Kyrgyz state seized control of the lucrative Kumtor mine from the Canadian firm Centerra Gold
Seven months after the Kyrgyz state seized control of the lucrative Kumtor mine from the Canadian firm Centerra Gold, the company has confirmed that it finally entered talks with Bishkek. Last summer, Centerra complained that Bishkek was refusing to engage in negotiations.
According to a company press release dated January 3, “Negotiations with representatives of the Kyrgyz Republic are ongoing, and there can be no assurance that any proposed resolution will be consummated or as to the final economic and other terms and conditions of any such resolution, if agreed.”
I’ve summarized the initial series of events previously:
The Kyrgyz parliament passed a law in early May  allowing for the imposition of “external management” on companies with mining concession rights that are found to be violating environmental protection and safety obligations. Conveniently, on the same day the bill was passed, a Kyrgyz court issued a $3 billion fine to Centerra’s Kyrgyz subsidiary following a suit by four private citizens (one of whom was the son of the head of Kyrgyzstan’s State Ecology and Climate Committee) on behalf of Kyrgyzstan seeking reparations for the mine’s past environmentally damaging practices. Then Kyrgyz tax authorities said the company owed $170 million in back-taxes.
The onslaught culminated in the Kyrgyz government seizing control of the mine on May 17.
Centerra filed for Chapter 11 bankruptcy in the United States on behalf of its two Kyrgyz subsidiaries — Kumtor Gold Company and the Kumtor Operation Company — “to protect the interests” of the company and “prevent any further efforts by the Kyrgyz Government to strip” the mine of its assets.
The initial three-month external management was extended in August. Centerra, meanwhile, initiated international arbitration proceedings.
As 2021 came to a close, the Kumtor saga seemed stuck. Arbitration can be a very long process, so there were no clues as to how long it could drag on.
In December 2021, Kyrgyz authorities announced that they were suing Centerra over the company’s alleged blocking of user and administrator access to Kumtor’s computers from May 2021. The company pushed back, saying that “Centerra’s global IT systems restricted user access to preserve the integrity of the organization’s global IT infrastructure and its confidential information” but did nothing that put the mines’ safe operation at risk. Around the same time, news emerged suggesting that the mine’s revenues were down significantly.
In its recent press release, the company confirmed that it is in talks with Kyrgyz authorities toward an out-of-court settlement of their dispute. But the mere fact that talks are happening does not mean a resolution will come quickly or easily. Centerra’s demands set a high bar.
The press release laid out five expectations with regard to any resolution of the conflict. These include the return of state-owned mining company Kyrgyzaltyn’s shares in Centerra, which Centerra would then cancel. Kyrgyzaltyn is presently Centerra’s largest single shareholder, with a 26.1 percent stake in the company. Centerra also said that it would expect the resignation of Kyrgyzaltyn’s two nominees to the Centerra board of directors.
In addition, Centerra expects that Kyrgyzstan would assume all responsibility for the company’s two Kyrgyz subsidiaries and the Kumtor Mine. Centerra also stated an expectation of payment in cash “equal to the net amount of the three dividends paid by Centerra in 2021 that Kyrgyzaltyn JSC did not receive as a result of the seizure of the mine and certain other financial consideration associated with the settlement of inter-company balances between Centerra and its two Kyrgyz subsidiaries.”
Finally, Centerra would expect the “full and final release of all claims” and the end of all legal proceedings “in all jurisdictions with no admissions of liability.”
Put more simply: Centerra wants to wash its hands of the Kumtor headache and walk away, with at least some compensation. Bishkek, for its part, may prefer an out-of-court settlement for fear of losing in court over its seizure of the mine.
Ahead of Centerra’s announcement, Kyrgyz President Sadyr Japarov visited the Kumtor mine and issued a statement: “At present, the parties are finalizing the discussion of an amicable agreement, including, among other things, the condition for the full transfer of the Kumtor Gold Company to the Kyrgyz Republic.”
Dundee Precious Metals saw its third consecutive year of record annual gold production in 2021
TSX-listed Dundee Precious Metals saw its third consecutive year of record annual gold production in 2021. Its two gold mines in Bulgaria performed better-than-expected in Q4, while processing at the Namibian Tsumeb smelter fell behind guidance.
“Our mining operations continued to deliver impressive performance in the fourth quarter, driven by a new record for quarterly gold production at Ada Tepe, combined with strong results from Chelopech,” Dundee’s president and CEO David Rae said on January 10.
The Canada-based miner’s consolidated gold production was 310,000oz for 2021, which is at the higher end of the 271,000-317,000oz guidance. This came after production of 82,800oz in Q4.
Canaccord Genuity Capital Markets analyst Dalton Baretto said the consolidated Q4 production beat Canaccord’s forecast of 73,000oz by 13%.
