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Kyrgyzstan|business|December 10, 2016 / 02:11 PM
Centerra Gold says it suspends dividends, extends Öksüt project financing facility

AKIPRESS.COM - Centerra Gold Inc. said Friday that UniCredit Bank AG and the European Bank for Reconstruction and Development (EBRD) have granted to Centerra’s wholly owned Turkish subsidiary, Öksüt Madencilik, an extension from November 30, 2016 to June 30, 2017 to satisfy various conditions to access the $150 million Öksüt project credit facility.

The credit facility will be used to finance a substantial portion of the construction, development and operation of the Company’s Öksüt gold mine and its related infrastructure in the Kayseri region of central Turkey.

Öksüt will continue to work to satisfy the conditions by such new deadline; however some conditions, such as the receipt of the pastureland permit, are beyond the control of Centerra and Öksüt. There are no assurances that all conditions will be satisfied by June 30, 2017.

In light of the current restrictions relating to funds held at Centerra’s wholly-owned Kyrgyz Republic subsidiary, Kumtor Gold Company, Centerra’s Board at its regularly scheduled board meeting yesterday decided against declaring a third quarter dividend, Centerra said in a press release.

A Kyrgyzstan court ruling in June restricted Kumtor from making certain financial transactions, including the transfer of money to parent Centerra. Centerra added the dispute to an international arbitration proceeding it initiated in May to challenge of Kyrgyzstan's actions and claims.

In addition, the Board has decided to suspend future dividends for the time being. The Board will reassess the declaration of dividends once this matter is fully resolved, Centerra said.

Kyrgyzstan holds a 27% stake in Centerra though Kyrgyzaltyn state company, and will lose approximately $9.5 million in annual dividends under the suspension, said RBC Capital Markets analyst Stephen Walker in a note to clients.

Kumtor had a $122 million third-quarter cash balance, which Walker estimates could grow to about $200 million by year-end as higher-grade ore is mined in the current quarter, Reuters reports. 

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