UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 Under
the Securities Exchange Act of 1934

Cameco Corporation

(Commission file No. 1-14228)

2121 – 11th Street West
Saskatoon, Saskatchewan, Canada S7M 1J3
(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F o Form 40-F þ

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

 

 

Exhibit Index

Exhibit No.		Description		Page No.
1.		Kumtor Technical Report dated March 28, 2008

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TECHNICAL REPORT

On the

2007 YEAR-END MINERAL RESERVES
AND RESOURCES

KUMTOR GOLD MINE

KYRGYZ REPUBLIC

for

CENTERRA GOLD INC.
and
CAMECO CORPORATION

		Iain Bruce, P. Eng.
		BGC Engineering Inc.
		Dan Redmond, P. Geo.
		Centerra Gold Inc.
March 28, 2008		Henrik Thalenhorst, P. Geo.
Toronto, Canada		Strathcona Mineral Services Limited

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TABLE OF CONTENTS

1.		SUMMARY					1
		1.1		Kumtor Gold Project			1
		1.2		Arrangements with the Kyrgyz Republic			1
		1.3		Property Location and Description			3
		1.4		Kumtor Geology and Mineralization			4
		1.5		Geotechnical Issues			5
				1.5.1 Central Open Pit			5
				1.5.2 Tailings Facility			8
		1.6		Mining Operations			9
		1.7		Mineral Resources and Reserves, Year-End 2007			10
		1.8		Possibilities to Augment the Kumtor Mineral Reserves and Resources			12
		1.9		Economic Analysis			13
		1.10		Conclusions and Recommendations			14
2.		INTRODUCTION					16
		2.1		Background			16
		2.2		Terms of Reference			19
		2.3		Sources of Information			21
		2.4		Report Contributions			22
3.		RELIANCE ON OTHER EXPERTS					23
4.		PROPERTY DESCRIPTION AND LOCATION					24
5.		ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY					31
6.		HISTORY					33
		6.1		Exploration History			33
		6.2		Mineral Reserves History			35
		6.3		Production History			37
7.		GEOLOGICAL AND STRUCTURAL SETTING					40
8.		DEPOSIT TYPE					49
9.		MINERALIZATION					50
		9.1		General Description			50
		9.2		The Central Deposit			51
		9.3		The Southwest Deposit			52
		9.4		The Sarytor Deposit			53
		9.5		Other Mineralized Zones			53
10.		EXPLORATION					54
11.		SAMPLING METHOD AND APPROACH					56
		11.1		Historical Methods			56
		11.2		KOC Methodology			56

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12.		SAMPLE PREPARATION, ANALYSES AND SECURITY					57
		12.1		Historical Methods			57
		12.2		KOC Methods			57
13.		DATA VERIFICATION					59
		13.1		Historical Database			59
		13.2		KOC Database			60
		13.3		Bulk Density			60
		13.4		Assay Data Verification			61
		13.5		Check Sampling			64
		13.6		Conclusions			64
14.		ADJACENT PROPERTIES					67
15.		MINERAL PROCESSING AND METALLURGICAL TESTING					68
16.		GEOTECHNICAL ISSUES AFFECTING THE KUMTOR OPEN PIT					69
		16.1		Introduction			69
		16.2		The Northeast Wall (High Wall)			71
		16.3		Southeast Wall			74
				16.3.1 The Davidov Glacier			74
				16.3.2 Till			74
				16.3.3 Bedrock			76
		16.4		Waste Dump Design			76
		16.5		Conclusions			77
17.		MINERAL RESOURCE AND RESERVE ESTIMATES					79
		17.1		General			79
		17.2		Geological Modelling			79
		17.3		Block Models			80
				17.3.1 The Central Deposit KS-8 Model			81
				17.3.2 Southwest and Sarytor Deposit Models			82
		17.4		Resource Classification			83
		17.5		Mineral Reserve Estimation			84
		17.6		Dilution Provisions			85
		17.7		Economic Pit Design Parameters			87
		17.8		Physical Pit Design Parameters			89
				17.8.1 Central Pit			89
				17.8.2 Southwest Pit			91
				17.8.3 Sarytor Pit			91
		17.9		Reserve Classification			92
		17.10		Cut-Off Grade			92
		17.11		December 31, 2007 Mineral Reserve Estimate			92
		17.12		Accuracy of the Reserve Estimate			98
		17.13		Reconciliation with Year-End 2006 Mineral Reserve Estimate			101
		17.14		Life-of-Mine Plan			103
		17.15		Additional Mineral Resources			105

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18.		EXPLORATION TARGETS					108
		18.1		Northend Target			108
		18.2		Down-Plunge Extension of SB Zone			108
				18.2.1 Obligation to Evaluate Underground Mining			109
				18.2.2 Underground Exploration of SB Core Zone			109
		18.3		Northeast Area			111
		18.4		Bordoo Area			111
		18.5		Akbel Area			112
		18.6		Planned Exploration Expenditures			112
19.		ADDITIONAL INFORMATION FOR PRODUCTION PROPERTIES					114
		19.1		Mining Operations			114
		19.2		Grade Control			117
		19.3		Mineral Processing			118
		19.4		Tailings Management Facility			121
				19.4.1 Introduction			121
				19.4.2 Deformations			122
				19.4.3 Conclusions — Tailings Dam Stability and Capacity			124
		19.5		Maintenance and Services			124
		19.6		Human Resources			125
		19.7		Permits and Licences			127
		19.8		Environmental Compliance			130
				19.8.1 Emergency Response			130
				19.8.2 Environmental Management Action Plan			131
				19.8.3 Environmental Management System			131
		19.9		Health and Safety			133
				19.9.1 Health and Safety Management System			133
				19.9.2 Worker Occupational Health and Safety Program			134
				19.9.3 Health and Safety Performance			135
		19.10		Closure Provisions			135
		19.11		Gold Sales			137
		19.12		Taxation			137
				19.12.1 Corporate Profit Tax			138
				19.12.2 Value Added Tax			139
				19.12.3 Other Taxes			139
		19.13		Historical Operating Cost Performance			140
		19.14		Capital and Operating Cost Estimates			142
		19.15		Financing			145
		19.16		Economic Analysis			145
		19.17		Effect of Agreement on New Terms			150
20.		INTERPRETATION AND CONCLUSIONS					151
21.		RECOMMENDATIONS					153
		21.1		Summary of Recommendations Already Made			153
		21.2		Outlook			154

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22.		REFERENCES					156
23.		DATE AND SIGNATURE PAGE					162
CERTIFICATES OF QUALIFICATION							163

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LIST OF FIGURES

Figure				Page
1		Project Location And Geotectonic Framework			25
2		Location And Access			26
3		Concession Area And Site Map			27
4		Geological Surface Map, Kumtor Area			41
5		Geological Map, 3800 Level, Central Block, Southwest And Sarytor Areas			42
6		Geological Section, Kumtor Line 122			43
7		Geological Section, Kumtor Line 26			44
8		Geological Section, Southwest Deposit Line 3200			45
9		Geological Section, Sarytor Deposit Line 196			46
10		Location of Areas of Geotechnical Significance			70
11		Interpretation of the High Wall Failure Mechanism			72
12		Ultimate Design of Central Pit and December 2007 Pit			90
13		Block Model Section, Central Deposit Line 122			94
14		Block Model Section, Central Deposit Line 26			95
15		Block Model Section, Southwest Deposit Line 3200			96
16		Block Model Section, Sarytor Deposit Line 196			97
17		Central Deposit — Vertical Longitudinal Section			107
18		Mill Flowsheet			119
19		Cash Flow Sensitivities			149

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LIST OF TABLES

Table				Page
1		Coordinates of Kumtor Mining Concessions			28
2		Summary of Additional Drilling Completed, 1998 — 2007			34
3		History of Mineral Reserve Estimates — Central Deposit Only			36
4		Kumtor Production History			38
5		Coarse Reject Check Assay Results (>0.1 G/T Gold)			63
6		Strathcona Re-Sampling Program 2007, SB Zone Drill Core			64
7		Factors of Safety for Wedge Failures as a Function of Slope Angle			73
8		External Dilution Contained in The KS-8 and SR-2 Models			87
9		Economic Design Parameters, Central and Sarytor Pits			88
10		Central Pit Physical Design Parameters			89
11		Sarytor Pit Physical Design Parameters			91
12		Kumtor Mineral Reserves of December 31, 2007			93
13		Reconciliation of the KS-8 and Southwest Models With Ore Mined and Milled			100
14		Comparison of Year-End 2006 and Year-End 2007 Kumtor Mineral Reserves			102
15		Life-of-Mine Plan and Mill Production Forecast			104
16		Kumtor Mineral Resources in Addition to Mineral Reserves			105
17		Additional SB Zone Inferred Mineral Resources for Possible Underground Mining (as of December 31, 2007)			110
18		Planned Exploration Expenditures for 2008			113
19		Major Mining Equipment Retirements, 2008 to 2014			116
20		Material Destination by Grade and Type			118
21		Summary of Kumtor Operations Personnel, December 31, 2007			125
22		Kumtor Personnel, 2008 to 2014			127
23		Historical Operating Costs, 1997 to 2007			141
24		Projected Operating Costs, 2008 — 2014			143
25		Projected Capital Costs, 2008 — 2014			144
26		Projected Mine Net Cash Flow, 2008 to 2014 with Internal Debt Payments			146
27		Projected Mine Net Cash Flow, 2008 to 2014 Without Internal Debt Repayment			147
28		Sensitivities of Mine Net Cash Flow			148

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1. SUMMARY

1.1 Kumtor Gold Project

The Kumtor gold project in the Kyrgyz Republic originated in 1992 when Cameco Corporation (Cameco), while pursuing uranium prospects in the Kyrgyz Republic, was presented with an opportunity to follow up on the discovery of gold at Kumtor in 1978 and subsequent extensive exploration work by the USSR Ministry of Geology when the Kyrgyz Republic was part of the former Soviet Union. Centerra Gold Inc. (Centerra), which became a separate public company in 2004, holds a 100% interest in the Kumtor project through its subsidiary, Kumtor Gold Company. Since achieving commercial production in late 1997, the Kumtor gold project has produced 6.2 million ounces of gold at average cash costs of US$233 per ounce for the eleven-year period. The project mineral reserves as of December 31, 2007 are the basis for a life-of-mine plan that provides an additional seven years of operating life to 2014.

1.2 Arrangements with the Kyrgyz Republic

In December 1992, Cameco signed an initial agreement with the Government of the Kyrgyz Republic (the Government) giving Cameco the exclusive right to evaluate and develop the Kumtor project. In December 1993, Kilborn Western Inc. (Kilborn), (now SNC-Lavalin Inc.), completed a feasibility study on the project, which was amended in 1994 and 1995 (Kilborn Feasibility Study). A final project development agreement was concluded with the Government in May 1994 under which Cameco, through its wholly-owned subsidiary Kumtor Mountain Corporation (KMC), acquired a one-third interest in Kumtor Gold Company (KGC), the project owner. The remaining interest was held by Kyrgyzaltyn JSC (Kyrgyzaltyn), a Kyrgyz joint stock company whose shares are 100% owned by the Government.

Project construction began in late 1994 and was financed by Cameco and an international group of banks and lending agencies. The mine achieved commercial production in the second quarter of 1997, after incurring capital expenditures of $452 million (all amounts in U.S. dollars). Kumtor Operating Company (KOC), then a wholly-owned subsidiary of Cameco, was granted responsibility to operate and manage the project for a ten-year period to May 2007 for which KOC received

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a management fee. This period has since been extended to the life of the concession pursuant to the Kumtor restructuring described below.

In December 2003 Cameco, Cameco Gold Inc. (Cameco Gold), Kyrgyzaltyn and Centerra entered into the Kumtor Restructuring Agreement, under which Kyrgyzaltyn, Cameco Gold and KMC agreed to sell to Centerra all of their respective shares in KGC. This restructuring was concluded in June 2004. On June 30, 2004 Centerra completed its initial public offering (IPO) and commenced trading on the Toronto Stock Exchange. As a result of the restructuring, Cameco Gold and KMC hold a majority shareholding interest in Centerra of 52.7%, while Kyrgyzaltyn holds 15.7% of the Centerra shares.

On August 30, 2007, Centerra, Cameco and the Government entered into framework agreements on certain outstanding issues regarding the Kumtor project. The framework agreements (the agreement with Centerra entitled the Agreement on New Terms) are subject to the satisfaction of certain conditions, including approval of the Parliament of the Kyrgyz Republic, the Centerra and Cameco boards of directors, and the negotiation and signing of final agreements among Centerra, Cameco and the Government. The closing of the transactions contemplated by the framework agreements has been postponed several times following requests by the Government, with the deadline for completion now being April 30, 2008. The Agreement on New Terms provides, among other items, for the existing tax regime to be replaced with a simplified new tax rate for the project, applied to gross proceeds from products sold, at the rate of 11% in 2008, 12% in 2009 and 13% thereafter. In addition, the existing concession area described in Section 4 will be enlarged to include all of the territory covered by the current Kumtor exploration license.