Baretto said the result was due to higher throughput, grades and recoveries at the central-western Bulgarian Chelopech underground gold-copper mine.
Chelopech’s Q4 gold production was 49,000oz, which took the 2021 total for the operation to 177,000oz. This beat the 156,000-176,000oz guidance, but was down from the 179,000oz achieved in 2020.
Chelopech’s 2021 copper production was in line with guidance at 34,700 million pounds after production of 9.2Mlbs in Q4.
Dundee reported that the Southern Bulgarian Ada Tepe mine – which began commercial production in June 2019 – produced 133,000oz of gold in 2021, which compares with guidance of 115,000-141,000oz. Production was 119,000oz in 2020.
The 2021 total came after Ade Tepe produced 33,800oz in Q4, which was “slightly above plan due to higher grades”, Dundee said.
Ade Tepe’s Q4 gold production was in line with Baretto’s forecast.
“The Tsumeb smelter processed approximately 52,000 tonnes of complex concentrate during the fourth quarter, reflecting an 8-day maintenance shutdown to repair a water leak in the offgas system,” Dundee said.
The miner noted that this resulted in the smelter processing about 189,700 tonnes of complex concentrate in 2021, which was below revised guidance of 195,000-200,000t.
Meanwhile, Dundee announced in November that it would supplement its base US$0.03/share quarterly dividend with the repurchase of 152,000 shares at C$7.51/share.
In aggregate, Dundee repurchased 1,723,800 common shares in 2021 at an average price of C$7.64/share, for a total value of about C$13.2 million, the company said.
Baretto said the total value implies an incremental C$0.07/share, and together with the base dividend implies a total trailing 12-month yield of 2.9% at the current C$7.33 share price.
Canadian Medgold continues to explore gold and silver near Bosilegrad in the spring
The Canadian company Medgold Resources, which discovered a rich gold and silver deposit near Bosilegrad, will continue research in the spring.
As Aleksandar Vulović from this company, which discovered the Barje site near Bosilegrad in 2018, told eKapija, there is an economic justification for the research to continue.
– We actively explored the site in 2018 and 2019, while last year we slowed down due to the corona, but next year we will continue with earlier intensity in the spring. Now we have a potential partner, the company Metaltech from Australia, which should elaborate the project in more detail – says Vulović.
When asked when we could expect the project to be concretized, Vulović said that it was too early to talk about it, because it would take several more years to do more detailed research and accompanying technical studies that would enable the possible exploitation of the ore.
– For now, we only have the right of investigation, we still do not have the right of exploitation. For now, we are in the middle of the project, the next steps are the continuation of research, and then the development of spatial planning documentation, which leads to obtaining the right of exploitation – explains the interlocutor of our portal.
He adds that in two years, the company will have a clearer picture of what the deposit is and more detailed information about the ore body, on the basis of which the design, excavation methodology and mining facilities are then done.
Vulovic also points out that the company has a desire to start research at some other locations in Serbia, and that it should be seen which locations are still free, but he notes that Barje is currently Medgold’s priority in Serbia.
On the website of Medgold istraživanja doo Belgrade, which is a Serbian subsidiary of the Canadian company, it was pointed out that Medgold currently has five approved exploration rights, each of which covers approximately 100 square kilometers and which includes a potentially rich belt of mineralization of silver and gold. and southern parts of Serbia.
Near the Municipality of Bosilegrad, Medgold has three exploration rights covering a total of about 250 square kilometers, two of which are part of the Tlamino project, which includes the Barje location.
As the media reported last summer, Medgold found close to 19.3 tons of gold, worth more than a billion dollars, within the Tlamino project.
Canadian investor disappointed after Rosia Montana mining landscape added to UNESCO’s world heritage list
The historic site of Rosia Montana, a gold mining site dating back to the period of the Roman Empire, was included on UNESCO’s world heritage list on July 27, prompting the most diverse reactions
The most expected one came from Gabriel Resources – the Canadian TSX Venture Exchange listed firm that operates Rosia Montana Gold Corporation, the project company for the gold mining project located in the area subject to UNESCO decision. It previously asked for damages of USD 4.4 billion from Romania at the International Centre for Settlement of Investment Disputes (ICSID) in Washington for the blocking of the mining project. And Romania asking for UNESCO protection may serve its lawyers in demonstrating the country breaches its agreements.
“Such application [for UNESCO protection] and the inscription [in the list of protected areas] are fundamentally incompatible with the rights the Gabriel group acquired to develop the Project and the continued existence of an exploitation mining license for the Project area. These acts, promoted by the Romania government, ignore the existing and valid decisions of Romania’s Ministry of Culture, removing the vast majority of the Project area’s status as a protected archaeological site and clearing the area for mining activities. Furthermore, most of the cultural heritage for which protection is sought through the UNESCO Application and which was identified by the extensive archaeological research programs funded by Gabriel would have been protected in any event by the Project irrespective of the Inscription”, the company says in a note to investors.
