Nov. 4 (Bloomberg) -- Egypt’s mineral resources authority will appeal a court ruling that annulled the Sukari gold mine contract, sparking a sell-off in Centamin Plc last week.
“We will appeal the decision, of course,” Egyptian Mineral Resources Authority Chairman Fekry Youssef Mohamed said in a phone interview today. “We don’t plan any amendments to the agreement. We must respect what was signed.” The authority has received a copy of the preliminary ruling from the Cairo-based Administrative Court and operations at Sukari will continue as normal, he said.
The court issued its ruling without having been presented as evidence with the contract signed in 2005 with the then oil minister giving the company operational rights in an additional 160km2 area, Oil Minister Osama Kamal said in an interview today.
The company and EMRA will “submit the required documents to clarify the situation and, in the end, the court will rule” as it sees fit, Kamal said.
The state-run Egyptian Mineral Resources Authority didn’t exercise enough oversight on gold extraction at the Sukari mine and should “rectify” the violations, the Administrative Court said on Oct. 30. The mine’s proven production to date is valued at $875 million, of which the government’s share was only $19 million, the court said. Centamin operates the mine in a 50-50 joint venture with the mineral resources authority.
Centamin’s London-listed shares fell as much as 59 percent, the most on record, on Oct. 30, closing the week 38 percent lower.
“I would assume that operations will continue whilst the appeal is heard,” said Julian Bruce, the Dubai-based head of institutional trading at EFG-Hermes Holding SAE. “Very hard to speculate, but it looks like a judiciary versus the government battle is now on the cards”
The case was filed by Hamdy El Fakharany, a lawmaker in the now-dissolved parliament, on the grounds that the concession granted to Centamin had not been submitted for parliamentary approval. The deal was signed in 1994 under the rule of former President Hosni Mubarak who was ousted in a popular uprising last year, and covered a 30-year renewable period, according to the state-run Middle East News Agency.
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