Road Block Hits Centerra Gold's Kyrgyz Operations

Road Block Hits Centerra Gold's Kyrgyz Operations

Planet Ark KYRGYZSTAN

August 4, 2005

BISHKEK - Environmental protesters have blocked a road to the Kumtor gold mine in Kyrgyzstan developed by a unit of Canada's Centerra Gold Inc., affecting output, a spokeswoman said on Wednesday.

"They have blocked the road, which is hampering the delivery of (supplies) to the mine," said Tynara Shaildayeva, spokeswoman for Kumtor Operating Company which runs the mine. "This is now affecting output at the mine."

Shaildayeva declined to say exactly how much output was affected by the protest, which started last Thursday. She said the protesters were letting trucks leaving the mine pass through their pickets, but blocked all trucks heading to the mine.

The protesters, mainly local villagers, want the mine closed down and are seeking compensation for what they say was damage to their health caused by a 1998 cyanide spillage into a nearby river when a truck carrying the chemical to Kumtor overturned.

Kyrgyz officials said at the time that a local woman had died from cyanide poisoning, although many experts called this into question, saying that cyanide decomposes quickly in water and the accident was not likely to have harmed anyone.

Media reports said later the woman had died from heart disease. The Canadian investor paid $2 million in compensation to the government following the 1998 accident.

Government officials say local villagers are now demanding compensation of 350,000 soms ($8,500) to each family affected by the cyanide spillage.

A government commission left the capital Bishkek on Wednesday morning in a bid to persuade the protesters to end their action, a government official told Reuters.

POLITICAL TURMOIL

Centerra, through Kumtor, is the largest investor in Kyrgyzstan, a mountainous nation of five million whose economy has been rocked by political turmoil since a coup in March that deposed veteran President Askar Akayev.

Centerra's shares fell last month after it warned that Kumtor was part of a criminal investigation, launched by the Central Asian
state's new government, into possible abuse of power by former government officials and Kumtor.

Centerra said it was not aware of the basis for any allegations of criminal conduct.

Kumtor's gold output dropped to 279,352 ounces in January to June from 351,822 ounces in the same period of 2004. The mine, in a permafrost area high up in the Tien Shan mountains, produces Dore alloy with gold content of around 80 percent.

Kumtor is the biggest gold-producing asset of Toronto-based Centerra which is 53 percent owned by Cameco Corp. Kyrgyzstan holds a 15.7-percent stake in Centerra.

Story by Olga Dzyubenko
REUTERS NEWS SERVICE