Centamin Plc (CEY), the gold producer that runs a mine in Egypt, said the outlook for operating in the country is improving as President Abdel-Fattah El-Sisi promotes foreign-investor friendly policies.
“Broadly the outlook for Egypt is improving with the new government,” said Andy Davidson, head of business development. “The new government certainly understands the need to attract foreign direct investment and being supportive of current investment in the country.”
Centamin shares fell by more than 50 percent in both 2011 and 2012 as the Arab Spring led to revolution in Egypt, home to its Sukari gold mine. El-Sisi is seeking to attract foreign investment to pull the economy from its worst slump in two decades.
“We’ve seen a progressive improvement in the general operating environment in Egypt,” Davidson said in an interview today. “Bear in mind that over the last three years we’ve been through two revolutions and four changes in government and we’ve continued to operate well.”
Centamin has encountered more than just political adversity: it is contesting a 2012 Egyptian court decision annulling the contract that allows it to mine gold at Sukari. Centamin, which has appealed against the preliminary ruling, expects a final decision next year.
Centamin today reported that second-quarter profit dropped more than 70 percent from a year earlier to $11.3 million. Sales fell 24 percent $102.6 million. The company, which produced 81,281 ounces of gold in the quarter, maintained its full-year target of 420,000 ounces at an average cost of $700 an ounce.
The gold miner is expanding Sukari and expects to produce 450,000 to 500,000 ounces next year, possibly more.
“We could do potentially better than that,” Davidson said “It’s something we would hope to be talking about in the course of next year, the potential to increase productivity from both the plant and underground operation.”
To contact the reporter on this story: Thomas Biesheuvel in London at email@example.com
To contact the editors responsible for this story: John Viljoen at firstname.lastname@example.org Tony Barrett