The value shares Centerra Gold Inc. on the Toronto Stock on 31.05.2020: 10.15 USD Value of Kyrgyzstan's shares in Centerra Gold Inc. : 785 627 924 USD

Claims in Kyrgyzstan, and Centerra’s investment in Turkey

published: 08 January 2013

Centerra Gold Inc.Centerra Gold acquires a small Turkish gold project, just as it prepares to endure more tough times at the world-class Kumtor gold mine in Kyrgyzstan. Issues at Kumtor have been ongoing, with talk concerning nationalization of the mine. Instead, a state commission was established to examine operations at the site and the latest agreement signed between the company and the government in 2009.
Now, a state agency says Centerra owes it $152 million for environmental damages.
The claim was issued by the Kyrgyz State Inspectorate Office for Environmental and Technical Safety (SEITS), which says the violations concern the placement of waste rock on waste dumps, water use, emissions and damages to land resources during initial construction.
SEITS is also demanding that actions be taken to correct the alleged violations.
But the merit of these claims, and the weight that SEITS can put behind them, is yet to be determined.
Centerra calls the claims exaggerated and says that some have no foundation, pointing out that supposed violations have been approved by the Kyrgyzstani government on an annual basis.
The project’s environmental performance has also been subjected to systemic audits and investigations by the government and international experts — the latest being an independent expert review that found no materially significant environmental issues. This report was issued in October 2012.
Further complicating the matter is that, as part of its 2009 agreement, the Kyrgyzstani government fully released Kumtor from all prior claims — including environmental matters — and provided a complete list of outstanding taxes and payments, including a fixed environmental charge.
“Accordingly, no other tax, duties or other obligations are to be paid to the Kyrgyz Republic, however they may be characterized,” Centerra says.
The company’s latest investment in Turkey, however, would keep it from getting entirely bogged down by issues in Kyrgyzstan.
The Turkish investment consists of acquiring a final 30% interest in the Oksut gold project from Stratex International (STI-L) for $20 million in cash, and a 1% net smelter return that is capped at $20 million.
The two companies formed a joint venture in a 2009 deal that allowed Centerra to earn a 50% interest for $3 million, and another 20% by anteing up an extra $3 million. In total, Centerra says it has spent $6.8 million on exploration at Oksut.
Once the final transaction closes — which is contingent on six exploration licences being converted into two operation licences — Centerra says it will focus on pushing development.
“Our immediate objective is to define the limits of the Ortacam North deposit and complete enough drilling to calculate a resource estimate by year-end, as we continue metallurgical and environmental baseline work,” Centerra CEO Ian Atkinson says.
The initial resource estimate is expected early this year.
Back in Kyrgyzstan, the next thing to watch will be the government’s reaction to the claims filed by SEITS. The agency is expected to report to the government and the Kyrgyz parliament in early 2013.
A 2009 agreement between Centerra and the government mandated that the project receive and maintain all the licences and permits that are “needed or convenient” for operating the project, and that the Kyrgyz government use its best efforts to reverse or annul any actions of public officials that conflict with the rights the agreement gave to the project.
The term “public officials” would include state agencies, such as SEITS.
Centerra says it will meet with senior Kyrgyz government officials to discuss the claims.

By: Anthony Vaccaro
2013-01-02


The full text of the article is available at: http://www.northernminer.com/news/centerra-gets-more-headaches-in-kyrgyzstan-puts-more-capital-into-turkey/1001967105/

Previous publicationIndependent company Prizma has examined the report of the Commission for Kumtor, having called its conclusions improper and exaggerated. Next publicationForeign investment in Kyrgyzstan
The value shares Centerra Gold Inc. on the Toronto Stock on 31.05.2020: 10.15 USD USD Value of Kyrgyzstan's shares in Centerra Gold Inc. : 785 627 924 USD
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