Kyrgyzystan considering delisting Centerra Gold shares

By bne IntelliNews October 21, 2014

bne -


Kyrgyzstan may seek a delisting of Centerra Gold to prevent its shares being seized through international court and arbitration judgements. There is already an injunction on part of the state’s shareholding in Centerra from a dispute with junior Canadian mining firm Stans Energy over a $118mn claim. 

“The Kyrgyz Republic respects the principles of the judicial system, but the emerging tendency sets before the government the task of using more effective mechanisms to protect  Kyrgyzstan's assets and prevent such threats in the future,” president Almazbek Atambayev said in a statement on October 20. “In particular, to raise the question of possible withdrawal of Centerra's shares from the listing on the Canadian stock exchange in Toronto." 

Toronto-traded Centerra Gold owns and operates the Kumtor gold mine, which makes up around 10% of Kyrgyzstan’s GDP and is considered the cash-strapped country's only valuable asset abroad and thus a natural object of desire for foreign companies looking for damages such as Stans Energy.  The state is the largest shareholder in Centerra with a 32.7% stake through state gold mining firm Kyrgyzaltyn. 

Stans Energy locked horns with the government over a 20-year licence at the Kutessay-II heavy rare earth elements mine in the Talas province. The government revoked the licence after a parliamentary recommendation in 2012.  Robert Mackay, then CEO of Stans Energy, alleged that the company had suffered “an orchestrated attack by a Chinese [rare earth] organisation with ties to public figures in Kyrgyzstan” that had bribed MPs. 

Stans Energy decided to bring its claims before an arbitration court at the Moscow Chamber of Commerce & Industry, where it obtained a $118.2mn award against the Kyrgyz republic in July. As the government failed to pay the sum, the company turned to the Ontario Supreme Court of Justice, seeking an enforcement of the arbitration award.

The court issued an injunction on October 14, which, among other things, prohibits the Kyrgyz Republic and Kyrgyzaltyn “from selling, disposing, exchanging, assigning, transferring, pledging or encumbering 47mn shares in the capital of Centerra Gold registered in the name of Kyrgyzaltyn [roughly 60% of Kyrgyzaltyn's total stake in Centerra and worth some $255mn],” the company disclosed in a statement. Stans Energy is now seeking to extend the injunction until a definitive ruling over the enforcement of the award comes through from the Supreme Court. 

“At this time, we see no alternative other than to proceed as we have on our present track for successful resolution of our arbitration award,” Rodney Irwin, Stans Energy's interim president and CEO, said in a statement following the court's injunction. 

It is not the first time that Centerra Gold, which has no direct interests in Stans Energy and Kutessay-II, has become embroiled in court crossfire between the Kyrgyz government and third parties. It already happened in 2012, when the Ontario Supreme Court froze a stake worth $8.5mn in Kyrgyzstan's Centerra Gold shares in a proceeding by Turkish company Sistem, which was seeking to enforce an  award by an arbitration tribunal in Geneva over a hotel that local authorities had seized in 2005. The court eventually upheld the arbitration award and ruled that the shares could be transferred to Sistem. 

However, Stans Energy's decision to bring its claims before an arbitration court in Moscow has raised some eyebrows. The Economic Court of the Commonwealth of Independent States (CIS) issued an advisory opinion in September which questions the basis of one of the arguments under which Stans brought its arbitration case against Kyrgyzst. 

“There can be no assurance that Stans will ultimately be successful in obtaining an order for recognition and enforcement of the award in Ontario,” the company said in a statement. 

The ongoing legal battle risks adding new tension to the already strained relationship between Kyrgyz authorities and Centerra Gold. Amid recurrent nationalisation threats, parliament gave the government mandate to renegotiate the terms of Centerra Gold's Kumtor concession and form a new 50-50 joint venture in charge of running the mine, which would grant the country direct ownership and thus protect it from foreign courts’ rulings. If such talks fail, the government now has ready a plan B, to seek a delisting of Centerra Gold shares.  

Related Articles

bne:Chart - Russia begins to steady the ship according to latest Despair Index

Henry Kirby in London - Ukraine and Russia’s latest “Despair Index” scores suggest that the two struggling economies could finally be turning the corner, following nearly two years of steady ... more

COMMMENT: Great challenges for Eurasia call for decisive solutions

Juha Kähkönen of the IMF - The Caucasus and Central Asia (CCA) region continues to navigate a wave of external shocks – the slump in global prices of oil and other key commodities, the slowdown ... more

IMF calls for Central Asia to tighten monetary policy

Naubet Bisenov in Almaty -   Caucasus and Central Asian (CCA) countries need to tighten their monetary policy to anchor inflation expectations, but excess tightening may weaken financial ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.