Centamin likely to benefit from new Egyptian contract law - UPDATE

24th Apr 2014 07:12

Thanks to a new investment law brought in by the Egyptian government, gold miner Centamin will try and dismiss an ongoing court case over rights to its Sukari mine in the country.The new law came into effect in Egypt on Wednesday and the FTSE 250 company's legal advisers have interpreted it as restricting "the capacity for third parties to challenge any contractual agreement between the Egyptian government and an investor". Centamin added that the new law appears to cover all currently pending lawsuits and challenges.Broker Peel Hunt noted that the law, which was released in draft form in February, was previously thought not to apply to currently pending cases, and "now appears to include all current challenges before the courts". The company said it continued to discuss with its advisers the process by which the original Sukari claim may be dismissed under the provisions of this new law.Peel Hunt said the implications for current court case were as follows: "The current court case is adjourned until October 7th; our previous assessment was that the legal dispute was unlikely to be resolved in 2014. While investors would be wise to be cautious in their expectations of the Egyptian legal system, particularly with regard to timing, the new legislation now in force provides Centamin with an opportunity to bring court applications filing for dismissal of the case, and provides a very strong argument that the challenge is without substance. Our opinion is that Centamin's chance of success in the court case is now very likely indeed."Analysts at Shore Capital also said they viewed the legislation as "a favourable development for Centamin".Centamin shares were down from the day's initial high, but still up 10.7% at 61.94p at 13:35 on Thursday.OH