In relation to the May seizure of the Canadian company’s Kumtor gold mine, two sectors of Canada’s Centerra Gold (TSX: CG) have filed a motion in a US Bankruptcy Court seeking penalties of $1 million a day against the Kyrgyzstan government.

The company’s Kumtor Gold Company (KGC) and Kumtor Operating Company CJSC (KOC) submitted the motion to the US Bankruptcy Court for the Southern District of New York.

The motion claims that the Kyrgyz government “blatantly and continuously” violates the court’s orders and has “continued and intensified” its efforts to deprive KGC and KOC of the protections afforded to them under Chapter 11 of the US Bankruptcy Code.

Bankruptcy proceedings following the nationalization of the miner’s Kumtor gold mine by the former Soviet republic were commenced by KGC and KOC in May, Centerra said. In the same month, the government seized control of Kyrgyzstan’s most significant foreign investment project in a move challenged by Centerra Gold through international arbitration.

The motion is also seeking the Kyrgyz government’s efforts to dismiss the case, and claims there have been “continued and willful” violations of the automatic stay given by the Bankruptcy Court.

These violations include “continued Kyrgyz court proceedings that seek to change KGC and KOC’s corporate resolutions illegally; the maintenance of the preliminary injunction barring KGC and KOC legal counsel and various individuals from participating in Kyrgyz court proceedings; the extension of the mandate of the so-called temporary manager; the termination of all KGC and KOC contracts with the Kyrgyz government and its related entities; and, laying the groundwork for the conversion of the Kyrgyz government’s environmental and tax claims against the KGC and KOC into equity with the effect of giving the Kyrgyz government complete ownership and control over the KGC and KOC.”

It was also reported earlier this month that the Kyrgyz state security service and prosecutors had gathered enough evidence to continue on with removing Centerra from the Kumtor Gold mine.

This follows an investigation into “possible corruption” in a deal that gave Centerra control and “subsequent amendments” over the country’s biggest gold mine.

A spokesperson for Centerra explained to Reuters, an author for mining.com, that “While we continue to pursue all measures necessary to protect the company’s rights related to the Kumtor mine, in arbitration and in other legal proceedings, the company has consistently stated that it remains willing and available to engage with the Kyrgyz government in a constructive dialogue on the matters it considers to be the subject of dispute.”

Centerra’s CEO, Scott Perry said earlier this month that following the Kyrgyzstan government’s seizure of the Kumtor mine, Centerra remains “financially strong” as its other operations have been performing well.

Centerra currently owns three mines including the Kumtor mine in the Kyrgyz Republic, along with the Mount Milligan Mine in Canada, and the Öksüt Mine in Turkey.

Perry also explained in a public letter to the people of the Kyrgyz Republic that “Centerra Gold recently announced plans to invest an additional US$2 billion to extend the life of the Kumtor Mine once again. That is all on hold now because of what has happened.”

Centerra does deny the corruption allegations, and ​​the motion will be presented to the Bankruptcy court on September 15 from KOC and KGC attorneys.

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.