Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Filer granted relief to file a preliminary short form prospectus that includes material scientific or technical information about mineral projects on properties material to the Filer that is not contained a previously filed technical report -- Filer unable to complete new technical reports prior to date controlling shareholder wishes Filer to file a preliminary short form prospectus -- disclosure in press release and preliminary prospectus to be reviewed by author of new technical reports, Filer will be in a position to ensure that the information in the press release and the preliminary prospectus will reflect the material information to be included in the new technical reports and will be supported thereby, Filer is not receiving any proceeds from the offering -- relief granted from National Instrument 44-101 Short Form Prospectus Distributions and National Instrument 43-101 Standards of Disclosure for Mineral Projects

Applicable Legislative Provisions

National Instrument 43-101 Standards of Disclosure for Mineral Projects, s. 4.2(1)(b).

National Instrument 44-101 Short Form Prospectus Distributions, s. 4.1(a)(v).

December 7, 2009

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the "Jurisdiction")

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS

IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

CENTERRA GOLD INC.

(the "Filer")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") for a decision under Section 8.1 of National Instrument 44-101 Short Form Prospectus Distributions ("NI 44-101") for an exemption from paragraph 4.1(a)(v) of NI 44-101 and under Section 9.1 of National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") for an exemption from paragraph 4.2(1)(b) of NI 43-101, in connection with a short form prospectus to be filed by the Filer (the "Exemption Sought").

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon Territory, Northwest Territories and Nunavut (collectively, the "Notified Jurisdictions").

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

(a) The Filer is a corporation governed by the Canada Business Corporations Act with its registered address located at 1 University Avenue, Suite 1500, Toronto, Ontario, M5J 2P1.

(b) The Filer is a reporting issuer in all provinces and territories of Canada and its principal regulator under MI 11-102 is the Ontario Securities Commission ("OSC").

(c) The Filer's common shares trade on the Toronto Stock Exchange.

(d) To the Filer's knowledge, the Filer is not in default of the securities legislation of Ontario or of the Notified Jurisdictions.

(e) The Filer is engaged in the business of acquiring, exploring, developing and operating gold properties primarily in Asia, the former Soviet Union and other emerging markets worldwide.

(f) The Filer currently owns and operates two producing gold mines: the Kumtor mine in the Kyrgyz Republic and the Boroo mine in Mongolia, both of which are material to the Filer, as well as interests in development and exploration properties.

(g) The Filer filed NI 43-101 compliant technical reports on the Kumtor mine (the "Kumtor Technical Report") on March 28, 2008 and on the Boroo mine (the "Boroo Technical Report") on May 14, 2004 (together, the "Current Technical Reports").

(h) The Filer's technical personnel are currently in the midst of their annual review of the Filer's Kumtor and Boroo mines which is currently scheduled to be completed in early December, 2009. The Filer anticipates that the review may result in the issuance of a press release (the "Press Release") that includes material scientific or technical information about either the Kumtor mine or the Boroo mine, or both, that is not contained in the Current Technical Reports. The Press Release will be issued if and when such disclosure is required by the Filer's timely disclosure obligations.

(i) The Filer understands that Cameco Corporation ("Cameco") owns 88,618,472 common shares (the "Cameco Shares") of the Filer (excluding 25,300,000 common shares that are being held in escrow for future transfer to the Kyrgyz Republic upon the satisfaction of certain conditions, as previously publicly disclosed), representing approximately 37.7% of the issued and outstanding common shares of the Filer.

(j) The Filer has been informed by representatives of Cameco that Cameco is considering a secondary offering of the Cameco Shares, by way of a public offering, in early December, 2009 to take advantage of current gold prices and a market window which Cameco believes will close by the middle of the month. Because of the holiday season, if the secondary offering is not launched by mid-December, it would have to be delayed until 2010, by which time market conditions may no longer be favourable.

(k) Pursuant to a shareholders agreement between Kyrgyzaltyn JSC, Cameco and the Filer dated June 6, 2009, the Filer is obligated to furnish all reasonable assistance to Cameco in connection with any secondary offering, including by preparing a prospectus for the purposes of such a secondary offering.

(l) As a result, shortly after the issuance of the Press Release and the dissemination of the information contained in the Press Release to the marketplace, the Filer may be required by Cameco to file a preliminary short form prospectus (the "Preliminary Prospectus") and thereafter a final short form prospectus (the "Final Prospectus") with the OSC and with the local securities regulatory authority in the each of the Notified Jurisdictions, to qualify the Cameco Shares for distribution. The Filer will not receive any proceeds from the securities distributed under the Final Prospectus.

(m) The Filer believes it is in the best interests of the Filer and its minority shareholders for Cameco to dispose of its controlling interest in the Filer by way of a secondary offering to the public, rather than a private sale of this controlling interest to a third party buyer (including potentially a foreign domiciled buyer).

(n) The technical information contained in the Press Release and disclosed in the Preliminary Prospectus will be reviewed by the qualified persons responsible for authoring the new NI 43-101 compliant technical reports on the Kumtor mine and the Boroo mine (the "New Technical Reports") .

(o) Although all the necessary engineering and other technical work, including site visits, will be completed prior to issuing the Press Release, the qualified persons authoring the New Technical Reports will not be in a position to complete the New Technical Reports prior to the date the Filer is likely to be required to file the Preliminary Prospectus, as required by paragraphs 4.2(1)(b) of NI 43-101 and 4.1(a)(v) of NI 44-101. The Filer will be in a position, however, to ensure that the information in the Press Release and the Preliminary Prospectus will reflect the material information to be included in the New Technical Reports and will be supported thereby.

(p) The Filer has no reason to believe that the information in the New Technical Reports will be materially different from the information in the Press Release.

(q) The New Technical Reports will be filed on SEDAR as soon as they are available, but prior to the filing of the Final Prospectus.

(r) The Filer will include, in the Preliminary Prospectus, the following cautionary language: "The technical disclosure in this Preliminary Prospectus relating to the Kumtor mine and the Boroo mine has not been supported by a technical report prepared in accordance with NI 43-101. The technical reports are being prepared by qualified persons as defined under NI 43-101 and will be available on SEDAR (www.sedar.com) on or before the filing of the Final Prospectus. Readers are advised to refer to those technical reports when filed." (the "Cautionary Disclosure")

(s) The Filer will disclose the terms of any decision arising out of this Application in the Preliminary Prospectus.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted, provided that:

(a) the terms of this decision are disclosed in the Preliminary Prospectus;

(b) the Cautionary Disclosure is included in the Preliminary Prospectus; and

(c) the New Technical Reports are filed prior to the Final Prospectus.

Furthermore, the decision of the principal regulator is that the application and this decision be kept confidential and not be made public until the earlier of: (a) the date on which the Filer announces its intention to file the Preliminary Prospectus; (b) the date on which the Filer files the Preliminary Prospectus; (c) the date the Filer advises the OSC that there is no longer any need for the application and this decision to remain confidential; and (d) January 31, 2009.

"Michael Brown"
Assistant Manager, Corporate Finance
Ontario Securities Commission