Centerra continues talks with Kyrgyzstan despite arrest of former CEO – by Seres Lu and Jeff Gray (Globe and Mail – August 5, 2015)

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Toronto-based Centerra Gold Inc. says it remains in talks with the government of Kyrgyzstan on the future of the company’s massive Kumtor gold mine in the mountains of the former Soviet republic, despite word that its former chief executive officer has been arrested on corruption allegations.

“We are committed to concluding these discussions,” John Pearson, Centerra’s vice-president of investor relations, said Tuesday, a day after the company disclosed that former president and CEO Leonard Homeniuk was detained in Bulgaria at the request of the Kyrgyzstani government.

Mr. Homeniuk, a Canadian mining executive who spent 16 years at the helm of the company as it developed the mine in Kyrgyzstan, retired in 2008. In a statement released on Monday, the company said he was picked up by Bulgarian authorities while on a family vacation. His photo was on Interpol’s website, saying he was wanted by Kyrgyzstani officials for “involvement in corruption.”

Mr. Homeniuk, 68, is now a director of Polymetal International PLC, a London- and Moscow-listed Russian gold and silver miner with operations in Russia and Kazakhstan. He is also listed as the founder and CEO of a private company, Polygon Gold, involved in Russian mining ventures.

Centerra said the allegations, which it did not detail but said involve payments to Kyrgyzstani officials, are “completely unfounded.”

Centerra, whose operations have been plagued by protests and allegations of environmental damage, has been in tense negotiations with Kyrgyzstan since 2009, discussing a restructuring of the ownership of the Kumtor mine that would give the government a larger share of the proceeds. Kumtor, located in Kyrgyzstan’s Tian Shan mountains, is the largest gold mine in Central Asia operated by a Western company, and is extremely valuable for both Centerra and its impoverished host country.

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