Member Info for Cowichan

Your input is greatly appreciated

Can do!

FOR IMMEDIATE RELEASE

19 JULY 2023

New contract win:

- A reverse circulation exploration drilling contract with Centamin, at the Nugrus Block in the

Egyptian Eastern Desert;

https://www.capdrill.com/media/investors/Financial-Results/Q223-CAPD-Trading-update-final_updated.pdf

And then, what goes around comes around... shares awarded to Capital's leaders end of H1...

Jamie Boyton Executive Chairman 361,682 & 361,682

Peter Stokes Chief Executive Officer 414,870 & 414,870

Brian Rudd Executive Director 183,819 & 183,819

not a bad set-up these executives have going for themselves

plus, at this point Capital knows more about Centamin's operations (including exploratory drilling hits/misses) than Centamin

The image you paint of the Egyptian people and their willingness to support one another is inspiring.

As far as our differing theses regarding the Sisi regime and the Egyptian people's willingness to support him come what may - many journalists in the region have a different opinion.

This article just from a day ago refers to Sisi labelling those who dare report on economic difficulties in Egypt as “terrorist group and spreading false news” - that's not good for attracting foreign investment dollars they so desperately need.

https://www.aljazeera.com/news/2023/7/25/al-jazeera-slams-naming-of-its-journalists-on-egypt-terror-list

I read that since Sisi came to power his regime has borrowed $100 billion US dollars from Egypt's Arab neighbors. And that with NO way to pay it back. Already Egypt is paying out

56% of it's 2023/2024 budget in interest payments alone.

That means Egypt only keeps 46% of revenue to pay for things like bread subsidies etc.

This is not sustainable, especially considering the buying power of the Egyptian pound is half of what it was - when they need to pay for food imports it costs them more than double as it did just a year ago.

Sorry to say but I would not reinvest in Centamin even should its stock price be cut in half - I'll wait to see if the country 'reboots' and if Centamin emerges on the other side intact,

it is a shame Centamin blew it's cash hoard on a massively overpriced waste contract and West African adventures - because that cash could have helped weather the storm -

now Mr Horgan is forced to spend shareholder's wealth to the tune of a cool $6 million - forced upon them by management's oh so woke 'sustainability line of credit' contractual agreements - just to ensure the gold price doesn't fall beyond a London banker's predetermined level -

I know now that Mr Horgan doesn't run the company to the benefit of shareholders but to the benefit of his circle of banker, corporate and industrial friends -

further reading

https://arabcenterdc.org/resource/egypt-is-in-serious-trouble-seven-decades-after-its-free-officers-revolution/

https://www.reuters.com/business/energy/egypts-zohr-gas-field-reach-15-bln-investments-three-years-government-2023-07-24/

Hi Siko,

It's always good to hear from you.

How about instead of me opining about the news articles I read on Egypt

(admittedly I've never spent a minute in the country)

please tell us the realities on the ground - your personal first hand experience with:

a) if inflation is or may be a problem for companies operating in Egypt

b) if pound devaluation is or may be a problem for companies operating in Egypt

c) if Sisi can continue to operate the country without being overthrown should subsidies need to be cut further

In one of the news reports I posted it said 70% of Egyptians currently rely on bread subsidies. Does that mean without those subsidies the general population would have trouble affording the basic necessities of life?

Nationalization is just one possibility. Take Mexico , a few years ago no one would imagine Lithium mines being nationalized - but it happened, and why? Because the leader said it was in the country's national security interest to do so. This is the exact language Sisi is using to justify NOT abiding by the IMF requirements his government just signed a 3 billion dollar loan agreement with - that doesn't give me much confidence in Sisi's regard for business deals.

Your thoughts, rebuttal is most welcome.

July 25,2023

More than half of Egypt's 2023/24 budget is allocated to debt servicing.

Mada Masr reported that the debt situation is so precarious that, within government circles, the option “to voluntarily default on some of the debt and negotiate with creditors about a new payment schedule” is on the table.

https://www.aljazeera.com/economy/2023/7/25/will-egypts-asset-sale-get-it-out-of-its-economic-hole

(and in regards to Egypt selling state assets to get some much needed cash fast, another article tells how it's going...)

“The government was pushing to sell certain companies at different times, trying to pit the various companies against each other to reach a higher sale price. But it did not only fail in achieving this, since the Gulf countries communicate with each other, but it also created political tension between Egypt and the three countries,” the analyst says.

