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The Kumtor Gold Company (KGC) says the nationalized Kumtor gold mine in Kyrgyzstan had exceeded production guidance for 2021.
Under the new external management, which took over the asset when the country expropriated the mine from Canadian miner Centerra Gold (TSX: CG; NYSE: CGAU) in May last year, reported full-year production of 14,561 kilograms of gold in 2021, or 513,624 ounces, beating Centerra Gold’s February 24, 2021, guidance for 470,000 to 510,000 ounces. Centerra’s guidance reflected lower average grades in the ore stockpiles available for processing than 2020.
The Kyrgyz State-owned company also said it had lopped off $220 per ounce from the overall production cost figure without providing the current cost figure. According to Centerra’s last guidance, 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 revenue of $856, of which $621 million was generated following the state’s seizure of the mine.
KGC further reported that Kumtor had achieved full compliance under the Kyrgyz tax regime for the first time, paying $160.4 million in taxes, a 150% increase compared with prior periods.
KGC said Kumtor was now set to implement its development plans for 2022. These include increasing its annual gold production to 17,000 kilograms (600,000 ounces) by implementing sustainable development projects to improve mineral processing technology, increase gold recovery, and reduce mine tailings. The key to this will be beginning underground mining operations, moving the mine away from its current open-cast setup.
KGC presented the 2021 production report to the Kyrgyz cabinet this week. The report came amid negotiations by the government of Kyrgyzstan and Centerra to reach an amicable settlement to the dispute over the ownership of the Kumtor mine.
During its management by Centerra Gold, the Kyrgyz state seized the Kumtor asset last year amid longstanding concerns about environmental damage, labour law violations, corruption, and other operational issues around the mine. Ironically, Centerra operated Kumtor under annually approved government-sanctioned ecological management and mining plans while reaching an agreement with the government that all other problems have been resolved.
In May of 2021, Centerra kicked off arbitration against the Kyrgyzstan government after it took over the country’s biggest mine for allegedly posing a danger to human lives or the environment.
A Kyrgyzstan court imposed a $3.1 billion fine on KGC, which operates the 550,000-ounce gold mine, after ruling that the firm had violated environmental laws by placing the waste rock on glaciers.
Centerra has denied all the allegations and declined to comment on the latest Kumtor production report.
KGC is the country’s biggest asset. It is responsible for 12% of Kyrgyzstan’s gross domestic product and 23% of its industrial output.
Centerra’s Toronto-quoted shares are still recovering from the Kumtor expropriation and at C$10.30 apiece are still trading 27% below the year-earlier level. Centerra has a market capitalization of C$3.07 billion (US$2.5 billion).
