Shares in London and Toronto-listed Centamin (LON:CEY, TSX:CEE) fell by as much as 10% on Monday after the company gave an update on its Sukari gold mine in Egypt where it is appealing a lower court's decision to annul its mining licence.
Centamin said the appeal against the 30th October ruling by an administrative court which set aside a 1994 agreement the company signed with authorities is currently being filed through its subsidiary Pharaoh Gold Mines.
The news Centamin's shares plummeting by more than 60% at the time although after today's losses it is still down almost 40% in value on the LSE.
The Alexandria-based company said that operations and its expansion project at Sukari – the first modern gold mine to operate in the North African country – have continued without any problems since that judgement.
The company – now worth ₤660 million in London – added that it is preparing to resume exports of gold which were earlier suspended pending the lodging of the appeal.
What did probably make investors nervous about Centamin's release is the next line of the announcement:
The Company manages its working capital in country through gold sales and consequently a gold shipment is required shortly to ensure that on-going working capital commitments can be met.
Centamin in August reported record output up 40% over last year at Sukari and the company said it is on track to produce 250,000 ounces this year at a cost of $565 an ounce. Sukari commenced production in 2009.
Since the fall of the Mubarak regime in Egypt and the takeover of the government by the Muslim Brotherhood led by Mohamed Morsi, foreign investor uncertainty has increased and many fear that contracts signed before the transition to democracy would now not always be honoured.
Egypt's eastern desert and Marsa Alam regions in the south bordering Sudan where mining dates back to the ancient times have gained more investor interest recently.
In July Naguib Sawiris, an Egyptian mobile phone entrepreneur, paid $492 million for gold miner La Mancha Resources (TSE:LMA). In June La Mancha released "significant" results from its Hassaï property in Sudan.
Undated image of a Cairo policeman and labourer compacting a dirt road from Brooklyn Museum Archives, Goodyear Archival Collection