More bad news for Egyptian gold miner, Centamin, whose shares are down 8% to 60p this morning. First there is the continued fall out from last week’s declaration from Mohamed Morsi, Egypt’s Islamist president granting himself wide-ranging powers and making all his decisions immune to legal challenge!This has fostered fears of a return to the violence which marked the ejection from power of President Mubarak in 2011. In addition Morsi, has endorsed measures forbidding the courts from disbanding both the controversial panel drafting the constitution and the Shura council or upper chamber of parliament elected last year. This knocked the Egyptian stock market down 10% yesterday.
On top of this, the company has warned that renewed exports from its suspended Sukari gold mine were needed soon to ensure it met working capital requirements. Centamin stopped exports from its flagship mine after an Egyptian administrative court declared its mining concession void in early November after its failed to disclose evidence of government approvals, provoking a sharp drop in the share price and temporary suspension in its shares. The company is currently challenging the ruling with an appeal.
The shares have now dropped over 40% since their October high of 107p which was triggered by encouraging production forecasts. However, the bad news from Egypt continues to pile the pressure on the company and the political landscape is unlikely to improve any time soon in the troubled country. Though the Sukari gold mine is a prize asset, Centamin is 100% reliant on the mine to deliver gold sales and currently the outlook is highly uncertain.
Contrarian Investor UK