Centerra says new law 'may affect' ownership of Kumtor
(Kitco News) - Centerra Gold (TSX: CG) (NYSE: CGAU) announced today that it has become aware of a number of legal and political developments in the Kyrgyz Republic which may affect Centerra's ownership of the Kumtor mine and its rights under the 2009 restated project agreements which govern the Kumtor mine.
The company explained that a law has been passed by the Kyrgyz Republic Parliament which would enable the Kyrgyz Republic Government to impose "external management" on companies in the Kyrgyz Republic operating under concession agreements.
Centerra noted that the law was proposed, passed three readings and was adopted by Parliament in a single day and will now be referred to the President of the Kyrgyz Republic for signature. The sponsor of the law, Mr. Akylbek Japarov, notes that the only project operating under a concession agreement in the Kyrgyz Republic is the Kumtor mine.
The company said it understands that this newly adopted law on external management would apply in circumstances where Kumtor Gold Company (KGC) violates certain Kyrgyz laws relating to safety and thereby creates an immediate threat to the life or health of people.
In case of violation, this law would prohibit KGC's managers from managing the mine (or else face criminal sanctions) and would enable the Prime Minister of the Kyrgyz Republic to appoint an external manager to take control of all management activities of KGC, including its bank accounts.
Centerra noted that Mr. A. Japarov is also the Chairman of the Kyrgyz Republic State Commission which was formed in February 2021 to review the activities of the Kumtor mine and is expected to report its findings shortly.
The company pointed out that it remains committed to continuing to work with local authorities to resolve any outstanding issues in accordance with the 2009 restated project agreements applicable to the Kumtor mine, which provide for all disputes to be resolved by international arbitration, if necessary.
Centerra Gold is a Canadian-based gold mining company that operates three mines, the Kumtor mine in the Kyrgyz Republic, the Mount Milligan mine in British Columbia, Canada and the Öksüt mine in Turkey.