CENTERRA GOLD SOCIAL IMPACT ASSESSMENT REPORT GATSUURT GOLD MINE PROJECT May 2016 Revision Author Review Approval Date A. Sexton B. Munkhtogo Rev A J. Miragliotta Y. Zagdaa J. Miragliotta 01/07/2015 Draft for internal review A. Sexton C. Grant S. Algaa A. Sexton C. Grant Rev 0 A. Sexton A. Sexton B. Munkhtogo 10/07/2015 Draft report for issue to client J. Miragliotta J. Miragliotta Y. Zagdaa S. Algaa C.Grant Rev1 B. Munkhtogo A. Sexton J. Miragliotta 14/09/2015 Final report for issue to client Y. Zagdaa J. Miragliotta S. Algaa Rev2 A. Sexton J. Miragliotta J. Miragliotta 02/12/2015 Revised final draft C. Grant Rev3 C. Grant J. Miragliotta J. Miragliotta 18/03/2016 Centerra Gold Social Impact Assessment Report TABLE OF CONTENTS GLOSSARY ....................................................................................................... XII EXECUTIVE SUMMARY ........................................................................................I INTRODUCTION ................................................................................................................ I PROJECT OVERVIEW AND LOCALITY .................................................................................... I STUDY PURPOSE AND METHODOLOGY................................................................................ II SOCIAL SCOPING ISSUES IDENTIFIED.............................................................. V DEMOGRAPHY................................................................................................................... V SOCIAL STRUCTURES .......................................................................................................VI ECONOMY ..................................................................................................................... VII EMPLOYMENT ............................................................................................................... VIII SOCIAL INFRASTRUCTURE ................................................................................................IX LAND USE AND NATURAL RESOURCES ................................................................................XI COMMUNITY HEALTH, SAFETY AND SECURITY ................................................................... XII CULTURAL HERITAGE .................................................................................................... XIII KEY BENEFITS, IMPACTS AND MITIGATION MEASURES ........................................................ XV 1. PROJECT OVERVIEW AND SOCIO-ECONOMIC SITUATION ...................... 1 1.1 INTRODUCTION ...................................................................................................... 1 1.2 REPORT STRUCTURE ............................................................................................... 3 2. PROJECT DESCRIPTION ............................................................................ 4 2.1 LOCATION AND ENVIRONMENT ................................................................................. 4 2.1.1 Selenge Aimag.......................................................................................... 4 2.1.2 Mandal Soum ........................................................................................... 4 2.1.3 Bayangol Soum ......................................................................................... 5 2.2 PROJECT COMPONENTS ........................................................................................... 7 2.2.1 Gatsuurt Mine ........................................................................................... 7 2.3 PROJECT AREA ...................................................................................................... 11 2.4 ALTERNATIVES ..................................................................................................... 13 2.4.1 Project Alternatives ................................................................................. 13 2.4.2 No Project Alternative .............................................................................. 14 3. LEGAL AND REGULATORY FRAMEWORK ................................................. 15 3.1 INTRODUCTION .................................................................................................... 15 3.2 MONGOLIAN FRAMEWORK ...................................................................................... 15 3.2.1 Overview of the Legal and regulatory structure ........................................... 15 3.2.2 Constitution of Mongolia........................................................................... 16 3.2.3 Government ........................................................................................... 16 3.2.4 Legislation ............................................................................................. 17 3.2.5 Mongolian Environmental, Health and Safety Standards ................................ 22 3.3 INTERNATIONAL STANDARDS AND LENDER REQUIREMENTS ...................................... 24 3.3.1 International Agreements to which Mongolia is a Signatory ........................... 24 3.4 LENDER REQUIREMENTS ........................................................................................ 26 3.5 CENTERRA POLICIES ............................................................................................. 27 4. METHODOLOGY ....................................................................................... 30 Centerra Gold Social Impact Assessment Report 4.1 SUMMARY OF THE IMPACT ASSESSMENT PROCESS.................................................... 30 4.2 SIA STAGES .......................................................................................................... 30 4.2.1 Scoping ................................................................................................. 30 4.2.2 Stakeholder Engagement ......................................................................... 31 4.2.3 Collection of Baseline Data ....................................................................... 31 4.2.4 Assessment of Impacts and Mitigation ........................................................ 32 4.2.5 Evaluating Significance ............................................................................ 34 4.2.6 Characterising Significance of Effects ......................................................... 38 4.2.7 Mitigation............................................................................................... 38 4.2.8 Assessing Residual Impacts ...................................................................... 39 4.2.9 Cumulative Impacts ................................................................................. 40 4.2.10 Addressing Uncertainty ............................................................................ 40 4.2.11 Social Management Plans ......................................................................... 40 4.2.12 Reporting and Disclosure.......................................................................... 40 4.3 SOURCES OF INFORMATION ................................................................................... 41 5. STAKEHOLDER ENGAGEMENT ................................................................. 42 5.1 PROJECT CONSULTATION ....................................................................................... 42 5.2 SUMMARY OF PREVIOUS STAKEHOLDER ENGAGEMENT ACTIVITIES ............................. 43 5.3 PUBLIC DISCLOSURE ............................................................................................. 44 5.4 ONGOING ENGAGEMENT ........................................................................................ 45 6. SOCIAL SCOPING ISSUES IDENTIFIED .................................................. 47 6.1 DEMOGRAPHY ....................................................................................................... 47 6.1.1 Introduction ........................................................................................... 47 6.1.2 Reference Data ....................................................................................... 47 6.1.3 Population and Migration .......................................................................... 47 6.1.4 Age and Gender ...................................................................................... 49 6.1.5 Education and Literacy ............................................................................. 50 6.1.6 Ethnicity ................................................................................................ 52 6.1.7 Religion ................................................................................................. 53 6.1.8 Conclusion ............................................................................................. 54 6.2 SOCIAL STRUCTURES............................................................................................. 56 6.2.1 Introduction ........................................................................................... 56 6.2.2 Reference Data ....................................................................................... 56 6.2.3 Social Structure and Functions .................................................................. 56 6.2.4 Government Institutions ........................................................................... 62 6.2.5 Social, Political, Cultural and Economic Organisations ................................... 64 6.2.6 Formal and Informal Decision-Making Process ............................................. 65 6.2.7 Access to Welfare / Income Support .........................................................