FTSE 250 gold miner Centamin rebounded strongly on Thursday after returning to the market following a suspension from trade, as the firm looked to reassure investors concerned about the future of its flagship Sukari project in Egypt.
Shares plummeted two days ago after media reports claimed that an Egyptian court had labelled its Sukari mining concession, its primary source of revenue, as void.
The stock, which has performed strongly in the last three months - from 70p level to around 100p in recent weeks - fell to 64p before being suspended from trade on Tuesday. Today, they were trading 12.81% higher at 72p.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
In a statement released yesterday, Centamin said that a full written decision of the administrative court has not yet been disclosed but is to be delivered in due course. The company said: "Until that time it is difficult to know the precise scope of the court's decision, though it is understood that the court is not asserting that the concession agreement as a whole is invalid."
Centamin reiterated its view that its concession remains valid and the court doesn't have the jurisdiction to cancel it.
It is now working in co-operation with the Egyptian Mineral Resource Authority (EMRA) and the Ministry of Petroleum in "taking vigorous action to both defend its rights to continue to extract gold from the Sukari mine in the short term and to challenge the written decision should this be necessary." If necessary, the company said it is prepared to mount a "substantive legal challenge."
Centamin, which owns a 50% interest in Sukari through its subsidiary Pharaoh Gold Mines, said in early October that it was on target to produce 250,000 ounces of gold after having ramped up production in the third quarter. EMRA owns the remaining 50% stake.
Josef El-Raghy, the Chairman of Centamin, said: "Our company takes very seriously any threat to our operating title, our investment and the livelihood of our employees.
"If, through our due diligence process in the coming weeks, we do uncover any such threat we will spare no effort in order to defend our position which at all times has been in accordance with the terms of the concession agreement, the Egyptian law and international best practice for both mining and general investment in the country."
Endorsement from Egyptian authorities
Fekry Youssef, the Chairman of EMRA, said: "EMRA takes this opportunity to reiterate its full support of our operating partner at the Sukari gold mine, PGM. We enjoy a positive and constructive relationship with PGM that will see not only very substantial cash flows to the Egyptian economy, but also the development of a world class gold mining industry in Egypt.
"In light of PGM's substantial investment in the Sukari project, we strongly believe that the terms of the Sukari Concession Agreement are both reasonable and fair to all parties concerned; namely the Egyptian people, the government and to our partners. We will endeavour to work on a solution together and to keep the project operating."
Centamin has invested over $700m in Egypt to date and has committed a further $287m to the Stage 4 expansion project since it was initiated in 2011. Sukari employs 1,200 people with a further 3,000 indirectly.
In the doghouse: hundreds of investment funds are underperforming - is it time to sell?
News The latest Spot The Dog research from Bestinvest reveals 151 funds are failing to beat their benchmark. We reveal the worst performers
By Marc Shoffman Published
Nationwide: House prices creep up for the first time in over a year
Nationwide’s latest house price index reveals property prices are finally rising. Will this pattern continue in 2024?
By Vaishali Varu Published