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Centerra initiates proceedings against former director, alleges 'breaches of fiduciary duties'

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(Kitco News) - Centerra Gold (TSX: CG) (NYSE: CGAU) announced Thursday that it had initiated proceedings in the Ontario Superior Court of Justice against Tengiz Bolturuk, a former member of its Board of Directors, in response to flagrant breaches of his fiduciary duties to the company related to the recent seizure of the Kumtor Mine by the Government of the Kyrgyz Republic.

Centerra said it seeks to enjoin Mr. Bolturuk, who was nominated to the Board by the Kyrgyz state-owned entity and Centerra shareholder Kyrgyzaltyn JSC, from direct or indirect involvement in the management of the Kumtor mine as well as engaging in further breaches of fiduciary and confidentiality duties owed to the company.

As previously announced, the company is investigating recent conduct by Kyrgyzaltyn JSC, including Mr. Bolturuk, its former nominee. Mr. Bolturuk, a dual Canadian and Kyrgyz citizen, joined the Centerra Board in December 2020 and resigned on May 17, 2021.

The company added that two days after his resignation, the Kyrgyz authorities announced that the Kyrgyz Government had appointed Mr. Bolturuk as the “external manager” of Centerra’s wholly owned subsidiary, Kumtor Gold Company (“KGC”), which operated the Kumtor Mine until its unjustified seizure.

The company said it has learned that, prior to his resignation from Centerra’s Board, Mr. Bolturuk had been in discussions with the Kyrgyz Government and others regarding plans to seize control of the Kumtor Mine in violation of Centerra’s longstanding investment agreements. Mr. Bolturuk did not disclose this information to Centerra, the company added.

Centerra pointed out that in addition, it has learned that on May 12, 2021, prior to the seizure of the mine, Kyrgyzaltyn JSC attempted to divert approximately US$29 million to an unauthorized bank account using a forged payment instruction sent to a third party. The account was purportedly opened in the name of KGC. This attempted fraud was identified by the third party and was not successful, the company explained.

Scott Perry, president and CEO of Centerra, said, “We can assure our shareholders that we are pursuing all avenues available to us in connection with recent events, including against any persons who violate their obligations to Centerra and its shareholders. In the meantime, to deflect attention from their unprecedented and unprovoked seizure of the Kumtor Mine, Kyrgyz officials and Mr. Bolturuk continue to make unjustified claims related to environmental and safety conditions in the past operation of the Kumtor Mine that are entirely meritless and have no justification under longstanding investment agreements or applicable law.”

Mr. Perry added, “We remain willing and available to engage with the Kyrgyz Government in a constructive dialogue on the matters it considers to be the subject of dispute. At the same time, the hostile actions of the Government leave us no choice but to continue to protect the interests of Centerra and its shareholders through all legal means.”

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