Egypt court ruling setback for Centamin
Cairo, October 31, 2012
Gold producer Centamin saw more than a third of its stockmarket value wiped out yesterday before trading was suspended, after an Egyptian court said its right to operate the Sukari mine, its main asset, was invalid.
Centamin later said that operations were continuing and that the Egyptian administrative court did not have jurisidiction over its mining rights. British drilling company Capital Drilling also said in a statement that operations at Sukari were continuing as normal.
A major gold mining company focused on the Arabian-Nubian Shield, Centamin has offices in London, Mount Pleasant (Western Australia) and Alexandria, Egypt.
The company's London-listed shares plunged to their lowest level for three years earlier in the day, dropping almost 60 per cent before recovering some ground.
Courts in Egypt have challenged a number of contracts reached during the rule of Hosni Mubarak who was ousted last year, adding to investor worries at a time when the government is trying to revive confidence in the economy.
"The court rules as invalid the contract to exploit the Sukari mine," Judge Said Al Qusair said, adding the court also ruled that a decision by the authorities to offer a 30-year contract and to allow it to be renewed was also void.
Centamin said that to date the administrative court had only made "comments" and as yet no final decision or written judgment was available.
The lawyer who challenged Centamin's contract said the government should now order mining at Sukari to be stopped.
The administrative court ruling can be appealed against in a higher court. Based on cases involving other Mubarak-era contracts, this court decision may herald a tortuous legal wrangle that could take many months or longer to resolve.