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Central Asian gold producer, Centerra Gold (CG:TSX) has encountered a colossal further breakdown in government relations by announcing that the MOU the company signed with the Kyrgyz Government in early September may have been rejected by Parliament.  The company was made aware via news reports, that the Kyrgyz Parliament has passed a decree to reject the MOU with the goal of forcing the Republic to further negotiate with CG in the hopes of gaining more than 67% interest in the Kumtor mine.

The MOU signed in September would see Kyrgyzaltyn exchange its 32.7% equity interest in CG for a 50% interest in the JV Company which owns the Kumtor mine and would get an equal number of board seats on that JV Company.  Kyrgyzaltyn would have to pay CG $100 million from future profits; however, they would get 6 million 2-year warrants exercisable at $10 per share.  All of the existing environmental claims against Kumtor would be resolved and CG would remain the operator.

Needless to say, the market wasn’t pleased with this latest development, especially on the back of the signing of the MOU in September.  Shares have been trading up lately, but at the time of writing the stock was down $1.25 or 24%.