Dec 14 Canadian miner Centerra Gold Inc
said it faces a $152 million environmental damages claim from
the Kyrgyzstan government related to mining at its Kumtor
Centerra, whose shares rose 2 percent, said the claim was
"exaggerated or without foundation" but it could not be sure
that the matter could be resolved without a material impact on
"I think some investors were thinking it was going to be a
lot worse in terms of environmental damage from the Kyrgyz point
of view," said David West, an analyst at Salman Partners.
The Kumtor mine accounted for 12 percent of the country's
GDP and more than a half of its exports in 2011. Toronto-based
Centerra is one-third owned by the Kyrgyzstan government.
The dispute could change the financial arrangements for the
mine, the largest gold mine operated in Central Asia by a
western company, Canaccord Genuity analyst Steven Butler said.
"I'm concerned not so much about environmental claims as I
would be about fiscal terms, about whether or not the government
will want a greater stake in the Kumtor project either on a
direct ownership basis or a gross revenue royalty basis," he
There have been persistent calls to nationalize the mine,
although new Prime Minister Zhantoro Satybaldiyev ruled this out
at the beginning of October.
Earlier this year, a state commission said it would review
the environmental, legal and fiscal structure of Kumtor and
submit its report to the Krgyz parliament by early 2013.
The government is paid a 14 percent tax on gross revenue
from Kumtor, Centerra's flagship mine.
The company said the claim by the Kyrgyzstan environmental
authority included about $142 million related to the placement
of waste rock from mining operations on waste dumps.
"The activities raised in the claims, particularly the
mining and placement of waste rock on waste dumps, have been
approved at all times by appropriate Kyrgyz authorities," Chief
Executive Ian Atkinson said in a statement on Friday.
The Kumtor mine, located near the Chinese border in
wilderness some 4,000 meters (13,000 feet) above sea level,
employs about 2,700 full-time workers.
The company previously cut its 2012 production outlook to
415,000 to 425,000 ounces of gold due to ice movement at Kumtor,
its only producing mine.
Centerra shares rose to C$8.26 by late morning on the
Toronto Stock Exchange.