first iteration of the Öksüt Mine conceptual closure plan will be prepared in 2021 using a systematic approach to accurately estimate the LOM and asset retirement obligation closure costs. OMAS’s asset retirement obligation (“ARO”) Standardized Reclamation Cost Estimator studies were completed in 2020. Biodiversity studies were carried out by local experts with a focus on endemic flora areas, oak forestry areas, seed collection and removing endemic species from observed areas to the protected translocation areas. In 2020, 1,000 astragalus fruits and approximately 5,000 verbascum fruits were collected and sent to the Gazi University’s genetic laboratory for germination testing and laboratory studies. In 2020, OMAS planted 10,054 oak acorns at the mine site, nursery and forestry area. Processing and Recovery Operations For “Processing and Recovery Operations”, see “Mining Operations – Processing” above. Capital and Operating Costs Sustaining capital requirements for the Öksüt Mine are minimal, primarily due to the contracting out of the mining tasks, obviating the need for allocating sustaining capital for mobile mining equipment, and for haul road maintenance, which is part of the mining contractor’s costs. The major sustaining capital requirements are for completing the Phase 2 and Phase 3 construction of the HLP. As set out in the Öksüt Technical Report, the other area requiring additional sustaining capital is the replacement of light vehicles during the life of the mine. Item Total ($ ‘000) HLF 9,485 Other 200 TOTAL 9,685
Operating costs were developed from first principles for processing and general and administrative costs. Manpower lists have been developed for all areas, including administrative offices in Ankara. Power and reagent consumptions have been estimated based on test work and engineering work completed to date on the crushing facility, ADR plant, and HLP. Mining costs have been based on discussion with mining contractors in Turkey, with additional costs for contractor oversight, grade control, and mine planning estimated by Centerra. Additional stockpile rehandle costs have
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also been included. Royalties (as further discussed below) have been applied to the Öksüt Mine and have been estimated assuming a gold price of $1,250/oz. Refining charges have also been included. Area Unit Value(2) Processing $/t processed 5.17 General & Administrative $/t processed 2.50 Mining(1) $/t mined 2.34 Royalties $/t processed 1.36 Refining $/t processed 0.11 (1) Mining includes ore re-handling costs and $30 million of capitalized stripping. (2) Information as set out in the Oksut Technical Report. Taxes and Royalties Taxes The corporate income tax rate in Turkey is 20%. However, Investment Incentive Certificates are available to provide reduced corporate tax rates for profits derived from investments made in Turkey to promote economic development. In February 2018 (amended in October 2018), we obtained an Investment Incentive Certificate for the Öksüt Mine, which makes the project eligible for various benefits, including a further reduction of corporate income tax rate (by way of income tax credits), VAT exemptions, and customs duty exemptions. Royalties The Öksüt Mine’s operations are subject to a Turkish Government State royalty, which is a sliding scale royalty, applicable to gold and other metals. The royalty rates for gold were increased in 2020. Turkish Mining Law provides a reduction of 40% of the royalty amount payable for gold processed at refining facilities within Turkey, which is the case for the Öksüt Mine. The Turkish Government State royalty is dependent on the price of gold, as follows: Gold price ($/oz) Royalty <800 1.25% 801 – 900 2.5% 901 – 1,000 3.75% 1,001 – 1,100 5% 1,100 - 1,200 6.25% 1201 - 1,300 7.5% 1,304 - 1,400 8.75% 1,401 - 1,500 10% 1,501 - 1,600 11.25% 1,601 - 1,700 12.5% 1,701 - 1,800 13.75% 1,801 - 1,900 15% 1,901 - 2,000 16.25% 2,001 - 2,100 17.5% >2,101 18.75%
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3.2 Other Properties Kemess Project Quick Facts Centerra acquired the Kemess Project effective January 8, 2018, with the acquisition of AuRico Metals Inc. (“AuRico”) The Kemess Project is at an advanced stage – it has an approved Environmental Assessment certificate, all permits required to commence construction and a completed NI 43-101 Feasibility Study. There are currently no mining activities at the Kemess site and on-site activities consist of care and maintenance work, initial surface construction, and pre- development activities for the proposed Kemess underground project. AuRico entered into an impact benefits agreement on May 17, 2017 with the Takla Lake First Nation, Tsay Keh Dene First Nations and the Kwadacha First Nation.
Location British Columbia, Canada
Ownership 100%
Business Structure Our wholly owned subsidiary (directly held), AuRico is the holder of the rights to the Kemess Project.
Mine Type Underground
Estimated Mineral Reserves Kemess Underground (as at December 31, 2020) Tonnage - 107,381 k tonnes (probable) See “Kemess Silver Stream Arrangement” below. 1,868 k oz contained gold (probable) Average gold grade – 0.50 g/t 630 M lbs contained copper (probable) Average copper grade – 0.27% 6,878 k oz contained silver (probable) Average silver grade –1.99 g/t
Estimated Mineral Resources Kemess Underground (as at December 31, 2020) Tonnage – 173,719 k tonnes (indicated) See “Kemess Silver Stream Arrangement” below. 1,737 koz of contained gold (indicated) Average gold grade – 0.31 g/t Mineral resources are in addition to reserves. Mineral 697 Mlbs contained copper (indicated) resources do not have demonstrated economic viability. Average copper grade – 0.18% Mineral resource estimates for the Kemess East deposit 8,632 koz of contained silver (indicated) are based on a preliminary economic assessment Average silver grade – 1.55g/t completed in May 2017 (the “PEA”). Readers are cautioned that the PEA is preliminary in nature and
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includes inferred mineral resources that are considered Kemess East too speculative geologically to have the economic Tonnage – 177,500 k tonnes considerations applied to them that would enable them 2,305 koz contained gold (indicated) to be categorized as mineral reserves, and there is no Average gold grade – 0.40 g/t certainty that the PEA will be realized. 1,410 M lb. contained copper (indicated) Average copper grade – 0.36% 11,240 koz contained silver (indicated) Average silver grade –1.97 g/t Inferred mineral resources have a great amount of Kemess Underground uncertainty as to their existence and as to whether they Tonnage – 47,700 k tonnes can be mined economically. It cannot be assumed that 529 koz. contained gold (inferred) all or part of the inferred resources will ever be upgraded average gold grade – 0.34 g/t to a higher category. 210 Mlbs contained copper (inferred) average copper grade – 0.20% 2,530 koz contained silver average silver grade – 1.65 g/t Kemess East Tonnage – 29,300 k tonnes 283 koz. of contained gold (inferred) average gold grade – 0.30 g/t 203 M lb. of contained copper (inferred) average copper grade – 0.31% 1,880 koz contained silver (inferred) average silver grade – 2.0 g/t
Technical Report The Kemess Technical Report with an effective date of July 14, 2017 can be found under the AuRico Metals Inc. profile on www.sedar.com. To the best of our knowledge, information and belief, there is no new material scientific or technical information that would make the disclosure of the mineral resources or mineral reserve, and other technical information on the Kemess Project as set out in the Kemess Technical Report to be inaccurate or misleading. Kemess Silver Streaming Arrangement Pursuant to a silver stream agreement entered into with Triple Flag dated June 27, 2018, the Company has agreed to sell 100% of the silver production from the Kemess project in exchange for advance payments for silver payable in tranches of $10 million, $10 million, $12.5 million and $12.5 million. The payments would be due upon public announcement of a construction decision for the Kemess underground development project and the three succeeding anniversaries of such date. In addition, Triple Flag will make ongoing payments of 10% of the then current market price for each ounce of silver delivered. No construction decision has been made yet. Property Description and Location Location The Kemess Project is located in a mountainous area of north-central British Columbia, Canada, approximately 250 km north of Smithers and 430 km northwest of Prince George. The property is host to the former Kemess South (“KS”) Mine (operated from 1998 to 2011), the Kemess Underground (“KUG”) deposit, and the Kemess East (“KE”) deposit. Work on KS is now focused on reclamation and site rehabilitation. The KUG project will use existing infrastructure originally used for the KS Mine which remain at site. The remainder of this section will primarily relate to the KUG deposit and the KUG Project unless otherwise noted. References to activities completed before January 8, 2018 relate to matters pre-dating our ownership of the Kemess Project.
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Mining Licenses The Kemess Project is comprised of 53 mining claims totaling 29,178 ha. AuRico also has an additional four mining leases totaling 3,483 ha. Mineralization The KUG deposit is a porphyry copper-gold-silver deposit and is typical of calc-alkaline porphyry copper-gold deposits in the western cordillera. It has a low-grade ore zone at a depth of 150 m below the surface on its western flank and a higher-grade zone 300 m to 550 m below surface on the eastern side, which forms the KUG project. The deposit is hosted by Takla Group volcanic rocks and Black Lake plutonic rocks of the area. It is centered on a porphyritic monzodiorite/diorite pluton with associated WSW trending dykes that extend to the southwest outside the deposit area. Higher grade copper-gold mineralization is associated with secondary biotite alteration (potassic stage) of the host rocks, and an overprinting chlorite-sericite alteration stage. The KE deposit is a porphyry copper-gold silver deposit and is also typical of calc-alkaline porphyry copper-gold deposits in the western cordillera. The deposit is deeply situated with mineralization starting at an average depth of 900 m below surface and extending to 1,500 m below surface. There is good continuity of mineralization within the deposit. Unlike KUG, there is less development of widespread low-grade mineralization. Mineralization is associated with potassic alteration and an overprinting chlorite-sericite assemblage and is mainly hosted in brecciated Black Lake plutonic rocks. In the eastern portion of the deposit, weak mineralization is also hosted in Takla Group volcanic rocks. Kemess’ Mineral Reserves and Mineral Resource Estimates For information on the Kemess Project mineral reserves and mineral resources, see “Mineral Reserves and Resources” starting on page 22 Mining Operations Mining It is expected that the KUG deposit will be mined with an underground panel caving approach. The KUG mine will be located approximately 6.5 km north of the existing KS site. It is expected that triple declines will be developed comprising access, intake air and conveyor declines. The access decline will provide access for personnel, equipment, and materials/consumables. The final design establishes a single extraction level that includes 582 drawpoints (291 drawbells). The cave will be initiated in the highest-grade ore in the northeast of the orebody and progress to the southwest over the life of the mine. Processing The KUG project proposes to process 12.7 Mt/y (35,000 t/d equivalent) through the grinding circuit, with one of the two original KS grinding circuits that processed KS ore was removed, so additional mills will be installed to achieve the required capacity. The existing Kemess grinding circuit is expected be used to process the KUG ore following primary crushing underground and stockpiling ahead of the process plant. The grinding circuit will be expanded to allow processing of the full design tonnage. The original flotation facilities remain; however, these will be retrofitted to incorporate both cleaner and cleaner scavenging. In addition, additional regrind capacity will be added to the circuit to achieve a finer grind size. Thickening, and concentrate handling facilities remain from KS operations. The tailings will be pumped to the KS open pit, which is permitted for use as a tailings storage facility. The KS open pit has a capacity for approximately 107 Mt tailings and 3.0 Mt waste rock from KUG mine development. To achieve this storage capacity, a 25m high dam (the “East Dam”) is required to be constructed at the east end of the open pit. A spillway will be constructed in the south-west area of the pit to allow discharge of excess water once KUG operations have ceased while ensuring adequate water cover of PAG tailings. For KUG ore, the process plant will produce a single concentrate at an estimated grade of 21% Cu, and is expected to achieve recoveries of 93% Cu, 69% Au and 65% Ag. Concentrate would be trucked to a Company-owned load-out facility in Mackenzie for subsequent rail transport to market. Test work indicates that KUG ore would produce a concentrate that is free of deleterious elements and readily marketable to both smelters and traders. Production Estimates It is expected that first ore will be mined at the KUG project 3 years after commencement of construction activities, with processing commencing in the subsequent year. Total ore mined over the 10-year LOM is expected to be 107.3 Mt at 0.27% Cu and 0.54 g/t Au and 1.99 g/t Ag for 285.7 kt Cu, 1,868 koz Au and 6,878 koz Ag,.
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Environmental Matters AuRico received a provincial EA certificate for the Kemess Underground project in March 2017. As part of the EA process, AuRico considered potential effects on several valued components of the natural and human environment including, among other components, aquatic and terrestrial ecosystems, current use of lands and resources for traditional purpose. The most substantive potential impacts of the project are associated with the long-term management of waste rock, tailings, mine water and process water and their potential downstream effects on high quality fish habitat. This assessment is based upon a number of factors, including: high quality fish habitat in potential receiving environments; water quality; environmental flow needs for surrounding streams; and waterbodies such as Thutade Lake and the Finlay River which are highly valued by Indigenous groups who have traditional territories in the area. With the application of appropriate engineering design, project planning, and implementation of mine and environmental management plans, it is anticipated that the project will avoid significant environmental effects. In addition to the EA certificate, the KUG project acquired a number of new provincial and federal licenses/permits. A number of existing permits for the KS Mine have been in place since 1996 and are in good standing but may require amendment or renewal before construction or operations begin. On August 31, 2017, the Company submitted permit applications to the British Columbia Major Mines Permitting Office for the commencement of construction at KUG, including construction of a water treatment and water discharge system. KUG received in July 2018 all of the permits required to commence construction. On September 21, 2018, the Company also received its effluent discharge permit which allows discharging treated water from the site. In 2020, amendments were approved allowing for increased throughput to help improve the economics of the mine. These amendments focused provincially on the Mines Act and the Environmental Management Act as well as an amendment to the Federal Decision Statement from Impact Assessment Agency of Canada (formerly the Canadian Environmental Assessment Agency). Water Management Tailings and mine development waste rock are expected to be stored in the KS open pit (the proposed KUG TSF). The potentially acid generating (PAG) waste materials will be stored under a water cover to prevent metal leaching/acid rock drainage. At closure, a non-acid generating (NAG) tailings beach extending from the East Dam to the supernatant pond will be present on the eastern end of the KUG TSF. During operations, process water from the KUG TSF supernatant pond are expected to be reclaimed for use as mill process water and excess water treated and discharged to Attichika Creek. The sludge produced from the water treatment plant during operations will be sub-aqueously stored in the KUG TSF. The closure phase will extend for the period of time (currently predicted to be six years) required for ongoing treatment of water within the KUG TSF and controlled discharge to Attichika Creek. Excess water in the KUG TSF supernatant pond will continue to be treated in the closure phase and thereafter until the water quality meets discharge criteria. The discharge rate from the KUG TSF will decline to approximately 1.5 Mm3/year (96 L/s) in the closure phase and be treated and discharged during approved periods, while waterways are open and flowing. Continued operation of two water treatment streams will be required for metals removal (rated to treat a maximum of 187 L/s) and selenium removal (rated to a maximum of 75 L/s) throughout the active closure phase, these two treatment streams will be housed within the same building on site. Once water quality within the KUG TSF reaches concentrations that would allow for untreated discharge to the receiving environment, active water treatment would cease and the KUG project would transition to post-closure. No water treatment is expected post-closure as water quality modelling results indicate that there are no contaminants of potential concern downstream of the proposed discharge location. When water quality in the KUG TSF meets discharge criteria without treatment, the upslope diversion ditch will be re- graded to original elevation and this will allow catchment runoff and melt-water to flow into the KUG TSF and out through the closure spillway to Waste Rock Creek and ultimately to Attichika Creek. Indigenous and Public Consultation Centerra continues to engage with the surrounding communities and impacted Indigenous groups regarding the KUG project and gaining support for the project. Discussions with Indigenous groups on the project continue and serves to identify the project’s potential effects on communities and Indigenous groups and opportunities to align interests and increase project benefits. Kemess East In May 2017, AuRico (prior to our acquisition) completed a PEA on the KE project. The PEA for the KE project presents a stand-alone scenario that does not factor in or modify in any way the economics of the feasibility stage KUG project.
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The PEA does, however, assume that the KUG project is advanced ahead of KE, and hence a number of project components, most notably the access corridor connecting KUG to the KS process plant, the triple decline access to the KUG footprint and the water treatment plants associated with KUG, are not duplicated in the capital expenditures for KE, these assets would be shared by both projects. Readers are cautioned that the PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. The PEA for the KE project is based on a mine plan for an underground panel cave with initial production beginning 4 years following the start of development of the KE declines and ramping up to a steady-state production rate of 30,000 tonnes per day. The PEA estimates average annual gold equivalent production of 222,000 ounces, based on annual production of 80,000 ounces of gold, 57 million pounds of copper and 318,000 ounces of silver. The KE mineral resources are located approximately 800 m to 1,140 m below surface. The KE cave footprint is 400 m by 275 m and will be accessed and supported by a twin decline system for access and ore conveying. This twin decline system starts from the KUG declines, utilizing 2.5 km of planned KUG development. A raise from surface supplies fresh air to the KE mine levels and is exhausted via the KE twin declines to the KUG exhaust ventilation system. Following extraction from the KE cave and primary crushing underground, ore would be conveyed to the existing KS process plant where it will be processed at an average rate of 30,000 tonnes per day using existing grinding, flotation, thickening, and concentrate handling facilities; and a grinding circuit of increased capacity included in the PEA design. Concentrate will be trucked to a loadout facility in Mackenzie for subsequent rail transport to market. The PEA identified many opportunities for the Company to further evaluate with the primary opportunity being integration with the KUG project to achieve optimal sequencing, tailings management, and economies of scale in areas including ore processing, G&A and site services. In addition, potential exists to improve the quality and quantity of the KE mineral resource by additional in-fill and expansion drilling. Kemess Property Exploration Since acquiring the Kemess Project, Centerra has focused on enhanced understanding of the series of porphyry copper- gold deposits along the Kemess North Trend (KNT). The KNT is a five-kilometer-long, east-northeast trend of porphyry deposits and prospects that includes, from west to east: Nugget, KUG, Kemess Offset Zone (KOZ), KE, and Hilda South. Exploration programs since 2018 have included historical database review, field-based studies (mapping and geochemical surface sampling), historical core relogging at Nugget (4,419 m in 8 drill holes) and KUG (3,760 m in 6 drill holes), historical pulp reanalysis with a multi-element analytical package (3,923 samples), updated geological cross- sections of Nugget and western KUG deposits, ground-based geophysical surveys (27.0 line-km in 2018 and 16.2 line- km in 2020), and helicopter-supported diamond drilling programs of brownfield prospects. Exploration was also completed along the parallel Kemess South Trend (KST), about six kilometres to the south of KNT, to test a geophysical target 1.5 km east of the Kemess South Mine. Results of exploration programs have indicated, 1) there is widespread low-grade porphyry mineralization associated with the Nugget East Block cupola zone and the low-grade gold shell (0.2 g/t) is continuous with the western KUG low-grade gold shell, 2) that porphyry mineralization continues to greater depth at KE for about 175 m on the footwall side of a late- stage breccia body in which previous years’ drilling was terminated, and 3) there are two additional deep porphyry targets east of Kemess East identified through mapping, sampling, and historical database review exercises. In total, since 2019, Centerra has completed over 15,620 metres of exploration diamond drilling in 17 drill holes at Kemess as outlined in the tables below. Total Resource Expansion and Exploration drilling meters completed at Kemess from 2019-2020 Program 2019 2020 2019-2020 Total (m) (m) (m) Nugget 4532.60 3,301.90 7,834.50 KUG 1,919.70 0.00 1,919.70 KE (Deep) 0.00 4,256.50 4,256.50 KST (Shrek) 1,610.00 0.00 1,610.00 Program Total 6,452.30 7,558.40 15,620.70
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Total Exploration drill holes completed at Kemess from 2019-2020 Program 2019 2020 2019-2020 Total (#) (#) (#) Nugget 3 4 7 KUG 1 0 1 KE (Deep) 0 7 7 KST (Shrek) 2 0 2 Program Total 6 11 17
In addition to exploration activities, the Exploration team has identified, sampled, and shipped historic drill core sample intervals for continued metallurgical testing, totaling 230 kg in 2019 and 870 kg in 2020. Sampling and Analysis, Data Verification and Security of Samples Samples from the 2019 Nugget and Kemess South drilling campaigns and 2020 Nugget and KE campaigns were submitted to Bureau Veritas (BV) labs for major and trace element analysis. At BV, samples were prepared as follows (code PRP80-250): • Samples were dried and weighed. • 1 kg sub-samples were crushed to ≥ 80% passing ~2 mm. • Crushed material then riffle split and a 250g sample pulverized to ≥ 85% passing 75 μm. Samples were then analyzed for major and trace element analyses. Gold was assayed using a 30 g fire assay with atomic absorption spectrometry (AAS) finish (BV lab code FA430). All samples were also analyzed for a 45 element package (including copper and base metals) using a 4 acid digest and inductively coupled plasma mass spectrometry/emission spectroscopy (ICP-MS/ES) on a 0.25 g aliquot (BV lab code MA200). Copper results ≥ 1% triggered analysis using 4 acid digest with AAS finish (MA404) on a 0.50 g aliquot. Sulfur >10% triggered Leco analysis (TC000). For 2019 and 2020 diamond drilling, certified reference materials (CRM), blanks, and duplicates were used to monitor quality assurance and quality control (QA/QC) of the core sampling, processing, and assaying processes. All samples were marked with a unique sample ID number and sample tag in the core box by a logging geologist and cut using an electric core saw. While sampling drill core, the logging geologists inserted CRMs and coarse blank samples alternately into the sample sequence every 10 samples. Two kilogram samples of barren granite, sourced from the Cox Station Quarry in Abbotsford, were used for blank material. Copper-gold CRMs were purchased from CDN Resource Laboratories Ltd. in Delta, British Columbia and Ore Research and Exploration Pty Ltd. The standards were selected to match low, medium and high-grade mineralization ranges and are predominantly sourced from copper-gold bearing porphyry intrusive rocks. Field and coarse reject duplicates were inserted alternately into the sample sequence every 20 samples. Field duplicates were prepared by quartering one half of the core, with one quarter sent for analysis with a unique sample ID, and the other remaining in the core box. Coarse reject duplicates were prepared at BV labs prior to sample pulverization. The QC insertion rates are acceptable according to current CIM best practice standards, with QC samples accounting for approximately 15% of 2019 and 2020 assay databases. After the assay results were received from the lab, gold, copper and silver assays were checked by a Centerra database manager using control charts for the CRMs, blanks and duplicates. Any quality control failures (samples bracketing CRMs with assay values ± three standard deviations of the expected value) were documented and relevant batches of samples were requested for re-assay by BV labs using the primary pulp.
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3.3 Molybdenum Endako Mine The Endako Mine is an open-pit molybdenum mine, concentrator and roaster located approximately 161 km west of Prince George, British Columbia, Canada. The property currently comprises a contiguous group of 60 mineral tenures containing 34 claims and 26 leases, covering approximately 12,835.11 ha. Annual rental payment on the 26 mine lease titles is typically paid in installments in May, August, and November. The Endako Mine is operated as a joint venture between Thompson Creek which holds a 75% interest, and Sojitz, which holds the remaining 25% interest. The Endako Joint Venture was formed on June 12, 1997 pursuant to the terms of the Endako Mine Joint Venture Agreement. We are the manager of the Endako Mine Joint Venture with overall management responsibility for operations. Endako Mine deposit is divided into four named areas: Northwest, Denak West, Denak East and Endako. Mining has occurred in the Endako and both Denak areas. The Northwest zone is yet to be put in operation. There are no royalties, back-in rights, encumbrances on title or other agreements, other than the agreement governing the Endako Mine Joint Venture. The infrastructure at Endako Mine includes a 55,000 ton per day concentrator, a 35,000 to 40,000 pound per day roaster (and an additional non-operating roaster), tailings and reclaim water ponds, a crushing plant, waste rock dumps, an administrative building, a truck shop/warehouse, a change house, a first aid station, a laboratory, a garage and other shops. The power supply of the site is provided by a 9 km, 69 kV power line owned by B.C. Hydro from a nearby substation. Water for the milling process is re-circulated from the tailings facility while make-up water is pumped from François Lake, located nearby. Starting in 2018, we initiated a review of our long-term water treatment options at the Endako Mine, as a result of ongoing discussions concerning mine reclamation obligations among regulatory and industry bodies in British Columbia. These discussions are ongoing. During 2019 and 2020, we updated our technical and environmental studies for the Endako Mine. A Best Available Technologies study was completed in February 2020, which was supported by a feasibility study, to assess the potential for the management of tailings seepage being discharged from the mine site. The studies have been the focus of ongoing review by local Indigenous groups and the provincial government as part of the Water Quality Working Group. The Endako Mine has been on care and maintenance effective July 1, 2015 due to the continued weakness in the molybdenum market. As of December 31, 2020, there are approximately 10 employees at Endako Mine for care and maintenance activities. Thompson Creek Mine TC Mine is an open-pit molybdenum mine and concentrator located approximately 48 km southwest of the town of Challis, Idaho, USA. The TC Mine land holdings comprise of 1,589 patented and unpatented lode, mill site and placer claims along with fee owned property totaling approximately 9,955 ha. All current resources are located on patented mineral claims and are not expected to be subject to any US federal government royalties that could be enacted in the future. Approximately 50% of the mineral claims are located within the boundaries of the Salmon-Challis National Forest, with the remaining 50% located within the perimeter of land managed by the United States Bureau of Land Management. TC Mine operates a commercial molybdenum beneficiation circuit to treat molybdenum concentrates to supplement the concentrate feed sourced directly for the Langeloth Facility. This beneficiation process at TC Mine allows the Company to process high copper molybdenum concentrate purchased from third parties, which is then transported to Langeloth for processing. TC Mine has been on care and maintenance since December 2014 due to declines in the molybdenum prices. As at December 31, 2020, TC Mine had 48 employees for care and maintenance, and beneficiation process activities. Langeloth Metallurgical Facility Our wholly-owned Langeloth Facility is located in Langeloth, Pennsylvania, approximately 40 km west of Pittsburgh, on land we own in fee simple. The facility receives molybdenum concentrate from third party producers that is either purchased for processing and re-sale or that is toll converted to finished products for third parties. The facility produces and sells ammonium perrhenate and rhenium metal pellets as well as sulfuric acid all recovered as by-products of processing the molybdenum disulfide. In addition, the Langeloth Facility calcines other metal containing materials from various third-party operations.
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Up to four multiple-hearth furnaces are used for the conversion (roasting) of molybdenum concentrate into technical grade molybdenum oxide. These roasters have the annual capacity to process 36 million pounds of molybdenum contained in concentrates. The molybdenum oxide can be sold as a finished product to customers or can be upgraded at the facility to molybdenum oxide briquettes, pure molybdenum trioxide powder or various sizes of ferromolybdenum products. Additional furnaces are used to calcine non-hazardous metal containing materials that contain metals other than molybdenum. As at December 31, 2020, the Langeloth Facility had 119 employees. Unionized staff at the Langeloth facility went on strike on September 9, 2019 following the expiration of the site's collective bargaining agreement earlier in the year, though the facility has continued operating without interruption using newly hired personnel. As of December 31, 2020, no significant disruption or impact to operations at Langeloth or deliveries to customers resulted from the economic strike, nor are any expected to result in 2021.
3.4 Other Properties (Exploration) We are party to various option agreements regarding the following exploration properties where our ownership interest in the underlying properties have not yet vested. Canada – Berg Berg is a copper, molybdenum and silver exploration project located in British Columbia, Canada. We acquired our interest in the Berg property in connection with the acquisition of Thompson Creek in October 2016. The Berg property comprises 91 mineral claims and one mining lease centered at 53° 48’ North Latitude and 127° 26’ West Longitude for a total of approximately 35,781.38 hectares. The Berg property is 100% owned by us with a 1% net smelter return royalty held by Royal Gold on eight of the mineral claims and one mining lease, including those which host the deposit on the Berg property. All mineral claims and the mining lease are in good standing. In December 2020, we entered into an option agreement granting a third party the right to earn-in to a 70% interest in the Berg property. Mineral claims are subject to exploration expenditure obligations, or annual fees may be paid to the province in lieu of exploration expenditures. Canada – Chuchi Property The Chuchi property is located approximately 190 kilometres northwest of Prince George and 36.5 kilometres west- northwest of the Mount Milligan Mine. It comprises 16 mineral claims, centered on 55.263°N, 124.545°W, covering an area of 6,102.10 ha. The property was acquired in early 2018 through the acquisition of AuRico Metals Inc. It is located at the southeastern margin of the of the regional-scale Hogem intrusive complex in the Quesnel island arc terrane of Northcentral British Columbia. The main target on the property, historically named the BP zone, comprises an alkalic porphyry copper-gold deposit with a 12 square-kilometre alteration footprint. The BP zone was tested with drilling in the late 1980s and early 1990s with 79 holes drilled to an average depth of less than 165 m. Canada – Max Property The Max property is located approximately 150 kilometres northwest of Prince George and 21 kilometres south of the Mount Milligan Mine. It is 100% owned by Jama Holdings Inc. (“JAMA”) and comprises 12 claims, centered on 54.920°N, 124.067°W, covering an area of 4868.83 ha. We entered into an option agreement with JAMA dated August 14, 2018 for the Max property in the Province of British Columbia and adjacent to the Mount Milligan Mine. Pursuant to the option agreement, we have the right to acquire a 51% interest in the property by (i) making cash payments to JAMA over a four- year period from the date of the agreement totaling C$200,000; and (ii) spending or allocating work credits/portable assessment credits totaling C$4 million over the same four-year period. Thereafter, we have a further right to earn an additional 19% interest in the property by (i) making cash payments or issuing shares of Centerra, in each case, worth C$400,000 to JAMA, and; (ii) spending or allocating work credits/portable assessment credits totaling C$3 million over a three-year period from exercising this second option. Thereafter in both cases (whether the second option right is exercised or not), the parties would fund the exploration and development of the applicable property proportionally to their respective interests. USA – Oakley Property We entered into an option agreement with Otis Gold Corp (“Otis”) made as of the 26th of February 2020 for the Oakley property located in Idaho, USA. Otis was subsequently acquired by Excellon Resources Inc. (“Excellon”) in April 2020. Pursuant to the option agreement, we have the right to earn a 51% interest in the Oakley property by making payments to Excellon in the aggregate amount of $250,000 over a three-year period from the date of the agreement, and by spending a total of $4,500,000 on the Oakley property over the same three-year period. Thereafter, we would have a further right to earn an additional 19% by spending an additional $3 million within a further three-year period and
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making a payment to Excellon of $300,000. Thereafter in both cases (whether the second option right is exercised or not), the parties would fund the exploration and development of the applicable property proportionally to their respective interests. USA – Vermillion Properties We entered into an option agreement with Vermillion Gold Inc.(“Vermillion”) made as of the 24th of September 2020 for their Virginia Horn, Lost Lake, and Linden Grove properties located in northern Minnesota, USA. Pursuant to the option agreement, we have the right to earn a 70% interest in the properties by making an immediate upfront payment to Vermillion in the aggregate of $25,000, and by spending a total of $5,000,000 on the properties over a four year period. Thereafter, the parties would fund the exploration and development of the applicable property proportionally to their respective interests. USA – Cherry Creek Property We entered into an option agreement with Viscount Mining Corp (“Viscount”) made as of the 31st of December 2020 for the Cherry Creek property in Nevada, USA. Pursuant to the option agreement, we have the right to earn a 70% interest in the Cherry Creek property by making payments to Viscount in the aggregate amount of $250,000 over a four year period from the date of the agreement, and by spending a total of $8,000,000 on the property over the same four year period. Thereafter, the parties would fund the exploration and development of the applicable property proportionally to their respective interests. Turkey – Kızılkaya Property The Kızılkaya property, located in central Turkey, is comprised of three tenements - Kızılkaya East, Kızılkaya West, and Kızılkaya North, covering an area of 5,161ha and within trucking distance of Öksüt Gold Mine. The tenements were acquired by our wholly owned Turkish subsidiary in late 2018 via an auction process and were granted in October 2019. During 2020, 26 drill holes were completed for a total of 4592.1 metres, targeting geological features and geochemical and geophysical anomalies. Weakly anomalous gold intercepts were obtained. A follow-up drilling program is planned for 2021. Turkey – Sivritepe Property The Sivritepe property, located in North-Central Turkey, is comprised of two tenements, Sivritepe East and Sivritepe West, covering an area of 2,810 ha. The tenements were acquired by our wholly owned Turkish subsidiary in late 2018 via an auction process and were granted in November 2019. In 2020, ten drill holes were completed for a total of 2,431.2 metres, targeting geological features and geochemical and geophysical anomalies. Significant oxide gold intercepts were obtained and further drilling is planned for 2021. Turkey – Ziyarettepe Property The Ziyarettepe property, located in central Turkey, is comprised of a single tenement covering an area of 406 ha. The tenement was acquired by our wholly owned Turkish subsidiary in late 2018 via an auction process and was granted in November 2019. In 2020, seven drill holes were completed for a total of 1,752.9 metres, targeting geological features and geochemical and geophysical anomalies. No significant assay results were obtained, and the decision was made to relinquish the tenement in early 2021. Turkey – Çavdaruşağı Property We entered into an agreement with a Turkish individual and his wholly owned company, Metalik Madencilik A.Ş (collectively the “Optionors”) for the Çavdaruşağı property located in the Kayseri Province of Turkey. Pursuant to the option agreement, we have the right to acquire 100% of the property, exercisable over a 5-year term. If we elect to exercise the option, we will then enter into a share purchase agreement for the property against consideration of $8 million and a 1% net smelter royalty. During the option term, we will be the project operator and have the sole and exclusive right to manage exploration activities. We are also responsible for maintaining the property in good standing. Other In early 2020, we terminated the strategic agreement with Gengold Resource Capital Pty. Ltd. in relation to the areas in Burkina Faso and Cote d’Ivoire. In August 2020, we terminated the option agreement for the Tepeköy property in Turkey. Later in 2020, following the decision to withdraw from exploration in Mexico, option agreements for the Tenoriba (Mammoth Resources) and Las Cumbres (Garcia) properties were terminated.
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4. GOVERNANCE
4.1 Directors and Officers The following tables set out the directors and executive officers of Centerra Gold Inc. as at December 31, 2020. The term of office for each of the directors will expire at the time of our next annual shareholders meeting, scheduled for May 11, 2021. Each of the directors on the Board as of December 31, 2020 was elected to his or her present term as a director by our shareholders at the annual meeting of our shareholders held on May 1, 2020, with the exception of Mr. Tengiz Bolturuk who was appointed by the Board effective December 4, 2020 to fill the vacancy created by the resignation of Mr. Askar Oskombaev. Directors
DIRECTOR BOARD COMMITTEES PRINCIPAL OCCUPATION OR EMPLOYMENT
MICHAEL S. PARRETT Audit Chair of the board of directors of Centerra since October Richmond Hill, Ontario, Canada 2019 69 years old Human Resources and Compensation Independent Consultant and Corporate Director. Director since May 8, 2014 Nominating and Corporate Director, Stillwater Mining Company from 2009 to 2017 Governance Director, Pengrowth Energy Corporation from 2004 to 2016
Director of Gabriel Resources Limited from 2003 to 2010 (including Chairman from 2005-2010) Other Public Company Directorships (current) None
TENGIZ A.U. BOLTURUK(1) n/a Consultant (since 2016) Oakville, Ontario, Canada 55 years old Chief Executive Officer & President of JSC Tin One Mining in Kazakhstan from 2014 to 2016, Director since December 4, 2020 Other Public Company Directorships (current) None
RICHARD W. CONNOR Audit (Chair) Corporate Director Columbine Valley, Colorado, USA 71 years old Risk Partner with KPMG LLP from 1980 to 2009 Director since June 5, 2012 Human Resources and Other Public Company Directorships (current) Compensation None Special
DUSHENALY (DUSHEN) KASENOV Risk Retired Consultant Bishkek, Kyrgyz Republic 63 years old Sustainable Operations Member of the management committee of Kumtor Gold Company from 2015 to 2019 Director since May 1, 2019 Other Public Company Directorships (current) None
MAKSAT KOBONBAEV Risk Corporate Director Bishkek, Kyrgyz Republic 41 years old Nominating and Corporate Deputy General Director and Advisor to General Director for Governance a subsidiary of the Australian gold developer Manas Director since May 1, 2019 Resources from 2012 to 2018. Sustainable Operations Other Public Company Directorships (current) None
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DIRECTOR BOARD COMMITTEES PRINCIPAL OCCUPATION OR EMPLOYMENT
JACQUES PERRON Risk (Chair) President and Chief Executive Officer, Pretium Resources Vancouver, British Columbia, Inc. since 2020. Canada Sustainable Operations 59 years old CEO of Thompson Creek from October 2013 to October 2016 (when we acquired Thompson Creek) Director since October 20, 2016 Other Public Company Directorships (current)
Pretium Resources Inc.
SCOTT G. PERRY None President and CEO of Centerra Gold Inc. since January 1, Toronto, Ontario, Canada 2018 44 years old CEO of Centerra Gold Inc. since November 1, 2015 Director since December 31, 2015 CEO and Director of AuRico Gold Inc. from September 2012 to October 2015 Executive Vice President and CFO of AuRico Gold Inc. from February 2008 to September 2012. Other Public Company Directorships (current) None
SHERYL K. PRESSLER Audit Investment and Strategy Consultant Atlanta, Georgia, USA 70 years old Nominating and Corporate Director of Stillwater Mining Company from May 2002 to Governance (Chair) May 2013 Director since May 7, 2008 Special CEO of Lending Lease Real Estate Investment – US from 2000 to 2001
Other Public Company Directorship (current) None
BRUCE V. WALTER Sustainable Operations Chairman of Nunavut Iron Ore, Inc. Toronto, Ontario, Canada (Chair) 63 years old Vice Chair of Centerra Gold Inc. since June 2008 Special (Chair) Director since May 7, 2008 Director and officer of Dynatec Corporation from 2002 to 2007 (Vice Chairman from 2002 to 2005 and President and CEO from 2005 to 2007) Other Public Company Directorships (current) Westaim Corporation
PAUL N. WRIGHT Risk Corporate Director Vancouver, British Columbia, Canada Sustainable Operations President and CEO Eldorado Gold Corp. from October 1999 67 years old to April 2017. Director since May 1, 2020 Other Public Company Directorships (current) Galiano Gold Inc.
SUSAN L. YURKOVICH Human Resources and President and CEO of the British Columbia Council of Forest Vancouver, British Columbia, Compensation (Chair) Industries and President of British Columbia Lumber Trade Canada Council 55 years old Nominating and Corporate Governance Executive Vice-President, British Columbia Hydro from Director since May 1, 2018 2006 to 2015 Sustainable Operations Other Public Company Directorships (current) None
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Executive Officers
OFFICER PRINCIPAL OCCUPATION IN PAST 5 YEARS
SCOTT G. PERRY CEO of Centerra Gold Inc. since November 1, 2015 and President and President & Chief Executive Officer CEO as of January 1, 2018. Toronto, Ontario, Canada 44 years old CEO and Director of AuRico Gold Inc. from September 2012 to October 2015. Executive Vice President and CFO of AuRico Gold Inc. from February 2008 to September 2012.
DARREN J. MILLMAN Vice President and CFO of Centerra since April 1, 2016. Vice President and Chief Financial Officer Toronto, Ontario, Canada Vice President, Finance and Treasurer of Centerra from January 2015 to 43 years old March 2016. Treasurer of Centerra from January 2013 to January 2015. General Manager Finance and Company Secretary of Ivanhoe Australia from July 2007 to December 2012.
DANIEL R. DESJARDINS Vice President and Chief Operating Officer of Centerra as of January 1, Vice President and Chief Operating Officer 2020. Toronto, Ontario, Canada 57 years old President, Kumtor Gold Company from January 2015 to December 2019
CLAUDIA D'ORAZIO Vice President and Chief Human Resources Officer as of February 10, VICE PRESIDENT, CHIEF HUMAN RESOURCES OFFICER 2020. Toronto, Ontario, Canada 51 years old Vice President, Human Resources from 2017 to 2020 and Vice President, Compliance and Risk from 2012 to 2017 at Pembina Pipeline Corporation.
DENNIS C. KWONG Vice President, Business Development and Exploration of Centerra since Vice President, Business Development and January 2016. Exploration Toronto, Ontario, Canada Vice President, Business Development of Centerra since October 2008 to 49 years old 2015.
YOUSEF REHMAN Vice President, General Counsel & Corporate Secretary of Centerra since Vice President, General Counsel & Corporate January 1, 2018. Secretary Burlington, Ontario, Canada Senior Legal Counsel of Centerra from 2014 to 2017. 39 years old
Other Information About Our Directors and Officers Share Ownership As of March 12, 2021, our directors and executive officers (as a group) beneficially own, control or direct, or exercise control or direction over, directly or indirectly, 450,378 Common Shares representing approximately 0.15% of our total outstanding Common Shares (on a non-diluted basis). Cease Trade Orders To our knowledge as of the date of this AIF, no director or executive officer of Centerra is or has been in the last ten (10) years a director, CEO or CFO of any company that: • was subject to an order that was issued while the director or executive officer was acting in the capacity as director, CEO or CFO, or • was subject to an order that was issued after the director or executive officer ceased to be a director, CEO or CFO and which resulted from an event that occurred while that person was acting in the capacity as director, CEO or CFO.
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For the purposes of the foregoing, order means (i) a cease trade order, (ii) an order similar to a cease trade order, or (iii) an order that denied the relevant company access to any exemption under securities legislation, in effect for a period of more than 30 consecutive days. Bankruptcy and Insolvency Other than as set out below, to our knowledge as of the date of this AIF, no director or executive officer of Centerra, or a shareholder holding a sufficient number of securities of Centerra to affect materially the control of Centerra: • is or has been within the last ten (10) years a director or executive officer of any company that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets, or • has within the last ten (10) years become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder. Mr. Wright was a director of Nordic Mines AB (“Nordic”) until November 17, 2012. On July 8, 2013, within one year of Mr. Wright ceasing to be a director, Nordic announced that it had requested a Court appointed Administrator for itself and its Swedish and Finnish subsidiaries. The appointment of the Swedish Administrator was terminated by the District Court of Uppsala in a decision on September 1, 2014, when an agreement on debt write-off was entered into between Nordic and its creditors and lenders. Mr. Parrett was a director of Mongolia Minerals Corporation (a Canadian private company involved in mining investments in Mongolia) which filed for protection under the Companies’ Creditors Arrangement Act in June, 2014. The Companies’ Creditors Arrangement Act proceedings were terminated in February 2015 and Mr. Parrett resigned. Mr. Perry was a director of Lachlan Star Limited, a mining company based in Australia. He ceased being a director in October 2014. In February 2015, Lachlan Star Limited entered into voluntary administration. Penalties and Other Sanctions To our knowledge as of the date of this AIF, no director or executive officer of Centerra, or a shareholder holding a sufficient number of securities of Centerra to affect materially the control of Centerra, has been the subject of: • any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or • any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision. Conflicts of Interest Some of our directors also serve as directors and/or officers of other companies involved in natural resource exploration, development and production, and as noted elsewhere in this document, certain directors of the Company have been nominated by Kyrgyzaltyn, a Kyrgyz Republic state-owned company which is also our largest shareholder. Consequently, there exists the possibility for such directors to be in a position of conflict.
4.2 Committees The Board and management believe that sound and effective corporate governance is essential to our performance. We have adopted certain practices and procedures to ensure that effective corporate governance practices are followed and that the Board functions independently of management. The Board carries out its responsibilities directly and through the following five standing committees: • Audit Committee • Nominating and Corporate Governance Committee • Human Resources and Compensation Committee • Sustainable Operations Committee • Risk Committee
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The Board has also formed a Special Committee whose mandate includes, among other things, overseeing the Company’s interactions with the Kyrgyz Government and Kyrgyzaltyn. A discussion of our approach to corporate governance and other committees can be found in our management information circular prepared in connection with our most recent annual meeting of shareholders. Audit Committee The Audit Committee is responsible for assisting the Board in fulfilling its oversight responsibilities in relation to the following: • the integrity of our financial statements • our compliance with legal and regulatory requirements (other than with respect to health, safety and the environment) • compliance with our Code of Ethics for employees and our international business conduct policy (anti- corruption policy) • overseeing procedures for the (i) the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and (ii) the confidential, anonymous submission by employees of concerns regarding such matters • the qualifications and independence of our external auditor • the design and implementation of internal controls over financial reporting and disclosure controls • management of financial risk delegated by the Board • related party transactions • the performance of our internal audit function and independent auditor • any additional matters delegated to the Audit Committee by the Board Audit Committee Charter A copy of the Audit Committee’s charter is attached as Schedule A to this AIF and is also available on our website at www.centerragold.com. Composition of the Audit Committee The Audit Committee is comprised of Richard W. Connor (Chair), Michael S. Parrett, and Sheryl K. Pressler. Each member of the Audit Committee is independent and financially literate within the meaning of National Instrument 52-110 – Audit Committees of the Canadian Securities Administrators. Relevant educational experience Richard W. Connor, a director and Chair of our Audit Committee, has over 25 years of experience as an audit partner with KPMG LLP in the United States, principally for publicly traded clients in a variety of industries, including Energy and Mining, and Media and Telecommunications. Mr. Connor retired from KPMG LLP in 2009, where he served as the Office Managing Partner of the KPMG Denver Office from 1996 to 2008. Mr. Connor was elected to the partnership in 1980 and was appointed to the firm’s SEC Reviewing Partners Committee in 1987. Mr. Connor earned his BS degree in Accounting from the University of Colorado. Michael S. Parrett, a director, is currently an independent consultant and corporate director. He served on the boards of Stillwater Mining Company from 2009 to 2017, and Gabriel Resources Limited from 2003 to 2010 (including as Chairman from 2005 to 2010), Pengrowth Energy Corporation from 2004 to 2016, and of Fording Canadian Coal Trust from 2003 to 2008. Previously, Mr. Parrett was the CFO and the President of Rio Algom Limited and, prior to that, CFO of Falconbridge Limited. Mr. Parrett is a Chartered Professional Accountant and received his Bachelor of Arts degree in Economics from York University. Sheryl K. Pressler, a director, is currently an investment and strategy consultant in Atlanta, Georgia. From 2000 to 2001, she served as CEO of Lend Lease Real Estate Investments-United States. From 1994 to 2000, she served as Chief Investment Officer of California Public Employees’ Retirement System. Prior thereto, she was responsible for the investment management of the retirement funds for the McDonnell Douglas Corporation. Ms. Pressler received a
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Bachelor of Arts degree from Webster University and a Master of Business Administration degree from Washington University. Ms. Pressler served on the board of directors of Stillwater Mining Company from 2002 until 2013. External Audit Pre-Approval Procedures As part of our corporate governance practices, under our Audit Committee charter, the Audit Committee is required to pre-approve the audit and non-audit services performed by external auditors in accordance with applicable law. Fees Paid to External Auditors Audit, tax and other fees billed by our external auditor, KPMG LLP, in respect of the years ended December 31, 2020 and December 31, 2019 are set out below.
2019 % total fees(4) 2020 % of total fees ($) (%) ($) (%) Audit fees(1) 1,163,715 94.3 1,125,430 96.7 Audit-related fees 0 0 0 0 Tax fees(2) 70,900 5.7 38,458 3.3 All other fees(3) 0 0 0 0 Total fees 1,234,615 1,166,888 Notes: (1) Audit fees in 2019 and 2020 included interim reviews of the consolidated financial statements. (2) Tax fees comprise amounts billed for transfer pricing advisory services, tax compliance and tax advisory services. (3) All non-audit services to be provided by KPMG LLP must be pre-approved by the Audit Committee.
4.3 Interest of Management and Others in Material Transactions A description of the material transactions entered into during the three years prior to the date of this AIF or during the current financial year with any director, executive officer or shareholder of Centerra or any associate or affiliate of such person that has materially affected or is reasonably expected to materially affect Centerra can be found under the heading “Management’s Discussion and Analysis – Related Party Transactions” in our MD&A for the year ended December 31, 2020.
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5. RISK FACTORS Below are the risk factors that we believe can have a material effect on the profitability, future cash flow, earnings, results of operations, resources and reserves and financial condition of the Company. If any event arising from these risks occurs, the Company’s business, prospects, financial condition, results of operations or cash flows could be adversely affected, the trading price of Centerra’s common shares could decline and all or part of any investment may be lost. You should note that the following is not, however, a complete list of the potential risks we face. Additional risks and uncertainties not currently known to us, or that are currently deemed immaterial, may also materially and adversely affect the Company’s business operations, prospects, financial condition, results of operations, or cash flows.
5.1 Strategic Risks Country, Political & Regulatory Centerra’s operations and mineral resources are subject to country political and regulatory risks Centerra’s mining operations and exploration activities are affected in varying degrees by the political stability and government regulations relating to investment, corporate activity, and the mining business in the countries in which it operates, explores and develops properties. Operations may also be affected in varying degrees by terrorism; military conflict or repression; crime; populism; activism; labour unrest; attempts to renegotiate or nullify existing concessions, licenses, permits and contracts; unstable or unreliable legal systems; changes in fiscal regimes including taxation, and other risks arising out of sovereignty issues. Governments have entered into contracts with Centerra and/or granted mining claims, permits, licenses or concessions that enable us to conduct operations or exploration and development activities. Notwithstanding these arrangements, Centerra’s ability to conduct operations, exploration and/or development activities at any of its properties is subject to obtaining and/or renewing permits or concessions, changes in laws or government regulations or shifts in political attitudes beyond its control. A significant portion of the Company’s gold production and its mineral reserves and mineral resources are derived from assets located in the Kyrgyz Republic and Turkey, countries that have experienced political difficulties in recent years. There continues to be a risk of future political instability in these jurisdictions. The Company does not currently carry political risk insurance covering its investments in any of the countries where it operates. From time to time, it assesses the costs and benefits of obtaining and maintaining such insurance. There can be no assurance that, if the Company chose to obtain it, political risk insurance would be available to it, or that particular losses the Company may suffer with respect to its foreign investments will be covered by any insurance that we may obtain in the future. Resource nationalism could adversely impact Centerra’s business Companies in the mining and metals sector continue to be targeted to raise government revenue, particularly as governments struggle with deficits and concerns over the effects of depressed economies. Many governments are continually assessing the fiscal terms of the economic rent for mining companies to exploit resources in their countries. Numerous countries, including the Kyrgyz Republic and Turkey have in the past introduced changes to their respective mining regimes that reflect increased government control or participation in the mining sector, including, but not limited to, changes of laws or governmental regulations affecting foreign ownership, taxation and royalties, labour mine safety, exchange rates, exchange controls, permitting and licensing of exploration, development and production, land use restrictions, annual fees to maintain mineral properties in good standing, price controls, export controls, export and import duties, restrictions on repatriation of income or return of capital, requirements for local processing of mineral products, environmental protection, as well as requirements for employment of local staff or contractors, and contributions to infrastructure and social support systems. Recent statements made by the President of the Kyrgyz Republic regarding state ownership of future mining projects of national importance to the Kyrgyz Republic are just one example of this type of sentiment. The Company’s operations may be affected in varying degrees by such laws and government regulations. There can be no assurance that industries deemed of national or strategic importance like mineral production will not be nationalized. Government policy may change to discourage foreign investment; nationalization of mining industries may occur; or other government limitations, restrictions or requirements not currently foreseen may be implemented. There can be no assurance that the Company’s assets will not be subject to nationalization, expropriation or confiscation, whether legitimate or not, by any authority or body. While there are often provisions for compensation and
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reimbursement of losses to investors under such circumstances, there is no assurance that such provisions would effectively restore the value of the Company’s original investment or that such restoration would occur within a reasonable timeframe. There also can be no assurance that the laws in these countries protecting foreign investments will not be amended or abolished or that existing laws will be enforced or interpreted to provide adequate protection against any or all of the risks described above. Furthermore, there can be no assurance that the agreements we have with the governments of these countries will prove to be enforceable or provide adequate protection against any or all of the risks described above. Centerra’s ability to make payments depends on the cash flows of its subsidiaries Centerra conducts substantially all of its operations through subsidiaries, some of which are incorporated outside North America. The Company has no direct operations and no significant assets other than the shares of its subsidiaries. Therefore, the Company is dependent on the cash flows of its subsidiaries to meet its obligations, including payment of principal and interest on any debt it incurs or dividends. The ability of Centerra’s subsidiaries to provide the parent company with payments may be constrained by, among others, the following factors: (i) the cash flows generated by operations, investment activities and financing activities; (ii) the level of taxation and royalties, particularly corporate profits and withholding taxes, in the jurisdiction in which they operate and in Canada; and (iii) the introduction of exchange controls, repatriation restrictions (including those that may be ordered by courts) or the availability of hard currency to be repatriated. Changes in, or more aggressive enforcement of, laws, regulations and government practices could adversely impact Centerra’s business Mining operations, development activities, and exploration activities are subject to extensive laws and regulations, both in the countries where mining operations, exploration and development activities are conducted and in the Company’s home jurisdiction. Centerra’s lenders may also impose additional requirements on Centerra’s operations. These regulations relate to production, development, exploration, exports, imports, taxes and royalties, labour standards, suppliers and contractors, occupational health, waste disposal, protection and remediation of the environment, mine decommissioning and reclamation, mine safety, toxic substances, transportation safety and emergency response, social responsibilities and sustainability, and other matters. Compliance with these laws, regulations and lender requirements increases the costs of exploring, drilling, developing, constructing, operating and closing mines and other facilities. It is possible that the costs, delays, access to land, water, and power, and other effects associated with these laws and regulations may impact the Company’s decision as to whether to continue operation of its existing mines, ore processing and other facilities, or whether to proceed with exploration or development of properties. Since legal requirements change frequently, are subject to interpretation and may be enforced to varying degrees in practice, the Company is unable to predict the ultimate cost of compliance with these requirements or their effect on operations. In particular, there has been a global increase in the level of local community concerns in respect of the environmental footprint of mining operations as well as concerns over the management of water resources, and mine closure plans. This may lead to governments and other stakeholders becoming increasing rigorous in the application of related laws, regulations or requirements. If the laws, regulations or lender requirements relating to the Company’s operations were to change, or the enforcement of such requirements were to become more rigorous, the Company could be required to incur significant capital and operating expenditures to comply, which could have a material adverse effect on its financial position and its ability to achieve operating and development targets. Changes to laws and regulations may also impact the Company’s mineral resources and reserves. Community activism may influence laws and regulations, result in increased contributory demands, or in business interruption Slow economic development in some of the countries in which the Company operates has resulted in an increase in community activism and expectations by local governments for resource companies to increase their contributions to local communities. Heightened global concern for the environment and water in particular, as a result of both climate change impacts as well as following certain significant industrial accidents, has led to increased scrutiny of mining operations, review of laws aimed at environmental protection, and delays in the issuance of required permits and licenses for development and operation activities.
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The Company’s planned activities are dependent upon receipt and/or renewal of numerous permits and licenses A number of approvals, licenses and permits are required for various aspects of exploration, mine development, and operations. These include licenses and permits, which include or cover without limitation air quality, water quality, water rights, dam safety, emergency preparedness, hazardous materials (including the transportation thereof), waste rock management, solid waste disposal and tailings operations. Changes in a mine's design, production rates, quality of material mined, milling processes or circuits, and many other matters often require submission of the proposed changes for agency approval prior to implementation (including consultations with potentially impacted Indigenous groups), and these may not be obtained. In addition, changes in operating conditions beyond our control, changes in agency policy and federal, provincial and state laws, litigation, community opposition or geopolitical considerations could further affect the successful permitting of operations. Obtaining and maintaining the various permits for the Company’s exploration, mine development, and operations is complex, time-consuming and expensive. The Company has in place processes and personnel designated to obtain all necessary permits and licenses. However, its efforts are contingent upon many variables outside of its control. The Company cannot be certain that all necessary permits and licenses will be maintained or obtained on acceptable terms or in a timely manner. Any failure to obtain or maintain permits or licenses, even if inadvertent, could result in the interruption of production, exploration or development, or material fines, penalties or other liabilities. The Company’s relationships with local communities may affect our existing operations and development projects Having a positive and constructive relationship with the communities in which the Company operates is critical to ensure the future success of our existing operations and the construction and development of our development projects. There is an increasing level of public concern relating to the real and perceived effect of mining activities on the environment and on communities impacted by such activities. Adverse publicity relating to the mining industry or the Company could have an adverse effect on the Company’s reputation or financial condition and may impact its relationship with the communities in which it operates. Reputation loss may also result in decreased investor confidence, increased challenges in developing and maintaining community relations and serve as an impediment to the Company’s overall ability to advance its projects, which could have a material adverse impact on the Company. While the Company is committed to operating in a socially responsible manner, there is no guarantee that its efforts in this regard will mitigate this potential risk. The inability of the Company to maintain positive relationships with local communities may also result in additional obstacles to permitting, increased legal challenges, or other disruptive operational issues at any of its operating mines, and could have a significant adverse impact on the Company’s ability to generate cash flow, with a corresponding adverse impact to the Company’s share price and financial condition. Indigenous Claims and Consultation Issues Certain of Centerra’s properties are located in areas where various Indigenous groups have asserted rights. The interests of such groups and rights as well as related consultation issues may impact the Company’s ability to pursue exploration, development and mining at certain of its properties. Governments in many jurisdictions must consult with, or require the Company to consult with, potentially impacted Indigenous groups with respect to grants of mineral rights, the issuance or amendment of project authorizations, and the grant of necessary licenses and permits. Consultation and other rights of Indigenous groups may require accommodation including undertakings regarding employment, procurement opportunities, royalty payments and other matters. This may affect the Company’s ability to acquire within a reasonable time frame effective mineral titles, permits or licenses in these jurisdictions in which title or other rights are claimed by Indigenous peoples, and may affect the timetable and costs of development and operation of mineral properties in these jurisdictions, particularly if the Company is required to, or chooses to, enter into community development, impact benefits agreements, or other similar agreements with potentially impacted communities. These legal requirements may also affect the Company’s ability to expand or transfer existing operations or to develop new projects. Legal and Other Current and future litigation may impact the revenue and profits of the Company The Company is from time to time involved in or subject to legal proceedings related to its business. These claims can be based on allegations of breach of contract, negligence, breach of statutory duty, public nuisance or private nuisance or otherwise in connection with our operations or investigations relating thereto. Such legal proceedings can be complex, costly, and highly disruptive to business operations by diverting the attention and energies of management and other key personnel. The assessment of the outcome of legal proceedings, including its potential liability, if any, is a highly subjective process that requires judgments about future events that are not within our control. The outcome of
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litigation, arbitration or other legal proceedings, including amounts ultimately received or paid upon judgment or settlement, may differ materially from management's outlook or estimates, including any amounts accrued in the financial statements. Centerra’s properties may be subject to defects in title Centerra has investigated its rights to explore and exploit all of its material properties, and to the best of its knowledge, those rights are in good standing. However, no assurance can be given that such rights will not be revoked or significantly altered to its detriment. There can also be no assurance that the Company’s rights will not be challenged or impugned by third parties, including local governments and Indigenous groups. As a result, the Company may be constrained in its ability to operate its properties or unable to enforce its rights with respect to its properties. Although the Company is not currently aware of any existing title uncertainties with respect to any of its properties except as discussed in the preceding paragraphs, there is no assurance that such uncertainties will not result in future losses or additional expenditures. Centerra may be unable to enforce its legal rights in certain circumstances In the event of a dispute arising at its foreign operations, the Company may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts outside such foreign jurisdiction or in arbitration. The Company may also be hindered or prevented from enforcing its rights with respect to a governmental entity or instrumentality because of the doctrine of sovereign immunity. The dispute resolution provisions of the Restated Investment Agreement for the Kumtor Mine stipulate that any dispute between the parties thereto is to be submitted to international arbitration. However, there can be no assurance that a particular governmental entity or instrumentality will either comply with the provisions of these or any other agreements or voluntarily submit to arbitration. Centerra’s largest shareholder is a state-owned entity of the Kyrgyz Government Centerra’s largest shareholder is Kyrgyzaltyn, which is a state-owned entity. Kyrgyzaltyn owns approximately 26% of the common shares of Centerra. Pursuant to the terms of the Restated Shareholders Agreement, to which Centerra and Kyrgyzaltyn are parties, Kyrgyzaltyn has two nominees on Centerra’s board of directors. In addition, and in light of various considerations including the importance of the Kumtor Mine to Centerra, Centerra included in its proposed nominees for election at the most recent annual general shareholders’ meeting a third nominee of Kyrgyzaltyn who was elected to the Board. There can be no assurance that the Kyrgyz Government, through its ownership and control of Kyrgyzaltyn, will not use its influence to materially change the direction of the Company either alone or in concert with third parties. Because the Kumtor Mine is located in the Kyrgyz Republic, the Kyrgyz Government’s interests may not align with those of the Company’s other shareholders. This concentration of ownership may also have the effect of delaying or preventing a change in control of Centerra, which may deprive its shareholders of a control premium that might otherwise be offered in connection with such a change of control. The Company is aware that Kyrgyzaltyn has in the past received inquiries regarding the potential acquisition of some or all of its common shares in the Company and the sale by Kyrgyzaltyn of its shareholdings to a third party could result in a new purchasing shareholder obtaining a considerable interest in the Company. Should Kyrgyzaltyn sell some or all of its interest in Centerra, there can be no assurance that an offer would be made to the other shareholders of Centerra or that the interests of such a shareholder would be consistent with the plans of the Company or that such a sale would not decrease the value of the Common Shares. Centerra’s directors may have conflicts of interest Certain of our directors also serve as directors and/or officers of other companies involved in natural resource exploration, development and production and, as noted above, certain directors of the Company have been nominated by Kyrgyzaltyn, a Kyrgyz Republic state-owned company. Consequently, there exists the possibility for such directors to be in a position of conflict. Centerra is subject to Anti-Corruption Legislation Centerra is subject to anti-corruption and anti-bribery laws, including Canada’s Corruption of Foreign Public Officials Act (the “Anti-Corruption Legislation”), which prohibits Centerra or any officer, director, employee or agent of Centerra or any shareholder of Centerra acting on its behalf from paying, offering to pay, or authorizing the payment of anything of value to any foreign government official, government staff member, political party, or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official capacity. The Anti-Corruption
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Legislation also requires public companies to make and keep books and records that accurately and fairly reflect their transactions and to devise and maintain an adequate system of internal accounting controls. Centerra’s international activities create the risk of unauthorized payments or offers of payments by Centerra’s employees, consultants or agents, even though they may not always be subject to Centerra’s control. Centerra prohibits these practices and provides training and education to its employees and seeks confirmation of compliance from its consultants and agents. However, Centerra’s existing safeguards may prove to be less than effective, and Centerra’s employees, consultants and agents may engage in conduct for which Centerra might be held responsible. Any failure by us to adopt appropriate compliance procedures and ensure that Centerra’s employees and agents comply with the Anti-Corruption Legislation and applicable laws and regulations in foreign jurisdictions could result in substantial penalties or restrictions on Centerra’s ability to conduct business in certain foreign jurisdictions. Strategy and Planning Centerra’s future exploration and development activities may not be successful Exploration for and development of mineral properties involve significant financial risks and may be subject to political, technical and other risks that even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of a mineral resource or mineral deposit may result in substantial rewards, few properties that are explored are ultimately developed into producing mines. The economic feasibility of development projects is based upon many factors, including the accuracy of mineral resource and reserve estimates; metallurgical recoveries; capital and operating cost estimates; government regulations relating to prices, taxes, royalties, land tenure, land use, water consumption, importing and exporting, and environmental protection; and metal prices, which are highly volatile. Development projects are also subject to the successful completion of socio-environmental impact assessments, feasibility studies, issuance of necessary governmental permits and availability of adequate financing. The Company’s ability to sustain or increase present levels of production is dependent on the successful acquisition or discovery and development of new orebodies and/or expansion of existing mining operations. The Company cannot ensure that its current exploration and development programs will result in profitable commercial mining operations or replacement of current production at existing mining operations with new mineral reserves. Also, substantial expenses may be incurred on exploration projects that are subsequently abandoned due to poor exploration results or the inability to define mineral reserves that can be mined economically. It is also not unusual for new mining operations to experience unexpected problems during the start-up phase and to require more capital and time than anticipated. Centerra’s mineral reserves may not be replaced If the Company’s existing mineral reserves are not replaced either by the development or discovery of additional reserves and extension of the LOM at its operations, or through the acquisition or development of an additional producing mine, there could have an adverse impact on its future cash flows, earnings, results of operations and financial condition, including as a result of requirements to expend funds for reclamation and decommissioning. Although the Company is actively engaged in programs to increase mineral reserves, there can be no assurance that these programs will be successful. Centerra may experience difficulties with its partners As a result of having partners in the exploration, development and operation of the Company’s projects (Endako and exploration option arrangements), the Company is subject to the risks normally associated with any partnership/joint venture arrangements. These risks include disagreement with a partner on how to explore, develop, operate and finance a project, possible litigation between us and a partner regarding matters in the agreement, and failure by the Company’s partners to abide by Centerra’s policies and procedures. This may be particularly the case when the Company is not the operator on the property. Centerra’s mineral reserve and resource estimates may be imprecise Mineral reserve and resource figures are estimates and no assurances can be given that the indicated levels of minerals will be produced or economically extracted, or that we will receive the price assumed in determining its mineral reserves. These estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling results and industry practices, and historical and forecasted costs. Valid estimates and the assumptions such estimates rely on may significantly change when new information becomes available or conditions change. While the Company believes that the mineral reserve and resource estimates included are well established and reflect management’s best estimates, by their nature mineral reserve and resource estimates are imprecise and depend, to a certain extent, upon analysis of drilling results and statistical inferences that may ultimately prove unreliable.
