Canada’s Centerra Gold Inc (CG.TO) announced Monday that the Kyrgyz units Kumtor Gold Co and Kumtor Operating Co have filed for bankruptcy in a US court following the nationalization of the miner’s Kumtor gold mine by the former Soviet Republic.
Centerra said the Chapter 11 filing would have no financial or operational impact on the company or any other areas of its business, including the Mount Milligan Mine in Canada, the Oksut Mine in Turkey, and the molybdenum business in North America.
Kumtor, the largest foreign investment project in Kyrgyzstan, was operated by Centerra. However, the government of the Central Asian country confiscated the mine, prompting the Canadian miner to seek redress in an international court.
The Kyrgyz legislature passed a law in early May giving the state the power to temporarily take control of the mine and appoint “outside management” to address alleged environmental and safety issues.
Centerra said bankruptcy proceedings would prevent further efforts by the Kyrgyz government to divest Kumtor Gold of its assets or otherwise “improperly dispose of” the Kumtor mine in violation of its investment agreements with the company.
Reuters could not immediately reach representatives of the Kyrgyz government for comment.
According to Centerra, the court-supervised restructuring envisages a worldwide automatic retention of all claims against the Kyrgyz business units that are currently considered to be solvent.
The Canadian miner said that while he hoped the process would ease the talks, he would continue to pursue arbitration to enforce agreements with the Kyrgyz government.
“These agreements are governed by New York law and we anticipate that the US lawsuit will serve to further protect Centerra’s interests on their terms pending reorganization or other settlement of the dispute,” said Scott Perry. Centerra’s chief executive, in a statement.
Centerra has suspended its 2021 production forecast and three-year outlook for Kumtor, which produced more than 556,000 ounces (15,762 kg) of gold last year.
The miner said he would also conduct a strategic review of his ownership of the subsidiaries “in light of recent events related to the Kumtor mine.”
Our standards: The Thomson Reuters Trust Principles.