Kumtor flagship gold mine’s contribution to Kyrgyz economy registers at 9.7% of GDP

Kumtor flagship gold mine’s contribution to Kyrgyz economy registers at 9.7% of GDP
By bne IntelliNews March 15, 2018

Flagship gold mine Kumtor’s contribution to the Kyrgyz economy accounted for 9.7% of GDP in 2017, according to a March 14 statement from Kumtor Gold Company, the subsidiary of Toronto-headquartered Centerra Gold which operates the mine.

The figure appears to contrast with official Kyrgyz growth data for 2017, which stated that when Kumtor’s contribution to the economy is deducted from total economic output, GDP growth stood unchanged at 4.5% - perhaps indicating problems in the compilation of national statistics. Kumtor produced 562,749 ounces of gold in 2017, up by 2% y/y, Kumtor Gold Company said last month. The mine enterprise also amounts to Kyrgyzstan's largest employer and taxpayer.

Kumtor’s contribution to the national budget in taxes and mandatory payments in 2017 exceeded KGS8.7bn (€103.1mn), the company said on March 14. Kumtor’s gold sales in 2017 amounted to 550,134 ounces with a revenue totaling $685.2mn.

Kyrgyzstan, via state-run gold company Kyrgyzaltyn, holds a 26.28% stake in Kumtor owner Centerra Gold. Centerra decided in December 2015 to issue 4.6mn shares as part of its plan to purchase Thompson Creek Metals, a move which reduced Kyrgyzaltyn’s stake in the company to 26.6% from its previous 32.7%. That eventuality triggered a dispute in 2016, which was settled last year.

Centerra and Kyrgyzstan signed the Kumtor-related settlement in September 2017. Both sides advanced talks and reached a deal to affirm 2009 mine agreements, including tax and fiscal rules. Centerra has agreed to provide a one-time $50mn payment to a new Kyrgyz state-run nature development fund as well as annual payments of $2.7mn conditional on the government continuing to comply with its obligations under the agreement. It is also to pay $7mn to a cancer care support fund and another $3mn within 12 months of Kumtor’s closure in the future.

The company is also to boost its payments to Kumtor’s reclamation fund to $6mn annually, until it covers an estimated reclamation cost of a minimum $69mn.

Data

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