Canadian Cameco Corporation has agreed with the Kyrgyz government to transfer the Kumtor Gold Company, which owns the Kumtor gold mine, to a new jointly owned Canadian company called Centerra Gold Inc., the company announced in a press release.
Cameco plans to hold an initial public offering (IPO) of Centerra in Canadia, after which it intends to retain a majority interest in the company. Initially Cameco subsidiaries will hold 67% of Centerra and JSC Kyrgyzaltyn (100% owned by the Kyrgyz government) will hold 33%.
"This is a significant milestone on the road to getting optimal shareholder value for our gold assets," said Jerry Grandey, Cameco's president and CEO, in a press statement. "We believe there will be substantial investor interest in a gold producer like Centerra."
As well as the Kumtor, Centerra's assets will include 56% of AGR Ltd, which owns 95% of the Boroo gold mine and 73% of the Gatsuurt exploration property, both in Mongolia, and 62% of the REN exploration project in Nevada, US.
In 2004, Centerra is expected to produce about 610,000 ounces of gold from the Kumtor mine, at an average cost of approximately US $220 per ounce. It also expects to produce about 210,000 ounces from the Boroo mine (which is due to start production this year), at an average cost of approximately $170 per ounce.
Cameco has negotiated a new agreement with the Kyrgyz government to ensure that a stable investment regime will be maintained in Kyrgyzstan for Centerra. Centerra will have a 10-year tax stabilization period, during which the application of Kyrgyz tax legislation is not to increase the tax burden on the Kumtor operation, the company said in a press release. However, the tax indemnity previously enjoyed by Cameco will not be transferred to Centerra. Cameco subsidiaries will vote their Centerra shares to support one Kyrgyzaltyn representative on the Centerra board provided that Kyrgyzaltyn maintains a minimum interest in Centerra.
The Times of Central Asia, January 15, 2004