UPDATE 2-Kyrgyz PM resigns after failing to reach new gold mine deal

Thu Apr 23, 2015 7:54am EDT
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* No agreement reached with Canada's Centerra

* PM had said proposed JV not in national interest

* Mine accounts for 15 pct of industrial output (Adds Otorbayev quotes, details)

By Olga Dzyubenko

BISHKEK, April 23 (Reuters) - Kyrgyzstan's Prime Minister Joomart Otorbayev resigned on Thursday after failing to clinch a deal with Canada's Centerra Gold on the future of the country's biggest gold mine.

Centerra, which operates the Kumtor mine, has been in talks with Kyrgyzstan for more than a year on a deal that would involve the former Soviet republic swapping its 32.7 percent stake in Centerra for half of a joint venture that would control the gold deposit.

Otorbayev, who this month withdrew his backing for the joint venture, resigned after several hours of heated debate in parliament over the government's performance last year. Many deputies attacked it for failing to reach a new deal with Centerra.

Kumtor, located in a permafrost area in the Tien Shan mountains near the Chinese border, is the central Asian country's largest gold field, and Centerra Gold's core asset. It accounted for 7.4 percent of Kyrgyz gross domestic product and 15.5 percent of industrial output in 2014.

As the main hard currency earner for the volatile, mainly Muslim nation of 5.5 million people, it is likely to loom large in parliamentary elections this autumn.   Continued...