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Furthermore, fluctuations in the market price of gold, copper and other commodities, exchange rates, as well as increased capital or production costs or reduced mining or metallurgical recovery rates may render mineral reserves uneconomic and may ultimately result in a reduction of reserves. The extent to which mineral resources may ultimately be reclassified as proven or probable mineral reserves is dependent upon the demonstration of their profitable recovery. The evaluation of mineral reserves or resources is always influenced by economic and technical factors, which may change over time. No assurances can be given that any mineral resource estimate will ultimately be reclassified as proven or probable mineral reserves or that inferred resources will be upgraded to measured or indicated resources. Centerra’s production and cost estimates may be inaccurate Centerra prepares estimates of future production and costs for its operations. These production and cost estimates are based on historical costs and productivity experience, or technical studies in the case of new operations; however actual production and costs may vary from estimates for a variety of reasons, including actual ore mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; short-term operating factors relating to the ore reserves, such as the need for sequential development of ore-bodies and the processing of new or different ore grades; encountering unusual or unexpected geological conditions; risks and hazards associated with mining; shortages of principal supplies needed for operations, including explosives, fuel, chemical reagents, water, equipment parts and lubricants; natural phenomena, such as inclement weather conditions, floods, earthquakes, ice or ground movements, pit wall failures and cave-ins; equipment failures; labour issues including unexpected labour shortages or strikes, and the inability to retain or attract the suitable personnel and civil action by employees; and insufficient modelling robustness. Costs of production may also be affected by a variety of factors, including changing waste-to-ore ratios, ore grade metallurgy, labour costs, costs of supplies and services (such as, for example, fuel and power), general inflationary pressures and currency exchange rates. As a result of social media and other web-based applications, reputational risks have increased. Damage to the Company’s reputation can be the result of the actual or perceived occurrence of any number of events, including, without limitation, allegations of fraud or improper conduct, environmental non-compliance or damage, or the failure to meet the Company’s objectives or guidance. Any of these events could result in negative publicity to the Company, regardless of whether the underlying information is true. Although Centerra emphasizes protecting its image and reputation, the Company does not ultimately have direct control over how it is perceived by others. Reputation loss as a result of inaccurate social media statements may lead to increased challenges in developing and maintaining government and community relations, decreased investor confidence and act as an impediment to the Company’s overall ability to advance its projects, or to access equity or debt financing. Centerra may be unable to identify opportunities to grow its business or replace depleted reserves, and it may be unsuccessful in integrating new businesses and assets that we acquire. As part of Centerra’s business strategy, the Company has sought and will continue to seek new operating, development and exploration opportunities in the mining industry. In pursuit of such opportunities, the Company may fail to select appropriate acquisition candidates or negotiate acceptable arrangements, including arrangements to finance acquisitions or integrate the acquired businesses into its business. The Company cannot provide assurances that it can complete any acquisition or business arrangement that it pursues, or is pursuing, on favorable terms, if at all, or that any acquisitions or business arrangements completed will ultimately benefit its business. Further, any acquisition the Company makes will require a significant amount of time and attention of the Company’s management, as well as resources that otherwise could be spent on the operation and development of its existing business. Any future acquisitions could be accompanied by risks, such as a significant decline in assumed commodity prices; the quality of the mineral deposit acquired proving to be lower than expected; the difficulty of assimilating the operations and personnel of any acquired companies; the potential disruption of its ongoing business; the inability of management to realize anticipated synergies and maximize its financial and strategic position; the failure to maintain uniform standards, controls, procedures and policies; and the potential for unknown or unanticipated liabilities associated with acquired assets and businesses, including tax, environmental or other liabilities. There can be no assurance that any business or assets acquired in the future will prove to be profitable, that any development or exploration properties acquired will prove to be promising and eventually benefit Centerra’s business, that the Company will be able to integrate the acquired businesses or assets successfully or that the Company will identify all potential liabilities during the course of due diligence.
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The trading price of the Company’s common shares may be subject to large fluctuations and may increase or decrease in response to a number of events and factors. These factors may include, but are not limited to the price of gold, copper and other metals; the impact of exchange rates on our operation costs; the Company’s operating performance and the performance of competitors and other similar companies; the public’s reaction to the Company’s press releases, other public announcements and its filings with the various securities regulatory authorities; changes in earnings estimates or recommendations by research analysts who track the Company’s common shares or the shares of other companies in the resource sector; changes in general economic conditions; the presences or actions of a large shareholder; the arrival or departure of key personnel; and acquisitions, strategic alliances or joint ventures involving the Company or its competitors. In addition, the market price of the Company’s shares are affected by many variables not directly related to the Company’s success and are therefore not within its control, including other developments that affect the market price and volume volatility for all resource sector shares, the breadth of the public market for the Company’s shares, and the attractiveness of alternative investments. The effect of these and other factors on the market price of the Common Shares on the exchanges in which the Company trades has historically made Centerra’s share price volatile and suggests that the Company’s share price will continue to be volatile in the future. Natural Phenomena Centerra may experience further ground movements at the Kumtor Mine or at the Öksüt Mine From time to time, the Kumtor Mine has experienced ground movement in various parts of the Central pit, which has led to an employee casualty, considerable short falls in the annual gold production, changes in mining sequences, increased expenditure on depressurization and dewatering programs, the movement of existing infrastructure and/or the redesign and construction of new infrastructure, reduced slope angles of the Central pit, and changes in waste rock dump designs. Recently, KGC experienced pit wall movement in the northwest wall of the Central Pit which required KGC to revise its mining sequence and to defer that area (a portion of cut-back 19) to the end of mine life. In the fourth quarter of 2019, we also experienced ground movement at the east wall of the Keltepe pit at the Öksüt Mine. No damage or injuries occurred as a result of this ground movement. The Company has commenced geotechnical/geological evaluations to understand the failure and its impact (if any) on the Öksüt operations. Although extensive efforts are employed by Centerra to prevent and anticipate ground movement at all of its operations, there is no guarantee that sudden unexpected ground movements will not occur. A future ground movement could result in a significant interruption of operations. The Company may also experience a loss of mineral reserves, a delay or suspension in operations, or a material increase in costs, if it is necessary to redesign the open pit or waste rock dumps as a result of a ground movement. The consequences of a ground movement will depend upon the magnitude, location and timing of any such movement. Centerra may experience unanticipated waste rock dump movements at the Kumtor Mine The Company often has to mine a significant amount of waste rock material in order to gain access to ore. At the Kumtor Mine, we place this waste rock material in three areas which have been permitted by Kyrgyz Republic authorities for such purpose: the Davidov Valley waste rock dump, Lysii waste rock dump and Sarytor waste rock dump. These waste rock dumps are continuously monitored to, among other things, ensure their stability. In 2013, a large section of the Kumtor Mine’s principal waste-rock dump, the Davidov Valley waste rock dump, experiencing a greater than anticipated rate of movement which required the relocation of certain mine infrastructure including workshops, administrative facilities and electrical substations. The Company expedited the relocation of the affected infrastructure to ensure continued safe operations. In December 2019, a significant rockslide incident occurred as a result of a waste rock dump failure at the Lysii waste rock dump located on site resulting in the deaths of two employees. Extensive efforts are employed by the Kumtor Mine to confirm the stability of the waste rock dumps and to anticipate waste rock dump movement (some minimal movement is naturally expected to occur) including automated system monitoring, third party geotechnical reviews, and revision to the strategies for placing waste rock on the waste rock dumps. However, despite these effects, there are no assurances that sudden unexpected waste rock dump movements will not recur as they are many factors that are outside of our control that may impact the stability and movement of the waste rock dump. Any unanticipated waste rock dump movement could result in interruption of operations, result in the redesign of waste rock dumps which may require regulatory approval which may not be provided in a timely manner or at all, and increased production costs if we are required to temporarily or permanently use other waste rock dumps which are further away from the mining activity There is also a possibility that waste rock dump movement may reach the tailings dam facility, which could have significant effects on the environment (see risk entitled “Water management and the oversight of our tailings management facilities are subject to regulation and risks and could result in significant
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damages to persons and property”). The consequences of a waste rock dump movement will depend upon the magnitude, location and timing of any such movement. Centerra will experience further ice movement at the Kumtor Mine Continued movement of ice from the South-East Ice Wall into the Kumtor Central pit above the high-grade SB Zone section requires the transfer of ice and waste to maintain its planned production of ore. Although the Company is employing extensive efforts including the engagement of experts in the discipline to manage further waste and ice movements, there is no guarantee that such efforts will be successful or that further waste and ice movements will not adversely affect operations at the Kumtor Mine. Future movements could result in a significant interruption of operations, impede access to ore deposits, or require redeployment of mobile equipment away from mining of ore. The Company may also experience a loss of mineral reserves or a material increase in costs if it is necessary to redesign the open pit and surrounding infrastructure as a result of waste and ice movements. The consequences of further ice movement into the Kumtor Central pit will depend upon the extent, location and timing of any such movement. Natural or Man-Made Disasters The Company’s operations are subject to adverse events brought on by both natural and man-made disasters including but not limited to severe weather conditions, forest fires, earthquakes and avalanche. These events could damage or destroy or adversely affect the operations at our physical facilities and similar events could also affect the facilities of our suppliers. Any such damage or destruction could adversely affect our financial results, future cash flows and earnings as a result of the reduced availability of supplies, decreased production output or increased operating costs. While the risks were taken into account when determining the design criteria for our operations, there can be no assurance that the Company’s operations will not be adversely affected by this kind of activity. Although we believe we have reasonable insurance arrangements in place to cover certain of such incidents related to damage or destruction, there can be no assurance that these arrangements will be sufficient to fully protect us against such losses. Competition Centerra’s future prospects may suffer due to increased competition for mineral acquisition opportunities Significant and increasing competition exists for mineral acquisition opportunities throughout the world, particularly for opportunities in jurisdictions considered politically safe. As a result of this competition, some of which is with large, better established mining companies with substantial capabilities and greater financial and technical resources, the Company may be unable to acquire rights to exploit additional attractive mining properties on terms we consider acceptable. Accordingly, there can be no assurance that the Company will acquire any interest in additional operations that would yield mineral reserves or result in commercial mining operations. The Company’s inability to acquire such interests could have an adverse impact on its future cash flows, earnings, results of operations and financial condition. Even if the Company does acquire such interests, the resulting business arrangements may not ultimately prove beneficial to its business.
5.2 Financial Risks Commodity Market Centerra’s business is sensitive to the volatility of gold and copper prices The value of the Company’s mineral resources and future operating profit and loss is largely dependent on the world market price of gold and copper, which are volatile and are affected by numerous factors beyond its control. A reduction in the price of gold or copper may prevent the Company’s properties from being economically mined or result in the write down of assets whose value is impaired as a result of low metal or commodity prices. The price of gold or copper may also have a significant influence on the market price of Centerra’s Common Shares. The price of gold and copper are subject to many factors which are beyond the control of the Company, including global supply and demand; central bank lending, sales and purchases; expectations for the future rate of inflation; the level of interest rates; the strength of, and confidence in, the U.S. dollar; market speculation; the availability and cost of substitute materials, including crypto-currencies; and global or regional political and economic events. If the market prices fall and remain below production costs of any of the Company’s mining operations for an extended period, losses would be sustained, and, under certain circumstances, there may be a curtailment or suspension of some or all of the Company’s mining, development and exploration activities. The Company would also have to assess the
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economic impact of any sustained lower metal prices on recoverability and, therefore, the cut-off grade and level of our mineral reserves and resources. We enter into provisionally-priced sales contracts, which could have a negative impact on our revenues if prices decline. In connection with the Company’s Mount Milligan Mine operations, it enters into provisionally-priced sales contracts, under which settlement occurs at prices to be determined at a future date. The future pricing mechanism of these agreements constitutes an embedded derivative, which is bifurcated and separately marked to estimated fair value at the end of each period. Changes to the fair value of embedded derivatives related to sales agreements are included in sales revenue in the determination of net income. To the extent final prices are higher or lower than what was recorded on a provisional basis, an increase or decrease to sales, respectively, is recorded each reporting period until the date of final pricing. Accordingly, in times of falling commodities prices, the Company’s revenues and cash flow are negatively impacted by lower prices received for contracts priced at current market rates and also from a decrease related to the final pricing of provisionally-priced sales pursuant to contracts entered into in prior years; in times of rising commodities prices, the opposite occurs. We rely on a few key customers for our projects and the loss of any one key customer could reduce our revenues. Centerra sells all of its gold doré produced from the Kumtor Mine to Kyrgyzaltyn pursuant to the Restated Gold and Silver Sale Agreement. Gold doré produced from the Öksüt Mine is sold at market prices on the Borsa Istanbul (stock exchange), subject to a right of first refusal by the Central Bank of the Republic of Turkey. The Company has also entered into three multi-year concentrate sales agreements for the sale of copper-gold concentrate produced at Mount Milligan Mine. A breach of any agreement by us or any customer, a significant dispute with one of these customers, a force majeure event affecting the parties' respective performances under the agreement, a bankruptcy event experienced by the customer, early termination of the agreement, disruptions to the Company’s logistics, trucking or rail networks or any other event significantly and negatively impacting the contractual relationship with one of these customers could have a material effect on the Company’s profitability, cash flow and financial condition. Our commodity hedging activities may reduce the realized prices we receive for our copper and gold (as it relates to Mount Milligan Mine), and involve market risk for the fair value of the derivatives, credit risk that our counterparties may be unable to satisfy their obligations to us, and financial risk due to fluctuations in the fair value of the derivatives. In order to manage our cash flow exposure to copper and gold price volatility in selling production from Mount Milligan Mine, the Company enters into commodity derivatives from time to time for a portion of its expected production from the Mount Milligan Mine. Additionally, the Company receives cash provisional payments in selling production for the Mount Milligan Mine, thus requiring that it purchases gold or copper in order to satisfy its obligation to pay Royal Gold in gold and copper (as the case may be). The Company enters into commodity derivatives from time to time in order to manage its gold and copper price risk that arises when physical purchase and concentrate sales pricing periods do not match. The Company currently has in place unsecured hedging lines with various banks and trading companies in order to manage these exposures. Commodity derivatives may limit the prices the Company actually realizes and therefore could reduce the Company’s copper and gold revenues in the future. The Company’s commodity hedging activities could impact its earnings in various ways, including recognition of certain mark- to-market gains and losses on derivative instruments. The fair value of the Company’s derivative instruments could fluctuate significantly between periods. The Company’s commodity derivatives may expose it to significant market risk, which is the risk that the fair value of a commodity derivative might be adversely affected by a change in underlying commodity prices or a change in its expected production, which may result in a significant financial loss on the derivative. The Company mitigates the potential market risk by establishing trading agreements with counterparties under which the Company is not required to post any collateral or make any margin calls on our derivatives. The Company’s commodity derivatives also expose it to credit risks that counterparties may be unable to satisfy their obligations to the Company. The Company mitigates the potential credit risk by entering into derivatives with a number of counterparties, limiting the amount of exposure to any one counterparty, and monitoring the financial condition of the counterparties. If any of the Company’s counterparties were to default on their obligations to the Company under the derivative transaction or seek bankruptcy protection, it could result in a larger percentage of the Company’s future production being subject to commodity price changes which may have a significant adverse effect on the Company’s cash flow, earnings and financial condition. The risk of counterparty default is heightened in a poor economic environment.
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Centerra’s operations are sensitive to fuel price volatility The Company is also exposed to price volatility in respect of key inputs, the most significant of which is fuel. Increases in global fuel prices can materially increase operating costs, erode operating margins and project investment returns, and potentially reduce viable reserves. Conversely, a significant and sustained decline in world oil prices may offset other costs and improve returns. While the Company has entered into hedge arrangements to minimize its risk to fluctuating fuel prices, there are no assurances that such arrangements will be successful. The Company’s operations are subject to currency fluctuations that may adversely affect the financial position of the Company The Company’s earnings and cash flow may also be affected by fluctuations in the exchange rate between the U.S. dollar and other currencies, such as the Kyrgyz som, Canadian dollar and Turkish Lira. The Company’s consolidated financial statements are expressed in U.S. dollars. The Company’s sales of gold and copper are denominated in U.S. dollars, while production costs and corporate administration costs are, in part, denominated in Kyrgyz soms, Canadian dollars and Turkish Lira and other currencies. Fluctuations in exchange rates between the U.S. dollar and other currencies may give rise to foreign exchange currency exposures, both favourable and unfavourable. Centerra does not currently use a hedging program to limit the adverse effects of foreign exchange rate fluctuations except for the Canadian dollar. We cannot hedge the Kyrgyz som because it is not freely traded but, as the Company’s exposure to other currencies increases, including the Turkish Lira with the operation of the Öksüt Mine, the Company may decide to engage in foreign exchange hedging transactions to reduce the risks associated with fluctuations in foreign exchange rates (to the extent available), but there are no assurances that any such hedging program will be available or successful. Economy, Credit and Liquidity Global Financial Conditions Global financial conditions are beyond the Company’s control. A significant disruption in the credit and capital markets could adversely affect our ability to obtain equity or debt financing in the future on favourable terms and could cause permanent decreases in our asset values, which may result in impairment losses. These factors could also increase the Company’s exposure to financial counterparty risk, adversely impact commodity prices, exchange rates, interest rates and impact the trading price of Centerra’s common shares. Centerra may experience reduced liquidity Centerra may not continue to generate cash flow from operations in the future sufficient to service its debt or make necessary or planned capital expenditures, including the further development and exploration of its mineral properties, including the Kemess Property. If the Company is unable to generate such cash flow, it may be required to adopt one or more alternatives, such as selling assets, borrowing additional funds, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive, cancelling or deferring capital expenditures and/or suspending or curtailing operations. Such actions may impact production at mining operations and/or the timelines and cost associated with development projects. Centerra may have difficulty in obtaining future financing The Company’s ability to borrow additional funds or refinance its indebtedness will depend on the capital markets and its financial condition at such time. The Company may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on its debt obligations. Many of the Company’s principal operations and development projects are located in under-developed areas that may have experienced past economic and political difficulties and may be perceived as unstable. This perceived increased country or political risk may make it more difficult for Centerra to obtain debt or equity financing. Failure to obtain additional financing on a timely basis may cause us to postpone development plans, forfeit rights in our properties or reduce or terminate our operations. Centerra’s ESG practices and reporting may be considered inadequate which may impact our ability to obtain financing There exist many environmental and social governance (“ESG”) analytics companies that review and report on the Company’s response to ESG matters, including climate change but also other matters relating to sustainable operations and governance. ESG factors, including climate change, are increasingly becoming a metric for institutional shareholders to review and assess the performance of the Company and a significant factor in their investment decisions. We have robust systems in place to management ESG matters at our operations, and to ensure proper and complete reporting thereof. In 2020, Centerra aligned its sustainability report to the Sustainability Accounting
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Standards Board (SASB). However, there are no assurances that our efforts will be sufficient or meet the standards set by ESG analysts or institutional or other investors or that our efforts will accurately be reported on, which can adversely impact our reputation and potentially our ability to access capital. In order to finance future operations, Centerra may raise funds through the issuance of shares or the issuance of debt instruments or other securities convertible into shares. Centerra cannot predict the potential need or size of future issuances of Common Shares or the issuance of debt instruments or other securities convertible into shares or the effect, if any, that this would have on the market price of our Common Shares. Any transaction involving the issuance of shares, or securities convertible into shares, could result in dilution, possibly substantial, to present and prospective security holders. Restrictive covenants in Centerra’s credit facilities may impact business activities Pursuant to Centerra’s credit facilities, the Company must maintain certain financial ratios and satisfy other non- financial maintenance covenants. Centerra and its material subsidiaries are also subject to other restrictive and affirmative covenants in respect of the Company’s respective operations. These covenants include, without limitation, restrictions on our ability to incur additional indebtedness; pay dividends or make other distributions; make loans or investments; sell, transfer or otherwise dispose of assets; and incur or permit to exist certain liens. Compliance with these covenants and financial ratios may impair the Company’s ability to finance its future operations or capital needs or to take advantage of other favourable business opportunities. The Company’s ability to comply with these covenants and financial ratios will depend on its future performance, which may be affected by events beyond its control. The Company’s failure to comply with any of these covenants or financial ratios, if left uncured, will result in a default under applicable credit agreements and may result in the acceleration of the applicable indebtedness and other indebtedness to the extent there are cross-default provisions. In the event of a default and the Company is unable to repay any amounts then outstanding, the applicable lender(s), may be entitled to take possession of any collateral securing the credit facility to the extent required to repay those borrowings. Insurance Centerra may not be adequately insured for certain risks Although the Company maintains insurance to cover some of the operational risks and hazards in amounts it believes to be reasonable, insurance may not provide adequate coverage or may not be available in all circumstances. No assurance can be given that insurance will continue to be available at economically feasible premiums or that it will provide sufficient coverage for losses related to these or other risks and hazards. The Company may also be subject to liability or sustain losses in relation to certain risks and hazards against which the Company cannot insure or for which it may elect not to insure. The occurrence of operational risks and/or a shortfall or lack of insurance coverage could have an adverse impact on the Company’s future cash flows, earnings, results of operations and financial condition. Tax and Royalties The Company is subject to taxation in multiple jurisdictions and adverse changes to the taxation laws of such jurisdictions could have a material impact on our profitability Centerra has operations and conducts business in a number of different jurisdictions and is accordingly subject to the taxation laws of each such jurisdiction, as well as tax reviews and assessments in the ordinary course. In some jurisdictions, such as Turkey, the Company is eligible for certain investment incentive programs which provide tax benefits for companies making investments in the relevant country. Participation in such programs requires continued oversight and compliance with the applicable program, which can be time consuming and require the input of third party contractors. In Turkey, the Company is also subject to a state royalty which is applied on the Company’s production. The exact royalty amount is dependent on the underlying gold price. The laws relating to the state royalty may change from time to time (most recently occurred in2020) which may impact the profitability of our operations in Öksüt. The Company’s international operations are also subject to the Organization of Economic and Co-operative Development’s Base Erosion and Profit Shifting Action Plan, which mandates global businesses to conduct themselves in a manner that ensures taxes are paid in jurisdictions in which income arises. Taxation laws are complex, subject to interpretation and subject to change. Any such changes in taxation law (including royalties) or reviews and assessments could result in higher taxes being payable by the Company, which could adversely
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affect its profitability. Taxes may also adversely affect the Company’s ability to repatriate earnings and otherwise deploy its assets. Counterparty Short-term investment risks The Company may, from time to time, invest some excess cash balances in short-term instruments issued by highly rated global financial institutions. The failure of any such financial institutions could have a negative effect on the liquidity of the Company’s investments. In connection with the Strategic Agreement, the Company has agreed to move a portion of the investments held in the Kumtor Reclamation Trust Fund into investments guaranteed by the Government of the Kyrgyz Republic. We believe that such investments would not be as secure as those issued by highly rated global financial institutions.
5.3 Operational Risks Centerra’s business is subject to production and operational risks that could adversely affect its business and insurance may not cover these risks and hazards adequately or at all. Mining and metals processing involve significant production and operational risks, some of which are outside of our control, including but not limited to the following: unanticipated ground and water conditions; shortages of water for processing activities; adjacent or adverse land or mineral ownership that results in constraints on current or future mine operations; geological problems, including earthquakes and other natural disasters; metallurgical and other processing problems; unusual or unexpected mineralogy or rock formations; ground or slope failures; pit flooding; tailings design or operational issues, including dam breaches or failures; structural cave-ins, wall failures or rock-slides; flooding or fires; equipment failures or performance problems; periodic interruptions due to inclement or hazardous weather conditions or operating conditions and other force majeure events; lower than expected ore grades or recovery rates; accidents; delays in the receipt of, or failure to receive, necessary government permits; the results of litigation, including appeals of decisions; delays in transportation of people, supplies, and product to and from the mine sites (as applicable), including any trucks, rail and/or ocean carriers used to delivery our product (gold doré or concentrates) to refineries or customers; interruption of energy supply; labour disputes, including any disputes of third parties which may impact our operations; physical and transition risks from climate change; inability to obtain satisfactory insurance coverage; the availability of drilling and related equipment and supplies in the area where mining operations will be conducted; and the failure of equipment or processes to operate in accordance with specifications or expectations. These risks could result in damage to, or destruction of, the Company’s mines, mills and roasting facilities, resulting in partial or complete permanent shutdowns, sterilization of mineral reserves, personal injury or death, environmental or other damage to our properties or the properties of others, delays in mining, reduced production, monetary losses and potential legal liability. Processing operations are subject to hazards, such as equipment failure or failure of retaining dams around tailings disposal areas that may result in personal injury or death, environmental pollution and consequential liabilities. The Company’s insurance will not cover all the potential risks associated with our operations. In addition, although certain risks are insurable, the Company may be unable to maintain insurance to cover these risks at economically feasible premiums. Moreover, insurance against risks such as environmental pollution or other hazards as a result of exploration and production is not generally available to the Company or to other companies in the mining industry on acceptable terms. The Company might also become subject to liability for pollution or other hazards that may not be insured against or that it may elect not to insure against because of premium costs or other reasons. Losses from these events may cause the Company to incur significant costs that could have a material adverse effect upon its business. Furthermore, should the Company be unable to fund fully the cost of remedying an environmental problem, it might be required to suspend operations or enter into interim compliance measures pending completion of the required remedy.
Health, Safety and Environment Centerra’s operations may be exposed to local epidemic and/or widespread pandemic A major global pandemic (e.g. COVID-19) could have material adverse impacts on our ability to operate due to employee absences, global supply chain disruptions, information technology system constraints, government interventions, market volatility and overall economic uncertainty. Centerra’s operations are located in areas relatively remote from local towns and village. We rely on various modes of transportation to move around our people, our product and the necessary supplies for our operations.
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At many of our sites, we have a high concentration of personnel working and residing in close proximity to one another at the Mine site (camps). Should an employee or visitor become infected with a serious illness that has the potential to spread rapidly, this could place Centerra’s workforce at risk. Centerra continues to prioritize the health, safety and well-being of its employees, contractors, communities, and other stakeholders during the current outbreak of COVID-19 and to take steps to minimize the effect of the pandemic on its business. The Company has established strict COVID-19 protocols at its mine sites to help prevent infection and reduce the potential transmission of COVID-19. The Company has also implemented travel restrictions and has temporarily closed various administration offices including its head office in Toronto. In addition, operating mine sites continue to assess the resiliency of their supply chains, increase mine site inventories of key materials and develop and implement contingency plans to allow for continued operations. While COVID-19 has not materially affected Centerra’s operations to date as employee absences due to COVID-19 and other illnesses have so far been successfully managed, the Company notes that the effects of COVID-19 on its business continue to change rapidly. The measures enacted to date reflect the Company’s best assessment at this time but will remain flexible and be revised as necessary or advisable and/or as recommended by the public health and governmental authorities. There can be no assurance that this virus or another infectious illness will not impact Centerra personnel and ultimately its operations. Centerra is subject to environmental, health and safety risks Centerra expends significant financial and managerial resources to comply with a complex set of environmental, health and safety laws, regulations, guidelines and permitting requirements (for the purpose of this paragraph, “laws”) drawn from a number of different jurisdictions. The Company believes it is in material compliance with these laws. The historical trend that the Company observes is toward stricter laws, and the Company expects this trend to continue. The possibility of more stringent laws or more rigorous enforcement of existing laws exists in the areas of worker health and safety, the disposition of wastes, the decommissioning and reclamation of mining sites, restriction of areas where exploration, development and mining activities may take place, consumption and treatment of water, and other environmental matters, each of which could have a material adverse effect on the Company’s exploration activities, operations and the cost or the viability of a particular project. Water management and the oversight of our tailings management facilities are subject to regulation and risks and could result in significant damages to persons and property. The water collection, treatment and disposal operations at the Company’s mines are subject to substantial regulation and involve significant environmental risks. The extraction process for gold and other metals can produce tailings, which are the sand like materials which remain from the extraction process. Tailings are stored in engineered facilities which are designed, constructed, operated and closed in conformance with local requirements and best practices. If collection or our management systems (including our physical tailings management facilities or tailings dams) were to fail, overflow or not operate properly (including through matters beyond our control or ability to predict and mitigate, such as extreme weather, seismic event, or other incident), untreated water or other contaminants could spill onto nearby properties or into nearby streams and rivers, causing damage to persons or property, injury to aquatic life and economic damages. Such failures could result in immediate suspension of mining operations by government authorities and cause significant expenses, write offs of material assets and recognize provisions for remediation, which affect the balance sheet and income statement. The Company could also be held liable for claims for natural resource damages, fines or penalties from governmental authorities, and claims relating to exposure to hazardous and toxic substances. In addition, any such failure would involve a lengthy clean-up. Environmental and regulatory authorities in the applicable jurisdictions of operation conduct periodic or annual inspections of the relevant mine. As a result of these inspections, the Company is from time to time required to modify its water management program, complete additional monitoring work or take remedial actions with respect to the operations as it pertains to water management. Liabilities resulting from non-compliance, damage, regulatory orders or demands, or similar, could adversely and materially affect the Company’s business, results of operations and financial condition. Moreover, in the event that the Company is deemed liable for any damage caused by overflow, the Company’s losses or consequences of regulatory action might not be covered by insurance policies.
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Centerra’s operations use cyanide The Kumtor Mine and Öksüt Mine operations employ sodium cyanide, which is a hazardous material, to extract gold from ore. There is inherent risk of unintended discharge of hazardous materials in the operation of leach pads. If any spills or discharges of sodium cyanide were to occur (at site or during transport), the Company could become subject to liability for remediation costs, which could be significant and may not be insured against. In addition, production could be delayed or halted to allow for remediation, resulting in a reduction or loss of cash flow. Finally, increased sensitivity in respect to the use of cyanide and the potential and perceived environmental impacts of cyanide use in mining operations could exacerbate potential reputational damage to the Company in the event of a cyanide release. While the Company takes appropriate steps to prevent discharges and accidental releases of sodium cyanide and other hazardous materials into the ground water, surface water and the downstream environment, there is inherent risk in the operation of gold processing facilities and there can be no assurance that a release of hazardous materials will not occur. We must remove and reduce impurities and toxic substances naturally occurring in copper, gold and molybdenum ores and comply with applicable law relating thereto, which could result in remedial action and other costs. Mineral ores and mineral products, including copper, gold and molybdenum ore and products, contain naturally occurring impurities and toxic substances. Although the Company has implemented procedures that are designed to identify, isolate and safely remove or reduce such impurities and substances, such procedures require strict adherence and no assurance can be given that employees, contractors or others will not be exposed to or be affected by such impurities and toxic substances, which may subject us to liability. Standard operating procedures may not identify, isolate and safely remove or reduce such substances. Even with careful monitoring and effective control, there is still a risk that the presence of impurities or toxic substances in the Company’s products may result in such products being rejected by the Company’s customers, penalties being imposed due to such impurities or the products being barred from certain markets. Such incidents could require remedial action and could result in curtailment of operations. Legislation requiring manufacturers, importers and downstream users of chemical substances, including metals and minerals, to establish that the substances can be handled and used without negatively affecting health or the environment may impact the Company’s operations and markets. We require permits to raise our tailings dams which may be refused and/or delayed. The tailings dam design for both the Kumtor Mine and the Mount Milligan Mine require additional approvals and permits to reach the height required for their respective life of mine plans. While the Company has received in the past approvals to raise the tailings dam when required, there are no assurances that such approvals will continue to apply in the future, or that the Company will receive further approvals required to raise the tailings dam to its final height. If all necessary approvals are not maintained or obtained, delays in, or interruptions or cessation of the Company’s production from the applicable mine may occur. The Company’s mining production depends on the availability of sufficient water supplies. The Company’s operations require significant quantities of water for mining, ore processing and related support facilities. Continuous production at the Company’s mines depends on its ability to maintain its water rights and claims. The failure to obtain needed water permits, the loss of some or all water rights for any of its mines, in whole or in part, or shortages of water to which the Company has rights due to weather, equipment issues or other factors could require the Company to curtail or close mining production and could prevent it from pursuing expansion opportunities. In December 2017, the Mount Milligan Mine mill operations were temporarily suspended due to a lack of available water for processing. The Mount Milligan Mine experienced a drier than normal spring and summer during 2017 with a limited amount of spring snow melt. This resulted in lower than expected reclaim water volumes in the TSF at the Mount Milligan Mine which is used for processing operations. The water shortage was exacerbated by unanticipated extremely cold temperatures at the Mount Milligan Mine, which resulted in a greater than expected loss of water volumes in the TSF due to ice formation. The Company restarted mill operations at the Mount Milligan Mine in early February 2018 after completing a number of steps to increase the flow of water into the TSF, including adding pumps to existing water wells, increasing pump sizes to increase the flow rate, maximizing tailing placement and drilling additional wells. The Company has also received regulatory approvals to access additional surface water, until November 2021, and groundwater for milling operations and has now started the necessary studies and commenced consultation with potentially impacted Indigenous groups to work toward a further, longer-term water solution for the Mount Milligan Mine. There are no assurances that this long-term solution will be successful, be obtained prior to expiry of current approvals to access surface water or groundwater (November 2021) or that the long-term solution will supply sufficient water
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resource for the continuous operation of the mill. The failure to find a long-term solution to the lack of available water resources at the Mount Milligan Mine, or the re-occurrence of any water availability issues at the Mount Milligan Mine, including due to drier than expected weather conditions, extreme temperatures, or for any other reason, could adversely impact on the Company’s future cash flows, earnings, results of operations and financial condition. Regulation of greenhouse gas emissions effects and climate change issues may adversely affect our operations and markets. Global climate change continues to attract considerable public, scientific and regulatory attention, and greenhouse gas emission regulation is becoming more commonplace and stringent. As energy, including energy produced from the combustion of carbon-based fuels, is a significant input to the Company’s mining and processing operations, it must also comply with emerging climate change regulatory requirements, including programs to reduce greenhouse gas emissions. The Company’s principal energy sources are electricity, purchased petroleum products and natural gas. In addition, the Company’s processing facilities and mobile mining equipment emit carbon dioxide. A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to the potential impacts of climate change. Where legislation already exists, regulation relating to emission levels and energy efficiency is becoming more stringent. The changes in legislation and regulation will likely increase the Company’s compliance costs. The Company also may be subject to additional and extensive monitoring and reporting requirements. In addition, the potential physical impacts of climate change on the Company’s operations are highly uncertain and may be particular to the unique geographic circumstances associated with each of its facilities. These may include extreme weather events, changes in rainfall patterns, water shortages, and changing temperatures. These physical impacts could require the Company to curtail or close mining production and could prevent the Company from pursuing expansion opportunities. The Company has taken measures to mitigate the impact of weather on its operations, including ensuring that extreme weather conditions are included in its emergency response plans. However, there are no assurances that extreme weather events such as severe cold temperature or drought conditions will not adversely impact the cost, production and financial performance of the Company’s operations. Centerra faces substantial decommissioning and reclamation costs The Company is required to establish at each of its mine sites and development projects a decommissioning and reclamation plan. Provision must be made for the cost of decommissioning and reclamation for operating sites. These costs can be significant and are subject to change depending on the requirements of regulatory authorities, changes in legislation, changes in the understanding of what reclamation activities are required at our operations, and changes in best practices for reclamation. We provide financial assurances, whether through cash deposits or bonds, with applicable regulatory authorities. However, there is no way to predict what level of decommissioning and reclamation may be required in the future. If the Company is required to comply with significant additional regulations or if the actual cost of future decommissioning and reclamation is significantly higher than current estimates, this could have an adverse impact on the Company’s future cash flows, earnings and financial condition. Centerra’s operations may directly or indirectly contribute to human rights risks The Company’s practices are aligned to the UN’s Voluntary Principles on Security and Human Rights (VPSHR), the UN Guiding Principles on Business and Human Rights and the articles set forth in the UN’s Universal Declaration of Human Rights. Our Employee Code of Ethics and Respectful Workplace Policy sets-out expectations for employees around compliance with laws regarding non-discrimination, harassment, and ensuring a safe workplace. To ensure the VPSHRs are adhered to, security and community relations personnel across our operating sites receive training on these principles which involves a mixture of classroom training and knowledge checks. VPSHR training is provided to employees and where appropriate private security contractors. However, these safeguards may prove to be less than effective, particularly with respect to third parties that we engage to carry out specified services, including private security and/or contract mining. Any allegation (even if unsupported) that Centerra is, directly or indirectly, violating human rights principles could lead to liability for Company, and Centerra facing a loss of reputation which may lead to increased challenges in developing and maintaining government and community relations, decreased investor confidence, and act as an impediment to the Company’s overall ability to advance its projects, or to access equity or debt financing.
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Biodiversity risks Centerra prohibits exploration or mining in UNESCO World Heritage sites. We have policies, plans and protocols in place to manage potential or actual impacts to our site’s biodiversity, and ensure we respect Ramsar sites (sites designated as Wetlands of International importance), key biodiversity areas, and legally protected areas. The Kumtor Mine is in the vicinity of the Sarychat-Ertash Nature Reserve, a legally protected area. The Öksüt Mine uses two powerlines that intersect with the Sultan Sazligi Wetland, a national park, and Erciyes Mountain Key Biodiversity Area. The Erciyes Dagi (Mountain) is also internationally recognized as an Important Plant Area (IPA). In addition, the Sultan Sazlığı Wetland is also internationally recognized as Important Bird Area (IBA) and Important Plant Area (IPA). Despite the policies, plans and protocols that the Company has put in place, there remains a risk that we may, directly or indirectly, harm the biodiversity in the areas that we operate or within the vicinity of our operations, adversely impact Ramsar sites, or destroy or impair important and legally protected areas. Any of these events could result in liability for Centerra, and Centerra facing a loss of reputation which may lead to increased challenges in developing and maintaining government and community relations, decreased investor confidence, and act as an impediment to the Company’s overall ability to advance its projects, or to access equity or debt financing. Development and construction risks The Company is not currently constructing or developing any properties, but regularly reviews potential properties in its own portfolio and the acquisition of, or investment in, properties that are in construction/development stages. In making any decision to commence construction of a development property, the Company must consider many factors including future metal prices and exchange rates, which can change significantly over the long period of time often needed to develop and construct the mine. The capital expenditures and time required to develop and construct mines are considerable and changes in cost or construction schedules can also significantly increase both the time and capital required to build the project. Construction costs and timelines can be impacted by a wide variety of factors, many of which are beyond our control. These include, but are not limited to, weather conditions, ground conditions, performance of the mining fleet and availability of appropriate materials required for construction, availability and performance of contractors and suppliers, delivery and installation of equipment, design changes, accuracy of estimates, global capital cost inflation, local in- country inflation and availability of accommodations for the workforce. Development schedules are also dependent on obtaining the governmental approvals necessary for the operation of a project. The timeline to obtain these government approvals is often beyond the control of the Company. A delay in start-up or commercial production would increase capital costs and delay receipt of revenues. Asset Management Centerra may experience mechanical breakdowns The Company’s mines (whether operating or currently on care and maintenance) use expensive, large mining and processing equipment that requires a long time to procure, build and install. Although the Company conducts extensive preventive maintenance programs, there can be no assurance that the Company will not experience mechanical breakdowns of mining and processing equipment. In the past, the Company has experienced such mechanical breakdowns, which have resulted in unplanned mill shutdowns and reduced mill capacity. In addition, obtaining replacement components for the equipment can take considerable time which may also impact production. Any extended breakdown in mining or processing equipment could have an adverse impact on the Company’s future cash flows, earnings, results of operations and financial conditions. Human Resources Certain of our projects are unionized and may be subject to labour disturbances Production at the Company’s operations depends on the efforts of its employees. The Company has unionized environments, including at our Kumtor Mine and Öksüt Mine, and therefore employees are subject to collective agreements which require frequent renegotiations. There can be no assurance that, when such agreements expire, there will not be any delays in the renewal process, that negotiations will not prove difficult or that Centerra will be able to renegotiate the collective agreement on satisfactory terms, or at all. The renewal of the collective agreement could result in higher on-going labour costs, which could have a material adverse impact on Centerra’s future cash flows, earnings, results of operations and financial condition. Centerra could be subject to labour unrest or other labour disturbances including strikes as a result of any failure of negotiations which could, while ongoing, have a material adverse impact on Centerra, including the achievement of any
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annual production guidelines and costs estimates. Existing collective agreements may not prevent a strike or work stoppage, and any such work stoppage could have a material adverse impact on the Company. There is also a possibility that the Company’s employees at its other projects, including the Mount Milligan Mine, could organize and certify a union in the future. Centerra’s success depends on its ability to attract and retain qualified personnel Recruiting and retaining qualified personnel is critical to the Company’s success. The number of persons skilled in the acquisition, exploration and development of mining properties is limited and competition for these resources is intense. As the Company’s business activity grows, it will require additional key financial, administrative and mining personnel as well as additional operations staff. Certain jurisdictions in which the Company operates may limit the number of foreign nationals that can be employed at the mining site. For example, the Restated Concession Agreement relating to the Kumtor Mine operations requires two thirds of all administrative or technical personnel to be citizens of the Kyrgyz Republic. However, it has been necessary in the past to engage expatriate workers for the Company’s operations in the Kyrgyz Republic and in Turkey because of the shortage locally of trained personnel. Furthermore, large-scale projects in northern and central British Columbia compete for talent with the Company’s operations at the Mount Milligan Mine and the Kemess Property. Although the Company believes that it will be successful in attracting, training and retaining qualified personnel, there can be no assurance of such success. Supply Chain Centerra’s properties are located in remote locations and require a long lead time for equipment and supplies Some of the Company’s properties are in remote locations and depend on an uninterrupted flow of materials, supplies and services to those locations. Any interruptions to the procurement of equipment, or the flow of materials, supplies and services to the Company’s properties could have an adverse impact on its future cash flows, earnings, results of operations and financial condition. Centerra’s operations may be impacted by supply chain disruptions The Company’s operations depend on uninterrupted supply of key consumables, equipment and components, which may be impacted by matters outside of the Company’s control or ability to mitigate. These conditions may include global events such as the COVID-19 pandemic, which may impact our operations globally, as well as localized events affecting specific operations. For example, the Company’s Kyrgyz Republic operations are limited with respect to alternative suppliers of fuel, and any disruption at supplier facilities could result in curtailment or suspension of operations. In addition, major equipment and components and certain key consumables are imported. Recent and potential future economic sanctions imposed on Russia by the U.S. and European Union in 2014 and 2016, may impact delivery of goods and services to the Kumtor Mine. The fact that the Kyrgyz Republic is a member of the Eurasian Economic Union may also impact the Kumtor Mine supply chains. Any disruption in the transportation of or restriction in the flow of these goods or the imposition of customs clearance requirements may result in production delays. Information Technology Systems Centerra’s critical operating systems may be compromised Cyber threats have evolved in severity, frequency and sophistication in recent years, and target entities are no longer primarily from the financial or retail sectors. Individuals engaging in cybercrime may target corruption of systems or data, or theft of sensitive data. Centerra is dependent on information technology systems in the conduct of its operations. The Company’s mines and mills are automated and networked such that Centerra could be adversely affected by network disruptions from a variety of sources, including, without limitation, computer viruses, security breaches, cyber-attacks, natural disasters and defects in design. Centerra’s operations also depend on the timely maintenance, upgrade and replacement of networks, equipment information technology systems and software, as well as pre-emptive expenses to mitigate the risk of failure. Given the unpredictability of the timing, nature and scope of information technology disruptions, a corruption of the Company’s financial or operational data or an operational disruption of its production infrastructure as a result of any of these or other events could result, among other things, in: (i) production downtimes; (ii) operational delays; (iii) destruction or corruption of data; (iv) increases in capital expenditures; (v) loss of production or accidental discharge; (vi) expensive remediation efforts; (vii) distraction of management; (viii) damage to our reputation or our relationship with customers; or (ix) in events of noncompliance, which events could lead to regulatory fines or penalties. Any of the foregoing could have a material adverse effect on the Company’s business, results of operations and financial condition.
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6. INVESTOR INFORMATION
6.1 Description of Share Capital Our authorized share capital consists of an unlimited number of Common Shares, an unlimited number of Class A non- voting shares and an unlimited number of preference shares, issuable in series. There are no constraints on the ownership of our shares, except as set out in the restated shareholders agreement dated as of June 6, 2009 entered into between Centerra and Kyrgyzaltyn (the “Restated Shareholders Agreement”). See “Restated Shareholders Agreement” below. The following summary does not purport to be complete and reference is made to our articles of incorporation, as amended, which can be found on www.sedar.com. Common Shares Each common share of Centerra (“Common Shares”) is entitled to: • one vote at meetings of shareholders, except for meetings at which only holders of another specified class or series of shares are entitled to vote separately as a class or series; • receive dividends if, as, and when declared by the Board; and • participate in any distribution of our net assets upon liquidation, dissolution or winding-up on an equal basis per share but subject to the rights of the holders of preference shares. There are no pre-emptive, redemption, purchase or conversion rights attached to our Common Shares. The Board, at a meeting held on May 9, 2006, approved a three-for-one stock split of our outstanding Common Shares, which was affected by way of a stock dividend. Shareholders of record at the close of business on May 29, 2006 received two additional Common Shares for each Common Share held. Our Common Shares began trading on a split basis on May 25, 2006 on the TSX. As at December 31, 2020, there were 295,827,906 Common Shares issued and outstanding (on a non-diluted basis). As at March 12, 2021, there were 296,194,503 Common Shares issued and outstanding (on a non-diluted basis) and 3,789,723 options to acquire Common Shares outstanding under its stock option plan and 951,375 units outstanding under its restricted share unit plan (exercisable on a 1:1 basis for common shares). Class A Non-Voting Shares The Class A non-voting shares have the same terms and conditions as our Common Shares, except: • they will be non-voting; and • they will not be entitled to any dividends or distributions that can be attributed reasonably to KGC or its assets or operations There are currently no Class A non-voting shares outstanding as they have been created solely for the purposes of the insurance risk rights plan described below. Preference Shares Preference shares may be issued at any time or from time to time in one or more series as may be determined by the Board. The Board is authorized to fix, before issue, the number, the consideration per share and the designation of and, subject to the special rights and restrictions attached to all preference shares, the rights and restrictions attached to the preference shares of each series. The preference shares of each series rank on a parity with the preference shares of each other series with respect to the payment of dividends and the return of capital on liquidation, dissolution or winding-up. The preference shares are entitled to a preference over the Common Shares and any other shares ranking junior to the preference shares with respect to the payment of dividends and the return of capital. The special rights and restrictions attaching to the preference shares as a class may not be amended without any approval as may then be required by law, subject to a minimum approval requirement of at least two thirds of the votes cast at a meeting of the holders of preference shares to be called and held for that purpose. There are currently no preference shares outstanding.
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6.2 Market for Our Securities We completed our initial public offering on June 30, 2004. Our Common Shares are listed on the TSX under the symbol CG. Trading Price and Volume The table below shows the high and low prices and total monthly trading volume for our Common Shares on the TSX in 2020. All prices listed below are in Canadian dollars. 2020 High ($) Low ($) Volume January 10.68 9.17 15,243,461 February 11.18 8.16 13,147,173 March 10.25 5.52 32,612,055 April 12.38 8.28 25,124,058 May 14.24 10.65 17,948,073 June 15.34 11.78 21,539,379 July 16.85 14.54 16,155,263 August 19.59 15.95 17,981,285 September 17.79 14.73 15,974,906 October 16.12 11.24 19,790,673 November 13.73 11.44 23,276,481 December 15.61 12.76 21,743,374 On December 31, 2020, the closing price of our Common Shares on the TSX was C$14.74. Registrar and Transfer Agent The transfer agent and registrar for our Common Shares is the AST Trust Company (Canada) at its principal office in Toronto, Ontario, Canada.
6.3 Dividend Policy In July 2010, we adopted a dividend policy whereby the decision to pay dividends, the timing and the quantum thereof is to be determined by the Board from time to time based on, among other things, our cash balance, operating cash flows, anticipated capital requirements for future growth and the yields of comparable companies’ dividend rates. Pursuant to the terms of our 2020 Corporate Facility with a syndicate of lenders entered into in December 31, 2020, we are restricted from declaring and paying cash dividends to our shareholders as follows: (i) no more than $135 million in any fiscal year and provided that there is no event of default; and (b) an amount equal to the net cash proceeds received from the sale of certain non-core assets provided that there is no event of default and that our liquidity after paying such dividend is at least $500 million. The table below shows the dividends paid per common share over the last three financial years.
2020 2019 2018
Cash dividends C$0.18(1) $0(2) $0(2) Notes: (1) In each of March and April, we declared dividends of C$0.04 per share. In July and November, the dividend declared was increased to C$0.05 per share. These quarterly dividends were payable: (i) on April 22, 2020 to shareholders of record on April 9, 2020; (ii) on June 4, 2020 to shareholders of record on May 21, 2020; (iii) on August 28, 2021 to shareholders of record on August 14, 2020; (iv) on December 4, 2020 to shareholders of record on November 20, 2020. (2) No cash dividends were paid in 2019 and 2018. On December 9, 2016, we announced the suspension of future quarterly dividends. This decision was made by the Board in light of the restrictions relating to funds held at our wholly owned Kyrgyz Republic subsidiary, KGC. These restrictions were removed in September 2017 as part of the Kumtor Strategic Agreement which was completed in August 2019. 6.4 Material Contracts The following are the only material contracts, other than contracts entered into in the ordinary course of business not otherwise required to be disclosed, that we have entered into within the most recently completed fiscal year or before the most recently completed fiscal year but still in effect. Mount Milligan Streaming Arrangement The Mount Milligan Mine is subject to the Mount Milligan Streaming Arrangement with Royal Gold. See “Marketing and Distribution – Royal Gold Streaming Arrangement” for a description of the agreement and the amendments.
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Restated Investment Agreement Centerra, KOC, KGC, the Kyrgyz Government and Kyrgyzaltyn entered into a Restated Investment Agreement dated as of June 6, 2009. The Restated Investment Agreement and related agreements set out the terms and conditions applicable to our ongoing operation and development of the Kumtor Mine, including providing for a comprehensive tax regime applicable to the Kumtor Mine. The Restated Investment Agreement has a term lasting until the earlier of 2042 or when the deposits comprising the Kumtor Mine are exhausted and mining is completed. For further information, see the section of this AIF entitled “Centerra’s Properties – Producing Properties – Kumtor Mine”. Restated Shareholders Agreement The Restated Shareholders Agreement was entered into among Centerra and Kyrgyzaltyn as of June 6, 2009 and sets out the rights and obligations of Centerra and Kyrgyzaltyn with respect to their respective ownership of our shares. The Restated Shareholders Agreement provides that, in the event that Kyrgyzaltyn wishes to initiate a distribution of our Common Shares (whether by private placement or public offering) we shall furnish all reasonable assistance in preparing the required disclosure documents. We are obliged to provide such assistance to Kyrgyzaltyn only once in any 12-month period and the costs of this assistance is for the account of Kyrgyzaltyn. Also, if we propose to issue any of our Common Shares by private placement or public offering, we will provide Kyrgyzaltyn with an opportunity to sell its shares as part of the offering provided that our reasonable capital needs take priority. So long as Kyrgyzaltyn and its affiliates continue to hold 10% or more of our outstanding Common Shares, we will include in our proposed slate of directors nominated for election at each annual or special meeting two Board nominees designated by Kyrgyzaltyn, one of whom must be independent of the Kyrgyz Government. Should Kyrgyzaltyn’s interest constitute less than 10% but more than 5% of our outstanding Common Shares, Kyrgyzaltyn’s right to Board nominee is limited to one. Restated Concession Agreement The Restated Concession Agreement is described under the heading “Centerra’s Properties – Producing Properties – Kumtor Mine – Property Description, Location and Concession”.
6.5 Legal Proceedings and Regulatory Actions Other than the proceedings discussed elsewhere in this document we are not a party to, or the subject of, any legal proceedings or regulatory actions that are outside of the ordinary course of business or that we would anticipate would result in a material adverse impact on our financial position or our results of operations, and no such proceedings or actions are known to be contemplated.
6.6 Interests of Experts Our auditor, KPMG LLP, is independent in accordance with applicable rules of professional conduct of the Institute of Chartered Accountants of Ontario. The individuals who are qualified persons for the purposes of NI 43-101 are listed under the section of this AIF entitled “Technical Information”. As a group, they beneficially own, directly or indirectly, less than 1% of any class of the outstanding securities of Centerra and our associates and affiliates.
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7. GLOSSARY OF GEOLOGICAL AND MINING TERMS The following is a glossary of technical terms and abbreviations that appear in this AIF: ADR plant “Adsorption – Desorption – Regeneration (ADR) plant which generally follows the CIL/CIP or heap leach process. ADR, covers the adsorption of precious metals on active carbon, stripping the carbon with strong cyanide solution, recovery of the metals through the electrowinning, pouring the precious metals as nuggets from the melting pot as well as regenerating the carbon to activate and reuse. assay An analysis to determine the presence, absence or concentration of one or more chemical components. ball mill A large steel cylinder containing steel balls into which crushed ore is fed. The ball mill is then rotated, causing the balls to cascade and grind the ore. belt An area characterized by a particular assemblage of mineral deposits, or by one or more characteristic types of mineralization. bench A ledge that, in open pit mines and quarries, forms a single level of operation above which minerals or waste materials are excavated from a contiguous bank or bench face. The mineral or waste is removed in successive layers, each of which is a bench. blast hole A hole drilled for the purpose of inserting an explosive charge in a material to be blasted. block model A model that utilizes a three-dimensional block grid of a fixed or variable size to estimate in-situ resources and reserves. breccia Rock consisting of fragments, more or less angular, in a matrix of finer-grained or cementing material. capping Individual assays above this assay grade value are limited to prior grade interpolation. Also referred to as high-grade top cutting. carbon-in-leach (CIL) A recovery process in which a slurry of gold ore, carbon granules and cyanide are mixed together in a leach tank. The cyanide dissolves the gold, which is then absorbed by the carbon. The carbon is subsequently separated from the slurry and the gold removed from the carbon. carbon-in-pulp (CIP) Similar process as CIL (above) except that the leaching takes place in tanks dedicated for leaching followed by adsorption into carbon in tanks dedicated for adsorption. circuits Facilities for removing valuable minerals from ore so that it can be processed and sold. concentrate A product containing valuable metal from which most of the waste material in the ore has been eliminated. concession Grants made under a system whereby the state or the private owner has the right to grant concessions or leases to mine operators subject to certain general restrictions. Concession systems are used in almost every mining country in the world except the United States. cut-off grade The minimum metal grade at which a tonne of rock can be economically mined and processed. cyanidation A method of extracting gold or silver by dissolving it in a weak solution of sodium cyanide.
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deposit A mineralized body that has been physically delineated by sufficient drilling, trenching and/or underground work and found to contain a sufficient average grade of metal or metals to warrant further exploration and/or development expenditures; such a deposit does not qualify as a commercially mineable orebody or as containing mineral reserves until final legal, technical and economic factors have been resolved. depressurization The mechanical process of lowering or removing hydraulic water pressure from a geological structure or unit without the complete removal of the contained water. dewatering The mechanical process of removing or controlling water contained within a geological structure, unit or excavated opening such as an open pit or underground working. diamond drill A type of rotary drill that cuts by abrasion rather than percussion. The cutting bit is set with diamonds and is attached to the end of long hollow rods through which water is pumped to the cutting face. The drill cuts a core of rock which is recovered in long cylindrical sections, approximately two centimetres or more in diameter. dip The angle at which a bed, stratum or vein is inclined from the horizontal, measured perpendicular to the strike and in the vertical plane. dilution The effect of waste or low-grade ore being included in mined ore, increasing tonnage mined and lowering the overall ore grade. doré Unrefined gold and silver bullion bars usually consisting of approximately 90% precious metals that will be further refined to almost pure metal. drill core A long cylindrical sample of rock, approximately two centimetres in diameter, brought to the surface by diamond drilling. electrowinning Recovery of a metal from ore by means of electro-chemical processes. fault A fracture in the earth’s crust, along which there has been displacement of the two sides relative to one another and parallel to the fracture. The displacement may be a few inches or many miles long. feasibility study A comprehensive study of a deposit in which all geological, engineering, operating, economic and other relevant factors are considered in sufficient detail that it could
reasonably serve as the basis for a final decision by a financial institution to finance the development of the deposit for mineral production. fire assay The assaying of metallic ores, in particular gold and silver, at high temperatures with an assay furnace. flotation A milling process by which some mineral particles are induced to become attached to bubbles of froth and float. Others are left to sink so that the valuable minerals
are concentrated and separated from the remaining rock or mineral material. g/t Grams per tonne. geotechnical drilling Drilling for the purpose of collecting information to be used in rock stability analyses. grade The amount of mineral in each tonne of ore. gravity concentration The separation of grains of minerals using a concentration method based on the different densities of those minerals.
host rock The body of rock in which mineralization of economic interest occurs. hydrothermal alteration Alteration of rocks or minerals by the reaction of hydrothermal water with pre- existing solid phases. infill drilling Drilling within a defined mineralized area to improve the definition of the known mineralization.
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intrusive Rock which, while molten, penetrated into or between other rocks but solidified before reaching the surface. IsaMill A high intensity, stirred mill used in the fine grinding of mineral ores. It was developed by Mount Isa Mines in the 1990s. leach To extract minerals or metals from ore with chemicals. lens A body of ore or rock that is thick in the middle and converges toward the edges, resembling a convex lens. matrix The non-valuable minerals in an ore. micron Former term for micrometer, meaning a unit of length equal to one-millionth of a metre. mill A processing facility where ore is finely ground and thereafter undergoes physical or chemical treatment to extract the valuable metals. mineral reserves The economically mineable part of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility study. This study must include
adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allowances for losses that may occur when the material is mined. Proven mineral reserve: The economically mineable part of a measured mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified. Probable mineral reserve: The economically mineable part of an indicated mineral resource, and in some circumstances a measured mineral resource, demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. mineral resources A concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal,
and industrial minerals in or on the earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. Measured mineral resources: That part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.
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Indicated mineral resources: That part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed. Inferred mineral resources: That part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. mineralization The concentration of minerals within a body of rock. net smelter return (“NSR”) A royalty payment made by a producer of metals, normally to a previous property royalty owner, based on gross mineral production from the property, less deduction of certain costs.
nugget effect Grade variation due to measurement errors and short-range special variation at short distances. open pit mine A mine that is entirely open to the surface. ore A metal or mineral, or a combination of these, of sufficient quality and quantity to enable it to be mined at a profit. ounces (oz) Troy ounces = 31.103 grams. oxidation A chemical reaction caused by exposure to oxygen that results in a change in the chemical composition of a mineral. pit design An open pit contour surface based on an optimized pit shell that has been engineered in detail by adding access ramps and by smoothing of the pit walls. Pit designs are supported by detailed mining plans. pit shell A non-engineered open pit contour surface produced by optimization software at a particular gold price, without consideration to equipment access and mining plans. placer A deposit of sand or gravel that contains particles of gold or other heavy, valuable minerals. The common types are stream gravels and beach sands. preg-robbing When leaching ore, a dilute cyanide solution is used to dissolve the gold to produce a pregnant solution. When carbon mineralization is present in the ore it may re- absorb some of the gold from the pregnant solution. This process is referred to as preg-robbing. pulp A mixture of ground ore and water capable of flowing through suitably graded channels as a fluid. pyrite An iron sulfide mineral, normally of little value and sometimes referred to as fool’s gold. recovery The proportion of valuable material obtained as a result of processing an ore. It is generally stated as a percentage of valuable metal in the ore that is recovered compared to the total valuable metal present in the ore. refractory ore/material Ore from which it is difficult to recover valuable substances. Refractory material must be pre-treated before gold can be recovered from it through conventional
cyanidation. reserves Means mineral reserves.
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resources Means mineral resources. roasting A method of oxidizing refractory ore using very high temperatures to thermally decompose the sulphide minerals encapsulating the gold, which is ultimately
recovered using conventional cyanide leaching. schist A strongly foliated crystalline rock that can be readily split into thin flakes or slabs due to the well-developed parallelism of more than 50% of the minerals present in
it. semi-autogenous (SAG) grinding A method of grinding rock into fine sand, in which the grinding media consist of larger chunks of rock and steel balls. shear key The removal of weak materials in a specified area and replacement with engineered fills to provide improved shear resistance and impermeability in the foundation of a
dam. shearing Deformation resulting from stresses that cause, or tend to cause, contiguous parts of a body to slide relative to each other. slurry A suspension of fine solid particles in a liquid, not thick enough to consolidate as a sludge. stockwork A mineral deposit consisting of a three-dimensional network of planar to irregular veinlets closely enough spaced that the whole mass can be mined. strike The horizontal direction or trend of a geologic structure. strip (or stripping) ratio The tonnage or volume of waste material that must be removed to allow the mining of one tonne of ore in an open pit. tailings The material that remains after recoverable metals or minerals of economic interest have been removed from ore through milling. tailings dam A natural or man-made confined area suitable for depositing tailings. tellurides Ores of the precious metals (chiefly gold) containing tellurium, a semi-metallic, trigonal mineral. thrust An overriding movement of one crustal unit over another. vein A sheet-like body of minerals formed by fracture filling or replacement of host rock. waste Barren rock in a mine, or mineralized material that is too low in grade to be mined and milled at a profit.
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SCHEDULE A - AUDIT COMMITTEE CHARTER
PURPOSE The purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities in relation to (a) the external auditor, (b) the internal auditor, (c) financial reporting, (d) compliance with legal and regulatory requirements related to financial reporting and certain corporate policies, and (e) internal controls over financial reporting and disclosure controls.
COMPOSITION The members of the Audit Committee and its Chair shall be appointed annually by the Board on the recommendation of the Nominating and Corporate Governance Committee. The Audit Committee shall consist of at least three and not more than six members. Each member will be independent and financially literate (as such terms are defined in National Instrument 52-110 – Audit Committees, as amended from time to time).
MEETINGS The Audit Committee will meet at least four times annually and as many additional times as the Audit Committee deems necessary to carry out its duties effectively. The Audit Committee will meet privately with each of the external auditor, the internal auditor and management at each regularly scheduled meeting. Notice of every meeting will be given to each member, the Chair of the Board, the external auditor and the internal auditor. A majority of the members of the Audit Committee shall constitute a quorum. No business may be transacted by the Audit Committee except at a meeting of its members at which a quorum of the Audit Committee is present. The Audit Committee may invite such officers, directors and employees of the Corporation and such other persons as it may see fit from time to time to attend meetings of the Audit Committee and assist in the discussion and consideration of any matter. A meeting of the Audit Committee may be convened by the Chair of the Audit Committee, a member of the Audit Committee, the external auditor or the internal auditor.
DUTIES AND RESPONSIBILITIES Financial Reporting 1. Review and recommend to the Board for approval the audited annual financial statements and related management’s discussion and analysis. 2. Review and recommend to the Board for approval all interim financial statements and quarterly reports and related management’s discussion and analysis. 3. Before the release of financial statements and related disclosures to the public, obtain confirmation from the CEO and CFO as to the matters addressed in the certifications required by the securities regulatory authorities. 4. Review and recommend to the Board for approval all other press releases containing financial information based upon the Corporation’s financial statements prior to their release. 5. Review and recommend to the Board for approval all other financial statements that require approval by the Board before they are released to the public, including financial statements for use in prospectuses or other offering or public disclosure documents and financial statements required by regulatory authorities. 6. Review status of significant accounting estimates and judgments (e.g., reserves) and special issues (e.g., major transactions, changes in the selection or application of accounting policies, off-balance sheet items, effect of regulatory and financial initiatives). 7. Review management’s assessment and management of financial risks (e.g., hedging, insurance, debt). 8. Review any litigation, claim or other contingency that could have a material effect on the financial statements.
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9. Discuss with the external auditor the quality, not just the acceptability, of the Corporation’s accounting principles as applied in its financial reporting. 10. Discuss with the external auditor any (i) difference of opinion with management on material auditing or accounting issues and (ii) any audit problems or difficulties experienced by the external auditor in performing the audit. 11. Discuss with management and the external auditor any significant financial reporting issues considered and the method of resolution.
External Auditor 12. Recommend to the Board the external auditor to be nominated for appointment or re-appointment by the shareholders. 13. Evaluate the external auditor’s qualifications, performance and independence. 14. Review the Corporation’s policies for hiring employees and former employees of the external auditor. 15. Review and approve the external auditor’s plans for the annual audit and interim reviews including the auditor’s fees. 16. Review and pre-approve all non-audit service engagement fees and terms in accordance with applicable law. 17. Consider any matter required to be communicated to the Audit Committee by the external auditor under applicable generally accepted auditing standards, applicable law and listing standards, including the auditor’s report to the Audit Committee (and management’s response thereto). 18. Require, in accordance with applicable law, that the external auditor report directly to the Audit Committee.
Internal Auditor 19. Review and approve the appointment or removal of internal auditor. 20. Review and approve the mandate of internal auditor and the scope of the internal auditor’s annual work plan. 21. Require that the internal auditor report directly to the Audit Committee. 22. Review significant audit findings and status updates on recommendations. 23. Review the internal auditor’s ongoing assessments of the Corporation’s business processes and system of internal controls. 24. Review the effectiveness of the internal audit function.
Compliance 25. Review procedures adopted by the Corporation to ensure that all material statutory deductions have been withheld by the Corporation and remitted to the appropriate authorities. 26. Monitor compliance with the Code of Ethics Policy and the Policy on International Business Conduct. 27. Review with legal counsel any legal matters that could have a significant effect on the Corporation’s financial statements. 28. Review with legal counsel the Corporation’s compliance with applicable laws and regulations and inquiries received from regulators and governmental agencies to the extent they may have a material impact on the financial position of the Corporation. 29. Oversee procedures in the Code of Ethics Policy for (i) the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and (ii) the confidential, anonymous submission by employees of concerns regarding such matters. 30. Review reports of compliance with the Corporation’s Financial Risk Management Policy and report to the Board thereon, and recommend to the Board any amendments to such policy. 31. Review and approve financial risk management programs.
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Internal Controls and Disclosure Controls 32. Oversee management’s review of the adequacy of the internal controls that have been adopted by the Corporation to safeguard assets from loss and unauthorized use and to verify the accuracy of the financial records. 33. Review any special audit steps adopted in light of material control deficiencies. 34. Review the controls and procedures that have been adopted by the Corporation to confirm that material information about the Corporation and its subsidiaries that is required to be disclosed under applicable law or stock exchange rules is disclosed.
Other 35. Review a report, at least annually, from the Reserves Committee on the Corporation’s mineral reserves and resources. 36. Review and pre-approve all proposed related party transactions and situations involving a director's, a senior officer's or an affiliate's potential or actual conflict of interest that are not required to be dealt with by an independent committee pursuant to securities law rules, other than routine transactions and situations arising in the ordinary course of business, consistent with past practice. 37. Review the appointment of the CFO and review with the CFO the qualifications of new key financial executives involved in the financial reporting process. 38. In conjunction with Human Resources and Compensation Committee, review succession plans for the CFO and the Controller. 39. Review on an annual basis expenses submitted for reimbursement by the CEO. 40. Provide orientation for new members and continuing education opportunities for all members to enhance their expertise and competencies with finance and accounting.
REPORTING The Audit Committee will report regularly to the Board on all other significant matters it has addressed and with respect to such other matters that are within its responsibilities.
REVIEW AND EVALUATION The Audit Committee will annually review and evaluate the adequacy of its mandate and recommend any proposed changes to the Nominating and Corporate Governance Committee. It will also participate in an annual performance evaluation by the Nominating and Corporate Governance Committee.
CHAIR Each year, the Board will appoint one member to be Chair of the Audit Committee. If, in any year, the Board does not appoint a Chair of the Audit Committee, the incumbent Chair will continue in office until a successor is appointed.
REMOVAL AND VACANCIES Any member of the Audit Committee may be removed or replaced at any time by the Board and shall cease to be a member of the Audit Committee upon ceasing to be a director. The Board may fill vacancies on the Audit Committee by appointment from among its members. If and whenever a vacancy shall exist on the Audit Committee, the remaining members may exercise all its powers so long as a quorum remains in office. Subject to the foregoing, each member of the Audit Committee shall remain as such until the next annual meeting of shareholders after that member's election.
