Centerra Gold stands by agreements with Kyrgyz authorities over Kumtor mine

By bne IntelliNews June 22, 2016

Canada's Centerra Gold, which operates Kyrgyzstan's flagship gold mine Kumtor, said it is standing by its agreements with the Kyrgyz authorities. The statement comes shortly after Kyrgyzstan launched a legal review of Centerra Gold's deals; the latest move in an ongoing dispute between the Central Asian nation's government and the Canadian company.

Kyrgyz President Almazbek Atambayev ordered state prosecutors to probe the legality of the investment agreements signed with Centerra Gold in 2003, 2004 and 2009 amid suspicion the deals might have involved corruption. Kumtor is the country’s largest taxpayer and employer, which accounted for 6.8% of GDP in 2015.

Centerra learned for the probe from recent media reports and wants to clarify its position on the issue “to avoid any misinformation or misunderstanding”, the company said in the statement posted on the website of its Kyrgyz subsidiary Kumtor Gold Company (KGC). Centerra said that 2009 agreements supersede all prior agreements including the 2003-2004 restructuring agreements and are part of Kyrgyz legislation.

“As part of the 2009 restructuring and as a comprehensive settlement of all outstanding issues affecting the Kumtor project, Kyrgyzaltyn received over 43 million shares of Centerra which more than doubled its shareholding from approximately 16% to over 32%. The 2009 agreements also provided for a comprehensive tax regime for the Kumtor project under which the Kyrgyz Republic receives a very beneficial 14% gross proceeds tax on gold sales from the Kumtor project,” Centerra said adding that the agreements were negotiated by the Kyrgyz Republic’s authorized representatives and international legal experts and were approved by the Kyrgyz Republic Parliament, Constitutional Court and Ministry of Justice. The agreement provides that all disputes relating to the Kumtor project are subject to international arbitration.

Centerra and KGC have repeatedly requested Kyrgyz authorities to provide any information or evidence to substantiate its claims of improper behavior concerning both international and internal anti-corruption laws. However, the authorities have failed to provide any such information or evidence, according to the statement. “Disputes relating to certain matters governed by the 2009 restated project agreements are now before international arbitration proceedings,” the company said adding that it expects the arbitrator to confirm that the 2009 agreements are legally valid.

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