On the satisfaction of the conditions to completion, Cameco will transfer 32.3 million shares of Centerra to the Government; 17.3 million of such shares will be held in escrow to be released within four years, subject to earlier release in certain circumstances. Centerra has entered into an agreement with Cameco to issue 10 million treasury shares of Centerra to Cameco after the transfer of shares by Cameco to the Government. After completion of the transactions, the Government will own 29.3% of Centerra, Cameco will own 40.5% and the balance of 30.2% will be held by public shareholders.

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Certain of the existing agreements relating to the Kumtor Project described in Section 2.1 below, including the Investment Agreement and Concession Agreement, are required to be amended to reflect the terms of the Agreement on New Terms.

1.3 Property Location and Description

The Kumtor mine is located in the Kyrgyz Republic, one of the independent successor states of the former Soviet Union, some 350 kilometres to the southeast of the Kyrgyz capital of Bishkek and about 60 kilometres to the north of the international boundary with the Peoples Republic of China, in the Tien Shan Mountains, at 41º 52’ N and 78º 11’ E. The mill site is situated in alpine terrain at an elevation above 4000 metres, with the wall of the Central pit extending above 4400 metres. The climate is dry and continental with a mean annual temperature of minus 8°C. Local valleys are filled with active glaciers, and the mine area is in permafrost that extends down to elevation 3900 metres.

Mining takes place on the Concession Area, a 750-hectare parcel of land centred on the Kumtor gold deposit to which KGC has been granted the exclusive rights to all minerals. As a result of the recent expansion of the mineral resources and reserves, KGC has applied for two additional mining concession areas situated to the northeast and to the southwest of the Concession Area, respectively. To facilitate the initiation of mining at the Southwest deposit, in production since 2005 and located outside of the Concession Area, KGC was granted a temporary concession covering the Southwest deposit (the Southwest Mining Licence), with an expiry date of December 31, 2008, by which time mining of the Southwest deposit will be complete. Additionally, the Government has granted a mining licence for the Sarytor deposit (the Sarytor Area Geological Allotment) expiring on December 31, 2013.

The Concession Area is surrounded by the Exploration Licence of 26 400 hectares, also centred on the Kumtor gold deposit, in which KGC was granted the exclusive right to develop any mineral resources. This includes the right to be granted any additional mining concessions within the Exploration Licence on the same terms and conditions as those specified for the Concession Area. The Exploration Licence cannot be renewed beyond its current expiry date of December 18, 2009, but a new licence may be applied for. Partial or complete conversion into a mining lease is possible at any time during the currency of the licence. The current Exploration

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Licence is expected to be converted into a mining concession upon the Agreement on New Terms coming into force.

1.4 Kumtor Geology and Mineralization

The Kumtor and satellite gold deposits occur in the southern Tien Shan metallogenic belt, a Hercynian fault and thrust belt in Central Asia that extends from Uzbekistan in the west through Tajikistan and the Kyrgyz Republic into northwestern China and hosts a number of important gold deposits, among them Muruntau, Zarmitan and Jilau.

The mine geology in the Kumtor area is dominated by several major thrust slices with each thrust sheet containing older rocks than the sheet it structurally overlies. The slice hosting the gold mineralization is composed of Vendian meta-sediments (youngest Proterozoic or oldest Palaeozoic) that are strongly folded and schistose. In most areas, the Kumtor Fault Zone (KFZ), a dark-grey to black, graphitic gouge and schist zone, forms the footwall of this structural segment. The KFZ strikes northeasterly, dips to the southeast at moderate angles and has a width of up to several hundred metres. The adjacent rocks in its hanging wall are strongly affected by shearing and faulting for a distance of up to several hundred metres. The rocks in the structural footwall of the KFZ are Cambro-Ordovician limestone and phyllite, thrust over Tertiary sediments of possible continental derivation which in turn rest, with apparent profound unconformity, on Carboniferous clastic sediments.

The structural geology at Kumtor has evolved through four main deformation events that span the time from pre-Carboniferous to Tertiary. The recent improvement in understanding of the structural geology has facilitated the awareness for some of the geotechnical issues affecting the Central pit.

Gold mineralization occurs where the Vendian sediments have been hydrothermally altered and mineralized, an event that has been dated as late Carboniferous to early Permian. Gold mineralization has been observed over a strike distance of more than twelve kilometres, with the Central deposit being the most important accumulation. Other known occurrences along the mineralized trend are the Southwest deposit (now essentially mined out), and the Sarytor deposit, for which a mineral reserve has been estimated for the first time at the end

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of 2007. Additional centres of mineralization are known from the Northeast, Akbel and Bordoo areas, but no mineral resources can yet be estimated.

Mineralization took place in four main pulses with the mineralization being most intense, and the gold grade being the highest, where the metasomatic activity was continuous through phases two and three. Substantial volumes affected by such activity are represented by the Stockwork Zone of the Central deposit, the most important to date, and by the SB Zone, that will replace the Stockwork Zone in the future. Native gold and gold-bearing minerals occur as very fine inclusions in pyrite, with an average size of only 10 microns, which accounts for the partly refractory nature of the Kumtor ore. However, the fine grain size of the gold also renders assaying of this mineralization relatively reliable, with only a small nugget effect. Post-ore faults, in addition to being of geotechnical significance, often carry significant quantities of graphite, and other carbonaceous components which constitute the source for the preg-robbing character of some of the mineralization.

1.5 Geotechnical Issues

           1.5.1 Central Open Pit

Operations at the Kumtor pit have been negatively affected as a result of two substantial failures of the high wall that forms the northeastern limit of the Kumtor pit. A failure on July 8, 2002 claimed a life, resulted in the temporary suspension of operations, and led to a shortfall in 2002 production because the high-grade Stockwork Zone was rendered temporarily inaccessible. A program of structural mapping and geotechnical drilling with assistance from SRK Consulting (UK) Ltd. (SRK UK) commenced shortly afterwards. Based on the advice of Centerra’s geotechnical consultant, Golder Associates Ltd. (Golder), and following further technical investigation, KOC revised the structural model in the area of the high wall and reformulated the slope design criteria for the final pit. As of December 31, 2005, the entire area affected by the 2002 failure had been mined out.

A second failure of similar magnitude occurred on July 13, 2006, in an area above the Stockwork Zone that was planned to be mined in 2006 and 2007. Due to safety concerns, mining from the area was deferred, and mill feed from this area was partly replaced with low-grade ore stockpiles resulting in a significant and negative impact on production. Mining of the high wall affected by the failure was again postponed and has not yet resumed.

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Following the second ground wall movement, Golder and SRK UK continued to assess the causes of the pit wall failure and provided guidance with respect to remedial and long-term pit slope design criteria that would reduce the possibility of a recurrence. This work has provided insight into why the high wall failures occurred. Large shallow wedges are interpreted to have formed the failure plane, and water seeping from the overlying Lysiii glacier into the pit wall, reducing the extent of the original permafrost regime, has also played a role.

Based on recommendations by Golder and SRK UK, the high wall for the year-end 2007 mineral reserve estimate and life-of-mine plan has now been designed with slope angles that range from 28° to 32°. The new slope design will mine out the known wedges to prevent exposure of the next set of wedges. The authors of this report note, however, that the factor of safety for this slope remains uncertain since the extent of thawing in the pit wall, and the degree of water saturation, remain unknown until the additional appropriate investigations can be undertaken.

In addition to the flattening of the high wall, more ice is scheduled to be removed from the toe of the remaining Lysii Glaciers starting in 2008, and any melt water from the glacier should be directed away from the pit so that the pit wall is no longer affected. A hydrological investigation is required to determine whether rock dewatering of the high wall is required and how it can be achieved. If all of these remedial measures are undertaken, the authors of this report judge the possibility of a recurrence of the high wall failing to be low enough as to accept the inclusion of the affected ore tonnage in the current statement of mineral reserves. There is, however, a risk that some or all of the reserves in question, 7.8 million tonnes with an average gold grade of 3.7 g/t and an incremental strip ratio of 29 to one, may not be recoverable without a further substantial flattening of the high wall.

Geologic mapping has also led to an improved understanding of the structural geology along the east wall of the Central pit, and has resulted in the flattening of the overall slope angle of the south east section of the Central pit. Previous slope instability has been attributed to changing foliation attitudes between two structural domains, 3b and 3c as they interact with discontinuities caused by cleavage and thrust faults. The new flatter wall angles reflect these conditions.

The southwestern part of the Kumtor pit will exploit the high-grade SB Zone in the years 2008 to 2010. The southeastern edge of the pit is determined by the necessity

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to leave a buffer with the adjacent Davidov glacier and cannot be moved out beyond the current design. Slope angles therefore are the only factor determining the depth of the Central pit in this area, and thus the amount of ore to be recovered from the SB Zone.

Glacial till consisting of cobbles, gravels, sands, silts and traces of clay deposited by the Davidov glacier has been exposed along the southeast wall of the part of the Central pit adjacent to the Davidov glacier . The till is frozen in the existing pit face, but drilling has indicated that further push backs will encounter unfrozen, water-saturated till. Dewatering tests undertaken to date indicate that the till can be depressurized to allow push back of the overall slope at an approximate angle of 30°. The rock slope below the till in areas with a slope azimuth of 115° to 165° has a design angle of 20° in its current water-saturated state. The current pit design assumes that the rock slopes below the till can also be depressurized, so that slopes of 30° to 32° can be safely achieved in rock. Depressurization tests have not yet been undertaken but the rock is fractured and is likely amenable to depressurization by horizontal drains or wells.

If depressurization of the till and of the underlying rocks cannot be achieved, the flatter slope angle would lead to a reduction of the mineral reserves mineable by open pit by approximately ten million tonnes with an average gold grade of 4.9 g/t. However, about 1.4 million tonnes with an undiluted grade of 21 g/t, which are part of this tonnage in question, would be added to the inferred resources scheduled for underground exploration and possible later mining by underground mining methods. The pit design, on which the December 31, 2007 mineral reserves are based, uses the steeper set of design angles which anticipate successful depressurization of both the till and the underlying rocks.

The mineral reserves with exposure to geotechnical risk total nearly 18 million tonnes with an average gold grade of 4.4 g/t. The authors of this report agree with the inclusion of this tonnage in the year-end 2007 reserve estimate under the assumption that Centerra will undertake the required remedial actions. To reflect the additional risk in this part of the Kumtor reserve, the entire tonnage in question has been included in the probable reserve class, even if their resource counterpart was originally in the measured category.

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           1.5.2 Tailings Facility

Movements in the tailings dam foundation caused by creep in ice-rich silts were first identified in 1998. Excavation of the ice-rich soil and replacement with compacted fill to form a shear key has now arrested or significantly reduced the rate of movement. The monitoring data supplied by KOC and interpreted by Golder and the Kyrgyz Institute of Rock Mechanics, to date, support the effectiveness of the stabilizing shear key.

The tailings facility at the end of 2007 contained nearly 48 million tonnes of tailings and, in its current configuration, can accommodate the mine production until the end of 2008. Permits have been received to raise the tailings dam by three metres, which will allow continuation of the use of the facility to the end of 2010 at the planned production rate. Another three metres of additional dam height would extend the life of the facility to last to the end of the current estimate of the mineral reserves. The cumulative capital costs for the step-by-step increase of the capacity of the tailings facility to accommodate the mineral reserves are estimated at $27.6 million.

The current design of the dam and the stabilizing toe berm allow the storage of some 12 million tonnes beyond what the current mineral reserves. To accommodate the additional tonnage, the main dam would have to be raised, a small saddle dam built on the north end, and the lower diversion ditch relocated. Raising the main dam by another five metres would not be a geotechnical concern and would increase the overall capacity of the facility by approximately 12 million in addition to the 20 million tonnes or more than two years of mill production.

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1.6 Mining Operations

Mining and processing operations have had to overcome the challenges of operating in a remote part of the Kyrgyz Republic and also in a dry cold climate at an altitude above 4000 metres. The Central deposit is mined in a large open pit where total material mined in 2007 was nearly 80 million tonnes, or 220 000 tonnes per day. Additionally, 35 million tonnes were mined in 2007 from the Southwest pit, or 96 000 tonnes per day. The overall waste to ore ratio in 2007 was 21.4. Unit mining costs have been very low until 2005, primarily because of favourable topography that allow short haul distances for the disposal of waste and delivery of ore to the process plant, but have increased in the past two years, in line with the general global experience of large open-pit mines.

Ore treatment has been at the rate of 5.6 million tonnes per year or 15 300 tonnes per day in the past five years. The fine-grained nature of the gold mineralization within sulphides has resulted in a flow sheet whereby a sulphide flotation concentrate is subjected to very fine grinding prior to cyanide leaching of the gold in a conventional carbon-in-leach circuit. A small amount of additional gold is recovered from the flotation tailings in a CIL circuit, and overall gold recovery has averaged 79.5% since commencement of operations, but has been only 73% in the past two years, due to the lower head grades of 2.3 g/t.

Gold production during the eleven-year period 1997-2007 from the milling of nearly 60 million tonnes of ore grading 4.1 grams of gold per tonne (g/t) has been 191 tonnes or 6.2 million ounces.

Citizens of the Kyrgyz Republic represent 97% of the total workforce of 2052 employees as of the end of 2007, and this high proportion demonstrates the successful adaptation of the Kyrgyz citizens to the employment opportunities at Kumtor and to the training programs offered at the operation. The benefits of drawing a high proportion of the workforce from within the Kyrgyz Republic have included very good operating cost performance, in a unique and challenging location.

