Commodities Buzz: Future of Centerra mine uncertain as Kyrgyz Govt revising settlement deal

Fresh doubt has been cast over a deal reached in December between Centerra Gold and the Kyrgyz Republic ending long-dragged disputes after the countrys Prime Minister said Tuesday the new government was reviewing the agreement.Among the stipulations, the pact increased Centerras annual environmental contributions in exchange for the government dropping a $ 100 million lawsuit in a local court.

Other key terms included a comprehensive settlement and release of all outstanding arbitral and environmental claims, disputes, proceedings and court orders, and releases of the company and its Kyrgyz subsidiaries from future claims covering the same subject matter as the existing environmental claims arising from approved mine activities. The agreement, which Centerra expected to sign on June 22, also provided for the termination of the Kyrgyz court order which, among other provisions, restricted subsidiary Kumtor Gold Company (KGC) to transfer cash to Centerra, the largest Western-based gold producer in Central Asia. As part of the settlement, the Kyrgyz government would also acknowledge there would be no future restrictions on the ability of KGC to distribute funds to Centerra. Further, all restrictions would be lifted on the free movement of KGCs employees.

n++While the agreement provides a pathway for the resolution of all outstanding matters affecting the Kumtor Project, there are no assurances that all of the conditions precedent to the completion of the settlement will be satisfied,n++ Centerra warned in April. Kumtor, which lies near the Chinese border at an altitude of 4,000 metres, has produced around 11m ounces since inception and remaining reserves are pegged at 5.6m ounces. Centerra didnt respond to requests for comments on the new development by the time this article was published.