Centamin propels modern mining rules in Egypt
Centamin (TSX: CEE; LSE: CEY) has helped Egypt develop a new mining law due for passage within weeks as it seeks to expand the Sukari gold mine in the ancient land’s southeast.
The London-based company, consultants Wood Mackenzie and Barrick Gold (TSX: ABX; NYSE: GOLD) advised the country which began revising regulations in 2018, Centamin CEO Martin Horgan said in an interview with The Northern Miner in Riyadh, Saudi Arabia.
“You had all this untapped geological potential available, but the old-style oil and gas concessions didn’t really work,” Horgan said on Wednesday at the Future Minerals Forum. “We’ve been negotiating the final details to a new royalty, taxation, free-carry model, basically bringing Egypt in line with pretty much the rest of the world.”
Centamin is investing in Egypt as wider interest in the Nubian Shield straddling the Red Sea gathers pace following neighbour Saudi Arabia’s third annual conference on developing an exploration super region stretching from Africa to Asia. Sukari, south of Luxor between the Nile and the Red Sea, has produced more than 5 million oz. of gold since it started production in 2009. Artisanal output dates from 2,500 BC.
Egypt’s current mining regulation was based on profit sharing with the government. The proposed law is to be a 5% royalty, a 22.5% tax rate and a 15% government free-carry stake. Over the life of a project, returns to the company and the state are about equal, Horgan said.
“Where we ended up is not quite as good as Western Australia or Canada, about the same as Côte d’Ivoire, and probably a bit better than Ghana,” Horgan said.
Grid savings
Centamin, which spent some $750 million over the past four years to improve efficiency at Sukari, Egypt’s only modern gold mine, plans to connect to the country’s electrical grid and company solar panels this year, alone cutting $41 million a year in diesel costs.
It wants to expand Sukari with nearby discoveries. It is exploring 3,000 sq. km in the eastern desert area near the mine. It’s budgeting 15,000 metres of reverse circulation drilling for the new area, metallurgical testing, a conceptual resource estimate and an optimization study to steer drilling.