Canadian Centerra Gold (TSX:CG) said Tuesday an independent assessment of a Kyrgyz Republic Parliamentary report backs the company’s view that the report’s allegations against its Kumtor gold mine are unfounded.
The document accusing Centerra of damaging the environment and stealing the country's riches, forced the Kyrgyzstan government in July this year to cancel a prior ruling that gave the company surface rights at Kumtor.
“As I have stated previously, Centerra believes that the parliamentary report's findings are without merit. Kumtor has operated in accordance with Kyrgyz and international standards and this has been proven over the years in systematic audits by Kyrgyz and international experts,” said President and CEO, Ian Atkinson in a statement.
U.S.-based Prizma LLC analyzed seven key environmental issues discussed in the report and confirmed it was unfounded, added the company. The full report in English and Russian, can be found at Kumtor’s and Prizma’s websites.
The company is a significant employer and taxpayer in the Central Asian country and a key contributor to the Kyrgyz economy. In fact, the Kumtor open pit gold mine accounts for 60% of the nation's industrial output and, according to the company, it is the largest gold mine operated in Central Asia by a Western-based company.
To give an idea of just how important Kumtor is to the country, Centerra’s announcement May 15 of reduced 2012 gold production guidance (from 642,000 ounces to 390,000 ounces) led to this pronouncement from Prime Minister Omurbek Babanov: “Kyrgyzstan’s annual GDP growth will fall to 1.8% from the original target of 7.5%.”
As reported by Reuters, “Hard hit by the slump in Kumtor’s output, Kyrgyzstan’s GDP shrank by 6.4% in January-May of this year compared with the same period of 2011, data released by the National Statistics Committee showed… Industrial output plunged by 31.2% in year-on-year terms in the same period.”
The Canadian miner was granted the license for Kumtor under Kyrgyzstan deposed leader, Kurmanbek Bakiyev, who was accused of corruption.
Last week, several hundred protesters rallied against Centerra. They were demanding the nationalization of Kumtor and accusing the Canadian miner of allegedly being the source of a series of toxic spills in past years, including a cyanide spill into a river.
The protest came three months after the ex-Soviet country's parliament backed proposals to review Centerra's operating licence.
Since it started running in 1997, Kumtor has generated $1.9 billion for Kyrgyzstan and produced more than 8.4 million oz. of gold.
Kyrgyzstan, a land-locked country of five million people on China's western border, has become infamous in recent years because it hosts a U.S. airbase used to support military operations in neighbouring Afghanistan.