Centerra Gold holds key talks with Kyrgyzstan over Kumtor ownership

Canadian miner Centerra Gold Inc. (TSX:CG) said Tuesday it’s in talks with representatives of the Kyrgyz Republic about a possible change to the ownership of the contentious Kumtor gold mine, operated by the Toronto-based company.

The firm said it expects a “constructive dialogue,” but added there’s no assurance that the two sides can reach an agreement.

Last week, Kyrgyzstan President —Almazbek Atambayev— declared a state of emergency in the area around the mine, after clashes between riot police and protesters demanding the mine’s nationalization and more social benefits.

Around 2,000 people, some on horseback, stormed the mine’s premises Thursday night after police dispersed demonstrators who had been blocking the road to Kumtor for days and arrested 92 people.

That move sparked the larger protest, as thousands of locals began a march to call for the release of those detained.

Kumtor has been the focus of violent protests and calls for the government to nationalize the mining operation, as well as  the focus of infighting among political forces and regional clans the Central Asian country.

The country's parliament had set June 1 as a deadline for the government to renegotiate – or revoke– a deal struck in 2009 with Centerra Gold. Although a decision has yet to be made, the Canadian miner said  the parties are currently considering a potential restructuring transaction under which Kyrgyzaltyn JSC would exchange its 32.7% equity interest in Centerra for an interest of equivalent value in a joint venture company that would own the Kumtor Project

Centerra Gold is a significant employer and taxpayer in the Central Asian country and a key contributor to the Kyrgyz economy, with the Kumtor open pit gold mine accounting for 60% of the nation's industrial output.

Image: “Secret to Venus,” sculpture at the Louvre Museum