ESG

Centerra, Kyrgyz move goal posts a fifth time

Centerra Gold (TSX: CG) says it has agreed to a further deadline extension with the Kyrgyz Republic to complete an agreement designed to end a long-running dispute over its Kumtor operations.

Staff reporter
Kumtor agreement deadline extended again

Kumtor agreement deadline extended again

The pair had struck a strategic agreement in September 2017, with Centerra to pay about US$60 million into government-administered environmental and health funds, in return for an end to existing arbitration, and guarantees of no future blocks on money transfers plus free movement for Centerra employees.

The first "longstop date" - the point when all conditions precedent to completing the agreement were to be satisfied - was originally April 20.

The Kyrgyz government was dismissed on April 19 and Centerra said at the time it expected to "continue to work with the government of the Kyrgyz Republic" to ensure the remaining conditions precedent were satisfied.

The longstop date has been extended, under agreement, by a month four times.

Under the fifth extension, Centerra said the new deadline had been pushed back to November 2.

"The company continues to work with the government of the Kyrgyz Republic to ensure the satisfaction of the remaining conditions precedent to completion of the strategic agreement, including the termination of certain legal proceedings and receipt of finalised land use certificates," Centerra said yesterday.

Kumtor accounted for about two-thirds of Centerra's gold production in the June quarter with the remainder produced by the company's Mount Milligan copper-gold mine in British Columbia.

Kumtor's 83,803 ounces of gold was 40% lower than the June 2017 quarter, due to lower milling grade and lower recovery ore from stockpiles, the company said this month.

Its Mount Milligan operations have been hampered by a lack of water and Centerra has warned its output may be cut back in the fourth quarter if the operation can't secure new water sources.

In further diversification, Centerra has construction activities underway at its Öksüt gold project in Turkey and is nearing a production decision for its Kemess underground copper-gold project in British Columbia.

Its shares had traded above C$9 almost a year ago. They reached a 52-week low last week of $5.48 and closed down 1.39% yesterday to $5.66.

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