Centerra Gold charged $98M fine for environmental damage in Kyrgyzstan

Canada’s Centerra Gold (TSX:CG) received Wednesday yet more bad news from Kyrgyzs authorities as a court ruled that its local subsidiary, Kumtor Gold Company (KGC), must pay about $98 million for environmental damage.

The move follows another court decision Monday ordering Kumtor, the country's biggest gold miner, to pay a $10,000 fine.

Kumtor's lawyers told reporters at the hearing that they would appeal the ruling, Reuters reports.

String of penalties are one of the latest signs of renewed tensions between the Kyrgyzstan government and the Canadian miner.

The string of penalties come less than a month after prosecutors raided Centerra’s offices in the Central Asian republic to collect documents related to a separate criminal case alleging financial violations by the firm.

They are also one of the latest signs of renewed tensions between the Kyrgyzstan government and the firm, which have been locked in a bitter dispute over profit sharing for over two years.

The government wants to swap its 32.7% stake in Centerra for half of a joint venture that would control the Kumtor gold mine, Kyrgyzstan's largest bullion operation, which lies near the Chinese border at an altitude of 4,000 metres.

Long-dragged dispute

Last year, former prime minister Joomart Otorbayev suggested a 50/50 joint venture with Centerra was not in the country's interests and rumours pointing to an imminent nationalization of the mine, later denied by Kyrgyzstan authorities, spread out.

Otorbayev resigned later that month after failing to clinch the restructuring deal. His successor, Temir Sariyev, said at the time that resolving the issue would be among his priorities.

Kyrgyzstan's environmental and technical safety authority has filed several lawsuits against Centerra’s subsidiary for a total of about $103 million. Wednesday's ruling was just the second one of those.

The vast open pit Kumtor gold mine is expected to produce 470,000-520,000 ounces at an all-in sustaining cost between $819-$908 per ounce this year.

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