Centamin legal fight over gold mine in Egypt set to end this year
London and Toronto-listed gold miner Centamin (LON:CEY) (TSX:CEE) said Monday its long-dragged dispute with Egyptian authorities over its flagship Sukari gold mine is likely to settle before the end of the year.
The Alexandria-based company, which is Egypt’s largest gold producer, is betting on the new government to pass an investor-friendly law that will null the case against Centamin.
The miner scored big last month after the country’s interim government granted it permission to expand its mining activities through increasing production capacity and the necessary energy levels for operation.
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, which may finally revoke the 2012 ruling and restore Centamin mining license for Sukari.
“My expectation is certainly you’ll see a resolution of that case before the end of the year,” Chairman Josef El-Raghy told Reuters in an interview.
“Our expectations are that the new government does what it has already started to do … that it continues to adhere to the agreements that have been signed with investors.”
But even if that problem is solved, Centamin may face other challenges, as the EMRA submitted a draft law to the petroleum ministry earlier this month that —if approved— will raise the rental value for mines by a whopping 20,000%, Al-Ahram’s Arabic news reported.
Gold in Egypt is most associated with Nubia a region that straddles the border of Northern Sudan and Egypt. The Egyptian word for gold was “nbu,” derived from gold-rich Nubia – shown on the Turin Papyrus as a major gold producer in antiquity.
In ancient Egypt, gold was considered the flesh of the gods, especially that of the sun god Ra.
Sukari, which began commercial production in 2010, is jointly owned by Centamin and the Egyptian Mineral Resources Authority (EMRA) on a 50:50 basis.
Images courtesy of Centamin.