"Critical safety and operational problems" - Centerra Gold faults Kumtor's new managers
Centerra Gold (TSE:CG) said there is evidence that the Kumtor open pit gold mine is filled with too much water, which could prove hazardous.
In the spring Centerra Gold's Kumtor Mine was taken over by the Kyrgyz government authorities, which now adminsters it.
Centerra found recent photos of the mine which show water pooling at the bottom of the open pit.
“While the government-controlled Kumtor Gold Company (KGC) says the mine is stable and running at full speed, Centerra has seen photographic evidence – including in a video posted on August 15 on a KGC social media page – showing that the mine’s central pit is flooded, with abnormally large amounts of water running down the pit walls.
“Based on these images, Centerra believes at least 40 meters of water may be at the bottom of the Kumtor central pit. This is far more water than we ever saw collect at the bottom of the pit in the more than 25 years of the mine’s operation under Centerra’s control. This has put the entire mine and its workers at risk of potentially catastrophic events, not to mention the real harm to the environment. We believe urgent action is needed to address critical safety and operational problems.
The mine's new administrators, Kumtor Gold Company, pushed back against the charges saying they “doesn’t correspond with reality,” according to a report by Bloomberg.
Centerra's Kumtor was seized in May. Last month Centerra Gold reported a net loss of $851.7 million in the second quarter of 2021, compared to net earnings of $80.7 million in the second quarter of 2020, due to writing down Kumtor.
Centerra has launched arbitration against the new administrators of the mine charging wrongful expropriation under the rules of the United Nations Commission on International Trade Law.