Big win for Centerra: Kyrgyzstan’s Parliament approves Kumtor joint venture
Centerra Gold (TSX:CG) and the Kyrgyz Republic have finally made peace, as the country’s Parliament approved Thursday the creation of a joint venture that evenly splits control of the Kumtor gold mine with its Canadian owner.
With 60 votes in favour and 35 against, the deal lets Kyrgyzstan trade its current its 32.7% equity interest in Centerra for a 50% stake in a joint venture that would own and operate the mine.
The agreement will also give the Asian country the right to increase its participation up to 67% after 2026, local news agency 24 reports.
Later in the day Centerra said in a statement that, while the resolution seemed to support the concept of the restructuring described in last year’s terms of agreement (HOA), it also contains “a number of recommendations that are materially inconsistent” with the terms of the document signed last December.
Among other things, the resolution calls for further audits of the Kumtor operation and for the Government and the General Prosecutor’s Office to continue pursuing claims for environmental and economic damages, which Centerra disputes.
Despite the happy ending, business leaders fear the parliament’s long-drawn-out dispute over rights with the Canadian firm has frightened off foreign investors.
“What’s happening with Kumtor signals to the world that we cannot secure property rights and have normal relations with Western countries,” prominent businessman Emil Umetaliev told EurasiaNet.org in November.
Kumtor employs more than 2,700 locals, many of whom are said to have lobbied before the Parliament to pass the resolution.
Yesterday Centerra reported a dive in its proven and probable gold reserves, which decreased by 53,000 ounces to a total 10.2 million ounces, compared to 11.1 million ounces in 2012. The miner's measured and indicated resources at the end of 2013 were estimated to total 5.5 million gold ounces, a 378,000-ounce increase over year-end 2012.
All 2013 year-end reserves were estimated using a gold price of $1,300 per ounce.