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1.7 Mineral Resources and Reserves, Year-End 2007

The mineral reserves and resources for the Kumtor gold mine have been estimated by Dan Redmond, P. Geo., Manager of Reserves and Resources of Centerra as of December 31, 2007.

Kumtor Mineral Reserves and Resources at December 31, 2007

										Contained Gold
Category	Tonnes (000’s)					Gold (g/t)				Ounces (000’s)				Tonnes
Mineral Reserves Mineable by Open Pit
Stockpiles			3 594				1.4				158				5
Proven in situ			6 294				5.3				1 065				33
Probable in situ			28 546				4.0				3 679				114
Total			38 434				4.0				4 902				153
Additional Mineral Resources Considered for Open-Pit Mining
Measured			18 770				3.2				1 931				60
Indicated			19 323				2.8				1 741				54
Measured & Indicated			38 093				3.0				3 672				114
Inferred			778				1.8				46				1
Additional Mineral Resources Considered for Underground Mining
Inferred			2 796				20.0				1 797				56

Mineral resources have no demonstrated economic viability. Additionally, inferred mineral resources have a large degree of uncertainty as to their existence and as to whether they can be mined legally or economically, It cannot be assumed that all or any part of the inferred resources can be upgraded to a higher resource category.

The mineral reserves are reported assuming a gold price of $550 per ounce and at a gold cut-off grade of 1.0 g/t compared to a cut-off grade of 1.3 g/t used for the year-end 2006 estimate. The new, lower cut-off grade recognizes the fact that, particularly in 2008 and 2009, low-grade material from existing stockpiles will augment ore from open-pit mining to provide the plant with the tonnage it is designed to treat. The additional mineral resources considered for mining by open pit are also reported at a gold cut-off grade of 1.0 g/t, but are in an optimized pit shell that is uneconomic at the gold price of $550 per ounce used for the mineral

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reserve estimate. The additional mineral resources considered for underground mining have been estimated using a cut-off grade of 7 g/t of gold.

The estimates of mineral reserves and resources have been derived from a resource block model incorporating sample data from historical diamond drilling and underground exploration that has been augmented by a substantial amount of diamond drilling in recent years. While the experience of reconciling eight years of production (1997 to 2004) with the reserve estimates for the areas mined had resulted in a high degree of confidence in previous reserve estimates that had not contained a dilution provision, the mining of parts of the Central deposit with narrower and less continuous zones of mineralization in subsequent years has required the inclusion of external mining dilution into the block models that were used for the estimation of the year-end 2006 and 2007 mineral resources and mineral reserves.

Of the total in situ mineral reserves, 31.6 million tonnes or 91% at a gold grade of 4.3 g/t are in the Central deposit, 0.4 million tonnes or 1% at 2.9 g/t are in the nearly mined-out Southwest deposit, and 2.8 million tonnes or 8% at a grade of 3.4 g/t are in the Sarytor deposit. After milling of 5.5 million tonnes in 2007, there is a net gain of 12.5 million tonnes compared to the year-end 2006 reserve estimate, which was 31.4 million tonnes with a grade of 4.7 g/t gold. The net gain is mainly due to the addition of the Sarytor deposit to the reserves for the first time (2.8 million tonnes), and to the lowering of the cut-off grade, which includes 8.7 million tonnes with an average grade of 1.1 g/t (existing stockpiles plus future production) that previously were not in the Kumtor mineral reserves.

The reserves are scheduled to be mined and milled over the seven-year period 2008-2014. Forecast gold production is 3.9 million ounces at a predicted mill recovery of 79%. The life-of-mine (LOM) plan is summarized in the following table (thousands of tonnes and recovered ounces):

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Kumtor Life-of Mine Plan, 2008 to 2014

						2008				2009				2010				2011				2012				2013				2014				Total
Ore mined		tonnes					3 715				4 323				6 307				5 922				5 851				6 172				2 551				34 840
		Au (g/t)					5.7				5.8				4.5				3.0				4.1				3.8				2.8				4.4
Waste		tonnes					115 156				115 396				112 854				116 783				125 654				110 251				2 544				698 638
mined		Strip Ratio					30.9				26.7				17.9				19.7				21.5				17.9				1.0				20.1
Ore milled		tonnes					5 658				5 658				5 658				5 658				5 658				5 658				4 468				38 434
		Au (g/t)					4.1				4.8				4.9				3.2				4.2				4.0				2.1				4.0
Gold Recovered		ounces					618				697				706				452				608				593				209				3 883

The LOM plan provides for only 3.7 and 4.3 million tonnes of open-pit mining in 2008 and 2009, respectively, but waste mining is carried out at full capacity. This explains the high strip ratios in the first two years of the LOM. Nearly all of the new mining equipment needed to handle this high tonnage has been acquired in 2006 and 2007.

1.8 Possibilities to Augment the Kumtor Mineral Reserves and Resources

Additions to the Kumtor mineral reserves and mineral resources estimated as of December 31, 2007 are possible from several sources. The most immediate possibility is the expansion of the three open pits in response to a higher gold price, to allow exploitation of part or all of the additional mineral resources shown in the reserve and resource table above. These additional mineral resources have been well drilled and are constrained by the design pits containing the year-end 2007 mineral reserves and larger, optimized pit shells that are not economic at a gold price of $550 per ounce.

Drilling has also outlined an inferred resource of 2.8 million tonnes at 20 g/t gold in the deeper parts of the SB Zone below the current pit design that may be mineable by underground methods, subject to the successful completion of a substantial underground exploration program that has recently started.

Ongoing property exploration, mainly by means of surface diamond drilling, will remain at a high level. Interesting initial results have been obtained by drilling the Northend target, but no immediate discoveries are apparent in the other areas of

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interest. Centerra has made a strong commitment to fund continued exploration efforts to extend the life of the Kumtor operation, and budgets for subsequent years will be established following an assessment of the exploration results of each year. For 2008, a budget of $27 million has been approved. Surface exploration (mostly drilling) is budgeted at $13 million for 2008, to identify new mineral resources, and to potentially upgrade existing mineral resources to a higher category or to provide the foundation on which they can be converted to mineral reserves. A three-year underground exploration and development program to investigate the high-grade SB Zone resources potentially mineable by underground has commenced and carries a budget of $14 million for 2008.

1.9 Economic Analysis

The performance of the Kumtor mine in achieving physical production and cost budgets to date has been very good, except for the effects of the two rock falls on the high wall, which forced substantial deviations from the planned mining schedule. With mining and processing operations now well established, the mine is expected to meet the life-of-mine (LOM) plan projections for future gold production of 3.9 million ounces at an average cash operating cost of approximately $390 per ounce for the period 2008-2014, barring further disruptions as a result of geotechnical issues.

The projected unit operating costs for the current LOM plan are based on the operating experience at Kumtor, and are at a level slightly higher than that experienced in the past two years.

Capital expenditures over the life of the mine are estimated at $114 million, mostly for mine and maintenance fleet replacement and for additions to the tailings facility. Exploration expenditures are not included in the capital budget and will be funded from cash provided by operations.

As of December 31, 2007, all of the remaining debt with external lenders involved in the original Kumtor project financing has either been repaid or converted to equity as part of the initial public offering of shares by Centerra in 2004. As of December 31, 2007, KGC had inter-company loans outstanding totalling $190 million, which includes two loans of $10 million each, repayable to Centerra

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remaining from the original senior and subordinated debt financing arranged for the development of the Kumtor project.

Based on projected gold production for the Kumtor mine and associated operating costs for the period 2008 to 2014, estimates for sustaining capital, repayment of the outstanding $190 million inter-company debt, and a gold price of $550 per ounce for the seven-year period, KGC would have net mine cash flow of $312 million ($512 million with internal debt removed), before allocation of funds for exploration programs. At a gold price of $850 per ounce, the net cash flow prior to exploration expenditures would increase to nearly $1.3 billion (1.5 billion with internal debt removed) if that gold price was maintained over the same period, although a sustained higher gold-price would increase the reserve base and mine life. The net cash flow at a gold price of $550 per ounce, but assuming the tax regime under the Agreement on New Terms would be $260 million.

A 10% increase in operating costs over the period 2008 to 2014 would decrease the net cash flow by $112 million if all other parameters including the gold price remained unchanged. A reduction in gold mill head grade by 10% would result in a decrease of the net cash flow by nearly $190 million. However, the possibility of a significant decrease in the gold grade from that currently estimated in the LOM plan is considered unlikely given the good reconciliation to date between reserve grade and the grades recorded from mining and processing. A ten-percent increase in capital cost decreases the net cash flow by a moderate $12 million.

1.10 Conclusions and Recommendations

As a consequence of Strathcona’s lengthy association with the Kumtor project and the resultant familiarity with its personnel, and the policies and standards followed in the management and conduct of mining operations, and the good production and cost performance during the eleven years the mine has been in operation the authors are of the opinion that the Kumtor mine should be able to achieve the production, cost and economic performance targets for the current mine plan, barring the occurrence of additional incidents or difficulties of a geotechnical nature. There remains the possibility of extending the mine life as a result of the commitment to further exploration in the Kumtor area.

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The authors recommend that the considerable tonnage of additional mineral resources of all classes identified at Kumtor be subjected to a feasibility-level study to determine what tonnages would be mineable at higher gold prices, what the break-even gold price would be, what additional capital and operating costs would be incurred, and how the tonnages that need to be mined by underground methods would fit into a potentially expanded LOM. The future for those mineral resources potentially by open pit also has important implications for the high wall stability issue, since a large part of these additional resources are in this part of the Central pit and mining in that area would greatly facilitate moving back this difficult pit wall.

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2. INTRODUCTION

2.1 Background

A technical report compliant with National Instrument 43-101 (NI 43-101) for the Kumtor gold mine has been commissioned by Centerra Gold Inc. (Centerra), and for Cameco Corporation (Cameco) who as of December 31, 2007 held a 52.7% interest in the share capital of Centerra, to update the technical reports dated May 13, 2004 and May 9, 2006 prepared by Strathcona Mineral Services Limited (Strathcona).

The Kumtor mine is operated by Kumtor Operating Company (KOC), which is incorporated in the Kyrgyz Republic and is a wholly-owned subsidiary of Centerra. Kumtor Gold Company (KGC), also a wholly-owned subsidiary of Centerra, holds the Centerra interest in the Kumtor project. Centerra became a publicly-listed company on the Toronto Stock Exchange in June 2004 following the transfer to Centerra of certain gold assets including the Kumtor project, previously held by the Government of the Kyrgyz Republic (the Government) and Cameco Gold Inc., a wholly owned subsidiary of Cameco.

The Kumtor operation is governed by an Investment Agreement entered into as of December 31, 2003, among Centerra, KGC and the Government setting out the terms and conditions applicable to the operation and development of the Kumtor project (the Investment Agreement). The Investment Agreement has an indefinite term and shall not be terminated, except (i) by agreement of the parties, or (ii) the Amended and Restated Concession Agreement (which grants KGC the right to explore and develop the Kumtor deposit) expiring without extension of the Concession granted there under at the end of its fifty-year term, or, if earlier, the exhaustion and completion of mining of the Kumtor deposits

There are a number of material legal documents with respect to the Kumtor project, including the Investment Agreement, which are briefly described as follows:

	•		The Kumtor Restructuring Agreement, dated December 31, 2003 and completed in June 2004 among Centerra, Cameco and Kyrgyzaltyn.
	•		The Investment Agreement, dated December 31, 2003, among Centerra, the Government and KGC.

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	•		The Amended and Restated Concession Agreement (Concession Agreement) dated December 31, 2003 among KGC and the Government under which the Government granted KGC a concession giving KGC the exclusive rights to the exploration and development of the Kumtor deposits.
	•		The Operating Agreement dated September 3, 1993 as subsequently amended among KGC and KOC, under which KOC is appointed as operator of the Kumtor mine.
	•		The Centerra Shareholders Agreement, dated January 9, 2004, among Centerra, Kyrgyzaltyn, Cameco Gold and KMC.
	•		The Agency Exchange Agreements, dated April 30, 2004 among Centerra and each of International Finance Corporation (IFC) and European Bank for Reconstruction and Development (EBRD), respectively, under which IFC and EBRD assigned the benefit of two $10-million loans to Centerra in exchange for an equity interest in Centerra and certain cash payments.
	•		The Insurance Risk Rights Plan Agreement, dated June 21, 2004, among Centerra and CIBC Mellon Trust Company.
	•		The Priority Power Supply Agreement dated May 22, 1995 among the State Joint Stock Energy Holding Company of the Kyrgyz Republic and KGC, under which the Kumtor project is guaranteed an uninterrupted source of electricity.
	•		The Gold and Silver Sale Agreement dated March 5, 1997 among KOC on behalf of KGC, Kyrgyzaltyn and the Government, as amended, under which Kyrgyzaltyn has agreed to purchase all of the gold produced by the Kumtor project for reprocessing at its refinery in the Kyrgyz Republic as further amended by the Gold Payment Agreement, dated December 22, 2005 (and subsequently amended), between Kyrgyzaltyn, Centerra Gold, KOC and KGC, which for a limited period of time provides Kyrgyzaltyn with a deferred payment facility until May 15, 2008.

