MAC/20: Mines and Communities

Protests shut Centerra's Boroo mine

Published by MAC on 2006-06-14

Protests shut Centerra's Boroo mine

The Northern Miner

14th June 2006

In another sign that the bloom is off the Mongolia rose, Toronto-based Centerra Gold (CG-T) has been forced to temporarily suspend operations at its Boroo gold mine in Mongolia in response to a demonstration by about 100 protesters on June 14.

Centerra says these demonstrators as being led by the Popular Party, which the company describes as a "small party on the fringe of Mongolian politics that has recently been criticized by the Mongolian Cabinet for its statements with respect to the Boroo project."

Centerra says the Mongolian cabinet has stated that Boroo conducts its operations in accordance with Mongolian law and that the Popular Party's demands are illegitimate and unconstitutional.

The company says it will work closely with police and governmental officials to ensure the prompt resumption of normal mine operations.

The Boroo open-pit gold mine and milling complex is located 110 km northwest of the capital Ulaanbaatar. The mine began commercial production in March 2004 and produced more than 245,000 oz. gold by year-end. Over the 2005-09 period, the mine is expected to produce an average of 180,000 oz. gold per year at a total cash cost of US$170 per oz.

At last count, the Boroo deposit hosted probable reserves of 10 million tonnes grading 3.5 grams gold per tonne, or 1.15 million contained oz. gold.

Centerra has a 95% equity interest in the operation, the first significant foreign investment for industrial development in Mongolia since 1979. Uranium giant Cameco (CCO-T, CCJ-N) owns 53% of Centerra Gold.

Some 35 km from Boroo, Centerra also has its wholly owned Gatsuurt gold project, where a feasibility study was completed last year. However, the development of Gatsuurt into a stand-alone gold mine similar in scale to Boroo has been thrown into doubt owing to the recent passage of a 68% profits tax on gold mining operations in Mongolia (Boroo is exempted from the new tax until 2013).

In Toronto trading on June 14, Centerra's shares dropped 36 cents, or 3.5%, to close at $10.05, while Cameco rose 74 cents to $39.25.

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