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Centerra Gold pushing for resolution with Kyrgyz government

A general view of the Kumtor mine in Kyrgyzstan.


Canada's Centerra Gold Inc. is confident it can resolve its differences with the government of Kyrgyzstan, where parliament is pushing to revise its rights on Kumtor, the company's lead asset and the largest gold mine run by a Western company in Central Asia.

"We've been operating in country for 15 years and had this sort of situation develop in the past and we've never lost a day's production for any sort of political event like this. And we've always been successful through discussion and constructive dialogue with the government and appropriate authorities to find a way through these issues," said chief executive officer Ian Atkinson.

Centerra's market capitalization has been sliced in half since the middle of last year, when the Kyrgyz government said it would review a mining deal dating back to 2009 after legislators wielding environmental concerns pushed to revoke its rights to Kumtor, its top asset.

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A state commission established by the Kyrgyz government issued a final report in December which alleged after five months of study that the Kumtor project violated corporate and environmental legislation, that the Kumtor management was ineffective, that the value of the assets had been understated and as such the government underpaid and that the 2009 deal was not properly approved.

Parliament passed a resolution on Thursday demanding the government revise the deal amid allegations of environmental damage.

"If within three months our negotiations yield no results, the government will unilaterally cancel the agreement," Economy Minister Temir Sariyev said during a debate on Wednesday, according to a Reuters report.

Mr. Sariyev accused Centerra of paying too little to Kyrgyzstan, and of inflicting "colossal damage" to the environment.

Mr. Atkinson said in an interview with The Globe and Mail on Thursday that he met last week with the government – its chief shareholder with a 33 per cent stake in Kumtor – as well as Prime Minister Zhantoro Satybaldiyev and that he was confident in ongoing negotiations.

"We are confident we can find a resolution for the issues when we sit down and discuss their views relative to ours across the table with the right technical experts," said Mr. Atkinson.

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