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•

The Reclamation Trust Deed dated January 25, 1996 among the Government, KOC and Torthchild Trust Corporation Limited (the Trustee) establishing the reclamation trust described in Section 19.10 of this report.

On August 30, 2007, Centerra, Cameco and the Government entered into framework agreements on certain outstanding issues regarding the Kumtor project. The framework agreements are subject to the satisfaction of certain conditions, including approval of the Parliament of the Kyrgyz Republic, the Centerra and Cameco boards of directors, and the negotiation and signing of final agreements among Centerra, Cameco and the Government. The closing of the transactions contemplated by the framework agreements has been postponed several times following requests by the Government, with the closing date now being April 30, 2008. The framework agreements between Centerra and the Government (Agreement on New Terms) provides, among other things, for:

	•		The Government’s full commitment to, and support for Centerra’s continuing long-term operation and development of the Kumtor project.
	•		Effective January 1, 2008, the current Kumtor tax regime will be replaced with a simplified new tax rate for the project applied to gross proceeds from products sold at the rate of 11% in 2008, 12% in 2009 and 13% thereafter.
	•		Kumtor’s existing concession area described in Section 4 will be enlarged to include all territory covered by its current exploration license.

The framework agreement between the Government and Cameco provides that on the satisfaction of the conditions to completion, Cameco will transfer 32.3 million shares of Centerra to the Government; 17.3 million of such shares will be held in escrow to be released within four years subject to earlier release in certain circumstances. Centerra has entered into an agreement with Cameco to issue 10 million treasury shares of Centerra to Cameco after the transfer of shares by Cameco to the Government. After completion of the transactions, the Government will own 29.3% of Centerra, Cameco will own 40.5% and the balance, 30.2%, will be held by public shareholders.

The Agreement on New Terms provides that certain of the agreements relating to the Kumtor Project described above, including the Investment Agreement,

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Shareholders Agreement and the Amended and Restated Concession Agreement, are required to be amended to reflect the terms of the Agreement on New Terms.

Since the transactions and agreements contemplated by the Agreement on New Terms have not been completed at the date of this report, the financial analysis of the project shown in Section 19.16 is based on the current tax regime. The effect of the new tax regime will be discussed as a variance of the financial base case, assuming that the final agreements will reflect the terms of the Agreement on New Terms.

2.2 Terms of Reference

Strathcona has been retained by Centerra and Cameco to provide a technical review and report on the mineral resources and reserves of the Kumtor gold project as at the end of 2007. The report is to comply with the standards for a technical review as set forth in National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101).

The requirement for a new report is due to a number of items:

	•		Several occurrences of pit slope instabilities and one failure in the past two years have resulted in significant and adverse changes to the Kumtor mine plan. The main effect has been the delay of mining of some of the high-grade parts of the deposit, with negative consequences for the mill head grade and thus the mine operating results in 2006 and 2007. If unresolved, the pit slope instabilities would result in a decrease of the Kumtor mineral resources that can be extracted by open-pit mining.
	•		The adjoining mineral reserve of the Southwest Deposit has been virtually exhausted by mining in 2006 and 2007.
	•		The Sarytor Deposit has for the first time been included in the Kumtor reserve estimate and mine plan.
	•		In response to an increased gold price and certain operational requirements in 2008 and 2009, the cut-off grade used to report the mineral reserves has been reduced.

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•

Progress has been made in identifying high-grade mineral resources that may be mineable by underground methods, and a substantial exploration and development program has begun to verify this assumption.

Strathcona has a long association with the Kumtor project, having initially been engaged as Independent Mining Engineer to monitor the performance of the project in accordance with the loan agreements entered into with EBRD, IFC and the Canadian Export Development Corporation (collectively, the Agency Lenders) from 1995 until 2002, when the Kumtor debt was restructured. As part of that assignment, Strathcona president Graham Farquharson, P. Eng. visited the project numerous times, and senior geologist Henrik Thalenhorst, P. Geo. travelled to the Kumtor site from November 27 to December 2, 1998.

Messrs. Farquharson and Thalenhorst were also co-authors of a Technical Report on the Kumtor mine in connection with the initial public offering of Centerra in 2004 (Strathcona, 2004), and Henrik Thalenhorst was the author of the updated Technical Report dated May 9, 2006 (Strathcona, 2006). In preparation for the 2006 report, Henrik Thalenhorst had visited the Kumtor project from January 8 to 14, 2006. The present report draws on the earlier Strathcona reports where appropriate but will provide new or additional information as required.

Because of the importance of geotechnical aspects as described in more detail in Section 16, the current report is co-authored by Iain Bruce, P. Eng., of BGC Engineering Inc. of Richmond, British Columbia. Iain Bruce had visited the site from September 13 to 18, 2005 to participate in a tailings facility audit (BGC Engineering, 2005). Iain Bruce is also a member of an independent committee created by Centerra in June 2007 to review the slope stability work being undertaken by Golder Associates Ltd. (Golder) pertaining to slopes intercepting glacial till in the southeast corner of the Kumtor pit.

The resource and reserve estimates for the Kumtor deposit as of December 31, 2007 have been undertaken in-house by Centerra staff. Dan Redmond, the Centerra Manager of Reserve and Resources, a qualified person within the meaning of NI 43-101, is also a co-author of this report. Dan Redmond has visited the site several times per year since 2005 as part of his duties.

In preparation for this report, the three co-authors visited the site together from October 28 to November 3, 2007, at which time visits were made to all active

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mining areas, the geotechnical issues were discussed with KOC staff, drill core was re-sampled, the quality assurance and quality control (QA/QC) program of the operation was reviewed, and the site exploration program discussed. On the return trip to Canada, Iain Bruce met with Rob Seago of SRK Consulting (UK) Ltd. (SRK UK) in Cardiff, UK to discuss progress in understanding of the structural geology at Kumtor.

The metric system of units is used throughout this technical report, deviating only to report ounces of gold. The currency used is the United States dollar, unless otherwise indicated.

2.3 Sources of Information

Following the initial discovery of gold at Kumtor in 1978, the deposit was delineated by a Soviet-Kyrgyz geological expedition. Extensive drilling programs, surface and underground sampling programs and studies related to the deposit and its exploitation were completed by various Soviet agencies. The data from those studies were evaluated and verified by the Kilborn Feasibility Study initiated by Cameco in 1993.

Since commencement of Kumtor production in late 1996, additional technical studies have been carried out by KOC, Cameco, Centerra and consultants retained by them with expertise in the fields of geology, geotechnical issues, resource estimation, engineering, mining, metallurgy, and environment as part of the ongoing mining operations. Such studies have included the preparation of periodic mineral resource models and annual mineral reserve estimates and the reconciliation of the reserve estimates to mine production, all of which have been made available to Strathcona. Other sources of technical information have included geological and engineering studies, sampling and assaying results, internal notes and memoranda, computer models, and monthly KOC operating reports from December 1996 through November 2007.

The mineral resources of the Kumtor project that are the subject of this report were estimated by Dan Redmond, P. Geo., Manager of Reserves and Resources for Centerra, in close consultation with Henrik Thalenhorst, P. Geo. The drilling cutoff date for the estimate is October 31, 2007. The mineral reserves based on that resource estimate were estimated as of December 31, 2007 using a mine plan and

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pit designs developed by the Kumtor mine engineering department under the guidance and supervision of Dan Redmond.

Considerable experience has been accumulated by Centerra on the Kumtor project, with mineral resource and reserve estimates being monitored by means of reserve-production reconciliation, the results of which are reviewed in Section 17.12.

Information with respect to actual historical and future estimated operating and capital costs and to taxation issues pertaining to the Kumtor operation has been provided by Centerra and KOC for inclusion in the economic evaluation of the Kumtor reserves presented in Section 19.16.

References used in the preparation of this report are listed in Section 22.

2.4 Report Contributions

The table below sets out the contributions by the three co-authors to this report. While each of the co-authors is responsible for his own contribution, Henrik Thalenhorst of Strathcona as lead author assumes overall responsibility for the content and conclusions of this report.

Report Contributions by the Three Authors

						Report Sections
		Company		Primary Areas of Responsibility		Authored
Iain Bruce		BGC Engineering Inc.		Geotechnical aspects of pit slopes, waste dumps and tailings facility		1.5; 16; 19.4
Dan Redmond		Centerra Gold Inc.		Resource and reserve estimation, pit optimization and mine plan		1.7; 17; 18.2; 19 (except 19.4)
Henrik Thalenhorst		Strathcona Mineral Services Limited		Overall responsibility for the report and its conclusions		1 (except 1.5 and 1.7); 2; 3; 4; 5 to 15; 18 (except 18.2); 20 to 22

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3. RELIANCE ON OTHER EXPERTS

The authors have relied, and believe they have a reasonable basis to rely upon the following individuals who have contributed the environmental, legal, marketing and taxation information stated in this report, as noted below:

Gord Reid, President, Kumtor Operating Company, has assured the authors that the Kumtor project continues to be operated in compliance with all regulations and reporting protocols outlined in the EMAP. Centerra have issued a formal letter stating that the “Kumtor Operating Company and Kumtor Gold Company at all their facilities are in full compliance with all environmental, safety legislation and regulations of the Kyrgyz Republic. All permits required for the operation are in good standing” and that there has been no “... exceedence of any Kyrgyz, Saskatchewan or World Bank environmental standard, nor violation of Kyrgyz regulation ...”

Philip Yee, Vice President of Finance, Kumtor Operating Company, Sections, 19.11 and 19.12

Andrew Sazanov, Vice President of Government and Corporate Relations, Kumtor Operating Company, Sections, 4 (title aspects) and 19.7

Rodney Stuparyk, Director of Business Improvements, Kumtor Operating Company, Sections, 19.8, 19.9 and 19.10

Manuela Battello, Treasurer, Centerra Gold Inc. Section, 19.15

Frank Herbert, General Counsel and Corporate Secretary, Centerra Gold Inc. Section: 1.2 and 2.1

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4. PROPERTY DESCRIPTION AND LOCATION

The Kumtor gold project is located in the Kyrgyz Republic, one of the independent successor states of the former Soviet Union, some 350 kilometres to the southeast of the Kyrgyz capital of Bishkek (Figure 1) and about 60 kilometres to the north of the international boundary with the People’s Republic of China, in the Tien Shan Mountains, at 41º 52’ N and 78º 11’ E (Figure 2).

Under the Concession Agreement, KGC has been granted a concession giving it the exclusive rights to all minerals within an area of approximately 750 hectares centred on the Kumtor gold deposit and with an expiry date of May 10, 2043 (the Concession Area). The Kumtor open pit mine, most of the waste dumps and the processing plant are located within the Concession Area.

The expansion of the mineral resources and reserves since 2004 has resulted in the Concession Area being too small. As a consequence, KGC has applied for two additional mining concession areas, one covering the Northeast Zone, the other the Southwest, Sarytor and adjacent areas to the southwest (the Concession Applications). The Investment Agreement provides that the Government shall grant any necessary additional mining concessions within the Exploration License (described below) on the same terms and conditions as those specified for the Concession Area.

While the application for the Concession Applications is under consideration by the Government, KGC was granted a temporary concession, the Southwest Mining Licence in January 2006 with an initial expiry date of July 22, 2006. The Southwest Mining Licence has subsequently been extended to December 31, 2008, by which time mining of the Southwest deposit will be complete. Additionally, as of November 30, 2007, the Government has granted a mining licence (the “Sarytor Area Geological Allotment”) for the Sarytor deposit expiring on December 31, 2013.

The coordinates of the Concession Area (corners 1 to 4), the Concession Applications (corners 5 to 9), the Southwest Mining Licence (corners 10 to 17) and the Sarytor Geological Allotment (corners 18 to 21) are shown in Figure 3 and are set out in Table 1.

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Table 1 Coordinates of Kumtor Mining Concessions¹

		Gauss Kruger Coordinates				Kyrgyz National Coordinates
		North		East		North		East
Concession Area (750 hectares)
Corner 1		4 637 478.2		14 266 091.8		4 621 033.7		9 355 309.6
Corner 2		4 639 915.8		14 267 840.7		4 623 538.5		9 356 958.4
Corner 3		4 636 020.9		14 268 123.1		4 619 659.7		9 357 396.9
Corner 4		4 638 458.4		14 269 872.0		4 622 164.4		9 359 045.7
Southwest Mining Licence (56 hectares)
Corner 10		4 636 108.0		14 264 739.1		4 619 610.8		9 354 013.5
Corner 11		4 636 998.3		14 265 166.4		4 619 518.4		9 354 444.7
Corner 12		4 636 518.2		14 265 213.9		4 620 039.5		9 354 471.2
Corner 13		4 636 580.7		14 265 475.3		4 620 112.5		9 354 729.8
Corner 14		4 636 171.4		14 265 812.6		4 619 717.2		9 355 083.2
Corner 15		4 635 613.0		14 265 231.7		4 619 136.1		9 354 525.4
Corner 16		4 635 578.1		14 264 883.6		4 619 087.4		9 354 179.1
Corner 17		4 635 875.9		14 264 688.0		4 619 367.9		9 353 971.8
Sarytor Area Geological Allotment (97 hectares)
Corner 18		4 638 236		14 263 688.3		4 619 774.6		9 353 007.9
Corner 19		4 638 147.9		14 264 576.6		4 619 722.4		9 353 898.2
Corner 20		4 637 153.2		14 263 581.1		4 618 689.3		9 352 944.2
Corner 21		4 637 065.2		14 264 469.3		4 618 637.1		9 353 834.6
Concession Applications (625 & 3026, total 3651 hectares)
Corner 5		4 629 608.5		14 263 522.4		4 613 068.2		9 353 062.8
Corner 6		4 632 475.8		14 260 655.2		4 615 815.8		9 350 082.2
Corner 7		4 638 353.3		14 264 872.2		4 621 858.2		9 354 055.7
Corner 8		4 641 947.0		14 269 298.3		4 625 628.4		9 358 331.1
Corner 9		4 640 489.7		14 271 328.4		4 624 255.2		9 360 419.4

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The Concession Area covering the Central pit, most of the waste dumps and the mill area has an area of 750 hectares, the Southwest Mining Licence has an area of not quite 56 hectares, and the Sarytor Area Geological Allotment has an area of 97.0 hectares. The Concession Applications have areas of 625 hectares (the northern part) and 3026 hectares (the southern part) respectively.

