Kyrgyz government set to go from cruel to kind for Centerra

Some good news could be about to shine on Centerra Gold (CG-T) from the Kyrgyz Republic.

The company has been battling to finalize an agreement between itself and the government for over a year now — a process begun when a new parliament and new government refused to ratify an agreement the company had come to with the previous government back in August of 2007.

The new governing bodies allowed that agreement to expire last summer, leaving Centerra to turn to an international arbiter until negotiations with the government improved.

Last August some positive signs emerged when the company said it would drop its arbitration case, and continue to negotiate directly with the government.

That process may soon be yielding fruit, as Kyrgyz media outlets are saying the government is prepared to sign off an a new agreement.
But if Centerra knows about the government’s disposition towards it, it isn’t letting on.

The company says due to the sensitive nature of the negotiations it won’t comment on any possible outcome, nor will it comment on specifics of the new agreement.

“The new agreement deals with many issues, but the terms of agreement are confidential until it is presented to the government and the government approves it,” John Pearson, a spokesman for Centerra says.

The company did, however, confirm that a draft of a new agreement was submitted to the government after significant process was made in negotiations. The government is set to review the draft on Friday.
If the government does approve it, the document will still have to go through parliament and be approved there. Pearson wouldn’t speculate on how long that process could take.

Estimating how far away Centerra is from having a signed agreement is difficult as there is no other western company of Centerra’s size operating in the region and so there is no equivalent precedent by which to measure against.

Still, it is safe to say that like most countries in central Asia, the Kyrgyz Republic’s parliament is not held up in western political circles as a model of efficiency.

Centerra is currently 53% owned by Cameco (CCO-T).

A previously announced deal that was never signed-off on, would have seen Cameco’s share fall to 41%, while the government’s would rise to 29% from 16%.

Pearson says that throughout the negotiation process, mining at Kumtor has continued uninterrupted. The company did, however, have three licences taken in away last July.

Of the three the one known as Sarytor was the most important as it had a proven and probable reserve of 300,000 oz. gold. The other two were the southwest licence – which has already been mined out — and an exploration target.

In Toronto on Apr. 22 the company’s shares finished 11% or 66¢ higher at $6.44 on 1.5 million shares traded.