Gold and Silver

Canada concerned about Kyrgyz seizure of Kumtor

Canada concerned about Kyrgyz seizure of Kumtor
Mining News Pro - The Canadian government on Monday reacted to Kyrgyzstan’s seizure of the Kumtor gold mine, which Canadian mining company Centerra Gold owns, stating that it was “very concerned” and “disappointed” about developments in the mining industry.

This comes as the Kyrgyzstan Parliament on Monday adopted a resolution instructing government to install “external management” at Kumtor and Centerra subsidiary Kumtor Gold Company (KGC).

Parliament is understood to have acted under a new law, applicable only to Centerra and KGC.

Canadian Foreign Affairs Minister Marc Garneau and Small Business, Export Promotion and International Trade Minister Mary Ng said in a joint statement that the developments would “potentially have far-reaching consequences on foreign director investment” in that country.

Government effectively seized control of Kumtor over the weekend by sending authorities to the mine, KGC’s office in Bishek and the homes of several employees. Consequently, Centerra has no longer control of the mine.

Centerra, which at the weekend also initiated arbitration proceedings, said on Monday that it would prohibit Kyrgyzaltyn, the State-owned entity holding 26% of Kumtor, from transferring or encumbering any shares of the company.

The restrictions of shares held by Kyrgyzaltyn were provided for under a 2009 shareholders agreement. The agreement also provided that dividends or distributions on Centerra shares that would otherwise be payable to Kyrgyzaltyn would be donated to the company to the extent such dividends could be attributed reasonably to KGC, or distributions from KGC.

Kyrgyzaltyn and its affiliates were also not entitled to any dissent rights in respect of their Centerra shares should such rights arise.

Centerra further announced that Kyrgyzaltyn nominee Tengiz Bolturuk had resigned as a director of with immediate effect, stating that he was unable to discharge his fiduciary and similar duties and obligations to the company. Bolturuk was also being investigated for his involvement in, and support for, the events ongoing in Kyrgyzstan.

The miner has suspended access to its global IT systems for all local KGC employees in Kyrgyzstan. About 2 700 people are employed by Kumtor, 99% of whom are locals.

The group’s previously announced 2021 guidance and three-year outlook relating to the mine had been suspended.

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