KYRGYZSTAN – Centerra Gold of Toronto has said it may have to close the Kumtor gold mine because the Kyrgyz authorities have not yet approved the 2014 Kumtor mine plan and related permits. The company says it will begin an orderly shutdown at the mine and mill on June 13, 2014, unless the approval and permits are received.
Centerra said it has been working since late last year, and continues to work, with the relevant government agencies. Still the government is dragging its feet despite a 2009 agreement that requires it to be reasonable in the review of mine plans. The same agreement provided guarantees to Centerra regarding the issuance of the required permits.
The Kumtor project, located 60 km north of the Chinese border, produced more than 600,000 oz of gold in 2013. The Kyrgyz government passed a law in April 2014 to protect glaciers in that country from activities that will affect the ice fields. Centerra believes the agreements already in place for the Kumtor mine exempt it from the new glacier law. Centerra further said that any disagreement related to the application of the new law to Kumtor would have to go before international arbitration under terms of the project agreement.
Centerra and the government are also engaged in discussions to potentially restructure the Kumtor project. It has been proposed that the Kyrgyz government exchange its 32.7% equity interest in Centerra for a 50% interest in a joint venture company that would own the Kumtor project.
The Kumtor project is also the target of several environmental claims from both the government and the Kyrgyz Green Party. Last December courts dismissed three appeals worth $152 million. Other claims from the government seek about $315 million for alleged environmental breaches.
More information about the Kumtor project, its woes and its successes is available at Kumtor.kg/en.
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