ACCESS TO OUTSIDE ADVISORS The Audit Committee may, without seeking approval of the Board or management, select, retain, terminate, set and approve the fees and other retention terms of any outside advisor, as it deems appropriate. The Corporation will provide for appropriate funding, for payment of compensation to any such advisors, and for ordinary administrative expenses of the Audit Committee.
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Exhibit C
May Arbitration Notice 21-11051-lgb Doc 92-3 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit C Pg 2 of 12
SULLIVAN & CROMWELL LLP 125 Pi31f<>«4 ~ TELEPHONE: 1·212·558·4000 FACSIMILE: 1· 212·558·3588 WWW SULLCROM.COM JVew o/twi, JVew o/twi tOOOll-211.93
LOS ANGELES • PALO ALTO • WASHINGTON. 0 C
ORUSS£LS • F AANt BEUING • HONG KONC • TOKYO MELBOURNE • SYDNEY May 14, 2021 By Hand and Courier Government of the Kyrgyz Republic Dom Pravitel'stva Bishkek 720003 Kyrgyz Republic Attn: His Excellency Prime Minister Mr. U. Maripov Re: Notice of Arbitration Dear Sir: We write on behalf of Centerra Gold Inc., Kumtor Gold Company CJSC and Kumtor Operating Company (collectively, the "Companies"), to provide you, as representative of the Government of the Kyrgyz Republic (the "Government"), with this Notice of Arbitration against the Kyrgyz Republic, pursuant to Clause 9.6 of the Strategic Agreement on Environmental Protection and Investment Promotion, dated September 11 , 2017 (the "SA"), Article 11.3 of the Restated Investment Agreement, dated June 6, 2009 (the "RIA"), and Article 3 of the UNCITRAL Arbitration Rules. The Government, through itself and its instrumentalities, have breached and/or have threatened to breach the SA and RIA as described herein, and the Companies hereby demand that this dispute be resolved by arbitration. 1 A. The Parties Claimants: Centerra Gold Inc. ("Centerra") is a company organized under the laws of Canada, with its corporate headquarters in Toronto, Canada. Centerra is a leading gold and copper producer. Kumtor Gold Company CJSC ("KGC") and Kumtor Operating Company ("KOC") are each companies organized under the laws of The Companies reserve their right to amend this Notice to include any and all non-injunctive relief claims under the RIA related to their Notice · 21 , 2021 , should such claims not be resolved within the 45-day p Iif1d«,fet-~tt~ft9fu•cwuwn negotiation" set forth in Article 11.2 of the RIA. The Notice of isP.ute \Ue'ilefl:i~d by ·1 22 2021 d b . A '126 2021 A11.NaRac,paaaa n pu R.u11a han d On Apn , an YCOUTJer On pTl , , Kwp rwmloi P./i:6/.u lrnpHIJI • "7t oij It!! ...... /:!./...... Z .. 7 6. Tllpi;l' \lf 6. 11a{1..·~ti • .1.npu:10:.i...... n. :.'.: ...... : •.... f?...£.... 20/...&.r. 21-11051-lgb Doc 92-3 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit C Pg 3 of 12 Mr. U. Maripov -2- the Kyrgyz Republic, and are wholly owned subsidiaries of Centerra. KGC and KOC operate an open-pit gold mine in the Issyk-Kul Region of the Kyrgyz Republic called the Kumtor Mine. Centerra's address is 1 University Avenue, Suite 1500, Toronto, Ontario, MSJ 2Pl, Canada; and KGC's and KOC's address is 24 lbraimov Street, Bishkek, Kyrgyz Republic 720031. All correspondence in this arbitration shall be sent to Claimants' counsel at the following address: Sullivan & Cromwell LLP 125 Broad Street New York, New York I 0004 U.S.A. Attn: Joseph E. Neuhaus ([email protected]) and Andrew J. Finn ([email protected]) Respondent: The Government of the Kyrgyz Republic entered into a series of concession and related agreements with the Companies beginning in 1993, including but not limited to the RIA and SA. The Government is currently led by the Prime Minister, Ulukbek Maripov, and the President, Sadyr Japarov. Through the Open Joint Stock Company Kyrgyzaltyn, the Government also is Centerra's largest shareholder. Under Section 15.4 of the RIA, all notices to the Government are to be directed to the following address: Government of the Kyrgyz Republic Dom Pravitel'stva Bishkek 720003 Kyrgyz Republic Attention: The Prime Minister B. The Arbitration Agreements The Government and the Companies entered into the RIA on June 6, 2009. The parties agreed that "disputes arising out of this Agreement or the Restated Concession Agreement shall be resolved under, and this Agreement and the Restated Concession Agreement shall be construed in accordance with, the laws of the State of New York, United States of America." Section 11.2 of the RIA requires the parties to "use their best efforts to resolve a Dispute and" a party seeking to resolve a Dispute "shall give at least 45 days 21-11051-lgb Doc 92-3 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit C Pg 4 of 12 Mr. U. Maripov -3- notice of any Dispute prior to commencing any arbitration (without prejudice to each party's rights to seek injunctive relief or its equivalent in arbitration)." On April 22, 2021 and April 26, 2021, the Companies delivered a Notice of Dispute to the Government. In particular, Section 11.3 states in relevant part: Any party can initiate arbitration by notice of intention to arbitrate to the other party or parties stating the Dispute (as defined in Section 11.1) to be arbitrated. Upon the giving of such notice, the Dispute shall be detennined by the arbitration award of an Arbitrator who is agreed upon in writing by the parties. Failing such agreement within four weeks after notice by either party, the Arbitrator shall be appointed upon the application of any party by the United Nations Commission of International Trade Law ('UNCITRAL') acting under its rules for conciliation and arbitration (the 'Arbitration Rules'). The Arbitrator shall be a person whose profession and experience make him or her qualified to consider the Dispute. The RIA further provides that "[a]ny arbitration shall be held at Stockholm, Sweden, or at such other place as may be agreed upon by those involved in the arbitration," and "arbitration proceedings shall be conducted in the English language." Section 9.6 of the SA incorporates Section 11.3 of the RIA, but does not require a pre-arbitration dispute notice or negotiation period: The Parties agree that any disputes or claims arising out of or relating to this Agreement shall be subject to the dispute resolution provisions in Section 11.3 of the RIA save that, if the Parties fail to agree to an Arbitrator, the PCA shall act as the Appointing Authority pursuant to the UNCITRAL Arbitration Rules. An arbitral tribunal constituted under this Agreement may, at the request of a party to the arbitration proceedings, consolidate the arbitration proceeding with any other arbitration arising under this Agreement, the Amended and Restated Reclamation Trust Deed or the Existing Project Agreements, if the arbitration proceedings raise common questions of law or fact, and consolidation would not prejudice the rights of any party. If two or more arbitral tribunals under this Agreement, the Amended and Restated 21-11051-lgb Doc 92-3 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit C Pg 5 of 12 Mr. U. Maripov -4- Reclamation Trust Deed or the Existing Project Agreements issue consolidation orders, the order issued by the arbitral tribunal first constituted shall prevail. C. The Arbitrator Section 11.3(a) of the RIA calls for the parties to agree on a sole arbitrator to resolve their Disputes. While the Claimants are willing to engage in constructive dialogue with the Government, if the parties fail to agree to appoint a sole arbitrator within 28 days of the date of this Notice, Claimants will request that the Permanent Court of Arbitration appoint an arbitrator, as provided under Clause 9.6 of the SA and Article 6 of the 2013 UNCITRAL Arbitration Rules (the "UNCITRAL Rules"), which govern this arbitration. D. The Dispute 1. The Illegitimate Glacier Lawsuit: As part of the SA, signed as of September 11, 2017 and fully effective as of August 26, 2019, the Companies agreed to make payments and concessions to the Government of at least $60 million USO and to make annual payments of at least $3.7 million USO to the Government for the life of the Kumtor Mine. In exchange, among other things the Government agreed "on behalf of itself and on behalf of each Government Entity, and ... any other person or entity who is entitled to make a Claim in the name of the KR Government" "never to bring any action, directly or indirectly ... on the subject matter of' several cases against the Companies that had been filed in Kyrgyz courts. One of those cases was brought by the Kyrgyz Republic State Inspectorate Office for Environmental and Technical Safety ("SIETS") and sought "damages for harm allegedly caused to the environment by KOC storing productio.n tails on glaciers." In addition to agreeing not to bring claims itself, the Government agreed, in Clause 2.2 of SA, "to support" the Companies and "to uphold the terms" of the SA "in any action brought by any Government Entity or third party acting or purporting to act on behalf of' the Government. The Government further represented that, as of August 26, 2019, it did not have any "actual, pending or threatened Claims or, to [its] Knowledge, any cause of action ... relating to or in connection with Centerra, KGC, [or] KOC .. . that arose on or after 24 April 2009 and before" August 26, 2019 except claims "in connection with Unknown Environmental Damage." In March 2021, four KR citizens acting for and in concert with the Government, including the son of the director of the Government' s State Agency for Environment Protection and Forestry ("SAEPF"), filed a lawsuit against KGC in the Oktyabrsky District Court of Bishkek seeking a declaration that "KGC actions related to waste dumping on the Davydov and Lyisi glaciers," which occurred prior to 2019 and were known to and approved by the Government at that time, were in fact illegal (the 21-11051-lgb Doc 92-3 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit C Pg 6 of 12 Mr. U. Maripov -5- "Glacier Lawsuit"). Claimants also sought unspecified "financial sanctions" that would be payable to, and thus sought on behalf of, the Government. Because the claims in Glacier Lawsuit were brought by third parties purporting to act on the Government's behalf and were related to the subject matter of a claim released pursuant to the SA, the Government was required to support KGC in the Glacier Lawsuit. Contrary to its contractual obligations under the SA, the Government actively supported claimants' action. SIETS began appearing at hearings as an interested party on April 29, 2021 and subsequently urged the court to rule in favor of the claimants on multiple occasions. Then, on May 3, 2021 , without any advance notice to KGC, the claimants amended their complaint to add a claim for KGS 261,719,674,080 (approximately $3,087,000,000 USO) payable to the Government. The Government facilitated claimants' amended demand by, among other things, reducing significantly a filing fee claimants otherwise would have had to pay to make such a demand. With the Government's full support and without providing KGC any reasonable time to prepare a defense and after dismissing all of KGC's objections out of hand at hearings on May 4 and May 6, the court hastily rendered judgment in claimants' favor on May 7, purporting to award the Government KGS 261,719,674,080 and even went so far as to award the claimants a filing fee they never paid. The Government's actions, including the judgment procured in the Glacier Lawsuit, violate the release and the Government's support obligations in the SA. Claimants seek a preliminary and final injunction barring enforcement of the Glacier Lawsuit judgment and damages resulting from the Government's breach of its obligations. 2. Temporary Management Law: The Kyrgyz Republic Parliament, the Jogorku Kenesh, has also taken and continues to take precipitous action targeting the Companies in violation of the RIA. Specifically, legislation was secretly introduced on April 30, 2021 and passed after three readings in a single day on May 6, 2021 that would allow the Government to illegally appropriate management authority over KGC (the "Temporary Management Law"). The Temporary Management Law was initiated by Mr. Akylbek Japarov, who heads a state commission established by the Jogorku Kenesh pursuant to resolutions dated February 17, 2021 and February 24, 2021 purportedly tasked with ''verifying the work of the Kumtor gold mining company," (the "State Commission"). 2 2 See, e.g., https://24.kg/vlast/183745 _ vsostav_deputatskoy _komissii_poproverke _ rabotyi _ kumtora_ voshli_ l 2deputatov/ [https://perma.cc /9SZ5-8A5 D] 21-11051-lgb Doc 92-3 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit C Pg 7 of 12 Mr. U. Maripov -6- While written in general terms, it was recognized during the short parliamentary debates on the Temporary Management Law that the only entity to which it applied was the Kumtor mine. This legislation gives the Government the ability to suspend "the powers of [KGC]'s management bodies" and introduce "temporary external management" if KGC's "right to use subsoil resources" is suspended "on the grounds of violation by [KGC] of the requirements for the protection of subsoil resources, environmental and industrial safety established by the legislation of the Kyrgyz Republic, creating an immediate threat to the life or health of people working or living in the zone of operations influence." The Temporary Management Law also permits the Government to take control of the assets of KGC through appointment of"temporary external manager[s]" who would be "vested with all the powers of the company's executive body" including power over "[a]ll bank accounts for the company." Further, the Law declares that, after the appointment of a temporary manager, the corporate powers of KGC's shareholders and board of directors shall be suspended and both the shareholders and the board of directors will "have no right to interfere in the current management of the company by giving direct instructions, orders or any other instructions in the form of a request or recommendation to the temporary external manager." Individuals who violate the legislation face criminal punishment. Based on media reports, the Temporary Management Law was signed into law by the President of the Kyrgyz Republic on May 14, 2021. 3 On information and belief, the Government intends imminently to implement the Temporary Management Law on a spurious claim that the operation of the mine creates "an immediate threat to the life or health of people working or living in the zone of operations influence." Such a conclusion would be wholly false and without foundation. The Kumtor Mine's environmental performance adheres to international standards and has been audited multiple times by, among others, the Kyrgyz Government's own environmental consultant, AMEC Foster Wheeler. AMEC's reports have confirmed that the Kumtor Mine is operated in accordance with international best practice and its recommendations for improvements have been implemented by the Company. Implementation of the Temporary Management Law would violate numerous provisions of the RIA, including but not limited to: (i) Article 6.1 's prohibition on Expropriatory Action, which includes "any action . .. that is confiscatory in effect or that otherwise deprives the direct or indirect owner of the asset ... subject to such action of the effective control thereof'; (ii) Article 2.2's guarantee that the "Project Companies," 3 https://24.kg/english/193950 _ Sadyr_Japarov _ approves_imposition_ of _external_management_on_companies/ [https://perma.cc/27KC-3WKT] 21-11051-lgb Doc 92-3 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit C Pg 8 of 12 Mr. U. Maripov -7- including KGC, "shall be governed as provided in their respective charters" and "[o ]nly shareholders of the relevant Project Company shall be entitled to any voting or other rights in respect of that Project Company's corporate matters"; and (iii) Article 6.3 's prohibition on subjecting the Companies to "Legislation that is, either by its terms or in its effect, discriminatory." Claimants seek a preliminary and final injunction barring implementation of the Temporary Management Law with respect to Kumtor. 3. State Tax Service Pursuit ofResolved or Precluded Claims: Article V of the RIA sets forth the tax and related payments regime for the life of the Kumtor Mine. In December 2020, the Kyrgyz Republic State Tax Service (the "STS") began what appears to be a coordinated effort to pursue historical claims against KGC that are precluded by Article V of the RIA and were in any event resolved years ago. According to one Kyrgyz official, these claims combined with the judgment in the Glacier Lawsuit total over $4.2 billion USO. In particular, the STS is attempting to re-audit KGC's social insurance payments for 2011 through 2017 even though those payments were previously audited in 2018, has filed a lawsuit seeking to collect additional payments for that period, and is attempting to audit payments for 2018 through 2020. In addition, the STS attempted to revive baseless claims against KGC that (a) alleged taxes are owed on certain dividend payments made to Centerra in 2016 and 2017; (b) alleged additional payroll deductions are owed for national employee compensation from the years 2016 and 2017 based on high-altitude premium and shift premium compensation; and (c) alleged additional payments are owed to the Kyrgyz Republic Social Fund (the "Social Fund") from the years 2011 through 2017 based on the shift premiums and on compensation paid to KGC employees who are not Kyrgyz citizens. On May 14, 2021 , the Bishkek Inter-District court rendered a KGS 2, I 05,631 ,566 (approximately $24 million USO) judgment against KGC for additional Social Fund payments. Each of these claims was previously raised in 2017 or 2018 and abandoned by the Government or dismissed by the Kyrgyz courts, because they are not legitimate claims under the RIA and Kyrgyz law. First, the RIA expressly precludes the Government from taxing dividends paid among the Companies. Article 5.4(b) of the RIA states unequivocally that the Companies "shall be exempt from paying Taxes with respect to intra-group transactions between them, including for services, dividends, interest, repayment of principal or other distributions or other transactions involving" the Companies. The Government's attempts to assess taxes on fully authorized dividend payments made by KGC to Centerra is a clear breach of this provision. Indeed, the State Tax Service conceded as much in 2018 when it accepted KGC' s previous challenge to this claim. 21-11051-lgb Doc 92-3 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit C Pg 9 of 12 Mr. U. Maripov -8- Second, the STS's payroll deduction claims were considered and rejected by Kyrgyz courts because they are contrary to Kyrgyz law. Article 5.3(i) of the RIA requires the Companies to make payroll deductions only as "required by the prevailing Legislation," and it is well-settled under Kyrgyz law that high-altitude pay is not considered taxable income subject to payroll deductions. For this reason, the Bishkek Inter-District Court on December 6, 2018 granted KGC's previous challenge to the Government's attempt to improperly require such deductions. The Government did not timely appeal that decision, and the dismissal of that case was a fundamental basis for the substantial payments to the Government provided for in the SA and subsequent Deed Poll, dated August 7, 2019. Moreover, the fact that the high-altitude pay is not subject to personal income tax was also confirmed by decisions of the Kyrgyz courts in similar cases. (See Court Ruling of the KR Supreme Court, Case No. AD-06/ l 9mbs4 (No. AB- 06-5 I 2/19AD, K\N No. 6-157/20AD) dated June 15, 2020.) Nevertheless, the Government has orchestrated an illegitimate appeal of the Inter-District Court's December 2018 decision more than two years after the fact, including by procuring both a baseless ruling from the Bishkek City Court reopening the appeal period. Third, the STS's attempt to require a contribution to the Social Fund or payroll deductions for shift premiums violates the RIA. Under KGC's long-term agreements with its employees, KGC has never paid shift premiums and instead provides free meal services to its employees. The Government has been well-aware of those labor agreements. Article 5.4(d) of the RIA expressly states that "provision of food at the Kumtor Mine by the Project Companies, free of charge to employees of the Project Companies, shall be exempt from Taxes." The term "Taxes" is defined to include "taxes, duties, rates, royalties, withholding obligations, deductions or other governmental charges whatsoever, however characterized." Fourth, KGC does not owe Social Fund payments for non-Kyrgyz citizens who work at the Kumtor Mine. Article 5.3(i) of the RIA requires the Companies to make Social Fund payments only "in respect of such Project Company employees who are Kyrgyz citizens." This is consistent with Article 17 of the Republic's Law on Investments, dated March 27, 2003, which grants the Companies "the right to transfer payment on social insurance and provision for foreign employee[s] to the respective funds of the foreign state[s] unless otherwise provided by the international agreements." This means that KGC may fulfill any Social Fund commitments for non-Kyrgyz citizen employees by paying applicable social tax in those employees' home countries, and there are decisions from Kyrgyz courts to this effect. (See Decision of the Bishkek Inter District Court dated January 8, 2019 and KR Supreme Court Ruling dated May 19, 2009.) Accordingly, the Government's attempt to require KGC to pay additional amounts to the Social Fund is contrary to both the RIA and Kyrgyz law. 21-11051-lgb Doc 92-3 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit C Pg 10 of 12 Mr. U. Maripov -9- Further, as noted above, the parties entered into a series of agreements from 2017 to 2019 to resolve numerous claims asserted by the Government. In the SA, the Govenunent represented to the Companies that as of August 2019 the Government had "no actual, pending or threatened Claims or, to their Knowledge, any cause of action, in each case, relating to or in connection with" the Companies "that arose on or after 24 April 2009 and before" August 26, 2019 "other than any Claims ... arising out of, or in connection with Unknown Environmental Damage." The STS was of course aware of all of the claims they are attempting to re-assert now because they had attempted to assert them before 2019. Claimants seek a preliminary and final injunction barring the Government from pursuing these spurious claims and damages for breach of the Government's representations in the SA. 4. Proposed Amendme11ts to tl,e New Kumtor Law and Tax Code: In April, 2021, one or more members of the Jogorku Kenesh proposed additional legislation that if adopted could fundamentally alter the legal foundation of the Kumtor Project4 and the parties' agreements by amending the New Kumtor Law that was adopted to specifically ratify the RIA. See On Ratification of the Agreement on New Terms for the Kumtor Project, dated April 24, 2009 (the "New Kumtor Law"). The new legislation, if adopted, would specifically amend the New Kum tor Law by deleting sections of that law that recognized the primacy of the RIA over other Kyrgyz legislation and subjecting the Kumtor mine to certain general legislation, including the Kyrgyz tax Jaws. Pursuant to the RIA, the parties agreed that the "New Kumtor Law and the other Legislation as modified by the New Kumtor Law shall be stabilized as of June 2, 2009." In addition, the RIA states that "the rates, amounts and other terms of any Taxes or other payments payable ... shall not be subject to any future change in Legislation or treaty provisions, which would be more burdensome to the" Companies. As recently as August 2019, pursuant to the terms of the SA, the Government re-confirmed the validity of the New Kumtor Law and the RIA and all provisions thereof. Claimants seek a preliminary and final injunction barring implementation of the new legislation. • • • All of these actions and threatened actions present an immediate threat of irreparable harm to Claimants. Indeed, based on media reports, the Government and its 4 Unless otherwise defined, capitalized terms have the meanings set forth in the RIA or SA. 21-11051-lgb Doc 92-3 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit C Pg 11 of 12 Mr. U. Maripov -I 0- agents appear to be threatening to use the illegitimate judgment procured in the Glacier Lawsuit, together with the STS's spurious tax claims and the "Temporary" Management Law, as a pretext to expropriate the Project Companies and Centerra's investments protected under the RIA and related agreements. For example, according to media reports Mr. A. Japarov, the head of the State Commission, stated at a meeting of the Commission on May 12, 2021 that: (i) the Govemment would seize the Kumtor Mine if the judgment rendered in the Glacier Lawsuit and pending tax claims described above are not paid;5 (ii) gold produced at the Kumtor Mine "will remain in Kyrgystan from May" if temporary external management is imposed on KGC;6 and (iii) "we ourselves" apparently referring to Government officials or instrumentalities-"will be able to continue production" at the Kumtor Mine. 7 Claimants understand based on media reports that an extraordinary session of the Jogorku Kenesh has been scheduled for May 17, 2021 to "discuss probable nationalization of the Kumtor company."8 E. Relief Sought Pursuant to Article 3 of the UNCITRAL Rules, Claimants seek in this arbitration: (i) declaratory relief; (ii) injunctive relief or the equivalent; (iii) an award of the costs of the arbitration, including costs for legal representation; and (iv) any other relief that the arbitrator may deem just and proper. If the parties are unable to resolve their dispute under the RIA in good faith negotiations as contemplated by Article 11.2 of the RIA as set forth in the Notice of Dispute, Claimants anticipate amending this Notice to seek damages that may result from any breach of the RIA and related agreements. As indicated above, based on the Government's aggressive actions that appear to be aimed at interfering with and potentially expropriating Centerra' s investment in clear violation of the RIA and SA, immediate interim measures are needed to enjoin the Government, including its instrumentalities and any person or entity acting in concert with it, from (i) attempting to enforce the judgment in the Glacier Lawsuit; (ii) imposing "temporary external management" on KOC under the Temporary Management Law; (iii) expropriating the Kumtor Mine; (iv) pursuing historical tax claims (including social s https://24.kg/english/193874_Centerra_Gold_gives_government_of_Kyrgyzstan _ 45_days _ for_negotiations/ [https://perma.cc/8B W8-BJAN] 6 Id 7 https://24.kg/vlast/193834/ [https://perma.cc/A4AD-2HG] 8 https://24.kg/english/193796_Nationalization_of_Kumtor_Parliament_to _hold_ extraordinary_session/ [https://perrna.cc/EDJ2-CP9Z] 21-11051-lgb Doc 92-3 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit C Pg 12 of 12 Mr. U. Maripov -1 1- insurance payments) that have been previously resolved or dismissed; (v) implementing any proposed changes to the ANT or Tax Code that would undermine the stabilization clause or any other rights. the Companies have under the RIA or related agreements; or (vi) otherwise aggravating the dispute. The Companies reserve their right to amend this Notice to include additional claims and parties. Sincerely yours, ..Sv//,1,,;,._ ef c ,.'?-7 ..,.,,// LL/4 Sullivan & Cromwell LLP 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 1 of 20 Exhibit D June Arbitration Notice 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 2 of 20 Sullivan & Cromwell llp 425 Jfaeet TELEPHONE: 1-212-558-4000 FACSIMILE: 1-21 2-558-3588 WWW.SULLCROM.COM ^d/ew- (^ LOS ANGELES • PALO ALTO • WASHINGTON, D.C. BRUSSELS • FRANKFURT • LONDON • PARIS BEIJING • HONG KONG • TOKYO MELBOURNE • SYDNEY June 16, 2021 By Courier and E-Mail Government of the Kyrgyz Republic Dom Pravitel’stva Bishkek 720003 Kyrgyz Republic Attn: His Excellency President Mr. S. Japarov Attn: His Excellency Chairman of the Council of Ministers Mr. U. Maripov Kyrgyzaltyn OJSC Ulitsa Abdumomunova, dom 195 Bishkek 720040 Kyrgyz Republic Attn: Chairman of the Board of Directors Arnold & Porter Kaye Scholer Tower 42, Old Broad Street London, United Kingdom Attn: Dmitri Evseev (by email) Re: First Amended Notice of Arbitration Dear Sirs: We write on behalf of Claimants Centerra Gold Inc., Kumtor Gold Company CJSC and Kumtor Operating Company CJSC (collectively, the “Claimants”), to provide this First Amended Notice of Arbitration against the Government of the Kyrgyz Republic (the “Government”) and Kyrgyzaltyn OJSC (“Kyrgyzaltyn” and together with the Government, “Respondents”), which is made pursuant to Clause 9.6 of the Strategic Agreement on Environmental Protection and Investment Promotion, dated September 11, 2017 (CXOl) (the “SA”) as well as certain related agreements, all of which incorporate an arbitration clause in a single agreement, Article 11.3 of the Restated Investment Agreement, dated June 6, 2009 (CX02) (the “RIA” and, collectively, the “Investment Agreements”). The Investment Agreements provide for arbitration under the UNCITRAL Arbitration Rules (the “UNCITRAL Rules”). Respondents have violated 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 3 of 20 Government of the Kyrgyz Republic -2- Kyrgyzaltyn OJSC the fundamental provisions of the Investment Agreements, as described herein, and the Claimants hereby demand that this dispute be resolved by arbitration.1 A. The Parties Claimants: Centerra Gold Inc. (“Centerra”) is a company organized under the Canada Business Corporations Act, with its corporate headquarters in Toronto, Canada. Centerra is a leading gold and copper producer. Kumtor Gold Company CISC (“KGC”) and Kumtor Operating Company CISC (“КОС”) are each companies organized under the laws of the Krygyz Republic, and are wholly owned subsidiaries of Centerra. Until on or about May 15, 2021, KGC and КОС operated an open-pit gold mine in the Issyk-Kul Region of the Krygyz Republic called the Kumtor Mine. As a result of Respondents’ violations of the Investment Agreements and other ongoing actions, on May 31, 2021, KGC and КОС commenced solvent restructuring proceedings under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York.2 Centerra’s address is 1 University Avenue, Suite 1500, Toronto, Ontario, M5J 2P1, Canada; and KGC’s and KOC’s address is 24 Ibraimov Street, Bishkek, Kyrgyz Republic 720031. All correspondence in this arbitration shall be sent to Claimants’ counsel at the following address: Sullivan & Cromwell LLP 125 Broad Street New York, New York 10004 U.S.A. Attn: Joseph E. Neuhaus (neuhausi @ sullcrom.com) and Andrew J. Finn ([email protected]) 1 The Claimants reserve their right to further amend this Notice to include additional claims. 2 Pursuant to Section 362 of the United States Bankruptcy Code, certain proceedings against KGC and КОС are subject to an automatic worldwide stay. On June 8, 2021, the Bankruptcy Court entered an order, among other things, setting forth the terms of the automatic stay. The automatic stay applies only to actions against KGC or КОС and does not prevent the Claimants from pursuing any claims set out in this Notice. 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 4 of 20 Government of the Kyrgyz Republic -3- Kyrgyzaltyn OJSC Respondents: The Government of the Kyrgyz Republic, on behalf of the Kyrgyz Republic, and its instrumentalities, entered into a series of concession and related agreements with the Claimants beginning in 1993, including but not limited to the Investment Agreements. The Government is currently led by the President, Sadyr Japarov, and the Chairman of the Council of Ministers, Ulukbek Maripov. Kyrgyzaltyn is a state-owned entity incorporated under the laws of the Kyrgyz Republic and controlled by the Government. Kyrgyzaltyn operates a gold- refining monopoly in the Kyrgyz Republic. Under the Restated Gold and Silver Sale Agreement, dated June 6, 2009 (CX03) (the “GSSA”), Kyrgyzaltyn receives all of the dore3 produced at the Kumtor Mine, refines the dore at its own facility, sells the refined gold and silver to a buyer, and instructs the buyer through irrevocable instructions to transfer the gold’s purchase price—less certain amounts payable to Kyrgyzaltyn— directly to KGC’s bank account in New York. Through Kyrgyzaltyn, the Kyrgyz Republic is Centerra’s largest shareholder, owning 77,401,766 shares of Centerra’s common stock (or approximately 26.2% of the issued and outstanding shares). According to the Agreement on New Terms for the Kumtor Project, dated April 24, 2009 (CX04) (the “ANT”), a framework agreement for the other Investment Agreements, Kyrgyzaltyn “holds shares in Centerra on behalf of the Government.” Pursuant to a Shareholders Agreement dated June 6, 2009 (CX05), Kyrgyzaltyn had the right to appoint two representatives to Centerra’s Board of Directors. Under the Second Amended and Restated Agreement on Payment of a Commission to Kyrgyzaltyn for its Participation in the Operation of the Kumtor Gold Project, dated June 6, 2009 (CX06) (the “Management Agreement”), Kyrgyzaltyn agreed to “assist[] with the resolution of issues that are subject to the jurisdiction of the Kyrgyz governmental bodies, including with respect to tax, financial, economic and legal matters that may arise in the course of the Kumtor Project operations.” Kyrgyzaltyn is the alter ego of the Government, has actively participated and conspired with the Government in the wrongful acts set forth herein, and, on information and belief, has acted at all relevant times and for all relevant purposes, and continues to act, at the behest and instruction of the Government, including with respect to Kyrgyzaltyn’s shareholding in Centerra. 3 Dore is a semi-pure alloy of gold and silver. As is typical in the mining industry, the Kumtor Project produces dore bars onsite instead of transporting unprocessed ore. 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 5 of 20 Government of the Kyrgyz Republic -4- Kyrgyzaltyn OJSC Under Section 15.4 of the RIA, Section 6.9 of the ANT, and Clause 17 of the GSSA, which provide the relevant notice provisions, all notices to the Government and Kyrgyzaltyn are to be respectively directed to the following addresses: Government of the Kyrgyz Republic Dom Pravitel’stva Bishkek 720003 Kyrgyz Republic Attention: The Prime Minister Kyrgyzaltyn OJSC Ulitsa Abdumomunova, dom 195 Bishkek 720040 Kyrgyz Republic Attention: Chairman of the Board of Directors The Kyrgyz Republic has retained counsel to represent it in this matter, who have requested that all future communications in this matter be directed to the following addresses: Arnold & Porter Kaye Scholer LLP Tower 42, 25 Old Broad Street London, United Kingdom Attn: Dmitri Evseev Tim Smyth Alice Osman Email: [email protected]; [email protected]; Alice. Osman @ arnoldporter.com; xCenterraKyrgyzstan @ arnoldporter.com Joel I. Greenberg Alexander Shaknes Arnold & Porter 250 West 55th Street New York, NY 10019-9710 Email: [email protected] Alex.Shaknes @ arnoldporter.com 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 6 of 20 Government of the Kyrgyz Republic -5- Kyrgyzaltyn О JSC The same counsel represent Respondent Kyrgyzaltyn. B. The Arbitration Agreements On June 6, 2009, the parties agreed to a single arbitration agreement to resolve their disputes related to the Kumtor Mine. The agreement is set forth in Section 11 of the RIA and is incorporated by reference in the GSSA and the Management Agreements, among others. Section 11.1 of the RIA, entered into between Claimants and the Government, defines a “Dispute” broadly to include: “disputes or claims relating to (a) [the RIA] or the Restated Concession Agreement, (b) any of the investment benefits provided therein or by the New Kumtor Law or other Legislation, or (c) any other matter in relation to Investor, any Project Company or the Kumtor Project, its operations or regulation thereof by the Government or any Government instrumentality or Investor’s investment therein.” Section 11.2 of the RIA requires the parties to “give at least 45 days notice of any Dispute prior to commencing any arbitration (without prejudice to each party’s rights to seek injunctive relief or its equivalent in arbitration).” Section 11.2 of the RIA requires the parties thereafter to “use their best efforts to resolve a Dispute through good faith negotiation” and states that “[a]ny Dispute not resolved by such negotiation shall be resolved by arbitration.” On April 22, 2021 and April 26, 2021, the Claimants delivered a Notice of Dispute to the Government. Accordingly, the 45-day negotiation period expired no later than June 10, 2021. During that time period, the Government failed to make any effort to resolve the dispute, and has instead aggravated the dispute as set forth herein. Section 11.3(a) further states in relevant part: Any party can initiate arbitration by notice of intention to arbitrate to the other party or parties stating the Dispute (as defined in Section 11.1) to be arbitrated. Upon the giving of such notice, the Dispute shall be determined by the arbitration award of an Arbitrator who is agreed upon in writing by the parties. Failing such agreement within four weeks after notice by either party, the Arbitrator shall be appointed upon the application of any party by the United Nations Commission of International Trade Law (‘UNCITRAL’) acting under its rules for conciliation and arbitration (the "Arbitration Rules''). The Arbitrator shall be 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 7 of 20 Government of the Kyrgyz Republic -6- Kyrgyzaltyn OJSC a person whose profession and experience make him or her qualified to consider the Dispute. Section 11.3(f) further provides that “[a]ny arbitration shall be held at Stockholm, Sweden, or at such other place as may be agreed upon by those involved in the arbitration.” Section 11.3(g) provides that “arbitration proceedings shall be conducted in the English language.” Clause 22 of the GSSA and Section 9.3 of the Management Agreement, each signed also by Kyrgyzaltyn, incorporate the foregoing provisions of the RIA by reference. The Government and the Claimants reaffirmed this same arbitration agreement in 2017 in the SA, while eliminating any requirement for a pre-arbitration negotiation period, simplifying the process for appointment of an arbitrator and agreeing that related arbitrations may be consolidated. Specifically, Section 9.6 of the SA incorporates Section 11.3 of the RIA, and provides in relevant part: The Parties agree that any disputes or claims arising out of or relating to this Agreement shall be subject to the dispute resolution provisions in Section 11.3 of the RIA save that, if the Parties fail to agree to an Arbitrator, the PCA shall act as the Appointing Authority pursuant to the UNCITRAL Arbitration Rules. An arbitral tribunal constituted under this Agreement may, at the request of a party to the arbitration proceedings, consolidate the arbitration proceeding with any other arbitration arising under this Agreement, the Amended and Restated Reclamation Trust Deed or the Existing Project Agreements,[4] if the arbitration proceedings raise common questions of law or fact, and consolidation would not prejudice the rights of any party. The parties’ single arbitration agreement carried over from the 2009 framework agreement, the ANT, that led to the other Investment Agreements. The ANT required Claimants and Respondents to arbitrate “any disputes, claims, differences or 4 The “Existing Project Agreements” include the Investment Agreements defined herein (other than the SA itself). 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 8 of 20 Government of the Kyrgyz Republic -7- Kyrgyzaltyn О JSC controversies between the Parties arising out of or in connection with” the ANT under rules materially identical to the RIA. C. Choice of Law Provisions Section 6.6 of the ANT provides that the “Agreement on New Terms (and any claims or disputes arising out of or in connection with the same) shall in all respects be governed by and construed in accordance with the laws of the State of New York including all matters of construction, interpretation, validity and enforcement, without regard to any conflict of law rules or principles that might lead to the application of the laws of any other jurisdiction.” Section 10.1 of the RIA states that “disputes arising out of this Agreement or the Restated Concession Agreement shall be resolved under, and this Agreement and the Restated Concession Agreement shall be construed in accordance with, the laws of the State of New York, United States of America.” Clause 21 of the GSSA states that the “Agreement [sjhall be governed by and construed in accordance with the laws of England.” Under Section 9.3 of the Management Agreement, “[a]ll disputes and disagreements that may arise with respect to [the Management] Agreement shall be resolved, and [the Management] Agreement shall be construed, in accordance with Articles X and XI of the Restated Investment Agreement,” which means that New York law applies. Clause 9.5 of the SA provides that the SA, like the ANT, the RIA, and the Management Agreement, “shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to any choice of law or conflict of laws provisions or principles.” D. The Arbitrator As set forth above, the SA states that “if the Parties fail to agree to an Arbitrator, the PCA [Permanent Court of Arbitration] shall act as the Appointing Authority pursuant to the UNCITRAL Arbitration Rules.” Similarly, the ANT, RIA, GSSA, and the Management Agreement all provide that a single arbitrator “shall be appointed upon application of any party by the United Nations Commission of International Trade Law (‘UNCITRAL") acting under its rules for conciliation and arbitration.” UNCITRAL “does not... act as [an] appointing authority” under the 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 9 of 20 Government of the Kyrgyz Republic -8- Kyrgyzaltyn О JSC UNCITRAL Rules,5 and instead Article 6 of those rules permits “either party [to] request the Secretary-General of the Permanent Court of Arbitration at The Hague to designate an appointing authority” “if the appointing authority agreed upon refuses to act.” The PCA may designate itself as an appointing authority. E. The Conspiracy To Expropriate the Kumtor Mine and Repudiate the Investment Agreements. Beginning in or around December 2020, Respondents, through their agents and instrumentalities, began what now appears to have been a coordinated campaign to expropriate the Kumtor Mine without compensation to Centerra, and thereby repudiate Respondents’ fundamental obligations under the Investment Agreements. In the words of a Kyrgyzaltyn-nominated former member of Centerra’s Board of Directors, the goal of this campaign was to “have Centerra on their knees.” Based on the Claimants’ cunent information and belief, that campaign has included but may not be limited to the following acts: 1. State Tax Service Pursuit of Resolved or Precluded Claims.’ In December 2020, the Kyrgyz Republic State Tax Service (the “STS”) began efforts to pursue historical claims against KGC that were previously resolved and/or are precluded by Article V of the RIA, which sets forth the tax and related payments regime for the life of the Kumtor Mine. In particular, the STS attempted to re-audit KGC’s social insurance payments for 2011 through 2017 even though those periods were previously audited in 2018, and has received several decisions in Kyrgyz courts permitting it to do so. In addition, the STS attempted to revive baseless claims against KGC that (a) alleged taxes are owed on certain dividend payments made to Centerra in 2016 and 2017; (b) alleged additional payroll deductions are owed for national employee compensation from the years 2016 and 2017 based on high-altitude premium and shift premium compensation; and (c) alleged additional payments are owed to the Kyrgyz Republic Social Fund (the “Social Fund”) from the years 2011 through 2017 based on the same high-altitude premiums and shift premiums and on compensation paid to KGC employees who are not Kyrgyz citizens. Each of these claims was previously raised in 2017 or 2018 and abandoned by the Government or dismissed by the Kyrgyz courts, because they are not legitimate claims under the RIA and Kyrgyz law. First, the RIA expressly precludes the Government from taxing dividends paid among the Claimants. Article 5.4(b) of the RIA states unequivocally that the 5 https://uncitral.un.org/en/texts/arbitration/faq [https://perma.cc/T67B-B3RC] 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 10 of 20 Government of the Kyrgyz Republic -9- Kyrgyzaltyn OJSC Claimants “shall be exempt from paying Taxes with respect to intra-group transactions between them, including for services, dividends, interest, repayment of principal or other distributions or other transactions involving” the Claimants. The Government’s attempts to assess taxes on fully authorized dividend payments made by KGC to Centerra is a clear breach of this provision. Indeed, the State Tax Service conceded as much in 2018 when it accepted KGC’s previous challenge to this claim. Second, the STS’s payroll deduction claims were considered and rejected by Kyrgyz courts because they are contrary to Kyrgyz law. Article 5.3(i) of the RIA requires the Claimants to make payroll deductions only as “required by the prevailing Legislation,” and it is well-settled under Kyrgyz law that high-altitude pay is not considered taxable income subject to payroll deductions. For this reason, the Bishkek Inter-District Court on December 6, 2018 granted KGC’s previous challenge to the Government’s attempt to improperly require such deductions. The Government did not timely appeal that decision, and the dismissal of that case was a fundamental basis for the substantial payments to the Government provided for in the SA and subsequent Deed Poll, dated August 7, 2019 (CX07). Moreover, Kyrgyz courts confirmed in 2020 that high-altitude pay is not subject to personal income tax. (See Court Ruling of the KR Supreme Court, Case No. AD-06/19mbs4 (No. AB-06-512/19AD, K\N No. 6-157/20AD) dated June 15, 2020.) Nevertheless, the Government has orchestrated an illegitimate appeal of the Inter-District Court’s December 2018 decision more than two years after the fact, including by procuring a baseless ruling from the Bishkek City Court reopening the appeal period. Third, the STS’s attempt to require a contribution to the Social Fund or payroll deductions for shift premiums violates the RIA. Under KGC’s long-term agreements with its employees, KGC has never paid shift premiums and instead provides free meal services to its employees. The Government has been well-aware of those labor agreements. Article 5.4(d) of the RIA expressly states that “provision of food at the Kumtor Mine by the Project Companies, free of charge to employees of the Project Companies, shall be exempt from Taxes.” The term “Taxes” is defined to include “taxes, duties, rates, royalties, withholding obligations, deductions or other governmental charges whatsoever, however characterized.” Fourth, KGC does not owe Social Fund payments for non-Kyrgyz citizens who work at the Kumtor Mine. Article 5.3(i) of the RIA requires the Claimants to make Social Fund payments only “in respect of such Project Company employees who are Kyrgyz citizens.” This is consistent with Article 17 of the Republic’s Law on Investments, dated March 27, 2003, which grants the Claimants “the right to transfer payment on social insurance and provision for foreign employeefs] to the respective funds of the foreign state[s] unless otherwise provided by the international agreements.” 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 11 of 20 Government of the Kyrgyz Republic -10- Kyrgyzaltyn О JSC This means that KGC may fulfill any Social Fund commitments for non-Kyrgyz citizen employees by paying applicable social tax in those employees’ home countries, and there are decisions from Kyrgyz courts to this effect. (See Decision of the Bishkek Inter District Court dated January 8, 2019 and KR Supreme Court Ruling dated May 19, 2009.) Accordingly, the Government’s attempt to require KGC to pay additional amounts to the Social Fund is contrary to both the RIA and Kyrgyz law. Further, the parties entered into a series of agreements from 2017 to 2019 to resolve numerous claims asserted by the Government. In the SA, the Government represented to Claimants that as of August 2019 the Government had “no actual, pending or threatened Claims or, to their Knowledge, any cause of action, in each case, relating to or in connection with” Claimants “that arose on or after 24 April 2009 and before” August 26, 2019 “other than any Claims ... arising out of, or in connection with Unknown Environmental Damage.” The STS was of course aware of all of the claims they are attempting to re-assert now because they had attempted to assert them before 2019. Based on statements made by Government officials, the Government appears to be using these spurious claims, and the Glacier Lawsuit referenced below, as an excuse to force KGC into a sham insolvency in the Krygyz Republic and strip KGC of its most valuable asset—the Kumtor Mine. Claimants seek a preliminary and final injunction barring the Government from pursuing these spurious claims and damages for breach of the Government’s representations in the SA. Claimants understand that the Government, through the STS, is working to assert additional meritless claims and reserve their right to further amend this Notice to add such claims to this arbitration. 2. The Illegitimate Glacier Lawsuit'. As part of the SA, signed as of September 11, 2017 and fully effective as of August 26, 2019, Claimants agreed to make payments and concessions to the Government of at least $60 million USD, and to make additional annual payments of at least $3.7 million USD to the Government for the life of the Kumtor Mine. In exchange, among other things the Government agreed “on behalf of itself and on behalf of each Government Entity, and ... any other person or entity who is entitled to make a Claim in the name of the KR Government” “never to bring any action, directly or indirectly ... on the subject matter of’ several cases against the Claimants that had been filed in Kyrgyz courts. One of those cases was brought by the Kyrgyz Republic State Inspectorate Office for Environmental and Technical Safety (“SJETS”) and sought “damages for harm allegedly caused to the environment by КОС storing production tails on glaciers.” In addition to agreeing not to bring claims itself, the Government agreed, in Clause 2.2 of SA, “to support” the Claimants and “to uphold the terms” of the SA “in any 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 12 of 20 Government of the Kyrgyz Republic -11- Kyrgyzaltyn О JSC action brought by any Government Entity or third party acting or purporting to act on behalf of’ the Government. As noted above, the Government further represented that, as of August 26, 2019, it did not have any “actual, pending or threatened Claims or, to [its] Knowledge, any cause of action . . . relating to or in connection with Centerra, KGC, [or] КОС . . . that arose on or after 24 April 2009 and before” August 26, 2019 except claims “in connection with Unknown Environmental Damage.” In March 2021, four KR citizens acting for and in concert with the Government, including the son of the director of the Government’s State Agency for Environment Protection and Forestry (“SAEPF”), filed a lawsuit against KGC in the Oktyabrsky District Court of Bishkek seeking a declaration that “KGC actions related to waste dumping on the Davydov and Lyisi glaciers” were illegal (the “Glacier Lawsuit”). Claimants also sought unspecified “financial sanctions” that would be payable to, and thus sought on behalf of, the Government. According to press reports, two of the claimants in the Glacier Lawsuit are associated with current President of the Kyrgyz Republic, Sadyr Japarov.6 Because the claims in the Glacier Lawsuit were brought by persons purporting to act on the Government’s behalf and were related to the subject matter of a claim released pursuant to the SA, the Government was required to support KGC in the Glacier Lawsuit. Contrary to its contractual obligations under the SA, the Government actively supported claimants’ action. SIETS appeared at court hearings as an interested party beginning on April 29, 2021 and urged the court to rule in favor of the claimants on multiple occasions. Then, on May 3, 2021, without any advance notice to KGC, the claimants amended their complaint to add a damages claim for KGS 261,719,674,080 (approximately $3,087,000,000 USD) payable to the Government. Based on information and belief, Government officials prepared the calculation purporting to justify claimants’ amended demand. In addition, among other things, the Government reduced significantly a filing fee claimants otherwise would have had to pay to make such a demand. With the Government’s full support and without providing KGC any reasonable time to prepare a defense and after dismissing all of KGC’s motions out of 6 Before he became President in October 2020, Sadyr Japarov was charged and convicted of taking a government official hostage as part of a violent protest demanding the nationalization of the Kumtor Mine. https://www.rferl.org/a/kyrgyzstan-japarov-trial- /28531107.html [https://perma.cc/E3T2-7ZYG]; https://www.rferl.org/a/kyrgyzstan- japarov-hostage-taking-charge-jailed/28655237.html [https://perma.cc/XA73-8DQR]. Two of the plaintiffs in the Glacier Lawsuit, Aibek Sarybaev and Nariste Kalchaev, were reportedly convicted of crimes in connection with the same protest, https ://kaktus.media /438087/ [https://perma.cc/JVA6-HXKM] 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 13 of 20 Government of the Kyrgyz Republic -12- Kyrgyzaltyn О JSC hand, the court held sham hearings on May 4 and May 6 and hastily rendered judgment in claimants’ favor on May 7, purporting to award the Government KGS 261,719,674,080 and even went so far as to award the claimants a filing fee they never paid. Based on statements made by Government officials, the Government appears to be using the Glacier Lawsuit, and tax claims referenced above, as an excuse to force KGC into a sham insolvency in the Krygyz Republic and strip KGC of its most valuable asset—the Kumtor Mine as described below. The Government’s actions, including the judgment procured in the Glacier Case, violate the release and the Government’s support obligations in the SA. Claimants seek a preliminary and final injunction barring enforcement of the Glacier Lawsuit judgment and damages resulting from the Government’s breach of its obligations. 3. Proposed Amendments to the New Kumtor Law and Tax Code'. In April 2021, one or more members of the Jogorku Kenesh proposed additional legislation that if adopted could fundamentally alter the legal foundation of the Kumtor Project and the parties’ agreements by amending the New Kumtor Law that was adopted to specifically ratify the RIA. See On Ratification of the Agreement on New Terms for the Kumtor Project, dated April 24, 2009 (the “New Kumtor Law”). The new legislation, if adopted, would specifically amend the New Kumtor Law by deleting sections of that law that recognized the primacy of the RIA over other Kyrgyz legislation and subjecting the Kumtor mine to certain general legislation, including the Kyrgyz tax laws. Pursuant to the RIA, the parties agreed that the “New Kumtor Law and the other Legislation as modified by the New Kumtor Law shall be stabilized as of June 2, 2009.” In addition, the RIA states that “the rates, amounts and other terms of any Taxes or other payments payable . . . shall not be subject to any future change in Legislation or treaty provisions, which would be more burdensome to the” Claimants. As recently as August 2019, pursuant to the terms of the SA, the Government re-confirmed the validity of the New Kumtor Law and the RIA and all provisions thereof. Claimants seek a preliminary and final injunction barring implementation of the proposed legislation, if enacted, and will seek damages that result from the Government’s breaches of the ANT and RIA. 4. Respondents’ Trojan Horse Nominee to Centerra’s Board of Directors'. On December 4, 2020, Kyrgzaltyn nominated Tengiz Bolturuk as one of its two representatives to the Centerra Board. Upon joining Centerra’s Board, Mr. Bolturuk confirmed that he understood, as a director, that he owed a duty of loyalty to Centerra, and that he would act in the best interests of Centerra at all times. Between December 2020 and May 2021, as a Centerra director, Mr. Bolturuk was provided and had access to 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 14 of 20 Government of the Kyrgyz Republic -13- Kyrgyzaltyn О JSC confidential and commercially sensitive information about the Kumtor Mine and Centerra. He also had unfettered access to the Kumtor Mine. At the same time, upon information and belief, Mr. Bolturuk was secretly working with Respondents and their U.S. and Canadian legal counsel to hatch a plan to expropriate the Kumtor Mine. In early May 2021, Mr. Bolturuk circulated a WhatsApp audio message championing Respondents’ efforts: Dear compatriots! I[,] Tengiz Bolturuk[,] would like to provide you with some information. [Last February], I came from Canada and I have been actively working, maybe you know from social networks or news, I am the [superintendent] of mining development, working with Kyrgyzaltyn, we are doing its restructuring. As to Kumtor[,] a lot of work is being done, as I gave my word [to you], I gave my word to the President that we will take Kumtor back, and, God willing, it will happen.... We are putting all this together, God willing we will bring Centerra to its knees, right now I can’t give all the details because, all this is being done off the record so that Centerra cannot prepare, and I can’t tell you the secrets. But God willing, believe me, by the end of May we will have finished everything. Everything will be this way, nothing will go the other way for sure. Claimants seek a preliminary and final injunction barring Respondents and their agents from taking further steps to expropriate the Kumtor mine, and will seek damages that resulted from Respondents’ breaches of the Agreements.7 5. Respondents’ Expropriation of the Kumtor Mine Under the Guise of “Temporary Management”'. On April 30, 2021, legislation was introduced and 7 Centerra is separately pursuing a claim for injunctive relief against Mr. Bolturuk in the Ontario Superior Court of Justice based on breaches of his fiduciary and confidentiality duties owed to Centerra as a former member of Centerra’s Board of Directors. That claim is not subject to arbitration. 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 15 of 20 Government of the Kyrgyz Republic -14- Kyrgyzaltyn OJSC passed by the Jogorku Kenesh after three readings in a single day on May 6, 2021 (one day before judgment was entered in the Glacier Lawsuit) that purportedly permits the Government to take over management of KGC (the “Temporary Management Law”). The Temporary Management Law applies only to KGC and ostensibly allows the Government to suspend “the powers of [KGCJ’s management bodies” and introduce “temporary external management” if KGC’s “right to use subsoil resources” is suspended “on the grounds of violation by [KGC] of the requirements for the protection of subsoil resources, environmental and industrial safety established by the legislation of the Kyrgyz Republic, creating an immediate threat to the life or health of people working or living in the zone of operations influence.” The Temporary Management Law also purports to “vest” with the “temporary external managers]” “all the powers of the company’s executive body” including power over “[a]ll bank accounts for the company.” Further, the Law purports to limit the rights of KGC’s duly appointed board and its shareholders from “giving direct instructions, orders or any other instructions in the form of a request or recommendation to the temporary external manager.” The Government has created a new crime for violating the Temporary Management Law, apparently in an effort to chill Claimants’ ability to protect their interests in the Kumtor Mine and rights under the Investment Agreements. Any claim that the KGC’s operation of the Kumtor Mine created “an immediate threat to the life or health of people working or living in the zone of operations influence” is wholly false and without foundation. The Kumtor Mine’s environmental performance adheres to international standards and has been audited multiple times by, among others, the Kyrgyz Government’s own environmental consultant, AMEC Foster Wheeler. Moreover, the Government, including the Kyrgyz Republic State Agency for Environment and Forestry Protection, has approved Kumtor’s mine plans each year, which include detailed waste rock dumping plans that provide for the manner and location of placement of any waste rock generated from mining activities. On May 14, 2021, the Temporary Management Law was signed into law by President Japarov but the Government did not purport to invoke the law at that time.8 Beginning on May 15, 2021, Respondents effectively seized control over the Kumtor Mine when Government agents invaded the mine and KGC’s office in Bishkek. Additionally, senior KGC personnel were subjected to visits by security services to their homes and threatened with unjustified criminal action, and IT personnel were forced https://24.kg/english/193950_Sadyr_Japarov_approves_imposition_of external_management_on_companies/ [https://perma.cc/27KC-3WKT] 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 16 of 20 Government of the Kyrgyz Republic -15- Kyrgyzaltyn OJSC from their homes and brought to the mine in an effort by the Government to infiltrate Centerra’s global IT systems and apparently to misappropriate proprietary information for Respondents’ own use in running the mine. In contrast to their obligations under the Investment Agreements and applicable fiduciary duties, Kyrgyzaltyn and its agents and representatives actively supported the Government’s efforts to seize the Kumtor Mine. Among other things, after the Government apparently did not locate certain senior KGC managers to intimidate during its weekend raids, Kyrgyzaltyn sent Centerra a letter on May 16, 2021 feigning “concern” about those managers’ absence from the Kyrgyz Republic. Kyrgyzaltyn also alleged that Centerra had taken actions to suspend or freeze KGC’s operations, which was false. Having already seized control of the Kumtor Mine, Respondents then sought to dress up the taking through invocation of the new Temporary Management Law. On May 17, 2021, the Jogorku Kenesh adopted a resolution instructing the Government to use its newfound authority under the Temporary Management Law to impose temporary external management on KGC. But the facade of legality fails even on its own terms. The newly minted Temporary Management Law requires as a condition to imposition of a temporary manager that the Mine’s “right to use subsoil resources” be suspended on the grounds of “an immediate threat to the life or health of people working or living in the zone of operations influence.” The Mine’s operations had not been Suspended as of May 15, 2021, and press reports widely report that the Mine has continued in operation without interruption to this day. On May 18, 2021, President Japarov announced that the Government would appoint Mr. Bolturuk, the Trojan horse director Centerra director, as the temporary manager of KGC and the Kumtor Mine. Among other things, Respondents have claimed to have “stepped up” “[djrilling operations” since taking control of the mine, and upon information and belief Respondents are planning to deviate from KGC’s mine plan.9 By doing so, Respondents are placing the future sustainability and safety of the mine, its workers and surrounding communities at grave risk. Respondents’ implementation of the Temporary Management Law, the purported installation of the temporary manager at KGC, and the seizure of the Kumtor Mine breach Claimants’ most fundamental rights under the ANT, RIA and related Investment Agreements, including but not limited to guarantees against expropriation. Indeed, at a June 8, 2021 hearing before the United States Bankruptcy Court for the https://24.kg/english/194654_Tengiz_Bolturik_tells_about_plans_for_operation of_Kumtor_mine_____I [https://perma.cc/N6UC-HT2U] 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 17 of 20 Government of the Kyrgyz Republic -16- Kyrgyzaltyn OJSC Southern District of New York, Respondents’ counsel admitted that “there was an expropriation event” at the Kumtor Mine, recognizing that the Temporary Management Law was not “temporary” at all. Among the rights that Respondents have violated are: (i) RIA Article 6.1’s prohibition on Expropriatory Action, which includes “any action . .. that is confiscatory in effect or that otherwise deprives the direct or indirect owner of the asset... subject to such action or effective control thereof’; (ii) RIA Article 6.1’s requirement, in the event Expropriatory Action occurs and “[wjithout limiting the binding effect and enforceability” of the prohibition on Expropriatory Action, that if Expropriatory Action is “wholly or partially consummated, the Government shall, simultaneously therewith, pay to” Centerra the pre-expropriation “fair market value” of the expropriated asset; (iii) RIA Article 2.2’s guarantee that the “Project Companies,” including KGC, “shall be governed as provided in their respective charters” and “[ojnly shareholders of the relevant Project Company shall be entitled to any voting or other rights in respect of that Project Company’s corporate matters”; and (iv) RIA Article 6.3’s prohibition on subjecting the Claimants to “Legislation that is, either by its terms or in its effect, discriminatory.” As a party to the ANT and other Investment Agreements, Kyrgyzaltyn also was obliged not to take any steps to expropriate the Kumtor Mine or interfere with any of Claimants’ other investment rights. Claimants seek a preliminary and final injunction barring further implementation of the Temporary Management Law with respect to Kumtor and a return to the pre-arbitration status quo. Claimants will also seek an award of any and all damages resulting from Respondents’ breaches of the Investment Agreements and related agreements. 