Centerra “Close” to
Kyrgyz Resolution

Issue 183, June 2017

It's Sunday evening and Centerra Gold's chief executive Scott Perry is pouring out tea to the sound of a distant piano in a hotel lobby in London. $277m of Centerra's cash is currently trapped in Kyrgyzstan under a long-running ownership dispute with the government over the snowy Kumtor mine near Kyrgyzstan's border with China. In fact, Perry says, the cash is sitting in a HSBC account in New York. “We could log-on and access it now.”

Not that Perry intends to. A towering 41-year-old accountant from Perth, he was pulled in as Centerra's CEO two years ago. Amid rumours of nationalisation, the mine has been bombarded with penalties and fees, weighing on the group's share price and bolstering the region's reputation as a grim place to do business.

Centerra is now seeking arbitration, whilst honouring a court agreement that has locked up a large chunk of its treasury. But relations may be finally improving, Perry says, en route to negotiations with Kyrgyzstan's top brass, in an attempt to break the impasse. “I think we're very close. I think we're the closest we've been.”

When Perry joined Centerra it was touted as one of the toughest positions in the gold mining industry. The company's cash flow came from just one asset, which has been locked in lawsuits for five years. “We're up to ten percent of the country's economy. We are literally the biggest fish in a small pond, and so as a result we often get politicised,” Perry says. The gold market also felt “like it was going down the tubes.”

But Perry only saw the positives. Kumtor was “chucking-off” cash flow of over $150m per annum, even at the bottom of the gold market in 2016. “It's a cash flow machine,” he says. Behind the legal wrangling, Centerra was profitable throughout the cycle and had cash of nearly $600m. “A balance sheet like that? This is a company that is in the camp of the haves versus the have-nots.”

Less than a year into the post, Perry threw Centerra into a hefty acquisition, paying $1.1bn for the Mount Milligan copper-gold mine in British Columbia, outbidding Kinross Gold. The mine had gone into construction at the top of the market in 2010 and by the time it entered...

Continue ➤

“It’s a cash flow machine.”

RELATED NEWS

AuRico Ponders Deals as Portfolio Grows

"These assets will ultimately be separated," says AuRico's CEO Chris Richter

............................................

Robert Giustra
Set for “Biggest Win” Since 1993

Emmanuel Macron cruised through France's presidential elections; that's good news for Robert Giustra

............................................

Dan Betts:
Shrugging off
the Critics

Hummingbird's journey has been "an absolute mission", says CEO Dan Betts

............................................

............................................

The Placer Dome Club

An invisible thread connecting over $1bn of gold deals in Ghana, Ontario and British Columbia

Roosen: Osisko's Drinking from a "Fire Hydrant"

"Obviously it's hard to say which child you love the most," says Osisko's chairman Sean Roosen. "But Falco in Quebec."