The Investment Agreement specifies that KGC will be guaranteed such access to the Kumtor site, including all necessary surface lands, together with access to water, power and other infrastructure, as is necessary or convenient for the operation of the Kumtor project. The area currently in use for such purposes is identified as “Surface Rights Area” on Figure 3 and covers approximately 7000 hectares. The Surface Rights Area includes all of the areas of current mining operations, the western part of Petrov Lake, the source of water for the Kumtor project, and covers the tailings management facility, the various roads and the camp and maintenance buildings.

Under the Master Agreement, the predecessor agreement to the Investment Agreement, and under Section 10 of the Law of the Kyrgyz Republic No. 42 of July 2, 1997 “On Subsoil”, KGC was granted the exclusive right to develop any mineral resources within a 7.5 kilometre radius of the perimeter of the Concession Area. The Exploration Licence granted in 1997 for this purpose covered an area of approximately 26 660 hectares. It was initially renewed on December 31, 2002, and again on December 31, 2005. The current expiry date is December 18, 2009, but the shape of the licence was changed during the last renewal to coincide with the principal directions of the Kyrgyz national coordinate system, and its size reduced slightly to approximately 26 400 hectares. This Exploration Licence includes all of the Concession Area, the Concession Applications, the Southwest Mining Licence, the Sarytor Area Geological Allotment, and the Surface Rights Area. The Exploration Licence cannot be renewed again, but a new licence may be requested. Conversion into a mining lease is possible at any time during the currency of the licence.

The Agreement on New Terms provides that the Exploration Licence shall be converted into a large concession area of identical size, shape and geometry, which will allow mining activities anywhere within its borders. The expansion of the Concession Area is subject to the completion of the transactions contemplated by the Agreement on New Terms, discussed in Section 2.1.

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The Concession Area, the Southwest Mining Licence, the Sarytor Area Geological Allotment and the Exploration Licence are registered with the Government using the Kyrgyz national coordinate system to denote the boundaries. Legal surveys are not required to establish the boundaries of the registered areas, and accordingly, no surveys of such boundaries have been undertaken.

For ongoing work, three grid sets with local coordinates are used, which are shown on Figure 6 in Section 6. For geological work including drilling and block modelling, local grids are used that are aligned with the predominant structural direction in each area of interest. The long axes of the Kumtor and Southwest area geological grids are oriented northeast-southwest (41 o counter-clockwise with respect to geographic north), and at 64.6 ocounter-clockwise to geographic north at Sarytor. Section lines are at nominal 40-metre intervals.

The authors have been advised by KOC that all permits and licenses required for the conduct of mining operations at Kumtor are currently in good standing. The principal permits are described in Section 19.7, while the environmental aspects and liabilities are described in Section 19.8. There are no royalties, payments or other agreements or encumbrances related to the Kumtor mine other than the agreements noted in Section 2.1 and various forms of local taxation as set forth in Section 19.12 of this report.

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5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

Access to the Kumtor mine site (Figure 2) is by main road from Bishkek to Balykchy, located on the western shore of Lake Issyk-Kul at an elevation of 1600 metres, a distance of 180 kilometres. A secondary road for 150 kilometres along the south shore of the lake leads to the town of Barskaun. The final 100 kilometres into the Tien Shan Mountains to reach the Kumtor mine site is on a narrow winding road that climbs to an elevation of 3700 metres through 32 switchbacks of the Sary-Moynuk Pass before proceeding eastward on a plateau through which the Kumtor River and other seasonal rivers flow. KOC has done considerable work to improve and maintain this access road and despite occasional avalanches and movements of gravel and till down steep slopes during heavy rains, there has not been any lengthy period during which the road has been out of service.

The Kumtor mill is situated in alpine terrain at an elevation of 4016 metres, while the highest waste and glacier mining occurs above 4400 metres. The main camp, administration and maintenance facilities are at about 3600 metres. Local valleys are occupied by active glaciers that extend down to elevations of 3800 to 3900 metres, and undisturbed permafrost in the area can reach a depth of 250 metres. The region is seismically active as a result of the continuing convergence between India and Eurasia, but the Kumtor area has a relatively sparse history of seismic activity. All facilities at Kumtor, including the process plant and tailings storage dam, have been designed in accordance with recommended seismic standards for the area.

The climate is continental with a mean annual temperature of minus 8°C. Extreme recorded temperatures vary from plus 23°C to minus 49°C, with short summers that last from June to September. Precipitation is low at around 300 millimetres per annum, with the majority falling in the summer months, and snow accumulations of 600 millimetres. Kumtor operates 365 days per year and have been no significant interruptions to Kumtor operations because of climatic conditions.

Reflecting the high elevation and the harsh climate, sparse low vegetation is restricted to the valley floors and lower mountain slopes, with a total absence of trees or shrubs.

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Most employees of KOC are citizens of the Kyrgyz Republic. The remainder are skilled expatriates. At the end of 2007, KOC had 1983 local and 69 expatriate staff, as more fully described in Section 19.6. Most employees work a two-week rotation, and are transported between the mine site from Bishkek and the Issyk-Kul region using a company-owned commuter bus service. Supplies are transported by rail to the Kumtor marshalling yard in Balykchy at the west end of Lake Issyk-Kul and then trucked 250 kilometres to the mine site. A helicopter pad is available at the mine site for emergency use.

The mine site is connected to the Kyrgyz Republic national power grid with a 110-kV overhead power line that was constructed for the project and that runs parallel to the access road. The mine maintains two standby generator stations in case of power outages. Fresh water for human and industrial use is taken from Petrov Lake, situated five kilometres northeast of the mill site (Figure 3). The minimum water inflow into this glacial lake is estimated to be in excess of 1000 cubic metres per hour or approximately twice the average project demand.

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6. HISTORY

     6.1 Exploration History

Intermittent exploration in the general Kumtor area dates back to the 1920s. Debris from the Sarytor deposit was discovered in 1978 by a geophysical expedition of the state Kyrgyz Geology department sampling float from the frontal moraine of the Sarytor Glacier (Figure 3). The sole outcrop of what is now called the Central deposit was found during follow-up prospecting. From 1979 to 1989, a systematic evaluation of the Central deposit, and to a lesser extent of the Southwest deposit, was carried out consisting of several phases of surface trenching and geological mapping, diamond drilling and underground development on three levels culminating in a detailed sampling program of the central upper part of the Central deposit. A report entitled “Results of Detailed Exploration of the Kumtor Gold Deposit” was issued in 1989, and an initial reserve statement was issued by the USSR State Committee on Reserves in March 1990².

After the break-up of the Soviet Union and following the emergence of the Kyrgyz Republic as an independent country in 1991, Cameco became aware of the Kumtor project, concluded an agreement with the Kyrgyz Republic in 1992 and retained Kilborn Western Inc. to undertake a feasibility study of the project (the Kilborn Feasibility Study). The feasibility work program included data verification (by re-sampling parts of the underground openings and re-assaying of original sample rejects), additional and definitive metallurgical testwork, and a re-estimation of mineral resources and reserves using geostatistical methods, a block model and pit optimization software. The Kilborn Feasibility Study was completed in 1993, with updates in April 1994 and in May 1995.

Final agreements were signed with, and the Kilborn Feasibility Study was approved by, the Kyrgyz authorities in 1994, financing arrangements were concluded in 1995 and project construction was completed late in 1996. After capital expenditures of $452 million, commercial production was achieved in the second quarter of 1997. Based on a mineral reserve of 53.5 million tonnes with an average gold grade of 3.9 g/t, the project was forecast to treat 4.8 million tonnes

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per year for eleven years, with a total gold production forecast of 5.4 million ounces (169 tonnes).

As the Central deposit was being mined, KOC undertook a substantial amount of additional diamond drilling on the deposit and on surrounding exploration targets beginning in 1998, to augment the limited deposit information below elevation 3950 metres, and to identify additional mineral resources and reserves that would extend the life of the operation. The pertinent drilling data are summarized in Table 2³:

Table 2 Summary of Additional Drilling Completed, 1998 — 2007

		Central Deposit								Other Targets
						Length								Length
Year		Number of Holes				(metres)				Number of Holes				(metres)
1998			16				3 010				0				0
1999			48				12 708				20				3304
2000			0				0				20				2977
2001			43				12 735				30				5352
2002			10				2 119				50				8646
2003			50				14 349				30				4543
2004			65				22 263				66				12684
2005			146				44 863				52				7969
2006			50				18 280				98				14620
2007			29				15 418				41				6593
Total			457				145 745				407				66688

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     6.2 Mineral Reserves History

The mineral resource and reserve estimates for the Central deposit have evolved over time. The principal estimates from 1990-2007 are summarized in Table 3 which does not include the reserve estimates for the Southwest deposit in order to allow comparison with the original Soviet estimate.

When comparing the results of the individual estimates in Table 3, it should be recognized that the cut-off grade has changed through the project history, making direct comparisons difficult. The initial Soviet polygonal estimate in 1990, given its character, over-estimated the grade and under-estimated the ore tonnage. It also used a cut-off grade that was below a reasonable economic level in an effort to mine as much of the Central deposit as possible. The Soviet estimate is not in compliance with past or present reporting guidelines in Canada.

Geostat Systems International Inc. (Geostat) used the Soviet information to develop a block model (GSII model) for the Kilborn feasibility study. The GSII model remained the official reserve model until early 1999 and was in compliance with the reporting guidelines of National Policy 2A in effect at the time. It used the original “mineralized” envelope as defined by Soviet geologists, which was too broad. As a result, the grade interpolation of the GSII block model “smeared” gold grades away from higher-grade areas into lower-grade sections of the deposit, and thus over-estimated the tonnage but under-estimated the grade of the feasibility study mineral resources and reserves. Since 1999, additional block models have been created by KOC, each an improvement over its predecessor, by incorporating the increasing geological knowledge about the deposit (Table 2) and about the grade distribution experienced during mining. This process has now culminated in the KS-8 model, which incorporates all information available as of October 31, 2007. All resource and reserve estimates by KOC, Cameco and Centerra since 2002 have been undertaken in accordance with NI 43-101.

