Canada's Centerra Gold and Kyrgyzstan have reached a proposed settlement related to mutual environmental lawsuits served in relation to the Kumtor gold mine, the company said on September 6. The agreement, however, has not been finalised.
Kyrgyzstan has been locked in a dispute since 2016 over profit-sharing at the mine. Nonetheless, both sides have been advancing the talks and are set to reach a deal to affirm 2009 mine agreements, including tax and fiscal rules.
The proposed agreement, subject to approval by Centerra’s board, sees the company providing a one-time $50mn payment to a new Kyrgyz state-run nature development fund as well as annual payments of $2.7mn. The payments would be contingent on the government’s compliance with the agreement.
Centerra would also pay $10mn to a cancer care support fund in two tranches of $7mn and $3mn and would also boost its payments to Kumtor’s reclamation fund to $6mn annually, until it covers an estimated reclamation cost of a minimum $69mn.
However, the company stressed in its statement that the agreement is not final, warning that there are no assurances “any discussions between the Kyrgyz Republic government and Centerra will result in a mutually acceptable settlement and resolution”.
Nonetheless, Centerra shares, which are listed on the Toronto Stock Exchange, peaked at a four year high on September 6 according to Reuters, before ending the day up 6.6% on the day at CAD8.22.
The Kumtor mine is the biggest employer and taxpayer in Kyrgyzstan, contributing to 10% of the Central Asian country’s GDP. The government owns a 26.6% stake in Centerra.