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Centerra ups the ante as it accuses Kyrgyzstan of high-grading Kumtor

Kumtor is Kyrgyzstan’s biggest industrial enterprise, providing employment to more than 4,000 people. (Image courtesy of Kumto Gold.)

Centerra Gold (TSX: CG) has asked an international arbitrator to impose ‘urgent interim measures’ on the Kyrgyz Republic and state miner Kyrgyzaltyn JSC to address alleged “critical operational and safety issues” at the Kumtor mine.

In its latest application, Centerra seeks immediate relief pending a final award in the arbitration to prevent the defendants from “causing irreparable damage to the mine.”

Centerra alleges that since secret police seized control of the open pit operation in mid-May, the Kyrgyz government and its agents have appointed mine managers who appear to be “departing from the mine plan” to high-grade the mine plan to “extract quick profits.”

Centerra Gold has asked for urgent arbitration measures to prevent ‘irreversible damage’ to its Kyrgyz Kumtor claims

It also alleges current management is improperly operating specialized water pumps, allowing large amounts of glacial meltwater to flow down the pit walls and accumulate at the bottom of the pit well. Centerra says the high pit water level prevents the mine from operating effectively and destabilizes the walls, causing them to collapse.

Centerra is also concerned about stated plans by current management to transition to underground mining, which it says is “not geologically and economically viable” and “risks causing irreversible damage” to its longstanding investment.

As of December 31, 2020, Centerra reported Kumtor as hosting proven and probable reserves of six million ounces gold in 70.3 million tonnes grading on average 2.66 grams per tonne. Centerra alleges the current management is only taking out the high-grade portions of the orebody, instead of following the approved mine plan.

Centerra’s international arbitration claims will be adjudicated in proceedings held in Stockholm, Sweden and conducted under the rules of the United Nations Commission on International Trade Law. The Permanent Court of Arbitration has appointed an arbitrator of the matters in dispute.

Centerra is seeking an order directing the Kyrgyz Republic to stop deviating from the government-approved 2021 Kumtor mine plan and provide Centerra with regular reports on the mine’s operations.

It is also petitioning the court for an order directing the Kyrgyz Republic and Kyrgyzaltyn JSC to stop transferring any Centerra shares or KGC assets without a prompt accounting and payment of profits that otherwise would have been payable to Centerra into an escrow account.

The company seeks another order directing the Kyrgyz Republic and Kyrgyzaltyn JSC to refrain from interfering with the arbitration process, including spurious fines, tax claims and legal proceedings, and intimidating or threatening Centerra’s employees and agents.

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