Newspaper article The Canadian Press

Centerra Shares Plunge as Kyrgyz Lawmakers Debate Kumtor Mine License

Newspaper article The Canadian Press

Centerra Shares Plunge as Kyrgyz Lawmakers Debate Kumtor Mine License

Article excerpt

Centerra shares plunge on Kyrgyz reports


BISHKEK, Kyrgyzstan - Shares of Centerra Gold plunged more than 25 per cent Friday as lawmakers in Kyrgyzstan debated whether to strip the company of its licence for its Kumtor open-pit mine and accused the company of damaging the environment.

The stock fell $3.07 to finish the trading day at $8.71 on the Toronto Stock Exchange. The drop wiped out more than $700 million of the company's stock market value.

Stripping Toronto-based Centerra (TSX:CG) of its licence would be a huge blow to the miner and could further dampen investor confidence in the former Soviet republic.

Centerra president and CEO Ian Atkinson said the more than 300-page report by a Kyrgyz parliamentary commission makes a number of allegations including claims of substantial environmental damage by Kumtor.

"Judging from its summary conclusions, however, Centerra believes that the report's findings are without merit," Atkinson said in a statement.

Centerra said the Kumtor project, which has been operating since 1997, is in full compliance with Kyrgyz laws and meets or exceeds Kyrgyz and international environmental, safety and health standards.

It wasn't immediately clear when the Kyrgyz deputies would vote on the motion.

BMO Capital Markets analyst Andrew Breichmanas said reports suggest four proposals have been drafted by various parties, with voting on the resolutions likely to occur on Wednesday.

"The mine is of critical importance to the country's economy, making payments of US$1.9 billion in the Kyrgyz Republic since commencing operations including US$383 million last year," Breichmanas wrote in a report to clients.

Breichmanas noted that the Kyrgyz government, through Kyrgyzaltyn JSC, owns a roughly one-third stake in Centerra shares.

The open-pit gold mine run by Centerra's Kumtor Operating Company subsidiary, which accounts for 12 per cent of the impoverished country's economy, has been the source of a string of toxic spills in past years, including a cyanide spill into a river.

Kyrgyzstan, a country of five million people on China's mountainous western border, has come to prominence in recent years because it hosts a U. …

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