6. Further Threats of Nationalization -. The actions and statements of Mr. Bolturuk and other Government officials indicate that Respondents intend to use the Glacier Lawsuit and tax proceedings as set forth supra, to nationalize the Kumtor Mine by bankrupting KGC and seizing its assets. In addition, according to news reports, Respondents have already stolen and sold at least 44,000 ounces of gold from the mine and received at least USD $40 million in profits for their own use. Nothing in the Temporary Management Law remotely suggests Respondents may take over management and abscond with the Kumtor Mine’s gold or other minerals. Claimants seek a preliminary and final injunction barring further efforts to cause the transfer of any KGC assets, including any dore produced at the Kumtor Mine, in violation of the RIA and related agreements. 7. Respondents’ Breaches of the GSSA: The last shipment of dore from the Kumtor Mine before imposition of temporary management was delivered to Kyrgyzaltyn on May 9, 2021, and payment for that shipment—approximately $26 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 18 of 20 Government of the Kyrgyz Republic -17- Kyrgyzaltyn OJSC million—was due to KGC on May 21 pursuant to Section 4.1 of the GSSA. The payment was supposed to go directly from StoneX Financial Ltd. (“StoneX”), the foreign buyer of the gold produced at the Kumtor Mine and refined by Kyrgyzaltyn, to a bank account designated by KGC. Under Section 4.1 of the GSSA, Kyrgyzaltyn was contractually obliged to deliver the gold and cause this payment to occur. Pursuant to Section 2.1, the Government unconditionally guaranteed Kyrgyzaltyn’s performance of all its obligations under the GSSA. On May 12, 2021, days before the seizure of the Mine, an email delivered from a Kyrgyzaltyn email address attached a written instruction, seemingly signed by a KGC representative, that directed StoneX to make the May 21 payment to a different bank account, one that was not opened by KGC. The instruction was a forgery: on information and belief, Kyrgyzaltyn took a valid, authorized payment instruction issued on May 9, 2021 directing payment to an authorized bank account in New York and signed and sealed by KGC, and inserted wiring information for the unauthorized bank account at a different New York bank over the wiring information for the correct account. Through this blatant fraud attempt, Kyrgyzaltyn appears to have been testing whether it could unilaterally change payment instructions to StoneX without the Claimants’ authorization, in anticipation of Respondents’ plan to expropriate the Kumtor Mine days later. The fraud was intercepted when StoneX wrote to KGC and Centerra representatives to confirm the new payment instructions. Respondents continue to breach the GSSA. Upon information and belief and according to news reports, the external manager continues to deliver dore to Kyrgyzaltyn, and Kyrgyzaltyn continues to refine it. However, Kyrgyzaltyn has failed to deliver that gold to StoneX, in violation of Section 4.4 of the GSSA and payment for that gold has not been transferred to KGC’s HSBC bank account as specified in the GSSA. Claimants therefore seek specific performance of the GSSA and will seek damages for Respondents’ continuing breach of that agreement. 8. Kyrgyzaltyn’s Breaches of the Management Agreement'. Under Section 3.3 of the Management Agreement, KGC has paid Krygyzaltyn a fee of one- dollar per ounce of gold the Kumtor Mine produces “for the services rendered by Kyrgyzaltyn.” These services include assisting “with the resolution of issues that are subject to the jurisdiction of the Kyrgyz governmental bodies, including with respect to tax, financial, economic and legal matters that may arise in the course of the Kumtor Project operations” and preparing “statements submitted to planning, financial and statistical Kyrgyz governmental bodies.” Rather than assisting Claimants, Kyrgyzaltyn has actively supported and participated in Respondents’ expropriation of the Kumtor 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 19 of 20 Government of the Kyrgyz Republic -18- Kyrgyzaltyn OJSC Mine. Claimants accordingly will seek damages for Kyrgyzaltyn’s breach of its obligations under the Management Agreement. 9. Kyrgyzaltyn’s Efforts To Remove Assets in Canada'. On May 13, 2021, mere days before the Government took control of the Kumtor Mine, Kyrgyzaltyn filed a Form 45-102F1 Notice of Intention to Distribute Securities with a Canadian securities regulator indicating that Kyrgyzaltyn intended to sell 14,825,512 Centerra shares (approximately 20% of Kyrgyzaltyn’s shares and just under 5% of Centerra’s total outstanding shares) on the Toronto Stock Exchange. This filing was apparently part of an attempt to remove assets from Canada and to liquidate some of Kyrgyzaltyn’s Centerra shares before Respondents’ expropriation of the Kumtor Mine. Removing attachable assets from Canada, a jurisdiction that respects and enforces duly issued arbitral awards, was likely important to Respondents because the Kyrgyz Republic has a long history of defaulting on such awards. See, e.g., Sistem Muhendislik Insaat Sanayi Ve Ticaret, A.S. v. Kyrgyz Republic, 2020 WL 7890222, at *4 (S.D.N.Y. Nov. 5, 2020) (“The Republic’s conduct has been and continues to be, in a word, contemptuous” in proceedings to enforce arbitral award, and imposing sanctions). Claimants seek a preliminary injunction barring Respondents from transferring, encumbering or otherwise modifying Centerra shares held by or on behalf of Respondents during the pendency of this arbitration. F. Relief Sought Pursuant to Article 3 of the UNCITRAL Rules, Claimants seek in this arbitration: (i) declaratory relief; (ii) injunctive relief or the equivalent; (iii) damages; (iv) an award of the costs of the arbitration, including costs for legal representation; and (v) any other relief that the arbitrator may deem just and proper. As indicated above, immediate interim measures are needed to enjoin the Respondents and any person or entity acting in concert with them, from (i) attempting to enforce the judgment in the Glacier Lawsuit against any Claimant; (ii) continuing to interfere with Claimants’ rights to the Kumtor Mine; (iii) continuing to impose “temporary external management” on KGC under the Temporary Management Law; (iv) failing to comply Article 6.1 of the RIA’s requirement to pay, in the event of expropriatory action, compensation “simultaneously therewith”; (v) transferring, encumbering, or otherwise modifying Centerra shares held by or on behalf of Respondents during the pendency of this arbitration; (vi) pursuing historical tax claims that have been previously resolved or dismissed; (vii) implementing any proposed changes to the ANT or Tax Code that would undermine the stabilization rights or any 21-11051-lgb Doc 92-4 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit D Pg 20 of 20 Government of the Kyrgyz Republic -19- Kyrgyzaltyn О JSC other rights the Claimants have under the Investment Agreements; (viii) taking any steps to extract or monetize any gold or other minerals at the Kumtor Mine without prompt payment to Claimants of amounts owed under the GSSA; (ix) taking any steps to sell, transfer or encumber any assets of KGC; (x) taking any steps to intimidate potential witnesses or other individuals relevant to the Dispute; or (xi) otherwise aggravating the dispute. The Claimants reserve their right to further amend this Notice to include additional claims and parties. Sullivan & Cromwell LLP (Attachments) cc: Tim Smith Alice Osman Joel I. Greenberg Alexander Shaknes (Arnold & Porter) 21-11051-lgb Doc 92-5 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit E Pg 1 of 3 Exhibit E July 12 PCA Letter 21-11051-lgb Doc 92-5 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit E Pg 2 of 3 Mr. Joseph E. Neuhaus His Excellency President Mr. S. Japarov Mr. Andrew J. Finn His Excellency Chairman of the Council of Sullivan & Cromwell LLP Ministers Mr. U. Maripov 125 Broad Street Government of the Kyrgyz Republic New York, New York 10004 Dom Pravitel’stva United States of America Bishkek 720003 Kyrgyz Republic BY E-MAIL: [email protected] [email protected] BY COURIER Chairman of the Board of Directors Kyrgyzaltyn OJSC Ulitsa Abdumomunova, dom 195 Bishkek 720040 Kyrgyz Republic BY COURIER Mr. Dmitri Evseev Mr. Tim Smyth Ms. Alice Osman Arnold & Porter Kaye Scholer LLP Tower 42, 25 Old Broad Street London, United Kingdom BY E-MAIL: [email protected] [email protected] [email protected] [email protected] Mr. Joel I. Greenberg Mr. Alexander Shaknes Arnold & Porter 250 West 55th Street New York, NY 10019-9710 United States of America BY E-MAIL: [email protected] [email protected] AN 358007 12 July 2021 DIRECT DIAL: +31 70 302 4180 E-MAIL: [email protected] RE: PCA CASE N° AA813 – AGREEMENT ON NEW TERMS FOR THE KUMTOR PROJECT PCA CASE N° AA817 – RESTATED INVESTMENT AGREEMENT PCA CASE N° AA818 – RESTATED GOLD AND SILVER SALE AGREEMENT PCA CASE N° AA819 – SECOND AMENDED AND RESTATED AGREEMENT PCA CASE N° AA820 – STRATEGIC AGREEMENT ON ENVIRONMENTAL PROTECTION AND INVESTMENT PROMOTION 21-11051-lgb Doc 92-5 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit E Pg 3 of 3 AN 358007 12 July 2021 Page 2 of 2 Dear Mesdames, dear Sirs, The Permanent Court of Arbitration (the “PCA”) acknowledges receipt of a letter dated 8 July 2021 and its attachments from Centerra Gold Inc., Kumtor Gold Company CJSC, and Kumtor Operating Company CJSC (the “Claimants”). The PCA also acknowledges receipt of correspondence dated 9 July 2021 from the Kyrgyz Republic and Kyrgyzaltyn JSC (the “Respondents”), requesting “an opportunity to provide a brief response on behalf of each of the Respondents.” The PCA recalls that, in support of their request to the PCA Secretary-General for the designation of an appointing authority and the appointment of sole arbitrators, the Claimants refer to the arbitration clauses of five different agreements concluded by varying sets of parties: 1) Article 6.7(a) of the Agreement on New Terms for the Kumtor Project dated 24 April 2009; 2) Article 11.3(a) of the Restated Investment Agreement dated 6 June 2009; 3) Article 22 of the Restated Gold and Silver Sale Agreement dated 6 June 2009; 4) Article 9.3 of the Second Amended and Restated Agreement on Payment of a Commission to Kyrgyzaltyn JSC for its participation in the operation of the Kumtor Gold Project dated 6 June 2009; and 5) Article 9.6 of the Strategic Agreement on Environmental Protection and Investment Promotion dated 11 September 2017 (together, the “Agreements”). In light of the submissions of the Parties thus far, please note that, going forward, the PCA will refer to and analyse the Claimants’ request with respect to each of the Agreements separately, using distinct case reference numbers as indicated above. This decision is without prejudice to the scope of claims or parties referred to arbitration in respect of each of the Agreements or to the Claimants’ ability to request the arbitrators to consider the consolidation of the claims into a single arbitration. The Claimants are invited, by 16 July 2021, to clarify which entities would be claimants and respondents in the above-referenced matters in respect of each Agreement and the basis for their inclusion. Upon receipt of the Claimants’ comments, the Respondents will be provided an opportunity to comment. Please do not hesitate to contact me should you have any queries concerning this letter. Yours sincerely, Ashwita Ambast Legal Counsel 21-11051-lgb Doc 92-6 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit F Pg 1 of 4 Exhibit F Centerra Gold News Release re: Proceedings Against Former Board Director 21-11051-lgb Doc 92-6 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit F Pg 2 of 4 NEWS RELEASE Centerra Gold Announces Proceedings Against Former Board Director Tengiz Bolturuk Identifies Attempted Fraud by Kyrgyzaltyn JSC and Responds to Inaccurate Statements by Bolturuk and Kyrgyz Officials Toronto, Canada, May 20, 2021: Centerra Gold Inc. (“Centerra” or the “Company”) (TSX: CG) (NYSE: CGAU) today announced that it had initiated proceedings in the Ontario Superior Court of Justice against Tengiz Bolturuk, a former member of its Board of Directors, in response to flagrant breaches of his fiduciary duties to the Company related to the recent seizure of the Kumtor Mine by the Government of the Kyrgyz Republic. Centerra seeks to enjoin Mr. Bolturuk, who was nominated to the Board by the Kyrgyz state-owned entity and Centerra shareholder Kyrgyzaltyn JSC, from direct or indirect involvement in the management of the Kumtor Mine as well as engaging in further breaches of fiduciary and confidentiality duties owed to the Company. As previously announced, the Company is investigating recent conduct by Kyrgyzaltyn JSC, including Mr. Bolturuk, its former nominee. Mr. Bolturuk, a dual Canadian and Kyrgyz citizen, joined the Centerra Board in December 2020 and resigned on May 17, 2021. Two days after his resignation, the Kyrgyz authorities announced that the Kyrgyz Government had appointed Mr. Bolturuk as the “external manager” of Centerra’s wholly owned subsidiary, Kumtor Gold Company (“KGC”), which operated the Kumtor Mine until its unjustified seizure. Based on information available to date, the Company has learned that, prior to his resignation from Centerra’s Board, Mr. Bolturuk had been in discussions with the Kyrgyz Government and others regarding plans to seize control of the Kumtor Mine in violation of Centerra’s longstanding investment agreements. Mr. Bolturuk did not disclose this information to Centerra. In addition, Centerra has learned that on May 12, 2021, prior to the seizure of the mine, Kyrgyzaltyn JSC attempted to divert approximately US$29 million to an unauthorized bank account using a forged payment instruction sent to a third party. The account was purportedly opened in the name of KGC. This attempted fraud was identified by the third party and was not successful. Scott Perry, President and Chief Executive Officer of Centerra, said: “We can assure our shareholders that we are pursuing all avenues available to us in connection with recent events, including against any persons who violate their obligations to Centerra and its shareholders. In the meantime, to deflect attention from their unprecedented and unprovoked seizure of the Kumtor 1 University Avenue, Suite 1500 Toronto, ON M5J 2P1 tel 416-204-1953 fax 416-204-1954 www.centerragold.com 21-11051-lgb Doc 92-6 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit F Pg 3 of 4 Mine, Kyrgyz officials and Mr. Bolturuk continue to make unjustified claims related to environmental and safety conditions in the past operation of the Kumtor Mine that are entirely meritless and have no justification under longstanding investment agreements or applicable law.” While it was controlled by Centerra, KGC operated Kumtor to international standards of environmental management and occupational health and safety and to the mutual benefit of the Company and the Kyrgyz Republic, where Kumtor is the largest taxpayer. Shortly before the Kyrgyz Government took control of the mine, all key safety, monitoring and operational systems were functioning properly. Centerra did not disable any such systems, and the mine was operating without incident. Mr. Perry added: “We remain willing and available to engage with the Kyrgyz Government in a constructive dialogue on the matters it considers to be the subject of dispute. At the same time, the hostile actions of the Government leave us no choice but to continue to protect the interests of Centerra and its shareholders through all legal means.” About Centerra Centerra Gold Inc. is a Canadian-based gold mining company focused on operating, developing, exploring and acquiring gold properties in North America, Asia and other markets worldwide and is one of the largest Western-based gold producers in Central Asia. Centerra owns three mines, the Kumtor Mine in the Kyrgyz Republic, the Mount Milligan Mine in British Columbia, Canada and the Öksüt Mine in Turkey. Centerra’s shares trade on the Toronto Stock Exchange (TSX) under the symbol CG and on the New York Stock Exchange (NYSE) under the symbol CGAU. The Company is based in Toronto, Ontario, Canada. Caution Regarding Forward-Looking Information Information contained in this document which are not statements of historical facts may be “forward-looking information” for the purposes of Canadian securities laws and within the meaning of the United States Private Securities Litigation Reform Act of 1995. 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”, “plan”, “intends”, “continue”, “budget”, “estimate”, “may”, “will”, “schedule”, “understand” and similar expressions identify forward-looking information. These forward-looking statements relate to, among other things: the court proceedings by the Company against Mr. Bolturuk and the potential for obtaining injunctive relief or other remedies thereunder; and the Company’s pursuit of other legal means and the potential for such legal avenues to protect its and its stakeholders interests. Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable by Centerra, are inherently subject to significant technical, 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 and assumptions that could cause actual results or events to differ materially from current expectations include, among other things: political risks associated with the 1 University Avenue, Suite 1500 2 Toronto, ON M5J 2P1 tel 416-204-1953 fax 416-204-1954 www.centerragold.com 21-11051-lgb Doc 92-6 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit F Pg 4 of 4 Company’s operations in the Kyrgyz Republic; the ongoing failure of the Kyrgyz Republic Government to comply with its continuing obligations under the 2017 Strategic Agreement on Environmental Protection and Investment Promotion and the 2009 Restated Project Agreements governing the Kumtor Mine to allow for the continued operation of the Kumtor mine by KGC and Kumtor Operating Company (“KOC”) and not take any expropriation action against the Kumtor mine; actions by the Kyrgyz Republic Government, any state agency or the General Prosecutor's Office or any representative thereof, including Mr. Bolturuk, that serve to restrict or otherwise interfere with the payment of funds by KGC and KOC to Centerra; resource nationalism including the management of external stakeholder expectations; the impact of changes in, or to the more aggressive enforcement of, laws, regulations and government practices, including unjustified civil or criminal action against the Company, its affiliates or its current or former employees, including the interaction of claims of harm to the environment or human health with the new Kyrgyz Republic law that enabled imposition of external management on the Kumtor Mine by the Kyrgyz Republic Government; potential impact on the Kumtor mine of investigations by Kyrgyz Republic instrumentalities; the inability of the Company and its subsidiaries to enforce their legal rights in certain circumstances before the Ontario Superior Court of Justice, in arbitration or in any other forum or to enforce any favourable order or arbitral judgement awarded against Mr. Bolturuk and/or the Kyrgyz Republic; or the presence of a significant shareholder of the Company that is a state-owned company of the Kyrgyz Republic. For additional risk factors, please see section titled “Risks Factors” in the Company’s most recently filed Annual Information Form available on SEDAR at www.sedar.com and EDGAR www.sec.gov/edgar. 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 May 20, 2021. 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. For more information: John W. Pearson Vice President, Investor Relations (416) 204-1953 [email protected] Additional information on Centerra is available on the Company’s web site at www.centerragold.com on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar. - end - 1 University Avenue, Suite 1500 3 Toronto, ON M5J 2P1 tel 416-204-1953 fax 416-204-1954 www.centerragold.com 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 1 of 81 Exhibit G 2021.06.08 - Kumptor Gold - Transcript of First Day Hearing 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 2 of 81 In Re: KUMTOR GOLD COMPANY CSJC and KYRGYZ REPUBLIC June 8, 2021 eScribers, LLC (973) 406-2250 [email protected] www.escribers.net To purchase copies of this transcript, please contact us by phone or email Min-U-Script® with Word Index 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 3 of 81 1 1 2 UNITED STATES BANKRUPTCY COURT 3 SOUTHERN DISTRICT OF NEW YORK 4 ------x 5 6 In the Matter of: 7 KUMTOR GOLD COMPANY CSJC and Main Case No. 8 KYRGYZ REPUBLIC, 21-11051-lgb 9 Debtors. 10 ------x 11 12 United States Bankruptcy Court 13 One Bowling Green 14 New York, New York 15 16 June 8, 2021 17 10:00 AM 18 19 20 21 B E F O R E: 22 HON. LISA G. BECKERMAN 23 U.S. BANKRUPTCY JUDGE 24 25 eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 4 of 81 2 1 2 Motion for Joint Administration Debtors Motion for Entry of an 3 Order (I) Directing Joint Administration of Chapter 11 Cases 4 and (II) Waiving Requirements of Section 342(c)(1) of the 5 Bankruptcy Code and Bankruptcy Rules 1005 and 2002(n) 6 7 Motion to Extend Deadline to File Schedules or Provide Required 8 Information Debtors Motion for Entry of an Order Extending Time 9 to File Schedules of Assets and Liabilities, Schedules of 10 Current Income and Expenses, Schedules of Executory Contracts 11 and Unexpired Leases and Statements of Financial Affairs 12 13 Motion to Authorize Debtors Motion for Entry of an Order (I) 14 Authorizing the Debtors to (A) Maintain a List of Creditors in 15 Lieu of Submitting a Formatted Mailing Matrix and (B) File a 16 Consolidated List of the Debtors Top 30 Creditors and (II) 17 Establishing Procedures for Notifying Parties of Commencement 18 of These Chapter 11 Cases 19 20 Motion to Appoint Bankruptcy Management Solutions, Inc. d/b/a 21 Stretto as Claims and Noticing Agent Debtors Application 22 Seeking Entry of an Order (I) Authorizing and Approving the 23 Appointment of Stretto as Claims and Noticing Agent and (II) 24 Granting Related Relief 25 eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 5 of 81 3 1 2 Motion to Authorize Debtors Motion for Entry of an Order 3 Enforcing Sections 362, 365(e)(1) and 525 of the Bankruptcy 4 Code 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Transcribed by: Sharona Shapiro 21 eScribers, LLC 22 352 Seventh Avenue, Suite #604 23 New York, NY 10001 24 (973)406-2250 eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 6 of 81 4 1 2 A P P E A R A N C E S (All present by video or telephone): 3 SULLIVAN & CROMWELL LLP 4 Proposed Counsel to Debtors 5 125 Broad Street 6 New York, NY 10004 7 8 BY: JAMES L. BROMLEY, ESQ. 9 CHRISTIAN P. JENSEN, ESQ. 10 11 12 ARNOLD & PORTER KAYE SCHOLER LLP 13 Attorneys for Government of Kyrgyzstan 14 250 West 55th Street 15 New York, NY 10019 16 17 BY: BENJAMIN MINTZ, ESQ. 18 19 20 21 22 23 24 25 eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 7 of 81 5 1 2 ARNOLD & PORTER KAYE SCHOLER LLP 3 Attorneys for Government of Kyrgyzstan 4 70 West Madison Street 5 Suite 4200 6 Chicago, IL 60602 7 8 BY: SETH J. KLEINMAN, ESQ. 9 10 11 U.S. DEPARTMENT OF JUSTICE 12 Attorneys for Office of The United States Trustee 13 U.S. Federal Office Building 14 201 Varick Street, Suite 1006 15 New York, NY 10014 16 17 BY: ANDREA B. SCHWARTZ, ESQ. 18 SHARA CORNELL, ESQ. 19 20 21 ALSO PRESENT: 22 DANIEL DESJARDINS, representative of Kumtor Gold Company 23 24 25 eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 8 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 6 1 P R O C E E D I N G S 2 THE COURT: Good morning again. This is Judge Lisa 3 Beckerman. Court is now in session. 4 I think, as our Zoom rules made clear, only parties 5 who are going to actually appear and make formal appearances on 6 the record will need to have their video on. And obviously, 7 when you are speaking, you can turn on your audio. And when 8 you're not, I'd appreciate if you'd mute it. 9 I'm going to go ahead and call the case, and then I 10 will ask the attorneys for appearances. And obviously, when 11 you're also speaking again later on, I would appreciate if 12 you'd also identify yourself for the record again at that time. 13 Thank you. 14 So we have case number 21-11051, Kumtor Gold Company 15 CSJC and related debtor. May I ask for appearances, please, of 16 counsel. 17 MR. BROMLEY: Good morning, Judge Beckerman. It's Jim 18 Bromley of Sullivan & Cromwell. It's a pleasure to be here 19 before you today. I am acting as counsel for -- proposed 20 counsel for the debtors, Kumtor Gold Company and Kumtor 21 Operating Company. 22 MR. MINTZ: Good morning, Your Honor. I'm Benjamin 23 Mintz from Arnold & Porter. I'm appearing today on behalf of 24 the Kyrgyz Republic, along with Seth Kleinman from my firm. 25 And there are others who are appearing but do not have their eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 9 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 7 1 video on as well. 2 As an initial matter, I just want to note for the 3 record that my appearance and my firm's appearance here today 4 shall not constitute a waiver of any rights, privileges, or 5 immunities to which the Kyrgyz Republic is entitled under 6 international and domestic law, including pursuant to the 7 Foreign Sovereign Immunities Act of 1976. Thank you, Your 8 Honor. 9 MS. SCHWARTZ: Good morning, Your Honor, Andrea 10 Schwartz for the United States Trustee. With me is my 11 colleague, Shara Cornell. 12 THE COURT: Thank you, Ms. Schwartz. 13 Is there anyone else who would be appearing for the 14 record? 15 Okay. Mr. Bromley, I believe it is your agenda. I'm 16 guessing you probably want to do some kind of background 17 discussion first and then get into the agenda, perhaps, in 18 order. Is that what you had in mind? 19 MR. BROMLEY: Yes, it is, Your Honor. 20 THE COURT: Okay, all right. So the floor is yours 21 and Mr. -- and your colleague as well. 22 MR. BROMLEY: Thank you, Your Honor. Yes, I do have 23 one colleague on; Christian Jensen is also on. He will be 24 controlling a slide presentation which we filed with the Court 25 last night. eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 10 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 8 1 Before I get there, Your Honor, however, let me just 2 thank you, first of all, for accommodating us this morning and 3 for your staff helping us so nicely over the past few days. We 4 did file the case on an emergency basis last week, and so it's 5 been a bit of a race to get everything accomplished, and we do 6 appreciate the accommodations. 7 With that, Your Honor, I think it's worthwhile to give 8 a little bit of background. We do have our first-day 9 declaration, which we filed on Friday. We have with us, 10 present on the Zoom call as well, Daniel Desjardins, who is the 11 first-day declarant. I will go through the declaration in some 12 detail. 13 But first let me give a little bit of context and 14 background. We are here with a solvent debtor, a solvent 15 debtor case. Kumtor Gold and Kumtor Operating are two debtors 16 that operate a gold mine, a gold mine in the Kyrgyz Republic. 17 It is a unique property. It is a property that is located at 18 over 4,000 meters above sea level. That's over 13,000 feet. 19 This is one of the highest mines, if not the highest mine in 20 the world. And the operation of the mine is a logistical and 21 technical miracle in many ways. 22 This mine is the product of over thirty years of 23 careful and cooperative and safe operation that took place 24 beginning with the fall of the Soviet Union. The first 25 commercial operation began in 1997. And this company, this eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 11 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 9 1 mine has been profitable, profitable for its owners, profitable 2 for the Kyrgyz Republic, profitable for its employees and its 3 creditors, throughout that period, and remains so. 4 The only reason we're here today, Your Honor, is as a 5 result of an illegal expropriation event that took place in the 6 last couple of months, particularly in May of 2021, that took 7 place in the Kyrgyz Republic under the direction of a new 8 regime that came into play this year. 9 What we have, Your Honor, is a critical situation with 10 respect to the two debtors, and this is a situation where we 11 are obviously here in New York. We are not sitting in the 12 Kyrgyz Republic. But this is a project that has been connected 13 with New York, the State of New York and the City of New York, 14 for over three decades. All of the critical documentation 15 relating to this was negotiated here in New York. Most of the 16 critical documentation is governed by New York law, and 17 critically, as we will go through when we go into the details 18 of the declaration, the proceeds of the gold sales have always 19 run through New York City. 20 The connection of this entity to the international 21 financial system, and in particular the New York financial 22 system, is not just something that popped out of the sky a 23 couple of weeks ago in order to obtain jurisdiction. This has 24 been happening and going on for decades. The bank account that 25 has been used has been in place for over thirteen years with eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 12 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 10 1 HSBC Bank here in New York. And hundreds of millions, if not 2 billions of dollars of proceeds related to gold sales have 3 flowed through that bank account. 4 Indeed, one of the issues that we raised is that the 5 most recent twenty-nine-million-dollar payment, which was 6 supposed to be made within the last thirty days, was 7 intercepted. It has not been made. We don't know where it is. 8 We do know and have evidence that it was attempted at Kyrgyz 9 Republic, through its controlled entity, Kyrgyzstan, to 10 redirect that money to a different bank account. 11 So what we have here, Your Honor, is a longstanding 12 voluntary submission to the jurisdiction of the New York laws 13 and the New York courts by the Kyrgyz Republic by its 14 instrumentalities. And while I understand Mr. Mintz's cautions 15 with respect to his appearance, we, as the debtors, also 16 reserve all of our rights with respect to the Kyrgyz Republic, 17 and note very well his appearance here today, and believe that, 18 with respect to everything that's going on, that it's nice to 19 see him in a court where there's actually a jurist in place 20 where we can make our arguments and be heard, which is not the 21 case in the Kyrgyz Republic. 22 So with that, Your Honor, let me go through the 23 declaration. And as I said, Mr. Desjardins is here and 24 available for cross-examination. It is a detailed story, but I 25 think it's worthwhile that we bring up our slides, as well, as eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 13 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 11 1 we can go through and give the Court a little bit of context. 2 So we have two debtors, Your Honor. They are Kumtor 3 Gold Company CSJC, which is a closed joint stock company under 4 Kyrgyz law, and Kumtor Operating Company CSJ. Right now KOC -- 5 and I will use the abbreviations KGC and KOC -- KOC is 6 effectively a dormant entity. KGC operates the mine and is the 7 direct owner of the mine. 8 The fact that there are these two entities is really a 9 remnant of the documentation, and there's no real operations 10 with respect to KOC, but they are a debtor because they are 11 parties to some of the critical documentation. 12 The headquarters of the debtors is located in Bishkek, 13 which is the capital and the largest city in the Kyrgyz 14 Republic. And the Kyrgyz Republic is located in Central Asia. 15 It is bordered by China. And indeed, the mine is very close to 16 the border of China. And it is a former member of the USSR. 17 The Kirghiz Soviet Socialist Republic was part of the USSR, and 18 in 1991, in August, declared its independence. 19 The principal business of the debtors is to operate 20 the Kumtor gold mine. And as I mentioned, Your Honor, the 21 Kumtor gold mine is located at 4,000 feet above sea level. It 22 is not just in a glacier field; it is surrounded by glaciers. 23 And certain of the allegations that Kyrgyz Republic have made 24 with respect to environmental issues raised issues relating to 25 the glaciers. eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 14 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 12 1 The fact is, Your Honor, that the mine was -- the 2 glaciers were there when the mine was built. It was with the 3 knowledge that the glaciers were there that the Kyrgyz Republic 4 needed to go outside of the Kyrgyz Republic to find 5 international assistance in terms of the technological 6 expertise that would be necessary to mine the gold there. 7 And here is a picture on the slide that shows you the 8 idea of what the gold mine looks like. It is so high that many 9 of the employees must wear oxygen masks and tanks while they're 10 working there. And it has been open and operating since 1996. 11 Between 1997 and 2020 over 13.2 million ounces of gold have 12 been obtained through the Kumtor gold mine. 13 Now, each of the debtors is one-hundred percent owned 14 by Centerra Gold. Centerra Gold is a publicly-traded company 15 located in Toronto, Canada. The assets of Centerra Gold are 16 mining interests around the world, including in Turkey, Canada, 17 as well as in the Kyrgyz Republic. It is a publicly-traded 18 company, as I mentioned. The shares are listed on the Toronto 19 Stock Exchange, as well as the New York Stock Exchange. They 20 are governed by the Ontario Securities Commission as well as 21 the SEC as a foreign issuer. 22 Now, going to the gold mine itself, there are nearly 23 3,000 full-time employees located at the mine. There are 24 additional staff that are contract staff of over 1,200. So 25 over 4,000 people are employed directly by the mine, either as eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 15 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 13 1 employees of the debtors or contract staff. This does not take 2 into account, Your Honor, the large number of people who are 3 also indirectly employed, because of the existence of the mine, 4 through vendors, creditors and the like. It is a very large 5 and substantial operation. 6 Now, let me take you through the gold mining process, 7 because I think this is an important set of descriptions, 8 because some of the issues that have come up later deal with 9 how the gold is mined. This is not my first gold mining case, 10 but it's been a while since I was involved in mine. And I do 11 remember, when I first got involved, that the way that gold was 12 mined struck me as somewhat different than what you might see 13 on TV or the like. 14 What you do here is -- there's several steps that are 15 critical to this. And you can see these are all pictures at 16 the mine site. The equipment that is used is enormous. It's 17 highly complicated. And every year, when the company is 18 setting out what's going to do for the year, it puts together 19 what is known as a mine plan. That mine plan is filed with 20 several authorities within the Kyrgyz Republic. Only when 21 those authorities review and sign off on the mine plan does the 22 process begin. And it is a very detailed set of plans, in that 23 it describes, on a day-to-day basis, over the course of an 24 entire year, what is going to be mined, how much is going to be 25 mined on a particular day, and where within the mine site is eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 16 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 14 1 going to be mined. 2 The first step is drilling. Drilling is used to 3 determine the amount of gold that is in a particular section. 4 Boring rigs are used and can go down to up to twelve meters, 5 and a 1,000 holes, on average, are drilled during any 6 particular shift. Once these holes are drilled, explosives 7 are put within the holes, and blasting is used to break up the 8 large sheets of rock. And geologists on the site decide which 9 of these areas should be blasted and which should not. 10 Now, once the blasting takes place, excavators, large 11 dump trucks and large front-end loaders, come and put the 12 blasted rock into the trucks. Waste rock is taken away to 13 designated waste rock dump locations and the gold ore is taken 14 to a mill. 15 And then what happens is the gold is then extracted 16 from the rock. The gold extraction process is complicated. 17 And the first is that it's delivered to crush -- the gold is 18 mixed in with rock. The rock is crushed, and then the gold is 19 extracted from the crushed rock. So as you can see here, the 20 crushers are so sensitive that they grind the ore down to one- 21 fifth of the diameter of a human hair. This is all happening 22 out at the mine site. 23 Then at the factory, a weak cyanide solution and 24 activated carbon are added to the powder. And this creates a 25 mixed slurry. The slurry passes through tanks. The gold is eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 17 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 15 1 dissolved. The gold then binds with the carbon in the 2 solution. The solution is then separated -- the carbon is then 3 separated from the solution, and the gold is stripped from the 4 carbon using various chemicals. 5 Then through this process of electrowinning, electric 6 current passes through the gold solution, causing the gold to 7 bind with steel wool located in the chamber, and once the gold 8 binds, it's melted into what are known as dore bars. And then 9 those dore bars are sold to the gold refinery. So the output 10 at the mine, effectively, is this this product called dore, 11 gold dore. And that's an unrefined gold product with a purity 12 that varies sometimes between seventy and eighty percent pure 13 gold. 14 Now, that's how the process works. The documentation 15 relating to the project is very carefully structured about how 16 that gold dore, which is the only output of the mine, is then 17 sold into the market. So from the very beginning, the gold 18 dore produced at the mine is purchased by a company, a company 19 that is owned and controlled and is the alter ego the Kyrgyz 20 Republic. That entity is called Kyrgyzaltyn JSC. We'll just 21 refer to it as Kyrgyzaltyn. It's a name you'll hear a lot, 22 Your Honor, and we'll come back to it. This is a gold refining 23 monopoly. It's wholly owned and controlled by the Kyrgyz 24 Republic. 25 The contracts require that Kyrgyzaltyn then sells the eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 18 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 16 1 refined gold through StoneX Financial. StoneX is a recognized 2 dealer in minerals and metals. It is an international company 3 that operates around the world. It is the sole and exclusive 4 gold offtaker of Kyrgyzaltyn. So in theory, what we're talking 5 about is the gold dore is created at the mine, the dore is 6 taken by Kyrgyzaltyn and refined into pure gold. Kyrgyzaltyn 7 then sells that, through StoneX, into the world markets. 8 And over the course of the relationship of the 9 parties, this has been the subject of what is known as offtake 10 agreement, the gold being the offtake. Right now we're 11 operating under, or had been until the expropriation event, 12 operating under a restated gold and silver sale agreement. 13 That's the offtake agreement dated June 9, 2009. And the 14 parties to that are the debtors as well as Kyrgyzaltyn and the 15 Kyrgyz government. 16 Again, the sale process requires that all proceeds 17 from the gold sales, every single dollar that are payable to 18 the debtor, KGC, must be deposited in KGC's New York bank 19 account. And that has taken place throughout the process, all 20 through these years, until last month. 21 This slide, Your Honor, is just a description of 22 exactly what I've described, the Kumtor mine, the gold dore, 23 and the money going through into the New York bank account. 24 Now, Your Honor, the business environment in the 25 Kyrgyz Republic has been uneven, to put it politely, over the eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 19 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 17 1 course of the thirty-year relationship that has been in place 2 with respect to the Kumtor mine. There have, undoubtedly, been 3 ups and downs with respect to the Kyrgyz government. There 4 have been several coups. Several presidents have left the 5 country involuntarily, and there have been at least two 6 disruptions which have been characterized within the country as 7 revolutions. This unsettled nature has continued and 8 accelerated in the past year. 9 In October of 2020, things began to move a little more 10 quickly. Sadyr Japarov, who is now the president of the 11 Republic, was in jail. He was in jail for attempted kidnapping 12 and hostage taking that had taken place in connection with 13 protests relating to the Kumtor mine. 14 Mr. Japarov had made it very clear that his view was 15 that the Kumtor mine should be nationalized, it should be 16 expropriated, it should be the sole asset of the Kyrgyz 17 Republic. And his political elections and efforts were solely 18 focused on that. 19 He was, under a prior government, arrested, tried, and 20 convicted, and jailed. Very abruptly, in October of 2020, his 21 conviction was overturned, and within a couple of weeks, he was 22 the interim president of the Kyrgyz Republic. 23 An election was scheduled for January. That election 24 took place. He was elected. Since his election, he has 25 significantly expanded his presidential powers. And over the eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 20 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 18 1 past several weeks, in particular, there have been widespread 2 arrests of former Kyrgyz Republic officials relating to their 3 dealings at the coal mine -- I mean, the gold mine, sorry, Your 4 Honor. 5 The U.S. State Department has made -- as it does, it 6 takes an annual review of business climates around the world. 7 And the quote on the next page, Your Honor, is from the U.S. 8 Department of State 2020 Investment Climate Statement that 9 corruption continues to be a major constraint to business 10 development, particularly in the state, customs, and border 11 agencies. 12 It also notes that -- this is the U.S. State 13 Department -- that the Kyrgyz judicial system is not fully 14 independent and susceptible to external political influence. 15 It ends with saying that the legal and regulatory framework, 16 while set up to be in accordance with international norms, 17 suffers from poor implementation and weak enforcement. It is 18 an endemic problem. There are similar statements out there 19 from other international oversight, including the CIA. 20 So Your Honor, I'll turn now to some things that are 21 also contained within Mr. Desjardins' declaration. And I'll 22 note that Mr. Desjardins is present and able to testify, if so 23 called. And we will offer his declaration into evidence. I 24 think maybe at this point we might as well offer it in, with 25 parties having the right to cross-examine. eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 21 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 19 1 THE COURT: Okay, Mr. Bromley, just a second. 2 So does anyone have any objection to Mr. Desjardins' 3 declaration being admitted into evidence? 4 MR. MINTZ: Your Honor, Benjamin Mintz. I do have an 5 objection, Your Honor, and at an appropriate time, I want to be 6 able to present the Court with, kind of, broad concerns about 7 this case. 8 But briefly, with respect to the declaration and its 9 proposed admission, we do not believe Mr. Desjardins is 10 authorized as a representative on behalf of the debtor. As Mr. 11 Bromley has acknowledged, there was an expropriation event, 12 that he characterizes as illegal, and we can debate the 13 characterization of it, but I think both parties agree that 14 actions have been taken in the Kyrgyz Republic, through its 15 legislature, that has altered the control and the responsible 16 parties for the debtor. 17 And Mr. Desjardins is no longer an authorized 18 representative who can speak on behalf of the debtor. And 19 accordingly, we would submit, it's not appropriate to accept 20 the declaration that is not on behalf of an authorized 21 representative. 22 THE COURT: Mr. Bromley, my understanding is that Mr. 23 Desjardins is a director of the debtor? 24 MR. BROMLEY: That's correct, Your Honor. 25 THE COURT: Okay, Mr. Mintz, I'm going to go ahead and eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 22 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 20 1 admit the declaration into evidence. I do believe he's an 2 authorized representative. He may not be the person running 3 the mine at the moment. I understand that there's been a 4 temporary manager appointed. But for purposes of being able to 5 represent the corporation in court, as you know, it's not 6 uncommon for anybody who's actually an authorized officer or a 7 director, under applicable law, to be able to do that. 8 I have no evidence that, through the proper corporate 9 process, Mr. Desjardins has been eliminated as a director. And 10 so my understanding is he is currently a director. So I am 11 going to go ahead and admit his declaration into evidence. 12 Obviously, you have the right to cross-examine him. 13 (Declaration of Mr. Desjardins was hereby received into 14 evidence as of this date.) 15 MR. BROMLEY: Well, thank you, Your Honor. I'll 16 proceed then on the assumption that if Mr. Mintz has any 17 questions for Mr. Desjardins we can deal with that at the end 18 of the presentation. We will, of course, reserve our right for 19 redirect. 20 So Your Honor, as set forth in the declaration, the 21 historical relationship between the debtors and the Kyrgyz 22 government dates back to 1992. Centerra's predecessor was a 23 company known as Cameco, a company that still exists. And just 24 as a frame of reference, Centerra was eventually spun out of 25 Cameco, in part, to provide the Kyrgyz government and eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 23 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 21 1 Kyrgyzaltyn, its controlled entity, with a way to monetize its 2 interest in the mine. 3 But back in 1992, when the original concession was 4 being marketed by the Kyrgyz government, the corporate entity 5 in Canada that was in control of that exercise was Cameco. 6 Centerra did not exist at that point but, as I said, was 7 eventually spun out. 8 The award of the concession was in 1992, and it was a 9 right to evaluate and develop the Kumtor mine. As noted, the 10 mine was in a very challenging physical location and presented 11 very substantial technical issues in terms of being able to 12 develop the mine into a commercial operation. 13 That operation reached commercial production in 1996, 14 and then into 1997 really, for the first time, produced 15 substantial gold. The original concession agreements and 16 related documentation remained in place from 1992 until around 17 2002, and this is when the first restructuring took place. 18 Cameco, at the time, and Kyrgyzaltyn entered into a 19 series of agreements. And what, at that time, had happened -- 20 the structure at that time had the Kyrgyz government, through 21 Kyrgyzaltyn, owning a direct interest in KGC. So they owned a 22 direct interest in the mine-owning entity. 23 In 2002, there was a restructuring, first 24 restructuring, and this was effectively to allow the Kyrgyz 25 government, through Kyrgyzaltyn, to elevate its ownership eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 24 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 22 1 interest in the mine from a relatively illiquid ownership 2 interest, in an entity that was controlled by a publicly-traded 3 company, in that case, Cameco, into a public -- interest in a 4 publicly-traded company that, in turn, owned the mine. 5 So it was in 2002 that you had the spinout 6 transaction. So instead of owning a portion of the mine, the 7 Kyrgyz government, through Kyrgyzaltyn, owned thirty-three-and- 8 a-third percent of Centerra. Centerra was created as a new 9 entity, at the time, and then spun out to the shareholders of 10 Cameco as well as to Kyrgyzaltyn. 11 So that was a watershed event, a clearly commercial 12 event, in which the Kyrgyz government, through Kyrgyzaltyn, was 13 able to sell substantial amounts of equity that they held in 14 the mine, in the public market, and the equity that they held 15 in the mine, having been transferred into the equity of 16 Centerra, allowed them to own -- not only liquidate that 17 ownership interest, to a certain extent, but as for the 18 remaining ownership interest, hold a publicly-traded security 19 rather than the ownership interest in the mine itself. 20 So that was the first restructuring. The second 21 restructuring took place in 2007, but actually was never 22 consummated. In 2007, the Kyrgyz parliament began to consider 23 a series of legislative changes, looking to change the 24 fundamental nature of the Kumtor mine concession. These were 25 things that were being considered that Centerra did not believe eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 25 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 23 1 were appropriate, under the governing documentation, and there 2 was a fair amount of back and forth. 3 Eventually, the Kyrgyz government, at the time, and 4 Centerra did agree to a set of restructuring constructs. That 5 was then presented to the Kyrgyz parliament, which did not act 6 on it. So the second restructuring, in 2007, did not actually 7 come to fruition. So the second restructuring is more of an 8 aborted restructuring as well. 9 The third restructuring in 2009 actually did take 10 place. There continued, through that period, through 2007, 11 '08, and '09, discussions between the Republic, Kyrgyzaltyn, 12 its controlled entity, and Cameco, which still owned a 13 substantial amount of Centerra. And this resulted in 14 substantial documentation and the third restructuring. 15 There was something known as the restated investment 16 agreement, that was entered into in June 6, 2009, as well as an 17 agreement known as the "New Terms for the Kumtor Project" that 18 was dated on April 24, 2009. While the documents are very 19 long, the major points were that the mine concession area was 20 increased. The tax regime within the Kyrgyz Republic, 21 applicable to the Kumtor mine, was simplified and, in 22 particular, with respect to intercompany transactions. 23 And most importantly, Kyrgyz laws applicable to the 24 mine were stabilized, was the term of art that was used, which 25 meant that the laws relating to the Kumtor mine that were eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 26 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 24 1 embodied within these documents became the governing law. And 2 there were representations made, consistently throughout the 3 documents on which the parties relied, that the laws within the 4 Kyrgyz Republic would not be changed in any way unless the 5 underlying documents themselves were changed. 6 And most importantly, these agreements are governed by 7 New York law. These agreements were negotiated in the context 8 of enforcement within the State of New York. There is an 9 arbitration provision for international arbitration, but that 10 arbitration would be done in the context of the laws of the 11 State of New York. 12 And now we're coming to the point where there are 13 certain of the documentation, that's still in effect, as to 14 which substantial violations have occurred. The fourth 15 restructuring is -- so the third restructuring was 2009, so a 16 period of seven or eight years go by, and then there's a fourth 17 restructuring in connection with further regime change within 18 the Kyrgyz Republic. 19 This got a little dicey. In 2014, the Kyrgyz Republic 20 issued what is known as an Interpol Red Notice. That's 21 effectively an international arrest warrant. And that Red 22 Notice was issued calling for the arrest of Centerra's former 23 chief executive officer alleging "involvement in corruption". 24 And the corruption was the negotiation of the 2009 documents, 25 so the ones that constituted the third restructuring -- we're eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 27 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 25 1 now seven or eight years later -- being alleged by the then in- 2 control government in the Kyrgyz Republic as having been 3 corrupt. And therefore they were arguing that the people at 4 Centerra, who were involved in that, including those who were 5 running the mine, the KGC managers, were being investigated. 6 It got so bad that this Red Notice was issued, and the 7 former CEO was arrested while on a holiday trip in Bulgaria, 8 and was detained in Bulgaria for several months before the 9 Bulgarian government decided that the Kyrgyz Republic did not 10 have any basis for extradition. 11 But obviously, what has happened that changed the 12 dynamic severely was, also in 2014, that the government in the 13 Kyrgyz Republic filed criminal cases against several KGC 14 managers and prevented managers from leaving the Kyrgyz 15 Republic. 16 This continued over a course of several years, and in 17 2016, Kyrgyz authorities filed claims against the debtors, KGC 18 and KOC, in Kyrgyz courts, alleging environmental damages. 19 That's important to note because the current pretext relates to 20 environmental damages, the same environmental damages. 21 Now, to preview those same environmental damages, this 22 fourth restructuring led to a complete and total release of all 23 of those claims. They have been resurrected, just in the past 24 couple of months, notwithstanding the implementation of what 25 did become the fourth restructuring. eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 28 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 26 1 So if we could just go back one slide. So what we -- 2 yes, that one. So in May 2016, a Kyrgyz court issued orders 3 against KGC and KOC, the two debtors, purporting to award over 4 300 million dollars to the Kyrgyz government. And the parties 5 sat down and entered into a comprehensive settlement agreement. 6 The settlement agreement entered into in September of 7 2017 is known as the "Strategic Agreement on Environmental 8 Protection and Investment Promotion". It was entered into on 9 September 11th 2017. That agreement provides full releases and 10 resolution of all then existing arbitral and environmental 11 claims, all disputes, proceedings, court orders. It is a 12 blanket U.S.-style, full and complete release. It is also a 13 contract that is, again, governed by New York law. 14 So fast forward again, Your Honor. We thought 15 everything had been settled. Again, this is a mine that, 16 throughout this period of time, had operated in complete 17 compliance with all local and international norms. It has been 18 a profitable enterprise, both for its shareholders, which oddly 19 enough, also include the Kyrgyz government, as well as in terms 20 of paying its taxes, paying its employees, providing direct and 21 indirect employment for thousands of people in the Kyrgyz 22 Republic. Never once was there any issue in terms of this mine 23 operation ever being insolvent or unable to satisfy any of its 24 obligations, whether environmental, legal, or otherwise. 25 What happened in the past few months that precipitated eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 29 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 27 1 this Chapter 11 filing? Well, as I noted, when President 2 Japarov was elected, in January of 2021, one of the first 3 things that happened was, in February 2021, the parliament 4 formed a commission, a new commission to study the 5 "effectiveness of the Kumtor mine activities". 6 On April 30th, this commission introduced legislation 7 that would allow the government to take control of the mine. 8 The claim that precipitated this was that KGC sought to shut 9 down safety monitoring and operational systems. This is 10 absolutely incorrect. The debtors did not do anything to 11 disable any systems. The mine operated at all times, and as 12 far as we know, continues to operate without incident. 13 This law was passed on May 6th, 2021. This is an 14 important date because, as the next slide will indicate, that 15 is the day before the entry of a three-billion-dollar judgment 16 against the debtors. 17 Now, in March of 2021, a lawsuit was filed, 18 effectively, on behalf of the Kyrgyz government. There were 19 four individuals who filed that lawsuit, and the Kyrgyz 20 government knew about it and was comfortable with it. They 21 sought financial sanctions with respect to environmental 22 damage. They did not specify a dollar amount at that point. 23 All the claims that they were pursuing under that lawsuit had 24 been released under the 2017 agreement. 25 On May 3rd of 2021, that complaint was amended. They eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 30 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 28 1 finally said how much the claims were. They claimed over three 2 billion dollars. On May 7th, four days later, the Kyrgyz court 3 ruled for the plaintiffs and granted a judgment in the full 4 amount of the claim, a claim that had only been made four days 5 earlier. KGC, the debtor, the operator of the mine, was denied 6 the ability to present any defense before the Kyrgyz court. 7 At the same time, remember, a day earlier, May 6th, 8 the legislature had passed a law that effectively allowed the 9 seizure and taking of control of the mine. 10 Kyrgyz state tax service, also at the same time, 11 decided to reassert a billion dollars' worth of claims that had 12 been previously withdrawn. As a result of all this, KGC, KOC, 13 and Centerra all filed for arbitration, as they have a right to 14 under the operative documents. That filing took place on May 15 14th of 2021. 16 On May 15th, the government seized computers of the 17 KGC senior management and effectively took control of the mine. 18 And then they appointed Tengiz Bolturuk, whose photograph is 19 here on the slide. He had been a director of Centerra, 20 appointed to the board as a representative of Kyrgyzaltyn. He 21 resigned from the board. He is now the temporary manager 22 relating to the mine. 23 Centerra immediately took legal action in Ontario -- 24 again, Centerra is a Canadian company, organized under the laws 25 of Canada, traded on the New York and Toronto stock eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 31 of 81 KUMTOR GOLD COMPANY CSJC, KYRGYZ REPUBLIC 29 1 exchanges -- and sought a preliminary injunction in the Ontario 2 Superior Court of Justice against Mr. Bolturuk based on 3 breaches of fiduciary duty and breaches of confidentiality that 4 he owed to Centerra. It is the view of the debtors, as well as 5 Centerra, that Mr. Bolturuk used his information, gained as a 6 result of being a member of the Board of Centerra, to help the 7 Kyrgyz government and Kyrgyzaltyn take control of the mine. 8 The Ontario court has issued a preliminary injunction. 9 Mr. Bolturuk is now barred from having any involvement, 10 directly or indirectly, with the management or control of the 11 Kumtor mine, pending a further order of the court. A hearing 12 was held -- that was effectively a TRO. A hearing was held 13 last Friday on June 4th. The court decided to keep the 14 preliminary injunction in place pending any briefing on the 15 issues. Based on the best information the debtors have, Mr. 16 Bolturuk continues to act as the temporary manager, despite the 17 Canadian court's preliminary injunction. 18 Now, Your Honor, earlier in the presentation, I 19 mentioned to you that there is -- I mentioned, Your Honor, that 20 Kyrgyzaltyn had attempted to defraud KGC with respect to 21 twenty-nine million dollars in gold sale proceeds. So as I 22 mentioned earlier, all if the documentation clearly provides 23 that, as the gold dore is purchased, it is then refined, it is 24 sold to StoneX Financial as the sole gold offtaker. And 25 payments are made, roughly once or twice a month, into the New eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 32 of 81 KUMTOR GOLD COMPANY CSJC, et al. 30 1 York bank account. 2 On May 7th of 2021, the debtors and Kyrgyzaltyn, as 3 they do every month, signed an order that would make it clear 4 that twenty-nine million dollars was to be delivered to the New 5 York bank account as a result of gold that was to be delivered 6 by Kyrgyzaltyn. 7 The debtors discovered that on May 12th Kyrgyzaltyn 8 offered a forged payment order and attempted to direct StoneX 9 to deposit proceeds of the sale into a different bank account 10 without the debtors' authorization. At this point, Your Honor, 11 we are not entirely clear as to whether or not that payment was 12 made to a different bank account. But we will be looking for 13 your assistance in tracking down the information to make sure 14 we understand what happened with that twenty-nine million 15 dollars. 16 If we could just go to the next slide. Oh, that is 17 the last slide. Sorry. So there we are, Your Honor. That 18 kind of brings us up to where we are today. As a result of all 19 of these issues that we have described, the debtors, together 20 with their shareholder, have been aggressively evaluating their 21 options for dealing with this illegal expropriation event. 22 And as a result of the exercise here, what we have is 23 a multi-front approach. Right now, there is litigation that's 24 been commenced in Canada against Mr. Bolturuk, and that 25 litigation is proceeding. There's an arbitration that has been eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 33 of 81 KUMTOR GOLD COMPANY CSJC, et al. 31 1 commenced pursuant to the terms of the governing documentation. 2 That arbitration will take place in Stockholm pursuant to 3 (indiscernible) rules. That arbitration, for the time being, 4 is to deal with the issues that have been alleged with respect 5 to the environmental claims, the three-billion-dollar claim 6 that the Kyrgyz court has purported to enter against the 7 debtors. 8 To date, there's been no attempt to do anything, as 9 far as we know, in Kyrgyz Republic, with respect to the 10 debtors, other than to operate the mine in accordance with what 11 we believe to be the existing mine plan. The debtors, though, 12 are very concerned that Mr. Bolturuk is not going to operate 13 the mine in a manner that is consistent with the prior 14 operating guidelines and that severe damage could take place to 15 the asset. 16 We also know that international creditors that have 17 been operating for years in good faith, in dealing with the 18 leadership of the mine, have not been paid. We are not clear 19 at the moment as to whether or not individuals on site who work 20 for the mine are being paid. We have some information that 21 there have been terminations, but we're not sure of whom, and 22 how, and how deep those terminations have taken place. 23 So Your Honor, we're here. We have two debtors who 24 have been active participants in the New York financial system, 25 accessing New York law, New York bank accounts for decades. eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 34 of 81 KUMTOR GOLD COMPANY CSJC, et al. 32 1 And the Kyrgyz Republic, through its alter ego, Kyrgyzaltyn, 2 has appointed the temporary owner manager of the mine. 3 It is our goal, in commencing these Chapter 11 4 proceedings, to use the full power of Chapter 11 to make sure 5 that the expropriation event cannot be implemented on a 6 worldwide basis. 7 So I'll stop there, Your Honor and see if you have any 8 questions before I go into any of the specific relief that 9 we're looking for today. 10 THE COURT: I do have some questions. So thank you, 11 Mr. Bromley. I appreciate that presentation. And obviously, I 12 had read Mr. Desjardins' declaration and all the papers that 13 you submitted. 