As the attempts to play the various buyers off each other to get the highest payout made the negotiations drag on, Egypt’s bargaining position weakened due to the downward pressure on the pound.

“The power is always in the hands of the buyer. They are the ones with cash looking to invest. In the beginning, the offers were tempting, but the Egyptian side’s greed wasted a lot of time and led to the buyers’ accruing more power,” the analyst adds. “The buyers are of course in search of the best investment opportunity, which would come only with the devaluation of the pound.”

https://www.madamasr.com/en/2023/07/17/feature/economy/reaching-a-dead-end-where-egypt-and-the-imf-stand-on-the-stalled-loan-program/

-------------->>>>>>

The questions I ask myself:

What could a financial crisis do to foreign operating companies like Centamin - especially if the Egyptian pound crashes further and hyperinflation takes hold?

The answer was for Centamin's BOD to have diversified to reduce single country risk years and years ago -

however Mr Pardey's hit & miss tenure notwithstanding,

Centamin should have diversified when Mr Horgan & some brighter directors came in

Now the question becomes, will a rushed merger or sale be the 'preferred' solution to fix the single country risk once and for all ?

All they need do is put their shareholder's slush fund into an Egyptian bank - instead of London.

July 25, 2023

EGYPT FOREX

Egypt's two biggest state banks on Tuesday issued U.S. dollar-denominated certificates of deposit with high returns, in what appears to be the country's latest attempt to lure dollars away from the black market and back into the financial system.

The North African nation is grappling with a shortage of hard currency, with the Egyptian pound having lost nearly 50% of its value against the dollar in a series of steep devaluations since March 2022.

Banque Misr and the National Bank of Egypt (NBE) are offering a three-year dollar-denominated deposit certificate with 9% annual interest to be paid upfront in Egyptian pounds.

The country pledged to move to a flexible exchange rate regime and reduce the state's footprint in the economy while boosting the private sector.

However, the first review under the IMF programme has been postponed as the exchange rate has remained steady at around 30.85 pounds to the dollar since March.

Egyptian President Abdel Fattah al-Sisi appeared to rule out a further currency devaluation anytime soon in remarks made to a youth conference in June, saying such a move could harm national security and hurt Egyptian citizens.

-------------------------->>>>

Personal Opinion To Follow:

Government finances are generally bad in most countries (save perhaps those wealthy oil & gas exporters, go figure) but in Egypt the economic irregularities are papered over to a level that would make even China blush. A day of reckoning is coming - will foreign assets be safe?

Yes, I too am very sad at the passing of Tony Bennett -

listened to his music all day yesterday,

great entertainer - yet

I guess I didn't hit the bottle as hard as some -

PS

Goldguy , are you seriously comparing armed militias, with sometime mass murder of the local villagers , rape & pillaging to some sort of freedom fight ? Sorry, maybe I missed the preamble ?

Even though Barrick did not sponsor the event - their representative was indeed present and did indeed sign the executive regulation documents - photo on link below

but why oh why does Egypt still need until the end of the year to present to parliament ? not holding my breath or reinvesting anytime soon but will be watching for an entry point perhaps next spring, as until the regs pass ministerial approval I can't see drilling begin in earnest , thus no catalysts for the share price IMO

https://www.linkedin.com/feed/update/urn:li:activity:7087691775003230208

posted 14hrs ago

Barrick Gold and Centamin sign new concession contracts Engineer Tarek El Molla, Minister of Petroleum and Mineral Resources, announced that the ministry and the Egyptian General Authority for Mineral Resources have reached an agreement with the Canadian companies Barrick Gold and the English Centamin on the commercial, financial and legal terms of the mineral exploitation contract model in a number of concession areas won by the two companies in the global auction to search for gold and associated minerals and exploit them, and all legal procedures are being taken to present the agreements to the relevant competent authorities. The minister stressed that this agreement is one of the successes achieved by the current session of the Egypt Mining Forum, especially since the two companies Barrick and Centamin are global and have the experience, solvency and techniques to accelerate the implementation of the agreement and achieve business results added to the development of the mining sector.

Will Centamin still be able to supplement fossil fuel power at will?

That would require keeping the current generators operationally ready & the fuel topped up.

