new mining laws in mongolia, page-2

MONGOLIAN GOVT. MINING POLICY CHANGES

Meanwhile, Centerra updated the status of Mongolia's Water and Forest Law, advising that the Mongolian Government is considering revoking all licenses for non-gold mining operations which utilize surface water, and revoking all 460 gold exploration and 931 non-gold exploration licenses while providing compensation.

"The company understands that Mongolia's Cabinet expects that the Water and Forest Law will take until approximately November 2012 to fully implement," Centerra said in a news release. The Toronto-based gold miner noted that the Mongolian government estimates that the total compensation due to mining companies for the revocation of their mineral licenses will amount to US$4 billion, "which is about equal to Mongolia's annual gross domestic product."

Centerra said the Water and Forest Law is opposed by the Mongolian National Mining Association and other groups. "The company also understands that a group of parliamentarians intends to propose amendments to the Water and Forest Law to reduce its impact on environmentally sound mining operations."

"Centerra is reasonably confident that the economic and development benefits resulting from its exploration and develop activities will ultimately result in the Water and Forest having a limited impact on the Company's Mongolian activities," Centerra management advised.

The company also cautioned investors about Mongolia's new graduated royalty that will apply to all mining projects as of Jan. 1, 2011, including Centerra's Gatsuurt project. The graduated fee replaces the previous flat 5% gold royalty levy.

Centerra said it did not believe the graduated royalty will impact its Boroo Mine due to taxation protection contained in the Boroo Investment Agreement. Gatsuurt has proven and probable reserves of 1.5 million ounces of gold, while Boroo has 392,000 ounces of proven and probable gold reserves.