Lengthy negotiations with the Mongolian government are at an end and Centerra Gold (CG-T) has been left with an amended stability agreement for its Boroo gold mine.
The project had drawn public ire in preceding years, because of what was perceived as too good of a deal for Centerra with regards to the projects tax structure.
The new agreement increases corporate income tax to 25% from 20%, effective January 1, 2007. The new rate will carry through until the end of the stability agreement, which expires in July of 2013.
Centerras old agreement which it inherited when it bought Australian exploration company AGR — exempted it from paying any income tax over the first three years of operation. Beginning in March of 2007, the corporate rate of 20% was set to kick in, which in three-years would increase to 40%.
Centerras mineral royalty will also increase under the new deal. It will move up to 5% rather than the 2.5% it had been paying.
Len Homeniuk, Centerra’s president and chief executive called the agreement “mutually acceptable and said he expected it would pave the way to an expedient final resolution on the Gatsuurt investment agreement.
Centerras plan has long been to take ore from nearby Gatsuurt and mill it at Boroo, but with public agitation over the initial Boroo deal, and with the government re-jigging its mineral tax scheme, the approval of the project was put on the bricks.
However, with the singing of the new deal for Boroo, the ministry told Centerra that the Government is willing to conclude an investment agreement for Gatsuurt and advance approvals and registrations of reserves with authorities.
Centerra says those registrations could be completed as early as this fall.
In Toronto on Aug. 3 Centerra shares were off 9 to $7.14 on roughly 63,000 shares traded.
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