The Kumtor gold mine is located in the Tian Shan mountains in the Issyk-Kul region. It is considered to be the second-highest gold mining operation in the world after Peru’s Yanacocha gold mine.
In the proposal, Chaarat Gold agreed to will pay $400m in cash to Centerra for the acquisition. Along with that, it has also proposed that, subject to an approval from Kyrgyz government, $400m worth of Centerra shares currently owned by Kyrgyzaltyn will be transferred to Centerra and cancelled. This will be in exchange for a 50% direct preferred economic interest in the Kumtor gold mine.
Kyrgyzaltyn, which is owned by the Kyrgyz government, is the largest shareholder in Centerra.
Through the transaction, Chaarat will own 100% of the common equity of Kumtor and also have control over management and operations of the gold mine. Kyrgyzaltyn, on the other hand, will own all of the preferred equity of Kumtor, and will receive 50% of the economic benefits from the mine.
Chaarat, in a statement, said: “Chaarat strongly believes that the proposal is attractive to all stakeholders – including the people and government of the Kyrgyz Republic, Centerra and its shareholders, and Chaarat’s own investors.”
The Kyrgyz miner also said that it plans to inject up to $600m into other mining projects in Kyrgyzstan over the next five to seven years.
The company is currently developing the 7Moz high grade Chaarat Gold Project in the Sandalash River Valley in the north-west of the Kyrgyz Republic.
However, Centerra Gold had turned down the offer made by the Kyrgyzstan-based Chaarat Gold last month, saying that it is not interested in the proposal.
The company, in a statement, said: “Centerra notes that the Kumtor Mine is directly held through Centerra’s wholly-owned, direct subsidiary, Kumtor Gold Company CJSC, and the transaction proposed by Chaarat could not occur without the participation of both Centerra and the Kyrgyz Republic Government.”