The company stresses that “UNESCO Application and Inscription are fundamentally at odds with Romania’s obligations under its investment treaties in relation to Gabriel’s investments and these acts, together with other measures taken”.
In Romania, the reactions were diverse and broadly politically biased.
Arbitration in favour of Denison Mines and its uranium assets in Mongolia
Denison Mines, Canada based company, won arbitration ruling over Mongolian uranium assets sale after the London Court of International Arbitration (LCIA) has rendered a final award in favor of this company for the arbitration proceedings between the company and Uranium Industry (UI), relating to the 2015 sale of Denison’s assets in Mongolia.
The primary assets were the exploration licences for the Hairhan, Haraat, Gurvan Saihan and Ulzit projects.
The arbitration panel declared that UI violated its obligations to Denison under the related agreements, and ordered UI to pay the company $10-million, plus interest at a rate of 5% a year from November 16, 2016, as well as certain legal and arbitration costs.
The arbitration panel also dismissed all other claims and counterclaims.
In November 2015, Denison completed the sale of its mining assets and operations located in Mongolia to UI pursuant to an amended and restated share purchase.
In September 2016, the Mineral Resources Authority of Mongolia formally issued mining licence certificates for all four projects, triggering Denison’s right to receive additional post-closing contingent consideration of $10-million.
Denison has extended the payment due date of the mining licence receivable from November 16, 2016 to July 16, 2017, and agreed to a 5% a year interest rate.
The uranium exploration company turned to arbitration after the required payments were not made.
Canadian Gold Pool at International Arbitration Tribunal – Kazakhstan wins the lawsuit
After nearly 20 years from the termination of the contract, in 2016, Gold Pool initiated a United Nations Commission on International Trade Law (UNCITRAL) arbitration proceedings against Kazakhstan based on the Canadian-Soviet bilateral investment treaty. The treaty was signed two years before Kazakhstan claimed its independence – allegedly making it the legal successor to the treaty. The Kazakh Ministry of Justice press service reported that on July 30 the International Arbitration Tribunal issued a unanimous decision on the immunity and dismissal of the case initiated in 2016 by Gold Pool, a Canadian junior mining company, against Kazakhstan.
The plaintiff claimed $917 million regarding the agreement on trust management of the Kazakhaltyn national gold mining and processing enterprise.
“The Gold Pool lawsuit is another attempt by so-called ‘investors’ to make money on arbitration, based on doubtful facts. The decision of the arbitration tribunal is a confirmation that Kazakhstan is forming a modern legal system that is capable of withstanding such hostile corporate actions,” said Kazakh Minister of Justice Marat Beketayev.
According to the statement, Gold Pool received management of Kazakhaltyn in March 1996 to pay off the company’s debts, restore and modernize production, create a favorable financial environment and an effective market strategy. The Canadian company, however, failed to follow its contractual obligations.
Kazakhstan terminated the contract in August 1997 after repeated systematic violations. Gold Pool responded with a lawsuit against the Kazakh government in international commercial arbitration under a management agreement. The case did not take any procedural steps and expired in 2000.
The Kazakh side strengthened its position on the absence of any obligations under the treaty after a scrupulous analysis of interstate agreements archival documents, among other documents. One of the key contributing papers was the legislative framework of the 1990s, which had undergone significant changes at the time of the filing of the arbitration claim.
The tribunal ordered the plaintiff to reimburse Kazakhstan for all the costs incurred in the arbitration process.
The Kazakh Ministry of Justice and Curtis, Mallet-Prevost, Colt & Mosle international law firm represented Kazakhstan’s interests in this case.
Euro Sun Mining raised money for mining projects in Romania
Euro Sun Mining has raised CAD 22.32 million in funding (USD 16.6 mln). The company operates the Rovina gold project and another prospect in Romania and will use the funds for exploration and the development of its mining projects.
In 2018, the Romanian Government completed the concession license ratification, allowing the Canadian company to start exploiting gold and copper at Rovina, in Hunedoara county.
In 2015, the National Agency for Mineral Resources (ANRM) granted the exploitation license to the Canadian group for 20 years. At that time, the value of the mine’s potential production was estimated at USD 3.6 billion for gold and USD 1.7 bln for copper, with the state relying on royalties of USD 310.4 mln.
The Rovina gold deposit, the second largest in Europe, contains measured and indicated resources of 204 tons of gold and over 635,000 tons of copper.
Miedzi Copper Corporation discovers deposits of silver and copper in Poland
Miedzi Copper Corporation had discovered deposits of silver and copper worth an estimated $60 billion in western Poland. Under Polish law natural resources belong to the state, so, if mined, the deposits could provide a handy boost to the nation’s coffers.
