Kumtor exceeds 2021 gold forecast under nationalized management
The Kyrgyz state-owned company also said it reduced the overall production cost by $220 an ounce without providing the current cost. According to Centerra’s latest forecast, Kutor was expected to have production costs of $400 to $450 per ounce and all-in sustaining costs of $950 to $1,000 per ounce.
KGC reported total revenues of $856, of which $621 million was generated as a result of the state seizure of the mine.
KGC further reported that Kumtor achieved full compliance with the Kyrgyz tax system for the first time, paying $160.4 million in taxes, a 150% increase from previous periods.
KGC said Kumtor is now ready to implement its development plans for 2022. These include increasing its annual gold production to 17,000 kilograms (600,000 ounces) by implementing development projects sustainable to improve mineral processing technology, increase gold recovery and reduce mine tailings. The key to this will be to begin mining operations underground, moving the mine away from its current open pit configuration.
KGC presented the 2021 production report to the Kyrgyz cabinet this week. The report came amid negotiations between the government of Kyrgyzstan and Centerra to reach an amicable settlement of the dispute over ownership of the Kumtor mine.
During its management by Centerra Gold, the Kyrgyz state seized Kumtor’s asset last year amid longstanding concerns about environmental damage, labor rights violations, corruption and other issues operational around the mine. Ironically, Centerra operated Kumtor under environmental management and mining plans approved annually by the government, while reaching an agreement with the government that all other issues were resolved.
In May 2021, Centerra launched arbitration against the Kyrgyz government after it took over the country’s largest mine for allegedly endangering human lives or the environment.
A Kyrgyz court has fined KGC, which operates the 550,000-ounce gold mine, $3.1 billion after ruling that the company violated environmental laws by placing tailings on glaciers.
Centerra denied all allegations and declined to comment on Kumtor’s latest production report.
KGC is the country’s greatest asset. It is responsible for 12% of Kyrgyzstan’s gross domestic product and 23% of its industrial output.
Toronto-listed Centerra shares are still recovering from the Kumtor expropriation and, at C$10.30 each, are still trading 27% below the year-ago level. Centerra has a market capitalization of C$3.07 billion (US$2.5 billion).