KYRGYZSTAN – A parliamentary review of the Kumtor gold mine belonging to Centerra Gold of Toronto has the company defending its position and taking a hit on the stock price earlier this week.
Criticism of Centerra is led by opposition deputies in the Kyrgyz parliament who allege that the operating company is badly managed, the mine is causing environmental problems, and the government deserves more of the profits. A committee tabled a report calling for revocation of the Canadian company’s environmental decrees and operating licences.
Centerra opened the open pit mine in 1997, and it is one of the largest gold producers in central Asia. Kumtor is responsible for 12% of the Kyrgyzstan economy. In 2009 the government and Centerra negotiated new agreements for continued operation of the project, and it is this agreement, approved by numerous Kyrgyz authorities including the parliament and constitutional court, that the company is using to defend itself.
Centerra believes the parliamentary resolution condeming Kumtor is not legally binding on the Kyrgyz government and that the Kumtor decrees and licences cannot be revoked without due process.
President and CEO Ian Atkinson said in a statement, “We believe that any discussion of the Kumtor project must take into account existing legal obligations and binding commitments. In particular, the Kyrgyz government undertook a number of legal obligations and binding commitments in the new agreements … These agreements form a solid foundation for the successful operation of the project, and enabled Centerra to make significant new investments in Kumtor. Centerra has confidence in the continuing validity of the new agreements, which provide as well for disputes concerning the project to be resolved by international arbitration, if necessary."
Guidance for 2012 gold production at Kumtor is 400,000 oz, and from Centerra’s other mine, Boroo, 60,000 oz.
More information and updates on the dispute will be available at CenterraGold.com.