This from last year:

in early August 2022, Egypt launched a plan to reduce local power consumption by cutting the amount of natural gas used in generating electricity in order to direct the savings for export in order to increase levels of foreign currency. This would generate $450 million per month - $4.5 billion per year, according to government estimates.

The electricity sector buys natural gas from the Petroleum Ministry for $3 every MBtu whereas it is exported for more than 30 per MBtu. Thus, economically speaking it is better to export it and receive hard currency, Hamza said.

https://english.ahram.org.eg/News/473325.aspx

And today:

Wednesday 19 Jul 2023

Power outages in Egypt

The recent power outages in the country were caused by increased consumption triggered by the ongoing intense heatwave, said Egyptian Prime Minister Mostafa Madbouly on Wednesday, in an answer to complaints from citizens about why the lights went out last week. Madbouly added that the reductions will continue until the middle of next week.

https://english.ahram.org.eg/NewsContent/1/2/505074/Egypt/Society/Power-outages-in-Egypt-resulted-from-increased-con.aspx

----------------------------->>>>

A serious decision will need to be made. I dunno if it's a great idea to trust Egypt to have uninterrupted power cuz whenever Egypt needs foreign currency (and when don't they) Sisi will no doubt dim the lights.

July 17, 2023

EGYPTMINING

Arab Finance: The Egyptian Ministry of Petroleum and Mineral Resources will sign seven contracts with Centamin and Barrick Gold this week for the commercial exploitation of gold discoveries, Asharq Business reported on July 16th, citing unnamed sources with the matter.

The deals will allow the government to obtain 50% of the net profit achieved from the commercial operation of the gold mine when it is operational, according to one of the sources.

https://www.zawya.com/en/projects/mining/egypt-to-pen-gold-exploration-contracts-with-centamin-barrick-gold-within-days-g2on7gu5

----------------------------->>>

As we know, the NEW terms are supposed to be a more attractive tax & royalty scheme - reverting to a 50% profit split would be back to the old terms

Monday, 10 July 2023

Food and beverage prices — the largest component of the basket of goods and services used to calculate inflation — accelerated to a record high of 65.9% y-o-y in June from 60.0% the month before.

The higher-than-expected surge was “driven mainly by the high demand for core items in the food sector during Eid season,” Bedeir told Enterprise yesterday. This was also due to “an unfavorable base effect coupled with the current underlying inflation pressures arising from the previous FX movements and the supply shortage in important commodities driven by the FX liquidity crisis,” she added.

Core inflation also moved higher: Core inflation — which strips out volatile items such as food and fuel — accelerated to 41.0% in June from 40.3% the month before, according to central bank figures

https://enterprise.news/news/story?storyId=869177c8-d101-4ffe-8c4e-f1c09a8c20bc

------------------------------>>>>

The question is - how will Egypt get its hands on more US dollars? Their greatest sources are the canal revenue, oil & gas exports and potentially, some day, gold exports. IMO nationalization of gold reserves could be a real option.

Saw this tweet:

"According to the St Louis Fed, interest payments by the Federal Government have now surpassed $900B for the first time ever, and within a quarter will probably rise above $1T."

https://twitter.com/GoldSeabridge/status/1679876982459252738

and had to look for myself:

https://fred.stlouisfed.org/series/A091RC1Q027SBEA

Looks like it is true. Interest payments by the US Federal government now approaching $ 1 trillion. Per quarter.

Endeavour sells non-core Burkina Faso gold mines for $300 million

Endeavour Mining (TSX, LON: EDV) said Friday it had sold its 90% interest in the Boungou and Wahgnion gold mines in Burkina Faso for about $300 million. The buyer, Lilium Capital’s subsidiary Lilium Mining, is an African and frontier markets focused investment vehicle led by West African entrepreneurs.

The total consideration for the mines, deemed non-core to Endeavour, comprises of upfront and deferred cash instalments. Endeavour will also earn a 4% net smelter return royalties (NSR) of gold sold at both mines, with Bougnou expected to generate $52 million over its productive life and Wahgnion $41 million

https://www.mining.com/endeavour-mining-sells-non-core-burkina-faso-mines-for-300-million/

--------------------------------------->>>>

To Follow, A Highly Critical Personal Opinion:

So Centamin investor, did Endeavour just do the impossible?

