Centerra Gold Issues Ultimatum to Kyrgyzstan Govt. Over Permits at Flagship Site

Canadian mining company Centerra Gold warned that it will cease operations at its most prized asset in Kyrgyzstan if it does not secure the permits and approvals it needs by the end of next week.

The Kumtor mine, in the east of the country which is south of Kazakhstan, is a key source of revenue for both Centerra and the government, who are yet to reach an agreement over the issue. The news also resulted in a sharp fall in Centerra share prices.

This latest setback is one of several to have hit the mine since the project began back in 1994. Threats of nationalisation, riots and a recent $300 million ecological damages lawsuit have provided Centerra’s operating unit Kumtor Gold Company (KGC) with great difficult to go alongside the otherwise profitable programme.

It has been working for months on seeking approval for the 2014 mine plan and such permits are usually granted at the beginning of the year.

If an agreement is not reached then the company will shut down all mine and mill operations at the end of next week, which ironically, or to some perhaps ominously, is Friday the 13th. It would only keep enough staff to provide essential environmental and safety monitoring, security, and essential maintenance of the site’s equipment.

The Kumtor mine operation is a complicated one and the openpit is subject to significant natural hazards, including in-flow of water, ice movement from the Davydov glacier toward the openpit and pit-wall instability.

An extended shutdown without active monitoring and management would almost certainly damage the mine and Centerra’s profits as a result. How long this shutdown will take place for will remain to be seen if the threat is carried through.