Kyrgyzstan's stake in Centerra Gold loses $1 bln of value since start-2012
BISHKEK. March 1 (Interfax) - The value of Kyrgyzstan's 32.75% stake in Canadian gold mining company Centerra Gold Inc. plunged by a third in the first two months of 2013 and has tumbled by two-thirds since the beginning of 2012, from $1.5 billion to $501.5 million as of February 28.
The shares of Centerra Gold, which is listed in Toronto, closed at $6.48 on Thursday, compared to $9.45 on January 2, when the Kyrgyz government's stake was worth $730.7 million, according to the Toronto Stock Exchange's website.
Kyrgyzstan's 77.4 million shares in Centerra Gold were worth $1.503 billion, or $19.40 each on January 10, 2012. They lost half their value last year.
The stock began falling in the summer of 2012, when Kyrgyzstan set up a government commission to investigate Kumtor Operating Company (KOC), the Centerra subsidiary that is mining the Central Asian country's largest gold deposit, Kumtor. The commission's lawyers concluded that all the agreements on Kumtor were unfavorable to the country's interests.
On February 21, 2013, Kyrgyzstan's parliament approved the commission's report, which calls for renouncing the agreements with Centerra Gold, and recommended that the government hold negotiations with the investor within three months to revise the terms of its contract taking into account the country's laws. The main demand is that the project should operate within "common practices," within the context of Kyrgyzstan's Tax Code.
KOC now pays taxes based on the 2009 agreement, a discounted rate of 13% on turnover and 1% contribution to the Issyk-Kul regional development fund. The average corporate tax rate in Kyrgyzstan is 17-20%, depending on the area of business.
