Centerra may take Kyrgyzstan to arbitration in gold dispute - CEO

Mon Dec 16, 2013 11:50am EST
 
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By Alessandra Prentice

MOSCOW Dec 16 (Reuters) - Canada's Centerra Gold said on Monday it would consider taking Kyrgyzstan to arbitration if the company cannot reach an agreement with the government, a potential escalation of a bitter row over the country's largest gold mine.

The Toronto-listed firm is under pressure from the Kyrgyz parliament, which demands the state hold 67 percent in a proposed joint venture to run the Kumtor mine, a major foreign-currency earner for the Central Asian nation of 5.5 million.

Negotiations have taken place against a backdrop of riots and opposition calls to nationalise Kumtor, which accounted for 12 percent of Kyrgyzstan's gross domestic product in 2011.

Centerra is actively working with the Kyrgyz government to reach an agreement, but would seek arbitration were talks to fail, Chief Executive Ian Atkinson told Reuters during a visit to Moscow.

"Under our 2009 agreements we do have the right to go through arbitration. The government's well aware of that and been advised of it not just by ourselves but also by their own legal advisers," said Atkinson, who is flying to the Kyrgyz capital Bishkek this week to continue talks.

"If parliament does make a decision to denounce the agreements or nationalise the mine, we've got to work in the best interests of all Centerra's shareholders and that is an avenue that we have to look at and take quite seriously."

In September, the government and Centerra signed a memorandum of understanding, paving the way for Kyrgyzstan to swap its 32.7 percent stake in the Canadian firm for 50 percent in a venture that would own Kumtor.

But in October, the legislature voted to tear up the deal and seek control over the planned venture. It gave the cabinet until Dec. 23 to report on its talks with Centerra.   Continued...