Boost for Centamin on reports of Egypt mulling new investment law

24th Feb 2014 14:48

Centamin, the gold miner with a focus on Egypt, saw its shares rise following reports that a draft investment law being put together by the Egyptian government contains provisions to prevent third parties from challenging contracts made between the government and an investor. Citing a cabinet source, Reuters reported that the move by Egyptian authorities aims to attract badly needed investment following a number of challenges to deals between the government and companies. The challenges have left investors wary of being exposed to the country. Since the uprising that toppled Hosni Mubarak in 2011, Egyptian courts have issued at least 11 rulings ordering the state to reverse deals signed by the former president's administration.The lawsuits have been brought by activists and lawyers who allege that companies were sold off too cheaply in corrupt deals during the Mubarak era.Centamin has been in Egyptian courts for months over its mining licence in Egypt. The company has been actively exploring in Egypt since 1995. Its main asset is its interest in the large scale, low cost Sukari Gold Mine, located in the Eastern Desert of Egypt. The operating company Sukari Gold Mines is jointly owned by Centamin's wholly owned subsidiary Pharaoh Gold Mines NL and the Egyptian Mineral Resource Authority on a 50% equal basis. Sukari produced 150,000 ounces of gold in its maiden year of production in 2010, consistently expanding thereafter to reach more than 260,000 ounces in 2012. The 'stage 4' plant expansion programme commenced in 2011 to target 450-500,000 ounces per annum production from 2015 onward. The Sukari Gold Mine is the first large-scale modern gold mine in Egypt.Several other foreign firms have been caught out by the challenges, including Mexico's cement giant CEMEX, which is locked in appeals processes against renationalisation of its Egyptian arm, Assiut Cement Co. Reuters noted that the draft investment law must be approved by Egypt's president before it becomes law. The government has yet to set a timeframe.In mid-afternoon trade Centamin shares were ahead 7.6% or 4.08p to 57.68p. KP