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Kyrgyzstan Review, 10 years ago

[23.04.23] Kyrgyzstan Earns Less Than Anticipated from Kumtor Gold Project

Kyrgyzstan's budget has received 62.9 million dollars from the Kumtor gold project since 1997, way below the 188 million dollars it expected, a parliamentary press release says.
The parliament convened to debate the outlook for the country's gold industry and the contribution made by the Kumtor project.
Kamchibek Kudaibergenov, head of the state-owned Kyrgyzaltyn mining concern, which owns two-thirds of the Kumtor project, said budget revenue had been lower than expected because of the drop in the price of gold between 1996 and 2000 and increase in the Kumtor operation's projected cost.
Kyrgyzstan and Canada's Cameco signed a general agreement on the Kumtor project back in 1992. Cameco received a third of the joint venture's equity. More than 400 million dollars has been invested in the mining complex at the site. The mine went on stream in 1997 and has so far produced 115 tons of gold.
Kudaibergenov also said Kyrgyzstan would receive more profit if it were to curtail tax benefits for the investor but give up most of the equity. Kyrgyzstan and Cameco have reached agreement in principle to restructure Kumtor Gold Company in such a way that Cameco would own 90% of the equity and Kyrgyzaltyn 10%. Kyrgyzaltyn would be guaranteed a fixed dividend in foreign currency, regardless of the price of gold. It could receive dividends of about 8 million dollars annually, and overall budget revenues would be 23 million-25 million dollars annually.
Cameco itself proposed this scheme, but the Kyrgyz, although not inclined to reject it, want to conduct their own appraisal.
Kumtor Gold reduced gold output by 29.7% in 2002, to 528,550 ounces (about 16.44 tons) due to a pit wall collapse last summer. The company contributed 54 million dollars to the government budget. The production target for 2003 is 20.891 tons of gold.
Interfax, April 23, 2003

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