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Table 3 History of Mineral Reserve Estimates — Central Deposit Only
(millions of tonnes ore and waste and millions of ounces of gold)

																																		Mined before Date of																Total Central Deposit
		Mineral Reserves In Situ																																Reserve Estimate (1)																(Reserves plus Production)
		Cut-Off																Ore																Ore																Ore
		Grade				Block					Bottom			Gold								Gold				Waste (2)												Gold				Waste (2)												Gold				Waste (2)								Total				Contained Gold
Reserve Estimate		g/t				Model					Bench			Price				Tonnes				g/t				Tonnes				S/R				Tonnes				g/t				Tonnes				S/R				Tonnes				g/t				Tonnes				S/R				Tonnes				Ounces				Tonnes
USSR State Committee, 1990 (3)			1			Polyg.					3 700				??				66.2				4.3			Not estimated												No Production													66.2				4.3							No Data									9.2				285
Feasibility Study, April 1994 (3)			2			GSII					3 796			$	350				53.5				3.9				273				5.1							No Production													53.5				3.9				273				5.1				327				6.8				211
KOC, October 1, 1995 (3)			1.7			GSII					3 722			$	375				76.6				3.7				581				7.6							No Production													76.6				3.7				581				7.6				658				9.2				285
KOC, December 31, 1998 (3)			1.7			OK99c					3 800			$	325				31.4				4.6				1985				6.3				10.8				4.8				58				5.3				42.2				4.7				255.				6.0				297				6.4				198
KOC, December 31, 1999 (3)			1.7			KS-1					3 800			$	301				32.7				4.4				248				7.6				18.9				4.3				91				4.8				51.6				4.4				339				6.6				390				7.2				223
KOC, December 31, 2001			1.5			KS-3					3 770			$	300				29.8				3.9				329.				11.1				31.0				4.4				174				5.6				60.8				4.2				504				8.3				565				8.1				253
KOC, December 31, 2003			1.3			KS-4					3 754			$	325				26.2				3.6				353				13.5				41.0				4.4				297				7.2				67.2				4.1				649				9.7				716				8.8				273
KOC, December 31, 2004			1.3			KS-5					3 754			$	375				26.3				3.4				382				14.5				46.0				4.4				378				8.2				72.3				4.0				760				10.5				832				9.4				292
KOC, December 31, 2005			1.3			KS-6					3 620			$	400				35.3				4.1				621				17.6				52.2				4.2				453				8.7				87.5				4.1				1 074				12.3				1 162				11.7				363
KOC, December 31, 2006			1.3			KS-7					3 650			$	475				27.1				4.9				702				25.8				57.7				4.1				523				9.1				84.4				4.3				1 225				14.5				1 310				11.8				368
KOC, December 31, 2007			1.0			KS-8					3 650			$	550				31.6				4.3				651				20.6				61.9				3.9				600				10.0				91.7				4.1				1 250				13.6				1 342				12.1				374

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The mineral reserve estimates for the Central deposit (excluding the satellite deposits), before mining, have varied over time, between 42 million tonnes grading 4.7 g/t gold with a strip ratio of 6.0, and most recently 92 million tonnes grading 4.1 g/t gold with a strip ratio of 13.6. Similarly, the gold estimated to be contained in the Central deposit (production plus mineral reserves at that time) has varied from a low of 6.4 million ounces (198 tonnes) to a high of 12.1 million ounces (374 tonnes) as of December 31, 2007, with the latter surpassing comfortably the original 1990 Soviet estimate of 285 tonnes of contained gold. The variance in the reserve estimates over the years is due primarily to fluctuations in the price of gold, improvements in the unit operating costs in the years 2000 to 2005 which allowed for an increased strip ratio, and an improved geological model based on additional drilling results. The discovery of the SB Zone has added a second, high-grade area to the deposit that was essentially unknown until 2004.

Historical reserve estimates quoted in this report prepared prior to February 2001 pre-date NI-43-101, are not classified in accordance with, and may not be comparable to, current CIM standards. The historical reserve estimates are quoted for their historical interest only and have been superseded by the current estimate contained in Section 17.

6.3 Production History

The Kumtor mill started processing ore in December of 1996. Until 2005, only the Central deposit was being mined, with ore deliveries from the Southwest deposit starting in 2006. As of December 31, 2007, a total of 59.5 million tonnes of ore from both deposits has been milled with an average gold content of 4.1 g/t. Since start-up, 192 tonnes or 6.2 million ounces of gold have been recovered. Stockpiles yet to be milled total 3.6 million tonnes with an average gold grade of 1.4 g/t. In addition, 639 million tonnes of waste and 5 million tonnes of ice have been mined for an overall strip ratio of 10.8 to 1, with the low-grade stockpiles counted as ore. Annual mine production data compiled from the monthly operating reports issued by KOC are shown in Table 4.

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Table 4 Kumtor Production History
(thousands of tonnes of ore and waste and thousands of ounces of gold)

		Ore & Low-Grade Mined								Waste Mined								Ore Milled												Gold Produced
		Tonnes				Gold (g/t)				Tonnes				Strip Ratio				Tonnes				Gold (g/t)				Recovery				Ounces				Tonnes
1996			477				4.1				13 346				28.0				159				3.2				58.2				10				0.3
1997			5 017				5.2				17 946				3.6				4 023				5.3				73.3				502				15.6
1998			5 349				4.5				26 425				4.9				5 254				4.9				78.5				645				20.1
1999			8 054				3.5				33 105				4.1				5 298				4.5				79.4				611				19.0
2000			6 518				4.1				36 763				5.6				5 498				4.7				81.5				670				20.8
2001			5 606				5.2				46 863				8.4				5 470				5.2				83.1				753				23.4
2002			5 141				3.5				49 184				9.6				5 611				3.7				78.1				529				16.3
2003			4 828				5.0				72 881				15.1				5 631				4.5				82.6				678				21.1
2004			3 428				6.2				81 427				23.8				5 654				4.4				82.1				657				20.5
2005			6 135				3.1				74 903				12.2				5 649				3.4				81.2				499				15.5
2006  Central Pit			2 903				2.5				70 523				24.3
SW Pit			984				2.6				11 011				11.2
Project			3 887				2.6				81 534				21.0				5 696				2.3				73.0				303				9.4
2007  Central Pit			3 617				2.4				76 280				21.1
SW Pit			1 515				2.9				33 369				22.0
Total			5 132				2.5				109 649				21.4				5 545				2.4				72.7				301				9.4
Total Central Pit			57 073				4.1				599 649				10.5
SW Pit			2 499				2.8				44 380				17.8
Total			59 572				4.1				644 025				10.8				59 488				4.1				79.4				6 162				191.5

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Table 4 uses the Kumtor reporting terminology, as more fully explained in Section 19.2. “Ore” is material estimated to grade above 1.5 g/t gold currently (above 1.7 g/t in earlier years), and “low-grade” is material with a grade between 1.0 g/t and the ore cut-off grade in effect at the time of reporting.

Mining tonnages are reported above the cut-off grade used at the time. Because the low-grade material is currently being used as mill feed and will continue to be processed in accordance with the life-of-mine (LOM) plan, it is treated as ore when calculating the strip ratio in Table 4.

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7.		GEOLOGICAL AND STRUCTURAL SETTING
		The Kumtor gold deposit occurs in the southern Tien Shan Metallogenic Belt, a Hercynian fold and thrust belt that traverses Central Asia, from Uzbekistan in the west through Tajikistan and the Kyrgyz Republic into northwestern China, a distance of more than 1500 kilometres (Figure 1). Along this belt, described by Cole (1992) as ... “a major metallogenic province which contains many world-class mesothermal-type gold deposits, ...” occur a number of important gold deposits including Muruntau (one of the largest gold deposits in the world), Zarmitan, Jilau and Kumtor. “The Tien Shan itself is an extremely complex fold and fault belt in which various components represent different orogenetic events that span the Phanerozoic and were later overprinted by Alpine-Himalayan deformation". This belt is located at ”...the margin of Paleozoic Asia (Baltica and Siberia) [to the north] and the Palaeo-Turkestan Ocean” (Cole, 1992).
		The general geology of the Kumtor Exploration License is shown in Figure 4, while Figure 5 provides a composite of the main geologic features and ore accumulations of the Kumtor, Southwest and Sarytor Areas on the 3800-metre elevation. Figures 6 to 9 illustrate the geology in the third dimension for the three deposits, providing a good illustration of the structural complexities of the Kumtor area.
		The structural geology of the Kumtor area has evolved through four main deformation events D1 to D4. Much new knowledge has been gained in the past few years through the work of R. Seago (Seago 2006a-c, 2007a&b) and T. Starling of Telluris Consulting (Telluris 2006, 2007). According to Seago and Starling, D1 and D2 pre-date the Carboniferous. D2 is of Caledonian age with D1 being an even earlier burial metamorphism event. D3 is of Hercynian age (late Carboniferous to early Permian) and extends over the mineralization episode with pre-, syn- and post-mineralization D3 structures. Mao et al (2004) report a late Carboniferous to early Permian age for the Kumtor mineralization itself. The observations at Kumtor correlate with the age of D3 at Jilau (Cole et al 2000) and Muruntau, where the age of the mineralization, however, is Triassic (Wilde et al 2001). D4 is of Alpine or Himalayan age, from Tertiary to the present.

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The presence of an ubiquitous schistosity (S1) in the metasediments of the area is a function of the D1 deformation episode which peaked at low to mid greenschist facies regional metamorphism. During the D2 episode, the S1 schistosity was folded into a series of open, asymmetric F2 folds which trend NE-SW with an associated axial planar crenulation cleavage (S2). While associated faults dip to the SE, these structures have been subjected to two further phases of deformation and their original orientation is therefore masked. Telluris (2007) reports of an early silicification event during D2, but is silent on any gold mineralization that may have been introduced at this time.

The third deformation episode D3 resulted in both S1 and S2 being deformed by an S-N compressional event resulting in the formation of E-W trending D3 fore-thrusts (dips to the south) and back-thrusts (dips to the north), and a series of roughly N-S trending strike-slip faults, lateral ramps and small-scale kink bands (F3). The most recent D4 event has re-activated many of the pre-existing structures, especially D2, and has imparted a NE-SW striking structural fabric, with an overall SE dip, on the main faults and S1 foliation. Many of the D2 cohesive structures were re-activated in D4 resulting in unconsolidated fault breccias and gouges. The D4 tectonic axis is SE-NW.

As a result of these multiple deformation events, the structural geology at Kumtor is dominated by several major thrust slices with an inverted age relationship. The dominant structural direction is northeast-southwest (D4), with moderate dips to the southeast. Each thrust sheet contains older rocks than the sheet it structurally overlies. Four major structural slices, stacked upon one another and bounded by long-lived faults that were active repeatedly, have been identified at Kumtor:

	•		Slice 0 consists of Cambro-Ordovician limestone and phyllite, thrust over Tertiary sediments of possible continental derivation that in turn rest, with apparent profound unconformity, on Carboniferous clastic sediments.
	•		Slice 1 constitutes the Kumtor Fault Zone (KFZ), whose upper limit is the Upper Kumtor Fault. The KFZ is generally a dark-grey to black, graphitic gouge zone, up to 600 metres wide. The KFZ strikes northeasterly, dips to the southeast at moderate angles and has a width of up to several hundred metres. The adjacent rocks in its hanging wall are strongly affected by shearing and faulting for a distance of up to several hundred metres.

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	•		Slice 2 includes the mineralization which is hosted by Vendian (youngest Proterozoic or oldest Paleozoic) meta-sediments, grey carbonaceous quartz-sericite-chlorite schists or phyllites that are strongly folded and schistose, with a large proportion of faulted and sheared rocks. Slice 2 is delimited in the footwall by the Upper Kumtor Fault and in the hanging wall by the Lysii Fault. It appears that the mineralizing event, itself multi-phase as discussed in Section 9, has healed some of the earlier brittle features within Slice 2.
	•		Slice 3 consists of phyllites, also of Vendian age, that show several phases of folding. The dip of the schistosity is shallow to steep to the northwest or shallow to the southeast. The subsequent brittle deformation is less strongly developed as in Slices 1 and 2. Slice 3 is sub-divided into three units based on the orientation of the foliation. Slice 3 is important for the pit slope stability questions discussed in Section 16 because of the development of the Main Boundary Thrust (MBT) and other tectonic zones (TZ Faults).

It is important to note that most fault structures in the area are persistent, with thick gouge or tectonic breccia and are therefore potential failure surfaces. This is attributed to D4 re-activation of pre-existing faults.

The main structures of the Central deposit are also present in the Southwest deposit and at Sarytor. The main thrust faults at Sarytor strike E-W, and the faults and S1 schistosity along with the mineralized zones have a shallow southerly dip. The structures are truncated in the west, with Slice 0 and juxtaposed against a steep NNE-SSW trending fault (Seago 2007a). This fault is strike-slip in nature indicating a D3 origin, and is likely the over-steepened continuation of the Lower Kumtor Fault, which separates Slices 0 and 1 in the Central Pit area. The E-W orientation of thrust faults with a southerly dip is a function of D3 deformation, with limited overprinting by the D4 structural event. Structures start to swing to a NE-SW trend as they continue eastward into the Southwest deposit area, where there is a strong D4 structural overprint. This D4 overprint can be traced northward into the Central Pit and thus the structural make-up of the Southwest deposit is more like that of the Central Pit than Sarytor. These observations indicate that the D3 structures were rotated into a NE-SW trend by the D4 structural event.

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8. DEPOSIT TYPE

Given the location astride a major fault of regional importance and owing to the strong association of gold mineralization with a multi-phased metasomatic system at relatively high temperatures, the Kumtor gold deposit, with its satellite deposits, is a member of the class of structurally controlled meso-thermal gold replacement deposits. The ongoing surface exploration program at Kumtor, described in more detail in Section 18.3, is guided by the overall structural arrangement of the mineralization as noted in Section 7.

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9. MINERALIZATION

Gold mineralization of economic importance occurs where the Vendian sediments have been hydrothermally altered and mineralized, an event that may have taken place in late Paleozoic time, based on structural considerations (Ivanov et al, 2000). Gold mineralization has been observed over a distance of more than twelve kilometres, with the Kumtor deposit itself located in what is called the Centre Block with a length of 1900 metres, a vertical range of 1000 metres and a width of up to 300 metres. A buried intrusive body is inferred by geophysical methods to occur some five kilometres to the northwest of the deposit and may be the “source of the mineralization process” at Kumtor (KOC, 2002). Other known occurrences along the mineralized trend that have either mineral reserves or have already been mined are the Southwest Area and the Sarytor Zone, as shown on Figures 4 and 5.

     9.1 General Description

According to Ivanov et al., 2000, mineralization took place in four main pulses. An initial pulse resulted primarily in pervasive quartz-carbonate-albite-chlorite-sericite-pyrite alteration, with little gold of economic consequence being deposited. However, this early alteration may have “stiffened” the host rocks sufficiently to make them susceptible to the intensive veining, stockwork and hydrothermal breccia development during the next two pulses that deposited all of the economically significant gold at Kumtor.

