April 17, 2015 / 10:09 PM / in 3 years

UPDATE 1-Kyrgyz lawmakers want more say in Centerra, not nationalisation

(Adds comment from Centerra, details on management circular, closing stock price)

BISHKEK, April 17 (Reuters) - The ruling coalition in Kyrgyzstan’s parliament said on Friday the Central Asian country should seek to raise its representation on Centerra Gold’s board, rejecting calls to nationalise the flagship venture with the Canadian investor.

“We do not support nationalisation. Our decision is to remain in Centerra and change its management. We do not trust the current management,” Felix Kulov, the leader of the three-party majority in the Kyrgyz legislature, told journalists after the coalition’s meeting.

“We support the government, we will not nationalise the venture,” said coalition member Omurbek Tekebayev.

Kyrgyzstan and the Toronto-listed miner have been in talks since 2013 on a deal that would involve the former Soviet nation swapping its 32.7 percent stake in Centerra for half of a joint venture that would control the Kumtor mine.

But Kyrgyz Prime Minister Joomart Otorbayev said last week that forming such a venture was no longer in Kyrgyzstan’s interest after a drop in the mine’s reserves, recently published by Centerra Gold.

He said Kyrgyzstan wanted to increase the number of its members on Centerra’s board of directors.

Centerra’s management information circular for its May 8 annual meeting is currently being mailed to shareholders, the company said.

The 11 director nominees, including three Kyrgyz nominees, elected at last year’s annual meeting, were approved by Centerra’s nominating and corporate governance committee and the full board of directors to be voted on at this year’s meeting.

The coalition plans to put to vote in parliament next week a draft resolution rejecting Kumtor’s nationalisation, backed by the country’s opposition, and propose to promote Kyrgyzstan’s interests in Centerra Gold by “introducing world-class managers” in its board. No further details of the draft were available.

Kumtor, located in a permafrost area in the Tien Shan mountains near the Chinese border, is Kyrgyzstan’s largest gold field and Centerra Gold’s core asset.

In February Centerra published its 2014 year-end reserve and resource update, which put Kumtor’s proven and probable reserves at an estimated 6.1 million ounces of contained gold, compared to 8.5 million as of end-2013.

Centerra said in an email late on Friday that it will continue to engage constructively and in good faith with the Kyrgyz government to resolve outstanding matters affecting the Kumtor project.

Shares in Centerra dropped 2.4 percent on Friday to end at C$6.18 on the Toronto Stock Exchange, down 21 percent from a 52-week high of C$7.83 in early February. (Reporting by Olga Dzyubenko and Susan Taylor in Toronto.; Writing by Dmitry Solovyov; Editing by David Evans, Toni Reinhold)

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