Canadian company Centerra Gold Inc (CG.TO) said on Monday that Kyrgyz units Kumtor Gold Co and Kumtor Operating Co have filed for bankruptcy in a US court following the nationalization of the Kumtor mining gold mine by the former Soviet republic.
Centerra said the Chapter 11 filing would have no financial or operational impact on itself or any other area of its business, including the Mount Milligan mine in Canada, the Oksut mine in Turkey and its molybdenum business in North America.
Kumtor, Kyrgyzstan’s largest foreign investment project, was operated by Centerra. However, the government of the Central Asian country seized the mine, prompting the Canadian miner to seek redress in an international tribunal.
In early May, Kyrgyz lawmakers passed a law giving the state the power to temporarily take control of the mine and appoint “external management” to address alleged environmental and safety concerns.
Centerra said bankruptcy proceedings would prevent the Kyrgyz government from stripping Kumtor Gold of its assets or “inappropriately disposing” of the Kumtor mine in violation of its investment agreements with the company.
Kyrgyz government officials could not immediately be reached by Reuters for comment.
Centerra said the court-supervised restructuring provides for an automatic worldwide suspension of all claims against Kyrgyz business units, which it says are currently solvent.
The Canadian miner said that while he hopes the process will facilitate talks, he will continue to pursue arbitration proceedings to enforce agreements with the Kyrgyz government.
“These agreements are governed by New York law, and we expect the US legal proceedings will serve to further protect Centerra’s interests on their terms pending a restructuring or other resolution of the dispute,” the director said. Centerra General Scott Perry in a statement.
Centerra has suspended its production forecast for 2021 and its three-year outlook for Kumtor, which last year produced more than 556,000 ounces (15,762 kg) of gold.
The miner said he would also conduct a strategic review of his subsidiary ownership “in light of recent events involving the Kumtor mine”.
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