Mining still ongoing at Sukari, Centamin reassures - UPDATE

Egypt-focused gold miner Centamin has reassured that mining operations are continuing as usual after concerns about the company's flagship Sukari concession sent the stock tumbling on Tuesday morning, prompting the temporary suspension of trading on the FTSE 250.

The share price, which closed yesterday at the 100p mark, dropped to an intraday low of 35.02p before recovering, after media reports said that an Egyptian court had over-ruled a 2005 decision to award the company the contract to mine at Sukari.

Subsequently, the Financial Services Authority announced at 10:00 that it would be temporarily suspending the securities from trading.

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Centamin said in a statement this afternoon: "Comments reportedly made by an Egyptian administrative court this morning have given rise to speculation that parts of the Concession Agreement may have, in fact, been suspended. However at this time, no details of a final decision are available and no written judgement has been given.

"Centamin confirms that it is not a party to this case, repeats its view that the concession as law 222 of 1994 remains valid and that the court does not have jurisdiction to cancel it."

The miner said it would update the market with information as soon as possible but claimed that, in the meantime, "normal mining operations continue".

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 [of a potential court ruling] 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.