Officials at Centerra Gold Inc., the operator of the Kumtor mine in Kyrgyzstan, have opened the door to talks potentially allowing the former Soviet Republic’s government a 50%-interest in the company’s largest asset.
Centerra has been negotiating over concerns from a state commission report regarding taxes and ownership. Kumtor, one of the largest mines in Central Asia, is one of two producing mines owned by the Toronto-based Centerra; its output is forecast to soar by 50% this year to 600,000 oz.
Both sides have entered into a non-binding agreement wherein the state-run Kyrgyzaltyn JSC could exchange its 33%-interest in Centerra for a direct stake in the mine, Centerra said in a statement quoted by Bloomberg News. The Canadian company’s officials added they would continue operating and managing the mine.
A finalized deal, according to Centerra representatives, would resolve all Kyrgyz state agency environmental claims. The board of the joint venture company would consist of an equal number of Centerra and Kyrgyzaltyn representatives; major decisions would be subject to board appproval.
In 2009, Centerra and then-majority shareholder Cameco Corp. allowed the Kyrgyz government an increased share in Centerra via a settlement ending legal disputes threatening Kumtor. The pact, according to company officials, resolved back-taxes and set a new tax rate while settling a dispute over the project’s exploration size and development concessions.
