Centerra Gold Inc. is pursuing an international arbitration suit against Kyrgyzstan, after the former Soviet state indicated it was getting ready to nationalize a giant gold mine wholly owned by the Canadian company.
On Friday, Toronto-based Centerra said that, in the space of 24 hours, the landlocked country in Central Asia passed a new law through parliament that allows the government to seize external control of mining assets granted under concessions when there are safety concerns.
Centerra’s Kumtor mine is the only asset in the country that qualifies under the criteria.
In addition, Kyrgyzstan claimed that Centerra owes it in excess of US$170-million in back taxes, and the gold miner is facing a civil suit in the country, alleging environmental malpractice, with claimants demanding damages of US$3-billion.
After news of the government’s claims broke on Friday, Centerra’s shares sank by 30 per cent, the worst single day performance in almost nine years.
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