TORONTO (Reuters) - Centerra Gold Inc is likely to reinstate its dividend after it closes a deal with Kyrgyzstan to resolve a longstanding dispute over the Kumtor gold mine, its chief executive said in an interview.
The company expects the agreement, which it reached in September 2017 to resolve issues including environmental and profit sharing disputes, to close by June, Centerra CEO Scott Perry said on the sidelines of the Prospectors and Developers Association of Canada mining conference in Toronto.
“We’re so close now. We’re targeting closing in first-half of this year, prior to May 31,” Perry said.
Included in the agreement is the removal of restrictions placed on the company in 2016 regarding the repatriation of cash to Canada, which saw Centerra cease its dividend payments.
“The government is rightfully saying ‘You’re enjoying the benefits of the mine, recommence dividends,’” Perry said. “I’ve replied that I’m very comfortable making that recommendation to the board, but will only do that if and when the strategic agreement is closed.”
Centerra is also considering the increase of the size of the mill facility at Kumtor, and is currently studying the economic feasibility of such an expansion, and expects to make a decision by summer, Perry said.
If the expansion goes ahead, it could result in a 10 percent to 15 percent increase in the mill’s capacity, he added.
Centerra is the biggest foreign investor and taxpayer in Kyrgyzstan, contributing up to 10 percent of the Central Asian country’s gross domestic product. The Kyrgyz state owns a 26 percent stake in Centerra.
In July 2016, Centerra acquired U.S.–based Thompson Creek Metals, for approximately $1.1 billion, in an effort to reduce its exposure to Kyrgyzstan.
Reporting by Nichola Saminather; editing by Ernest Scheyder and G Crosse
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