Centerra’s Kumtor mine. Source: Centerra

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.
Gold, the oft-viewed safe-haven precious metal, has been having quite a year. Some of the major gold miners, including Franco Nevada Corp. (TSX:FNV) (NYSE:(FNV), Newcrest Mining Ltd. (TSX:NCM)(ASX:NCM), and Newmont Corp.(TSX:NGT) (NYSE:NEM), have been expanding their project portfolios quickly as the global economic reopening continues. These stocks have always been at the top of the list for investors looking for long term exposure to gold. Gold stocks have typically been a great way for investors to gain exposure to the yellow metal. 

Companies engaged in exploration, mining, and trading often have good returns and revenues. The past year has seen the VanEck Vectors Gold Miners ETF (GDX) underperform the broad market in the last 12 months, but the 11.8% return was more than solid. It is only against the backdrop of a 46.2% gain for the iShares Russell 1000 ETF or the S&P 500 that comparisons lose steam. 

Mining for Gold Value

Gold mining companies within gold indexes, however, have been generating asymmetric returns. Many of the winners have continued to scoop up the gains of a rising gold price and a favorable market. Today we’ll take a look at those stocks which may be undervalued according to it’s P/E for June 2021.

Stock picking is often thought of as the reserve of people who have a special talent or gift, however, value investing is as simple as figuring out whether a business’s stock is cheap compared to its intrinsic value as measured by its price-to-earnings ratio. Taking a look at the 12-month trailing P/E ratio, the best value gold stocks are Centerra Gold Inc. (TSX:CG) (NYSE:CGAU), Jaguar Mining Inc. (JAG.TO), Torex Gold Resources Inc. (TSX:TXG), Karora Resources Inc. (TSX:KRR)), and Kinross Gold Corp. (TSX:K)).

Centerra Gold (TSX:CG) (NYSE:CGAU)

The Canadian gold mining and exploration company operates three mines at the moment producing 824,059 ounces of gold and 82.8 million pounds of copper in 2020 alone. The company ran into a speed bump at its Kumtor Mine in the Kyrgyz Republic when the Kyrgyz Government took control of the mine in mid-May. The company lost control of the mine and suspended previously issued guidance for 2021 due to the uncertainty of the situation. However, with a 12-month trailing P/E ratio of 4.1, the company could be a value play for some portfolios. 

Jaguar Mining Inc. (TSX:JAG) (OTC:JAGGF)

Our second Canuck on the list explores and develops gold properties in the Iron Quadrangle in Brazil, a profitable greenstone belt in Minas Gerais, Brazil. With a 12-month trailing P/E of 5.4, Jaguar (TSX:JAG) (OTC:JAGGF) is a technical value play for a company operating in an area of mineral exploration dating back to the 16th century. 

Torex Gold Resources (TSX:TXG) (OTC:TORXF)

Torex’s 100% owned Morelos Gold Property comprising 29,000 hectares in the Guerrero Gold Belt in Mexico is the flagship project for the company, in a portfolio that includes two other major mines in Mexico. The company’s P/E of 6.7 may be an indicator of an undervalued company waiting for the right attention from investors.

Karora Resources Inc. (TSX:KRR) (OTC:KRRGF)

Both of the company’s primary gold-producing operations are located in Australia along the Norseman-Wiluna Greenstone Belt. Net earnings for Q1 2021 came in at more than ten times YoY as revenue grew 9.2%. The company’s P/E of 6.7 could be an indication of a value play waiting to be unlocked with the kind of financial results from the first quarter of this year.

Kinross Gold Corp. (TSX:K) (NYSE:KGC)

With a diverse portfolio spanning Brazil, Chile, Ghana, Mauritania, and Russia, and forward guidance of 2.4 million gold equivalent ounces for 2021, Kinross (TSX:K) (NYSE:KGC). Net earnings rose 21% as revenues grew 12.1%, possibly making the company’s P/E of 6.8 a value indicator for 2021.

Hunting for Deals

Undervalued companies can be opportunities to pick up shares at bargain prices before the rest of the market figures it out. Stocks like Centerra Gold (TSX:CG) (NYSE:CGAU), Jaguar Mining Inc. (TSX:JAG) (OTC:JAGGF), Torex Gold Resource (TSX:TXG) (OTC:TORXF), Karora Resources Inc. (TSX:KRR) (OTC:KRRGF), and Kinross Gold Corp. (TSX:K) (NYSE:KGC) could be the value buys for 2021 for investors looking to add some gold stocks to their portfolios. 

 

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. 

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