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Centerra Gold Inc. has launched a lawsuit aimed at ejecting the new external manager of the recently nationalized Kumtor mine in the Kyrgyz Republic, alleging that he conspired to steal the asset from under the nose of the Canadian gold company while he was a director.

In the suit filed in the Ontario Superior Court on Thursday, Centerra alleges former board member, Tengiz Bolturuk, worked in secret with Canadian and U.S. law firms, and the Kyrgyzstani government to orchestrate an expropriation of the giant gold mine. “He had given his word to the President of the Republic that they would take back the Kumtor mine,” the suit said.

Mr. Bolturuk, a dual Kyrgyzstani and Canadian citizen, was a director of Toronto-based Centerra up until a few days ago. He joined the board in December as a representative of the Kyrgyzstani government, Centerra’s biggest shareholder, but resigned on May 17 after Kyrgyzstan seized control of Kumtor.

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Centerra alleges Mr. Bolturuk breached his duty of loyalty and confidentiality to Centerra as a director, by going behind the company’s back. “Mr. Bolturuk has engaged in egregious breaches of his fiduciary duties and duty of confidentiality,” the suit said. “Mr. Bolturuk stated publicly that he is working with and in the interests of the Republic and its wholly-owned state corporation, Kyrgyzaltyn, to expropriate Centerra’s flagship asset, the Kumtor gold mine, and to cause harm to Centerra.”

None of the allegations against Mr. Bolturuk have been proven in court.

Mr. Bolturuk, a resident of Oakville, Ont., did not immediately respond to a request for comment.

After almost two decades of strife between the former Soviet republic and the gold company, Kyrgyzstan on the weekend nationalized the Kumtor mine, ejecting Centerra personnel and installing Mr. Bolturuk as external manager. The government justified the nationalization of Kumtor based on security grounds, taking advantage of a new law that it proposed and passed through parliament in a 24-hour period.

The lawsuit is the latest salvo from Centerra after it earlier in the week launched an international arbitration suit against the Central Asian state, and moved to prevent its government from selling any of its shares in the mid-tier Canadian gold company. Centerra also said in a news release on Thursday that earlier this month it prevented an “attempted fraud,” by the Kyrgyz government, aimed at siphoning US$29-million out of the subsidiary that operates Kumtor to an unauthorized bank account. Centerra did not specify who would have received the funds.

For now, the future looks uncertain for Centerra. Kumtor is the largest of its three gold mines, accounting for more than half of its production. Arbitration proceedings can take five to 10 years to reach a conclusion, and even if Centerra is successful, there is no guarantee it will be paid. Barrick Gold was awarded about US$2.9-billion in 2019 following arbitration proceedings against the Pakistani government but hasn’t yet received any remuneration, despite attempts to collect.

The giant open-pit Kumtor mine has been in operation since the 1990s, employs thousands and is the single biggest contributor to GDP in the country. Kumtor was previously controlled by Canadian uranium company Cameco Corp.; Centerra’s ownership dates back to 2004. Over the years, Centerra and Kyrgyzstan have clashed repeatedly over ownership rights, with the company seeking arbitration on two earlier occasions and agreeing ultimately to further financial concessions to the government.

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Kyrgyzstan has also accused Centerra of environmental infractions, attacked its safety record and accused it of hundreds of millions of dollars in tax evasion. Sadyr Japarov, a fervent nationalist, who had has long called for a nationalization of Kumtor, was elected as the country’s President in January, and tensions flared up again in the past few months.

Analysts have speculated that Centerra may eventually bring another lawsuit attempting to cancel the shares held by the government, a move that would reduce the company’s overall share count, and put it on a stronger financial footing.

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