The National Post is Canada’s second largest national paper.
Centerra Gold Inc. is so used to getting threatened by its host government in Kyrgyzstan that it scarcely blinks anymore.
Over the past couple of weeks, Centerra watched as the Kyrgyz parliament passed a law prohibiting activities (like gold mining) that affect glaciers, and as a government agency suggested the company’s flagship Kumtor mine could be suspended. On top of that, its 2014 mine plan has still not been approved by the state.
If these events happened in another country, mining investors would be running for the hills. But they are so commonplace in Kyrgyzstan that Centerra shares barely budged, remaining around the $5.50 mark so far this week. It is simply the price Centerra has to pay to operate in a country that the Fraser Institute recently deemed the worst mining jurisdiction on earth.
Yet through all the noise, the one constant is that the Kumtor mine continues to run and churn out cash. It has done so for 16 years, with only one brief interruption last year that had anything to do with politics.
“Even though the mine comes under a lot of rhetoric and is used as a political football, they do allow it to continue to operate because it’s such a key part of the country,” Centerra chief executive Ian Atkinson said in an interview. “We’re still the largest employer in the country, the largest taxpayer, and a key part of the revenue stream of the government.”
Centerra’s first-quarter earnings, released late Tuesday, showed Kumtor had another solid quarter. The mine produced nearly 103,000 ounces of gold at an all-in sustaining cost of US$1,058 an ounce, which was 5% lower than the year-ago period. That helped the company eke out a US$2.1-million profit and improve its liquidity position despite weak gold prices.
But the Kyrgyz political overhang remains as unnerving as ever. In addition to the issues mentioned above, the company has been unable to finalize a pact with the government that would clarify ownership of the mine.
For the rest of this article, click here: http://business.financialpost.com/2014/05/07/centerra-gold-continues-to-navigate-minefield-of-kyrgyzstan-politics/