Centerra's Kyrgyz gold mine caught in green tangle; shares plunge

Fri Jun 22, 2012 2:41pm EDT
 
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By Bhaswati Mukhopadhyay

(Reuters) - Canadian miner Centerra Gold Inc said allegations of environmental violations at its flagship Kumtor mine in Kyrgyzstan, made by a commission set up by the country's parliament, were without merit.

The Kyrgyz Parliament is discussing a report by the commission, formed to review Kumtor's compliance with environmental, health and safety standards, the company said.

Shares of Centerra, in which the Kyrgyz state owns a 33 percent stake, fell as much as 35 percent to a more than two-and-half-year low of C$7.66 on Friday on the Toronto Stock Exchange.

Centerra, which also produces gold in Mongolia, said it is not able to comment on the likely outcome of the discussions in parliament at this time.

The report said the company is polluting the site around the mine, Centerra CFO Jeffrey Parr told Reuters. He said he did not expect the report to interrupt the mine's production.

The economy in Kyrgyzstan, a mountainous former Soviet republic, relies heavily on gold production from Kumtor.

"The operating mine is vital to the economy. Whatever the outcome is, the parliament will tread very carefully in terms of what impact its decision will have on the operation of the mine," said analyst David West of Salman Partners.

Kumtor, one of the highest-altitude gold mines in the world at nearly 4,000 meters above sea level, accounted for nearly 12 percent of the country's GDP and more than half of its export revenue last year.   Continued...