Mr Horgan assured Centamin shareholders nothing could be done with its gold reserves/resources at Batie West, Wadaradoo & Napalapera in Burkina Faso (even going as far as saying the concessions were ALREADY taken back by the State when clearly they were still allotted to Centamin in early 2023 , as I previously documented)

How is it then that Endeavour got $300 million/ with royalty in exchange for two Burkina Faso assets just last week?

Mr Horgan, your efforts on behalf of Centamin investors (at least in Burkina Faso) have been horribly inadequate. In legal jargon, a crime of omission. It's past time for you to go.

Posted 3hrs ago

The potential for mineral exploration and development in Egypt’s Eastern desert is limitless, untapped, and largely undiscovered.

During this high-level session, Martin Horgan, Chief Executive officer of Centamin PLC; Mike Silver, Chief Executive & Co-Founder of Lotus Gold Corporation; Mark Campbell, Chairman & General Manager at Akh Gold and Patrick Barnes, Heads of Metals & Mining Consulting at Wood Mackenzie will discuss the steps Egypt can take to develop its mining sector, increase commercial discoveries and become a lucrative destination for international investors.

Join the panel discussion on Unlocking the Investment Potential of Egypt’s Mining Sector at the Egypt Mining Forum, next week, Tuesday 18 July in Cairo.

https://www.linkedin.com/posts/egypt-mining-show_egyptminingforum-mininginvestments-commercialdiscoveries-activity-7085214615172767744-p-1v

----------------------------->>>>

My Personal and Highly Biased Opinion:

Given Centamin is still encouraging Egypt to 'take steps' a full decade after the new mining legislation was announced, and nigh 3 years after the 2nd largest gold miner in the world was awarded huge concessions of known gold endowed land, then, Egypt's 'failure to launch' is self-inflicted and (most likely) intentional

An excerpt from Egypt's latest 'State Ownership Policy Document' dated March 2023

"Thirdly, the State shall adjust and increase its economic presence while permitting partial participation by the private sector in some of the activities related to those sectors. This applies to 76 activities and is justified by strategic or social dimensions. These activities include pre-primary and higher education, healthcare, activities associated with the Suez

Canal, investments in oil and gas extraction and refining, investments in electricity transmission networks, several activities in the information and communications technology (ICT) sector such as infrastructure for wireless and terrestrial communications, and units for modern postal services, press and media activities, including video films and cinema, radio and television broadcasts."

https://idsc.gov.eg/Upload/DocumentLibrary/Attachment_E/8411/State%20Ownership%20Policy.pdf

----------------------------------->>>>

Note it says the State plans to INCREASE its economic presence in " investments in oil and gas extraction and refining "

Wait just one cotton picking minute - the news reports for the last several years talk about Egypt planning to SELL stakes in various state owned enterprises, but the official policy statement from the government of March 2023 says it plans to INCREASE participation in no less than 76 economic activities - INCLUDING one of Egypt's top foreign owned industries - namely oil & gas extraction (see above)

Bottom Line:

Instead of blindly hoping that Egypt is making the reforms necessary to add foreign investment and secure Sukari's future (Centamin) - analyze the policies Egypt is publishing itself and then decide if you are willing to take a chance on Egypt over let's say, Australia for your current investment dollars. Actions always speak louder than words - and so far the Egyptian military has expanded its hold on Egypt's industries - not loosened it. Therefore, are Centamin's gold reserves actually safe ? It's a big unknown.

Breakout 'soon' is that:

Increases since 1999...

Rents: 135%

Household Income: 77%

chart here:

https://twitter.com/charliebilello/status/1678405238741499905

(it's a great account to follow)

In the public sphere only the wealthy have the spare resources to increase gold demand as a safe haven. Beyond the rich it's up to central banks. Is that enough to force gold to 'outperform'?

And for those touting unsustainable government debt as a reason for people to rush into gold - again, the public is struggling to pay for food, rent & mortgages - with what will they buy all the gold?

Holes on their 2020 awarded concession sites until negotiations with EMRA are complete.

This goes against what Mr Horgan has thus far advised Centamin shareholders, as he is on the record saying concession exploration drilling outside the Sukari concession site would start H2 2023.

