CORRECTED-Canada's Centerra given go-ahead to mine Mongolian gold deposit

(Corrects size of deposit reserve to 1.6 million ounces, not 1,603 ounces, in third paragraph)

ULAN BATOR, Feb 4 (Reuters) - Canada’s Centerra Gold Inc has been given the go-ahead from Mongolia’s lawmakers to mine the Gatsuurt Gold deposit after a five-year delay, as the resource-rich country looks to bolster its economic activity and gold reserves.

Mongolia’s once-booming economy has taken a steep slide, with the Asian Development Bank estimating growth in 2015 at less than 3 percent compared with 17.5 percent in 2011. Mongolia hopes to rake in greater revenue this year and stimulate growth by green lighting projects such as Gatsuurt, despite a backlash from some citizens.

The parliament passed a bill granting the country 34 percent ownership of the mine with 1.6 million ounces of probable gold reserves, a government website says. Centerra, which also owns the Boroo mine in Mongolia, will hold the remaining 66 percent of equity.

With the parliament’s approval, the government can now negotiate the final conditions for mining with Centerra.

Approval comes a year after legislators rejected the first deal proposed with a smaller stake holding for the government in return for larger royalty fees. It also follows an agreement signed last May to relaunch an expansion project at Mongolia’s Oyu Tolgoi copper mine, owned by Rio Tinto with a price tag of $4-6 billion.

Centerra has been waiting since 2010 for a decision from the government on whether it could go ahead after a law banned mining at certain areas near forests and water sources, including the Gatsuurt deposit.

In December 2014, Gatsuurt was included in a list of strategic deposits that is exempt from the restrictions but requires government ownership.

The deposit has attracted opposition from environmentalists and conservationists concerned about sites where historical artefacts have been discovered at the Noyon Uul mountain, located seven km away from where Centerra plans to mine.

The government led by Prime Minister Chimed Saikhanbileg ramped up efforts to reach a deal when artisanal miners began mining the area for themselves illegally.

The legislation establishes special protected areas that includes Noyon Uul where mining will not be permitted. A spokesperson from the mining ministry could not confirm that the specially protected areas did not include Gatsuurt, but said that would be the likely result. (Reporting by Terrence Edwards; Editing by Sue-Lin Wong and David Evans)