TORONTO (miningweekly.com) – Up to ten former and current Kyrgyzstan government officials could face corruption charges over a 2003 contract with gold miner Centerra Gold that gave the Canadian company control over the operations of Kumtor, the country's largest gold mine, a local news agency has reported.

Local Kyrgyz news outlet 24.kg reported on Wednesday that Kyrgyzstan's prosecutor-general Aida Salyanova had told lawmakers that at least 9 of the 12 top authorities that signed the original 2003 deal, could be charged with corruption and unlawful activity.

The contract gave the Kyrgyz government a 17% stake in Kumtor, with Centerra owning the remaining 83%.

The news outlet had reported that three former Ministers, including former of Finance Minister Bolot Abdildayev and former Ecology and Emergency Situations Minister Temirbek Akmataliyev, were detained owing to signing unprofitable agreements for Kumtor.

The current agreement, renegotiated in 2009, increased the Central Asian nation's government’s interest in the mine to 33%, however, pressure for its revision had been mounting over the last 12 months.

Centerra last week said Parliament had instructed the government to continue negotiations with the Canadian company with a view to increasing the Kyrgyz shareholding in the Kumtor joint venture project to 67%, and should the parties fail to reach a mutually acceptable solution, government should start denouncing the current project agreements.

The company said Parliament had set a new deadline of December 23 for the parties to conclude these discussions.

The Kyrgyz Parliament earlier this year decreed that the Kumtor project agreements, which were signed in 2009, should be revised, while Centerra was also facing multimillion-dollar environmental claims.

For longer than a year now, the company had dealt with local protests, demanding the mine’s nationalisation and more social benefits. In May, the Kyrgyz government imposed a state of emergency to protect the Kumtor mine from protesters.

The Canadian miner is a significant employer and taxpayer in the country and a critical contributor to the Kyrgyz economy.

Kyrgyz Prime Minister Zhantoro Satybaldiyev on Thursday said the government was working on three variants of the agreement, adding that he expected to reach a prompt solution, as stopping the Kumtor operations would have negative consequences for the economy.

“Unfortunately, there is more politics than economics,” 24.kg quoted the President as saying.

Toronto-listed Centerra's Kumtor mine, hidden in the Tien Shan mountains, is Kyrgyzstan's largest gold deposit and helps to keep the country's shaky economy afloat. Kyrgyz nationalist deputies and groups had been calling for the nationalisation of the mine – the biggest gold venture run by a Western company in Central Asia.

The Kumtor mine is expected to almost double its output this year to 600 000 oz.

Q3 EARNINGS

Centerra on Thursday reported that it had narrowed its year-on-year loss to $1.78-million, or $0.01 a share, in the quarter, from a loss of $33.66-million, or $0.14 a share, a year earlier. Analysts had on average been expecting a loss of $0.02 a share on revenue of $170.77-million.

Revenue more than doubled to $155-million in the quarter, up from $68.8-million, as a result of higher sales volumes (115 941 oz of gold compared with 41 251 oz), which was partially offset by a 20% decrease in the average realised gold price at $1 337/oz, compared with $1 667/oz.

The higher sales volumes reflected the increase in gold output at both the Kumtor mine and the Boroo mine, in Mongolia.

Gold output totalled 113 840 oz, compared with 42 723 oz in the same quarter a year earlier. Centerra said the 166% increase in ounces poured was mainly owing to the increased output at Kumtor, as compared to the same quarter of 2012, which was impacted by a seven-week mill shutdown at Kumtor, and restarting heap leach operations at Boroo in October 2012.

The all-in pretax cash costs per ounce of gold declined 60% to $1 426, down from $3 604/oz a year earlier.

Centerra’s cash and cash equivalents and short-term investments at the end of September decreased to $236.8-million, compared with cash and short-term investments of $382.1-million at December 31, 2012.

Centerra’s 2013 consolidated gold output guidance was revised upwards to between 635 000 oz and 685 000 oz, which was higher than the previous guidance of 615 000 oz to 675 000 oz, reflecting the higher gold production expected at the Boroo mine.