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Apr 4, 2022

Centerra to exit Kyrgyzstan, shed mine in government deal

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Centerra Gold Inc. said it struck an deal with Kyrgyzstan’s government that sees the Canadian miner hand over ownership of its seized flagship Kumtor mine and exit the country, ending a nearly year-long dispute with the Central Asian nation.

The Toronto-based miner will get back 77.4 million of its shares held by a state-owned company under the agreement, Centerra said Monday in a statement. The shares, representing a 26 per cent stake in Centerra, is valued at $972 million (US$778 million), based on the April 1 closing share price.

Centerra shares rose 0.2 per cent to $12.59 at 9:48 a.m. in Toronto.

Relations between Centerra and the Kyrgyz Republic had soured so much since the government took control of Kumtor last year that it would have been difficult the parties to continue in business together, Chief Executive Officer Scott Perry told Bloomberg last June, saying the company was looking for a “clean divorce.”

Kumtor was one of Kyrgyzstan’s largest foreign investment projects and an asset responsible for almost 60 per cent of Centerra’s 2020 revenue. Centerra owned and operated the mine through subsidiary Kumtor Gold Co. under a 2009 agreement with the government, until the Kyrgyz Republic took over the asset last May using environmental concerns and tax issues to justify the seizure. Centerra said such claims were without merit and had no justification under longstanding investment agreements or applicable law.

The Kyrgyz Republic and state-owned company Kyrgyzaltyn JSC will assume all responsibility for Kumtor, including all reclamation obligations, Centerra said in the statement.