ULAANBAATAR, MONGOLIA - It's hard to quibble with the economics of Centerra Gold's (CG-T, CAGDF-O) Boroo gold mine in Mongolia. The mine will turn out roughly 275,000 oz. gold in 2006 with total cash costs in the 210 US dollars- to 215 US dollars-per-oz. range. Over the course of its 7-year life, Boroo should pour over 1 million oz. gold with a favourable tax structure keeping total production costs low. But the strength of the tax scheme is at the same time the project's Achilles heel, as the stability agreement it is born from has drawn public ire. Under the agreement, Centerra pays no income tax during its first three years of operation, and just half the standard amount for each of the following three years. That second period begins in March 2007 and will see the company pay income tax at a rate of 15 percent.
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