Kyrgyzstan, Canadian company complete talks on Kumtor project
By Aynur Jafarova
Kyrgyz Cabinet of Ministers and Canadian Centerra Gold Inc. have completed negotiations on the future of the Kumtor project, Kyrgyz Telegraph Agency reported on September 10 with reference to Kyrgyzaltyn JSC.
The sides reached an agreement to establish a joint venture with equal percentage of shares. However, according to the agreement, Kyrgyzstan will leave the staff of Canadian company's composition of shareholders.
The final stage of the negotiations was held on September 9 in Bishkek with the participation of the Canadian investors and members of the advisory committee for negotiations with Centerra Gold Inc.
The sides agreed to establish a joint venture on the development of Kumtor and to merge Kumtor Gold Company and Kumtor Operating Company. Both sides will get 50 percent of shares in the newly established company respectively. In the first year the company will be headed by Kyrgyz representative.
However, the Kyrgyz side will refuse the equity stake (32.75 percent) in Centerra Gold Inc. and keep about 6 million pieces that makes about 3 percent.
Currently Kyrgyzstan is the largest shareholder of the Canadian company through Kyrgyzaltyn JSC.
As a result of negotiations the sides signed a memorandum.
The report of the government on the results of the negotiations will be submitted to the Jogorku Kenesh (Kyrgyz Parliament) in a short period.
However, Kyrgyzaltyn said that the final decision on Kumtor will be adopted by the Canadian side as the agreement should be approved by the shareholders of Centerra Gold Inc. and then the Canadian court.
The Kyrgyz parliament instructed the government to hold negotiations with the Canadian Centerra Gold Inc. on restructuring the Kumtor project to increase Kyrgyzstan's benefits. If the parliament does not approve the agreement, it can denounce the agreement with Centerra Gold Inc. signed in 2009.
In May several hundred residents of the Issyk-Kul province blocked the road leading to the Kumtor mine. They seized the 'Tamga' substation and cut off the power supply to the mine and the gold extracting factory. On May 31 the police managed to free the substation and detain the riot organizers
The protesters demanded that the mine be nationalized and provide more social benefits in the Central Asian state.
The Kumtor gold mine, operated by Toronto-based Centerra Gold, is the largest foreign-owned gold mine in the former Soviet Union.
According to Centerra's website, it produced more than 8.4 million ounces of gold between 1997 and the end of 2011.