Holiday strike at Centerra’s Kumtor

Christmas isn’t coming early for Centerra Gold (CG-T). The Toronto-based company with a penchant for operating in difficult regions has to contend with a strike at its Kumtor mine in Kyrgyzstan as the holidays fast approach.

The strike which Centerra has labeled “illegal” is being undertaken by the mine department and some support services over the renewal of the current labour contract, which expires Dec. 31 of this year.

Meetings are scheduled between the work force, trade union and Kumtor management, prompting a spokesperson for Centerra to tell Reuters that a resolution was hoped for by the end of the week.

Milling operations at the site are continuing by the use of stockpiles.

Centerra says it has the full support of the Kyrgyz government, as the minister of labour had already issued a letter to workers telling them that a strike would be deemed illegal.

Centerra wholly owns Kumtor, a project which it describes as the largest gold mine in Central Asia operated by a Western company. Last year the mine turned out roughly 500,000 oz. of gold, but this year’s totals will come in at roughly 300,000 oz. due to the previously reported movement of a pit wall.

Almost 1,500 people work at the mine.

In Toronto on Dec. 19 Centerra’s shares were off just over 3% or 42 to $12.88 on roughly 550,000 shares traded.

Centerra which was created as a spin-off of Cameco‘s (CCO-T, CCJ-N) gold assets — is still majority owned by the uranium giant.

Just two weeks ago, on Dec. 7, the company issued positive news regarding plans to put US$36-million into underground exploration and development at Kumtor in second half of 2007.

The target of new exploration drilling is the high-grade SB zone, which remains open along strike and down dip. The zone has an inferred resource of 1.4 million oz with grades as high as 20.3 grams gold per tonne but lies below the planned pit depth.

Centerra also announced plans to expand its heap leaching capacity at its Boroo gold mine in Mongolia. The new US$20-million facility will be set to take 3 million tonnes of ore a year and should begin production in the first quarter of 2007.