May 28, 2013 / 6:40 PM / in 5 years

UPDATE 2-Centerra Gold says protesters block road to Kyrgyz mine

* Says mine operations currently not impacted

* Says production may be hit if road block not removed in timely manner

* Co in talks with local authorities, Kyrgyz government

By Bhaswati Mukhopadhyay

May 28 (Reuters) - Protesters have blocked the only road to Centerra Gold Inc’s flagship mine in Kyrgyzstan, the latest in a series of disruptions to jeopardize the gold production that underpins the Central Asian state’s fragile economy.

Toronto-listed Centerra Gold said operations at the high-altitude Kumtor mine had not been impacted, but said the community protest was interfering with the movement of supplies and personnel to and from the pit.

“If the road block is not removed in a timely manner, there may be a material negative impact on operations,” Centerra said in a statement on Tuesday. This would include the company’s gold production and financial results, it said.

The Kumtor mine, bisected by a glacier 4,000 meters (13,000 ft) above sea level, is the largest gold mine operated by a Western company in Central Asia and has been a frequent flashpoint between rival politicans in the restive ex-Soviet republic.

Amid calls to nationalize the mine, Kyrgyzstan’s parliament has demanded that the government redraw the 2009 agreement under which Centerra operates Kumtor, which contributed 12 percent of the country’s gross domestic product in 2011.

Kyrgyzstan gave Centerra three months to redraw terms before ripping up an agreement to run the Kumtor mine, accusing the Canadian miner of “colossal” environmental damage and underpaying the state.

John Pearson, Centerra’s vice-president for investor relations, said the parliament had asked the government to report back to it on the discussions with the company by June 1.

Pearson also said the government would probably ask for an extension of the timeline as its advisors had been put in place only in the last couple of weeks. “It does take some time to go through these discussions,” Pearson told Reuters.

Centerra’s stock, one-third of which is owned by the Kyrgyz state, has lost 58 percent of its value this year as gold prices have fallen and pressure on its Kyrgyz operations has mounted.

Pearson said the protesters on the road were demanding “various concessions” from the company, but that he had yet to see the full list.

“... It is typically things like ‘the road is in rough shape because the company’s vehicles continue to run across the road through our village ... So we want that fixed’ ... stuff like that,” Pearson said.

A year ago, around 100 protesters staged a three-day blockade of the same mountain road along which trucks carry workers, mining equipment and fuel to the mine. Their demands included environmental protection.

“We are in discussions with the local authorities and the Kyrgyz government to get this resolved, so that it doesn’t interfere with the movement of supplies and personnel to the mine site,” Pearson said.

Analyst Trevor Turnbull of Scotiabank said if the road block lasted for a week or more, operations at the mine might have to be stopped because it would probably run out of diesel fuel.

“But I expect this will probably be resolved within the space of a few days,” Turnbull said.

Centerra’s shares were trading up 5 percent at C$4.21 on Tuesday afternoon on the Toronto Stock Exchange.

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