The refusal to proceed with exploration drilling is tacit admission Centamin doesn't trust the EMRA to uphold its end of the negotiations. The question is why is the EMRA stalling? Do they have military orders to thwart development? Is the Egyptian military keen on taking over such exploration activities? And gold production? That is what the following Egyptian news article alleges:

----------------------->>>

July 9, 2023

according to the intelligence website, the permits granted in November 2020 did not lead to any new exploration activity, as several companies that obtained the permits are still negotiating with the Egyptian General Authority for Mineral Resources, and refuse to invest until the agreement with them is completed.

These include Centamin, which operates the Sukari gold mine; Canadian giant Barrick Gold; And the Canadian B2Gold company as well.

These companies do not plan to start exploration at this stage, and they want to first obtain the necessary clarifications from the Egyptian Authority for Mineral Resources regarding taxes, customs, and procedures for moving from exploration to actual extraction under the concession permits granted to them.

[ Additionally ] the current call for applications for mining rights has not yielded satisfactory results so far, and for good reason, as the concessions offered are still subject to the old legislative framework, which requires companies to enter into a partnership with the Shalatin Mineral Resources Company, a company that partly owns by the military, and offers relatively unattractive profit-sharing arrangements

In the context of the militarization permeating the backbone of the Egyptian economy, all investors have become apprehensive about entering the Egyptian market, as army companies are exempted from taxes and customs fees, and land is granted free of charge, which makes competition with private sector companies or investors not possible. To work as subcontractors, given that they do not obtain projects and tenders directly from the government, as the army seizes all tenders by direct order, then distributes projects in exchange for a 40% deduction of their value, as gains for them, without efforts or work, which puts investors before two options, Either exit from the Egyptian market or accept to work as subcontractor.

full article here:

https://www.fj-p.com/351594/%D8%B9%D8%B2%D9%88%D9%81-%D8%A7%D9%84%D8%B4%D8%B1%D9%83%D8%A7%D8%AA-%D8%A7%D9%84%D8%A3%D8%AC%D9%86%D8%A8%D9%8A%D8%A9-%D8%B9%D9%86-%D8%AA%D8%B9%D8%AF%D9%8A%D9%86-%D8%A7%D9%84%D8%B0%D9%87%D8%A8-%D8%A8/

They are running low, so much so they are willing to entice foreign residents thru simple purchase of dwellings. The more you pay for your dwelling, the longer you can stay! (Note: It's not a new concept - the US dollar amount to qualify were just DRASTICALLY reduced. And temp residency can be renewed indefinitely)

a $50,000 USD home buys you ONE year temporary residency

$100,00 USD home buys you THREE years temporary residency

$200,000 USD home buys you FIVE years temporary residency

https://www.linkedin.com/posts/adsero_egypts-residency-program-activity-7074679992705572864-qE7S

Not a bad deal, considering house/condo prices are a fraction of what we're used to in the UK/US/Canada/Australia

Who's in? 007??

Marsa Alam has some stunning seaside properties - and you could check up on Sukari to report back to shareholders now and again...

On a not-so-sunny note - what happens if Egypt doesn't get enough US dollars to meet their importation demands? Already there is billions of product/foodstuff tied up in Egyptian ports waiting for payment in US dollars. Single country risk really, really sucks , Mr Horgan.

Like it has been assumed? Seems not.

The recent law which granted negotiating powers to Egypt's Minister of Petroleum and Mineral Resources makes amendments to these type of existing concession laws possible (in the following case it's for an oil/gas co.).

This *could* be good news for approving an amendment to the existing Sukari concession law 1994 to exploit newly discovered deposits surrounding Sukari - utilizing the existing plant/infrastructure.

A rare streamlining/cutting red tape effort by the Egyptians that apparently worked for Trident Petroleum Egypt. (And a rare positive post by Yours Truly - see I can be optimistic if the right occasion should arise)

-------------------------->>>>

posted 1hr ago

Great news!!!

My company’s concession commitment agreement amendment has been approved by the council of ministers.

A law licensing the Minister of Petroleum and Mineral Resources to contract with the Egyptian General Petroleum Corporation (EGPC) and Trident Petroleum Egypt to amend the commitment agreement issued under the Law 204 of the year 2017 for the oil exploration, exploitation and development at Esh El-Mallaha Marine Field (Magawish).

This means that we have a lot of work to do…

Kindly wish us luck.

https://www.linkedin.com/posts/sarafakhry_petroleum-work-development-activity-7082758771109769216-qOcx