(Corrects third paragragh to show that proposal does address profit sharing. Corrects government ownership stake, in seventh paragragh, to 26.6 percent from 32.7 percent.)
By Olga Dzyubenko and Susan Taylor
BISHKEK/TORONTO, Sept 6 (Reuters) - Centerra Gold Inc and the Kyrgyz Republic have reached a proposed settlement related to mutual environmental lawsuits on the company’s Kumtor gold mine, though an agreement has not yet been finalized, the Canadian miner said on Wednesday.
Talks are at an advanced stage on a deal to settle all outstanding disputes affecting Kumtor, said Toronto-based Centerra, which has been locked in a bitter dispute with Kyrgyzstan over profit sharing at the mine, the company’s largest asset.
The proposed settlement would affirm 2009 mine agreements, including tax and fiscal rules.
Centerra shares were up about 8.4 percent to C$8.36 on the Toronto Stock Exchange after the announcement and lifting of a trading halt.
Under the proposed agreement, which is subject to approval by Centerra’s board, the company would make a one-time $50 million payment to a new government-run nature development fund, alongside annual payments of $2.7 million contingent on government-compliance with the agreement.
Centerra would also pay $7 million to a cancer care support fund and a further $3 million payment one year after a deal closed.
Centerra is the biggest foreign investor and tax payer in Kyrgyzstan, contributing up to 10 percent of the impoverished Central Asian nation’s gross domestic product. The state owns a 26.6 percent stake in Centerra.
In 2016, the miner took the nation to international arbitration over the profit sharing disagreement.
It also was fined around $100 million for environmental damage by a court in Kyrgyzstan last year, while another regulator filed a $230 million lawsuit against the company.
Under the proposed settlement, Centerra said it would also boost its payments to a reclamation fund to $6 million annually, until reaching the estimated reclamation cost, subject to a $69 million minimum.
Centerra said it would also follow previous recommendations from the government’s environmental consultant, Amec Foster Wheeler, adding that most are fully implemented.
Last July, Centerra acquired U.S.–based Thompson Creek Metals, for approximately $1.1 billion, to reduce its exposure to Kyrgyzstan. (Reporting by Olga Dzyubenko in Bishek and Susan Taylor in Toronto; Writing by Olzhas Auyezov; Editing by Andrey Ostroukh, Bill Trott and Paul Simao)