The temperature of formation of the second stage veins was 310 ±15°C, according to Ivanov & Ansdell, 2002. The mineralogy during the main phases includes early K-feldspar followed by later albite, and variable amounts of carbonate (calcite, dolomite, ankerite and siderite), quartz, pyrite, sericite, and chlorite, in addition to small amounts of chalcopyrite, haematite, barite, strontianite and accessory magnetite, scheelite, ferberite, rutile, cassiterite, sphalerite, galena, native gold, tetrahedrite, as well as a number of silver-gold, lead and nickel tellurides. The feldspars combine to comprise nearly 20% of the ore, the carbonates collectively 25 to 30%, pyrite 15 to 20%, quartz 5 to 10%, and the remainder are host rock inclusions.

The mineralization is most intense, and the gold grade is the highest, where metasomatic activity was continuous through mineralization phases two and three. This is the case for the Stockwork and SB Zones, to a lesser extent for the South

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Zone, and explains their higher-than-average gold grades. The last pulse created planar carbonate-pyrite metasomatic rocks that are associated with zones of intense deformation of previously altered phyllites and hydrothermal rocks.

Native gold and the gold-silver tellurides are intimately associated with pyrite to the extent that gold grade and pyrite content are “positively correlated” (Ivanov et al., 2000). The gold and the gold-bearing minerals occur as very fine inclusions in the pyrite, with an average size of only 10 microns. This, together with the poor cyanide leach response of the gold tellurides, accounts for the partly refractory nature of the Kumtor ore. The refractory characteristics are reflected in the relatively low historic and forecast gold recovery of around 80%, despite the very fine grind applied to the pyrite flotation concentrate from which most of the gold at Kumtor is recovered. However, the fine grain size of the gold also renders assaying of this mineralization relatively reliable, with only a small nugget effect.

Most of the mineralization takes the form of veins, veinlets, and breccia bodies in which the mineralization forms the matrix. In the more intensely mineralized areas, the surrounding host rock has also been altered. Post-ore faulting is generally parallel to, or at low angles with, the mineralized sequence. These faults often carry significant quantities of graphite, and other carbonaceous components which constitute the sources for the preg-robbing character of some of the mineralization.

     9.2 The Central Deposit

Within the Central Deposit, a number of zones of gold mineralization have been delineated as shown in Figure 5.

•

Two parallel zones of alteration and gold mineralization strike north-easterly and dip to the southeast at 45° to 60°, separated by 30 to 50 metres of barren or poorly mineralized rock. The South Zone, with a length of 700 to 1000 metres and a horizontal width of 40 to 80 metres, is reasonably well mineralized throughout its entire length, with an average gold grade of 3 to 4 g/t. The North Zone, somewhat more extensive along strike but with a similar width, has lesser gold grade continuity and splits into a number of individual lenses that have average gold grades in the range of 2 to 3.5 g/t.

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	•		At their north-eastern end, the North and South Zones coalesce into the Stockwork Zone, which has been the heart of the deposit, having the highest gold grades and the best grade continuity. Its dimensions in the upper part of the deposit are 400 to 500 metres long by 50 to 200 metres wide, with an average gold grade of 5 to 6 g/t. The Stockwork Zone plunges northeasterly at 40° to 50°, and diminishes in size below elevation 3900 metres. Its down-plunge continuation below elevation 3900 metres is known as the NB Zone. Geographically, the Stockwork Zone is located closest to the pit highwall (Figure 5) and thus has a large effect on the overall strip ratio of the pit.
	•		In the southwestern part of the Central Deposit, the SB Zone (structurally a part of the South Zone) tops out at elevation 3900 metres, below which it widens significantly (Figure 7). Drilling to date has defined the SB Zone along strike for 700 metres, for a vertical extent of 650 metres, and a width that ranges from 6 to 75 metres, overall somewhat smaller than the Stockwork Zone, but of excellent grade, in the range of 5 g/t gold. It is the discovery of the SB Zone that has given rise to a large increase in the mineral reserves in 2005 of the Central deposit (Table 3).

     9.3 The Southwest Deposit

The Southwest deposit is located three kilometres to the southwest of the Central deposit across the Davidov glacier, along the Kumtor fault (Figures 4 and 5). Very little drilling has been completed below the glacier, and continuity of mineralization between the Kumtor and Southwest deposits is unknown but will be subjected to drilling from the planned exploration ramp described in Section 18.2. To the southwest, the Southwest Zone is covered by the Sarytor glacier, beyond which additional mineralization is known as the Sarytor deposit. At the end of 2007, the mineral reserves of the Southwest Deposit had been almost completely mined.

The structural/lithological framework of the Southwest and Sarytor areas is identical to those of the Kumtor deposit, as described in Section 7 and as shown in Figure 8, with the structural dips generally at an angle of 20° to 50 o somewhat shallower than at Kumtor.

A number of individual zones of mineralization have been identified at the Southwest Deposit within an overall mineralized envelope that is around 100 metres thick and has been traced along strike for a distance in excess of one kilometre.

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Individual zones tend to be relatively narrow and of different levels of mineralization intensity, and their contacts are often marked by tectonic crush zones with black fault gouge. The footwall contacts are generally sharp and clearly defined, while the hanging wall contacts are more gradational. Gold enrichment along both contacts can be observed on many sections. Due to flat orientation of the mineralized zones, their contacts have a sinuous feature in both plan and section.

     9.4 The Sarytor Deposit

The Sarytor area is located further southwest from the Southwest Area. The two zones are probably contiguous under the Sarytor glacier. The main geological structures are common for the Southwest and Sarytor areas. The drill results indicate that the mineralized horizon in the Sarytor area strikes east-west and dips south at 20° to 30° The thickness of the mineralized envelope is relatively consistent and varies from 80 to 120 metres, with the strike length of the known mineralization being approximately 800 metres. Recently, mineralization following the normal Kumtor trend has also been found, but additional drilling is required to determine its extent and exact attitude.

Host rocks are tectonized slates and phyllites with lenses of till-like conglomerates and dolomitic slates. Development of background alteration is weak and represented mainly by vein-type silicification. Host rocks do not carry any elevated gold values. The zone has been traced by drilling for 200 to 300 metres down dip.

The mineralized envelope hosts three mineralized zones separated by zones of strongly faulted host rocks. Alteration intensity and zone thickness increase southward. Metasomatism is represented by banded albite-carbonate-quartz alteration with 3% to 5% pyrite. Barite and siderite are well developed in the southern part of Sarytor. As a rule, pyrite content is positively correlated with the gold grade.

     9.5 Other Mineralized Zones

Several other mineralized zones are known within the Exploration Concession including the Northeast, the Bordoo and the Akbel Zones, shown on Figures 4 and 5. These exhibit many structural, alteration and mineralization features similar to the main zones described previously, and remain under-explored.

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10. EXPLORATION AND DRILLING

The principal exploration data acquisition method at Kumtor is diamond drilling. There is a large historical drill-hole database (augmented by underground exploration results) dating back to Soviet times. To a large extent, this information is no longer relevant to the current reserve estimate, since the upper parts of the Central deposit, to which the historical information pertained, has now been mined out. There are only small areas in the current mineral reserves that rely to a significant extent on Soviet data, and this old data is successively being verified by in-fill or replacement drilling.

As a result of the lack of sufficiently detailed information below elevation 3950 metres, about 28% of the Kilborn Feasibility Study open-pit reserves containing one-quarter of the total gold to be mined had been substantially less well documented than the upper part of the deposit. To fill this information gap, and to explore for extensions to the known mineralization, KOC has undertaken a large infill diamond drill program in the years 1998 to 2007 as described in Section 6.1 and as compiled in Table 2. Drilling was undertaken from various pit benches and setups outside of the pit, including setups on the waste piles. This has now increased the density of the drill pattern in the lower part of the deposit to that available at the time of the KIilborn Feasibility Study for the upper part.

In the Central, Southwest and Sarytor deposits, the drill holes are now generally spaced 40 metres along strike and 40 to 80 metres down-dip in geologically complex areas, and at 80 metres along strike and 60 to 80 metres down-dip in other areas. The Kumtor project data base as of December 31, 2007 consisted of more than 255 000 assays, with roughly 30% dating from the Soviet era as shown by deposit below.

Deposit		Soviet Era				KOC-Centerra				Total
Central Pit			42 681				112 046				154 727
Southwest			15 774				34 378				50 152
Sarytor			5 765				30 583				36 348
Other			10 844				3 579				14 423
Totals			75 064				180 586				255 650

Most of the reserves largely or exclusively based on Soviet-era information were located in the upper parts of the Central deposit and have now been mined.

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The KOC drill programs have been conducted with their own fleet of diamond drill rigs which currently number eleven, of which two are underground rigs. KOC drill crews are both national (Kyrgyz) and expatriate, under the supervision of a Canadian drill foreman. International drill contractors are added when drilling requirements are high. It is planned to augment this fleet with one reverse circulation (RC) rig, particularly for shorter in-fill and for dewatering holes in connection with the geotechnical issues discussed in Section 16.

All of the KOC diamond drill holes are steeply inclined and recover HQ-size core, except when ground conditions necessitate a reduction in core size to NQ. For all of the holes, drill collars are surveyed and down-hole deviations are measured using either a Sperry-Sun single shot camera or a Reflex single shot camera. Limitations on set-ups dictate that a certain number of off-section holes are drilled, particularly within the Kumtor pit.Drill cores are logged for geological and geotechnical information, and are photographed prior to sampling. Drill collar coordinates, down-hole deviation surveys, assay results, and information on lithology, alteration and mineralization are recorded in the mine or exploration drilling databases. The drilling database and the assay database derived from it are used for mineral resource and reserve estimation as described in Section 17.

Drill core recovery typically varies from 80% to 100%, averaging greater than 95%. In certain cases where the core recovery from mineralized intervals is low, the hole is stopped and re-drilled to achieve better core recovery. The angle of intersections between the drill holes and the mineralization is generally such that the true width of the mineralization is equivalent to 80% to 100% of the length of mineralized drill-hole intervals.

Section 18 of this report contains additional information about areas targeted for planned exploration programs at and around the Kumtor operations.

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11. SAMPLING METHOD AND APPROACH

     11.1 Historical Methods

The sampling protocol employed in the years prior to 1993 is summarized below from the descriptions in the Kilborn Feasibility Study. As in many projects of the Soviet era, the entire core was removed for sampling, in intervals of an average length of 1.4 metres. Core recovery averaged only 75%. Trench samples were generally one metre long, presumably taken horizontally, but the sampling method is not described. Channel samples were collected from the extensive underground openings approximately one metre above the floor and varied from 0.5 to 2 metres long. The channels are reported to have measured 10 centimetres (cm) wide by 5 cm deep.

     11.2 KOC Methodology

For the drilling completed by KOC, the drill core length is measured and checked against the depth blocks inserted by the drillers in the core boxes. The core is logged and photographed. Sample intervals are chosen to be representative of geological features such as veining, alteration and mineralization. Individual samples are normally one metre long, but the interval may be increased to 2.0 metres in unaltered rocks. With the exception of geotechnical holes, drill holes are sampled over their entire length.

Competent drill core selected for sampling is cut by a diamond saw into two halves. One half is placed into a numbered bag and sent to the laboratory for assaying. The other half is placed back in the core box and retained in permanent storage. Incompetent core intervals are sampled with a scoop that fits snugly into the individual rows, removing one-half of the material at the discretion of the sampling technician.

Blasthole cuttings are sampled with a device that is placed radially away from the collar of the hole. It collects about ten kilograms for an eight-metre bench height. Given the relatively forgiving nature of the Kumtor mineralization with respect to sampling, this is satisfactory, if not ideal. Wet samples below the permafrost line should be noted as such on the sample sheet in addition to the usual information such as the sample number, since wet samples tend to be less representative.

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12. SAMPLE PREPARATION, ANALYSES AND SECURITY

     12.1 Historical Methods

The sample preparation and analytical protocols used by the Kyrgyz geological personnel in the years to 1989 were those prescribed by the USSR State Committee on Reserves in Moscow and are referred to in the Kilborn Feasibility Study.

The analytical work was carried out at the Central Scientific Research Laboratory (CSRL) of Kyrgyz Geology at Kara Balta located west of Bishkek. The sample preparation protocol is not described, but the gold assay method was fire assay for all samples prior to 1989 (a total of 44 580 determinations), and “a more productive atomic absorption method” (Kilborn Feasibility Study, page 3-6) in 1989 (12 612 determinations). Internal and external duplicate assaying was undertaken.

The influence on the gold grade of the relatively poor core recovery of 75% was not investigated in the Kilborn Feasibility Study. Kilborn, however, concluded that results of their check assaying on 151 reject samples by a Canadian laboratory were satisfactory — the check assays tended to be slightly higher than the originals. A total of 239 samples collected by Kilborn in Adit 2 also indicated that the original assay information from underground sampling was reliable. Supporting evidence for these two cases of assay and sample checking is not provided in the Kilborn Feasibility Study text.

