Centerra’s Bishkek office searched by Kyrgyz general prosecutor

TORONTO (miningweekly.com) – Canadian miner Centerra Gold on Thursday reported a raid of its Kyrgyz subsidiary Kumtor Gold Company’s (KGC’s) Bishkek office on Thursday afternoon by the country’s general prosecutor.

The General Prosecutor’s Office (GPO) had issued a press release stating that the purpose of the search was to collect documents relevant to a criminal case relating to alleged financial violations regarding a $200-million intercorporate dividend declared and paid by KGC to Centerra in December 2013.

Mine operations remained unaffected by the GPO's action.

According to Centerra, the Kyrgyz government had “very recently” indicated its dissatisfaction with the current arrangements governing Centerra and the Kumtor project. The government repeated certain historical concerns and allegations regarding Centerra's and KGC's management and governance, as well as the operations of the Kumtor project. It also expressed its desire to resolve all matters through proposals that it would provide to Centerra.

“Centerra has communicated to the Kyrgyz Republic government its openness to receive and discuss proposals to resolve such concerns in a manner that is fair to all of Centerra's shareholders. No negotiations with the Kyrgyz Republic government have taken place to date,” Centerra stated.

The company reiterated its position that its intercorporate dividend complied with the 2009 agreements governing the Kumtor project and all applicable Kyrgyz laws.

Centerra advised that it remained committed to working with the Kyrgyz government to resolve outstanding issues according to the provisions of the Kumtor project agreements, which provided for all disputes to be resolved by international arbitration, if necessary.

While a shadow of uncertainty had been growing over its flagship Kumtor mine, Centerra had been geographically diversifying its portfolio, with development projects located in Mongolia, Turkey and Canada.

Centerra’s TSX-listed stock fell as much as 11.32% to C$6.42 on Thursday following the news.