No end in sight for Centamin legal fight over gold mine in Egypt
Shares in gold miner Centamin (LON:CEY) (TSX:CEE) closed down over 6% in London Thursday as the company said its long-dragged dispute with Egyptian authorities over its flagship Sukari gold mine might drag into 2015.
Delivering its second quarter results, the Alexandria-based company — Egypt's largest bullion producer— also logged lower production and higher costs during the first half of the year. It, however, kept its annual forecasts unchanged, suggesting it would deliver more output at better grades over the rest of the year.
Centamin problems in Egypt go back to 2012, when a court cancelled its mining license for Sukari, the firm’s only producing mine, and the country’s first large-scale modern gold operation.
Last year, a 400 kg gold shipment from Sukari was prevented from leaving Egypt as authorities claimed Centamin needed a permit from the national petroleum ministry to do so.
Both the Egyptian General Petroleum Corporation (EGPC) and Egypt's Mineral Resources Authority (EMRA) said in mid-December 2012 that their dispute with Centamin had been settled and that they would authorize the firm’s gold shipments.
Fast-forward almost two years and the company is still waiting for a court hearing, scheduled for October. However Centamin’s shares have doubled over the past year as it has insisted its rights will be protected and as it has held out the prospect of a dividend.
Investors will receive a maiden interim payout of $10m, or 0.87 cents per share, Centamin said.
The miner had an important win in May, when the country’s interim government granted it permission to expand its mining activities through increasing production capacity and the necessary energy levels for operation.
The following month, Centamin’s executives appeared optimistic and said the long-running battle over Sukari was likely to settle before the end of the year.
Sukari, which began commercial production in 2010, is jointly owned by Centamin and the Egyptian Mineral Resources Authority (EMRA) on a 50:50 basis.
Analysts didn't seem concerned about the case running into 2015, Reuters reported, particularly as enforcement of the original 2012 ruling has been suspended pending resolution of the appeal hearing.
Images courtesy of Centamin.