Centerra mine’s future up in the air as Kyrgyzstan to review deal
Fresh doubt has been cast over a deal reached last year between Centerra Gold (TSX:CG) (OTCMKTS: CAGDF) and the Kyrgyz Republic ending long-dragged disputes, after a government speaker confirmed Friday the parliament will review the settlement in September.
According to radio Azattyk, the upcoming revision of the strategic agreement may lead to increased environmental payments for the company.
The news comes two weeks after MINING.com reported the country’s new Prime Minister, Muhammadkaliy Abylgaziev, was reconsidering the agreement signed by his predecessor, adding his administration planned to submit to parliament its own proposals regarding the document.
The parliament’s revision of the strategic agreement, set for September, may lead to increased environmental payments for Canada's Centerra Gold.
It also follows recent charges of corruption against former Prime Minister Sapar Isakov, who signed the deal with Centerra last year — a development local media said it could jeopardize the legitimacy of the pact.
Last week, the Canadian miner said it had extended the deadline for completion of all conditions included in the agreement from June 22 to July 23, without providing details about the reasons for the deferral.
When and if finally signed, the wide-ranging arrangement would end a long-drawn-out dispute that crippled investor confidence in the impoverished Central Asian country and prevented Centerra from partaking in any profit from its majority-held and majority-operated Kumtor mine, resulting in the Canadian company filing for international arbitration.
The settlement would also end mutual lawsuits and force the Kyrgyz government to drop all environmental claims against Centerra and its subsidiary. In return, the miner would increase its annual environmental contributions.
Kumtor, which lies near the Chinese border at an altitude of 4,000 metres, has produced around 11m ounces since inception and remaining reserves are pegged at 5.6m ounces.
The Kyrgyz government owns just under a third of Kumtor and the mine contributes nearly 10% of the country's GDP.