TORONTO (miningweekly.com) – The Mongolian Parliament has passed a resolution giving the green light for TSX-listed Centerra Gold’s Gatsuurt project to be developed, ending a five-year impasse on the project’s permitting and authorising the government to complete negotiations with Centerra on the terms of project ownership.

“The parliamentary resolution is a very important next step in advancing the Gatsuurt project. The Gatsuurt project represents an exciting opportunity to use Centerra’s existing Boroo mill and other infrastructure to develop the 1.6-million-ounce Gatsuurt deposit with very modest initial capital investment,” stated Centerra CEO Scott Perry on Thursday.

In March 2010, Centerra received a letter from Minerals Resource Authority of Mongolia (MRAM) stating that certain of its mining and exploration licences, including the Gatsuurt mining licences, could be revoked under the water basin and forestry law, which was enacted by the Mongolian Parliament in July 2009.

Under the Water and Forest Law, minerals prospecting, exploration and mining in water basins and forestry areas in Mongolia would be prohibited, and the affected licences would be revoked.

The legislation provided a specific exemption for “mineral deposits of strategic importance”, which would exempt the Boroo mining licences from the application of the legislation. However, Centerra’s Gatsuurt licences and its other exploration licence holdings in Mongolia, were not exempt.

Under the minerals law of Mongolia, Parliament, through its own initiative or the recommendation of the government, could designate a mineral deposit as strategic. Such designation could result in Mongolia receiving up to a 34% interest in the deposit.

As such, the Gatsuurt project was designated a project of strategic importance early last year, with the Parliamentary resolution confirming State ownership at 34%.

Nevertheless, Centerra on Thursday said that it had reached an agreement with the government in October last year that the government would instead take a 3% special royalty in place of the 34% State ownership interest, in addition to the existing Mongolian mineral royalty and tax regime. Centerra said it understood that the parliamentary resolution was a mandate to government to implement this agreement between the two parties.

“The company will now focus on finalising the investment agreements with the government of Mongolia,” Perry said.

Centerra advised that it now expected to proceed with negotiating definitive agreements (including a deposit development agreement and an investment agreement) with the Mongolian government, after which it would undertake economic and technical studies to update the existing studies on the project, which were completed and published in May 2006.

The company would also undertake an exploration programme, with the aim of expanding the existing resource, and start additional hydrogeological drilling.

The Gatsuurt project was located about 55 km by road from the company’s Boroo mine. As at December 31, 2014, the deposit held reserves of 17.1-million tonnes at an average grade of 2.9 g/t gold, containing 1.6-million ounces when using a cutoff grade of 1.4 g/t.

Centerra planned to mine the Gatsuurt ore and truck it to the existing Boroo mill to be processed. The current Gatsuurt plan was to process about 3.6-million tonnes of oxide ore with an average grade of 2.86 g/t through the existing Boroo facility in the first two-and-a-half years of operation. During this time, a Biox plant would be added to the existing facility to be used for processing the remaining sulphide ores totalling about 13.5-million tonnes, with an average grade of 2.92 g/t gold.

Meanwhile, news agency Reuters on Thursday, in a separate report, noted that a Kyrgyz representative on Centerra's board said the Central Asian country of Kyrgyzstan might sue Centerra over its plans to issue additional shares, which would somewhat dilute the country’s stake in the flagship Kumtor gold mine.