Centerra launches lawsuit against former director named Kumtor gold mine manager

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This article was published 20/05/2021 (1915 days ago), so information in it may no longer be current.

TORONTO – Centerra Gold Inc. says it is suing the man named Tuesday by the government of the Kyrgyz Republic as general manager of the Kumtor gold mine.

In a news release, the Toronto-based miner says it is alleging in Ontario Superior Court that Tengiz Bolturuk, a former member of its board of directors, breached his fiduciary duties to the company by co-operating in the government’s seizure of the mine last weekend.

It says Bolturuk was nominated to the Centerra board in December by the Kyrgyz state-owned company Kyrgyzaltyn JSC, which holds a 26 per cent stake in Centerra, but he resigned on Monday.

It says it wants the court to stop Bolturuk from accepting a management role at the mine, as well as engaging in “further breaches of fiduciary and confidentiality duties.”

Centerra claims that Bolturuk, a dual Canadian and Kyrgyz citizen, discussed plans to seize control of the Kumtor Mine with the Kyrgyz government and others. It also charges that, prior to the seizure of the mine, Kyrgyzaltyn JSC tried to divert US$29 million to an unauthorized bank account using a forged payment instruction sent to a third party.

On Tuesday, the Kyrgyz Republic issued a news release saying it took control of the Kumtor mine because of the “abdication of its fundamental duties of care” by Centerra, charging that it had suspended deliveries of materials needed to operate the mine and had disabled “critical sensors” used to monitor the stability of the mine and the movement of nearby glaciers.

“We can assure our shareholders that we are pursuing all avenues available to us in connection with recent events, including against any persons who violate their obligations to Centerra and its shareholders,” said Centerra CEO Scott Perry in Thursday’s release.

“In the meantime, to deflect attention from their unprecedented and unprovoked seizure of the Kumtor Mine, Kyrgyz officials and Mr. Bolturuk continue to make unjustified claims related to environmental and safety conditions in the past operation of the Kumtor Mine that are entirely meritless and have no justification under long-standing investment agreements or applicable law.”

The government used a recently passed law to assume control of the Kumtor mine on security grounds after a long-running series of tax payment demands and accusations of environmental violations.

Centerra says it has launched an international arbitration suit against the Central Asian state and is trying to prevent Kyrgyzaltyn JSC from carrying out a plan to sell about one-fifth of its Centerra shares.

This report by The Canadian Press was first published May 20, 2021.

Companies in this story: (TSX:CG)