Court orders Centerra to halt trade of shares owned by Kyrgyz gov't
The Ontario Superior Court of Justice froze Tuesday all transactions related to Canada’s Centerra Gold (TSX:CG) shares owned by the Kyrgyz government.
The injunction, sought by Stans Energy (TSX-V:HRE), say the 47 million shares cannot be “sold, disposed, exchanged, assigned, transferred, pledged or encumbered,” until further notice.
The ruling is the outcome of the most recent battle in a war between Stans Energy and the Kyrgyz government regarding the disappropriation of its Kutessay II rare earth project. In a final and binding ruling last July, the Arbitration Court at the Moscow Chamber of Commerce and Industry had ordered the Kyrgyz government to pay Stans Energy $118 million in compensation.
But as authorities have not shown much willingness to pay up, seizing the nation’s assets abroad seemed to be the only option for Stans Energy to recover value for its shareholders, Rodney Irwin, Interim President and CEO said in a statement.
Centerra Gold itself is entwined in a protracted legal battle with the government of Kyrgyzstan over control of the vast Kumtor open pit gold mine.
Despite the parts apparently made peace in June, the Toronto-based company and authorities continued talks trying to agree on the future of the operation, which accounts for 60% of the nation's industrial output and, according to the Centerra, it is the largest gold mine operated in Central Asia by a Western-based company.
Kumtor, which lies near the Chinese border at an altitude of 4,000 metres, has long been mired in political and environmental controversy and has sparked repeated political crises, particularly in the past five years, due to public protests over alleged corruption.
The Kyrgyz Republic, via Kyrgyzaltyn JSC, is Centerra's largest shareholder owning 77,401,766 common shares (about 33%) for a 50% stake at Kumtor. As of August 11, 2014, Kyrgyzstan's interests were estimated at $424 million, according to local news agency 24.