08:53
USD 84.57
EUR 100.74
RUB 1.17

Nationalization of Kumtor: Kyrgyzstan intends to sell 19 percent of shares

The state company of the Kyrgyz Republic, which holds 26 percent of the shares of the Canadian mining company Centerra Gold Inc., has announced its intention to sell about 19 percent of its shares. Bloomberg reports with reference to the Canadian media.

Earlier it was reported that Centerra shares fell by 6.5 percent on the Toronto Stock Exchange, that is, to $ 8.40. This is due to the fact that the state-owned company Kyrgyzaltyn said it intends to sell 14.8 million of its 77.4 million shares of the Canadian company.

Centerra reported the Kyrgyz Republic Parliament had passed a law that would allow the government to impose «external management» of its Kumtor gold mine if the operating company, Kumtor Gold Co., violates certain Kyrgyz laws.

Centerra also said Kumtor Gold Co. was ordered by a Kyrgyz Republic court last week to pay more than US$3 billion in damages after a ruling that its past practice of placing waste rock on glaciers was illegal, adding it has received further tax assessments that add to claims worth hundreds of millions of dollars.

«Centerra says it believes the actions are a concerted effort to coerce it to give up economic value or ownership of the Kumtor mine or to falsely justify a nationalization of the mine. It says it is committed to trying to work with Kyrgyz Republic authorities, but that it will not hesitate to use all legal avenues to protect its rights and interests,» Bloomberg writes.

In a report to investors, analyst of the National Bank of Canada Mike Parkin says he expects share prices will remain volatile as Centerra struggles to register its position in the ongoing dispute and considers its options with regard to the share sale.

Earlier, the deputies adopted a law allowing imposing external management at the enterprise. In addition, there is a court decision to recover a compensation in the amount of more than $ 3 billion for environmental damage from the company.

Centerra Gold Inc. announced that it became aware of a number of legal and political developments in Kyrgyzstan that may have an impact on the ownership and its rights of Kumtor mine under the revised 2009 project agreements.

Accordingly, the company understands that the adopted law on external management would apply in circumstances where Kumtor Gold Company (KGC) violates certain Kyrgyz laws relating to safety and thereby creates an immediate threat to the life or health of people:

  • Prohibits KGC’s managers from managing the mine (or else face criminal sanctions);
  • And enables the Prime Minister of the Kyrgyz Republic to appoint an external manager to take control of all management activities of KGC, including its bank accounts.
Popular