Mining and exploration firm Centerra Gold has turned down an offer by Chaarat Gold to purchase the Kumtor mine in the Kyrgyz Republic.

Chaarat’s proposal also involved the Kyrgyz state consortium, Kyrgyzaltyn.

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Chaarat sought to acquire Kumtor’s common equity under the proposed three-way deal, as well as assume management and operatorship of the mine.

In addition, the proposed initiative would have seen Kyrgyzaltyn take ownership of Kumtor’s preferred equity and have rights over 50% of the mine’s economic benefits.

"Chaarat sought to acquire Kumtor’s common equity under the proposed three-way deal, as well as assume management and operatorship of the mine."

Chaarat noted that it would fund its share of the acquisition via a cash payment, while Kyrgyzaltyn would issue most of the shares it currently holds in Centerra back to Centerra in exchange for the rights.

In a statement, Chaarat Gold stated: “The proposed acquisition represents a substantial increase in the overall scale of Chaarat’s business and Chaarat’s board of directors is confident that Chaarat can achieve significant value for its shareholders.

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“In the medium term, the acquisition will serve as a platform for further acquisitions and generate significant and stable dividends.”

Centerra rejected the proposal on the grounds of a lack of enthusiasm from the Kyrgyz Republic Government.

In a statement, Centerra stated: “In recent meetings with the Kyrgyz Republic Government, senior Kyrgyz Republic officials have confirmed to Centerra that the Government is also not interested in pursuing the transaction proposed by Chaarat.”

The Kumtor mine produced more than 500,000 ounces (oz) of gold last year.

The mine is estimated to have more than four million ounces remaining in open-pit reserves, in addition to 3.4 million ounces of inferred resources at 7.3 grams per tonne (g/t).

Chaarat plans to invest up to $600m in two other projects in the country’s mining sector over the next five-to-seven years.