US bankruptcy court sentences Kyrgyz government in contempt of seizure of Kumtor
In the order issued late July 20, Judge Lisa Beckerman said the Kyrgyz Republic contempt of court for violating US bankruptcy rules when she filed a lawsuit against KGC in the Kyrgyz Republic at the beginning of the month.
“I declare that there is a violation of the automatic stay by the Kyrgyz Republic,” she said in a 115-page transcript of KGC’s emergency request to enforce the automatic stay of prosecution in the world, previously granted to the company by the same court.
In her ruling, Judge Beckerman noted that “the proceedings in the courts of the Kyrgyz Republic appear to have an impact on the automatic stay that is in place here and appear to violate it in many respects.”
Beckerman said the Kyrgyz court injunction “infringes” KGC’s rights to take specific action during this Chapter 11 proceeding.
Centerra also recently named Kyrgyzaltyn, the state-owned monopoly gold refiner and main shareholder of Centerra, as respondent.
According to the amended arbitration notice, Kyrgyzaltyn conspired with the Kyrgyz government to take control of the mine under the guise of temporary “external management”. It appears to continue to act on government orders regarding Operation Kumtor and its stake in Centerra, the company claims.
Kumtor is the largest of Centerra’s three gold mines, accounting for over 50% of the company’s total production. Since the seizure at the end of May, the Kyrgyz subsidiaries of Centerra have filed for Chapter 11 protection. He also sued the new external manager of the mine, alleging that he conspired to steal the company’s assets while he was administrator.
Centerra said at the time that KGC and the Kumtor Operating Company were solvent, with total assets (including the Kumtor mine) exceeding $ 1.1 billion and no external bank debt.
Centerra is not a party or affected by the Chapter 11 filing and remains with over $ 800 million in cash and over $ 1.2 billion in cash as of March 31, 2021, he said.
The mine produced over 13.2 million ounces of gold between 1997 and the end of 2020. Last year’s production was just over 556,000 ounces. Centerra guided Kumtor’s production of 470,000 to 510,000 ounces of gold in January, with grade and production improvement expected towards the end of the year.