The riches lie buried around 1,900 metres beneath the surface near the towns of Zielona Góra and Nowa Sól, and, if extracted could create 8,600 jobs and bring in an estimated PLN 1 billion a year to the state budget for decades to come, according to Miedzi Copper Corporation, the Canadian firm that discovered the deposits.
“The value of the deposits is worth an estimated $60 billion,” said Professor Stanisław Speczik, CEO of Miedzi Copper Corporation.
“We want to start building the mine in 2024-25. This deposit is the property of the state so we will only get a mining license.”
It may not be all good news for the Canadian firm, however. It has been in competition with KGHM, a Polish mining giant, for a number of years, and there is speculation that the government might award the license to the local firm rather than the foreign company.
There are also environmental concerns
Although modern mining methods have less of an environmental impact than their predecessors there are fears new mines could damage the ecology and lead to people having to give up their homes so the mine can be built.
The news of the new deposits should, however, bolster Poland’s already good standing as a country rich in metals.
According to the Polish National Geological Institute, Poland ranked second and fifth in the world in 2015 when it came to anticipated economic resources of silver and copper.
People Power in Romania stopped a mining project – Now the corporation is suing for billions of dollars
Recently, a colorful group gathered outside a World Bank building in downtown Washington, D.C. to defend a community 5,000 miles away in Romania. Most had never met each other but when each pointed to her or his hand-drawn sign it was smiles and nods all round. And before you knew it, they were chanting slogans together as if they had done this before, including one in the Romanian language: “Uniti Salvam Rosia Montana!”
Several Romanian citizens were joined at the demonstration by activists from the Center for International Environmental Law, the Institute for Policy Studies, Earthworks, the AFL-CIO, and other U.S. environmental justice organizations. All had come together to defend a place called Rosia Montana.
Nestled in Romania’s mountainous and resource-rich region of Transylvania, Rosia Montana is a pretty town with a history dating back 2000 years. This place, however, holds an ineffable importance that goes beyond its historical significance. Today, it is an inspiring example of how a group of stubborn local farmers fought for their homes, their community, their lands, and their cultural heritage in the face of an assault by a Canadian mining corporation, Gabriel Resources.
This corporation wanted to destroy Rosia Montana by turning it into Europe’s largest open-pit gold mine, posing a severe environmental threat due to the use of toxic cyanide. It was David against Goliath. Gabriel had the money, it had connections to the highest echelons of power, and it controlled Romania’s media via million-dollar publicity contracts. In Rosia Montana, they waged nothing short of a war — buying up vital communal infrastructure, such as shops, the local dispensary, etc. to close them down. They also offered money for homes and so divided the community, setting family members against each other.
Many locals gave in. But a group of property owners resisted. To them, a home and roots meant more than any money in the world. They ganged together, set up a powerful campaign,and sued to block permit after permit. And when they blocked the mine proposal from all legal corners, Gabriel’s shareholders grew impatient and ever more nasty. They pressured its partner in crime or joint venture, the Romanian government, to pass a law to fast-track the mine. Those refusing to leave could be quickly expropriated.
Luckily the locals’ 15-year-long struggle had not gone unnoticed. It had spread by word of mouth and later, via social media. In 2013, when the government proposed that illicit law, when everything seemed dark and bleak, an entire nation inspired by the stubbornness of Rosia Montana’s resistance came to their support.
Hundreds of thousands took to the streets until the government backed down. Together they won. This moment, known as “Romania’s autumn” was equivalent to a revolution, to a national awakening. People, whether young or old or urban or rural, realized that if you fight together, you can win together. The slogan that coined this moment is “Uniti Salvam Rosia Montana!” — united we save Rosia Montana.
That moment forever transformed the country’s political landscape, too. The spirit, the wit, the feistiness, the organizing, and the tactics used in 2013 catalyzed movements such as #rezist, which halted political attempts by corrupt politicians to weaken the judiciary’s independence.
You might think, “Cool! A happy ending! So what was all the fuss in D.C. last week about?” Good question. It’s about profit and how to make one when there isn’t even a millimeter of reason to make one.
Rather than admitting the gross injustices and illegalities they committed, Gabriel was very miffed that all their Corporate Social Responsibility endeavors, public relations exercises, mitigation, and you-name-it stunts didn’t result in a permit for their mine.
They now want their money back. And because they are greedy, they not only want compensation for what they already spent, but also what they hoped to make in the future with an operating mine. In 2015, Gabriel submitted a legal claim, demanding at least $3.3 billion and as much as $4.4 billion (the equivalent of about 2 percent of the country’s GDP). To do so, they invoked bilateral investment treaties between Romania and the UK. These treaties allow corporations to sue governments in international tribunals through an investor-state dispute settlement system (ISDS). The most-used tribunal for such cases is the International Center for the Settlement of Investment Disputes (ICSID), which is associated with the World Bank.