Vancouver – As Centerra Gold‘s (CG-T, CAGDF-O) headache in the Kyrgyz Republic dissipates a fresh one is building in Mongolia.
Having just finalized a partnership with the Kyrgyz Republic on its Kumtor mine – staying speculation of full-bore nationalization – the Mongolian government has suspended Centerra’s Boroo mine operating license.
The suspension adds to its woes at Boroo as workers have been on what Centerra alleges is an illegal strike since May 24.
Centerra says the government notice of suspension alleges problems with “record keeping, incorrect land use, and improper operating procedures.”
The suspension notice is valid for three months, by which time if Centerra has not resolved the problems with the Mongolian government, “there is a possibility that the licenses will be revoked,” Centerra reports.
The basis and intent of the Mongolian government’s allegations are not clear.
The Mongolian ambassador to Canada Dugerjav Gotov says he has not received notice of the suspension and could not comment. A call to Centerra went unanswered at presstime.
Annual production at the 6,500-tonne-per-day mine over the past few years has been between about 200,000 and 300,000 oz. gold.
Though a suspension of operations is never a good thing for any mining company, this one comes at a particularly painful time for Centerra – after a first quarter loss of US$20.3 million. Combined quarterly production from Kumtor and Boroo mine was 103,200 oz. gold.
It also hurt as Centerra finally appeared to have cured political issues plaguing it at its Kumtor mine in Kyrgyz.
June 11, the day before it announced the mine suspension in Mongolian, Centerra announced it had finalized an agreement for the Kumtor mine that was earlier ratified by both the Kyrgyz parliament and president.
The agreement lays out more straightforward taxes and gives the Kyrgyz government a stake in both Centerra and its majority stakeholder Cameco (CCO-T).
On news of the suspension of operations Centerra’s share prive fell 82¢ to close at $6.48.
The Boroo mine is 110-km northwest of Ulaanbaatar.
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