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Centerra Gold initiates proceedings against former Board member

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Global Mining Review,

Centerra Gold Inc has reportedly 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.

The latest company statement from Centerra outlined the following:

Centerra seeks to enjoin 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.

The company is investigating recent conduct by Kyrgyzaltyn JSC, including Bolturuk, its former nominee. Bolturuk, a dual Canadian and Kyrgyz citizen, joined the Centerra Board in December 2020 and resigned on 17 May 2021. Two days after his resignation, the Kyrgyz authorities announced that the Kyrgyz Government had appointed 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, 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. Bolturuk did not disclose this information to Centerra.

In addition, Centerra has learned that on 12 May 2021, prior to the seizure of the mine, Kyrgyzaltyn JSC attempted to divert approximately US$29 million to an unauthorised 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 Mine, Kyrgyz officials and 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.

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.”

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