UPDATE 2-Kyrgyz MPs give government deadline for Kumtor mine, Centerra deal
(Adds Centerra statement, stock price)
BISHKEK, Feb 6 (Reuters) - Kyrgyzstan's parliament on Thursday gave the government up to four months to finalize a draft deal with Canada's Centerra Gold on forming a 50-50 joint venture to run the country's Kumtor gold mine.
Kumtor, hidden in the Tien Shan mountains near the border with China, has long been a source of political tension in the impoverished Central Asian nation, including facing calls for nationalization.
The government has withstood opposition pressure, rejecting any talk of nationalization or unilateral repeal of financial agreements with Kumtor operator Centerra. But it has sought ways for Kyrgyzstan to reap higher revenues from the mine.
"The parliament gave the government a short period of time - three to four months - for restructuring the project," Kyrgyz Deputy Prime Minister Zhoomart Otorbayev told Reuters after the vote in the parliament.
The draft project, agreed with the Canadian investor in December, proposes to swap Kyrgyzstan's 32.7 percent stake in Centerra for half of the Kumtor gold mine, Centerra's core asset. Centerra had a market capitalization at Wednesday's close of US$949 million.
After two days of heated debate, 60 parliamentarians voted for the government to continue work with Centerra on forming a 50-50 Kumtor venture, while 35 voted against.
Centerra said in a statement that while the parliament's resolution appeared to support a restructuring it contained a number of recommendations that are "materially inconsistent" with the December draft agreement.
"Among other things, the resolution calls for further audits of the Kumtor operation and for the government and the general prosecutor's office to continue pursuing claims for environmental and economic damages, which the company disputes," Centerra said.
The Toronto-based company said it would continue talks with the Kyrgyz government. Centerra's stock, which had been halted pending Thursday's news, rose 1.57 percent to C$4.52.
Kyrgyzstan's negotiations with Centerra have been overshadowed by a $300 million ecological damages suit filed by the government against the company.
"Until we have settled the ecological issues, the restructuring will not be completed," Kyrgyz Prime Minister Zhantoro Satybaldiyev said in parliament on Thursday.
When the government presented the current draft deal with Centerra in late December, the company said that at the end of the mine's planned life in 2026, Kyrgyzstan would have the rights to increase its ownership interest in the project to 67 percent for a price equal to fair market value.
The nationalist opposition in the legislature demanded in October the government should seek straightaway a 67 percent stake in the new gold venture with Centerra. President Almazbek Atambayev said later such a task was "obviously unachievable".
Talks to reach the current draft deal took place amid riots in several parts of the volatile, mainly Muslim nation of 5.5 million which lies on a drug trafficking route out of Afghanistan.
Kumtor remains a major hard currency earner for Kyrgyzstan, where per capita gross domestic product (GDP) is just one tenth of that in oil-rich neighbor Kazakhstan. The mine accounted for some 12 percent of Kyrgyzstan's GDP in 2011. GDP expanded by 10.5 percent last year after shrinking by 0.1 percent in 2012, driven by a sharp rise in Kumtor's output. Kumtor ramped up production to 600,402 ounces of gold in 2013 from 315,238 ounces in 2012.
(Writing by Dmitry Solovyov; additional reporting by Nicole Mordant in Vancouver; Editing by Keiron Henderson and Stephen Powell)