Centamin's flagship Sukari contract at risk, shares suspended

Centamin plummeted on Tuesday morning shortly before trading in the shares was suspended on concerns that it could lose its flagship Sukari gold mine in Egypt.

Centamin plummeted on Tuesday morning shortly before trading in the shares was suspended on concerns that it could lose its flagship Sukari gold mine in Egypt.

According to media reports, an Egyptian court has said that the gold miner's contract to mine Sukari has been withdrawn, after a decision in 2005 to award the company the contact was over-ruled.

The judge said: "The court rules as invalid the contract to exploit the Sukari mine."

Bloomberg said that the court also ruled that a decision by authorities to offer a 30-year contract (and automatic option) was also void.

The stock, which closed yesterday at the 100p mark, dropped to an intraday low of 35.02p before recovering to 70p. The Financial Services Authority announced at 10:00 that it would be temporarily suspending the securities from trading.

Centamin 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.

"The impact is considerable as the Sukari mine is the company's primary source of revenue," said Rik Thakrar, risk manager and senior dealer at Spread Co.

"Shares in Centamin benefitted from a rising gold price following the Fed's QE programme and the company is likely to appeal the decision, however the continued short selling in the stock noted by our dealing team this morning indicates that there is as yet little support for the stock at current levels," he said.

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