14 So I guess my question for you is, in the temporary 15 manager role, do you think that this constitutes a custodian 16 for purposes of 543? You know, is that where this is sort of 17 headed? I was trying to understand myself where this might go 18 because, while we certainly have the power of the U.S. courts 19 and worldwide automatic stay, and lots of things that we can 20 do, as you've pointed out, there's a lot of difficulty with 21 enforcing things outside of certain jurisdictions, even with 22 our court. 23 Certainly, if someone is before me, like I'm guessing 24 StoneX, for example, might have operations in New York, there 25 might be an ability for me to get records for you and do eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 35 of 81 KUMTOR GOLD COMPANY CSJC, et al. 33 1 certain things. But I'm just trying to understand what are you 2 thinking that you're going to be bringing before me? Obviously 3 you noted a few things that also concern me, which is, normally 4 when we have a debtor, we obviously have issues about are there 5 payments of pre-petition debts? And you obviously don't know 6 if there is payments of pre-petition debts, if there is not 7 payments of pre-petition debts, what people are owed. So that 8 will also make it, as you would understand, more difficult to 9 handle some things here. 10 I know you have not filed those types of motions. I 11 understand maybe why, because you don't have the information, 12 it sounds like, to know whether you need that relief, but it 13 does cause some problems potentially. 14 So I guess I wanted to understand what your thinking 15 was here. There's obviously things that will be easier to do 16 here, and things that I can do here, but things that might not 17 be -- other places might not afford the same level of respect 18 for the order. 19 MR. BROMLEY: Very much understand that, Your Honor, 20 and if you saw the list of things that we've been considering, 21 you'd be happy that we haven't brought them all before you yet. 22 We're trying to -- 23 THE COURT: Thank you. I've spent a lot of time 24 thinking about it myself, Mr. Bromley, and as I guess you can 25 imagine, with my years of experience before I took the bench, eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 36 of 81 KUMTOR GOLD COMPANY CSJC, et al. 34 1 in doing things like you do and Mr. Mintz does, I have had a 2 lot of thoughts. 3 MR. BROMLEY: And so look, we're trying to be prudent 4 about that. We're not trying -- so what we did was -- our view 5 has been let's take this step by step. We've filed the cases. 6 We wanted to get the protection of the automatic stay. We have 7 carefully thought about what we need, from a first-day 8 perspective, and we've looked for very minimal relief at this 9 point. One of the things I'd like to keep on our calendar for 10 today's hearing is to talk about our second-day hearing and 11 what we might want to do in that context. 12 But you raise an interesting question with respect to 13 543 and the custodial relationship. At some level, yes, I 14 think that the temporary manager is a custodian and therefore 15 is completely responsible for anything that he does incorrectly 16 to damage the asset. 17 But we have not yet made any decision whether to seek 18 any relief with respect to 543. It's something that we are 19 considering. I'm glad the Kyrgyz Republic has appeared, 20 through Arnold & Porter, and I would simply advise it is not 21 easy to run that gold mine and that anything that is done in a 22 manner that is inconsistent with the operational norms, that 23 damages that gold mine, are obviously things that the Kyrgyz 24 Republic is going to have to be responsible for. 25 I think that Mr. Mintz's comment about the Foreign eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 37 of 81 KUMTOR GOLD COMPANY CSJC, et al. 35 1 Sovereign Immunity Act is a classic knee-jerk reaction to it: 2 Of course, I'm sitting here representing a sovereign; I have 3 foreign sovereign immunity. Well, one of the major points of 4 foreign sovereign immunity is that you're not engaging in a 5 commercial activity. And when you have taken action to take a 6 thirty-year-old international commercial activity and 7 nationalize it, I think that the idea that you are acting in a 8 sovereign capacity, and entitled to foreign sovereign immunity 9 as a result of that action, is frankly laughable. 10 And so the idea that we're going to have to deal with 11 that at some point, I think, is clear. Mr. Mintz has raised 12 it; we will deal with it. And the fact that Kyrgyzaltyn is an 13 instrumentality of the Kyrgyz Republic, its alter ego, does not 14 provide any kind of barrier to making those sorts of arguments. 15 And the fact is, is that the way expropriation works 16 is if -- it's not all that different then eminent domain. If I 17 own a piece of property next to what became the Mario Cuomo 18 Bridge, and the State of New York says they need to build the 19 bridge abutment on my property, they have the right to come and 20 take that property from me, but they have to pay for it. 21 If what the Kyrgyz government is saying is we want 22 this gold mine, then one of the things Your Honor might need to 23 do is to figure out how much they need to pay for it. If they 24 want it, and they want to keep it, then that's something 25 completely different. But what you cannot do is create out of eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 38 of 81 KUMTOR GOLD COMPANY CSJC, et al. 36 1 whole cloth or resurrect released claims, make an argument that 2 those claims, in your own court, are in amounts that you might 3 believe are in excess of the value of the property, and then 4 feel that you don't have any obligation with respect to 5 payments on an expropriation basis. 6 So I think, Your Honor, we're still working through 7 these things, the very basic things. I can say we're very 8 concerned about the twenty-nine million dollars that went 9 missing last month. It went missing, as far as we can tell, as 10 a result of actions in the Southern District of New York, and 11 we believe that you are well positioned to help us figure out 12 what happened there. 13 And if those amounts went missing because of actions 14 that were either directed by or approved by the Kyrgyz 15 Republic, whether through its alter ego, Kyrgyzaltyn, or on its 16 own, then we believe that we have the right to get that 17 information. That information is located here. StoneX, I know 18 is located here in New York as well. 19 And so this isn't the situation where we need relief 20 to operate the mine tomorrow. They've taken the mine. What we 21 need is relief that will help us find out what happened and to 22 prosecute our claims against the Kyrgyz Republic and 23 Kyrgyzaltyn to make sure that -- if you're thinking about the 24 assets that are located here in the United States, the assets 25 located here in the United States that are present and most eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 39 of 81 KUMTOR GOLD COMPANY CSJC, et al. 37 1 actionable are the causes of action and the investigation that 2 would need to take place. 3 THE COURT: Okay. Well, that's helpful. 4 Okay. I guess, Mr. Mintz, I don't know when you would 5 like to have the opportunity to speak, if now is it, or you'd 6 like to wait till we start going through first-day motions, 7 because I think that would be the next thing, if you have 8 questions, you want to cross-examine Mr. Desjardins about. So 9 I'm not sure how you'd like to proceed here. 10 MR. MINTZ: I would like the opportunity now to 11 address the Court with some, kind of, broad concerns about the 12 case and I think are important to lay that groundwork before 13 Your Honor before we turn to the motions that are the subject 14 of today's hearing. 15 THE COURT: Okay. Ms. Schwartz -- 16 MS. SCHWARTZ: Your Honor? 17 THE COURT: -- I see you are raising your hand. 18 MS. SCHWARTZ: Thank you so much, Your Honor. I just 19 wanted to let the Court know that I have another commitment at 20 11 o'clock. However, Ms. Cornell is on the call, and I have 21 gone through all the first-day motions with debtors' counsel. 22 There's only one outstanding modification that debtors' counsel 23 will make with respect to the Stretto application so that it 24 conforms with the protocol. 25 Ms. Cornell will be able to address any questions from eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 40 of 81 KUMTOR GOLD COMPANY CSJC, et al. 38 1 the Court. I just wanted to jump in quickly, before Mr. Mintz 2 made his comments and so forth, just so -- I didn't anticipate 3 that the presentation would go for an hour before we got to it. 4 So I just wanted to let Your Honor know that, number 5 one, debtors' counsel has been completely cooperative with the 6 U.S. trustee, got us everything. We have spent several hours 7 discussing what Mr. Bromley has now discussed with the Court. 8 So I'm up on the gold dore and all of those things. And I just 9 wanted to respectfully request that I be excused at 11 o'clock. 10 And Ms. Cornell is on the phone for the U.S. trustee. 11 THE COURT: Yes, thanks. Thank you very much, Mr. 12 Schwartz. Of course, you are excused. And I appreciate the 13 fact that you and your office have been interfacing with Mr. 14 Bromley. It doesn't surprise me. Thank you. 15 Okay, Mr. Mintz, I think your turn to talk. 16 MR. MINTZ: Thank you, Your Honor, and I appreciate 17 the opportunity to address the Court. I think, following on 18 some of the questions Your Honor raised, I want to bring to 19 Your Honor's attention our view that there are threshold 20 questions regarding the debtors' ability to proceed with the 21 Chapter 11 cases. I alluded to this somewhat when I objected 22 to the admission of the Desjardins declaration. And we will 23 bring these issues in a formal motion to the Court. But they 24 are clearly important and central to how this case moves 25 forward in the near term and beyond that. And I think it's eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 41 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 39 1 important to run through them for the Court today just so the 2 Court understands what issues we are going to be raising with 3 Your Honor in the very near future. 4 But before I touch on that, just a couple of 5 observations on some comments that Mr. Bromley made. The 6 debtors characterize what has happened as an illegal 7 expropriation event. That's verbiage that they have spun for 8 this Court. But there's no question that the parliament of 9 Kyrgyzstan passed the law, the law was implemented in 10 accordance with Kyrgyz law, and that the entities that are 11 before Your Honor, the two debtor entities, are both Kyrgyz 12 incorporated entities. Those are entities that are subject to 13 Kyrgyz law under the internal affairs doctrine. Their 14 governance is determined by Kyrgyz law and laws that have been 15 passed and in Kyrgyzstan, and those are what govern and 16 determine the governance and rights of the debtors as things 17 stand today. 18 The external manager has been delegated with all 19 authority for the company. It's not just control of the mine. 20 His role has effectively displaced the board and management. 21 And it's for that reason that I did object to the admission of 22 Mr. Desjardins' declaration, because he is not authorized to 23 act on behalf of the company, notwithstanding his title as 24 director. Under Kyrgyz law, the external manager has that 25 authority. And it's for that reason that that I submitted to eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 42 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 40 1 the Court that it wasn't appropriate for Mr. Desjardins to 2 speak on behalf of the company. 3 As is acknowledged in the Desjardins declaration, and 4 as I mentioned, the debtors are Kyrgyz companies. They're 5 organized under Kyrgyz law, and virtually all of their assets 6 are located in Kyrgyzstan. The connections to the U.S. are 7 slim at best. 8 The bank account that has been referenced, we don't 9 know how much cash is currently in that account. We don't 10 believe it's very material. And while there is a choice of New 11 York law in certain of the contracts, there is no choice of a 12 New York forum. And I think that was implied by Mr. Bromley. 13 But that is certainly not the case. The forum selection is the 14 arbitration proceeding that's been initiated that is going to 15 go forward in Stockholm, Sweden. 16 The ties to the U.S. are -- I mean, they can't even be 17 identified because there are none. If you look at the list of 18 top thirty creditors, none of them are U.S. creditors. The 19 entire operations and business are obviously located in 20 Kyrgyzstan, and trying to argue that this Court and that the 21 U.S. court is an appropriate place to determine the affairs of 22 these debtors is a stretch, I think, under any reasonable sense 23 of how we think about U.S. bankruptcy law. 24 Of critical importance today, though, and to this case 25 going forward, is the purported representatives of the debtors eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 43 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 41 1 that are here, as I mentioned, Mr. Desjardins, Sullivan & 2 Cromwell, they don't have the authority to represent or act on 3 behalf of the debtors. And that defeats the Court's ability to 4 move forward. And the law that I've referred to plainly 5 divests both the shareholders and the existing board from 6 exercising rights of management over the company. And neither 7 the petitions nor any of the filings made in this case were 8 authorized by the currently authorized representatives of the 9 debtor. So any requests for relief today are premature until 10 the Court resolves certain threshold questions. 11 And I think those questions I would outline as 12 follows: 1, where the petitions validly authorized under the 13 company's charters and Kyrgyz law for the Court to have any 14 ability to move forward, that determination needs to be made. 15 Are the purported representatives of the debtors, including Mr. 16 Desjardins and Sullivan & Cromwell, authorized to act on the 17 debtor's behalf in these cases. As I've alluded to, I think 18 the answer to that is no. 19 Beyond that, those threshold governance questions is, 20 should the Court hear these cases, should The Court abstain 21 from hearing these cases as a matter of international comity 22 and the debtors' inability, as a practical matter, to affect 23 and implement a plan of reorganization. As Your Honor has 24 alluded to, there are questions about what Your Honor will be 25 able to do in terms of ultimate relief. And that has to be a eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 44 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 42 1 consideration in terms of thinking about the purposes and 2 practicalities of a case like this. 3 And then the fourth question I would ask and pose, is 4 this a legitimate restructuring matter or is this really a 5 two-party dispute that can be addressed as the parties have 6 agreed in the arbitration forum that that they've agreed upon 7 pursuant to their contracts. What is the purpose of this 8 bankruptcy case from a restructuring perspective? I think 9 that's been lost in the discussion for today. 10 So let me just briefly run through these issues just 11 to lay them out for Your Honor. And as I said, we do intend to 12 bring these as the subject of a formal motion. As 13 I mentioned, as a result of the Kyrgyz law, the 14 shareholders in the former board and management ceased to have 15 authority to act on behalf of the debtors. And Mr. Bolturuk, 16 the external manager, now has that authority. That renders the 17 resolutions that were attached to the petition ultra vires as a 18 matter of Kyrgyz law. And it means, as I've mentioned a few 19 times, that the representatives who are here today on behalf of 20 the debtors do not have the authority to act on their behalf. 21 Importantly, the resolutions -- and the 22 shareholders -- the shareholders who authorize the bankruptcy 23 filing did not comply with the requirements of the company's 24 charters. And I want to highlight a few things because I think 25 these are important. eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 45 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 43 1 Among other things, certain board actions were 2 required to be undertaken before that petition could be 3 authorized, and that did not occur. And I don't think there's 4 any dispute that it did not occur. And then second, I would 5 highlight -- and I think this is an important provision to 6 focus on, the charters of these companies, of the debtor 7 companies, specifically provide that the reorganization and 8 liquidation of the company is to be done in accordance with 9 Kyrgyz law. So there's an express provision in each of the 10 debtors charters that says that the reorganization and 11 liquidation should be done in accordance with Kyrgyz law. 12 Obviously, this Court is not in a position to do that in a 13 reorganization. 14 To the extent that these companies are going to 15 proceed in that manner clearly have to be done under the terms 16 of the charter in Kyrgyzstan. So for that reason, that's a 17 second reason that would warrant dismissal because of the lack 18 of the corporate governance threshold determination that this 19 Court needs to make, that these petitions were properly 20 authorized in accordance with the company's charters in Kyrgyz 21 law. And I think for the reasons I've said, we will be able to 22 show that that hasn't occurred. 23 As I mentioned, principles of international comity are 24 going to warrant the abstention by this Court from hearing this 25 case. And as I -- as everybody acknowledges substantially, all eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 46 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 44 1 of the assets, if not virtually all of them, are in Kyrgyzstan. 2 We've heard reference to this bank account. Not clear how much 3 money is in that bank account, but it's certainly not integral 4 to the operations of the assets and all the employees who are 5 located in Kyrgyzstan, the witnesses who are who are located 6 there, the creditors who are not here, who are primarily 7 located in Kyrgyzstan. 8 This is not a U.S. case. This is this is a case that 9 has the thinnest connections to the United States. The 10 references that Mr. Bromley made to the choice of New York law 11 in certain of the contracts is different from the question of 12 where the parties have elected for the litigation to go forward 13 in resolving their dispute. And as Mr. Bromley has 14 acknowledged, there's an international arbitration forum 15 selection. And that's going forward in Stockholm, Sweden. And 16 this Court and its involvement is not going to change that fact 17 at this point. That arbitration is the place that will 18 determine the amount of the claims and the parties' rights 19 under their contracts. 20 I mentioned the Foreign Sovereignty Immunities Act, 21 and I want to come back to that. That will constrain the 22 Court's ability to grant effective and enforceable relief 23 against the government of Kyrgyzstan as a practical matter. 24 While Section 106 of the Bankruptcy Code affects a waiver of 25 sovereign immunity in respect of certain code provisions, it eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 47 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 45 1 notably does not include either Section 541 or 1129. So it's 2 hard to conceive how the Court would be able to confirm a plan 3 that is binding on the government of Kyrgyzstan in view of the 4 Foreign Sovereign Immunities Act. 5 To Mr. Bromley's point about whether this involves 6 commercial activity or not may be a question for a later day. 7 This certainly implicates the government's interest in the 8 glaciers and environmental concerns, which certainly go beyond 9 commercial activity. And in any event, none of the commercial 10 activity is in the United States. And accordingly, the FSIA 11 will apply to the types of issues that we're talking about 12 here. 13 Section 106 to the Bankruptcy Code also does not 14 encompass a waiver of enforcement rights. So that, too, as a 15 practical matter, is going to constrain this Court's ability to 16 effect meaningful relief. The entry of orders that that can't 17 be enforced as a practical matter is something that will be a 18 challenge in a case like this. 19 And then my last point, as I as I mentioned, this is a 20 two-party dispute. There's an available pending forum in an 21 arbitration proceeding in Stockholm that can adequately and 22 will be able to resolve the parties' disputes. That's where 23 the parties have agreed the claims should be adjudicated. And 24 when you consider that and the lack of a legitimate 25 restructuring purpose, none has been identified here. There is eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 48 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 46 1 no legitimate restructuring purpose that that the debtors have 2 articulated. Those facts warrant dismissal or abstention in 3 the case. 4 And as I said, Your Honor, I recognize I'm making a 5 lot of argument today, and I do that because I think it's 6 important for Your Honor to appreciate what will be coming to 7 Your Honor. But I'm -- but I understand that I need to present 8 these issues in a formal motion, which we will do. I think for 9 today's purposes, I would ask that the Court consider deferring 10 the first-day motions. None are of critical need. There's no 11 irreparable harm, I think, that could be identified if these 12 first-day motions were deferred. That being said, I recognize 13 that that most of the first-day motions are administrative and 14 really don't affect any substantive relief. 15 I do have some comments on the -- and we would like 16 the opportunity to address the automatic stay motion, but I 17 think that would probably be better presented when that motion 18 is actually presented to Your Honor. 19 THE COURT: Okay. I understand. I actually have a 20 few comments on that motion as well, so we might even have some 21 of the same comments. It's possible, Mr. Mintz. 22 So I hear what you say, Mr. Mintz. But what I will 23 say to you is, obviously, unless there's something -- you're 24 going to have to file your motion, as you said, to dismiss. 25 I'm obviously not going to not move forward today without eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 49 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 47 1 that -- having decided or even seen that motion. Unless 2 there's something about this law, and maybe you're going to 3 tell me when you file your motion to dismiss that that's true 4 and I have evidence of it, that demonstrates either of the 5 things you said, that either somehow it completely upends all 6 the things that are in the existing charter of the entity or 7 that the charter wasn't complied with, those are two 8 possibilities, that absent that, obviously, as you know, 9 someone who is a validly appointed director does have the 10 ability and the directors of the company just to sign a 11 resolution and do such a thing. 12 So it's going to have to be the subject of your motion 13 to dismiss explaining why that isn't authorized based on either 14 the law you mentioned or the actual language of the charter, 15 which I'm obviously going to have to see and don't have. So I 16 can't decide that one today. I'm not saying what you're saying 17 is impossible. It may very well be correct, but, obviously, I 18 don't have any of that evidence in front of me today. And as 19 you know, absent someone dissolving a corporation, there not 20 being properly elected directors to do this or something else 21 in the charter not permitting it or, in this case, perhaps some 22 other foreign law that governs the organization of the company 23 applying, there isn't any basis I have right now for not 24 allowing this to move forward. So I'm going to do that. 25 I expect your motion to dismiss and abstain. I eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 50 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 48 1 understand. And there's obviously a lot of information that 2 will have to be provided to me, including documents, some of 3 the ones I've mentioned, in connection with that. And I think 4 that's really where we are today. And so I guess, Mr. Bromley, 5 my suggestion would be at this point that we go ahead and start 6 moving forward with the first-day motions. 7 MR. BROMLEY: Absolutely. Thank you, Your Honor. And 8 I won't respond to all of the points other than to say I 9 respectfully disagree with everything that Mr. Mintz said other 10 than his name and his firm. 11 And let's just go on to the first-day agenda. We 12 don't have much, Your Honor, as I said. We -- as Ms. Schwartz 13 mentioned before she signed off, we did have some conversations 14 over the past few days. There was one thing that came up right 15 before the hearing with respect to the application to retain 16 Stretto as the claims agent. We'd be -- 17 THE COURT: I have one thing on that, too. And it 18 might be the same thing as her, I suspect. 19 MR. BROMLEY: Okay. Why don't why don't we -- the 20 first thing I'll say that noticeable, even though Stretto 21 hasn't been formally retained yet, all of the notices that were 22 sent out with respect to today's hearing and the motions were 23 sent out by Stretto. The certificate of service, as noted, is 24 located a docket number 12. 25 The first thing that we've asked for, Your Honor, is eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 51 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 49 1 joint administration. That is item number 4 on the agenda. 2 It's at docket number 4. We propose that the two cases be 3 jointly consolidated under the caption of Kumtor Gold Company 4 CJSC to allow for an efficient administration of the cases. In 5 connection with that, we also seek authority to file our 6 monthly operating reports by consolidating the information. In 7 one report, we'll break out disbursements on a debtor-by-debtor 8 basis. 9 The Debtors are affiliates as defined under Section 10 1012 of the Bankruptcy Code. Each debtor is 100 percent owned 11 by Centerra Gold, Inc. And Rule 1015(b) provides that a joint 12 administration order is appropriate for debtor and the 13 affiliate. So unless Your Honor has any questions, we'd 14 respectfully ask that the joint administration order be 15 entered. 16 THE COURT: Okay. Mr. Mintz, I assume your prior 17 standing objection is applying to everything. So that's the 18 way I'm going to take it till we get to the automatic stay 19 motion, unless you have a different view on that now. 20 MR. MINTZ: No, that's correct, Your Honor. I don't 21 have anything additional to add on any of the motions except 22 for the automatic stay. 23 THE COURT: Okay, all right. So I've heard Mr. 24 Mintz's objection. I've heard Mr. Bromley's presentation. 25 I've read the motion that was filed. And I'm going to go ahead eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 52 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 50 1 and grant it. So, Mr. Bromley, you just submit an order to our 2 chambers for that. 3 MR. BROMLEY: Thank you, Your Honor. 4 The next item is item number 5 on the agenda. It's 5 also item number 5 on the docket, which is the schedules 6 extension motion. We are requesting authority to extend the 7 time for the file schedules of assets and liabilities and the 8 various other schedules and lists by twenty days. So that's a 9 total of twenty-four days from petition date without the 10 debtors -- without prejudice to the debtors' ability to request 11 additional extensions or waivers. 12 As we've described in the motion, at the moment we do 13 not have complete access to all books and records that contain 14 the information necessary to prepare the schedules and 15 statements. And so we're asking for the additional time to 16 assemble what we do have. And we don't believe that this will 17 amount to any harm of creditors or any parties-in-interest. 18 So with that, Your Honor, we have, as I described, 19 discussed this with the Office of the U.S. Trustee's. And we 20 would ask that the Court enter the order. 21 THE COURT: Okay. And I've heard Mr. Mintz's standing 22 objection to this as well. And Mr. Bromley, I've obviously 23 heard your argument. I've read the papers myself. And I'm 24 going to go ahead and grant the extension. I obviously won't 25 be surprised if you seek a further extension because it sounds eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 53 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 51 1 like we're going to be mired in some dismissal extension 2 litigation for a while. And that might make it more difficult. 3 But I understand. So I will go and grant the motion. You'll 4 have to submit an order to our chambers. 5 MR. BROMLEY: Thank you very much, Your Honor. We 6 will do so. 7 The next motion, Your Honor, is item number 6, docket 8 number 6. It's the creditor matrix motion. And by this 9 motion, it's our standard request to -- for authority to 10 maintain a consolidated creditor matrix, file a consolidated 11 list of top thirty creditors and approval of the form and the 12 manner of notifying creditors of the commencement of the 13 Chapter 11 cases. This is all standard operating procedure, 14 Your Honor. We reviewed it with the U.S. Trustee's Office. 15 We're happy to answer any questions or clarify anything if Your 16 Honor has any issues. 17 THE COURT: I don't. I've obviously read the motion. 18 And for the record, obviously, I've heard Mr. Mintz's standing 19 objection to this as well. And I'm going to overrule that. 20 And I'm going to go ahead and grant this motion. Mr. Bromley, 21 you'll just need to go ahead and submit an order to chambers 22 for this. 23 MR. BROMLEY: Thank you, Your Honor. We will do so. 24 The next item is item number 7 on the agenda and 25 docket number 7. It's the application for the appointment of eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 54 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 52 1 Stretto as claims and noticing agent. 2 As noted, Your Honor, we have discussed with the U.S. 3 Trustee's Office about the one comment that they had. And I 4 know Your Honor mentioned you had a comment. So maybe if you 5 could just let us know if they're same comment. We might 6 already be there. 7 THE COURT: It relates to paragraph 10 which is the 8 limitation on liability provision. 9 MR. BROMLEY: It's exactly that, Your Honor. 10 THE COURT: That was my guess. Not surprising that 11 Ms. Cornell or Ms. Schwartz would raise that, because when I 12 looked at your order compared to what is standard in our 13 district, that is the one thing that jumped out at me and 14 our -- my clerks that was missing, which didn't surprise me 15 that the U.S. Trustee would catch it as well. 16 So you're going to put in language, I presume, saying 17 that notwithstanding this provision, that that's not 18 enforceable in the bankruptcy proceeding, something to that 19 effect. 20 MR. BROMLEY: Yes. We will make sure that it's 21 satisfactory to the U.S. Trustee's Office. 22 THE COURT: Okay. 23 MR. BROMLEY: And we'll let you know that as well. 24 THE COURT: Okay. All right. So, again, having heard 25 Mr. Mintz's standing objection to this, I guess, Ms. Cornell, I eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 55 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 53 1 just want to make sure. Is there anything you want to be heard 2 on this before I rule on it? 3 MS. CORNELL: Thank you, Your Honor, Shara Cornell 4 with the Office of the United States Trustee. 5 No, Your Honor. Our issue was with also paragraph 10. 6 THE COURT: Okay, great. Thank you. Okay. 7 So, Mr. Bromley, having read the retention application 8 and with the discussion that we've had on the record and that 9 you had with U.S. Trustee's about amending that and modifying 10 the order to deal with that one provision, I'm going to go 11 ahead and grant the application, overruling Mr. Mintz's 12 standing objection. And you can submit a revised order to 13 chambers after you've obviously run it by Ms. Cornell. 14 MR. BROMLEY: Very good, Your Honor. We will do that. 15 Thank you. 16 That brings us to the last item on the agenda, which 17 is the automatic stay motion. That's item number 8 on the 18 agenda, docket number 8. And, Your Honor, this is the -- and I 19 know Mr. Mintz has raised the question about this. And you 20 have as well, Your Honor. Clearly what we have here is a 21 Chapter 11 proceeding which implicates foreign creditors and 22 foreign bodies. These automatic stay motions have been around 23 for quite a long time, certainly as long as I've been 24 practicing, and have always been sort of a basic building block 25 of cases that deal with non-U.S. entities. eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 56 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 54 1 The automatic stay, as we all know, in the United 2 States is automatic. And Section 362 comes into play as soon 3 as the petition is filed, which is not consistent with the laws 4 dealing with creditor rights in most other jurisdictions where 5 moratoriums and creditor stays and the like are implemented 6 through a form of order that is entered by the applicable 7 court. 8 And so over the years, I think as American 9 practitioners, we have run into a lot of clients who have said, 10 well, wait a second, it's very hard for us to show somebody 175 11 of Colliers Code and say this is what it says, you need to 12 comply with it. And so what has built up over the years is 13 a -- I think a smart practice where we take the content of 14 Section 362 and put it in the form of an order so that it's 15 more recognizable as a legally binding application. 16 And so that's what we've done here, Your Honor. We 17 attempted to stay within the lanes of the standard operating 18 procedures. We use those models, the cases that we've seen in 19 the Southern District for the Latin American Airlines notices. 20 And so with that, we have -- it goes through the standard 21 litany of things, enforcing and restating global automatic 22 stay, focusing on ipso facto and antidiscrimination provisions, 23 directing courts of competent jurisdiction to take the 24 appropriate measures to recognize and enforce the Chapter 11 25 cases. eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 57 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 55 1 And in my experience, what we're often doing here is 2 usually these in two ways. Right. One is to either provide it 3 to a counterparty who we think is not aware of the automatic 4 stay and may be in danger of violating it, frankly, without 5 thinking it through, or to use it in order to obtain 6 recognition of Chapter 11 proceeding under the model -- rule -- 7 model law in other jurisdictions. So we obviously reserve the 8 right to use them in those ways. But I think that's -- for 9 right now, we think the primary purpose would be the first one, 10 which is to allow us to be able to tell counterparties who were 11 running into -- that there is an automatic say that the Chapter 12 11 has been commenced. 13 So we think there's ample justification in this in 14 this circumstance for the entry of an order like this. I would 15 note, obviously that Your Honor had said you might have 16 comments. So we would like to hear what your comment is. And 17 we also understand that Mr. Mintz has maybe an additional 18 objection to the one standing objection that's already raised. 19 THE COURT: Right. So I'm going to go ahead and give 20 my comments first, and then Mr. Mintz can raise his issues. I 21 might address one or two of his perhaps. Maybe not. I guess 22 we'll see. 23 So it's not what's in your order. It's what's not in 24 your order, I guess -- 25 MR. BROMLEY: Okay. eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 58 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 56 1 THE COURT: -- is really where my comments are. I 2 have three things that I traditionally like to see in these 3 orders. And there is precedent because I have had another case 4 like this that was international already in my three months 5 involving some of your former colleagues. And also this is 6 traditional from other precedent in the Southern District of 7 New York, not just mine. 8 So the first, which I'm sure you won't have any 9 objection to, it's just something that conflicts with the other 10 provisions of the Bankruptcy Code, is that I would like to have 11 a sentence in the order basically saying that the order is 12 immediately effective and enforceable notwithstanding the 13 possible application of 603(b) or otherwise, because I don't 14 think it helps you if there's an issue with that in your 15 enforceability against other parties. So that would be my 16 first statement. I'm sure that's not controversial with you. 17 MR. BROMLEY: Not at all. 18 THE COURT: Okay. But my second statement is that I 19 think that it has to have a provision in it saying that, on a 20 request of a party-in-interest and after notice in a hearing, 21 the Court may grant relief from the restraints imposed herein 22 in the event that it's necessary, appropriate or warranted to 23 so terminate, annul, or modify of condition the relief herein. 24 I guarantee you some of Mr. Mintz's requests are going to come 25 into that. eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 59 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 57 1 And then my third point, which also might involve 2 something Mr. Mintz might raise, is the extent of the automatic 3 stay. So what I would like to see is some language that says 4 something like nothing to anything in the -- notwithstanding 5 anything to the contrary contained herein, this order shall not 6 be construed as enjoining or staying any act, it is not stayed, 7 or that is subject to an exception from the automatic stay 8 pursuant to the terms of 362 of the Bankruptcy Code. 9 I'm sure you understand where I'm getting at, because 10 there is -- there are issues here about governmental regulatory 11 actions and whether or not -- as you know, there is an 12 exception in the automatic stay for that. And whether or not 13 things fall into them or otherwise is an issue. But to the 14 extent there is anything that falls into that legitimately and 15 the Court ultimately determines that, determines that here, the 16 stay can go farther than, what 362 lets me do as you know. 17 So I would like to have that clarifying language in 18 place because here we do have an issue where somebody may be 19 asserting that. And whether or not that's valid or not will 20 ultimately be before me. But I do think there is an issue 21 about the fact that we do have governmental regulatory 22 authorities involved in this case already, whether there are -- 23 in this case foreign. But it wouldn't matter. As you know, 24 from other matters we've dealt with before and prior to my 25 being on the bench. That doesn't matter whether governmental eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 60 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 58 1 units are U.S. or foreign. 2 So, Mr. Mintz, you may have other things to mention, 3 but those were my comments. 4 MR. MINTZ: Thank you, Your Honor. Your comments are 5 helpful and, to a certain extent, address some of my concerns. 6 But I would go beyond what Your Honor articulated in 7 the sense that, as described, this is intended to be presented 8 to foreign creditors who don't understand the automatic stay, 9 and they can look at the order and understand how it applies to 10 them. I am here. I know what the automatic stay says. So as 11 to my client, I don't think this relief is necessary or 12 appropriate. Either the order does not affect any substantive 13 relief beyond what is stated in the Bankruptcy Code -- and I 14 think that's the intention, in which case it's unnecessary as 15 to my client because it's not doing anything beyond what the 16 statute says, or perhaps the order does go beyond the statute. 17 And that certainly would be inappropriate in the context of 18 this first-day motion and would be a basis to not enter it 19 as -- against my client. 20 So what I would ask is that my client be my client 21 then, the Kyrgyzaltyn, the state-owned mining company, be 22 excluded from the effect of this order. We understand what the 23 automatic stay says. And it's not like this order is going to 24 have any further impact on guiding how we respond and act and 25 in respect of this bankruptcy proceeding. eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 61 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 59 1 THE COURT: Okay. Mr. Mintz, I'm not going to carve 2 your client out from the order. The order is what it is. It's 3 not unreasonable for these comfort orders to be entered. There 4 are thirty creditors listed on the list. I obviously don't 5 know how much each of them are owed, but some of them are 6 foreign creditors. It's not unreasonable to have an order. 7 There's no time I've ever seen at the beginning of a case a 8 foreign government getting a carveout from an -- the effect of 9 a comfort order, which is in essence what this is. 10 You understand that obviously there are actions 11 preceding now. You may want to argue that, for example, there 12 are some things that are not covered by the automatic stay that 13 are going on. I would expect you're going to argue some of 14 those things. And I don't think this order is going to change 15 that one way or the other, but I'm not carving your client out. 16 So I'm going to overrule your objection. I'm going to 17 make the changes -- ask the debtor to make the changes I wanted 18 to the order because I think those do need to be made. So in 19 case you actually want to come back before me and argue that 20 this falls into the regulatory exception or something, and you 21 may not for foreign sovereign immunity purposes or otherwise, 22 but you may, it'll be clear that it doesn't apply to that as 23 long as it fits within that category. So I think that's what's 24 fair here, and that's what I'm going to do with the order. 25 So, Mr. Bromley, with those three changes that I've eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 62 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 60 1 requested, I'm going to overrule Mr. Mintz's objection. And 2 I'm going to enter the order with those changes. So you'll 3 need to submit a revised order to my chambers that incorporate 4 those provisions. 5 MR. BROMLEY: Very good, Your Honor. We will 6 absolutely do that. We'll get those circulated, and we'll 7 provide Mr. Mintz with a copy. So we need -- obviously, it's 8 what we were doing. 9 If I could just ask one question of Mr. Mintz while 10 we're here. Did you say that you're also representing 11 Kyrgyzaltyn at this point, Mr. Mintz? I just -- I wasn't clear 12 if I heard what you were saying. 13 MR. MINTZ: At this time, I'm only appearing on behalf 14 of the Republic. 15 MR. BROMLEY: Okay, thank you. 16 THE COURT: Okay. 17 MR. BROMLEY: So, Your Honor, thank you very much. 18 With that, we don't have any further relief other than to just 19 say thank you very much for your time. And we do have a 20 request if we could just set a date for a second-day hearing. 21 THE COURT: Yeah. And I have something for you, which 22 is -- 23 MR. BROMLEY: Okay. 24 THE COURT: -- we have to have that initial case 25 conference within thirty days of the filing date. So I was eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 63 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 61 1 trying to recall off the top of my head while I was sitting 2 here without trying to go through my papers while I was 3 listening to people argue what that date was. So maybe you can 4 remind me what date you actually filed last week. 5 MR. BROMLEY: I filed on the 31st. 6 THE COURT: Okay. All right. So I have to have a 7 conference before the -- by no later than the 29th. There's 8 some leeway, as you know, but I think we ought to go ahead and 9 schedule that. And it may not fit with your second-day hearing 10 because you may want more time for that because of today. 11 So I would go ahead and suggest that we do the initial 12 case conference if you're available on the 29th, which is the 13 thirtieth day, because you'll probably have a better idea about 14 what's going on and what may be coming to me and what you may 15 want to tell me by -- if we do this later in the period rather 16 than earlier in the period is my guess. 17 MR. BROMLEY: Okay. 18 THE COURT: And that is the latest date I could do it. 19 MR. BROMLEY: That works for us, Your Honor. That 20 would be perfect. 21 THE COURT: Okay. And Mr. Mintz, I'm sure you'll want 22 to come to that. So I'm just making sure there's no problem 23 with that date with you as well. 24 MR. MINTZ: No problem, Your Honor. Is that 10 a.m. 25 as well? eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 64 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 62 1 THE COURT: Yes, 10 a.m. And we can do it on Zoom, if 2 you like, Mr. Bromley. That's fine. So we'll arrange that. 3 Okay. All right. 4 And then what did you have in mind for second-day? I 5 have my availability calendar in front of me. 6 MR. BROMLEY: Great. We were we were looking for the 7 week of July 12th. 8 THE COURT: Okay, that's fine. I have -- I'm at 9 any -- I have hearings generally on Tuesday, Wednesday or 10 Thursday. So the 13th, the 14th or the 15th are all fine. 11 MR. BROMLEY: If we could have the 15th, Your Honor. 12 THE COURT: That's fine. 13 MR. BROMLEY: Okay. Thank you very much. 14 THE COURT: Okay. 15 MR. BROMLEY: 10 a.m. as well? 16 THE COURT: Yep, uh-huh. And we'll also do it on 17 Zoom. 18 MR. BROMLEY: Great. 19 THE COURT: Okay. Anything else we talk about with 20 scheduling, Mr. Mintz, or otherwise? 21 MR. MINTZ: Not at this time, you're okay. 22 THE COURT: All right. You know -- I'm sure you know 23 where to find us when you're ready and you have figured out 24 what you want to do and you have some idea about when you're 25 going to be filing that motion and what we need to schedule it. eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 65 of 81 KUMTOR GOLD COMPANY CSJC AND KYRGYZ REPUBLIC 63 1 And I'm guessing, to be really candid, that there'll 2 be a bunch of discovery that's going to happen to happen in 3 connection with that motion. I might be wrong, but my gut says 4 that's what would be necessary on both sides there because 5 we're talking about things that aren't necessarily all readily 6 available, at least not readily available to me anyway, I'll 7 say. So that would be my guess. But that's fine. When you're 8 ready, you'll let us know. 9 MR. MINTZ: Thank you, Your Honor. 10 MR. BROMLEY: Well, thank you very much, Your Honor. 11 We really appreciate all the time and attention both from you 12 as well as from your staff and also thanks to the U.S. 13 Trustee's Office. We do appreciate the accommodations. 14 THE COURT: Okay. If there's nothing else than 15 anybody wants to discuss today, then court is adjourned. 16 MR. BROMLEY: Thank you very much, Your Honor. Have a 17 great day. 18 THE COURT: Thank you. Bye-bye. 19 MR. MINTZ: Thank you. 20 (Whereupon these proceedings were concluded at 11:32 AM) 21 22 23 24 25 eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 66 of 81 64 1 2 I N D E X 3 E X H I B I T S 4 DEBTORS' DESCRIPTION MARKED ADMITTED 5 Declaration of Mr. 20 6 Desjardins 7 8 RULINGS: PAGE LINE 9 Motion for joint administration is 50 23 10 granted. 11 Motion to extend deadlines is granted. 50 21 12 Motion authorizing debtors to maintain 51 17 13 a consolidated creditor matrix is 14 granted. 15 Motion to appoint Stretto as claims 53 8 16 and noticing agent is granted. 17 Motion for order enforcing Sections 60 25 18 362, 365(e)(1), and 525 of the 19 Bankruptcy Code is granted. 20 21 22 23 24 25 eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G Pg 67 of 81 65 1 2 C E R T I F I C A T I O N 3 4 I, Sharona Shapiro, certify that the foregoing transcript is a 5 true and accurate record of the proceedings. 6 7 8 9 ______ 10 Sharona Shapiro (CET-492) 11 AAERT Certified Electronic Transcriber 12 13 eScribers 14 352 Seventh Ave., Suite #604 15 New York, NY 10001 16 17 Date: June 9, 2021 18 19 20 21 22 23 24 25 eScribers, LLC | (973) 406-2250 [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G KUMTOR GOLD COMPANY CSJC and Pg 68 of 81 KYRGYZ REPUBLIC June 8, 2021 45:4;57:6;58:24 49:9 9:18;53:24 19:5,19;23:1;40:1, A acting (2) afford (1) amended (1) 21;49:12;54:24; 6:19;35:7 33:17 27:25 56:22;58:12 abbreviations (1) action (4) again (9) amending (1) approval (1) 11:5 28:23;35:5,9;37:1 6:2,11,12;16:16; 53:9 51:11 ability (9) actionable (1) 26:13,14,15;28:24; American (2) approved (1) 28:6;32:25;38:20; 37:1 52:24 54:8,19 36:14 41:3,14;44:22; actions (6) against (11) Among (1) April (2) 45:15;47:10;50:10 19:14;36:10,13; 25:13,17;26:3; 43:1 23:18;27:6 able (12) 43:1;57:11;59:10 27:16;29:2;30:24; amount (7) arbitral (1) 18:22;19:6;20:4,7; activated (1) 31:6;36:22;44:23; 14:3;23:2,13; 26:10 21:11;22:13;37:25; 14:24 56:15;58:19 27:22;28:4;44:18; arbitration (12) 41:25;43:21;45:2, active (1) agencies (1) 50:17 24:9,9,10;28:13; 22;55:10 31:24 18:11 amounts (3) 30:25;31:2,3;40:14; aborted (1) activities (1) agenda (8) 22:13;36:2,13 42:6;44:14,17;45:21 23:8 27:5 7:15,17;48:11; ample (1) area (1) above (2) activity (5) 49:1;50:4;51:24; 55:13 23:19 8:18;11:21 35:5,6;45:6,9,10 53:16,18 ANDREA (2) areas (1) abruptly (1) actual (1) agent (2) 5:17;7:9 14:9 17:20 47:14 48:16;52:1 annual (1) argue (5) absent (2) actually (10) aggressively (1) 18:6 40:20;59:11,13, 47:8,19 6:5;10:19;20:6; 30:20 annul (1) 19;61:3 absolutely (3) 22:21;23:6,9;46:18, ago (1) 56:23 arguing (1) 27:10;48:7;60:6 19;59:19;61:4 9:23 anticipate (1) 25:3 abstain (2) add (1) agree (2) 38:2 argument (3) 41:20;47:25 49:21 19:13;23:4 antidiscrimination (1) 36:1;46:5;50:23 abstention (2) added (1) agreed (3) 54:22 arguments (2) 43:24;46:2 14:24 42:6,6;45:23 appear (1) 10:20;35:14 abutment (1) additional (5) agreement (10) 6:5 ARNOLD (3) 35:19 12:24;49:21; 16:10,12,13;23:16, appearance (4) 5:2;6:23;34:20 accelerated (1) 50:11,15;55:17 17;26:5,6,7,9;27:24 7:3,3;10:15,17 around (5) 17:8 address (6) agreements (4) appearances (3) 12:16;16:3;18:6; accept (1) 37:11,25;38:17; 21:15,19;24:6,7 6:5,10,15 21:16;53:22 19:19 46:16;55:21;58:5 ahead (12) appeared (1) arrange (1) access (1) addressed (1) 6:9;19:25;20:11; 34:19 62:2 50:13 42:5 48:5;49:25;50:24; appearing (4) arrest (2) accessing (1) adequately (1) 51:20,21;53:11; 6:23,25;7:13; 24:21,22 31:25 45:21 55:19;61:8,11 60:13 arrested (2) accommodating (1) adjourned (1) Airlines (1) applicable (4) 17:19;25:7 8:2 63:15 54:19 20:7;23:21,23; arrests (1) accommodations (2) adjudicated (1) allegations (1) 54:6 18:2 8:6;63:13 45:23 11:23 application (7) art (1) accomplished (1) administration (4) alleged (2) 37:23;48:15; 23:24 8:5 49:1,4,12,14 25:1;31:4 51:25;53:7,11; articulated (2) accordance (6) administrative (1) alleging (2) 54:15;56:13 46:2;58:6 18:16;31:10; 46:13 24:23;25:18 applies (1) Asia (1) 39:10;43:8,11,20 admission (3) allow (4) 58:9 11:14 accordingly (2) 19:9;38:22;39:21 21:24;27:7;49:4; apply (2) assemble (1) 19:19;45:10 admit (2) 55:10 45:11;59:22 50:16 account (14) 20:1,11 allowed (2) applying (2) asserting (1) 9:24;10:3,10;13:2; admitted (1) 22:16;28:8 47:23;49:17 57:19 16:19,23;30:1,5,9, 19:3 allowing (1) appointed (5) asset (3) 12;40:8,9;44:2,3 advise (1) 47:24 20:4;28:18,20; 17:16;31:15;34:16 accounts (1) 34:20 alluded (3) 32:2;47:9 assets (7) 31:25 affairs (2) 38:21;41:17,24 appointment (1) 12:15;36:24,24; acknowledged (3) 39:13;40:21 along (1) 51:25 40:5;44:1,4;50:7 19:11;40:3;44:14 affect (3) 6:24 appreciate (9) assistance (2) acknowledges (1) 41:22;46:14;58:12 alter (4) 6:8,11;8:6;32:11; 12:5;30:13 43:25 affects (1) 15:19;32:1;35:13; 38:12,16;46:6;63:11, assume (1) Act (13) 44:24 36:15 13 49:16 7:7;23:5;29:16; affiliate (1) altered (1) approach (1) assumption (1) 35:1;39:23;41:2,16; 49:13 19:15 30:23 20:16 42:15,20;44:20; affiliates (1) always (2) appropriate (9) a-third (1) Min-U-Script® eScribers, LLC | (973) 406-2250 (1) abbreviations - a-third [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G KUMTOR GOLD COMPANY CSJC and Pg 69 of 81 KYRGYZ REPUBLIC June 8, 2021 22:8 16:18,23;30:1,5,9, 11:12 Bromley's (2) 15:15;34:7 attached (1) 12;31:25;40:8;44:2, bit (4) 45:5;49:24 carve (1) 42:17 3 8:5,8,13;11:1 brought (1) 59:1 attempt (1) bankruptcy (11) blanket (1) 33:21 carveout (1) 31:8 40:23;42:8,22; 26:12 build (1) 59:8 attempted (5) 44:24;45:13;49:10; blasted (2) 35:18 carving (1) 10:8;17:11;29:20; 52:18;56:10;57:8; 14:9,12 Building (2) 59:15 30:8;54:17 58:13,25 blasting (2) 5:13;53:24 case (29) attention (2) barred (1) 14:7,10 built (2) 6:9,14;8:4,15; 38:19;63:11 29:9 block (1) 12:2;54:12 10:21;13:9;19:7; Attorneys (3) barrier (1) 53:24 Bulgaria (2) 22:3;37:12;38:24; 5:3,12;6:10 35:14 board (7) 25:7,8 40:13,24;41:7;42:2, audio (1) bars (2) 28:20,21;29:6; Bulgarian (1) 8;43:25;44:8,8; 6:7 15:8,9 39:20;41:5;42:14; 25:9 45:18;46:3;47:21; August (1) based (3) 43:1 bunch (1) 56:3;57:22,23; 11:18 29:2,15;47:13 bodies (1) 63:2 58:14;59:7,19; authorities (4) basic (2) 53:22 business (5) 60:24;61:12 13:20,21;25:17; 36:7;53:24 Bolturuk (8) 11:19;16:24;18:6, cases (12) 57:22 basically (1) 28:18;29:2,5,9,16; 9;40:19 25:13;34:5;38:21; authority (9) 56:11 30:24;31:12;42:15 Bye-bye (1) 41:17,20,21;49:2,4; 39:19,25;41:2; basis (8) books (1) 63:18 51:13;53:25;54:18, 42:15,16,20;49:5; 8:4;13:23;25:10; 50:13 25 50:6;51:9 32:6;36:5;47:23; border (2) C cash (1) authorization (1) 49:8;58:18 11:16;18:10 40:9 30:10 became (2) bordered (1) calendar (2) catch (1) authorize (1) 24:1;35:17 11:15 34:9;62:5 52:15 42:22 Beckerman (2) Boring (1) call (3) category (1) authorized (13) 6:3,17 14:4 6:9;8:10;37:20 59:23 19:10,17,20;20:2, become (1) both (6) called (3) cause (1) 6;39:22;41:8,8,12, 25:25 19:13;26:18; 15:10,20;18:23 33:13 16;43:3,20;47:13 began (3) 39:11;41:5;63:4,11 calling (1) causes (1) automatic (19) 8:25;17:9;22:22 breaches (2) 24:22 37:1 32:19;34:6;46:16; begin (1) 29:3,3 came (2) causing (1) 49:18,22;53:17,22; 13:22 break (2) 9:8;48:14 15:6 54:1,2,21;55:3,11; beginning (3) 14:7;49:7 Cameco (7) cautions (1) 57:2,7,12;58:8,10, 8:24;15:17;59:7 Bridge (2) 20:23,25;21:5,18; 10:14 23;59:12 behalf (13) 35:18,19 22:3,10;23:12 ceased (1) availability (1) 6:23;19:10,18,20; briefing (1) can (22) 42:14 62:5 27:18;39:23;40:2; 29:14 6:7;10:20;11:1; Centerra (20) available (5) 41:3,17;42:15,19,20; briefly (2) 13:15;14:4,19;19:12, 12:14,14,15; 10:24;45:20; 60:13 19:8;42:10 18;20:17;32:19; 20:24;21:6;22:8,8, 61:12;63:6,6 bench (2) bring (4) 33:16,24;36:7,9; 16,25;23:4,13;25:4; average (1) 33:25;57:25 10:25;38:18,23; 42:5;45:21;53:12; 28:13,19,23,24;29:4, 14:5 Benjamin (2) 42:12 55:20;57:16;58:9; 5,6;49:11 award (2) 6:22;19:4 bringing (1) 61:3;62:1 Centerra's (2) 21:8;26:3 best (2) 33:2 Canada (5) 20:22;24:22 aware (1) 29:15;40:7 brings (2) 12:15,16;21:5; Central (2) 55:3 better (2) 30:18;53:16 28:25;30:24 11:14;38:24 away (1) 46:17;61:13 broad (2) Canadian (2) CEO (1) 14:12 beyond (7) 19:6;37:11 28:24;29:17 25:7 38:25;41:19;45:8; BROMLEY (52) candid (1) certain (11) B 58:6,13,15,16 6:17,18;7:15,19, 63:1 11:23;22:17; billion (2) 22;19:1,11,22,24; capacity (1) 24:13;32:21;33:1; back (7) 28:2,11 20:15;32:11;33:19, 35:8 40:11;41:10;43:1; 15:22;20:22;21:3; billions (1) 24;34:3;38:7,14; capital (1) 44:11,25;58:5 23:2;26:1;44:21; 10:2 39:5;40:12;44:10, 11:13 certainly (8) 59:19 bind (1) 13;48:4,7,19;50:1,3, caption (1) 32:18,23;40:13; background (3) 15:7 22;51:5,20,23;52:9, 49:3 44:3;45:7,8;53:23; 7:16;8:8,14 binding (2) 20,23;53:7,14;55:25; carbon (4) 58:17 bad (1) 45:3;54:15 56:17;59:25;60:5,15, 14:24;15:1,2,4 certificate (1) 25:6 binds (2) 17,23;61:5,17,19; careful (1) 48:23 bank (14) 15:1,8 62:2,6,11,13,15,18; 8:23 challenge (1) 9:24;10:1,3,10; Bishkek (1) 63:10,16 carefully (2) 45:18 Min-U-Script® eScribers, LLC | (973) 406-2250 (2) attached - challenge [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G KUMTOR GOLD COMPANY CSJC and Pg 70 of 81 KYRGYZ REPUBLIC June 8, 2021 challenging (1) clarify (1) commercial (9) 29:3 44:11,19 21:10 51:15 8:25;21:12,13; confirm (1) contrary (1) chamber (1) clarifying (1) 22:11;35:5,6;45:6,9, 45:2 57:5 15:7 57:17 9 conflicts (1) control (9) chambers (5) classic (1) Commission (4) 56:9 19:15;21:5;25:2; 50:2;51:4,21; 35:1 12:20;27:4,4,6 conforms (1) 27:7;28:9,17;29:7, 53:13;60:3 clear (9) commitment (1) 37:24 10;39:19 change (4) 6:4;17:14;30:3,11; 37:19 connected (1) controlled (6) 22:23;24:17; 31:18;35:11;44:2; companies (4) 9:12 10:9;15:19,23; 44:16;59:14 59:22;60:11 40:4;43:6,7,14 connection (6) 21:1;22:2;23:12 changed (3) clearly (5) Company (28) 9:20;17:12;24:17; controlling (1) 24:4,5;25:11 22:11;29:22; 5:22;6:14,20,21; 48:3;49:5;63:3 7:24 changes (5) 38:24;43:15;53:20 8:25;11:3,3,4;12:14, connections (2) controversial (1) 22:23;59:17,17, clerks (1) 18;13:17;15:18,18; 40:6;44:9 56:16 25;60:2 52:14 16:2;20:23,23;22:3, consider (3) conversations (1) Chapter (9) client (7) 4;28:24;39:19,23; 22:22;45:24;46:9 48:13 27:1;32:3,4;38:21; 58:11,15,19,20,20; 40:2;41:6;43:8; consideration (1) convicted (1) 51:13;53:21;54:24; 59:2,15 47:10,22;49:3;58:21 42:1 17:20 55:6,11 clients (1) company's (3) considered (1) conviction (1) characterization (1) 54:9 41:13;42:23;43:20 22:25 17:21 19:13 Climate (1) compared (1) considering (2) cooperative (2) characterize (1) 18:8 52:12 33:20;34:19 8:23;38:5 39:6 climates (1) competent (1) consistent (2) copy (1) characterized (1) 18:6 54:23 31:13;54:3 60:7 17:6 close (1) complaint (1) consistently (1) CORNELL (10) characterizes (1) 11:15 27:25 24:2 5:18;7:11;37:20, 19:12 closed (1) complete (4) consolidated (3) 25;38:10;52:11,25; charter (5) 11:3 25:22;26:12,16; 49:3;51:10,10 53:3,3,13 43:16;47:6,7,14,21 cloth (1) 50:13 consolidating (1) corporate (3) charters (5) 36:1 completely (4) 49:6 20:8;21:4;43:18 41:13;42:24;43:6, coal (1) 34:15;35:25;38:5; constitute (1) corporation (2) 10,20 18:3 47:5 7:4 20:5;47:19 chemicals (1) Code (8) compliance (1) constituted (1) corrupt (1) 15:4 44:24,25;45:13; 26:17 24:25 25:3 Chicago (1) 49:10;54:11;56:10; complicated (2) constitutes (1) corruption (3) 5:6 57:8;58:13 13:17;14:16 32:15 18:9;24:23,24 chief (1) colleague (3) complied (1) constrain (2) counsel (6) 24:23 7:11,21,23 47:7 44:21;45:15 6:16,19,20;37:21, China (2) colleagues (1) comply (2) constraint (1) 22;38:5 11:15,16 56:5 42:23;54:12 18:9 counterparties (1) choice (3) Colliers (1) comprehensive (1) constructs (1) 55:10 40:10,11;44:10 54:11 26:5 23:4 counterparty (1) Christian (1) comfort (2) computers (1) construed (1) 55:3 7:23 59:3,9 28:16 57:6 country (2) CIA (1) comfortable (1) conceive (1) consummated (1) 17:5,6 18:19 27:20 45:2 22:22 couple (5) circulated (1) coming (3) concern (1) contain (1) 9:6,23;17:21; 60:6 24:12;46:6;61:14 33:3 50:13 25:24;39:4 circumstance (1) comity (2) concerned (2) contained (2) coups (1) 55:14 41:21;43:23 31:12;36:8 18:21;57:5 17:4 City (3) commenced (3) concerns (4) content (1) course (7) 9:13,19;11:13 30:24;31:1;55:12 19:6;37:11;45:8; 54:13 13:23;16:8;17:1; CJSC (1) commencement (1) 58:5 context (6) 20:18;25:16;35:2; 49:4 51:12 concession (5) 8:13;11:1;24:7,10; 38:12 claim (4) commencing (1) 21:3,8,15;22:24; 34:11;58:17 COURT (86) 27:8;28:4,4;31:5 32:3 23:19 continued (3) 6:2,3;7:12,20,24; claimed (1) comment (5) concluded (1) 17:7;23:10;25:16 10:19;11:1;19:1,6, 28:1 34:25;52:3,4,5; 63:20 continues (3) 22,25;20:5;26:2,11; claims (14) 55:16 condition (1) 18:9;27:12;29:16 28:2,6;29:2,8,11,13; 25:17,23;26:11; comments (10) 56:23 contract (3) 31:6;32:10,22; 27:23;28:1,11;31:5; 38:2;39:5;46:15, conference (3) 12:24;13:1;26:13 33:23;36:2;37:3,11, 36:1,2,22;44:18; 20,21;55:16,20;56:1; 60:25;61:7,12 contracts (5) 15,17,19;38:1,7,11, 45:23;48:16;52:1 58:3,4 confidentiality (1) 15:25;40:11;42:7; 17,23;39:1,2,8;40:1, Min-U-Script® eScribers, LLC | (973) 406-2250 (3) challenging - COURT [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G KUMTOR GOLD COMPANY CSJC and Pg 71 of 81 KYRGYZ REPUBLIC June 8, 2021 20,21;41:10,13,20, custodian (2) 22,25;41:3,15;42:15, descriptions (1) disable (1) 20;43:12,19,24; 32:15;34:14 20;43:10;46:1;49:9; 13:7 27:11 44:16;45:2;46:9,19; customs (1) 50:10 designated (1) disagree (1) 48:17;49:16,23; 18:10 debtors' (7) 14:13 48:9 50:20,21;51:17;52:7, cyanide (1) 30:10;37:21,22; DESJARDINS (16) disbursements (1) 10,22,24;53:6;54:7; 14:23 38:5,20;41:22;50:10 5:22;8:10;10:23; 49:7 55:19;56:1,18,21; debtor's (1) 18:22;19:9,17,23; discovered (1) 57:15;59:1;60:16,21, D 41:17 20:9,13,17;37:8; 30:7 24;61:6,18,21;62:1, debts (3) 38:22;40:1,3;41:1,16 discovery (1) 8,12,14,16,19,22; damage (3) 33:5,6,7 Desjardins' (4) 63:2 63:14,15,18 27:22;31:14;34:16 decades (3) 18:21;19:2;32:12; discuss (1) courts (4) damages (5) 9:14,24;31:25 39:22 63:15 10:13;25:18; 25:18,20,20,21; decide (2) despite (1) discussed (3) 32:18;54:23 34:23 14:8;47:16 29:16 38:7;50:19;52:2 court's (4) danger (1) decided (4) detail (1) discussing (1) 29:17;41:3;44:22; 55:4 25:9;28:11;29:13; 8:12 38:7 45:15 DANIEL (2) 47:1 detailed (2) discussion (3) covered (1) 5:22;8:10 decision (1) 10:24;13:22 7:17;42:9;53:8 59:12 date (10) 34:17 details (1) discussions (1) create (1) 20:14;27:14;31:8; declarant (1) 9:17 23:11 35:25 50:9;60:20,25;61:3, 8:11 detained (1) dismiss (4) created (2) 4,18,23 declaration (17) 25:8 46:24;47:3,13,25 16:5;22:8 dated (2) 8:9,11;9:18;10:23; determination (2) dismissal (3) creates (1) 16:13;23:18 18:21,23;19:3,8,20; 41:14;43:18 43:17;46:2;51:1 14:24 dates (1) 20:1,11,13,20;32:12; determine (4) displaced (1) creditor (4) 20:22 38:22;39:22;40:3 14:3;39:16;40:21; 39:20 51:8,10;54:4,5 day (6) declared (1) 44:18 dispute (4) creditors (13) 13:25;27:15;28:7; 11:18 determined (1) 42:5;43:4;44:13; 9:3;13:4;31:16; 45:6;61:13;63:17 deep (1) 39:14 45:20 40:18,18;44:6; days (8) 31:22 determines (2) disputes (2) 50:17;51:11,12; 8:3;10:6;28:2,4; defeats (1) 57:15,15 26:11;45:22 53:21;58:8;59:4,6 48:14;50:8,9;60:25 41:3 develop (2) disruptions (1) criminal (1) day-to-day (1) defense (1) 21:9,12 17:6 25:13 13:23 28:6 development (1) dissolved (1) critical (7) deal (7) deferred (1) 18:10 15:1 9:9,14,16;11:11; 13:8;20:17;31:4; 46:12 diameter (1) dissolving (1) 13:15;40:24;46:10 35:10,12;53:10,25 deferring (1) 14:21 47:19 critically (1) dealer (1) 46:9 dicey (1) District (4) 9:17 16:2 defined (1) 24:19 36:10;52:13; Cromwell (3) dealing (3) 49:9 different (8) 54:19;56:6 6:18;41:2,16 30:21;31:17;54:4 defraud (1) 10:10;13:12;30:9, divests (1) cross-examination (1) dealings (1) 29:20 12;35:16,25;44:11; 41:5 10:24 18:3 delegated (1) 49:19 docket (6) cross-examine (3) dealt (1) 39:18 difficult (2) 48:24;49:2;50:5; 18:25;20:12;37:8 57:24 delivered (3) 33:8;51:2 51:7,25;53:18 crush (1) debate (1) 14:17;30:4,5 difficulty (1) doctrine (1) 14:17 19:12 demonstrates (1) 32:20 39:13 crushed (2) debtor (17) 47:4 direct (5) documentation (11) 14:18,19 6:15;8:14,15; denied (1) 11:7;21:21,22; 9:14,16;11:9,11; crushers (1) 11:10;16:18;19:10, 28:5 26:20;30:8 15:14;21:16;23:1, 14:20 16,18,23;28:5;33:4; DEPARTMENT (4) directed (1) 14;24:13;29:22;31:1 CSJ (1) 39:11;41:9;43:6; 5:11;18:5,8,13 36:14 documents (7) 11:4 49:10,12;59:17 deposit (1) directing (1) 23:18;24:1,3,5,24; CSJC (2) debtor-by-debtor (1) 30:9 54:23 28:14;48:2 6:15;11:3 49:7 deposited (1) direction (1) dollar (2) Cuomo (1) debtors (37) 16:18 9:7 16:17;27:22 35:17 6:20;8:15;9:10; described (5) directly (2) dollars (7) current (2) 10:15;11:2,12,19; 16:22;30:19; 12:25;29:10 10:2;26:4;28:2; 15:6;25:19 12:13;13:1;16:14; 50:12,18;58:7 director (7) 29:21;30:4,15;36:8 currently (3) 20:21;25:17;26:3; describes (1) 19:23;20:7,9,10; dollars' (1) 20:10;40:9;41:8 27:10,16;29:4,15; 13:23 28:19;39:24;47:9 28:11 custodial (1) 30:2,7,19;31:7,10, description (1) directors (2) domain (1) 34:13 11,23;39:6,16;40:4, 16:21 47:10,20 35:16 Min-U-Script® eScribers, LLC | (973) 406-2250 (4) courts - domain [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G KUMTOR GOLD COMPANY CSJC and Pg 72 of 81 KYRGYZ REPUBLIC June 8, 2021 domestic (1) elected (4) 21:18;23:16;26:5, 36:3 25:10 7:6 17:24;27:2;44:12; 6,8;49:15;54:6;59:3 Exchange (2) done (6) 47:20 enterprise (1) 12:19,19 F 24:10;34:21;43:8, election (3) 26:18 exchanges (1) 11,15;54:16 17:23,23,24 entire (2) 29:1 fact (7) dore (11) elections (1) 13:24;40:19 excluded (1) 11:8;12:1;35:12, 15:8,9,10,11,16, 17:17 entirely (1) 58:22 15;38:13;44:16; 18;16:5,5,22;29:23; electric (1) 30:11 exclusive (1) 57:21 38:8 15:5 entities (6) 16:3 facto (1) dormant (1) electrowinning (1) 11:8;39:10,11,12, excused (2) 54:22 11:6 15:5 12;53:25 38:9,12 factory (1) down (5) elevate (1) entitled (2) executive (1) 14:23 14:4,20;26:5;27:9; 21:25 7:5;35:8 24:23 facts (1) 30:13 eliminated (1) entity (11) exercise (2) 46:2 downs (1) 20:9 9:20;10:9;11:6; 21:5;30:22 fair (2) 17:3 else (4) 15:20;21:1,4,22; exercising (1) 23:2;59:24 drilled (2) 7:13;47:20;62:19; 22:2,9;23:12;47:6 41:6 faith (1) 14:5,6 63:14 entry (3) exist (1) 31:17 Drilling (2) embodied (1) 27:15;45:16;55:14 21:6 fall (2) 14:2,2 24:1 environment (1) existence (1) 8:24;57:13 dump (2) emergency (1) 16:24 13:3 falls (2) 14:11,13 8:4 environmental (11) existing (4) 57:14;59:20 during (1) eminent (1) 11:24;25:18,20,20, 26:10;31:11;41:5; far (3) 14:5 35:16 21;26:7,10,24;27:21; 47:6 27:12;31:9;36:9 duty (1) employed (2) 31:5;45:8 exists (1) farther (1) 29:3 12:25;13:3 equipment (1) 20:23 57:16 dynamic (1) employees (6) 13:16 expanded (1) fast (1) 25:12 9:2;12:9,23;13:1; equity (3) 17:25 26:14 26:20;44:4 22:13,14,15 expect (2) February (1) E employment (1) ESQ (3) 47:25;59:13 27:3 26:21 5:8,17,18 experience (2) Federal (1) earlier (5) encompass (1) essence (1) 33:25;55:1 5:13 28:5,7;29:18,22; 45:14 59:9 expertise (1) feel (1) 61:16 end (1) evaluate (1) 12:6 36:4 easier (1) 20:17 21:9 explaining (1) feet (2) 33:15 endemic (1) evaluating (1) 47:13 8:18;11:21 easy (1) 18:18 30:20 explosives (1) few (7) 34:21 ends (1) even (5) 14:6 8:3;26:25;33:3; effect (5) 18:15 32:21;40:16; express (1) 42:18,24;46:20; 24:13;45:16; enforce (1) 46:20;47:1;48:20 43:9 48:14 52:19;58:22;59:8 54:24 event (10) expropriated (1) fiduciary (1) effective (2) enforceability (1) 9:5;16:11;19:11; 17:16 29:3 44:22;56:12 56:15 22:11,12;30:21; expropriation (8) field (1) effectively (9) enforceable (3) 32:5;39:7;45:9; 9:5;16:11;19:11; 11:22 11:6;15:10;21:24; 44:22;52:18;56:12 56:22 30:21;32:5;35:15; fifth (1) 24:21;27:18;28:8, enforced (1) eventually (3) 36:5;39:7 14:21 17;29:12;39:20 45:17 20:24;21:7;23:3 extend (1) figure (2) effectiveness (1) enforcement (3) everybody (1) 50:6 35:23;36:11 27:5 18:17;24:8;45:14 43:25 extension (4) figured (1) efficient (1) enforcing (2) evidence (9) 50:6,24,25;51:1 62:23 49:4 32:21;54:21 10:8;18:23;19:3; extensions (1) file (6) efforts (1) engaging (1) 20:1,8,11,14;47:4,18 50:11 8:4;46:24;47:3; 17:17 35:4 exactly (2) extent (5) 49:5;50:7;51:10 ego (4) enjoining (1) 16:22;52:9 22:17;43:14;57:2, filed (14) 15:19;32:1;35:13; 57:6 example (2) 14;58:5 7:24;8:9;13:19; 36:15 enormous (1) 32:24;59:11 external (4) 25:13,17;27:17,19; eight (2) 13:16 excavators (1) 18:14;39:18,24; 28:13;33:10;34:5; 24:16;25:1 enough (1) 14:10 42:16 49:25;54:3;61:4,5 eighty (1) 26:19 except (1) extracted (2) filing (5) 15:12 enter (4) 49:21 14:15,19 27:1;28:14;42:23; either (8) 31:6;50:20;58:18; exception (3) extraction (1) 60:25;62:25 12:25;36:14;45:1; 60:2 57:7,12;59:20 14:16 filings (1) 47:4,5,13;55:2;58:12 entered (8) excess (1) extradition (1) 41:7 Min-U-Script® eScribers, LLC | (973) 406-2250 (5) domestic - filings [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G KUMTOR GOLD COMPANY CSJC and Pg 73 of 81 KYRGYZ REPUBLIC June 8, 2021 finally (1) forum (5) 54:20 guiding (1) high (1) 28:1 40:12,13;42:6; Gold (62) 58:24 12:8 financial (6) 44:14;45:20 5:22;6:14,20;8:15, gut (1) highest (2) 9:21,21;16:1; forward (11) 16,16;9:18;10:2; 63:3 8:19,19 27:21;29:24;31:24 26:14;38:25; 11:3,20,21;12:6,8, highlight (2) find (3) 40:15,25;41:4,14; 11,12,14,14,15,22; H 42:24;43:5 12:4;36:21;62:23 44:12,15;46:25; 13:6,9,9,11;14:3,13, highly (1) fine (5) 47:24;48:6 15,16,17,18,25;15:1, hair (1) 13:17 62:2,8,10,12;63:7 four (3) 3,6,6,7,9,11,11,13, 14:21 historical (1) firm (2) 27:19;28:2,4 16,17,22;16:1,4,5,6, hand (1) 20:21 6:24;48:10 fourth (5) 10,12,17,22;18:3; 37:17 hold (1) firm's (1) 24:14,16;25:22, 21:15;29:21,23,24; handle (1) 22:18 7:3 25;42:3 30:5;34:21,23; 33:9 holes (3) first (19) frame (1) 35:22;38:8;49:3,11 happen (2) 14:5,6,7 7:17;8:2,13,24; 20:24 Good (7) 63:2,2 holiday (1) 13:9,11;14:2,17; framework (1) 6:2,17,22;7:9; happened (8) 25:7 21:14,17,23;22:20; 18:15 31:17;53:14;60:5 21:19;25:11; Honor (83) 27:2;48:20,25;55:9, frankly (2) govern (1) 26:25;27:3;30:14; 6:22;7:8,9,19,22; 20;56:8,16 35:9;55:4 39:15 36:12,21;39:6 8:1,7;9:4,9;10:11,22; first-day (11) Friday (2) governance (4) happening (2) 11:2,20;12:1;13:2; 8:8,11;34:7;37:6, 8:9;29:13 39:14,16;41:19; 9:24;14:21 15:22;16:21,24;18:4, 21;46:10,12,13;48:6, front (2) 43:18 happens (1) 7,20;19:4,5,24; 11;58:18 47:18;62:5 governed (4) 14:15 20:15,20;26:14; fit (1) front-end (1) 9:16;12:20;24:6; happy (2) 29:18,19;30:10,17; 61:9 14:11 26:13 33:21;51:15 31:23;32:7;33:19; fits (1) fruition (1) governing (3) hard (2) 35:22;36:6;37:13,16, 59:23 23:7 23:1;24:1;31:1 45:2;54:10 18;38:4,16,18;39:3, floor (1) FSIA (1) Government (26) harm (2) 11;41:23,24;42:11; 7:20 45:10 5:3;16:15;17:3,19; 46:11;50:17 46:4,6,7,18;48:7,12, flowed (1) full (4) 20:22,25;21:4,20,25; head (1) 25;49:13,20;50:3,18; 10:3 26:9,12;28:3;32:4 22:7,12;23:3;25:2,9, 61:1 51:5,7,14,16,23; focus (1) full-time (1) 12;26:4,19;27:7,18, headed (1) 52:2,4,9;53:3,5,14, 43:6 12:23 20;28:16;29:7; 32:17 18,20;54:16;55:15; focused (1) fully (1) 35:21;44:23;45:3; headquarters (1) 58:4,6;60:5,17; 17:18 18:13 59:8 11:12 61:19,24;62:11;63:9, focusing (1) fundamental (1) governmental (3) hear (4) 10,16 54:22 22:24 57:10,21,25 15:21;41:20; Honor's (1) following (1) further (5) government's (1) 46:22;55:16 38:19 38:17 24:17;29:11; 45:7 heard (10) hostage (1) follows (1) 50:25;58:24;60:18 governs (1) 10:20;44:2;49:23, 17:12 41:12 future (1) 47:22 24;50:21,23;51:18; hour (1) Foreign (17) 39:3 grant (7) 52:24;53:1;60:12 38:3 7:7;12:21;34:25; 44:22;50:1,24; hearing (12) hours (1) 35:3,4,8;44:20;45:4; G 51:3,20;53:11;56:21 29:11,12;34:10, 38:6 47:22;53:21,22; granted (1) 10;37:14;41:21; HSBC (1) 57:23;58:1,8;59:6,8, gained (1) 28:3 43:24;48:15,22; 10:1 21 29:5 great (4) 56:20;60:20;61:9 human (1) forged (1) generally (1) 53:6;62:6,18; hearings (1) 14:21 30:8 62:9 63:17 62:9 hundreds (1) form (3) geologists (1) grind (1) held (4) 10:1 51:11;54:6,14 14:8 14:20 22:13,14;29:12,12 formal (4) glacier (1) groundwork (1) help (3) I 6:5;38:23;42:12; 11:22 37:12 29:6;36:11,21 46:8 glaciers (5) guarantee (1) helpful (2) idea (5) formally (1) 11:22,25;12:2,3; 56:24 37:3;58:5 12:8;35:7,10; 48:21 45:8 guess (11) helping (1) 61:13;62:24 formed (1) glad (1) 32:14;33:14,24; 8:3 identified (3) 27:4 34:19 37:4;48:4;52:10,25; helps (1) 40:17;45:25;46:11 former (6) global (1) 55:21,24;61:16;63:7 56:14 identify (1) 11:16;18:2;24:22; 54:21 guessing (3) hereby (1) 6:12 25:7;42:14;56:5 goal (1) 7:16;32:23;63:1 20:13 IL (1) forth (3) 32:3 guidelines (1) herein (3) 5:6 20:20;23:2;38:2 goes (1) 31:14 56:21,23;57:5 illegal (4) Min-U-Script® eScribers, LLC | (973) 406-2250 (6) finally - illegal [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G KUMTOR GOLD COMPANY CSJC and Pg 74 of 81 KYRGYZ REPUBLIC June 8, 2021 9:5;19:12;30:21; 23:20 7:6;9:20;12:5; jail (2) KLEINMAN (2) 39:6 Indeed (2) 16:2;18:16,19;24:9, 17:11,11 5:8;6:24 illiquid (1) 10:4;11:15 21;26:17;31:16; jailed (1) knee-jerk (1) 22:1 independence (1) 35:6;41:21;43:23; 17:20 35:1 imagine (1) 11:18 44:14;56:4 January (2) knew (1) 33:25 independent (1) Interpol (1) 17:23;27:2 27:20 immediately (2) 18:14 24:20 Japarov (3) knowledge (1) 28:23;56:12 indicate (1) into (34) 17:10,14;27:2 12:3 immunities (4) 27:14 7:17;9:8,17;13:2; Jensen (1) known (8) 7:5,7;44:20;45:4 indirect (1) 14:12;15:8,17;16:6, 7:23 13:19;15:8;16:9; Immunity (6) 26:21 7,23;18:23;19:3; Jim (1) 20:23;23:15,17; 35:1,3,4,8;44:25; indirectly (2) 20:1,11,13;21:12,14, 6:17 24:20;26:7 59:21 13:3;29:10 18;22:3,15;23:16; joint (4) KOC (7) impact (1) indiscernible (1) 26:5,6,8;29:25;30:9; 11:3;49:1,11,14 11:4,5,5,10;25:18; 58:24 31:3 32:8;54:2,9;55:11; jointly (1) 26:3;28:12 implement (1) individuals (2) 56:25;57:13,14; 49:3 Kumtor (23) 41:23 27:19;31:19 59:20 JSC (1) 5:22;6:14,20,20; implementation (2) influence (1) introduced (1) 15:20 8:15,15;11:2,4,20, 18:17;25:24 18:14 27:6 Judge (2) 21;12:12;16:22; implemented (3) information (10) investigated (1) 6:2,17 17:2,13,15;21:9; 32:5;39:9;54:5 29:5,15;30:13; 25:5 judgment (2) 22:24;23:17,21,25; implicates (2) 31:20;33:11;36:17, investigation (1) 27:15;28:3 27:5;29:11;49:3 45:7;53:21 17;48:1;49:6;50:14 37:1 judicial (1) Kyrgyz (81) implied (1) initial (3) Investment (3) 18:13 6:24;7:5;8:16;9:2, 40:12 7:2;60:24;61:11 18:8;23:15;26:8 July (1) 7,12;10:8,13,16,21; importance (1) initiated (1) involuntarily (1) 62:7 11:4,13,14,23;12:3, 40:24 40:14 17:5 jump (1) 4,17;13:20;15:19,23; important (9) injunction (4) involve (1) 38:1 16:15,25;17:3,16,22; 13:7;25:19;27:14; 29:1,8,14,17 57:1 jumped (1) 18:2,13;19:14;20:21, 37:12;38:24;39:1; insolvent (1) involved (4) 52:13 25;21:4,20,24;22:7, 42:25;43:5;46:6 26:23 13:10,11;25:4; June (3) 12,22;23:3,5,20,23; importantly (3) instead (1) 57:22 16:13;23:16;29:13 24:4,18,19;25:2,9, 23:23;24:6;42:21 22:6 involvement (3) jurisdiction (3) 13,14,17,18;26:2,4, imposed (1) instrumentalities (1) 24:23;29:9;44:16 9:23;10:12;54:23 19,21;27:18,19;28:2, 56:21 10:14 involves (1) jurisdictions (3) 6,10;29:7;31:6,9; impossible (1) instrumentality (1) 45:5 32:21;54:4;55:7 32:1;34:19,23;35:13, 47:17 35:13 involving (1) jurist (1) 21;36:14,22;39:10, in- (1) integral (1) 56:5 10:19 11,13,14,24;40:4,5; 25:1 44:3 ipso (1) JUSTICE (2) 41:13;42:13,18;43:9, inability (1) intend (1) 54:22 5:11;29:2 11,20 41:22 42:11 irreparable (1) justification (1) Kyrgyzaltyn (27) inappropriate (1) intended (1) 46:11 55:13 15:20,21,25;16:4, 58:17 58:7 issue (6) 6,6,14;21:1,18,21, Inc (1) intention (1) 26:22;53:5;56:14; K 25;22:7,10,12;23:11; 49:11 58:14 57:13,18,20 28:20;29:7,20;30:2, incident (1) intercepted (1) issued (5) KAYE (1) 6,7;32:1;35:12; 27:12 10:7 24:20,22;25:6; 5:2 36:15,23;58:21; include (2) intercompany (1) 26:2;29:8 keep (3) 60:11 26:19;45:1 23:22 issuer (1) 29:13;34:9;35:24 Kyrgyzstan (12) including (6) interest (10) 12:21 KGC (13) 5:3;10:9;39:9,15; 7:6;12:16;18:19; 21:2,21,22;22:1,2, issues (17) 11:5,6;16:18; 40:6,20;43:16;44:1, 25:4;41:15;48:2 3,17,18,19;45:7 10:4;11:24,24; 21:21;25:5,13,17; 5,7,23;45:3 inconsistent (1) interesting (1) 13:8;21:11;29:15; 26:3;27:8;28:5,12, 34:22 34:12 30:19;31:4;33:4; 17;29:20 L incorporate (1) interests (1) 38:23;39:2;42:10; KGC's (1) 60:3 12:16 45:11;46:8;51:16; 16:18 lack (2) incorporated (1) interfacing (1) 55:20;57:10 kidnapping (1) 43:17;45:24 39:12 38:13 item (9) 17:11 lanes (1) incorrect (1) interim (1) 49:1;50:4,4,5; kind (5) 54:17 27:10 17:22 51:7,24,24;53:16,17 7:16;19:6;30:18; language (4) incorrectly (1) internal (1) 35:14;37:11 47:14;52:16;57:3, 34:15 39:13 J Kirghiz (1) 17 increased (1) international (15) 11:17 large (5) Min-U-Script® eScribers, LLC | (973) 406-2250 (7) illiquid - large [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G KUMTOR GOLD COMPANY CSJC and Pg 75 of 81 KYRGYZ REPUBLIC June 8, 2021 13:2,4;14:8,10,11 8:18;11:21;33:17; 12:8 maybe (7) mine-owning (1) largest (1) 34:13 lost (1) 18:24;33:11;47:2; 21:22 11:13 liabilities (1) 42:9 52:4;55:17,21;61:3 minerals (1) last (11) 50:7 lot (7) mean (2) 16:2 7:25;8:4;9:6;10:6; liability (1) 15:21;32:20; 18:3;40:16 mines (1) 16:20;29:13;30:17; 52:8 33:23;34:2;46:5; meaningful (1) 8:19 36:9;45:19;53:16; limitation (1) 48:1;54:9 45:16 minimal (1) 61:4 52:8 lots (1) means (1) 34:8 later (7) liquidate (1) 32:19 42:18 mining (4) 6:11;13:8;25:1; 22:16 meant (1) 12:16;13:6,9; 28:2;45:6;61:7,15 liquidation (2) M 23:25 58:21 latest (1) 43:8,11 measures (1) MINTZ (35) 61:18 Lisa (1) Madison (1) 54:24 6:22,23;19:4,4,25; Latin (1) 6:2 5:4 melted (1) 20:16;34:1;35:11; 54:19 list (4) maintain (1) 15:8 37:4,10;38:1,15,16; laughable (1) 33:20;40:17; 51:10 member (2) 46:21,22;48:9;49:16, 35:9 51:11;59:4 major (3) 11:16;29:6 20;53:19;55:17,20; law (31) listed (2) 18:9;23:19;35:3 mention (1) 57:2;58:2,4;59:1; 7:6;9:16;11:4; 12:18;59:4 making (3) 58:2 60:7,9,11,13;61:21, 20:7;24:1,7;26:13; listening (1) 35:14;46:4;61:22 mentioned (16) 24;62:20,21;63:9,19 27:13;28:8;31:25; 61:3 management (5) 11:20;12:18; Mintz's (9) 39:9,9,10,13,14,24; lists (1) 28:17;29:10; 29:19,19,22;40:4; 10:14;34:25; 40:5,11,23;41:4,13; 50:8 39:20;41:6;42:14 41:1;42:13,18; 49:24;50:21;51:18; 42:13,18;43:9,11,21; litany (1) manager (9) 43:23;44:20;45:19; 52:25;53:11;56:24; 44:10;47:2,14,22; 54:21 20:4;28:21;29:16; 47:14;48:3,13;52:4 60:1 55:7 litigation (4) 32:2,15;34:14;39:18, metals (1) miracle (1) laws (8) 30:23,25;44:12; 24;42:16 16:2 8:21 10:12;23:23,25; 51:2 managers (3) meters (2) mired (1) 24:3,10;28:24; little (5) 25:5,14,14 8:18;14:4 51:1 39:14;54:3 8:8,13;11:1;17:9; manner (4) might (19) missing (4) lawsuit (3) 24:19 31:13;34:22; 13:12;18:24; 36:9,9,13;52:14 27:17,19,23 LLP (1) 43:15;51:12 32:17,24,25;33:16, mixed (2) lay (2) 5:2 many (2) 17;34:11;35:22; 14:18,25 37:12;42:11 loaders (1) 8:21;12:8 36:2;46:20;48:18; model (2) leadership (1) 14:11 March (1) 51:2;52:5;55:15,21; 55:6,7 31:18 local (1) 27:17 57:1,2;63:3 models (1) least (2) 26:17 Mario (1) mill (1) 54:18 17:5;63:6 located (17) 35:17 14:14 modification (1) leaving (1) 8:17;11:12,14,21; market (2) million (6) 37:22 25:14 12:15,23;15:7;36:17, 15:17;22:14 12:11;26:4;29:21; modify (1) led (1) 18,24,25;40:6,19; marketed (1) 30:4,14;36:8 56:23 25:22 44:5,5,7;48:24 21:4 millions (1) modifying (1) leeway (1) location (1) markets (1) 10:1 53:9 61:8 21:10 16:7 mind (2) moment (3) left (1) locations (1) masks (1) 7:18;62:4 20:3;31:19;50:12 17:4 14:13 12:9 mine (78) monetize (1) legal (3) logistical (1) material (1) 8:16,16,19,20,22; 21:1 18:15;26:24;28:23 8:20 40:10 9:1;11:6,7,15,20,21; money (3) legally (1) long (4) matrix (2) 12:1,2,6,8,12,22,23, 10:10;16:23;44:3 54:15 23:19;53:23,23; 51:8,10 25;13:3,10,16,19,19, monitoring (1) legislation (1) 59:23 matter (10) 21,25;14:22;15:10, 27:9 27:6 longer (1) 7:2;41:21,22;42:4, 16,18;16:5,22;17:2, monopoly (1) legislative (1) 19:17 18;44:23;45:15,17; 13,15;18:3,3;20:3; 15:23 22:23 longstanding (1) 57:23,25 21:2,9,10,12;22:1,4, month (4) legislature (2) 10:11 matters (1) 6,14,15,19,24;23:19, 16:20;29:25;30:3; 19:15;28:8 look (3) 57:24 21,24,25;25:5;26:15, 36:9 legitimate (3) 34:3;40:17;58:9 May (25) 22;27:5,7,11;28:5,9, monthly (1) 42:4;45:24;46:1 looked (2) 6:15;9:6;20:2; 17,22;29:7,11;31:10, 49:6 legitimately (1) 34:8;52:12 26:2;27:13,25;28:2, 11,13,18,20;32:2; months (5) 57:14 looking (4) 7,14,16;30:2,7;45:6; 34:21,23;35:22; 9:6;25:8,24;26:25; lets (1) 22:23;30:12;32:9; 47:17;55:4;56:21; 36:20,20;39:19;56:7 56:4 57:16 62:6 57:18;58:2;59:11,21, mined (5) moratoriums (1) level (4) looks (1) 22;61:9,10,14,14 13:9,12,24,25;14:1 54:5 Min-U-Script® eScribers, LLC | (973) 406-2250 (8) largest - moratoriums [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G KUMTOR GOLD COMPANY CSJC and Pg 76 of 81 KYRGYZ REPUBLIC June 8, 2021 more (6) 35:18,22,23;36:19, 52:1 officer (2) options (1) 17:9;23:7;33:8; 21;37:2;46:7,10; notifying (1) 20:6;24:23 30:21 51:2;54:15;61:10 51:21;54:11;59:18; 51:12 officials (1) order (38) morning (5) 60:3,7;62:25 notwithstanding (5) 18:2 7:18;9:23;29:11; 6:2,17,22;7:9;8:2 needed (1) 25:24;39:23; offtake (3) 30:3,8;33:18;49:12, Most (7) 12:4 52:17;56:12;57:4 16:9,10,13 14;50:1,20;51:4,21; 9:15;10:5;23:23; needs (2) number (14) offtaker (2) 52:12;53:10,12;54:6, 24:6;36:25;46:13; 41:14;43:19 6:14;13:2;38:4; 16:4;29:24 14;55:5,14,23,24; 54:4 negotiated (2) 48:24;49:1,2;50:4,5; often (1) 56:11,11;57:5;58:9, motion (25) 9:15;24:7 51:7,8,24,25;53:17, 55:1 12,16,22,23;59:2,2,6, 38:23;42:12;46:8, negotiation (1) 18 Once (5) 9,14,18,24;60:2,3 16,17,20,24;47:1,3, 24:24 NY (1) 14:6,10;15:7; orders (5) 12,25;49:19,25;50:6, neither (1) 5:15 26:22;29:25 26:2,11;45:16; 12;51:3,7,8,9,17,20; 41:6 one (24) 56:3;59:3 53:17;58:18;62:25; New (37) O 7:23;8:19;10:4; ore (2) 63:3 5:15;9:7,11,13,13, 26:1,2;27:2;34:9; 14:13,20 motions (11) 13,15,16,19,21;10:1, object (1) 35:3,22;37:22;38:5; organization (1) 33:10;37:6,13,21; 12,13;12:19;16:18, 39:21 47:16;48:14,17; 47:22 46:10,12,13;48:6,22; 23;22:8;23:17;24:7, objected (1) 49:7;52:3,13;53:10; organized (2) 49:21;53:22 8,11;26:13;27:4; 38:21 55:2,9,18,21;59:15; 28:24;40:5 move (5) 28:25;29:25;30:4; objection (13) 60:9 original (2) 17:9;41:4,14; 31:24,25,25;32:24; 19:2,5;49:17,24; one- (1) 21:3,15 46:25;47:24 35:18;36:10,18; 50:22;51:19;52:25; 14:20 others (1) moves (1) 40:10,12;44:10;56:7 53:12;55:18,18; one-hundred (1) 6:25 38:24 next (8) 56:9;59:16;60:1 12:13 otherwise (5) moving (1) 18:7;27:14;30:16; obligation (1) ones (2) 26:24;56:13; 48:6 35:17;37:7;50:4; 36:4 24:25;48:3 57:13;59:21;62:20 much (16) 51:7,24 obligations (1) only (8) ought (1) 13:24;28:1;33:19; nice (1) 26:24 6:4;9:4;13:20; 61:8 35:23;37:18;38:11; 10:18 observations (1) 15:16;22:16;28:4; ounces (1) 40:9;44:2;48:12; nicely (1) 39:5 37:22;60:13 12:11 51:5;59:5;60:17,19; 8:3 obtain (2) Ontario (4) out (20) 62:13;63:10,16 night (1) 9:23;55:5 12:20;28:23;29:1, 9:22;13:18;14:22; multi-front (1) 7:25 obtained (1) 8 18:18;20:24;21:7; 30:23 none (5) 12:12 open (1) 22:9;32:20;35:23, must (2) 40:17,18;45:9,25; obviously (29) 12:10 25;36:11,21;42:11; 12:9;16:18 46:10 6:6,10;9:11;20:12; operate (6) 48:22,23;49:7; mute (1) non-US (1) 25:11;32:11;33:2,4, 8:16;11:19;27:12; 52:13;59:2,15;62:23 6:8 53:25 5,15;34:23;40:19; 31:10,12;36:20 outline (1) myself (3) nor (1) 43:12;46:23,25;47:8, operated (2) 41:11 32:17;33:24;50:23 41:7 15,17;48:1;50:22,24; 26:16;27:11 output (2) normally (1) 51:17,18;53:13;55:7, operates (2) 15:9,16 N 33:3 15;59:4,10;60:7 11:6;16:3 outside (2) norms (3) occur (2) Operating (11) 12:4;32:21 name (2) 18:16;26:17;34:22 43:3,4 6:21;8:15;11:4; outstanding (1) 15:21;48:10 notably (1) occurred (2) 12:10;16:11,12; 37:22 nationalize (1) 45:1 24:14;43:22 31:14,17;49:6; over (20) 35:7 note (5) o'clock (2) 51:13;54:17 8:3,18,18,22;9:14, nationalized (1) 7:2;10:17;18:22; 37:20;38:9 operation (7) 25;12:11,24,25; 17:15 25:19;55:15 October (2) 8:20,23,25;13:5; 13:23;16:8,25; nature (2) noted (5) 17:9,20 21:12,13;26:23 17:25;25:16;26:3; 17:7;22:24 21:9;27:1;33:3; oddly (1) operational (2) 28:1;41:6;48:14; near (2) 48:23;52:2 26:18 27:9;34:22 54:8,12 38:25;39:3 notes (1) off (3) operations (4) overrule (3) nearly (1) 18:12 13:21;48:13;61:1 11:9;32:24;40:19; 51:19;59:16;60:1 12:22 Notice (4) offer (2) 44:4 overruling (1) necessarily (1) 24:20,22;25:6; 18:23,24 operative (1) 53:11 63:5 56:20 offered (1) 28:14 oversight (1) necessary (5) noticeable (1) 30:8 operator (1) 18:19 12:6;50:14;56:22; 48:20 Office (9) 28:5 overturned (1) 58:11;63:4 notices (2) 5:12,13;38:13; opportunity (4) 17:21 need (17) 48:21;54:19 50:19;51:14;52:3, 37:5,10;38:17; owed (3) 6:6;33:12;34:7; noticing (1) 21;53:4;63:13 46:16 29:4;33:7;59:5 Min-U-Script® eScribers, LLC | (973) 406-2250 (9) more - owed [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G KUMTOR GOLD COMPANY CSJC and Pg 77 of 81 KYRGYZ REPUBLIC June 8, 2021 own (4) 16:17 31:11;41:23;45:2 precipitated (2) proceed (4) 22:16;35:17;36:2, paying (2) plans (1) 26:25;27:8 20:16;37:9;38:20; 16 26:20,20 13:22 predecessor (1) 43:15 owned (8) payment (3) play (2) 20:22 proceeding (7) 12:13;15:19,23; 10:5;30:8,11 9:8;54:2 prejudice (1) 30:25;40:14; 21:21;22:4,7;23:12; payments (5) please (1) 50:10 45:21;52:18;53:21; 49:10 29:25;33:5,6,7; 6:15 preliminary (4) 55:6;58:25 owner (2) 36:5 pleasure (1) 29:1,8,14,17 proceedings (3) 11:7;32:2 pending (3) 6:18 premature (1) 26:11;32:4;63:20 owners (1) 29:11,14;45:20 point (13) 41:9 proceeds (5) 9:1 people (6) 18:24;21:6;24:12; prepare (1) 9:18;10:2;16:16; ownership (5) 12:25;13:2;25:3; 27:22;30:10;34:9; 50:14 29:21;30:9 21:25;22:1,17,18, 26:21;33:7;61:3 35:11;44:17;45:5, pre-petition (3) process (8) 19 percent (4) 19;48:5;57:1;60:11 33:5,6,7 13:6,22;14:16; owning (2) 12:13;15:12;22:8; pointed (1) PRESENT (7) 15:5,14;16:16,19; 21:21;22:6 49:10 32:20 5:21;8:10;18:22; 20:9 oxygen (1) perfect (1) points (3) 19:6;28:6;36:25; produced (2) 12:9 61:20 23:19;35:3;48:8 46:7 15:18;21:14 perhaps (4) politely (1) presentation (6) product (3) P 7:17;47:21;55:21; 16:25 7:24;20:18;29:18; 8:22;15:10,11 58:16 political (2) 32:11;38:3;49:24 production (1) page (1) period (6) 17:17;18:14 presented (5) 21:13 18:7 9:3;23:10;24:16; poor (1) 21:10;23:5;46:17, profitable (5) paid (2) 26:16;61:15,16 18:17 18;58:7 9:1,1,1,2;26:18 31:18,20 permitting (1) popped (1) president (3) project (3) papers (3) 47:21 9:22 17:10,22;27:1 9:12;15:15;23:17 32:12;50:23;61:2 person (1) PORTER (3) presidential (1) Promotion (1) paragraph (2) 20:2 5:2;6:23;34:20 17:25 26:8 52:7;53:5 perspective (2) portion (1) presidents (1) proper (1) parliament (4) 34:8;42:8 22:6 17:4 20:8 22:22;23:5;27:3; petition (4) pose (1) presume (1) properly (2) 39:8 42:17;43:2;50:9; 42:3 52:16 43:19;47:20 part (2) 54:3 position (1) pretext (1) property (6) 11:17;20:25 petitions (3) 43:12 25:19 8:17,17;35:17,19, participants (1) 41:7,12;43:19 positioned (1) prevented (1) 20;36:3 31:24 phone (1) 36:11 25:14 propose (1) particular (6) 38:10 possibilities (1) preview (1) 49:2 9:21;13:25;14:3,6; photograph (1) 47:8 25:21 proposed (2) 18:1;23:22 28:18 possible (2) previously (1) 6:19;19:9 particularly (2) physical (1) 46:21;56:13 28:12 prosecute (1) 9:6;18:10 21:10 potentially (1) primarily (1) 36:22 parties (13) picture (1) 33:13 44:6 Protection (2) 6:4;11:11;16:9,14; 12:7 powder (1) primary (1) 26:8;34:6 18:25;19:13,16; pictures (1) 14:24 55:9 protests (1) 24:3;26:4;42:5; 13:15 power (2) principal (1) 17:13 44:12;45:23;56:15 piece (1) 32:4,18 11:19 protocol (1) parties' (2) 35:17 powers (1) principles (1) 37:24 44:18;45:22 place (23) 17:25 43:23 provide (5) parties-in-interest (1) 8:23;9:5,7,25; practical (4) prior (4) 20:25;35:14;43:7; 50:17 10:19;14:10;16:19; 41:22;44:23; 17:19;31:13; 55:2;60:7 party-in-interest (1) 17:1,12,24;21:16,17; 45:15,17 49:16;57:24 provided (1) 56:20 22:21;23:10;28:14; practicalities (1) privileges (1) 48:2 passed (4) 29:14;31:2,14,22; 42:2 7:4 provides (3) 27:13;28:8;39:9, 37:2;40:21;44:17; practice (1) probably (3) 26:9;29:22;49:11 15 57:18 54:13 7:16;46:17;61:13 providing (1) passes (2) places (1) practicing (1) problem (3) 26:20 14:25;15:6 33:17 53:24 18:18;61:22,24 provision (7) past (6) plainly (1) practitioners (1) problems (1) 24:9;43:5,9;52:8, 8:3;17:8;18:1; 41:4 54:9 33:13 17;53:10;56:19 25:23;26:25;48:14 plaintiffs (1) precedent (2) procedure (1) provisions (4) pay (2) 28:3 56:3,6 51:13 44:25;54:22; 35:20,23 plan (6) preceding (1) procedures (1) 56:10;60:4 payable (1) 13:19,19,21; 59:11 54:18 prudent (1) Min-U-Script® eScribers, LLC | (973) 406-2250 (10) own - prudent [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G KUMTOR GOLD COMPANY CSJC and Pg 78 of 81 KYRGYZ REPUBLIC June 8, 2021 34:3 63:5,6 59:20 11:14,14,17,23;12:3, 24:15,15,17,25; public (2) ready (2) related (3) 4,17;13:20;15:20,24; 25:22,25;42:4,8; 22:3,14 62:23;63:8 6:15;10:2;21:16 16:25;17:11,17,22; 45:25;46:1 publicly-traded (5) real (1) relates (2) 18:2;19:14;23:11, result (9) 12:14,17;22:2,4,18 11:9 25:19;52:7 20;24:4,18,19;25:2, 9:5;28:12;29:6; purchased (2) really (8) relating (7) 9,13,15;26:22;31:9; 30:5,18,22;35:9; 15:18;29:23 11:8;21:14;42:4; 9:15;11:24;15:15; 32:1;34:19,24; 36:10;42:13 pure (2) 46:14;48:4;56:1; 17:13;18:2;23:25; 35:13;36:15,22; resulted (1) 15:12;16:6 63:1,11 28:22 60:14 23:13 purity (1) reason (5) relationship (4) request (5) resurrect (1) 15:11 9:4;39:21,25; 16:8;17:1;20:21; 38:9;50:10;51:9; 36:1 purported (3) 43:16,17 34:13 56:20;60:20 resurrected (1) 31:6;40:25;41:15 reasonable (1) relatively (1) requested (1) 25:23 purporting (1) 40:22 22:1 60:1 retain (1) 26:3 reasons (1) release (2) requesting (1) 48:15 purpose (4) 43:21 25:22;26:12 50:6 retained (1) 42:7;45:25;46:1; reassert (1) released (2) requests (2) 48:21 55:9 28:11 27:24;36:1 41:9;56:24 retention (1) purposes (5) recall (1) releases (1) require (1) 53:7 20:4;32:16;42:1; 61:1 26:9 15:25 review (2) 46:9;59:21 received (1) relied (1) required (1) 13:21;18:6 pursuant (5) 20:13 24:3 43:2 reviewed (1) 7:6;31:1,2;42:7; recent (1) relief (16) requirements (1) 51:14 57:8 10:5 32:8;33:12;34:8, 42:23 revised (2) pursuing (1) recognition (1) 18;36:19,21;41:9,25; requires (1) 53:12;60:3 27:23 55:6 44:22;45:16;46:14; 16:16 revolutions (1) put (5) recognizable (1) 56:21,23;58:11,13; reserve (3) 17:7 14:7,11;16:25; 54:15 60:18 10:16;20:18;55:7 right (22) 52:16;54:14 recognize (3) remained (1) resigned (1) 7:20;11:4;16:10; puts (1) 46:4,12;54:24 21:16 28:21 18:25;20:12,18; 13:18 recognized (1) remaining (1) resolution (2) 21:9;28:13;30:23; 16:1 22:18 26:10;47:11 35:19;36:16;47:23; Q record (6) remains (1) resolutions (2) 48:14;49:23;52:24; 6:6,12;7:3,14; 9:3 42:17,21 55:2,8,9,19;61:6; quickly (2) 51:18;53:8 remember (2) resolve (1) 62:3,22 17:10;38:1 records (2) 13:11;28:7 45:22 rights (7) quite (1) 32:25;50:13 remind (1) resolves (1) 7:4;10:16;39:16; 53:23 Red (3) 61:4 41:10 41:6;44:18;45:14; quote (1) 24:20,21;25:6 remnant (1) resolving (1) 54:4 18:7 redirect (2) 11:9 44:13 rigs (1) 10:10;20:19 renders (1) respect (23) 14:4 R refer (1) 42:16 9:10;10:15,16,18; rock (8) 15:21 reorganization (4) 11:10,24;17:2,3; 14:8,12,12,13,16, race (1) reference (2) 41:23;43:7,10,13 19:8;23:22;27:21; 18,18,19 8:5 20:24;44:2 report (1) 29:20;31:4,9;33:17; role (2) raise (4) referenced (1) 49:7 34:12,18;36:4; 32:15;39:20 34:12;52:11; 40:8 reports (1) 37:23;44:25;48:15, roughly (1) 55:20;57:2 references (1) 49:6 22;58:25 29:25 raised (6) 44:10 represent (2) respectfully (3) Rule (3) 10:4;11:24;35:11; referred (1) 20:5;41:2 38:9;48:9;49:14 49:11;53:2;55:6 38:18;53:19;55:18 41:4 representations (1) respond (2) ruled (1) raising (2) refined (3) 24:2 48:8;58:24 28:3 37:17;39:2 16:1,6;29:23 representative (6) responsible (3) rules (2) rather (2) refinery (1) 5:22;19:10,18,21; 19:15;34:15,24 6:4;31:3 22:19;61:15 15:9 20:2;28:20 restated (2) run (6) reached (1) refining (1) representatives (4) 16:12;23:15 9:19;34:21;39:1; 21:13 15:22 40:25;41:8,15; restating (1) 42:10;53:13;54:9 reaction (1) regarding (1) 42:19 54:21 running (3) 35:1 38:20 representing (2) restraints (1) 20:2;25:5;55:11 read (5) regime (3) 35:2;60:10 56:21 32:12;49:25; 9:8;23:20;24:17 Republic (44) restructuring (21) S 50:23;51:17;53:7 regulatory (4) 6:24;7:5;8:16;9:2, 21:17,23,24;22:20, readily (2) 18:15;57:10,21; 7,12;10:9,13,16,21; 21;23:4,6,7,8,9,14; Sadyr (1) Min-U-Script® eScribers, LLC | (973) 406-2250 (11) public - Sadyr [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G KUMTOR GOLD COMPANY CSJC and Pg 79 of 81 KYRGYZ REPUBLIC June 8, 2021 17:10 seizure (1) shift (1) someone (3) stated (1) safe (1) 28:9 14:6 32:23;47:9,19 58:13 8:23 selection (2) show (2) sometimes (1) Statement (3) safety (1) 40:13;44:15 43:22;54:10 15:12 18:8;56:16,18 27:9 sell (1) shows (1) somewhat (2) statements (2) sale (4) 22:13 12:7 13:12;38:21 18:18;50:15 16:12,16;29:21; sells (2) shut (1) soon (1) state-owned (1) 30:9 15:25;16:7 27:8 54:2 58:21 sales (3) senior (1) sides (1) sorry (2) States (8) 9:18;10:2;16:17 28:17 63:4 18:3;30:17 5:12;7:10;36:24, same (8) sense (2) sign (2) sort (2) 25;44:9;45:10;53:4; 25:20,21;28:7,10; 40:22;58:7 13:21;47:10 32:16;53:24 54:2 33:17;46:21;48:18; sensitive (1) signed (2) sorts (1) statute (2) 52:5 14:20 30:3;48:13 35:14 58:16,16 sanctions (1) sent (2) significantly (1) sought (3) stay (19) 27:21 48:22,23 17:25 27:8,21;29:1 32:19;34:6;46:16; sat (1) sentence (1) silver (1) sounds (2) 49:18,22;53:17,22; 26:5 56:11 16:12 33:12;50:25 54:1,17,22;55:4; satisfactory (1) separated (2) similar (1) Southern (3) 57:3,7,12,16;58:8, 52:21 15:2,3 18:18 36:10;54:19;56:6 10,23;59:12 satisfy (1) September (2) simplified (1) Sovereign (10) stayed (1) 26:23 26:6,9 23:21 7:7;35:1,2,3,4,8,8; 57:6 saw (1) series (2) simply (1) 44:25;45:4;59:21 staying (1) 33:20 21:19;22:23 34:20 Sovereignty (1) 57:6 saying (8) service (2) single (1) 44:20 stays (1) 18:15;35:21; 28:10;48:23 16:17 Soviet (2) 54:5 47:16,16;52:16; session (1) site (5) 8:24;11:17 steel (1) 56:11,19;60:12 6:3 13:16,25;14:8,22; speak (3) 15:7 schedule (2) set (6) 31:19 19:18;37:5;40:2 step (3) 61:9;62:25 13:7,22;18:16; sitting (3) speaking (2) 14:2;34:5,5 scheduled (1) 20:20;23:4;60:20 9:11;35:2;61:1 6:7,11 steps (1) 17:23 SETH (2) situation (3) specific (1) 13:14 schedules (4) 5:8;6:24 9:9,10;36:19 32:8 still (4) 50:5,7,8,14 setting (1) sky (1) specifically (1) 20:23;23:12; scheduling (1) 13:18 9:22 43:7 24:13;36:6 62:20 settled (1) slide (8) specify (1) stock (4) SCHOLER (1) 26:15 7:24;12:7;16:21; 27:22 11:3;12:19,19; 5:2 settlement (2) 26:1;27:14;28:19; spent (2) 28:25 SCHWARTZ (10) 26:5,6 30:16,17 33:23;38:6 Stockholm (4) 5:17;7:9,10,12; seven (2) slides (1) spinout (1) 31:2;40:15;44:15; 37:15,16,18;38:12; 24:16;25:1 10:25 22:5 45:21 48:12;52:11 seventy (1) slim (1) spun (4) StoneX (7) sea (2) 15:12 40:7 20:24;21:7;22:9; 16:1,1,7;29:24; 8:18;11:21 several (9) slurry (2) 39:7 30:8;32:24;36:17 SEC (1) 13:14,20;17:4,4; 14:25,25 stabilized (1) stop (1) 12:21 18:1;25:8,13,16;38:6 smart (1) 23:24 32:7 second (8) severe (1) 54:13 staff (5) story (1) 19:1;22:20;23:6,7; 31:14 Socialist (1) 8:3;12:24,24;13:1; 10:24 43:4,17;54:10;56:18 severely (1) 11:17 63:12 Strategic (1) second-day (4) 25:12 sold (3) stand (1) 26:7 34:10;60:20;61:9; shall (2) 15:9,17;29:24 39:17 Street (2) 62:4 7:4;57:5 sole (3) standard (5) 5:4,14 section (7) SHARA (3) 16:3;17:16;29:24 51:9,13;52:12; stretch (1) 14:3;44:24;45:1, 5:18;7:11;53:3 solely (1) 54:17,20 40:22 13;49:9;54:2,14 shareholder (1) 17:17 standing (6) Stretto (5) Securities (1) 30:20 solution (5) 49:17;50:21; 37:23;48:16,20, 12:20 shareholders (6) 14:23;15:2,2,3,6 51:18;52:25;53:12; 23;52:1 security (1) 22:9;26:18;41:5; solvent (2) 55:18 stripped (1) 22:18 42:14,22,22 8:14,14 start (2) 15:3 seek (3) shares (1) somebody (2) 37:6;48:5 struck (1) 34:17;49:5;50:25 12:18 54:10;57:18 State (9) 13:12 seized (1) sheets (1) somehow (1) 9:13;18:5,8,10,12; structure (1) 28:16 14:8 47:5 24:8,11;28:10;35:18 21:20 Min-U-Script® eScribers, LLC | (973) 406-2250 (12) safe - structure [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G KUMTOR GOLD COMPANY CSJC and Pg 80 of 81 KYRGYZ REPUBLIC June 8, 2021 structured (1) talk (3) thought (2) transactions (1) unable (1) 15:15 34:10;38:15;62:19 26:14;34:7 23:22 26:23 study (1) talking (3) thoughts (1) transferred (1) uncommon (1) 27:4 16:4;45:11;63:5 34:2 22:15 20:6 subject (6) tanks (2) thousands (1) tried (1) under (22) 16:9;37:13;39:12; 12:9;14:25 26:21 17:19 7:5;9:7;11:3; 42:12;47:12;57:7 tax (2) three (5) trip (1) 16:11,12;17:19; submission (1) 23:20;28:10 9:14;28:1;56:2,4; 25:7 20:7;23:1;27:23,24; 10:12 taxes (1) 59:25 TRO (1) 28:14,24;39:13,24; submit (6) 26:20 three-billion-dollar (2) 29:12 40:5,22;41:12; 19:19;50:1;51:4, technical (2) 27:15;31:5 trucks (2) 43:15;44:19;49:3,9; 21;53:12;60:3 8:21;21:11 threshold (4) 14:11,12 55:6 submitted (2) technological (1) 38:19;41:10,19; true (1) underlying (1) 32:13;39:25 12:5 43:18 47:3 24:5 substantial (7) temporary (6) throughout (4) Trustee (6) understands (1) 13:5;21:11,15; 20:4;28:21;29:16; 9:3;16:19;24:2; 5:12;7:10;38:6,10; 39:2 22:13;23:13,14; 32:2,14;34:14 26:16 52:15;53:4 undertaken (1) 24:14 Tengiz (1) Thursday (1) Trustee's (6) 43:2 substantially (1) 28:18 62:10 50:19;51:14;52:3, undoubtedly (1) 43:25 term (2) ties (1) 21;53:9;63:13 17:2 substantive (2) 23:24;38:25 40:16 trying (8) uneven (1) 46:14;58:12 terminate (1) till (2) 32:17;33:1,22; 16:25 suffers (1) 56:23 37:6;49:18 34:3,4;40:20;61:1,2 Union (1) 18:17 terminations (2) times (2) Tuesday (1) 8:24 suggest (1) 31:21,22 27:11;42:19 62:9 unique (1) 61:11 terms (10) title (1) Turkey (1) 8:17 suggestion (1) 12:5;21:11;23:17; 39:23 12:16 United (8) 48:5 26:19,22;31:1; today (20) turn (5) 5:12;7:10;36:24, Suite (2) 41:25;42:1;43:15; 6:19,23;7:3;9:4; 6:7;18:20;22:4; 25;44:9;45:10;53:4; 5:5,14 57:8 10:17;30:18;32:9; 37:13;38:15 54:1 Sullivan (3) testify (1) 39:1,17;40:24;41:9; TV (1) units (1) 6:18;41:1,16 18:22 42:9,19;46:5,25; 13:13 58:1 Superior (1) thanks (2) 47:16,18;48:4; twelve (1) unless (5) 29:2 38:11;63:12 61:10;63:15 14:4 24:4;46:23;47:1; supposed (1) theory (1) today's (4) twenty (1) 49:13,19 10:6 16:4 34:10;37:14;46:9; 50:8 unnecessary (1) sure (13) therefore (2) 48:22 twenty-four (1) 58:14 30:13;31:21;32:4; 25:3;34:14 together (2) 50:9 unreasonable (2) 36:23;37:9;52:20; there'll (1) 13:18;30:19 twenty-nine (4) 59:3,6 53:1;56:8,16;57:9; 63:1 tomorrow (1) 29:21;30:4,14; unrefined (1) 61:21,22;62:22 thinking (6) 36:20 36:8 15:11 surprise (2) 33:2,14,24;36:23; took (10) twenty-nine-million-dollar (1) unsettled (1) 38:14;52:14 42:1;55:5 8:23;9:5,6;17:24; 10:5 17:7 surprised (1) thinnest (1) 21:17;22:21;28:14, twice (1) up (9) 50:25 44:9 17,23;33:25 29:25 10:25;13:8;14:4,7; surprising (1) third (5) top (3) two (12) 18:16;30:18;38:8; 52:10 23:9,14;24:15,25; 40:18;51:11;61:1 8:15;9:10;11:2,8; 48:14;54:12 surrounded (1) 57:1 Toronto (3) 17:5;26:3;31:23; upends (1) 11:22 thirteen (1) 12:15,18;28:25 39:11;47:7;49:2; 47:5 susceptible (1) 9:25 total (2) 55:2,21 upon (1) 18:14 thirtieth (1) 25:22;50:9 two-party (2) 42:6 suspect (1) 61:13 touch (1) 42:5;45:20 ups (1) 48:18 thirty (6) 39:4 types (2) 17:3 Sweden (2) 8:22;10:6;40:18; tracking (1) 33:10;45:11 use (5) 40:15;44:15 51:11;59:4;60:25 30:13 11:5;32:4;54:18; system (4) thirty-three-and- (1) traded (1) U 55:5,8 9:21,22;18:13; 22:7 28:25 used (7) 31:24 thirty-year (1) traditional (1) ultimate (1) 9:25;13:16;14:2,4, systems (2) 17:1 56:6 41:25 7;23:24;29:5 27:9,11 thirty-year-old (1) traditionally (1) ultimately (2) using (1) 35:6 56:2 57:15,20 15:4 T though (3) transaction (1) ultra (1) USSR (2) 31:11;40:24;48:20 22:6 42:17 11:16,17 Min-U-Script® eScribers, LLC | (973) 406-2250 (13) structured - USSR [email protected] | www.escribers.net 21-11051-lgb Doc 92-7 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit G KUMTOR GOLD COMPANY CSJC and Pg 81 of 81 KYRGYZ REPUBLIC June 8, 2021 US-style (1) weak (2) 9:8;13:17,18,24; 12 (1) 30th (1) 26:12 14:23;18:17 17:8 48:24 27:6 usually (1) wear (1) years (10) 12th (2) 31st (1) 55:2 12:9 8:22;9:25;16:20; 30:7;62:7 61:5 Wednesday (1) 24:16;25:1,16; 13,000 (1) 362 (4) V 62:9 31:17;33:25;54:8,12 8:18 54:2,14;57:8,16 week (3) Yep (1) 13.2 (1) 3rd (1) valid (1) 8:4;61:4;62:7 62:16 12:11 27:25 57:19 weeks (3) York (33) 13th (1) validly (2) 9:23;17:21;18:1 5:15;9:11,13,13, 62:10 4 41:12;47:9 West (1) 13,15,16,19,21;10:1, 14th (2) value (1) 5:4 12,13;12:19;16:18, 28:15;62:10 4 (2) 36:3 what's (5) 23;24:7,8,11;26:13; 15th (3) 49:1,2 Varick (1) 13:18;55:23,23; 28:25;30:1,5;31:24, 28:16;62:10,11 4,000 (3) 5:14 59:23;61:14 25,25;32:24;35:18; 175 (1) 8:18;11:21;12:25 varies (1) Whereupon (1) 36:10,18;40:11,12; 54:10 4200 (1) 15:12 63:20 44:10;56:7 1976 (1) 5:5 various (2) whole (1) 7:7 4th (1) 15:4;50:8 36:1 Z 1991 (1) 29:13 vendors (1) wholly (1) 11:18 13:4 15:23 Zoom (4) 1992 (4) 5 verbiage (1) who's (1) 6:4;8:10;62:1,17 20:22;21:3,8,16 39:7 20:6 1996 (2) 5 (2) video (2) whose (1) 0 12:10;21:13 50:4,5 6:6;7:1 28:18 1997 (3) 541 (1) view (6) widespread (1) 08 (1) 8:25;12:11;21:14 45:1 17:14;29:4;34:4; 18:1 23:11 543 (3) 38:19;45:3;49:19 withdrawn (1) 09 (1) 2 32:16;34:13,18 violating (1) 28:12 23:11 55:4 within (15) 2002 (3) 6 violations (1) 10:6;13:20,25; 1 21:17,23;22:5 24:14 14:7;17:6,21;18:21; 2007 (4) 6 (3) vires (1) 23:20;24:1,3,8,17; 1 (1) 22:21,22;23:6,10 23:16;51:7,8 42:17 54:17;59:23;60:25 41:12 2009 (6) 603b (1) virtually (2) without (7) 1,000 (1) 16:13;23:9,16,18; 56:13 40:5;44:1 27:12;30:10; 14:5 24:15,24 60602 (1) voluntary (1) 46:25;50:9,10;55:4; 1,200 (1) 201 (1) 5:6 10:12 61:2 12:24 5:14 6th (2) witnesses (1) 10 (5) 2014 (2) 27:13;28:7 W 44:5 52:7;53:5;61:24; 24:19;25:12 wool (1) 62:1,15 2016 (2) 7 wait (2) 15:7 100 (1) 25:17;26:2 37:6;54:10 work (1) 49:10 2017 (3) 7 (2) waiver (3) 31:19 10014 (1) 26:7,9;27:24 51:24,25 7:4;44:24;45:14 working (2) 5:15 2020 (4) 70 (1) waivers (1) 12:10;36:6 1006 (1) 12:11;17:9,20; 5:4 50:11 works (3) 5:14 18:8 7th (2) wants (1) 15:14;35:15;61:19 1012 (1) 2021 (8) 28:2;30:2 63:15 world (5) 49:10 9:6;27:2,3,13,17, warrant (4) 8:20;12:16;16:3,7; 1015b (1) 25;28:15;30:2 8 24:21;43:17,24; 18:6 49:11 21-11051 (1) 46:2 worldwide (2) 106 (2) 6:14 8 (2) warranted (1) 32:6,19 44:24;45:13 24 (1) 53:17,18 56:22 worth (1) 11 (11) 23:18 Waste (2) 28:11 27:1;32:3,4;37:20; 29th (2) 9 14:12,13 worthwhile (2) 38:9,21;51:13; 61:7,12 watershed (1) 8:7;10:25 53:21;54:24;55:6,12 9 (1) 22:11 wrong (1) 11:32 (1) 3 16:13 way (6) 63:3 63:20 13:11;21:1;24:4; 1129 (1) 3,000 (1) 35:15;49:18;59:15 Y 45:1 12:23 ways (3) 11th (1) 300 (1) 8:21;55:2,8 year (5) 26:9 26:4 Min-U-Script® eScribers, LLC | (973) 406-2250 (14) US-style - 9 [email protected] | www.escribers.net 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 1 of 55 Exhibit H KGC 341 Meeting Transcript 7.8.21 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 2 of 55 Page 1 1 UNITED STATES BANKRUPTCY COURT 2 SOUTHERN DISTRICT OF NEW YORK 3 Case No. 21-11051-lgb 4 ------x 5 In the Matter of: 6 7 KUMTOR GOLD COMPANY, 8 9 Debtor. 10 11 ------x 12 Office of the United States Trustee 13 Southern District of New York 14 One Bowling Green 15 Room 511, Fifth Floor 16 New York, NY 10004 17 18 July 8, 2021 19 20 341 Meeting of Creditors 21 22 23 B E F O R E: 24 ANDREA SCHWARTZ 25 TRUSTEE Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 3 of 55 Page 2 1 A P P E A R A N C E S : 2 3 SULLIVAN & CROMWELL LLP 4 Attorneys for the Debtors 5 125 Broad Street 6 New York, NY 10004 7 8 BY: JAMES BROMLEY (TELEPHONICALLY) 9 ALEXA KRANZLEY (TELEPHONICALLY) 10 CHRISTIAN JENSEN (TELEPHONICALLY) 11 12 ARNOLD & PORTER KAYE SCHOLER LLP 13 Attorneys for Kyrgyz Republic 14 250 West 55th Street 15 New York, NY 16 17 BY: MADELYN NICOLINI (TELEPHONICALLY) 18 19 BORGES & ASSOCIATES LLC 20 Attorneys for Leica Geosystems PTY LTD 21 575 Underhill Boulevard, Suite 118 22 Syosset, NY 11791 23 24 BY: WANDA BORGES (TELEPHONICALLY) 25 Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 4 of 55 Page 3 1 YOUNG CONAWAY STARGATT & TAYLOR 2 Co-counsel and Conflicts Counsel for the Debtors 3 Rodney Square, 1000 North King Street 4 Wilmington, DE 5 6 BY: KARA HAMMOND COYLE (TELEPHONICALLY) 7 PAULINE MORGAN (TELEPHONICALLY) 8 BETSY FELDMAN (TELEPHONICALLY) 9 10 HARNIK LAW FIRM 11 Attorneys for 12 666 3rd Ave 10th Floor 13 New York, NY 10017 14 15 BY: STEPHEN M. HARNIK (TELEPHONICALLY) 16 ARMIN KAISER (TELEPHONICALLY) 17 18 ALSO APPEARING TELEPHONICALLY: 19 20 DANIEL DESJARDINS 21 KENT KOLBIG 22 AILEEN DAVERSA 23 LETICIA SANCHEZ 24 SAFAK HERDEN 25 Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 5 of 55 Page 4 1 P R O C E E D I N G S 2 MS. SCHWARTZ: Okay. Thank you so much for your 3 patience. Again, my name is Andrea Schwartz. I am the 4 presiding officer at this 341 meeting. The first thing -- in 5 Kumtor. And the case is Kumtor Gold Company CJSC. It’s Case 6 Number 21-11051. And the case is being adjudicated by Judge 7 Lisa Beckerman. 8 The first thing I’d like to do is take a roll call of 9 who is on the phone. First from the Debtor, please. 10 MR. BROMLEY: Good morning. This is Jim Bromley from 11 Sullivan & Cromwell on behalf of the Debtors. 12 MS. SCHWARTZ: And Mr. Bromley, are -- 13 MR. KRANZLEY: Good morning. Also from Sullivan & 14 Cromwell, this is Alexa Kranzley with Christian Jensen. 15 MS. SCHWARTZ: Okay. You beat to me to it, Ms. 16 Kranzley. Okay. Is that all of the Sullivan & Cromwell folks 17 on, Mr. Kranzley, you and Christian? 18 MS. KRANZLEY: Yes, me and Christian. 19 MS. SCHWARTZ: Okay. 20 MS. KRANZLEY: I believe that’s it from Sullivan & 21 Cromwell. 22 MS. SCHWARTZ: Right. And your Debtor’s 23 representative today is? 24 MR. DESJARDINS: Daniel Desjardins. I represent the 25 Debtor. Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 6 of 55 Page 5 1 MS. SCHWARTZ: Okay. Welcome. Okay. Who is on from 2 Arnold Porter, please? 3 MS. NICOLINI: This is Madelyn Nicolini from Arnold & 4 Porter for the Kyrgyz Republic. 5 MS. SCHWARTZ: Is there anyone else on the phone with 6 you? Mr. (indiscernible)? 7 MS. NICOLINI: No. I am the only one from Arnold & 8 Porter on. 9 MS. SCHWARTZ: Okay. Could you spell your last name 10 for me, please? 11 MS. NICOLINI: N-i-c-o-l-i-n-i. 12 MS. SCHWARTZ: Okay. All right. Who is on from 13 Moses & Singer, please? 14 MR. KOLBIG: This is Kent Kolbig from Moses & Singer. 15 And I am observing the 341 meeting. 16 MS. SCHWARTZ: Excuse me. I’m sorry. But if you’re 17 not speaking, please mute your line. I can’t listen to your 18 paper and all this other stuff in the background. It’s very 19 distracting. Okay. 20 Thank you, Mr. Kolbig. Who else is on the line, 21 please? 22 MS. BORGES: This is Wanda Borges, B-o-r-g-e-s, 23 Borges & Associates LLC, on behalf of Leica, that’s L-e-i-c-a, 24 Geosystems PTY LTD. 25 MS. SCHWARTZ: Thank you, Ms. Borges. Who else, Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 7 of 55 Page 6 1 please? 2 MS. COYLE: Hi, this is Kara Coyle, Young Conaway 3 Stargatt & Taylor, co-counsel and conflicts counsel for the 4 Debtors. I am joined on the line with Pauline Morgan and Betsy 5 Feldman, also from Young Conaway. 6 MS. SCHWARTZ: Okay. Thank you very much, Ms. Coyle. 7 It’s Pauline Morgan and Betsey -- what was the last name, 8 please? 9 MS. COYLE: Feldman. 10 MS. SCHWARTZ: Got it. Okay. Who was the gentleman 11 that was trying to come in with Ms. Coyle? 12 MR. HARNIK: That was me. Stephen Harnik, H-a-r-n-i- 13 k. And I have with me Armin Kaiser, an associate of my firm. 14 That’s K-a-i-s-e-r, first name Armin, A-r-m-i-n. And we 15 represent IP Consult. 16 MS. SCHWARTZ: Thank you very much. Who else is on 17 the line, please? 18 MS. DAVERSA: Aileen Daversa from Stretto on behalf 19 of Kumtor. And Leticia Sanchez is on the call with me as well. 20 MS. SCHWARTZ: I’m sorry, Ms. Daversa, what was your 21 first name? 22 MS. DAVERSA: Aileen, it’s A-i-e-e-n. 23 MS. SCHWARTZ: And are you a creditor in this case? 24 MS. DAVERSA: No. I work with Stretto. We helped 25 prepare the schedules and statements. Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 8 of 55 Page 7 1 MS. SCHWARTZ: In preparing the schedules and 2 statements, I guess my question is that was from, like, putting 3 the data in, not -- you didn’t do the actual financial review 4 of that data. Is that right, or am I wrong about that? 5 MS. DAVERSA: We did some financial review, but a lot 6 of it was just compiling it into the forms. 7 MS. SCHWARTZ: It’s unusual -- it’s unusual -- the 8 reason I’m asking you, you are the first time a claims 9 agent/administrative advisor has sat in on a 341 meeting to my 10 knowledge. What is Ms. Sanchez’s first name, please? 11 MS. DAVERSA: Leticia, L-e-t-i-c -- 12 MS. SCHWARTZ: I got it. Okay. Thank you very much. 13 Who else is on the call, please? 14 MR. HERDEN: Hello, this is Safak Herden, S-a-f-a-k, 15 H-e-r-d-e-n, on behalf of (indiscernible). 16 MS. SCHWARTZ: Okay, Mr. Herden. 17 MR. HERDEN: Co-counsel with Moses Singer. 18 MS. SCHWARTZ: Oh, you are also with Moses Singer. 19 Is that what you just said? 20 MR. HERDEN: Yes. We represent the company from 21 other jurisdiction, but our counsel in U.S. is Moses Singer. 22 MS. SCHWARTZ: Got it. Oh, your counsel in the U.S. 23 is Mr. Kolbig that’s on the line. Is that correct? 24 MR. HERDEN: Yes, exactly. 25 MS. SCHWARTZ: You are the creditor, correct? Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 9 of 55 Page 8 1 MR. HERDEN: Yes. 2 MS. SCHWARTZ: Okay, thank you. 3 Who else is on the line, please? Okay. I have 15 4 people and my recording said there’s 19. Is there anyone that 5 is on the phone that has not stated their name? Okay. Well, 6 maybe somebody dropped off. But I appreciate you all providing 7 me with that information. 8 Let the record reflect that today is July 8th, 2021. 9 We are here for the Bankruptcy Code Section 341 meeting of 10 creditors in the case of Kumtor Gold Company CJC and its 11 affiliated company, Kumtor Operating Company CJC. Both cases 12 are being jointly administered by order of the Court. 13 As I stated earlier, the case is being administered 14 by Lisa Beckerman, Honorable Bankruptcy Judge for the Southern 15 District of New York. 16 The United States Trustee program is a component of 17 the United States Department of Justice. We are by statute 18 charged with many things. But in essence, overseeing the 19 administration of the bankruptcy case. 20 In particular, we are charged with serving as the 21 presiding officer and convening this meeting of creditors. For 22 those of you that are not familiar with a meeting of creditors, 23 essentially it will have two parts. That is the first part 24 will be an opportunity for me to examine the Debtor’s 25 representative, obviously under oath, regarding the papers that Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 10 of 55 Page 9 1 have been filed to commence the case and the financial 2 condition of the Debtor. Then there will be a second part at 3 which creditors may ask questions of the Debtor. And I’ll give 4 specific instructions at that time as to the parameters of such 5 questions. Okay. 6 At this time, I’d like to swear in the Debtor’s 7 representative. 8 Mr. Desjardins, would you raise your right hand, 9 please? 10 MR. DESJARDINS: I have. 11 MS. SCHWARTZ: Do you swear or affirm to tell the 12 truth, the whole truth, and nothing but the truth here today? 13 MR. DESJARDINS: Yes, I do. 14 MS. SCHWARTZ: Okay. You can lower your right hand. 15 And please state your name and spell it for the record. 16 MR. DESJARDINS: My name is Daniel Desjardins, D-a-n- 17 i-e-l, Desjardins, D-e-s-j-a-r-d-i-n-s. 18 MS. SCHWARTZ: And Mr. Desjardins, where do you 19 reside? 20 MR. DESJARDINS: I reside in Toronto, Ontario, 21 Canada. 22 MS. SCHWARTZ: And what is your relationship to the 23 Debtor, please? 24 MR. DESJARDINS: I am a director of KGC and I am the 25 chief operating officer for Centerra, the sole owner of Kumtor. Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 11 of 55 Page 10 1 MS. SCHWARTZ: Okay. Thank you very much. 2 Now, today’s meeting is being recorded. Normally, we 3 hold these meetings in person. But due to the pandemic, we 4 have been conducting them telephonically. As such, the 5 recording that I’m making here today is the only official 6 recording of today’s meeting. If anyone would like a copy put 7 on a CD, that’s the way we provide them, you can reach out to 8 me after the meeting and I will put you in touch with the 9 person with whom you need to make that request. 10 As we are on telephonic call, I would very much 11 appreciate your courtesy in just keeping your line on mute if 12 in fact you are not speaking at the time. That’s with the 13 exception of counsel for Kumtor, as they may want to speak at 14 some time. 15 Mr. Bromley, will you be the person that will be 16 speaking on behalf of the Debtors in connection with this 341 17 if such speaking becomes necessary? 18 MR. BROMLEY: Yes, Ms. Schwartz, I will be. 19 MS. SCHWARTZ: Okay. Mr. Desjardins, before we 20 begin, I would like to go over a couple of the ground rules for 21 today’s 341 meeting, okay? 22 MR. DESJARDINS: Yes. 23 MS. SCHWARTZ: Okay. A few moments ago, you took an 24 oath to tell the truth with respect to all your answers here 25 today, correct? Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 12 of 55 Page 11 1 MR. DESJARDINS: Correct. 2 MS. SCHWARTZ: I want you to understand that what you 3 say here today, irrespective of a seemingly different format, 4 has the same force and effect as if you were sitting in a court 5 of law in the bankruptcy court and there is a judge with robes 6 on and you’re in the witness box. It has that same effect. Do 7 you understand that? 8 MR. DESJARDINS: I understand. 9 MS. SCHWARTZ: Okay. And I ask you a question today 10 and you don’t know the answer, please tell me that. There is 11 not a goal here today to encourage fabrication or guessing in 12 response to my questions. Do you understand that? 13 MR. DESJARDINS: I understand. 14 MS. SCHWARTZ: Okay. Similarly, if I ask you a 15 question and you don’t understand it, will you agree to tell me 16 so that I can rephrase the question until you do understand my 17 question? 18 MR. DESJARDINS: I agree. 19 MS. SCHWARTZ: Okay. Therefore, if I ask you a 20 question, you give an answer and you haven’t said you didn’t 21 understand it, we will understand for purposes of today’s 22 meeting that you fully understood my question. Okay? 23 MR. DESJARDINS: Yes. 24 MS. SCHWARTZ: All right. And I said, you know, you 25 are here you are represented by counsel, Mr. Bromley. And a Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 13 of 55 Page 12 1 341 meeting is somewhat like an interrogation at a deposition. 2 Have you ever had your deposition taken? 3 MR. DESJARDINS: In a different format, but not in 4 the United States. 5 MS. SCHWARTZ: And that format, would that have been 6 under the Canadian format? 7 MR. DESJARDINS: No, in Kyrgyzstan. 8 MS. SCHWARTZ: I see. Was that testimony under oath? 9 MR. DESJARDINS: Not under oath, no. It was in the 10 investigation. 11 MS. SCHWARTZ: So it was informal? 12 MR. DESJARDINS: It was all recorded and put in as 13 preliminary documents as evidence. 14 MS. SCHWARTZ: All right. 15 MR. DESJARDINS: I’m not sure the... 16 MS. SCHWARTZ: Well, it sounds like it could have 17 different formalities than here today. And the reason I asked 18 you that question is because today’s interrogation is -- it’s 19 similar, but it’s not exactly the same. 20 First of all, you have counsel here who you might 21 need to jump in a little bit if there is a question I ask that 22 he feels could use further information to clarify it and so 23 forth. It’s usually very minimal, but we do allow that in a 24 341 meeting so that, you know, we understand that 25 representatives of companies may have -- this would be their Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 14 of 55 Page 13 1 first experience in this process. So our effort is really to 2 obtain the truth and obtain the correct and accurate 3 information that we are asking today. All right? 4 MR. DESJARDINS: Yes. 5 MS. SCHWARTZ: All right. Do you understand the 6 ground rules as I have explained them to you? 7 MR. DESJARDINS: Yes. 8 MS. SCHWARTZ: Do you have any questions for me? 9 MR. DESJARDINS: No, I don’t. 10 MS. SCHWARTZ: Okay. So the first thing I’d like to 11 do, Mr. Desjardins, is to -- and by the way, I think you 12 pronounced your name a little differently. It’s not 13 Desjardins, is it? How do you say it, please? 14 MR. DESJARDINS: I say it Desjardins. 15 MS. SCHWARTZ: Desjardins. I’ll do my best to do 16 that. Okay? 17 MR. DESJARDINS: That’s fine. 18 MS. SCHWARTZ: I’ll do my best. I may not be perfect 19 because I have some longstanding improper pronunciation of 20 that. So I’ll try. 21 The first thing I’d like to do is verify the 22 documents that have been filed that commenced this case. Would 23 you take a look please at the petitions, the voluntary 24 petitions that were filed in the case? Of course I am assuming 25 you have all of your documents in front of you. Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 15 of 55 Page 14 1 MR. DESJARDINS: I believe I have them, yes. The 2 right ones, yeah. 3 MS. SCHWARTZ: Is anyone sitting with you at this 4 point from counsel? 5 MR. DESJARDINS: No. I am by myself. 6 MS. SCHWARTZ: Okay. 7 MR. DESJARDINS: But I have the documents that were 8 filed. 9 MS. SCHWARTZ: Okay. Why don’t you take a look -- 10 MR. DESJARDINS: Four documents, two for KGC and two 11 for KOC. 12 MS. SCHWARTZ: Correct. Okay. I’d like you to take 13 a look at, please, the document that at the top of it says 14 Official Form 201, Voluntary Petition for Non-Individual Filing 15 for Bankruptcy. Do you see that document? Take your time, Mr. 16 Desjardins. 17 MR. DESJARDINS: I’m looking at the very top of the 18 first tab. It has a number of numbers. Document 43 is the 19 (indiscernible). 20 MS. SCHWARTZ: No, that’s the legend. What you’re 21 looking at is the filing legend. If you go down about three 22 inches on the page -- 23 MR. DESJARDINS: Okay. 24 MS. SCHWARTZ: -- you should see some substantive 25 title, like official form. It would seem to me that Document Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 16 of 55 Page 15 1 43 is not the correct document. 2 Ms. Kranzley, might you or Mr. Jensen be able to help 3 the representative locate the voluntary petition, please? 4 MS. KRANZLEY: Yes. We are sending them to him right 5 now. 6 MS. SCHWARTZ: Oh, I see. He doesn’t have it? 7 MS. KRANZLEY: I think he does, but we’re just 8 sending it to him so he has them at the top of his inbox. 9 MS. SCHWARTZ: Okay, great. Mr. Desjardins, you let 10 me know when you have received that. 11 MR. DESJARDINS: Okay. Well, the ones that I’ve 12 opened, if I go down a little bit, one is the statement of 13 financial affairs for Kumtor Gold Company. 14 MS. SCHWARTZ: Right. That’s not what I’m asking you 15 about. I’m asking about Official Form 201, Voluntary Petition 16 for Non-Individuals Filing for Bankruptcy, Kumtor Gold Company, 17 CSJC. 18 MR. DESJARDINS: They have not come in yet. 19 MS. SCHWARTZ: Okay. 20 MR. BROMLEY: It’s Jim Bromley. The email that we 21 just sent to you has six attachments. The document that Ms. 22 Schwartz is referring to is the second document listed in the 23 attachment. It’s KGC as filed petition. 24 MR. DESJARDINS: Okay. It’s not in yet. I have -- 25 the one I had was four documents. Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 17 of 55 Page 16 1 MS. SCHWARTZ: It’s not a problem, Mr. Desjardins. 2 The accent isn’t on the jar, right, Desjardins. 3 MR. DESJARDINS: In French -- the French say 4 Desjardins. And then I grew up in an English town, so I say 5 Desjardins. 6 MS. SCHWARTZ: Oh, so you -- okay, I got it. 7 Desjardins. I got it. Yeah, I know that -- 8 MR. DESJARDINS: Okay, I do have the voluntary -- 9 apologies. I have the voluntary petition for non-individual 10 filing for bankruptcy. 11 MS. SCHWARTZ: Okay. And at the top of that 12 document, does it say -- remember you were looking at the 13 legend before? Does it say Doc 1? 14 MR. DESJARDINS: Yes, it does. 15 MS. SCHWARTZ: Okay. Tell me -- look at that 16 document and tell me whether you recognize it. 17 MR. DESJARDINS: I recognize it. Yes. 18 MS. SCHWARTZ: And how is that? How do you recognize 19 it? 20 MR. DESJARDINS: We went over this before it was 21 filed, yeah. 22 MS. SCHWARTZ: And are you the person that provided 23 the information that’s contained in this document? 24 MR. DESJARDINS: I was part of accumulating the 25 information, yeah. And I reviewed it, yes. Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 18 of 55 Page 17 1 MS. SCHWARTZ: And did you review it carefully before 2 you signed it? 3 MR. DESJARDINS: I understand it, yes. 4 MS. SCHWARTZ: Okay. And did you in fact sign this 5 document? 6 MR. DESJARDINS: Electronically, yes. And I believe 7 a web copy as well. 8 MS. SCHWARTZ: Okay. And as we sit here today -- as 9 we sit here today, is there anything that needs to be correct? 10 MR. DESJARDINS: Not that I know of, no. 11 MS. SCHWARTZ: Okay. And, Mr. Desjardins, I see that 12 on the back of this document there is -- the document is 13 translated. The English -- the resolution is attached. It 14 says, if you turn to page -- excuse me -- Page 6 of 18 of the 15 filed document, there are resolutions attached where it says 16 written resolutions in English, extraordinary shareholders 17 meeting, Kumtor Gold Company CJSC. Do you see that? 18 MR. DESJARDINS: I’m going down it here. 19 MS. SCHWARTZ: Yeah. It’s on Page 6 of 18. 20 MR. DESJARDINS: Okay, I see 6 of 18, yeah. 21 MS. SCHWARTZ: And -- 22 MR. DESJARDINS: Resolutions, yeah. 23 MS. SCHWARTZ: Right. And it’s translated into what 24 language on the right-hand side? 25 MR. DESJARDINS: I believe that’s Kyrgyz, but it -- Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 19 of 55 Page 18 1 MS. SCHWARTZ: But you don’t read Kyrgyz, is that 2 right? 3 MR. DESJARDINS: I do not, no. I would only be going 4 by the English version. 5 MS. SCHWARTZ: And, Mr. Bromley, how is it that the 6 company was able to obtain the translation into Kyrgyz? 7 MR. BROMLEY: Well, Ms. Schwartz, we used a 8 professional translation service. 9 MS. SCHWARTZ: And is there an affidavit that you 10 filed that evidences the truth of what you have translated? 11 MR. BROMLEY: I don’t believe that we have that. 12 MS. SCHWARTZ: You need that on the docket. Okay? 13 So for anything that you are going to translate into Kyrgyz or 14 another language, you need to have that on the docket. So you 15 can take care of that after this 341 meeting. 16 Mr. Desjardin, who is Scott Perry? 17 MR. DESJARDINS: Scott Perry is the chief executive 18 officer for Centerra and the sole owner of Kumtor, so 19 representative shareholder. 20 MS. SCHWARTZ: Okay, got it. Thank you. Okay. And 21 if you keep scrolling down -- let me ask you this before I move 22 to that. With respect to the other debtor, that is the Kumtor 23 Gold Operating Company, would your answers be the same if I 24 were asking you about the voluntary petition that was filed in 25 that case? Was it also you that was involved with that? Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 20 of 55 Page 19 1 MR. DESJARDINS: It would be the same, yes. 2 MS. SCHWARTZ: And your answers would be exactly the 3 same to the questions I asked you on this voluntary petition? 4 MR. DESJARDINS: Yes. 5 MS. SCHWARTZ: Okay, thank you. I’m just trying to 6 not spend more time than necessary if in fact that’s the case. 7 If not, we can certainly go through those individually. 8 Take a look at Official Form 202. On the top of the 9 legend it’s Page 12 of 18 and it’s titled Declaration Under 10 Penalty of Perjury for Non-Individual Debtors. Tell me when 11 you see that document. 12 MR. DESJARDINS: I see it, yes. 13 MS. SCHWARTZ: Okay. And did you also sign this 14 document? 15 MR. DESJARDINS: Yes. 16 MS. SCHWARTZ: Okay. And it says here that this is 17 swearing to the truth under penalty of perjury as to the 18 corporate ownership statement and list of equity holders. Did 19 you review those documents carefully before you signed this 20 declaration? 21 MR. DESJARDINS: Yes. 22 MS. SCHWARTZ: And is there anything in those 23 documents that needs to be corrected as we sit here today? 24 MR. DESJARDINS: No. 25 MS. SCHWARTZ: Okay, thank you. Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 21 of 55 Page 20 1 MR. DESJARDINS: You’re welcome. 2 MS. SCHWARTZ: All right. If at any time -- I just 3 want to say this globally. If at any time your answer would be 4 different with respect to the documents for the other debtor 5 entity, will you agree to tell me? Otherwise, I’ll just assume 6 your answers would be the same. 7 MR. DESJARDINS: I agree. 8 MS. SCHWARTZ: Okay. All right. Let’s take a look 9 at the document that was filed as -- let’s see where you have 10 it -- your schedules of assets and liabilities. I’ll point you 11 to the title of the document. 12 MR. DESJARDINS: Document 43? 13 MS. SCHWARTZ: Yes, Document 43. Do you recognize 14 this document? 15 MR. DESJARDINS: Yes, I do. 16 MS. SCHWARTZ: And what is it? 17 MR. DESJARDINS: Well, it’s a listing of 18 (indiscernible) of assets and liabilities and listing a detail 19 of prepaids and then detail by vendor of liabilities. 20 MS. SCHWARTZ: And did you provide this information 21 to the Debtors and perhaps some of the Stretto professionals 22 that are on the line in order to complete this document? 23 MR. DESJARDINS: Myself and my team, yes. 24 MS. SCHWARTZ: Who is on your team? Who is on your 25 team? Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 22 of 55 Page 21 1 MR. DESJARDINS: We have the ex-director of finance, 2 who had worked at Kumtor for about six years. 3 MS. SCHWARTZ: Name, please. 4 MR. DESJARDINS: He was critical and also -- his name 5 was Simon Tan, T-a-n. 6 MS. SCHWARTZ: Got it. 7 MR. DESJARDINS: And we also had the director of 8 supply chain management, who has also resigned but is on 9 contract. And his name is (indiscernible) Bumaf, B-u-m-a-f. 10 MS. SCHWARTZ: Okay. So these gentlemen, were they 11 maybe more the numbers people and then you reviewed it? Or how 12 did it go? 13 MR. DESJARDINS: Yeah. They were able to utilize our 14 IT people to access all the data for the relevant dates and 15 accumulate the information. And then put also some of their 16 judgement in terms of accruals up to certain dates in order to 17 have some solid estimates in a few of the liabilities. 18 MS. SCHWARTZ: Okay. Is there anything in the 19 document in your schedules of assets and liabilities that you 20 believe is inaccurate today and needs to be corrected? 21 MR. DESJARDINS: No. 22 MS. SCHWARTZ: And you reviewed this document 23 carefully before you signed it? 24 MR. DESJARDINS: Yes. And it’s an extensive 25 document. Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 23 of 55 Page 22 1 MS. SCHWARTZ: Yes. And also I just want to mention, 2 Mr. Bromley, I note here that in the beginning of the 3 schedules, there is this document that’s attached called, let’s 4 see, reservation of rights and basis of -- you know, et cetera. 5 The U.S. Trustee does not accept those global notes-type 6 documents. So I’m going to ask you to file a document on the 7 docket that withdraws this document. And to the extent there 8 is information that explains the accounting mechanism or any 9 issues, you can certainly submit such a document. But a 10 document that reserves rights and so forth is not accepted by 11 the U.S. Trustee. Okay? 12 MR. DESJARDINS: Understood. Noted. 13 MS. SCHWARTZ: Okay. Thank you. And also anybody 14 that’s moving papers, please try not to do it. If you can mute 15 yourself, please mute yourself. Okay. All right. 16 Let’s take a look now then -- and that would go for 17 the other case also, Mr. Bromley. Because I’m assuming you got 18 the same thing in both. 19 MR. BROMLEY: Yes, understood. 20 MS. SCHWARTZ: Okay. Mr. Desjardin -- I don’t think 21 I’m going to get it right, but I’m going to keep trying. All 22 right, let’s take a look at Document 44, the Statement of 23 Financial Affairs. Do you see that document, sir? 24 MR. DESJARDINS: Yes, I have it in front of me. 25 MS. SCHWARTZ: Excellent. Do you recognize it? Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 24 of 55 Page 23 1 MR. DESJARDINS: I do. 2 MS. SCHWARTZ: And how is that? 3 MR. DESJARDINS: I don’t understand your question. 4 MS. SCHWARTZ: How do you recognize it? Did you 5 prepare it? Did you work on it? 6 MR. DESJARDINS: I reviewed it after it was put 7 together for its accuracy and completeness. 8 MS. SCHWARTZ: Okay. And did you work with the same 9 gentleman, Mr. Tan and Mr. Bumaf, to prepare this? 10 MR. DESJARDINS: Yes. 11 MS. SCHWARTZ: Okay. Same process, correct? 12 MR. DESJARDINS: Correct. 13 MS. SCHWARTZ: Okay. And you signed this document? 14 MR. DESJARDINS: Yes. 15 MS. SCHWARTZ: And before you signed it, you made 16 sure everything was accurate and correct to the best of your 17 knowledge? 18 MR. DESJARDINS: Yes. 19 MS. SCHWARTZ: Okay. Anything need to be corrected 20 today as we sit here? 21 MR. DESJARDINS: No. 22 MS. SCHWARTZ: I want you to know, and I’m sure 23 Counsel has advised you that you can amend your schedules or 24 your statement of financial affairs at any time up until the 25 time of confirmation. So if additional information comes to Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 25 of 55 Page 24 1 your knowledge or those members of your team, you know, you are 2 not only permitted to amend it, you are obligated to amend it. 3 Okay? So I don’t want you to be concerned if you sometime 4 later on find a mistake or a number needs to be adjusted 5 because you have the ability to do that. Okay? 6 MR. DESJARDINS: Yes. They had made that clear also. 7 MS. SCHWARTZ: Awesome. So, Mr. Desjardins, why 8 don’t you tell us what led to the filing of the bankruptcy of 9 these two Debtors? 10 MR. DESJARDINS: What led to the filing of the 11 bankruptcy was the Kyrgyz government, in conjunction with 12 Kyrgyzstan and one of our (indiscernible) really taking over 13 the asset, the main asset, which is the mine, of the company 14 back on May 17th. 15 MS. SCHWARTZ: Okay. And can you be a little bit 16 more specific on that? 17 MR. DESJARDINS: I guess so. For the -- there was a 18 change in political leadership where the -- a Kyrgyz criminal 19 was released early from jail, who then ended up taking over the 20 leadership of the country. And then they started a coordinated 21 action to change law and legislation in order to put an 22 external manager over Kumtor alone. They were taking action 23 and putting -- arresting our employees and putting what they 24 called their secret service onto the mine site the week before 25 the planned takeover through placing an external manager. And Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 26 of 55 Page 25 1 they started taking over our systems and literally taking our 2 employees from their homes. And then on the 17th of May, they 3 did execute that activity with parliament declaring an external 4 manager over the asset and effectively making it illegal for 5 employees or to act against the operation of the mine or to 6 communicate -- for the employee to communicate with the sole 7 owner of the company. 8 MS. SCHWARTZ: Okay. And now at this point do either 9 of the Debtors have any visibility into the operations of the 10 mine? 11 MR. DESJARDINS: The Debtor, which is the directors, 12 myself, very little to none. So we don’t have any -- first of 13 all, the revenue even preceding the takeover was taken because 14 there’s a shipment of gold every two weeks at this time. 15 Sometimes it’s different than that, but right now it’s two 16 weeks. And they intercepted the shipment that had been made a 17 week before they took over. And then -- so we have no 18 understanding at all where that revenue has gone and/or any 19 activity of the site since the -- really effectively the 15th. 20 MS. SCHWARTZ: Okay. And so since that time, has the 21 debtor, either of the debtors been able to receive any revenue? 22 MR. DESJARDINS: The Debtor itself? 23 MS. SCHWARTZ: Yes, either of the Debtors. 24 MR. DESJARDINS: Unknown. We don’t know if the 25 revenue -- the gold, the product, if any of the revenue went Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 27 of 55 Page 26 1 back into the company or of it was just held by the government 2 or other parties. We don’t know. We have no visibility to 3 that. 4 MS. SCHWARTZ: Okay. I hear what you’re saying, but 5 there is a mechanism by which money would be deposited into the 6 accounts of the Debtors, correct? 7 MR. DESJARDINS: Normally, yes. 8 MS. SCHWARTZ: And that has been truncated, is that 9 right? 10 MR. DESJARDINS: And the account that the directors 11 or the sole owner know about did not receive any of the revenue 12 for the activity at the mine site. 13 MS. SCHWARTZ: And that’s since the case was filed. 