FTSE 250-listed Egypt-focused gold mining company Centamin has suspended operations at its Sukari gold mine because diesel has stopped being supplied.
In an official statement made by the company to the London Stock Exchange, Centamin stated that it had received a "retrospective claim" for LE403m (approximately $65m) from the Egyptian General Petroleum Corporation (EGPC) for diesel fuel supplied from December 2009 to January 2012.
Centamin alleged that the claim was "illegal" and claimed that EGPC had refused to authorise future supply of diesel to the Sukari Gold Mine until the amount was paid.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
It said that together with the Egyptian Mineral Resources Authority's support, Centamin has been seeking to have the fuel supplies reinstated. Discussions are "ongoing" but fuel supplies have reached "critical levels".
Unexpected setback on fledgling gold export business
The company has also faced a setback on its planned gold exports.
Having obtained necessary permission from the EMRA, it commenced the process of gold exports, but during the process, Centamin said that an unforeseen "arbitrary request" from customs officials for prior approval by the Minister of Finance halted the shipment. The company said that it had urgently sought the approval but had not yet received it.
"In light of these developments, it is with regret that, due to a resultant lack of diesel and a short-fall in working capital in Egypt for the local operations the decision has been taken to suspend operations at Sukari and to place the mine on care and maintenance until these issues are satisfactorily resolved," a company statement read.
"Centamin will take vigorous action to defend its rights to continue the extraction and export of gold from the Sukari mine, to obtain fuel supplies and to challenge the illegal retrospective claim from EGPC."
Trading terms: The Santa Rally
Glossary Will the Santa Rally result in its traditional December effect on global markets?
By Dr Matthew Partridge Published
Lock in high yields on savings, before they disappear
As interest rates peak, time to lock in high yields on your savings, while they are still available.
By Ruth Jackson-Kirby Published