KYRGYZ REPUBLIC - Although mining and processing continues normally, the Kumtor gold project remains the target of heated political debate. The latest salvo comes from the Kyrgyz Attorney General's office, which is conducting an investigation into alleged criminal abuses of power by former members of the Kyrgyz government.
CENTERRA GOLD INC. of Toronto operates the mine through its subsidiary, KUMTOR OPERATING COMPANY. The Centerra subsidiary that owns the mine, KUMTOR GOLD COMPANY, was restructured in 2003. At that time Kurgyzaltyn JSC, a state-owned company, traded its two-thirds interest in Kumtor for a 15.7% share of Centerra. The current investigation is based on previous parliamentary resolutions opposing and challenging the Kumtor agreements and the legality of the restructuring.
The Kumtor mine is 100%-owned by Centerra (www.CenterraGold.com). The project is the largest private sector employer in the republic and Central Asia's largest gold mine operated by a Western-based company. It produced about 650,000 oz of gold at an average cash cost of US$200/oz in 2004.
Earlier this year Kumtor operations were temporarily scaled back due to political unrest that preceded parliamentary elections in the Kyrgyz Republic. Centerra is hoping the new government under president Kurmanbek Bakiev, elected on July 10, will foster a more welcoming climate for investment. He has stated on several occasions that his government will honour its agreements with foreign investors, says the company.
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