14 Is that correct? 15 MR. DESJARDINS: That is correct. 16 MS. SCHWARTZ: And is the debtor’s or the sole 17 shareholder able to take any action with respect to those 18 funds, in other words, to obtain them, or any legal action that 19 it can do? 20 MR. DESJARDINS: There has been an arbitration case. 21 In the agreement, the investment agreements with the 22 government, there is a mechanism of arbitration in Sweden. And 23 that arbitration has been initiated. 24 MS. SCHWARTZ: Okay. And what is the status of that 25 arbitration? Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 28 of 55 Page 27 1 MR. DESJARDINS: I would have to turn to Counsel. 2 MS. SCHWARTZ: Mr. Bromley, what is the status of 3 that arbitration? 4 MR. BROMLEY: Ms. Schwartz, the arbitration demand 5 has been made by the Debtors and Centerra. There has been no 6 arbitrator appointed yet. There has been communication back 7 from the Kyrgyz Republic, through their counsel, Arnold & 8 Porter, indicating that they feel that the (indiscernible) the 9 automatic stay an impediment to the continuation of the 10 arbitration. And for that reason, we have filed a motion with 11 the Court to be taken up at the next hearing to modify the 12 automatic stay. So it will allow the arbitration to go forward 13 in its entirety. 14 MS. SCHWARTZ: Okay. And what date do you have that 15 schedule for, Mr. Bromley? 16 MR. BROMLEY: I’d have to ask Ms. Kranzley. When is 17 the next hearing date, Alexis? 18 MR. KRANZLEY: It’s next Thursday, July 15th. 19 MS. SCHWARTZ: Okay. Thank you, Counsel. 20 Mr. Desjardins, tell me, what’s the plan for the 21 bankruptcy cases of these two Debtors? What are you seeking to 22 accomplish in bankruptcy? 23 MR. DESJARDINS: Yes. Well, one was to help the 24 Kyrgyz government understand that they needed to sit down 25 through either arbitration or direct negotiation, find a way to Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 29 of 55 Page 28 1 successfully operate the operations going forward, to bring it 2 back to normal, and then to have a proper agreement going 3 forward, whatever that may look like, between the sole owners 4 and the government. 5 MS. SCHWARTZ: And just for my edification, can you 6 explain to me when you say the sole owners, tell me which 7 Debtors are the sole owners? 8 MR. DESJARDINS: The -- Centerra Gold is the hundred 9 percent owner of both Kumtor Gold Company and Kumtor Operating 10 Company. 11 MS. SCHWARTZ: And each of those two Kumtor are the 12 actual owners of the mine? 13 MR. DESJARDINS: Yeah. In fact, I believe it was in 14 2009 a new entity called Kumtor Gold Company, all of the assets 15 except for a couple of potential I think lawsuits were 16 transferred from KOC to KGC as a restructuring. But it was 17 really to create a clean new entity I believe. 18 MS. SCHWARTZ: Do you have any insight into why that 19 happened other than -- I mean, to create a clean, new entity. 20 I don’t really get much information from that. 21 MR. DESJARDINS: My very generalist understanding was 22 that as part of the restructuring in 2009, the change -- there 23 was a substantial change in the corporate structure ownership 24 where I believe the government had direct ownership, some 25 percentage of direct ownership of KOC. And that was Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 30 of 55 Page 29 1 transferred to the direct ownership of Centerra, who then 2 became the hundred percent owner of the new entity, KGC. 3 MS. SCHWARTZ: And you don’t -- you don’t know why 4 that happened, do you? 5 MR. DESJARDINS: Apologies? 6 MS. SCHWARTZ: No, no. You don’t have to apologize. 7 I said you don’t know why they did that, why they did that 8 restructure. 9 MR. DESJARDINS: I don’t have a detail of the legal 10 reasons and benefits of that, no. 11 MS. SCHWARTZ: Do you have any information or can you 12 tell me whether or not these debtors are paying any of the 13 debts that they owe, their expenses as they come due? 14 MR. DESJARDINS: Okay, that’s a very good question. 15 KOC is not an operating activity, so it would not have any. 16 KGC, our understanding through (indiscernible) were saying a 17 little bit of contact with suppliers is that they have 18 continued activity and they -- and that the external -- the 19 temporary external manager that the government put in place has 20 made some payments from the assets that they’ve taken. So 21 either from gold or -- we don’t have visibility on how they 22 would have gotten funds. Probably from -- 23 MS. SCHWARTZ: Let me ask you this question. Let me 24 ask you this question. The mine has a list of suppliers and 25 vendors, correct? That they have to pay, right? Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 31 of 55 Page 30 1 MR. DESJARDINS: Yes. 2 MS. SCHWARTZ: How many suppliers or vendors would be 3 on that list approximately? 4 MR. DESJARDINS: I think typically we had about -- 5 I’m going to totally guess this number -- about 1,500 different 6 active suppliers. 7 MS. SCHWARTZ: Would that be an estimate rather than 8 a guess? Or would you just not know because you’re not close 9 enough to the operations? 10 MR. DESJARDINS: I’m close enough to that detail to 11 know a solid number of different suppliers. But what I wanted 12 to add is that due to the uniqueness of the location of the 13 mine and the country, a number of suppliers do not supply 14 without being prepaid. So they never really have a liability. 15 MS. SCHWARTZ: Oh, I see. Thank you. I appreciate 16 that. So is that basically a hundred percent of the suppliers 17 and vendors? 18 MR. DESJARDINS: I would have estimated that probably 19 about 1,500 different suppliers and vendors, yeah, from very 20 small to very large. 21 MS. SCHWARTZ: Let me ask you this. So earlier 22 today, you testified that you are the COO for Centerra, the -- 23 MR. DESJARDINS: Centerra, yes. 24 MS. SCHWARTZ: Right? And as the COO -- who is the 25 COO of KGC? Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 32 of 55 Page 31 1 MR. DESJARDINS: I was -- it was the title as 2 president there, head of the in-country. I was the president 3 from January of 2015 until January of 2020. So five years I 4 was president there. I was replaced by a gentleman named Deon 5 Badenhorst. 6 MS. SCHWARTZ: Deon what? 7 MR. DESJARDINS: Badenhorst. It’s an African name. 8 Let me get the correct spelling. 9 MS. SCHWARTZ: No, that’s okay. I’m good enough. 10 But not, Mr. Deon Badenhorst was replaced by the external 11 manager? 12 MR. DESJARDINS: Effectively, yes. Yeah. 13 MS. SCHWARTZ: Why don’t you tell me what you mean by 14 -- 15 MR. DESJARDINS: He resigned. 16 MS. SCHWARTZ: Oh, he resigned? 17 MR. DESJARDINS: He resigned about a month later. 18 MS. SCHWARTZ: And just refresh my recollection, when 19 was that? When did the external manager come in? 20 MR. DESJARDINS: On May the 17th. 21 MS. SCHWARTZ: Okay. And that’s of ’21, correct? 22 MR. DESJARDINS: Correct. 23 MS. SCHWARTZ: I got it. Okay. So at the time when 24 you were president of the Debtors, did you not have any 25 exposure to the number of vendors and so forth that were there? Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 33 of 55 Page 32 1 I’m just getting the sense, like, when you said I would have 2 been guessing how many they have, I’m thinking -- and correct 3 me if I’m wrong -- that if you’re the president, you have some 4 idea of the number of vendors. You’ve got to be looking at the 5 financials that are going out, how much money is going to 6 suppliers. Is it more that you just don’t know exactly and 7 you’re estimating? I just would ask you to clarify that for 8 me. 9 MR. DESJARDINS: That’s a very fair question. No, I 10 would not have gotten a list of every vendor, ever, in the five 11 years I was there. In the financial review, we would have 12 looked at the balance sheet and looked at key suppliers. You 13 know, the top 50 and manage that on cash flow basis. But in 14 terms of -- it is an educated guess on that number. 15 MS. SCHWARTZ: All right, yeah. Well, I just want to 16 make sure when you say -- when you use the word guess, that’s 17 really not helpful to me. Because as I said to you in the 18 beginning, you know, I’m not trying to elicit guesses. But if 19 you’re saying it’s an educated response but you’re not sure, 20 then that gives me a little more comfort that I have some idea 21 as to the number of entities that are doing business with the 22 Debtor. 23 And the reason I’m asking you is because one of the 24 things we’re interested in knowing is whether or not the Debtor 25 is making its payments as they come due. You’ve already Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 34 of 55 Page 33 1 testified that you have very little insight into that. But I 2 wanted to kind of understand the scope of what we’re talking 3 about in terms of how many vendors have to be paid and so 4 forth. So that was helpful to me. And I just wanted to make 5 sure that, you know, that it wasn’t really guessing per se, but 6 it was an estimate. Would that be correct? 7 MR. DESJARDINS: It would be correct. It would be a 8 very long, well-educated guess. 9 MS. SCHWARTZ: Okay. I appreciate that. Okay. So 10 now what’s the plan to emerge from Chapter 11? 11 MR. DESJARDINS: In my opinion, the plan is to sit 12 down with the government and clearly understand -- find a win- 13 win and understand what they really require and what we require 14 so that the entity can go forward in a proper way. 15 MS. SCHWARTZ: Okay. So, Mr. Desjardins, I don’t 16 have any other questions for you today. I’ve read carefully 17 the documents that have been filed. I have read the monthly 18 operating report. I understand that this is a difficult 19 situation. I do have one other question. I said I didn’t, but 20 I do. 21 I understand there was a situation that occurred 22 where an officer of perhaps the sole shareholder was arrested 23 by a vehicle known as a Red Notice. Can you tell me a little 24 bit about that? Because I understand from Counsel that there 25 are some safety concerns currently. Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 35 of 55 Page 34 1 MR. DESJARDINS: That was to me? 2 MS. SCHWARTZ: Yes, that’s you. 3 MR. DESJARDINS: I can give you a basic 4 understanding, yes. The CEO that had negotiated -- and I’m not 5 even sure which agreement -- I think it was the 2002 agreement 6 with the government -- when they had a change in leaders in 7 country, they were accusing both the company and the 8 representatives of Kyrgyzstan of corruption because they had 9 restructured the company. And because of that, the Kyrgyzstan 10 government had created this Red Notice where certain agencies 11 are able to arrest people in other countries. His name, it 12 fails me right now. 13 But when he was traveling, this gentleman was about 14 80 years old about three years ago. And he was traveling in 15 Belarus I think. And he was arrested and they held him for a 16 number of months until the Belarus government finally realized 17 that there was no evidence or justification for holding him and 18 they let him go. 19 MS. SCHWARTZ: Okay. And since that time, have you 20 been aware of any other similar arrests or threats against 21 employees of the Debtors or of the sole shareholder? 22 MR. DESJARDINS: Not directly at this point. But in- 23 country the government has been arresting all previous senior 24 politicians that had put their signature on any agreement with 25 Kumtor. And my understanding is they have not shown any Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 36 of 55 Page 35 1 evidence. All they’re saying is that those politicians did not 2 negotiate a good deal for the country. 3 MS. SCHWARTZ: And how do you know that? 4 MR. DESJARDINS: Through mostly news releases from 5 in-country. 6 MS. SCHWARTZ: Okay. And just for clarification for 7 the record, when you refer to in-county, you mean in Kyrgyz, 8 correct? 9 MR. DESJARDINS: Yeah, in Kyrgyzstan. The different 10 news outlets reporting on all of this activity. 11 MS. SCHWARTZ: Okay. I appreciate it very much. 12 At the outset of this meeting, I stated that the 13 purpose of a 341 meeting is twofold. One is to give the U.S. 14 Trustee the opportunity to examine the debtor through its 15 representee under oath about the documents that have been 16 filed, verify the accuracy, ask questions about the case, why 17 it was filed, what the plan is going forward and so forth. And 18 then the second part is an opportunity for creditors to ask 19 questions of the debtor. 20 So we had about 15 people put their appearances on 21 the record. I’m going to go through the list that I have of 22 the people that are not representing the debtor and see if they 23 want to ask any questions. 24 So Matt Nicolini, would you like to ask any 25 questions? Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 37 of 55 Page 36 1 MS. NICOLINI: Arnold & Porter has no questions. 2 MS. SCHWARTZ: Okay. How about Mr. Kolbig? 3 MR. KOLBIG: No questions. 4 MS. SCHWARTZ: Okay. Ms. Borges? 5 MS. BORGES: Yes, this is Borges, with an S. And, 6 yes, I do have a question -- 7 MS. SCHWARTZ: Okay. I’m not there yet. I’m not 8 there yet. I’m not -- excuse me -- 9 MS. BORGES: -- (indiscernible) perhaps an unusual 10 situation -- 11 MS. SCHWARTZ: Ms. Borges, Mr. Borges -- 12 MS. BORGES: I have (indiscernible) with James 13 Bromley of -- 14 MS. SCHWARTZ: Stop, stop, stop. Please. Stop. 15 Stop, stop, stop. Can you hear -- 16 MS. BORGES: (indiscernible) 341 and (indiscernible) 17 if there were any other vendors or creditors in a similar 18 situation. I know Mr. Bromley will be able to tell me what 19 (indiscernible) -- 20 MS. SCHWARTZ: Ms. Borges, can you hear me? Ms. 21 Borges. 22 MS. BORGES: But I just wanted to bring it up to the 23 U.S. Trustee -- 24 MS. SCHWARTZ: Okay, Ms. Borges -- Ms. -- 25 MS. BORGES: (indiscernible) a contract vendor as Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 38 of 55 Page 37 1 well as a creditor in other situations with Kumtor. And there 2 is a contract for roughly $915,000 euro that is for product, 3 equipment, and -- 4 MS. SCHWARTZ: Ms. Borges, can you hear me? Mr. 5 Borges, can you hear me? Ms. Borges, can you hear me? Can you 6 hear me? 7 MR. BROMLEY: Ms. Borges? Hello? 8 MS. BORGES: Yes. 9 MR. BROMLEY: I believe Ms. Schwartz is trying to say 10 something. 11 MS. SCHWARTZ: Yeah. I’ve been trying to say 12 something since you said your name. All I want to do first is 13 get a list of the people that are going to ask questions, and 14 then I will take one in turn. Okay? So just hang on. 15 MS. BORGES: I’m sorry. I didn’t hear you. I’ll be 16 quiet. 17 MS. SCHWARTZ: I know. Hold on a second. Okay? 18 Thank you so much. All right. Let’s see. Mr. Harnik, are you 19 interested in asking any questions? 20 MR. HARNIK: Not at this time, no. 21 MS. SCHWARTZ: Okay. Mr. Herden? 22 MR. HERDEN: No questions. 23 MS. SCHWARTZ: Okay. Is there anyone that’s on this 24 line that would like to ask questions that I did not 25 specifically mention? Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 39 of 55 Page 38 1 Okay, Ms. Borges, with an S, now you’re up. Please 2 start again. 3 MS. BORGES: Thank you. 4 MS. SCHWARTZ: And state the part -- state your -- 5 wait, wait, wait, wait. Why can’t she hear me? 6 Mr. Bromley, jump in. Jump in -- 7 MS. BORGES: -- (indiscernible) with a delivery date 8 of mid-July, which is only about a week from now. The Kyrgyz 9 government has approached us, approached my client. They want 10 the product. They are willing to pay for the product. But it 11 is technically an executory contract. And I don’t want to do 12 anything in violation of course of the Bankruptcy Code or the 13 automatic stay. So I want to know if the Debtor has any plans 14 on telling us or getting a stipulation or approaching the Court 15 as to what a contract vendor is to do with product, equipment, 16 and the software that is to be delivered to Kumtor. 17 MS. SCHWARTZ: Okay. Hang on a second, Ms. Borges. 18 Again, I just think you have some trouble hearing me. But 19 please just state your name and the party you represent for the 20 record. 21 MS. BORGES: Yes, I’m sorry. I guess while I’m 22 talking I don’t hear you. 23 MS. SCHWARTZ: Yeah. 24 MS. BORGES: We represent Leica Geosystems PTY LTD. 25 MS. SCHWARTZ: And your name for the record? Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 40 of 55 Page 39 1 MS. BORGES: Leica appears as a creditor on the 2 schedules, but those are for other unrelated services under 3 other executory contracts. 4 MS. SCHWARTZ: All right. And for the record -- and 5 for the record -- 6 MS. BORGES: (indiscernible). Go ahead. 7 MS. SCHWARTZ: For the record, your name is Wanda 8 Borges. And the law firm you are from? 9 MS. BORGES: Borges and Associates LLC. 10 MS. SCHWARTZ: Okay, very good. Now, your questions 11 are directed at Ms. Desjardins. He is the representative of 12 the Debtor. Mr. Desjardins, did you understand the question 13 Mr. Borges was asking? 14 MR. DESJARDINS: I believe I do, yes. 15 MS. SCHWARTZ: Okay. Please provide her with an 16 answer. 17 MR. DESJARDINS: Okay. Unfortunately, at this time, 18 we don’t know who contacted you, so we could not verify that. 19 And we also don’t -- Centerra as the sole owner or the debtor, 20 Kumtor, the owners of Kumtor and directors of Kumtor have no 21 visibility on if Kumtor has the financial ability to take -- 22 so, you know, we would be saying that, you know, you need to 23 review any potential future liability. I wouldn’t want to give 24 you any advice. But right now, we do not have visibility or 25 control of the operation. Therefore, until we sit down with Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 41 of 55 Page 40 1 the government and be able to work something out, we would say 2 that you’re not dealing with the Debtor and you’re not dealing 3 with Centerra. 4 MS. SCHWARTZ: So what should she do? Do you have 5 any suggestion for her? 6 MR. DESJARDINS: I would say my own suggestion right 7 now is to hold. And all that does is help everyone encourage 8 the government to come back and talk with how we move forward. 9 If I could add just a little bit of light, too. 10 We’re starting to hear different things that operations are 11 starting to fail terribly at the mine site. The pit is 12 starting to flood. They’re not able to pump out the water 13 because they don’t have the capability or expertise to be able 14 to run the pumping system. That’s very critical. And we 15 understand that they are hydrating the stockpile, which means 16 they are removing all of the highest-grade gold and the 17 recoveries are substantially below what we would normally run 18 at, which means they are now wasting the asset. And we also 19 understand that trucks are now starting to be parked. There’s 20 120 haul trucks, monster trucks. And they’re starting park 21 trucks one at a time because of failing activity. And so that 22 just heightens the risk for anyone in the immediate future. 23 MS. SCHWARTZ: Ms. Borges, do you have any other -- 24 who was that? 25 MR. BROMLEY: Sorry, Ms. Schwartz. It’s Jim Bromley. Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 42 of 55 Page 41 1 MS. SCHWARTZ: Oh, sure. 2 MR. BROMLEY: If I could just add. I did speak to 3 Ms. Borges a couple of days ago, and we are receiving 4 inquiries, similar inquiries from other vendors. So we will be 5 talking with the client about whether or not there is anything 6 that might be done from a court perspective. We haven’t 7 reached any conclusion from that perspective yet. And, you 8 know, our goal is to try to come to some conclusion on that in 9 the next several days. But I think that Mr. Desjardins’ 10 comments are correct in particular with respect to the idea 11 that we are not -- these debtors, KGC and KOC, before the 12 Chapter 11 bankruptcy court are not in control of the day-to- 13 day operations of the mine. And to the extent that there are 14 communications that are being made to vendors from within 15 Kyrgyzstan or from their representatives here in the United 16 States. Those are not communications that are coming from the 17 Debtors. They are communications that are coming from either 18 the Kyrgyz government, Kyrgyz (indiscernible), or someone else. 19 But they are not coming from the Debtors. 20 MS. SCHWARTZ: Okay. I appreciate that. Thank you so 21 much. 22 Ms. Borges, do you have any other questions? 23 MS. BORGES: No. I appreciate Mr. Desjardins’ 24 comments as well as Mr. Bromley’s. And I will follow up 25 directly with Mr. Bromley. Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 43 of 55 Page 42 1 MS. SCHWARTZ: Okay. Very good then. Okay. Mr. 2 Desjardins, I would like to thank you for participating in 3 today’s -- 4 MR. HARNIK: Ms. Schwartz? 5 MS. SCHWARTZ: Yes. 6 MR. HARNIK: Ms. Schwartz, this is Stephen Harnik. 7 Just in respect to Ms. Borges’ question, could I ask for a 8 response from Arnold & Porter? Because we’ve gotten 9 correspondence from them saying we should continue with our 10 (indiscernible). 11 MS. SCHWARTZ: Well, Mr. Harnik, the purpose of 12 today’s -- the purpose of today’s meeting is to give creditors 13 an opportunity to ask questions of the debtor and the debtor’s 14 representative. You certainly can have whatever communications 15 you want with the law firm that represents the Kyrgyz Republic. 16 But that’s not part of today’s meeting. If you have a question 17 that you want to direct to the Debtor, you are totally 18 permitted to do so. Would you like to ask a question of the 19 Debtor? 20 MR. HARNIK: No. I understand your point. 21 MS. SCHWARTZ: Okay. All right. Then again, I’d 22 like to thank you, Mr. Desjardins, for participating today and 23 counsel and all attorneys. And I’m going to close this meeting. 24 Thank you very much. 25 (Whereupon these proceedings were concluded) Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 44 of 55 Page 43 1 C E R T I F I C A T I O N 2 3 I, Sonya Ledanski Hyde, certified that the foregoing 4 transcript is a true and accurate record of the proceedings. 5 Digitally signed by Sonya Ledanski Sonya Hyde 6 DN: cn=Sonya Ledanski Hyde, o, ou, [email protected], c=US 7 Ledanski Hyde Date: 2021.07.17 17:26:41 -04'00' 8 Sonya Ledanski Hyde 9 10 11 12 13 14 15 16 17 18 19 20 Veritext Legal Solutions 21 330 Old Country Road 22 Suite 300 23 Mineola, NY 11501 24 25 Date: July 17, 2021 Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 45 of 55 [& - arrested] Page 1 & 341 1:20 4:4 5:15 accuracy 23:7 ahead 39:6 & 2:3,12,19 3:1 7:9 8:9 10:16,21 35:16 aileen 3:22 6:18 4:11,13,16,20 5:3 12:1,24 18:15 accurate 13:2 6:22 5:7,13,14,23 6:3 35:13 36:16 23:16 43:4 alexa 2:9 4:14 27:7 36:1 42:8 3rd 3:12 accusing 34:7 alexis 27:17 act 25:5 allow 12:23 27:12 1 4 action 24:21,22 amend 23:23 24:2 43 14:18 15:1 1 16:13 26:17,18 24:2 20:12,13 1,500 30:5,19 active 30:6 andrea 1:24 4:3 44 22:22 1000 3:3 activity 25:3,19 answer 11:10,20 10004 1:16 2:6 5 26:12 29:15,18 20:3 39:16 10017 3:13 50 32:13 35:10 40:21 answers 10:24 10th 3:12 511 1:15 actual 7:3 28:12 18:23 19:2 20:6 11 33:10 41:12 55th 2:14 add 30:12 40:9 anybody 22:13 11501 43:23 575 2:21 41:2 apologies 16:9 11791 2:22 6 additional 23:25 29:5 118 2:21 6 17:14,19,20 adjudicated 4:6 apologize 29:6 12 19:9 666 3:12 adjusted 24:4 appearances 120 40:20 administered 8:12 35:20 8 125 2:5 8:13 appearing 3:18 15 8:3 35:20 8 1:18 administration appears 39:1 15th 25:19 27:18 80 34:14 8:19 appointed 27:6 17 43:25 8th 8:8 administrative appreciate 8:6 17th 24:14 25:2 9 7:9 10:11 30:15 33:9 31:20 915,000 37:2 advice 39:24 35:11 41:20,23 18 17:14,19,20 a advised 23:23 approached 38:9 19:9 advisor 7:9 38:9 19 8:4 ability 24:5 39:21 affairs 15:13 approaching 2 able 15:2 18:6 22:23 23:24 38:14 21:13 25:21 26:17 affidavit 18:9 approximately 2002 34:5 34:11 36:18 40:1 2009 28:14,22 affiliated 8:11 30:3 40:12,13 affirm 9:11 arbitration 26:20 201 14:14 15:15 accent 16:2 2015 31:3 african 31:7 26:22,23,25 27:3 accept 22:5 agencies 34:10 27:4,10,12,25 202 19:8 accepted 22:10 2020 31:3 agent 7:9 arbitrator 27:6 access 21:14 ago 10:23 34:14 armin 3:16 6:13 2021 1:18 8:8 accomplish 27:22 43:25 41:3 6:14 account 26:10 agree 11:15,18 arnold 2:12 5:2,3 21-11051 1:3 4:6 accounting 22:8 250 2:14 20:5,7 5:7 27:7 36:1 42:8 accounts 26:6 agreement 26:21 arrest 34:11 3 accruals 21:16 28:2 34:5,5,24 arrested 33:22 300 43:22 accumulate 21:15 agreements 26:21 34:15 330 43:21 accumulating 16:24 Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 46 of 55 [arresting - company] Page 2 arresting 24:23 basic 34:3 27:16 36:13,18 chapter 33:10 34:23 basically 30:16 37:7,9 38:6 40:25 41:12 arrests 34:20 basis 22:4 32:13 40:25 41:2,25 charged 8:18,20 asked 12:17 19:3 beat 4:15 bromley’s 41:24 chief 9:25 18:17 asking 7:8 13:3 beckerman 4:7 bumaf 21:9 23:9 christian 2:10 15:14,15 18:24 8:14 business 32:21 4:14,17,18 32:23 37:19 39:13 beginning 22:2 c cjc 8:10,11 asset 24:13,13 32:18 cjsc 4:5 17:17 c 2:1 4:1 5:11,23 25:4 40:18 behalf 4:11 5:23 claims 7:8 7:11 43:1,1 assets 20:10,18 6:18 7:15 10:16 clarification 35:6 call 4:8 6:19 7:13 21:19 28:14 29:20 belarus 34:15,16 clarify 12:22 32:7 10:10 associate 6:13 believe 4:20 14:1 clean 28:17,19 called 22:3 24:24 associates 2:19 17:6,25 18:11 clear 24:6 28:14 5:23 39:9 21:20 28:13,17,24 clearly 33:12 canada 9:21 assume 20:5 37:9 39:14 client 38:9 41:5 canadian 12:6 assuming 13:24 benefits 29:10 close 30:8,10 can’t 5:17 38:5 22:17 best 13:15,18 42:23 capability 40:13 attached 17:13,15 23:16 code 8:9 38:12 care 18:15 22:3 betsey 6:7 come 6:11 15:18 carefully 17:1 attachment 15:23 betsy 3:8 6:4 29:13 31:19 32:25 19:19 21:23 33:16 attachments bit 12:21 15:12 40:8 41:8 case 1:3 4:5,5,6 15:21 24:15 29:17 33:24 comes 23:25 6:23 8:10,13,19 attorneys 2:4,13 40:9 comfort 32:20 9:1 13:22,24 2:20 3:11 42:23 borges 2:19,24 coming 41:16,17 18:25 19:6 22:17 automatic 27:9,12 5:22,22,23,25 41:19 26:13,20 35:16 38:13 36:4,5,5,9,11,11 commence 9:1 cases 8:11 27:21 ave 3:12 36:12,16,20,21,22 commenced 13:22 cash 32:13 aware 34:20 36:24,25 37:4,5,5 comments 41:10 cd 10:7 awesome 24:7 37:7,8,15 38:1,3,7 41:24 centerra 9:25 38:17,21,24 39:1 communicate b 18:18 27:5 28:8 39:6,8,9,9,13 25:6,6 b 1:23 5:22 21:9 29:1 30:22,23 40:23 41:3,22,23 communication back 17:12 24:14 39:19 40:3 borges’ 42:7 27:6 26:1 27:6 28:2 ceo 34:4 boulevard 2:21 communications 40:8 certain 21:16 bowling 1:14 41:14,16,17 42:14 background 5:18 34:10 box 11:6 companies 12:25 badenhorst 31:5,7 certainly 19:7 bring 28:1 36:22 company 1:7 4:5 31:10 22:9 42:14 broad 2:5 7:20 8:10,11,11 balance 32:12 certified 43:3 bromley 2:8 4:10 15:13,16 17:17 bankruptcy 1:1 cetera 22:4 4:10,12 10:15,18 18:6,23 24:13 8:9,14,19 11:5 chain 21:8 11:25 15:20,20 25:7 26:1 28:9,10 14:15 15:16 16:10 change 24:18,21 18:5,7,11 22:2,17 28:14 34:7,9 24:8,11 27:21,22 28:22,23 34:6 22:19 27:2,4,15 38:12 41:12 Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 47 of 55 [compiling - different] Page 3 compiling 7:6 corrected 19:23 daniel 3:20 4:24 desjardins 3:20 complete 20:22 21:20 23:19 9:16 4:24,24 9:8,10,13 completeness 23:7 correspondence data 7:3,4 21:14 9:16,16,17,18,20 component 8:16 42:9 date 27:14,17 9:24 10:19,22 conaway 3:1 6:2,5 corruption 34:8 38:7 43:25 11:1,8,13,18,23 concerned 24:3 counsel 3:2,2 6:3 dates 21:14,16 12:3,7,9,12,15 concerns 33:25 6:3 7:17,21,22 daversa 3:22 6:18 13:4,7,9,11,13,14 concluded 42:25 10:13 11:25 12:20 6:18,20,22,24 7:5 13:14,15,17 14:1 conclusion 41:7,8 14:4 23:23 27:1,7 7:11 14:5,7,10,16,17 condition 9:2 27:19 33:24 42:23 day 41:12,13 14:23 15:9,11,18 conducting 10:4 countries 34:11 days 41:3,9 15:24 16:1,2,3,4,5 confirmation country 24:20 de 3:4 16:7,8,14,17,20 23:25 30:13 31:2 34:7 deal 35:2 16:24 17:3,6,10 conflicts 3:2 6:3 34:23 35:2,5 dealing 40:2,2 17:11,18,20,22,25 conjunction 24:11 43:21 debtor 1:9 4:9,25 18:3,17 19:1,4,12 connection 10:16 county 35:7 9:2,3,23 18:22 19:15,21,24 20:1 consult 6:15 couple 10:20 20:4 25:11,21,22 20:7,12,15,17,23 contact 29:17 28:15 41:3 32:22,24 35:14,19 21:1,4,7,13,21,24 contacted 39:18 course 13:24 35:22 38:13 39:12 22:12,24 23:1,3,6 contained 16:23 38:12 39:19 40:2 42:13 23:10,12,14,18,21 continuation 27:9 court 1:1 8:12 42:17,19 24:6,7,10,17 continue 42:9 11:4,5 27:11 debtors 2:4 3:2 25:11,22,24 26:7 continued 29:18 38:14 41:6,12 4:11 6:4 10:16 26:10,15,20 27:1 contract 21:9 courtesy 10:11 19:10 20:21 24:9 27:20,23 28:8,13 36:25 37:2 38:11 coyle 3:6 6:2,2,6,9 25:9,21,23 26:6 28:21 29:5,9,14 38:15 6:11 27:5,21 28:7 30:1,4,10,18,23 contracts 39:3 create 28:17,19 29:12 31:24 34:21 31:1,7,12,15,17 control 39:25 created 34:10 41:11,17,19 31:20,22 32:9 41:12 creditor 6:23 7:25 debtor’s 4:22 8:24 33:7,11,15 34:1,3 convening 8:21 37:1 39:1 9:6 26:16 42:13 34:22 35:4,9 coo 30:22,24,25 creditors 1:20 debts 29:13 39:11,12,14,17 coordinated 8:10,21,22 9:3 declaration 19:9 40:6 42:2,22 24:20 35:18 36:17 42:12 19:20 desjardins’ 41:9 copy 10:6 17:7 criminal 24:18 declaring 25:3 41:23 corporate 19:18 critical 21:4 40:14 delivered 38:16 detail 20:18,19 28:23 cromwell 2:3 4:11 delivery 38:7 29:9 30:10 correct 7:23,25 4:14,16,21 demand 27:4 didn’t 7:3 11:20 10:25 11:1 13:2 csjc 15:17 deon 31:4,6,10 33:19 37:15 14:12 15:1 17:9 currently 33:25 department 8:17 different 11:3 23:11,12,16 26:6 d deposited 26:5 12:3,17 20:4 26:14,15 29:25 deposition 12:1,2 25:15 30:5,11,19 d 4:1 7:15 9:16,17 31:8,21,22 32:2 desjardin 18:16 35:9 40:10 9:17 33:6,7 35:8 41:10 22:20 Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 48 of 55 [differently - form] Page 4 differently 13:12 due 10:3 29:13 estimated 30:18 failing 40:21 difficult 33:18 30:12 32:25 estimates 21:17 fails 34:12 direct 27:25 28:24 e estimating 32:7 fair 32:9 28:25 29:1 42:17 et 22:4 familiar 8:22 e 1:23,23 2:1,1 4:1 directed 39:11 euro 37:2 feel 27:8 4:1 5:22,23 6:14 directly 34:22 evidence 12:13 feels 12:22 6:22,22 7:11,15 41:25 34:17 35:1 feldman 3:8 6:5,9 7:15 9:17,17 43:1 director 9:24 21:1 evidences 18:10 fifth 1:15 earlier 8:13 30:21 21:7 ex 21:1 file 22:6 early 24:19 directors 25:11 exactly 7:24 12:19 filed 9:1 13:22,24 edification 28:5 26:10 39:20 19:2 32:6 14:8 15:23 16:21 educated 32:14,19 distracting 5:19 examine 8:24 17:15 18:10,24 33:8 district 1:2,13 35:14 20:9 26:13 27:10 effect 11:4,6 8:15 excellent 22:25 33:17 35:16,17 effectively 25:4,19 doc 16:13 exception 10:13 filing 14:14,21 31:12 docket 18:12,14 excuse 5:16 17:14 15:16 16:10 24:8 effort 13:1 22:7 36:8 24:10 either 25:8,21,23 document 14:13 execute 25:3 finally 34:16 27:25 29:21 41:17 14:15,18,25 15:1 executive 18:17 finance 21:1 electronically 15:21,22 16:12,16 executory 38:11 financial 7:3,5 9:1 17:6 16:23 17:5,12,12 39:3 15:13 22:23 23:24 elicit 32:18 17:15 19:11,14 expenses 29:13 32:11 39:21 email 15:20 20:9,11,12,13,14 experience 13:1 financials 32:5 emerge 33:10 20:22 21:19,22,25 expertise 40:13 find 24:4 27:25 employee 25:6 22:3,6,7,9,10,22 explain 28:6 33:12 employees 24:23 22:23 23:13 explained 13:6 fine 13:17 25:2,5 34:21 documents 12:13 explains 22:8 firm 3:10 6:13 encourage 11:11 13:22,25 14:7,10 exposure 31:25 39:8 42:15 40:7 15:25 19:19,23 extensive 21:24 first 4:4,8,9 6:14 ended 24:19 20:4 22:6 33:17 extent 22:7 41:13 6:21 7:8,10 8:23 english 16:4 17:13 35:15 external 24:22,25 12:20 13:1,10,21 17:16 18:4 doesn’t 15:6 25:3 29:18,19 14:18 25:12 37:12 entirety 27:13 doing 32:21 31:10,19 five 31:3 32:10 entities 32:21 don’t 11:10,15 extraordinary flood 40:12 entity 20:5 28:14 13:9 14:9 18:1,11 17:16 floor 1:15 3:12 28:17,19 29:2 22:20 23:3 24:3,8 flow 32:13 33:14 f 25:12,24 26:2 folks 4:16 equipment 37:3 f 1:23 7:14 21:9 28:20 29:3,3,6,7,9 follow 41:24 38:15 43:1 29:21 31:13 32:6 force 11:4 equity 19:18 fabrication 11:11 33:15 38:11,22 foregoing 43:3 essence 8:18 fact 10:12 17:4 39:18,19 40:13 form 14:14,25 essentially 8:23 19:6 28:13 dropped 8:6 15:15 19:8 estimate 30:7 33:6 fail 40:11 Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 49 of 55 [formalities - i’ll] Page 5 formalities 12:17 gold 1:7 4:5 8:10 hear 26:4 36:15 39:6 41:18 42:10 format 11:3 12:3 15:13,16 17:17 36:20 37:4,5,5,6 individual 14:14 12:5,6 18:23 25:14,25 37:15 38:5,22 16:9 19:10 forms 7:6 28:8,9,14 29:21 40:10 individually 19:7 forth 12:23 22:10 40:16 hearing 27:11,17 individuals 15:16 31:25 33:4 35:17 good 4:10,13 38:18 informal 12:11 forward 27:12 29:14 31:9 35:2 heightens 40:22 information 8:7 28:1,3 33:14 39:10 42:1 held 26:1 34:15 12:22 13:3 16:23 35:17 40:8 gotten 29:22 hello 7:14 37:7 16:25 20:20 21:15 four 14:10 15:25 32:10 42:8 help 15:2 27:23 22:8 23:25 28:20 french 16:3,3 government 24:11 40:7 29:11 front 13:25 22:24 26:1,22 27:24 helped 6:24 initiated 26:23 fully 11:22 28:4,24 29:19 helpful 32:17 33:4 inquiries 41:4,4 funds 26:18 29:22 33:12 34:6,10,16 herden 3:24 7:14 insight 28:18 33:1 further 12:22 34:23 38:9 40:1,8 7:14,16,17,20,24 instructions 9:4 future 39:23 41:18 8:1 37:21,22 intercepted 25:16 40:22 grade 40:16 hi 6:2 interested 32:24 g great 15:9 highest 40:16 37:19 green 1:14 hold 10:3 37:17 interrogation g 4:1 5:22 grew 16:4 40:7 12:1,18 generalist 28:21 ground 10:20 holders 19:18 investigation gentleman 6:10 13:6 holding 34:17 12:10 23:9 31:4 34:13 guess 7:2 24:17 homes 25:2 investment 26:21 gentlemen 21:10 30:5,8 32:14,16 honorable 8:14 involved 18:25 geosystems 2:20 33:8 38:21 hundred 28:8 ip 6:15 5:24 38:24 guesses 32:18 29:2 30:16 irrespective 11:3 getting 32:1 38:14 guessing 11:11 hyde 43:3,8 isn’t 16:2 give 9:3 11:20 32:2 33:5 hydrating 40:15 issues 22:9 34:3 35:13 39:23 it’s 4:5 5:18 6:7 42:12 h i 6:22 7:7,7 12:18 gives 32:20 h 6:12 7:15 idea 32:4,20 41:10 12:19,23 13:12 global 22:5 hammond 3:6 illegal 25:4 15:20,23,24 16:1 globally 20:3 hand 9:8,14 17:24 immediate 40:22 17:19,23 19:9,9 go 10:20 14:21 hang 37:14 38:17 impediment 27:9 20:17 21:24 25:15 15:12 19:7 21:12 happened 28:19 improper 13:19 25:15 27:18 31:7 22:16 27:12 33:14 29:4 inaccurate 21:20 32:19 40:25 34:18 35:21 39:6 harnik 3:10,15 inbox 15:8 i’d 4:8 9:6 13:10 goal 11:11 41:8 6:12,12 37:18,20 inches 14:22 13:21 14:12 27:16 going 17:18 18:3 42:4,6,6,11,20 indicating 27:8 42:21 18:13 22:6,21,21 haul 40:20 indiscernible 5:6 i’ll 9:3 13:15,18 28:1,2 30:5 32:5,5 haven’t 11:20 7:15 14:19 20:18 13:20 20:5,10 35:17,21 37:13 41:6 21:9 24:12 27:8 37:15 42:23 head 31:2 29:16 36:9,12,16 36:16,19,25 38:7 Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 50 of 55 [i’m - meeting] Page 6 i’m 5:16 6:20 7:8 key 32:12 l 29:17 32:20 33:1 10:5 12:15 14:17 kgc 9:24 14:10 l 5:11,23 7:11 9:17 33:23 40:9 15:14,15 17:18 15:23 28:16 29:2 language 17:24 llc 2:19 5:23 39:9 19:5 22:6,17,21 29:16 30:25 41:11 18:14 llp 2:3,12 22:21 23:22 30:5 kind 33:2 large 30:20 locate 15:3 30:10 31:9 32:1,2 king 3:3 law 3:10 11:5 location 30:12 32:3,18,23 34:4 know 11:10,24 24:21 39:8 42:15 long 33:8 35:21 36:7,7,8 12:24 15:10 16:7 lawsuits 28:15 longstanding 37:15 38:21,21 17:10 22:4 23:22 leaders 34:6 13:19 42:23 24:1 25:24 26:2 leadership 24:18 look 13:23 14:9 i’ve 15:11 33:16 26:11 29:3,7 30:8 24:20 14:13 16:15 19:8 37:11 30:11 32:6,13,18 led 24:8,10 20:8 22:16,22 j 33:5 35:3 36:18 ledanski 43:3,8 28:3 37:17 38:13 39:18 looked 32:12,12 j 9:17 legal 26:18 29:9 39:22,22 41:8 looking 14:17,21 jail 24:19 43:20 knowing 32:24 16:12 32:4 james 2:8 36:12 legend 14:20,21 knowledge 7:10 lot 7:5 january 31:3,3 16:13 19:9 23:17 24:1 lower 9:14 jar 16:2 legislation 24:21 known 33:23 jensen 2:10 4:14 leica 2:20 5:23 m koc 14:11 28:16 15:2 38:24 39:1 m 3:15 6:14 21:9 28:25 29:15 41:11 jim 4:10 15:20 leticia 3:23 6:19 madelyn 2:17 5:3 kolbig 3:21 5:14 40:25 7:11 main 24:13 5:14,20 7:23 36:2 joined 6:4 let’s 20:8,9 22:3 making 10:5 25:4 36:3 jointly 8:12 22:16,22 37:18 32:25 kranzley 2:9 4:13 judge 4:6 8:14 lgb 1:3 manage 32:13 4:14,16,17,18,20 11:5 liabilities 20:10 management 21:8 15:2,4,7 27:16,18 judgement 21:16 20:18,19 21:17,19 manager 24:22,25 kumtor 1:7 4:5,5 july 1:18 8:8 liability 30:14 25:4 29:19 31:11 6:19 8:10,11 9:25 27:18 38:8 43:25 39:23 31:19 10:13 15:13,16 jump 12:21 38:6,6 light 40:9 matt 35:24 17:17 18:18,22 jurisdiction 7:21 line 5:17,20 6:4,17 matter 1:5 21:2 24:22 28:9,9 justice 8:17 7:23 8:3 10:11 mean 28:19 31:13 28:11,14 34:25 justification 20:22 37:24 35:7 37:1 38:16 39:20 34:17 lisa 4:7 8:14 means 40:15,18 39:20,20,21 list 19:18 29:24 mechanism 22:8 k kyrgyz 2:13 5:4 30:3 32:10 35:21 26:5,22 k 6:13,14 7:14 17:25 18:1,6,13 37:13 meeting 1:20 4:4 kaiser 3:16 6:13 24:11,18 27:7,24 listed 15:22 5:15 7:9 8:9,21,22 kara 3:6 6:2 35:7 38:8 41:18 listen 5:17 10:2,6,8,21 11:22 kaye 2:12 41:18 42:15 listing 20:17,18 12:1,24 17:17 keep 18:21 22:21 kyrgyzstan 12:7 literally 25:1 18:15 35:12,13 keeping 10:11 24:12 34:8,9 35:9 little 12:21 13:12 42:12,16,23 kent 3:21 5:14 41:15 15:12 24:15 25:12 Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 51 of 55 [meetings - patience] Page 7 meetings 10:3 39:22 occurred 33:21 operations 25:9 members 24:1 needed 27:24 office 1:12 28:1 30:9 40:10 mention 22:1 needs 17:9 19:23 officer 4:4 8:21 41:13 37:25 21:20 24:4 9:25 18:18 33:22 opinion 33:11 mid 38:8 negotiate 35:2 official 10:5 14:14 opportunity 8:24 mine 24:13,24 negotiated 34:4 14:25 15:15 19:8 35:14,18 42:13 25:5,10 26:12 negotiation 27:25 oh 7:18,22 15:6 order 8:12 20:22 28:12 29:24 30:13 never 30:14 16:6 30:15 31:16 21:16 24:21 40:11 41:13 new 1:2,13,16 2:6 41:1 outlets 35:10 mineola 43:23 2:15 3:13 8:15 okay 4:2,15,16,19 outset 35:12 minimal 12:23 28:14,17,19 29:2 5:1,1,9,12,19 6:6 overseeing 8:18 mistake 24:4 news 35:4,10 6:10 7:12,16 8:2,3 owe 29:13 modify 27:11 nicolini 2:17 5:3,3 8:5 9:5,14 10:1,19 owner 9:25 18:18 moments 10:23 5:7,11 35:24 36:1 10:21,23 11:9,14 25:7 26:11 28:9 money 26:5 32:5 non 14:14 15:16 11:19,22 13:10,16 29:2 39:19 monster 40:20 16:9 19:10 14:6,9,12,23 15:9 owners 28:3,6,7 month 31:17 normal 28:2 15:11,19,24 16:6 28:12 39:20 monthly 33:17 normally 10:2 16:8,11,15 17:4,8 ownership 19:18 months 34:16 26:7 40:17 17:11,20 18:12,20 28:23,24,25 29:1 morgan 3:7 6:4,7 north 3:3 18:20 19:5,13,16 p morning 4:10,13 note 22:2 19:25 20:8 21:10 p 2:1,1 4:1 moses 5:13,14 noted 22:12 21:18 22:11,13,15 page 14:22 17:14 7:17,18,21 notes 22:5 22:20 23:8,11,13 17:14,19 19:9 motion 27:10 notice 33:23 34:10 23:19 24:3,5,15 paid 33:3 move 18:21 40:8 number 4:6 14:18 25:8,20 26:4,24 pandemic 10:3 moving 22:14 24:4 30:5,11,13 27:14,19 29:14 paper 5:18 mute 5:17 10:11 31:25 32:4,14,21 31:9,21,23 33:9,9 papers 8:25 22:14 22:14,15 34:16 33:15 34:19 35:6 parameters 9:4 numbers 14:18 35:11 36:2,4,7,24 n park 40:20 21:11 37:14,17,21,23 n 2:1 4:1 5:11,11 parked 40:19 ny 1:16 2:6,15,22 38:1,17 39:10,15 6:12,14,22 7:15 parliament 25:3 3:13 43:23 39:17 41:20 42:1 9:16,17 21:5 43:1 part 8:23 9:2 42:1,21 name 4:3 5:9 6:7 o 16:24 28:22 35:18 old 34:14 43:21 6:14,21 7:10 8:5 o 1:23 4:1 5:11,22 38:4 42:16 ones 14:2 15:11 9:15,16 13:12 43:1 participating 42:2 ontario 9:20 21:3,4,9 31:7 oath 8:25 10:24 42:22 opened 15:12 34:11 37:12 38:19 12:8,9 35:15 particular 8:20 operate 28:1 38:25 39:7 obligated 24:2 41:10 operating 8:11 named 31:4 observing 5:15 parties 26:2 9:25 18:23 28:9 necessary 10:17 obtain 13:2,2 18:6 parts 8:23 29:15 33:18 19:6 26:18 party 38:19 operation 25:5 need 10:9 12:21 obviously 8:25 patience 4:3 39:25 18:12,14 23:19 Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 52 of 55 [pauline - representing] Page 8 pauline 3:7 6:4,7 political 24:18 pump 40:12 received 15:10 pay 29:25 38:10 politicians 34:24 pumping 40:14 receiving 41:3 paying 29:12 35:1 purpose 35:13 recognize 16:16 payments 29:20 porter 2:12 5:2,4 42:11,12 16:17,18 20:13 32:25 5:8 27:8 36:1 42:8 purposes 11:21 22:25 23:4 penalty 19:10,17 potential 28:15 put 10:6,8 12:12 recollection 31:18 people 8:4 21:11 39:23 21:15 23:6 24:21 record 8:8 9:15 21:14 34:11 35:20 preceding 25:13 29:19 34:24 35:20 35:7,21 38:20,25 35:22 37:13 preliminary putting 7:2 24:23 39:4,5,7 43:4 percent 28:9 29:2 12:13 24:23 recorded 10:2 30:16 prepaid 30:14 q 12:12 percentage 28:25 prepaids 20:19 recording 8:4 question 7:2 11:9 perfect 13:18 prepare 6:25 23:5 10:5,6 11:15,16,17,20,22 perjury 19:10,17 23:9 recoveries 40:17 12:18,21 23:3 permitted 24:2 preparing 7:1 red 33:23 34:10 29:14,23,24 32:9 42:18 president 31:2,2,4 refer 35:7 33:19 36:6 39:12 perry 18:16,17 31:24 32:3 referring 15:22 42:7,16,18 person 10:3,9,15 presiding 4:4 8:21 reflect 8:8 questions 9:3,5 16:22 previous 34:23 refresh 31:18 11:12 13:8 19:3 perspective 41:6,7 probably 29:22 regarding 8:25 33:16 35:16,19,23 petition 14:14 30:18 relationship 9:22 35:25 36:1,3 15:3,15,23 16:9 problem 16:1 released 24:19 37:13,19,22,24 18:24 19:3 proceedings releases 35:4 39:10 41:22 42:13 petitions 13:23,24 42:25 43:4 relevant 21:14 quiet 37:16 phone 4:9 5:5 8:5 process 13:1 remember 16:12 pit 40:11 23:11 r removing 40:16 place 29:19 product 25:25 r 1:23 2:1 4:1 5:22 rephrase 11:16 placing 24:25 37:2 38:10,10,15 6:12,14,14 7:15 replaced 31:4,10 plan 27:20 33:10 professional 18:8 9:17 43:1 report 33:18 33:11 35:17 professionals raise 9:8 reporting 35:10 planned 24:25 20:21 reach 10:7 represent 4:24 plans 38:13 program 8:16 reached 41:7 6:15 7:20 38:19 please 4:9 5:2,10 pronounced read 18:1 33:16 38:24 5:13,17,21 6:1,8 13:12 33:17 representative 6:17 7:10,13 8:3 pronunciation realized 34:16 4:23 8:25 9:7 15:3 9:9,15,23 11:10 13:19 really 13:1 24:12 18:19 39:11 42:14 13:13,23 14:13 proper 28:2 33:14 25:19 28:17,20 representatives 15:3 21:3 22:14 provide 10:7 30:14 32:17 33:5 12:25 34:8 41:15 22:15 36:14 38:1 20:20 39:15 33:13 represented 11:25 38:19 39:15 provided 16:22 reason 7:8 12:17 representee 35:15 point 14:4 20:10 providing 8:6 27:10 32:23 representing 25:8 34:22 42:20 pty 2:20 5:24 reasons 29:10 35:22 38:24 receive 25:21 26:11 Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 53 of 55 [represents - solutions] Page 9 represents 42:15 rodney 3:3 19:25 20:2,8,13 service 18:8 24:24 republic 2:13 5:4 roll 4:8 20:16,20,24 21:3 services 39:2 27:7 42:15 room 1:15 21:6,10,18,22 serving 8:20 request 10:9 roughly 37:2 22:1,13,20,25 shareholder require 33:13,13 rules 10:20 13:6 23:2,4,8,11,13,15 18:19 26:17 33:22 reservation 22:4 run 40:14,17 23:19,22 24:7,15 34:21 reserves 22:10 s 25:8,20,23 26:4,8 shareholders reside 9:19,20 26:13,16,24 27:2 17:16 s 2:1 4:1 5:22 6:14 resigned 21:8 27:4,14,19 28:5 sheet 32:12 7:14 9:17,17 36:5 31:15,16,17 28:11,18 29:3,6 shipment 25:14 38:1 resolution 17:13 29:11,23 30:2,7 25:16 safak 3:24 7:14 resolutions 17:15 30:15,21,24 31:6 shown 34:25 safety 33:25 17:16,22 31:9,13,16,18,21 side 17:24 sanchez 3:23 6:19 respect 10:24 31:23 32:15 33:9 sign 17:4 19:13 sanchez’s 7:10 18:22 20:4 26:17 33:15 34:2,19 signature 34:24 sat 7:9 41:10 42:7 35:3,6,11 36:2,4,7 signed 17:2 19:19 saying 26:4 29:16 response 11:12 36:11,14,20,24 21:23 23:13,15 32:19 35:1 39:22 32:19 42:8 37:4,9,11,17,21 similar 12:19 42:9 restructure 29:8 37:23 38:4,17,23 34:20 36:17 41:4 says 14:13 17:14 restructured 34:9 38:25 39:4,7,10 similarly 11:14 17:15 19:16 restructuring 39:15 40:4,23,25 simon 21:5 schedule 27:15 28:16,22 41:1,20 42:1,4,5,6 singer 5:13,14 schedules 6:25 7:1 revenue 25:13,18 42:11,21 7:17,18,21 20:10 21:19 22:3 25:21,25,25 26:11 scope 33:2 sir 22:23 23:23 39:2 review 7:3,5 17:1 scott 18:16,17 sit 17:8,9 19:23 scholer 2:12 19:19 32:11 39:23 scrolling 18:21 23:20 27:24 33:11 schwartz 1:24 4:2 reviewed 16:25 se 33:5 39:25 4:3,12,15,19,22 21:11,22 23:6 second 9:2 15:22 site 24:24 25:19 5:1,5,9,12,16,25 right 4:22 5:12 35:18 37:17 38:17 26:12 40:11 6:6,10,16,20,23 7:4 9:8,14 11:24 secret 24:24 sitting 11:4 14:3 7:1,7,12,16,18,22 12:14 13:3,5 14:2 section 8:9 situation 33:19,21 7:25 8:2 9:11,14 15:4,14 16:2 see 12:8 14:15,24 36:10,18 9:18,22 10:1,18 17:23,24 18:2 15:6 17:11,17,20 situations 37:1 10:19,23 11:2,9 20:2,8 22:15,21 19:11,12 20:9 six 15:21 21:2 11:14,19,24 12:5 22:22 25:15 26:9 22:4,23 30:15 small 30:20 12:8,11,14,16 29:25 30:24 32:15 35:22 37:18 software 38:16 13:5,8,10,15,18 34:12 37:18 39:4 seeking 27:21 sole 9:25 18:18 14:3,6,9,12,20,24 39:24 40:6 42:21 seemingly 11:3 25:6 26:11,16 15:6,9,14,19,22 rights 22:4,10 sending 15:4,8 28:3,6,7 33:22 16:1,6,11,15,18 risk 40:22 senior 34:23 34:21 39:19 16:22 17:1,4,8,11 road 43:21 sense 32:1 solid 21:17 30:11 17:19,21,23 18:1 robes 11:5 sent 15:21 solutions 43:20 18:5,7,9,12,20 19:2,5,13,16,22 Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 54 of 55 [somebody - traveling] Page 10 somebody 8:6 stretto 6:18,24 tan 21:5 23:9 things 8:18 32:24 somewhat 12:1 20:21 taylor 3:1 6:3 40:10 sonya 43:3,8 structure 28:23 team 20:23,24,25 think 13:11 15:7 sorry 5:16 6:20 stuff 5:18 24:1 22:20 28:15 30:4 37:15 38:21 40:25 submit 22:9 technically 38:11 34:5,15 38:18 sounds 12:16 substantial 28:23 telephonic 10:10 41:9 southern 1:2,13 substantially telephonically 2:8 thinking 32:2 8:14 40:17 2:9,10,17,24 3:6,7 threats 34:20 speak 10:13 41:2 substantive 14:24 3:8,15,16,18 10:4 three 14:21 34:14 speaking 5:17 successfully 28:1 tell 9:11 10:24 thursday 27:18 10:12,16,17 suggestion 40:5,6 11:10,15 16:15,16 time 7:8 9:4,6 specific 9:4 24:16 suite 2:21 43:22 19:10 20:5 24:8 10:12,14 14:15 specifically 37:25 sullivan 2:3 4:11 27:20 28:6 29:12 19:6 20:2,3 23:24 spell 5:9 9:15 4:13,16,20 31:13 33:23 36:18 23:25 25:14,20 spelling 31:8 suppliers 29:17 telling 38:14 31:23 34:19 37:20 spend 19:6 29:24 30:2,6,11 temporary 29:19 39:17 40:21 square 3:3 30:13,16,19 32:6 terms 21:16 32:14 title 14:25 20:11 stargatt 3:1 6:3 32:12 33:3 31:1 start 38:2 supply 21:8 30:13 terribly 40:11 titled 19:9 started 24:20 25:1 sure 12:15 23:16 testified 30:22 today 4:23 8:8 starting 40:10,11 23:22 32:16,19 33:1 9:12 10:5,25 11:3 40:12,19,20 33:5 34:5 41:1 testimony 12:8 11:9,11 12:17 state 9:15 38:4,4 swear 9:6,11 thank 4:2 5:20,25 13:3 17:8,9 19:23 38:19 swearing 19:17 6:6,16 7:12 8:2 21:20 23:20 30:22 stated 8:5,13 sweden 26:22 10:1 18:20 19:5 33:16 42:22 35:12 syosset 2:22 19:25 22:13 27:19 today’s 10:2,6,21 statement 15:12 system 40:14 30:15 37:18 38:3 11:21 12:18 42:3 19:18 22:22 23:24 systems 25:1 41:20 42:2,22,24 42:12,12,16 statements 6:25 t that’s 4:20 5:23 top 14:13,17 15:8 7:2 6:14 7:23 10:7,12 16:11 19:8 32:13 t 7:11 21:5 43:1,1 states 1:1,12 8:16 13:17 14:20 15:14 toronto 9:20 tab 14:18 8:17 12:4 41:16 16:23 17:25 19:6 totally 30:5 42:17 take 4:8 13:23 status 26:24 27:2 22:3,14 26:13 touch 10:8 14:9,12,15 18:15 statute 8:17 29:14 31:9,21 town 16:4 19:8 20:8 22:16 stay 27:9,12 38:13 32:9,16 34:2 transcript 43:4 22:22 26:17 37:14 stephen 3:15 6:12 37:23 40:14 42:16 transferred 28:16 39:21 42:6 there’s 8:4 25:14 29:1 taken 12:2 25:13 stipulation 38:14 40:19 translate 18:13 27:11 29:20 stockpile 40:15 they’re 35:1 40:12 translated 17:13 takeover 24:25 stop 36:14,14,14 40:20 17:23 18:10 25:13 36:14,15,15,15 they’ve 29:20 translation 18:6,8 talk 40:8 street 2:5,14 3:3 thing 4:4,8 13:10 traveling 34:13,14 talking 33:2 38:22 13:21 22:18 41:5 Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-8 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit H Pg 55 of 55 [trouble - ’21] Page 11 trouble 38:18 uniqueness 30:12 water 40:12 30:8 32:3,7,19,19 trucks 40:19,20 united 1:1,12 8:16 way 10:7 13:11 38:1 40:2,2 40:20,21 8:17 12:4 41:15 27:25 33:14 you’ve 32:4,25 true 43:4 unknown 25:24 web 17:7 ’ truncated 26:8 unrelated 39:2 week 24:24 25:17 ’21 31:21 trustee 1:12,25 unusual 7:7,7 38:8 8:16 22:5,11 36:9 weeks 25:14,16 35:14 36:23 use 12:22 32:16 welcome 5:1 20:1 truth 9:12,12,12 usually 12:23 went 16:20 25:25 10:24 13:2 18:10 utilize 21:13 west 2:14 19:17 v we’re 15:7 32:24 try 13:20 22:14 33:2 40:10 vehicle 33:23 41:8 we’ve 42:8 vendor 20:19 trying 6:11 19:5 what’s 27:20 32:10 36:25 38:15 22:21 32:18 37:9 33:10 vendors 29:25 37:11 willing 38:10 30:2,17,19 31:25 turn 17:14 27:1 wilmington 3:4 32:4 33:3 36:17 37:14 win 33:12,13 41:4,14 two 8:23 14:10,10 withdraws 22:7 verify 13:21 35:16 24:9 25:14,15 witness 11:6 39:18 27:21 28:11 word 32:16 veritext 43:20 twofold 35:13 words 26:18 version 18:4 type 22:5 work 6:24 23:5,8 violation 38:12 typically 30:4 40:1 visibility 25:9 worked 21:2 u 26:2 29:21 39:21 wouldn’t 39:23 u 21:9 39:24 written 17:16 u.s. 7:21,22 22:5 voluntary 13:23 wrong 7:4 32:3 22:11 35:13 36:23 14:14 15:3,15 underhill 2:21 16:8,9 18:24 19:3 x understand 11:2 w x 1:4,11 11:7,8,12,13,15 wait 38:5,5,5,5 y 11:16,21,21 12:24 wanda 2:24 5:22 yeah 14:2 16:7,21 13:5 17:3 23:3 39:7 16:25 17:19,20,22 27:24 33:2,12,13 want 10:13 11:2 21:13 28:13 30:19 33:18,21,24 39:12 20:3 22:1 23:22 31:12 32:15 35:9 40:15,19 42:20 24:3 32:15 35:23 37:11 38:23 understanding 37:12 38:9,11,13 years 21:2 31:3 25:18 28:21 29:16 39:23 42:15,17 32:11 34:14,14 34:4,25 wanted 30:11 york 1:2,13,16 2:6 understood 11:22 33:2,4 36:22 2:15 3:13 8:15 22:12,19 wasn’t 33:5 young 3:1 6:2,5 unfortunately wasting 40:18 you’re 5:16 11:6 39:17 14:20 20:1 26:4 Veritext Legal Solutions 212-267-6868 www.veritext.com 516-608-2400 21-11051-lgb Doc 92-9 Filed 07/19/21 Entered 07/19/21 01:55:00 Exhibit I Pg 1 of 39 Exhibit I NRA Dismissal Order Case21-11051-lgb 21-30085-hdh11 Doc Doc 92-9 740 Filed 05/11/2107/19/21 Entered 05/11/2107/19/21 14:06:1801:55:00 PageExhibit 1 Iof 38 Pg 2 of 39 The following constitutes the ruling of the court and has the force and effect therein described. Signed May 11, 2021 United States Bankruptcy Judge ______ UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF TEXAS DALLAS DIVISION In re: § Chapter 11 § National Rifle Association of America § Case No. 21-30085 (HDH) and Sea Girt LLC, § § (Jointly Administered) Debtors. § ORDER GRANTING MOTIONS TO DISMISS The National Rifle Association of America (the “NRA”) is a 150-year-old organization with approximately five million members that is dedicated to the rights of Americans to own and safely use firearms for their personal protection and recreational use. The mission and function of the NRA is focused on gun safety, and the NRA asserts it is “the nation’s foremost defender” of the Second Amendment of the United States Constitution. In recent years, however, it has become apparent that the NRA was suffering from inadequate governance and internal controls. The attorney general for the state of New York conducted a fifteen-month-long investigation of the NRA that revealed, the New York attorney general claims, widespread misuse of assets by the NRA’s executive vice president and his circle of insiders for their personal benefit. Nine months ago, the New York attorney general filed a lawsuit seeking dissolution of the NRA Case21-11051-lgb 21-30085-hdh11 Doc Doc 92-9 740 Filed 05/11/2107/19/21 Entered 05/11/2107/19/21 14:06:1801:55:00 PageExhibit 2 Iof 38 Pg 3 of 39 based on allegations that (1) the NRA has exceeded the authority conferred upon it by New York law and has conducted its business in a persistently illegal manner and abused its powers contrary to the public policy of the state of New York by operating without effective oversight or control by its officers and directors, and (2) the directors or members in control of the NRA have looted or wasted the corporate assets, have perpetuated the corporation solely for their personal benefit, or have otherwise acted in an illegal, oppressive, or fraudulent manner. The NRA filed this case seeking the protection of the Bankruptcy Code to preserve itself as a going concern in the face of litigation that, it argues, poses an existential threat. Debtors commonly file bankruptcy when faced with a judgment that has, or will, render them insolvent, but the threat against the NRA differs from the classic scenario in that dissolution would not be a collateral effect of litigation but rather the intended relief sought in a state’s regulatory action. And in this instance, dissolution could only occur after judicial consideration of whether dissolution is in the best interest of the public. The question the Court is faced with is whether the existential threat facing the NRA is the type of threat that the Bankruptcy Code is meant to protect against. The Court believes it is not. For the reasons stated herein, the Court finds there is cause to dismiss this bankruptcy case as not having been filed in good faith both because it was filed to gain an unfair litigation advantage and because it was filed to avoid a state regulatory scheme. The Court further finds the appointment of a trustee or examiner would, at this time, not be in the best interests of creditors and the estate. I. Jurisdiction and Venue This Court has jurisdiction to consider this matter under 28 U.S.C. §§ 157 and 1334. This is a core proceeding under 28 U.S.C. § 157(b)(2)(A). Venue is proper in this District under 28 U.S.C. §§ 1408 and 1409. 2 Case21-11051-lgb 21-30085-hdh11 Doc Doc 92-9 740 Filed 05/11/2107/19/21 Entered 05/11/2107/19/21 14:06:1801:55:00 PageExhibit 3 Iof 38 Pg 4 of 39 II. Relevant Background The NRA is a charitable not-for-profit corporation chartered by special act of the New York State Legislature on November 17, 1871. The NRA has approximately five million members, almost 500 employees, and annual revenue of approximately $300 million. The NRA is primarily supported by dues from members and private contributions from donors. Around the middle of 2017, NRA Board Member Tom King received a phone call from Eric Schneiderman, who at the time was the New York attorney general.1 According to Mr. King, Mr. Schneiderman told him that investigations into the NRA were being opened and they should “prepare for the worst.”2 Mr. King shared this message with Wayne LaPierre,3 the NRA’s executive vice president.4 In response to this warning, Mr. LaPierre testified that he decided the “NRA ought to take a look at everything, a 360-degree look to make sure we were in total compliance with New York State not-for-profit law, and if we weren’t, we needed to fix things.”5 This was the beginning of what the NRA now refers to as its course correction.6 As part of its course correction, the NRA hired the law firm Morgan, Lewis & Bockius LLP to provide advice regarding tax and nonprofit governance matters.7 The NRA also hired Brewer, Attorneys & Counselors (the “Brewer Firm”) in early 2018 to aid with the course 1 Transcript of Hearing Held April 21, 2021 [Docket No. 670] at 79:3-80:7; Transcript of Hearing Held April 6, 2021 [Docket No. 499] at 62:12-16. 2 Transcript of Hearing Held April 21, 2021 [Docket No. 670] at 79:18-80:1. 3 Transcript of Hearing Held April 21, 2021 [Docket No. 670] at 80:19-81:2. 4 In the NRA’s organizational structure, the executive vice president is the functional equivalent of a chief executive officer. See Ackerman Exhibit 10 (NRA Bylaws, Article V, section 2(c)). 5 Transcript of Hearing Held April 8, 2021 [Docket No. 654] at 41:25-42:14. 6 Transcript of Hearing Held April 6, 2021 [Docket No. 499] at 62:8-11. 7 Transcript of Hearing Held April 8, 2021 [Docket No. 654] at 43:17-44:1; Transcript of Hearing Held April 6, 2021 [Docket No. 499] at 62:19-63:12. 3 Case21-11051-lgb 21-30085-hdh11 Doc Doc 92-9 740 Filed 05/11/2107/19/21 Entered 05/11/2107/19/21 14:06:1801:55:00 PageExhibit 4 Iof 38 Pg 5 of 39 correction process and potential upcoming litigation.8 Since that time, in addition to becoming the NRA’s primary litigation counsel, the Brewer Firm appears to have become involved in many aspects of the NRA. In March 2018, the NRA hired Craig Spray as its new chief financial officer.9 Before joining the NRA, Mr. Spray served as the chief financial officer for two different companies, one of which was a publicly traded company valued at over $1 billion. On April 19, 2018, the New York Department of Financial Services sent letters to insurers and financial institutions encouraging them to review their relationships with the NRA and consider whether such relationships harm their corporate reputations and jeopardize public safety (the “NY DFS Letter”). Less than a month later, the NRA, with the assistance of the Brewer Firm, filed a complaint in federal court in the Northern District of New York against the governor of New York and the New York Department of Financial Services regarding their alleged attempts “to deprive the NRA and its constituents of their First Amendment rights to speak freely about gun-related issues and defend their Second Amendment freedoms against encroachment.”10 In July 2018, several whistleblowers came forward with the encouragement of Mr. Spray and presented a memo to the NRA Audit Committee regarding their top concerns (the “Whistleblower Memo”).11 That list included concerns related to (1) financial conflicts of interest of senior management and board members, (2) senior management override of internal controls relating to, among other things, accounts payable procedures, travel and expense reporting, and procurement/contracts policy, (3) management making decisions in the best interests of vendors 8 Transcript of Hearing Held April 6, 2021 [Docket No. 499] at 67:13-16; Transcript of Hearing Held April 21, 2021 [Docket No. 670] at 81:3-9; Transcript of Hearing Held April 23, 2021 [Docket No. 697] at 148:16-19. 9 The board of directors also elected Mr. Spray as the treasurer of the NRA in September 2018. 10 NRA Exhibit 663. 11 Transcript of Hearing Held April 8, 2021 [Docket No. 654] at 95:1-21; NYAG Exhibit 72. 4 Case21-11051-lgb 21-30085-hdh11 Doc Doc 92-9 740 Filed 05/11/2107/19/21 Entered 05/11/2107/19/21 14:06:1801:55:00 PageExhibit 5 Iof 38 Pg 6 of 39 instead of the NRA, (4) vague and deceptive billing practices of vendors, (5) improper reimbursement for apartments and living expenses of certain employees, and (6) lack of control over vehicle leases obtained by senior management.12 Following the presentation of the Whistleblower Memo to the Audit Committee, the NRA took several actions, including examining related party transactions and reviewing vendor contracts.13 As a result of this review process, the NRA required the inclusion of specific metrics in all contracts14 and improved documentation and recordkeeping.15 One of the more significant actions taken in response to the Whistleblower Memo was to send letters to the NRA’s vendors notifying them of the rules regarding proper invoicing.16 While most vendors complied with these new measures, some did not.17 As a result, some contracts with vendors were re-negotiated, and some were terminated.18 This process caused a rift between the NRA and one of its most significant vendors, Ackerman McQueen, Inc. (“Ackerman”). Ackerman had very close ties with the NRA and had been the NRA’s marketing and public relations firm for decades, but several of the concerns expressed in the Whistleblower Memo related to the NRA’s relationship with Ackerman.19 The disagreements that came from discussions regarding billing practices and their business 12 NYAG Exhibit 72. 13 Transcript of Hearing Held April 23, 2021 [Docket No. 697] at 90:4-19. 14 Transcript of Hearing Held April 13, 2021 [Docket No. 578] at 69:22-70:2. 15 Transcript of Hearing Held April 7, 2021 [Docket No. 700] at 24:24-25:9; Transcript of Hearing Held April 13, 2021 [Docket No. 578] at 157:6-20. 16 Transcript of Hearing Held April 23, 2021 [Docket No. 697] at 90:4-19; Transcript of Hearing Held April 7, 2021 [Docket No. 700] at 25:10-25; Transcript of Hearing Held April 6, 2021 [Docket No. 499] at 91:8-17. 17 Transcript of Hearing Held April 6, 2021 [Docket No. 499] at 91:8-92:4. 18 Transcript of Hearing Held April 23, 2021 [Docket No. 697] at 91:2-9. 19 NYAG Exhibit 72. 5 Case21-11051-lgb 21-30085-hdh11 Doc Doc 92-9 740 Filed 05/11/2107/19/21 Entered 05/11/2107/19/21 14:06:1801:55:00 PageExhibit 6 Iof 38 Pg 7 of 39 relationship escalated and have spawned four overlapping lawsuits—three in Virginia state court and one in federal court in the Northern District of Texas. On August 6, 2020, following a fifteen-month investigation, the New York attorney general (the “NYAG”) filed a complaint in New York state court against the NRA seeking, among other relief, dissolution of the NRA (the “NYAG Complaint” commencing the “NYAG Enforcement Action”).20 The NYAG Complaint also named four individual defendants: (1) Mr. LaPierre; (2) John Frazer, the NRA’s general counsel; (3) the NRA’s former treasurer and chief financial officer; and (4) the NRA’s former chief of staff. The allegations in the 163-page NYAG Complaint are extensive but, in very general terms, accuse Mr. LaPierre of (i) exploiting the NRA for his financial benefit and the benefit of a close circle of NRA staff, board members, and vendors, (ii) intimidating, punishing, and expelling anyone at a senior level who raised concerns about his conduct, (iii) hiring and retaining individuals in senior positions at the NRA, or as NRA contractors, whom he believed would aid and enable him to control the organization, regardless of their skills, experience, integrity, or contribution to the charitable mission, and (iv) entering into post-employment agreements with departing officers and employees that provided excessive payments in exchange for little, if any, services and non-disclosure/non-disparagement agreements. Other of the individual defendants were accused of (i) ignoring, overriding, or otherwise violating the bylaws and internal policies and procedures they were charged with enforcing, resulting in charitable assets being diverted to benefit NRA insiders and favored vendors, (ii) instituting a practice whereby millions of dollars in entertainment and travel expenses incurred by NRA executives were billed to the NRA as disbursements by the NRA’s largest vendor, and (iii) circumventing internal controls, condoning or partaking in expenditures that were 20 NYAG Exhibit 107. 6 Case21-11051-lgb 21-30085-hdh11 Doc Doc 92-9 740 Filed 05/11/2107/19/21 Entered 05/11/2107/19/21 14:06:1801:55:00 PageExhibit 7 Iof 38 Pg 8 of 39 an inappropriate and wasteful use of charitable assets, and concealing or misreporting relevant information, rendering the NRA’s annual reports filed with the NYAG materially false and misleading. The NYAG Complaint, in addition to dissolution of the NRA, seeks (i) restitution of certain funds paid to current and former officers, which would be returned to the NRA, (ii) a ban on certain former and current officers, including Mr. LaPierre and Mr. Frazer, from serving as fiduciaries of any New York charity, and (iii) voiding of certain transactions.21 On September 10, 2020, Carolyn Meadows (the NRA’s President) created a Special Litigation Committee to oversee (i) the NYAG Enforcement Action, (ii) a lawsuit filed against the NRA and the NRA Foundation by the District of Columbia attorney general, (iii) the NRA’s pending lawsuit against the NYAG, and (iv) any future proceedings that arise out of or relate to the previously-identified matters. In an e-mail sent to the board of directors, Ms. Meadows explained that the creation of the Special Litigation Committee was done on the advice of counsel to avoid the appearance of any conflict because Mr. LaPierre and Mr. Frazer were named as individual defendants in the NYAG Enforcement Action.22 The Special Litigation Committee’s members were Ms. Meadows, Charles Cotton (the NRA’s First Vice President), and Colonel Willes Lee (the NRA’s Second Vice President). On November 18, 2020, the NRA filed its IRS Form 990 signed by Mr. LaPierre.23 This form is an annual informational tax return filed by a nonprofit to justify maintaining its tax-exempt status. In the Form 990, the NRA disclosed several excess benefit transactions entered into by individuals at the NRA, including Mr. LaPierre. 21 Id. 22 NYAG Exhibit 1. 23 NYAG Exhibit 8. 7 Case21-11051-lgb 21-30085-hdh11 Doc Doc 92-9 740 Filed 05/11/2107/19/21 Entered 05/11/2107/19/21 14:06:1801:55:00 PageExhibit 8 Iof 38 Pg 9 of 39 On November 23, 2020, the NRA hired the Neligan Law Firm to advise on bankruptcy and restructuring options.24 The next day, Sea Girt, LLC was formed as a transition vehicle to facilitate the NRA’s relocation to Texas.25 On January 7, 2021, the NRA held a board meeting. At this meeting, the board of directors adopted a resolution formalizing the Special Litigation Committee.26 The board of directors also passed a resolution approving an employment agreement for Mr. LaPierre.27 Significantly, Mr. LaPierre’s employment agreement contained language permitting Mr. LaPierre to “exercise corporate authority in furtherance of the mission and interests of the NRA, including without limitation to reorganize or restructure the affairs of the Association for the purposes of cost- minimization, regulatory compliance or otherwise.”28 Throughout the entirety of the board meeting, both in the general and executive sessions, no discussion of bankruptcy, Chapter 11, or the possible reorganization of the NRA occurred.29 The board of directors was not informed that the language cited above could authorize Mr. LaPierre to unilaterally authorize a petition for bankruptcy relief for the NRA. In fact, the board of directors was not informed that the NRA was considering filing for bankruptcy at all.30 On January 15, 2021, the NRA and Sea Girt, LLC filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. The cases are being jointly administered.31 On February 8, 24 Transcript of Hearing Held April 7, 2021 [Docket No. 700] at 98:9-99:25; NYAG Exhibit 298. 25 Transcript of Hearing Held April 7, 2021 [Docket No. 700] at 89:3-10; NYAG Exhibit 347. 26 NYAG Exhibits 2, 3. 27 NYAG Exhibit 3. 28 NYAG Exhibit 50. 29 Transcript of Hearing Held April 13, 2021 [Docket No. 584] at 92:1-93:10; Transcript of Hearing Held April 6, 2021 [Docket No. 692] at 76:15-21; Transcript of Hearing Held April 8, 2021 [Docket No. 544] at 92:24-93:4. 30 Transcript of Hearing Held April 5, 2021 [Docket No. 497] at 118:8-16; Transcript of Hearing Held April 8, 2021 [Docket No. 654] at 47:7-10; Transcript of Hearing Held April 6, 2021 [Docket No. 692] at 85:24-86:16. 31 Order Granting Debtors’ Emergency Motion for Joint Administration of Chapter 11 Cases [Docket No. 36]. 