Centerra Gold (CG-T, CAGDF-O) officials have heard nothing from the Kyrgyz government regarding media reports that its Kumtor gold mine is being investigated for tax evasion.
Canadian Press reported that the government was auditing the company’s books back to 2003 for the Kumtor mine, which was forecast to produce 450,000 oz. gold in 2007.
Turatbek Masybayev, head of the tax police division, was quoted saying the mine had caused, “injury to the state of a very great size.”
Centerra says that the Kyrgyz Republic State Tax Inspectorate recently audited its subsidiary, Kumtor Gold, for 2003 and 2004, and concluded that the company had paid all taxes.
John Pearson, Centerra’s director of investor relations says the company has not been made aware of the investigation from the government.
“Our local people talk with the government officials (in the Kyrgyz Republic) all the time, and I’m sure that they are following up on this,” Pearson says.
He declined to comment on the accuracy of the media report.
“We believe there is no basis for this so-called reported investigation,” Pearson says.
This is not the first problem Centerra has dealt with in the Kyrgyz Republic. Last August, Centerra avoided the nationalization of Kumtor, when the the government instead nearly doubled its stake in Centerra to 29.3%, which is 53%-owned by Cameco (CCO-T. CCJ-N).
After the parliamentary vote, which has been delayed several months, Cameco will own 40.5% of Centerra and public shareholders will hold the remaining 30.2% of shares. The deadline for the vote is Feb. 15.
Centerra was able to enlarge its concession area by 25 sq. km and establish a stable tax regime whereby it would pay 11% on gross revenues in 2008, 12% in 2009 and 13% thereafter, which has yet to be voted on by parliament.
Centerra shares fell 6% in Toronto today, down 91 to $14.41 per share on a trading volume of about 508,000 shares.
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