Canada's Centerra faces environmental claim from Kyrgyz government
(Reuters) - Canadian miner Centerra Gold Inc said it faces a $152 million environmental damages claim from the Kyrgyzstan government related to mining at its Kumtor project.
Centerra, whose shares rose 2 percent, said the claim was "exaggerated or without foundation" but it could not be sure that the matter could be resolved without a material impact on the company.
"I think some investors were thinking it was going to be a lot worse in terms of environmental damage from the Kyrgyz point of view," said David West, an analyst at Salman Partners.
The Kumtor mine accounted for 12 percent of the country's GDP and more than a half of its exports in 2011. Toronto-based Centerra is one-third owned by the Kyrgyzstan government.
The dispute could change the financial arrangements for the mine, the largest gold mine operated in Central Asia by a western company, Canaccord Genuity analyst Steven Butler said.
"I'm concerned not so much about environmental claims as I would be about fiscal terms, about whether or not the government will want a greater stake in the Kumtor project either on a direct ownership basis or a gross revenue royalty basis," he said.
There have been persistent calls to nationalize the mine, although new Prime Minister Zhantoro Satybaldiyev ruled this out at the beginning of October.
Earlier this year, a state commission said it would review the environmental, legal and fiscal structure of Kumtor and submit its report to the Krgyz parliament by early 2013.
The government is paid a 14 percent tax on gross revenue from Kumtor, Centerra's flagship mine. Continued...