8 Case21-11051-lgb 21-30085-hdh11 Doc Doc 92-9 740 Filed 05/11/2107/19/21 Entered 05/11/2107/19/21 14:06:1801:55:00 PageExhibit 9 Iof 38 Pg 10 of 39 2021, Judge Phillip Journey,32 a longtime member, donor, and director of the NRA, filed a motion seeking the appointment of an examiner with special duties and powers under section 1104(c) of the Bankruptcy Code to investigate the governance of the NRA and the actions of its management (the “Examiner Motion”).33 The Examiner Motion was originally set for hearing on March 9, 2021.34 On February 10, 2021, Ackerman, now a former vendor and current litigation adversary of the NRA, filed a motion to dismiss the Chapter 11 case or, in the alternative, appoint a Chapter 11 trustee pursuant to section 1104(a) of the Bankruptcy Code.35 The motion to dismiss filed by Ackerman was quickly followed by similar motions filed by the NYAG36 and the District of Columbia attorney general37 (the “Motions to Dismiss”) and a joinder filed by Christopher W. Cox, a former executive director of the NRA Institute for Legislative Action.38 Because of the overlapping facts and interrelated relief being requested in the Examiner Motion and the Motions to Dismiss, the Court chose to set them for trial together after a brief period of time for expedited discovery. 32 Judge Phillip Journey currently serves as the Division 1 Judge of the 18th Judicial District Court of Kansas. 33 Motion for Appointment of Examiner [Docket No. 114]. 34 See Notice of Hearing [Docket No. 130]. 35 Ackerman McQueen, Inc.’s Motion to Dismiss the Chapter 11 Bankruptcy Petition, or, in the Alternative, Motion for the Appointment of a Chapter 11 Trustee, and Brief in Support [Docket No. 131]. 36 The State of New York’s Motion to Dismiss, or, in the Alternative, to Appoint a Chapter 11 Trustee [Docket No. 155]; The State of New York’s Motion to Dismiss, or, in the Alternative, to Appoint a Chapter 11 Trustee [Docket No. 163]. 37 The District of Columbia’s Motion in Support in the State of New York’s Motion to Appoint Chapter 11 Trustee [Docket No. 214]; The District of Columbia’s Motion in Support in the State of New York’s Motion to Dismiss [Docket No. 429]. 38 Christopher W. Cox’s Joinder to (I) the Motions to Dismiss or, in the Alternative, to Appoint a Chapter 11 Trustee Filed by Ackerman McQueen, Inc. and the State of New York, or (II) the Motion of Phillip Journey for Appointment of an Examiner [Docket No. 172]. 9 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 10 I of 38 Pg 11 of 39 In the following weeks, the many parties involved in this case—each with different interests, perspectives, and goals—engaged in discovery and began to take positions on the motions filed and the various relief requested therein. Judge Journey filed an objection to the Motions to Dismiss but amended his previous request for an examiner to include an expanded role for the proposed examiner.39 The Official Committee of Unsecured Creditors (the “Committee”) took the position that while the NRA is in need of major changes to its governance, current management should not be displaced by a Chapter 11 trustee, but if a trustee is appointed, they should have limited powers. The Committee also took the position that the NRA should retain a chief restructuring officer and that the appointment of an examiner was not necessary because the Committee was already fulfilling that role.40 The NRA opposed all of the motions but did eventually consent to the appointment of a chief restructuring officer.41 David Dell’Aquila, a member of the Committee and the plaintiff in a purported class action against the NRA, filed a partial joinder opposing dismissal but supporting the appointment of a Chapter 11 trustee with limited authority.42 39 Limited Objection to the Motions to Dismiss or the Appointment of Trustee [Docket No. 306]. 40 The Official Committee of Unsecured Creditors’ Objection to the Motion for Appointment of an Examiner [Docket No. 354]; The Official Committee of Unsecured Creditors’ Omnibus Response to (I) Ackerman McQueen, Inc.’s Motion to Dismiss the Chapter 11 Bankruptcy Petition, or, in the Alternative, Motion for the Appointment of a Chapter 11 Trustee, and Brief in Support, (II) the State of New York’s Motion to Dismiss, or, in the Alternative, to Appoint a Chapter 11 Trustee, and (II) the District of Columbia’s Motion in Support in the State of New York’s Motion to Appoint Chapter 11 Trustee [Docket No. 368]. 41 Omnibus Opposition to (1) Ackerman McQueen, Inc.’s Motion to Dismiss the Chapter 11 Bankruptcy Petition, or, in the Alternative, Motion for the Appointment of a Chapter 11 Trustee, (2) the State of New York’s Motion to Dismiss or, in the Alternative, to Appoint Chapter 11 Trustee, and (3) the District of Columbia’s Motion to Appoint Chapter 11 Trustee [Docket No. 307]; Debtor’s Response in Opposition to the Motion for Appointment of an Examiner Filed by Phillip Journey [Docket No. 358]. 42 David Dell’Aquila’s Partial Joinder to (I) Ackerman McQueen, Inc.’s Motion to Dismiss the Chapter 11 Bankruptcy Petition, or, in the Alternative, Motion for the Appointment of a Chapter 11 Trustee, and Brief in Support, (II) the State of New York’s Motion to Dismiss, or, in the Alternative, to Appoint a Chapter 11 Trustee, (III) the District of Columbia’s Motion in Support in the State of New York’s Motion to Appoint Chapter 11 Trustee, and (IV) the Official Committee of Unsecured Creditors Motion in Response to (I), (II), and (III) [Docket No. 415]. 10 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 11 I of 38 Pg 12 of 39 The United States Trustee did not initially express an opinion regarding the underlying motions but did express views on several of the options the parties had discussed.43 Specifically, the United States Trustee took the position that there is no such entity as a limited purpose trustee under the Bankruptcy Code, and if the Court orders the appointment of a Chapter 11 trustee, the trustee must have full statutory powers. The United States Trustee also took the position that while an examiner may be granted expanded powers, the Bankruptcy Code does not permit a chief restructuring officer to usurp the powers of a Chapter 11 trustee.44 Sixteen states, as amici curiae, filed a brief in support of the NRA, 45 and the state of Texas submitted its own brief in support of the NRA.46 Trial commenced on April 5, 2021 and continued over twelve days with twenty-three witnesses. On April 7, 2021, the NRA filed an application to employ a chief restructuring officer,47 which the Court heard concurrently with the ongoing trial. Closing arguments took place on May 3, 2021, after which the Court took the matters under advisement. 43 In closing arguments following trial, the United States Trustee took the position that the evidence supports dismissal, the appointment of a trustee, or the appointment of an examiner. 44 United States Trustee’s Statement Regarding Motions Seeking Appointment of Examiner, Trustee, or Case Dismissal [Docket No. 405]. 45 Brief of the States of Arkansas, Alabama, Alaska, Georgia, Idaho, Kentucky, Louisiana, Mississippi, Missouri, Montana, Ohio, Oklahoma, South Carolina, South Dakota, Utah, and West Virginia as Amici Curiae in Support of Debtors; and in Opposition to the State of New York’s Motion to Dismiss, or in the Alternative to Appoint a Chapter 11 Trustee [Docket No. 445]. 46 Brief of the State of Texas as Amicus Curiae in Support of Debtors; and in Opposition to the State of New York’s Motion to Dismiss, or in the Alternative to Appoint a Chapter 11 Trustee [Docket No. 465]. 47 Application of the Debtors for an Order Authorizing the Retention and Employment of Ankura Consulting Group, LLC and Appointment of Louis E. Robichaux IV as the Debtors’ Chief Restructuring Officer [Docket No. 519] (the “CRO Motion”). 11 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 12 I of 38 Pg 13 of 39 III. Applicable Legal Standard The movants generally seek three forms of relief: dismissal of the bankruptcy cases, the appointment of a Chapter 11 trustee, or the appointment of an examiner. Pursuant to section 1112(b) of the Bankruptcy Code, the court shall dismiss a case under this chapter for cause unless the court determines that the appointment under section 1104(a) of a trustee or an examiner is in the best interests of creditors and the estate.48 Section 1112(b)(4) contains a non-exclusive list of what constitutes “cause” for purposes of dismissal, but the Fifth Circuit Court of Appeals has held that the term “cause” affords flexibility to the bankruptcy courts and can include a finding that the debtor’s filing for relief is not in good faith. In re Little Creek Dev. Co., 779 F.2d 1068, 1072-73 (5th Cir. 1986); In re Humble Place Joint Venture, 936 F.2d 814, 816-17 (5th Cir. 1991). After the movant satisfies the initial burden of making a prima facie showing of a lack of good faith in filing, the burden shifts to the debtor to demonstrate good faith. In re Mirant Corp., 2005 Bankr. LEXIS 1686, at *27 n.20 (Bankr. N.D. Tex. Jan. 26, 2005) (noting that some courts hold that the burden of showing good faith is on the debtor while other courts hold that the movant has an initial burden to present a prima facie case of a lack of good faith before the burden shifts to the debtor to show good faith); In re Sherwood Enters., Inc., 112 B.R. 165, 170-71 (Bankr. S.D. Tex. 1989). Furthermore, courts have held that a Chapter 11 petition is not filed in good faith unless it serves a valid bankruptcy purpose. Off. Comm. of Unsecured Creditors v. Nucor Corp. (In re SGL Carbon Corp.), 200 F.3d 154, 165 (3d Cir. 1999). If a court finds cause for dismissal, it must dismiss the case unless the court determines that the appointment under section 1104(a) of a trustee or an examiner is in the best interests of 48 Section 1112(b) also requires consideration of whether conversion to a case under chapter 7 would be in the best interests of creditors and the estate, but pursuant to section 1112(c), in cases where the debtor is a nonprofit, the court may not convert a case under chapter 11 to a case under chapter 7 unless the debtor requests such a conversion. The NRA has not requested such a conversion, so the Court need not consider it in this case. 12 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 13 I of 38 Pg 14 of 39 creditors and the estate. Pursuant to section 1104(a), at any time after the commencement of the case but before confirmation of a plan, on request of a party in interest or the United States Trustee, and after notice and a hearing, the court shall order the appointment of a trustee (1) for cause, including fraud, dishonesty, incompetence, or gross mismanagement of the affairs of the debtor by current management, either before or after the commencement of the case, or similar cause, but not including the number of holders of securities of the debtor or the amount of assets or liabilities of the debtor; or (2) if such appointment is in the interests of creditors, any equity security holders, and other interests of the estate, without regard to the number of holders of securities of the debtor or the amount of assets or liabilities of the debtor. Pursuant to section 1104(c), if the court does not order the appointment of a trustee, then at any time before the confirmation of a plan, on request of a party in interest or the United States Trustee, and after notice and a hearing, the court shall order the appointment of an examiner to conduct such an investigation of the debtor as is appropriate, including an investigation of any allegations of fraud, dishonesty, incompetence, misconduct, mismanagement, or irregularity in the management of the affairs of the debtor of or by current or former management of the debtor, if (1) such appointment is in the interests of creditors, any equity security holders, and other interests of the estate or (2) the debtor’s fixed, liquidated, unsecured debts, other than debts for goods, services, or taxes, or owing to an insider, exceed $5,000,000. 13 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 14 I of 38 Pg 15 of 39 IV. Discussion Because of the structure of the relevant provisions of the Bankruptcy Code, the Court will first determine whether there is cause for dismissal and, specifically, whether the NRA filed for bankruptcy in good faith. The NRA’s Stated Reasons for Filing Bankruptcy At various times in this case, the NRA has provided the Court with several—and at times slightly different—reasons for why this bankruptcy case was filed.49 In an informational brief filed on January 20, 2021, the NRA explained that it “instituted this chapter 11 reorganization proceeding to establish a centralized, neutral forum in which it can streamline, resolve, and address all outstanding claims and preserve its ability to pursue its constitutionally protected mission as a going concern” and that it “intends to restructure through a plan of reorganization that provides for the reorganized NRA to emerge from these chapter 11 cases as a Texas nonprofit entity.”50 The NRA went on to explain that “separate and apart from the on-going disputes with the NYAG, the NRA seeks to avail itself of the protections of the Bankruptcy Code in order to continue its efforts to reduce operating costs and to address the ever-increasing litigation being filed against the NRA” and that “[c]ontrary to the NYAG’s press releases, the NRA is not seeking to evade regulatory oversight; rather it seeks, and is entitled, to being treated fairly by regulators providing that oversight.”51 Finally, the NRA announced its intention to propose a plan of reorganization that will (1) pay all of the allowed claims of the NRA’s creditors in full, (2) provide a mechanism for adjudicating and/or resolving the claims of the NYAG and any other creditor with contingent, 49 In its discussion, the Court will focus on the NRA rather than Sea Girt, LLC. Sea Girt, LLC has no employees or operations and was formed to accomplish a shared bankruptcy purpose with the NRA. 50 Debtors’ Informational Brief in Connection with Voluntary Chapter 11 Petitions [Docket No. 31] at ¶¶ 3, 6. 51 Id. at ¶ 26. 14 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 15 I of 38 Pg 16 of 39 unliquidated, and disputed claims, and (3) allow the NRA to exit Chapter 11 as a Texas nonprofit organization.52 Counsel for the NRA reiterated these reasons at the hearing held on January 20, 2021, with a particular emphasis on (1) the cost of ongoing litigation and the time and effort of the NRA management team being spent on litigation, (2) the need for a breathing spell and an opportunity to centralize litigation, and (3) the NRA’s desire to emerge from bankruptcy as a company domiciled in Texas.53 Counsel for the NRA went so far as to say that “absent being able to streamline discovery and have all of this litigation, or much of it, handled in a centralized forum, the NRA was indeed facing the adage, death by a thousand cuts.”54 In the Examiner Motion and the Motions to Dismiss, the other parties offered different opinions on the true purpose of the NRA’s bankruptcy. Judge Journey took the position that if the NRA was able to successfully terminate its corporate existence in New York and reconstitute the organization under Texas law, the NRA wishes to “avoid the ongoing challenges to its corporate charter brought by the State of New York and other ongoing litigation.”55 Ackerman accused the NRA of primarily using the bankruptcy filing to escape civil prosecution and avoid regulatory oversight from the NYAG, but also to stall litigation.56 The NYAG agreed with Ackerman that the NRA’s purpose in filing bankruptcy was to evade regulatory oversight.57 52 Id. at ¶ 27. 53 Transcript of Hearing Held January 20, 2021 [Docket No. 55] at 11:8-17, 12:1-14:9, 15:2-6. 54 Id. at 12:19-23. 55 Motion for Appointment of Examiner [Docket No. 114] at 2. 56 Ackerman McQueen, Inc.’s Motion to Dismiss the Chapter 11 Bankruptcy Petition, or, in the Alternative, Motion for the Appointment of a Chapter 11 Trustee, and Brief in Support [Docket No. 131] at ¶¶ 2, 29-31. 57 The State of New York’s Memorandum of Law and Brief in Support of Motion to Dismiss, or, in the Alternative, to Appoint a Chapter 11 Trustee [Docket No. 156] at ¶¶ 3, 20, 24. 15 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 16 I of 38 Pg 17 of 39 In its brief in opposition to the Examiner Motion and the Motions to Dismiss, the NRA again summarized its reasons for filing bankruptcy, but in a slightly more expansive way: On January 15, 2021, the Debtors filed their chapter 11 petitions with a series of goals: a. The Debtors seek to streamline the barrage of litigation they are facing. Although the Debtors expect to ultimately prevail on the merits in many pending cases, the disruption and expense of such litigation creates significant burdens for the NRA. b. The organizational structure of the NRA is based on a 150-year-old charter that has not been updated in over a century. Given the size and impact that the NRA now has, the organization would benefit from the modernization to ensure its continued existence as a going concern for the benefit of the NRA’s creditors and members. c. While this case is certainly unique, ultimately, the NRA is not unlike a typical chapter 11 debtor grappling with the typical operational strains with which chapter 11 is designed to assist. The NRA seeks to reduce operating expenses, address burdensome executory contracts and unexpired leases, maintain its employees and operations, and institute and effectuate a streamlined claims process to address the multitude of claims and repayment through a confirmed plan of reorganization. d. The NRA seeks to move its corporate domicile and its principal place of business to Texas which, as has been widely reported, welcomes the NRA with open arms.58 Later in the brief, the NRA acknowledged that there is no judgment against it and no impending trial but expressed the belief that it faces existential threats: The NRA filed for protection under chapter 11 in good faith, not to circumvent judgments in other courts (in fact, no judgments have been rendered), nor to escape an impending trial (because there is none), but because it is in a situation where it must be able to continue its operations in the face of existential threats, in order to maximize the value of its estate and to protect the interests of its members, employees, vendors, and legitimate creditors.59 58 Omnibus Opposition to (1) Ackerman McQueen, Inc.’s Motion to Dismiss the Chapter 11 Bankruptcy Petition, or, in the Alternative, Motion for the Appointment of a Chapter 11 Trustee, (2) the State of New York’s Motion to Dismiss or, in the Alternative, to Appoint Chapter 11 Trustee, and (3) the District of Columbia’s Motion to Appoint Chapter 11 Trustee [Docket No. 307] at p. 13, ¶ 40. 59 Id. at p. 25, ¶ 38. 16 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 17 I of 38 Pg 18 of 39 In its briefing, the Committee seemed to agree that the NRA’s primary goal was to avoid dissolution in the NYAG Enforcement Action but did not find this to be an improper motive and also saw other benefits for the NRA in bankruptcy: In seeking the dismissal of these Chapter 11 Cases, the Moving Parties conflate the concept of litigation gamesmanship with prudent liability management. The Debtors filed these bankruptcy cases not to gain a tactical litigation advantage, but to implement a strategy to survive in the event of a potential adverse ruling in the NYAG Action. As described below, there could not be a more fundamental and proper use of the federal bankruptcy laws than preservation of and as a going- concern. . . . . In addition to protecting the NRA from dissolution, these Chapter 11 Cases also offer the NRA an opportunity to implement corporate governance changes that will promote transparency and increase public confidence in the way the NRA handles its finances, conducts business with vendors and customers, and safeguards against future mismanagement.60 In the NRA’s opening statement at trial, the stated reasons for filing bankruptcy were significantly narrower than in the NRA’s briefing and appeared to focus heavily on the NYAG Enforcement Action: The exclusive testimony as to good faith will be we had three goals in mind. First, avoid the death penalty. Avoid dissolution. Two, avoid a receiver in a New York state court that would deny us the ability to file. And third, we wholly embrace our third goal. Our third goal is to [ . . . ] remove ourselves from New York and relocate ourselves to Texas.61 It is against this backdrop that the Court evaluates the evidence presented at trial regarding the NRA’s reasons for filing bankruptcy. 60 The Official Committee of Unsecured Creditors’ Omnibus Response to (I) Ackerman McQueen, Inc.’s Motion to Dismiss the Chapter 11 Bankruptcy Petition, or, in the Alternative, Motion for the Appointment of a Chapter 11 Trustee, and Brief in Support, (II) the State of New York’s Motion to Dismiss, or, in the Alternative, to Appoint a Chapter 11 Trustee, and (III) the District of Columbia’s Motion in Support in the State of New York’s Motion to Appoint Chapter 11 Trustee [Docket No. 368] at ¶¶ 24, 31 (emphasis in original). 61 Transcript of Hearing Held April 5, 2021 [Docket No. 497] at 40:25-41:7. 17 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 18 I of 38 Pg 19 of 39 Evidence of the NRA’s Reasons for Filing Bankruptcy The parties elicited testimony from several witnesses regarding the NRA’s reasons for filing bankruptcy, but the way in which the Court has weighed that evidence is based on the somewhat unusual way in which this case was filed. There was no vote on whether the NRA should file for bankruptcy, and therefore there is no need to resolve inconsistent or conflicting reasoning and motivations of individuals who all had an equal say in the decision. Rather, the ultimate decision to file for bankruptcy was made solely by Mr. LaPierre.62 As a result, Mr. LaPierre’s testimony is the most direct, and, since the Court finds it credible on this topic, the most compelling evidence for why the NRA filed for bankruptcy, but it is not the only evidence to consider.63 Mr. LaPierre consulted the three members of the Special Litigation Committee about the decision to file bankruptcy before it was made,64 so their knowledge of the decision-making process is also relevant. The only other person within the NRA who appears to have known about the decision to file bankruptcy prior to the actual filing was the NRA spokesman,65 but he did not testify. Neither the NRA’s treasurer and then-CFO nor the NRA’s current acting CFO were consulted about the decision to file bankruptcy, and they only learned of the decision after bankruptcy was filed.66 Nevertheless, they were both able to offer helpful testimony regarding 62 Transcript of Hearing Held April 5, 2021 [Docket No. 497] at 84:8-19; Transcript of Hearing Held April 7, 2021 [Docket No. 700] at 68:1-8, 70:12-72:23. 63 See Elmwood Dev. Co. v. Gen. Elec. Pension Tr. (In re Elmwood Dev. Co.), 964 F.2d 508, 512 (5th Cir. 1992) (“Because the good faith standard is an objective one, the court was not constrained to entertain and give dispositive weight to testimony of the subjective state of mind of [the debtor’s] manager.”); In re Little Creek Dev. Co., 779 F.2d 1068, 1072-73 (5th Cir. 1986) (stating that in determining whether a debtor’s filing for relief is in good faith, courts must consider a conglomerate of factors, including motives). 64 Transcript of Hearing Held April 5, 2021 [Docket No. 497] at 84:8-85:11; Transcript of Hearing Held April 6, 2021 [Docket No. 499] at 36:18-23; NYAG Exhibit 4 at 5-10. 65 Transcript of Hearing Held April 7, 2021 [Docket No. 700] at 72:11-23. 66 Transcript of Hearing Held April 7, 2021 [Docket No. 700] at 70:12-17; Transcript of Hearing Held April 5, 2021 [Docket No. 497] at 119:23-120:1; Transcript of Hearing Held April 6, 2021 [Docket No. 692] at 49:7-11; Transcript of Hearing Held April 13, 2021 [Docket No. 578] at 54:12-21; Transcript of Hearing Held April 8, 2021 [Docket No. 654] at 85:19-22. 18 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 19 I of 38 Pg 20 of 39 potential reasons for the bankruptcy, including the cost of litigation and the financial condition of the NRA. The NRA’s general counsel also offered testimony regarding reasons for the NRA to file for bankruptcy, but he did not participate in the actual decision-making process and did not know about the decision to file bankruptcy until bankruptcy had already been filed.67 There was a general consensus among the witnesses that, as the NRA has consistently represented to the Court and to its members, the NRA is in its strongest financial condition in years68 and intends to pay creditors all allowed claims in full.69 The CFO at the time of the bankruptcy filing, Mr. Spray, testified that there was no financial reason for the NRA to file bankruptcy,70 but he later qualified that testimony by noting that he did not have any information about potential litigation outcomes.71 The current acting CFO, Ms. Rowling, gave supporting testimony regarding the financial strength of the NRA and its ongoing ability to pay its creditors72 and testified that the NRA has sufficient funds to prosecute and defend its current litigation.73 Ms. Rowling also testified, however, that it was her opinion that the NRA was in bankruptcy because of potential litigation losses that could severely impact the organization’s financial position.74 67 Transcript of Hearing Held April 5, 2021 [Docket No. 497] at 118:17-119:21; Transcript of Hearing Held April 6, 2021 [Docket No. 692] at 43:19-44:8. 68 Transcript of Hearing Held April 7, 2021 [Docket No. 700] at 78:16-81:2; Transcript of Hearing Held April 8, 2021 [Docket No. 654] at 32:24-33:2; Transcript of Hearing Held April 6, 2021 [Docket No. 692] at 160:24-161:2; Transcript of Hearing Held April 13, 2021 [Docket No. 584] at 33:12-14, 34:13-21; Transcript of Hearing Held April 13, 2021 [Docket No. 578] at 51:21-53:13; NYAG Exhibit 151. 69 Transcript of Hearing Held April 6, 2021 [Docket No. 692] at 32:9-17; Transcript of Hearing Held April 8, 2021 [Docket No. 654] at 52:22-53:5. 70 Transcript of Hearing Held April 13, 2021 [Docket No. 578] at 53:11-13, 129:17-130:20, 132:22-133:4. 71 Transcript of Hearing Held April 16, 2021 [Docket No. 620] at 19:10-16. 72 Transcript of Hearing Held April 13, 2021 [Docket No. 584] at 33:12-14, 34:13-21, 36:17-38:14. 73 Transcript of Hearing Held April 13, 2021 [Docket No. 584] at 39:17-23. 74 Transcript of Hearing Held April 13, 2021 [Docket No. 584] at 34:22-35:1. 19 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 20 I of 38 Pg 21 of 39 The testimony of the NRA’s general counsel, Mr. Frazer, on the reasons for filing bankruptcy was, in some respects, a bit difficult to reconcile. Despite not being involved in the decision to file for bankruptcy and not knowing about the decision until after bankruptcy was filed,75 Mr. Frazer was designated as the corporate representative of the NRA as to the reasons, both financial and non-financial, for the NRA seeking protection under Chapter 11 of the Bankruptcy Code.76 During his deposition, the only reasons for filing bankruptcy that Mr. Frazer identified were to streamline litigation, consolidate the claims against the NRA, and reorganize in Texas.77 Mr. Frazer did not identify avoiding dissolution or avoiding receivership as reasons for the NRA filing bankruptcy at that time.78 Nevertheless, Mr. Frazer testified at trial that he agreed the bankruptcy filing allowed the NRA to seek protection from regulators in New York.79 With regard to the threats of dissolution or a receiver being appointed, it is clear that the NYAG was seeking dissolution of the NRA.80 Nevertheless, Mr. Frazer was not sure if a trial date is currently set in the NYAG Enforcement Action but anticipated a trial early next year and acknowledged that dissolution is not imminent.81 Mr. Frazer also acknowledged having no personal knowledge of an imminent threat of a receiver being appointed over the NRA.82 With regard to streamlining litigation, Mr. Frazer reaffirmed that it is one of the NRA’s reasons for filing 75 Transcript of Hearing Held April 6, 2021 [Docket No. 692] at 43:19-44:8, 109:22-24. 76 Transcript of Hearing Held April 7, 2021 [Docket No. 559] at 17:5-14. 77 Transcript of Hearing Held April 7, 2021 [Docket No. 559] at 17:15-20, 57:8-25. 78 Transcript of Hearing Held April 7, 2021 [Docket No. 559] at 20:20-21:1. 79 Transcript of Hearing Held April 6, 2021 [Docket No. 692] at 107:22-108:6; Transcript of Hearing Held April 7, 2021 [Docket No. 559] at 21:12-19. 80 See NYAG Exhibit 107 (NYAG Complaint in which the first two causes of action are labeled “Dissolution of the NRA”). 81 Transcript of Hearing Held April 7, 2021 [Docket No. 559] at 29:10-30:6, 30:19-22. 82 Transcript of Hearing Held April 7, 2021 [Docket No. 559] at 33:18-34:11. 20 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 21 I of 38 Pg 22 of 39 bankruptcy83 but acknowledged that he has not conducted an analysis, and was not aware of anyone else conducting an analysis, of the cost of proceeding with litigation outside of bankruptcy versus the cost of the bankruptcy and proceeding with the litigation in the bankruptcy case.84 Mr. Frazer also testified that the NRA previously filed a motion for centralization of four pending actions that was denied by the United States Judicial Panel on Multidistrict Litigation on the basis that they were not persuaded that centralization was necessary for the convenience of the parties and witnesses or to further the just and efficient conduct of the litigation.85 The Court received testimony from all three members of the Special Litigation Committee, but their testimony did not explore the reasons for filing bankruptcy in much depth. The parties offered excerpts of the deposition of Ms. Meadows, but those excerpts did not include a discussion of why the NRA filed for bankruptcy. Colonel Lee testified that he understood the NYAG had sought the appointment of a receiver to seize the NRA’s assets and that if a receiver were appointed over the NRA, it would be disastrous.86 Mr. Cotton testified that he believed there was a risk that the NYAG could attempt to put the NRA into receivership because the first cause of action in the NYAG Complaint was for dissolution.87 Mr. Cotton further testified that dissolution in the NYAG Enforcement Action was a legitimate risk that the NRA was concerned about.88 During trial, Mr. LaPierre was questioned several times regarding why the NRA filed for bankruptcy. In response to a question of whether the NRA filed bankruptcy to leave New York, Mr. LaPierre testified that the NRA filed bankruptcy to look for a fair legal playing field where 83 Transcript of Hearing Held April 6, 2021 [Docket No. 692] at 109:2-11. 84 Transcript of Hearing Held April 6, 2021 [Docket No. 692] at 112:19-113:1. 85 Transcript of Hearing Held April 7, 2021 [Docket No. 559] at 36:20-38:12; Ackerman Exhibit 121. 86 Transcript of Hearing Held April 21, 2021 [Docket No. 673] at 45:10-46:2. 87 Transcript of Hearing Held April 6, 2021 [Docket No. 499] at 37:3-7. 88 Transcript of Hearing Held April 6, 2021 [Docket No. 499] at 38:15-39:10. 21 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 22 I of 38 Pg 23 of 39 the NRA could prosper and grow in a fair legal environment89 and later testified that the NRA needs the approval of a federal court to move to a new state.90 At one point, Mr. LaPierre was presented with a series of communications informing the NRA’s members, the NRA’s board of directors, and the general public that the NRA had filed for bankruptcy and asked if the contents of those communications were accurate, which Mr. LaPierre testified they were.91 The communications, which were prepared by the NRA’s Managing Director of Public Affairs working with a member of the Brewer Firm,92 described a variety of reasons for why the NRA filed bankruptcy, including leaving New York and reincorporating in Texas, seeking protection from New York officials, streamlining legal and financial affairs, organizing pending litigation in a coordinated and structured manner, and realizing other financial and strategic advantages. In one of the communications, a question and answer page posted on the NRA’s website, the NRA states: “This action is necessitated primarily by one thing: the unhinged and political attack against the NRA by the New York Attorney General.”93 With regard to the risk of a receiver being appointed, Mr. LaPierre testified that the NRA has not been put on notice that the NYAG intends to seek a receivership and he does not have any facts to suggest that there is an imminent threat of a receiver being appointed.94 The most helpful testimony from Mr. LaPierre came during an exchange when counsel for one of the movants was attempting to discern which of the many reasons for filing for bankruptcy 89 Transcript of Hearing Held April 7, 2021 [Docket No. 700] at 66:11-23. 90 Transcript of Hearing Held April 8, 2021 [Docket No. 654] at 42:23-43:4. 91 Transcript of Hearing Held April 7, 2021 [Docket No. 700] at 67:14-25 (affirming the accuracy of NYAG Exhibit 153); id. at 86:18-21 (affirming the accuracy of NYAG Exhibit 55); id. at 87:5-18 (affirming the accuracy of NYAG Exhibit 151); id. at 87:22-88:8 (affirming the accuracy of NYAG Exhibit 208). 92 Transcript of Hearing Held April 7, 2021 [Docket No. 700] at 88:1-4. 93 NYAG Exhibit 208. 94 Transcript of Hearing Held April 8, 2021 [Docket No. 654] at 21:8-22:1. 22 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 23 I of 38 Pg 24 of 39 that have been discussed was the real driving force behind Mr. LaPierre’s decision. A few very valuable pieces of information came from that exchange. After establishing that the bankruptcy filing was not related to the NRA’s financial condition,95 Mr. LaPierre acknowledged that although the cost of defending the NYAG Enforcement Action was significant, the cost of bankruptcy is high as well.96 Mr. LaPierre then confirmed that if the NRA’s bankruptcy case is dismissed, the NRA would be able to pay its debts in full and meet its obligations.97 The exchange continued: Q: Okay. So it comes down to the reason you filed Chapter 11 is because you have this New York attorney general enforcement action which is asking for dissolution of the NRA; is that correct? [Counsel for the NRA]: Objection; misstates his testimony. [Counsel for the Movant]: Well -- THE COURT: Well, I’m going to go ahead and let him answer that. Try to give an answer to that, Mr. LaPierre. THE WITNESS: Yes, Your Honor. Yes, we filed the Chapter 11 to -- because the New York State attorney general is seeking dissolution of the NRA and [seizure of] its assets, and we believe it’s not a fair, level playing field. . . . . Q: So really what we’re down to is that it’s -- the New York attorney general action is the reason you believe you need to be in bankruptcy, and, really, solvency and all your other litigation, those are not issues that would require you to be in bankruptcy; is that correct? A: That’s correct. Transcript of Hearing Held April 8, 2021 [Docket No. 654] at 33:19-34:20. 95 Transcript of Hearing Held April 8, 2021 [Docket No. 654] at 32:9-20. 96 Transcript of Hearing Held April 8, 2021 [Docket No. 654] at 32:15-23. 97 Transcript of Hearing Held April 8, 2021 [Docket No. 654] at 32:24-33:2. 23 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 24 I of 38 Pg 25 of 39 The Court’s Determination of the NRA’s Primary Reason for Filing Bankruptcy The evidence does not support a finding that the purpose of the NRA’s bankruptcy filing was to reduce operating costs, to address burdensome executory contracts and unexpired leases, to modernize the NRA’s charter and organization structure, or to obtain a breathing spell. While some of these could be added benefits of going through a bankruptcy process, they do not appear to have been significant considerations for the NRA. There was some evidence that the NRA wants to streamline litigation and control litigation costs, but this does not appear to have been the real purpose behind filing for bankruptcy. Ms. Rowling testified that she believes the NRA is in bankruptcy because of potential litigation losses, but this concern did not appear to be shared by Mr. LaPierre or supported by other evidence. The testimony regarding the ongoing cost of litigation was that the NRA is currently able to afford to pay its legal fees and that there has not been an analysis of the cost of proceeding with litigation outside of bankruptcy versus the cost of the bankruptcy and proceeding with the litigation in the bankruptcy case. Furthermore, Mr. LaPierre testified that but for the NYAG Enforcement Action, it would not have been necessary to file for bankruptcy. Whether the NRA’s desire to leave New York and reincorporate in Texas was a true reason for filing bankruptcy is a closer call, but the evidence weighs in favor of a finding that it was not the real purpose for filing for bankruptcy. Several witnesses testified that New York is a hostile environment for the NRA,98 but the testimony was that individuals within the organization had been interested in leaving New York and reincorporating in Texas for a long time.99 The choice 98 Transcript of Hearing Held April 7, 2021 [Docket No. 700] at 16:23-25; Transcript of Hearing Held April 21, 2021 [Docket No. 670] at 7:25-8:12; Transcript of Hearing Held April 6, 2021 [Docket No. 499] at 37:14-38:9; Transcript of Hearing Held April 13, 2021 [Docket No. 584] at 146:1-8; Transcript of Hearing Held April 7, 2021 [Docket No. 559] at 22:10-13; Transcript of Hearing Held April 7, 2021 [Docket No. 700] at 66:11-20. 99 Transcript of Hearing Held April 6, 2021 [Docket No. 499] at 37:8-38:14. 24 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 25 I of 38 Pg 26 of 39 to attempt to do so now—and to do so through a bankruptcy reorganization—appears to have been a means of achieving the more specific purpose of avoiding dissolution in the NYAG Enforcement Action. In closing arguments at the conclusion of trial, there was a suggestion that part of the desire to move to Texas, and therefore part of the reason for filing bankruptcy, was due to the NRA having increasing difficulty with its relationships with financial institutions because of the NY DFS Letter.100 The specific evidence on this topic came from Mr. Spray, who testified that he “didn’t know exactly what the catalyst was for their angst,” but that the NRA’s relationships with banks when Mr. Spray joined the NRA were tenuous and he had to find more enthusiastic banking support.101 Mr. Spray also testified that it was becoming difficult to get insurance when he joined the NRA and that problem has only gotten worse.102 Counsel for the NRA characterized this as an existential threat that the NRA was facing before the NYAG Enforcement Action was pending and a reason for filing bankruptcy to move to Texas. There are a few reasons the Court is skeptical of this argument. The first is one of timing. The NY DFS Letter was sent in April 2018, and the NRA filed its lawsuit over alleged interference with its banking and insurance relationships in May 2018. The speed with which the NRA sought relief by filing a complaint in the Northern District of New York and the delay in filing bankruptcy, over two years later, suggests the purpose of the bankruptcy was related to something else. Moreover, the general testimony was that financial reasons did not drive the bankruptcy filing. The Court understands how this might not fall into the category of current financial health when asking most people at the NRA, but even Mr. Spray, who was fully aware of the banking and insurance relationships, testified that he was not aware of any 100 The NY DFS Letter is attached to NRA Exhibit 663. 101 Transcript of Hearing Held April 13, 2021 [Docket No. 578] at 153:18-154:20. 102 Transcript of Hearing Held April 13, 2021 [Docket No. 578] at 154:21-155:9. 25 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 26 I of 38 Pg 27 of 39 reasons to file for bankruptcy. If the deterioration of banking and insurance relationships is an existential threat and an important reason for filing bankruptcy, one would think Mr. Spray would have been consulted, but he was not consulted on—or even informed of—the decision to file for bankruptcy. With regard to receivership, there was no evidence to suggest that it was an imminent threat, and the witnesses only appear to have been concerned about receivership in the context of dissolution being granted. In other words, the witnesses appeared to be conflating the appointment of a receiver and dissolution when dissolution was the real concern. As far as the Court can tell, the appointment of a receiver was never requested by the NYAG in the NYAG Complaint or elsewhere. There was a statement in a press conference held by the NYAG that she may attempt to freeze assets,103 but this comment appeared to relate to finding hidden assets and, in any event, none of the witnesses testified that this caused them concern that a receiver would be appointed. It is possible that if the NYAG had become aware that the NRA was preparing to file for bankruptcy, the NYAG could have attempted to have a receiver appointed on an expedited basis, but that would only be a reason for the NRA to go to extreme lengths to avoid leaks about its intention to file bankruptcy and not a reason for the bankruptcy filing itself. Though articulated slightly differently, the remaining reasons for filing bankruptcy, such as preserving the NRA as a going concern, can be grouped under the general reason of avoiding dissolution in the NYAG Enforcement Action. Based on the statements of counsel and the evidence in the record, the Court finds that the primary purpose of the bankruptcy filing was to avoid potential dissolution in the NYAG Enforcement Action. 103 NRA Exhibit 675. 26 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 27 I of 38 Pg 28 of 39 Analysis of Whether the NRA Filed Bankruptcy to Achieve a Valid Bankruptcy Purpose Having identified the purpose of the NRA’s bankruptcy filing, the Court must now decide whether it was a valid purpose for bankruptcy such that the bankruptcy was filed in good faith. The Fifth Circuit Court of Appeals has offered guidance on how courts should approach the good faith inquiry: Determining whether the debtor’s filing for relief is in good faith depends largely upon the bankruptcy court’s on-the-spot evaluation of the debtor’s financial condition, motives, and the local financial realities. Findings of lack of good faith in proceedings based on §§ 362(d) or 1112(b) have been predicated on certain recurring but non-exclusive patterns, and they are based on a conglomerate of factors rather than on any single datum. In re Little Creek Dev. Co., 779 F.2d 1068, 1072 (5th Cir. 1986).104 The Third Circuit Court of Appeals has stated that almost every federal Court of Appeals follows some variation of this “totality of the circumstances” approach to the good faith filing requirement for Chapter 11 petitions. In re 15375 Mem’l Corp., 589 F.3d 605, 618 n.7 (3d Cir. 2009). In that same case, the Third Circuit went on to note that they focus on two inquiries that are particularly relevant to the question of good faith: (1) whether the petition serves a valid bankruptcy purpose and (2) whether the petition is filed merely to obtain a tactical litigation advantage. Id. at 618. The Court has great concern about this case because its purpose is to avoid dissolution that is being sought as a remedy in a state regulatory action. It has been asserted that this case is about preserving the NRA as a going concern, which is a very common good faith reason for filing bankruptcy. There is a difference, however, between a lawsuit in which a party seeks a monetary judgment that would pose an existential threat to a debtor and one where the attorney general of a 104 The Fifth Circuit also identified several conditions that usually exist in filings that are not made in good faith. Id. at 1072-73. Because of the unusual circumstances of this case, the Court considered the Little Creek factors but did not structure its discussion around them. 27 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 28 I of 38 Pg 29 of 39 state is specifically seeking dissolution of a debtor under the state’s laws and therefore required to satisfy standards and requirements that specifically justify dissolution. The New York Legislature constructed a regulatory system under which charities would be dissolved under certain circumstances. In this situation, the NRA is financially healthy, and the only way that the NRA will be dissolved is if it is determined in the New York court system that the requirements in Article 11 of the New York Not-For-Profit Corporation Law have been met. The NYAG has requested dissolution of the NRA under two different statutory provisions and acknowledged the high burden that it must meet: But New York law does not allow the NYAG to summarily dissolve a charity, but rather place[s] a burden upon the NYAG to prove to a court that dissolution is called for under the law in a given circumstance. With respect to N-PCL § 1101, the Attorney General must show a regulated entity’s misconduct “has produced, or tends to produce, injury to the public. The transgression must not be merely formal or incidental, but material and serious, and such as to harm or menace the public welfare.” People v. Oliver Schools, Inc., 206 A.D.2d 143, 145 (4th Dep’t 1994) (interpreting BCL § 1101, from which N-PCL § 1101 is derived) (quoting People v. North River Sugar Refining Co., 121 N.Y. 582, 609 (1890)). . . . With respect to Dissolution under N-PCL § 1102, the Attorney General stands in the shoes of the NRA’s members and, as relevant here, must prove that the “directors or members in control of [the NRA] have looted or wasted the corporate assets, have perpetuated the corporation solely for their personal benefit, or have otherwise acted in an illegal, oppressive or fraudulent manner.” N-PCL § 1102(a)(2)(D); 112(a)(7). The State of New York’s Omnibus Reply to Debtors’ Opposition and the Committee’s Response to Motion to Dismiss or Appoint a Trustee [Docket No. 459] at ¶ 17. A dissolution that requires this showing is not the type of dissolution that the Bankruptcy Code is meant to protect against. The Court is not in any way saying it believes the NYAG can or cannot make the required showing to obtain dissolution of the NRA, but the Court is saying that the Bankruptcy Code does not provide sanctuary from this kind of a threat. 28 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 29 I of 38 Pg 30 of 39 For this reason, the Court believes the NRA’s purpose in filing bankruptcy is less like a traditional bankruptcy case in which a debtor is faced with financial difficulties or a judgment that it cannot satisfy and more like cases in which courts have found bankruptcy was filed to gain an unfair advantage in litigation or to avoid a regulatory scheme. The purpose of this bankruptcy filing may not have been to end the NYAG Enforcement Action immediately, but it was to deprive the NYAG of the remedy of dissolution, which is a distinct litigation advantage. This differs materially from the prescribed parallel proceedings structure for regulatory actions where regulators can obtain monetary judgments in one forum and then are required to have any claims treated through a bankruptcy process in that it is the NRA’s goal to avoid dissolution and subvert the remedy provided for under New York law entirely through this Chapter 11 case. The Court does not know what specific mechanism the NRA plans to use,105 but its intention is clearly to “take dissolution off the table.”106 Courts have consistently held that a bankruptcy case filed for the purpose of obtaining an unfair litigation advantage is not filed in good faith and should be dismissed. See Antelope Techs., Inc. v. Lowe (In re Antelope Techs, Inc.), 431 F. App’x. 272 (5th Cir. 2011) (affirming dismissal for cause based on finding that “the purpose of the petition was not primarily to reorganize or respond to financial crisis but instead was to gain unfair advantage in the shareholder derivative action”); Investors Group, LLC v. Pottorff, 518 B.R. 380, 383-84 (N.D. Tex. 2014) (affirming dismissal of a bankruptcy case for being filed in bad faith based on a finding that the primary 105 Transcript of Hearing Held April 5, 2021 [Docket No. 497] at 41:22-42:5 (Counsel for the NRA describing different ways in which a plan could be structured to achieve the NRA’s goal in this case). 106 Transcript of Hearing Held April 5, 2021 [Docket No. 497] at 49:23-25 (Counsel for the NRA: “We filed, again, for three reasons that constitute good faith. We needed to take dissolution, the equivalent of foreclosure, off the table. . . .”). 29 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 30 I of 38 Pg 31 of 39 purpose for filing the bankruptcy petition was to gain an advantage in pending litigation); In re Alexandra Trust, 526 B.R. 668, 679-680 (Bankr. N.D. Tex. 2015) (citing cases). Using the bankruptcy process to avoid dissolution in the NYAG Enforcement Action is also problematic because it deprives the state of New York of the ability to regulate not-for-profit corporations in accordance with its laws. There is a regulatory scheme for evaluating whether a New York charity should continue in existence under Article 11 of the New York Not-For-Profit Corporation Law. While bankruptcy courts can, in some circumstances, apply state regulatory law,107 a bankruptcy case filed for the purpose of avoiding a regulatory scheme is not filed in good faith and should be dismissed. See In re First Plus Fin. Enters., Inc., 99 B.R. 751, 755-56 (Bankr. W.D. Tex. 1989) (finding cause for dismissal under section 1112(b) because the case was filed in bad faith where “the obvious purpose in this case is to use the Chapter 11 filing as a litigation strategy and leverage in order to defeat the Texas regulatory scheme for the receivership and conservatorship of insolvent life insurance companies”); In re Forest Hill Funeral Home & Mem’l Park-East, LLC, 364 B.R. 808, 822-23 (Bankr. E.D. Okla. 2007) (finding cause for dismissal under section 1112(b) because the case was not filed in good faith for several reasons, including that it was filed to evade the regulatory authority of the state of Tennessee); cf. Halo Wireless, Inc. v. Alenco Commc’ns Inc. (In re Halo Wireless, Inc.), 684 F.3d 581, 587-88 (5th Cir. 2012) (noting that section 362(a)(4) assists with the goal of discouraging debtors from submitting bankruptcy petitions either primarily or solely for the purpose of evading impending governmental efforts to invoke the governmental police powers to enjoin or deter ongoing debtor conduct that would seriously threaten the public safety and welfare). 107 See, e.g., In re HHH Choices Health Plan, LLC, 554 B.R. 697 (Bankr. S.D.N.Y. 2016). 30 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 31 I of 38 Pg 32 of 39 The Court would also like to discuss some of the NRA’s other stated reasons for filing bankruptcy. The Court understands that the NRA wants to leave New York for a variety of reasons, not least of which being what it perceives to be a generally hostile environment. While the Court does not find that reincorporating in Texas was the true purpose of the bankruptcy filing, the Court would have concerns even if it were. Reincorporating in Texas could be accomplished outside of bankruptcy pursuant to applicable regulations for New York not-for-profit organizations,108 which begs the question of what the Bankruptcy Code is being used for. If the goal is moving to Texas, the purpose of the bankruptcy would still appear to be avoidance of the regulatory scheme in New York that would be required for such a transition outside of bankruptcy, or at least avoidance of the New York regulators. While the Court also does not find potential adverse judgments in litigation other than the NYAG Enforcement Action to have been a purpose for filing bankruptcy, the Court notes that based on the evidence, the NRA is financially healthy and potentially adverse litigation outcomes are too attenuated to justify a good faith bankruptcy filing. See Off. Comm. of Unsecured Creditors v. Nucor Corp. (In re SGL Carbon Corp.), 200 F.3d 154, 163 (3d Cir. 1999) (holding that dismissal was appropriate where bankruptcy filing was based on litigation because the record was replete with evidence of the debtor’s financial strength, there was no evidence that a judgment was imminent, and an assessment that pending litigation might result in a judgment causing financial and operational ruin was premature). In closing arguments, counsel for the NRA raised several additional arguments that the Court would like to address. One of those arguments was that if avoiding dissolution is found to 108 See Article 9 of the New York Not-For-Profit Corporation Law (governing merger or consolidation); Article 10 of the New York Not-For-Profit Corporation Law (governing non-judicial dissolution). 31 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 32 I of 38 Pg 33 of 39 be an inappropriate bankruptcy purpose, this would allow a state to block a debtor’s right to file for bankruptcy simply by filing an action seeking dissolution, and this would be tantamount to allowing a state to preempt federal law. This argument is based on the misconception that the state of New York has blocked access to bankruptcy relief just by filing a complaint with the word dissolution in it. The Court has not announced a per se rule that a pending dissolution action renders an entity ineligible for bankruptcy. Rather, the Court is evaluating the debtor’s good faith or lack thereof in filing bankruptcy based on the totality of the circumstances of this specific case. The NRA is a solvent and growing organization using this bankruptcy as a tool to win its dissolution lawsuit, and that is not an appropriate use of bankruptcy. Counsel for the NRA also, as the Court understands it, made the following argument. Section 1129(d) of the Bankruptcy Code states that the court may not confirm a plan over the objection of a governmental unit if the principal purpose of the plan is the avoidance of the application of section 5 of the Securities Act of 1933. Section 5 of the Securities Act of 1933 is an exercise of police power. Therefore, counsel argues, Congress has implicitly instructed that it is acceptable to file a bankruptcy petition for the purpose of avoiding any exercise of police power other than section 5 of the Securities Act of 1933. The Court does not understand this provision of the Bankruptcy Code to make such a sweeping endorsement of using bankruptcy for the principal purpose of avoiding the exercise of police power. Just because Congress has provided a guard rail for confirmation does not relieve the Court of its duty to conduct a fact-intensive inquiry to determine where a particular petition for bankruptcy relief falls along the spectrum ranging from the clearly acceptable to the patently abusive. See In re 15375 Mem’l Corp., 589 F.3d 605, 618 (3d Cir. 2009) (discussing the duties of courts in examining whether bankruptcy petitions are filed in good faith). 32 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 33 I of 38 Pg 34 of 39 Finally, the Court notes that even if it agreed with one or more of the NRA’s arguments regarding eligibility or confirmation standards, the Fifth Circuit Court of Appeals has already given clear instruction to examine cases to determine whether they were filed in good faith and to dismiss those that were not. See In re Humble Place Joint Venture, 936 F.2d 814, 817 (5th Cir. 1991) (“Because Little Creek explicitly treated the question of good faith dismissals under § 1112, the case settles any statutory or constitutional question about that procedure.”). The Court finds, based on the totality of the circumstances, that the NRA’s bankruptcy petition was not filed in good faith but instead was filed as an effort to gain an unfair litigation advantage in the NYAG Enforcement Action and as an effort to avoid a regulatory scheme. This constitutes cause for dismissal under section 1112(b)(1) of the Bankruptcy Code. Consideration of the Appointment of a Trustee or Examiner Having found cause for dismissal, section 1112(b)(1) requires that the Court now consider whether appointment under section 1104(a) of a trustee or an examiner is in the best interests of creditors and the estate. The appointment of a Chapter 11 trustee is an extraordinary remedy that requires a movant to meet their burden of proof by clear and convincing evidence. In re Patman Drilling Int’l, Inc., 2008 Bankr. LEXIS 715, at *15-16 (Bankr. N.D. Tex. Mar. 14, 2008). As mentioned previously, there is nothing approaching a consensus from the parties on what should be done. As counsel for the NRA acknowledged on the record, there were cringeworthy facts during this trial. The movants have presented evidence of the NRA’s past misconduct. Some facts regarding the NRA’s past conduct were not available to this Court because the NRA’s former treasurer asserted his rights under the Fifth Amendment during large swaths of his deposition. 33 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 34 I of 38 Pg 35 of 39 Some of the conduct that gives the Court concern is still ongoing. The NRA appears to have very recently violated its approval procedures for contracts in excess of $100,000. Mr. LaPierre is still making additional financial disclosures. There are also lingering issues of secrecy and a lack of transparency. For example, even after hearing testimony from several witnesses, it is still very unclear why Mr. Spray, an officer everyone seemed to hold in high regard for his talent and integrity, parted ways with the NRA two weeks into this bankruptcy case. What is clear is that Mr. Spray’s departure was precipitated by a call from Mr. LaPierre without involvement of the board of directors. What concerns the Court most though is the surreptitious manner in which Mr. LaPierre obtained and exercised authority to file bankruptcy for the NRA. Excluding so many people from the process of deciding to file for bankruptcy, including the vast majority of the board of directors, the chief financial officer, and the general counsel, is nothing less than shocking. The determination of whether appointment of a trustee or an examiner is in the best interests of creditors and the estate in this case, however, is complicated for a variety of reasons. The NRA has a mission that is, at times, political and polarizing. The NRA does not sell goods or services, and it would not be easy to find a suitable individual to serve in the role of trustee or examiner with expanded powers.109 In an odd twist for a bankruptcy case, the NRA is financially healthy, and undisputed creditors are likely to be paid sooner in the ordinary course outside of bankruptcy than they would if they must wait for confirmation of a plan of reorganization. On the other hand, if a trustee or an 109 The examiner that has been requested is one with expanded powers, including the power to “independently examine, and the extent necessary, remove management for cause.” 34 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 35 I of 38 Pg 36 of 39 examiner with expanded powers were appointed, the Court believes the members and other donors who provide financial support to the NRA may not continue to support the organization. While there is evidence of the NRA’s past and present misconduct, the NRA has made progress since 2017 with its course correction. Whether it is yet complete or not, there has been more disclosure and self-reporting since 2017. Both Ms. Rowling and Mr. Erstling, the NRA’s Director of Budget and Financial Analysis, testified that the concerns they expressed in the 2017 Whistleblower Memo are no longer concerns.110 Mr. Frazer testified regarding the compliance training program that the NRA now has for employees.111 Mr. Spray testified credibly that the change that has occurred within the NRA over the past few years could not have occurred without the active support of Mr. LaPierre.112 It is also an encouraging fact that Ms. Rowling has risen in the ranks of the NRA to become the acting chief financial officer, both because of her former status as a whistleblower and because of the Court’s impression of her from her testimony as a champion of compliance. In short, the testimony of Ms. Rowling and several others suggests that the NRA now understands the importance of compliance. Outside of bankruptcy, the NRA can pay its creditors, continue to fulfill its mission, continue to improve its governance and internal controls, contest dissolution in the NYAG Enforcement Action, and pursue the legal steps necessary to leave New York. While the Court appreciates the way in which some of the parties have presented the appointment of an examiner as a compromise that could provide some benefits without taking too much control from the NRA, the Court finds that the reasons discussed above weigh against keeping this case in bankruptcy with the appointment of a trustee or an examiner. For these 110 Transcript of Hearing Held April 23, 2021 [Docket No. 697] at 94:24-95:4. 111 Transcript of Hearing Held April 7, 2021 [Docket No. 700] at 26:15-28:1. 112 Transcript of Hearing Held April 13, 2021 [Docket No. 578] at 156:17-157:5. 35 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 36 I of 38 Pg 37 of 39 reasons, the Court finds appointment of a trustee or an examiner would not be in the best interests of creditors and the estate. Analysis of the Unusual Circumstances Exception Under Section 1112(b)(2) The NRA did not allege unusual circumstances under section 1112(b)(2) of the Bankruptcy Code in their briefing but did discuss them during closing arguments at the conclusion of trial. Section 1112(b)(2) states: The court may not convert a case under this chapter to a case under chapter 7 or dismiss a case under this chapter if the court finds and specifically identifies unusual circumstances establishing that converting or dismissing the case is not in the best interests of creditors and the estate, and the debtor or any other party in interest establishes that— (A) there is a reasonable likelihood that a plan will be confirmed within the timeframes established in sections 1121(e) and 1129(e) of this title, or if such sections do not apply, within a reasonable period of time; and (B) the grounds for converting or dismissing the case include an act or omission of the debtor other than under paragraph (4)(A)— (i) for which there exists a reasonable justification for the act or omission; and (ii) that will be cured within a reasonable period of time fixed by the court. While there are certainly unusual circumstances in this case, the Court does not find that they establish that dismissing the case is not in the best interests of creditors and the estate. This is true for many of the reasons discussed above. In addition, no party has established the requirement of section 1112(b)(2)(A). At trial, the Court was aware that the NRA intended to file a plan that would pay creditors in full, but the plan was not filed before the close of evidence. It was also clear from the evidence that the NRA could face substantial challenges in confirming a plan depending on how the NRA would be willing to structure it. The Court is aware that the NRA has now filed a plan of reorganization, but that plan was not offered into evidence and is not properly before the Court. 36 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 37 I of 38 Pg 38 of 39 V. Conclusion There are several aspects of this case that still trouble the Court, including the manner and secrecy in which authority to file the case was obtained in the first place, the related lack of express disclosure of the intended Chapter 11 case to the board of directors and most of the elected officers, the ability of the debtor to pay its debts, and the primary legal problem of the debtor being a state regulatory action. The Court agrees with the NYAG that the NRA is using this bankruptcy case to address a regulatory enforcement problem, not a financial one. The Court finds that the NRA did not file the bankruptcy petition in good faith because this filing was not for a purpose intended or sanctioned by the Bankruptcy Code. Therefore, cause exists under section 1112(b) to dismiss this case, which the Court finds is in the best interests of creditors and the estate. The Court is not dismissing this case with prejudice,113 but should the NRA file a new bankruptcy case, this Court would immediately take up some of its concerns about disclosure, transparency, secrecy, conflicts of interest of officers and litigation counsel, and the unusual involvement of litigation counsel in the affairs of the NRA, which could cause the appointment of a trustee out of a concern that the NRA could not fulfill the fiduciary duty required by the Bankruptcy Code for a debtor in possession. IT IS THEREFORE ORDERED that the Motions to Dismiss are GRANTED and the above-captioned cases are dismissed without prejudice; IT IS FURTHER ORDERED that the Examiner Motion is DENIED as moot; and IT IS FURTHER ORDERED that the CRO Motion is DENIED as moot. 113 The movants did not request a prejudice period in their original Motions to Dismiss. While the NYAG did request dismissal with prejudice in a reply brief, it was not discussed in the body of the reply, and the NRA did not have an opportunity to provide responsive briefing to that request. 37 Case 21-11051-lgb21-30085-hdh11 Doc Doc 92-9 740 Filed Filed 05/11/21 07/19/21 Entered Entered 05/11/21 07/19/21 14:06:18 01:55:00 Page Exhibit 38 I of 38 Pg 39 of 39 ###End of Order### 38