     12.2 KOC Methods

All sample collection, preparation and assaying from the 1998-2007 drilling programs were performed by KOC personnel at the KOC-owned site laboratory, which is not certified but is subjected to periodic calibration and operations checks by the Kyrgyz National Accreditations agency. Sample collection protocols are monitored by KOC’s exploration manager and the QA/QC geologist. Preparation and assay protocols are supervised by KOC’s chief assayer at the Kumtor mine. Samples are delivered to and from the laboratory at the mine site by KOC personnel. Additional security of samples is not required in this mining environment.

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Since 1998, drill core as well as blast hole, mill and tailings samples have been assayed at the mine laboratory using the following sample preparation and assaying procedures:

	•		Samples are received by the sample preparation section with a corresponding manifest indicating the number of samples and the numerical sample identification.
	•		Dry at a temperature of 105° C.
	•		Crush the entire sample in three sequential jaw crushers to 95% passing 1.7 millimetres (10 mesh).
	•		The last of the three jaw crushers directly feeds a rotary splitter that is set to obtain a 150-gram sub-sample. The remaining reject material is returned to the original bag and, in the case of core samples, is delivered to the exploration department for storage.
	•		Pulverize the sub-sample to 100% passing 106 microns (150 mesh) using a ring-and-puck pulverizer.
	•		A 30-gram aliquot of the pulp is fire assayed with a suitable flux and a gravimetric finish. The sample weight is decreased to 20 grams for samples with high sulphide content.

The sample collection, sample preparation and assaying protocols in place at the Kumtor operation are in accordance with normal industry operating practises.

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13. DATA VERIFICATION

     13.1 Historical Database

During the Kilborn Feasibility Study, the information from surface trenches, underground crosscuts and drill holes was entered into a computerized database and was validated by Geostat. This database was used by Geostat to construct the GSII model, which was the basis for the resource and reserve estimations in the 1993 Kilborn Feasibility Study, and its 1994 and 1995 revisions (Table 3). In 1996, the database created by Geostat was verified by Cameco’s mining resources and methods department. The database was again compared to the original data contained in the 1989 Kyrgyz Geology report and, where necessary, corrected or completed.

Face sample assays from the main drifts and samples from the raises were not included in the assay database. The face samples were generally taken in drifts developed along the strike of the ore zones and were thus not suitable for grade estimation. The few short raises provided minimal data compared to the considerable amount of data from trenches, crosscuts and drill holes.

Drill holes in two areas were found to be problematic. Firstly, a series of flat holes oriented to the northwest from the main Adit 2 opening contained intercepts that were not confirmed by the neighbouring crosscuts. All of these holes originated in high-grade mineralization and contamination of the samples was suspected. The assays from these holes were excluded from the Kilborn Feasibility Study and subsequent databases.

A second series of drill holes testing below Adit 1 (elevation 3950 metres) on section lines 61 to 64 contained thick mineralized intercepts that were inconsistent with other drill holes in the vicinity. The higher-grade mineralization reported in these holes influenced the Kyrgyz Geology report interpretation as well as the GSII model resource estimation and the pit designs derived from them. This deep mineralization was referred to as the “3900 Zone”. A comprehensive drilling campaign completed by KOC in 1998 failed to confirm the “3900 Zone” mineralization. Similarly, several drill holes completed in 1999 failed to confirm other questionable intercepts. The ‘inconsistent’ intercepts are attributed to sample contamination from mineralization higher up in the drill holes due to the drilling equipment and techniques available before 1988. Based on the confirmation drilling results, the database was modified prior to the establishment of the KS-1 resource

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block model in 1999 to exclude all questionable drill holes. A small remnant of the original “3900 Zone” resources, included in the 2004 year-end estimate, was also subsequently removed.

In general, the additional drilling undertaken by KOC since 1998 has generally confirmed the Soviet data, except for the “3900 Zone” as noted above, and losses in one part of the deposit were usually balanced by gains elsewhere.

     13.2 KOC Database

Standard database checks are being performed regularly under the supervision of the KOC Exploration Manager, who is responsible for its upkeep and reliability, with the verification being performed by the Gemcom Database Verification Module. Assay results, lithology, drill-hole locations and down-hole surveys are verified back to the Laboratory Data Sheets and original data by the Kumtor QA/QC geologist for every drill hole.

With the in-fill drilling program largely complete, the database for the deposit is now reliable down to below the 3700-metre elevation which is the bottom of the original Soviet pit design. After the removal of previous spurious drill results based on recent drilling, the successful completion of the in-fill drill program and mine production statistics, the data relied upon for the estimation of the resource model appear valid.

     13.3 Bulk Density

In-situ volumes of both ore and waste are translated into tonnes by applying a bulk density factor of 2.85 tonnes per cubic metre which is well established based on direct measurements on small and larger samples, and is borne out by the reconciliation of predicted and milled tonnes of ore and waste. This density factor has not changed since the Kilborn Feasibility Study.

Visual inspection of higher-grade intervals in the SB Zone indicates that some of them are characterized by relatively high pyrite contents. The existing assay database should be consulted to determine whether there is a quantifiable relationship between gold grade and sulphur content that could serve as the basis for

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a more sophisticated method of determining the bulk density for particular parts of the deposit.

     13.4 Assay Data Verification

The internal quality control measures at the KOC mine laboratory consist of the routine insertion of internally prepared standards and a blank at a combined rate of one standard/blank per 30 samples. An original set of standards was certified by four independent laboratories, but subsequent standards are not. The standards are prepared from Kumtor mineralization and reflect three grade ranges — tailings grade (around 0.4 g/t), a head sample that has varied from 3.7 g/t to 7.3 g/t gold, and a concentrate sample that has varied from 29.5 to 33.8 g/t gold. A review of data available from January 2000 to late 2007 has shown that, with a few exceptions, the actual results tend to be higher by 3 to 10% than the accepted values. Of concern is also that no action appears to have been taken in those cases where individual standard results are clearly out of line, and re-assaying of a batch would have been required.

In addition, the laboratory routinely re-assays duplicate pulps at a rate of 20% as an internal check on assay precision. The results of these measures are monitored by the chief assayer, the KOC exploration manager and the QA/QC geologist. KOC geological staff does not submit external blanks and standards as blind samples with their drill core sample batches. However, bench composites are created from drill-hole intersections for check assaying and metallurgical test work, and this data provides a further check for the initial assay results.

Quality control checks on reject duplicates are routinely performed by the CSRL laboratory at Kara Balta which is certified by the United Kingdom Accreditation Service under ISO 17025:2006. A minimum of 20% of the total samples from the KOC drill programs have been re-assayed using the fire assay method with a gravimetric finish. During 1998 and 1999, KOC geological staff periodically re-assayed second splits of the coarse rejects for entire mineralized intervals to compare against the initial assays. Since 1999, this has become standard practice for all mineralized intervals that are intersected by drilling. The re-split samples retain the original sample number and are re-assayed at both the mine and the CSRL. A review of the results indicates good overall coincidence of the two laboratories.

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Periodic check assaying is also undertaken at the local laboratory of Alex Stewart Assayers and Environmental Laboratory (ASAEL) also located in Kara Balta, which is not accredited but participates in an international laboratory round-robin organized by Geostats Pty. Ltd. Similarly, a small batch of 38 pulp repeats was check assayed at ASAEL in 2005.

The results of the coarse reject check assay program, which is the most pertinent for the Kumtor resource estimate, along with the results of the check assays performed at ASAEL, are compiled in Table 5 for assay pairs averaging more than 0.1 g/t gold.

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Table 5 Coarse Reject Check Assay Results (>0.1 g/t Gold)

						Pairs				Original KOC				KOC Re-				Check
Period		Number				Removed				(g/t)				split(g/t)				Results(g/t)
Reject Check Assays at Central Scientific Research Laboratory
2003 and earlier			1 279				8				2.56				2.55				2.56
2004			3 424				42				2.77				2.79				2.71
2005			4 990				89				4.46				4.47				4.35
2006			4 578				74				4.42				4.42				4.38
2007			768				18				2.46				2.45				2.44
Total			15 039				221				3.80				3.81				3.74

Check Assays at Alex Stewart Assayers and Environmental Laboratory

														Original
						Pairs								KOC				Check
Period		Number				Removed				Type				(g/t)				Results(g/t)
2002			489				4			Reject					2.34				2.42
2002			44				0			Pulp					2.87				2.66
2005			38				0			Pulp					1.37				1.35
2007			197				0			Pulp					0.87				0.83
Total			768				4								1.95				1.97

The “pairs removed” constitute a small proportion of the overall check assay population. They were excluded from the comparison in Table 5 because the pairs are so dissimilar as to most likely be caused by something other than an assay accuracy problem or the natural variability (sample error) of the material being assayed.

Detailed analysis of the KOC/CSRL assay comparison shows that the detection limits of the two laboratories are different, with CSRL reporting higher values than KOC for values <0.1 g/t. In the range from 0.1 to 1.0 g/t, KOC is systematically higher, typically by a factor of 10% to 20%. Above 1 g/t, the two laboratories produce identical average results in most cases. CSRL has used certified reference materials only sparingly in the past, and there is virtually no check on the gold grades below 1 g/t. The lack of control at both the KOC laboratory and at CSRL does not allow a decision to be made as to which of the two laboratories has produced accurate assays in this grade range.

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      13.5 Check Sampling

Given the status of Kumtor as an active mine, Strathcona has in the past not undertaken any independent sampling or check assaying for the purpose of verifying the Kumtor assay database, since the successful eleven-year operation, together with the good reconciliation between the resource model estimates and actual production results as described in Section 17.12, had not indicated any requirement for independent data verification. However, because of its importance for the future Kumtor operations, Strathcona was asked to undertake a program of random spot re-sampling of some high-grade intersections of the SB Zone on the occasion of our last site visit. Three high-grade drill-hole intervals were selected from which the remaining core that had been placed in the core trays after the original sampling by KOC was retrieved. The samples were assayed in duplicate at the SGS Lakefield laboratory with the same assay protocol as is used at KOC. The results are compiled in Table 6:

Table 6 Strathcona Re-Sampling Program 2007, SB Zone Drill Core

														Original				Re-Sampling
														Assays				Results
DDH		From				To				Length				Au (g/t)				Au (g/t)
1039A			417.0				422.0				5.0				85.1				82.6
1121			504.1				509.8				5.7				36.4				27.8
1127A			532.6				533.6				5.0				15.3				13.2
TOTALS											15.7				45.2				40.6

The results are in general agreement with the high-grade nature of the SB Zone. This is only a small re-sampling program, and the slightly low bias of the Lakefield re- sampling results is probably not statistically significant.

      13.6 Conclusions

There were some unresolved issues with the original assay database created prior to Cameco’s involvement in the Kumtor project. However, much of the deposit covered by the early sampling programs has now been mined, and the only effect of any deficiency is the possible influence of a faulty early database during the testing of a block model against the mined-out, upper parts of the deposit where this data predominates.

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The sample preparation and assaying methods used by KOC meet industry standards. While the results of the check assay program indicate that there are no major apparent issues with respect to assay accuracy as shown in Table 5, the QA/QC protocol used was both incomplete (the lack of true blanks and standards that are blind to the KOC laboratory and to CSRL) and cumbersome, since much duplicate assaying is performed on low-grade to very low-grade samples. KOC have recently implemented certain changes to the protocol, with which we agree, as follows:

	1.		The KOC lab-internal standards are suspect and their values will be ascertained by a round-robin with ten aliquots of each standard being sent to four different accredited laboratories, one of which will be CSRL.
	2.		The KOC laboratory will participate regularly (at least quarterly) in an international round-robin such as the one being organized by Geostats Pty. Ltd.
	3.		Based on the previous QA/AC protocol, a very large number of samples with low or very low gold values were unnecessarily check assayed at the KOC and at the CSRL laboratories. These procedures will be changed as follows:

	•		During the original round of assaying of drill core samples, only field blanks will be inserted. These consist of sawed core that is known to contain less than 50 ppb gold, and is inserted within what is expected to be a mineralized zone at a rate of 5%. There will be no duplicate or check assaying at this stage.
	•		Once the initial assays have been received, new pulp splits will be produced at a rate of 20% from all samples that returned ³ 0.1 g/t gold, the new splits will be re-numbered and internationally certified reference materials will be inserted at a rate of 5%. There will be four such standards, with relevant gold values and matrices. The field blanks will remain part of this re-numbered set of pulps.
	•		External check assaying at the CSRL laboratory will be undertaken at a rate of 25% of the duplicates re-submitted to the KOC laboratory (5% of the assays >0.1 g/t gold).

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	•		The original pulps are to be re-homogenised prior to making duplicates, to avoid any bias due to settling of sulphides in bags during transport/storage.
	•		Samples that returned gold values ³ 10 g/t initially will be assayed in duplicate at each lab, using two thirty-gram aliquots, and the results averaged.
	•		If either of the two laboratories produces results for the standards that are outside of the accepted limits, then the entire batch will be re-assayed at the laboratory in question.
	•		If there is a conflict between the two laboratories despite satisfactory standard results, coarse rejects of the sample batches in question will be re-submitted to both laboratories, including the field blanks, and including a new set of standards at a rate of 5%.
	•		If there are still unresolved issues after the rejects have been re-assayed, re-splitting of the half-core and a repeat of the entire sampling and assaying protocol will be required. It is not anticipated that this final step will be required very often.