The company is also expected to pay about $36 million to Kyrgyzaltyn, conditional to the cancellation of all legal proceedings involving the parties in all jurisdictions within 45 days of the date of the deal, Centerra said in the statement.
In exchange, Kyrgyzaltyn will return its 26% stake in Centerra back to the company, which plans to cancel the shares. The equity interest was valued at about C$972 million ($777m), based on the company’s shares closing price of C$12.56 a piece on April 1.
Roughly $25 million of the cash payment will be withheld by Centerra and remitted to the Canadian tax authorities on account of Canadian withholding tax payable by Kyrgyzaltyn on the shares exchange and the $11 million balance will be paid to Kyrgyzaltyn on closing of the arrangement.
The Toronto-based miner and the Kyrgyz government have clashed over financial and environmental issues related to the mine for years. Their standoff took a turn for the worse in May 2021, when the nation took control of the mine, alleging that Centerra was running it in a detrimental way for both the environment and nearby communities.
Centerra, which has denied all the allegations, kicked off arbitration shortly after and sued former director Tengiz Bolturuk, claiming that the dual Canadian and Kyrgyz citizen had secretly co-operated to stage the expropriation.
Kumtor was the largest of Centerra’s gold mines, contributing to more than 50% of the company’s total output.
The operation is also crucial to Kyrgyzstan. The mine accounts for a fifth of the ex-Soviet country’s total industrial output, it’s its largest private-sector employer and taxpayer and main foreign investment.
Between 1997 and 2020, Kumtor produced more than 13.2 million ounces of gold, with last year’s output slightly over 556,000 ounces.
