Protests shut Centerra's Boroo mine
Published by MAC on 2006-06-14
Protests shut Centerra's Boroo mine
14th June 2006
In another sign that the bloom is off the Mongolia rose, Toronto-based Centerra Gold (CG-T) has been forced to temporarily suspend operations at its Boroo gold mine in Mongolia in response to a demonstration by about 100 protesters on June 14.
Centerra says these demonstrators as being led by the Popular Party, which the company describes as a "small party on the fringe of Mongolian politics that has recently been criticized by the Mongolian Cabinet for its statements with respect to the Boroo project."
Centerra says the Mongolian cabinet has stated that Boroo conducts its operations in accordance with Mongolian law and that the Popular Party's demands are illegitimate and unconstitutional.
The company says it will work closely with police and governmental officials to ensure the prompt resumption of normal mine operations.
The Boroo open-pit gold mine and milling complex is located 110 km northwest of the capital Ulaanbaatar. The mine began commercial production in March 2004 and produced more than 245,000 oz. gold by year-end. Over the 2005-09 period, the mine is expected to produce an average of 180,000 oz. gold per year at a total cash cost of US$170 per oz.
At last count, the Boroo deposit hosted probable reserves of 10 million tonnes grading 3.5 grams gold per tonne, or 1.15 million contained oz. gold.
Centerra has a 95% equity interest in the operation, the first significant foreign investment for industrial development in Mongolia since 1979. Uranium giant Cameco (CCO-T, CCJ-N) owns 53% of Centerra Gold.
Some 35 km from Boroo, Centerra also has its wholly owned Gatsuurt gold project, where a feasibility study was completed last year. However, the development of Gatsuurt into a stand-alone gold mine similar in scale to Boroo has been thrown into doubt owing to the recent passage of a 68% profits tax on gold mining operations in Mongolia (Boroo is exempted from the new tax until 2013).
In Toronto trading on June 14, Centerra's shares dropped 36 cents, or 3.5%, to close at $10.05, while Cameco rose 74 cents to $39.25.
Protests Halt Work at Mongolian Gold Mine
By the Associated Press
June 15, 2006
ULAN BATOR, Mongolia (AP) -- Canadian mining company Centerra Gold Inc. said Thursday it has temporarily halted work at its Boroo gold mine in Mongolia amid protests over the government's dealings with the company.
''We shut down all our production work because of threats from protesters,'' Paul A. Korpi, president of Centerra subsidiary Boroo Gold Co., told reporters in the Mongolian capital, Ulan Bator on Thursday.
About 800 people demonstrated Wednesday in downtown Ulan Bator over Mongolia's mining policies, which offer generous incentives to foreign mining companies such as Centerra. Critics accuse the government of giving away too much of the country's abundant mineral wealth.
After the rally, about 150 protesters boarded buses and cars to travel to the mine site, about 90 miles from Ulan Bator. Protest leaders said they planned to camp in the mine to obstruct its operations and prevent workers from detonating explosives.
Korpi urged the government to take action to peacefully resolve the dispute.
''Centerra has a history of cooperative relations with the government of Mongolia and intends to work closely with police and governmental officials to ensure the prompt resumption of normal mine operations,'' the company said in a statement posted on its Web site.
Meanwhile, police were investigating the death of one protester who collapsed at the mine Wednesday evening, Korpi said.
''Our medical personnel tried to revive the person ... and then upon arrival at our medical facility the person died,'' he said without giving further details.
There have been no accusations of improprieties by Centerra. Like other foreign miners, though, it has become the focus of domestic political clashes over how to exploit the country's mineral resources.
Centerra is 53 percent owned by Canadian uranium producer Cameco Corp. and it owns a 95 percent stake in Boroo Gold. The company has signed an agreement with the Mongolian government that allows it to pay no taxes during the mine's first three years of operations and only 50 percent of the usual profit tax in the next three years. The mine began operations in March 2004.
The deal also shields Boroo from changes in laws such as a windfall profits tax, which were enacted amid similar protests last month.