UPDATE 2-Kyrgyz court fines Centerra Gold unit Kumtor $98 mln

Wed May 25, 2016 4:27pm EDT
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(Adds company response, share price move)

BISHKEK May 25 (Reuters) - A court in Kyrgyzstan on Wednesday fined the country's biggest gold miner, Kumtor Operating Company, a unit of Canada's Centerra Gold Inc, 6.7 billion soms ($98 million) for environmental damage.

Kumtor's lawyers told reporters at the hearing that they would appeal the ruling.

Kyrgyzstan's environmental inspection authority had said that Kumtor's placement of waste rock on its waste dumps was subject to tariffs normally applied to industrial or domestic waste, Toronto-based Centerra said in a statement.

The Central Asian republic and Centerra have been locked in a bitter dispute over profit-sharing and Bishkek said last year it was withdrawing from the negotiations.

Kyrgyzstan's environmental and technical safety authority has filed several lawsuits against Kumtor for a total of about $103 million and Wednesday's ruling was the second one this week, both being in favor of the state.

There are still two outstanding environmental claims, totaling around $5 million, made by the environmental inspection unit against Kumtor, Centerra said.

Kumtor also faces a claim for damages of some $220 million for environmental pollution fees from another Kyrgyz state body, Centerra said. The next court hearing on this matter is scheduled for May 30.

"Centerra strongly disputes the allegations made... and considers the claims to be without merit," the miner said. It will continue to challenge the claims in court and could also commence international arbitration, Centerra said.

Kyrgyz prosecutors raided the company's offices last month to collect documents related to a separate criminal case alleging financial violations by the firm.

Centerra's shares ended 1.4 percent firmer at C$7.07 on the Toronto Stock Exchange on Wednesday. (Reporting by Olga Dzyubenko in Bishkek; Additional reporting by Nicole Mordant in Vancouver; Writing by Olzhas Auyezov; Editing by Dmitry Solovyov and Louise Heavens)