April 28, 2016 / 5:12 PM / 2 years ago

UPDATE 1-Kyrgyz authorities search Centerra unit Kumtor's office

(Adds stock decline, dividend, background on dispute with government, mine size)

TORONTO, April 28 (Reuters) - Canadian miner Centerra Gold Inc said prosecutors and state law enforcement agencies had conducted a search at the Bishkek offices of its subsidiary Kumtor Gold Co on Thursday and its shares fell nearly 9 percent.

Centerra, which operates Kyrgyzstan’s biggest gold mine, Kumtor, said the search was to collect documents related to a criminal case alleging financial violations by its subsidiary.

The government has said it is concerned about a dividend paid by Kumtor to Centerra in 2013, Centerra said, adding that the dividend complied with Kyrgyz laws and 2009 agreements governing the Kumtor project.

Toronto-based Centerra and the government have been in drawn-out, on-and-off talks on restructuring the ownership of the mine. The ex-Soviet republic currently holds a 32.7 percent stake in Centerra.

In late December, the government said it had stopped talks with Centerra because the current agreement “ran counter to the country’s national interests.”

The Kumtor mine is the biggest foreign investment in Kyrgyzstan and accounted for 7.4 percent of the Central Asian nation’s GDP in 2014.

In February, Centerra cut its proven and probable gold reserves at Kumtor by 495,000 contained ounces to an estimated 5.6 million ounces of gold as of Dec. 31, 2015. The company processed 658,000 contained ounces in 2015. (Additional reporting by Manish Parashar in Bengaluru; Editing by Shounak Dasgupta and Alan Crosby)

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