Member Info for Cowichan

November 6, 2023

Gold reserves in Egypt rose to $8.098 billion in October from $7.644 billion in September, according to data released by the Central Bank of Egypt (CBE).

https://www.zawya.com/en/economy/north-africa/egypts-gold-reserves-hit-8bln-in-october-vh2ge4lc

Nov 3 (Reuters) - Ratings agency Fitch downgraded Egypt's long-term foreign-currency issuer default rating (IDR) to 'B-' from 'B', citing increased financial risks and higher government debt.

The downgrade reflects increased risks to Egypt's external financing, macroeconomic stability and the trajectory of already-high government debt, the rating agency said.

Recovery in Egypt's key tourism industry, which had been hammered by the pandemic, has been offset by last year's surge in energy prices and ongoing rise in global borrowing costs. This has added to the country's external loans, which quadrupled to over $160 billion in the seven years

https://www.reuters.com/world/africa/fitch-downgrades-egypt-b-with-stable-outlook-2023-11-03/

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1) in times past buying/owning gold made you a more stable country economically

2) where does Egypt get funds to 'buy' more gold during their economic crisis ?

3) how much does the Central Bank of Egypt still owe Centamin for its monthly gold purchases ?

Doaa A.Moneim , Wednesday 1 Nov 2023

"Other factors include the surge in Egypt's one-year Credit Default Swap (CDS) to 2,013 bps from 1,230 in mid-September, widening the gap between the parallel and official FX rates to as much as 50 percent and 30 percent between the Real Exchange Rate (RER) and Real Effective Exchange Rate (REER) models.

https://english.ahram.org.eg/News/511406.aspx

November 1, 2023 12:00AM EDT

The Egyptian authorities have arbitrarily detained and prosecuted dozens of peaceful protesters in demonstrations since the beginning of October 2023, Human Rights Watch said today. The authorities should remove overwhelming restrictions on the right to peaceful assembly, release all those detained solely for joining or calling for peaceful protests, and drop charges against them.

She said that when the protesters arrived at Tahrir Square, security forces and men in civilian clothes pushed them out of the square, chased protesters through the surrounding streets, and randomly arrested people.

Security agencies also arrested several activists they believed were connected to the protests at their homes.

the Supreme State Security Prosecution (SSSP), which ordered all of them to be kept in pretrial detention. They faced charges of “joining a terrorist group,” participating in “illegal assembly,” “committing a terror act,” and vandalism.

authorities presented no evidence of a criminal offense in any of the cases. Human Rights Watch found no allegation of violence in government-affiliated or independent media reports.

Throughout October, security forces have violently dispersed and detained protesters at other separate anti-government peaceful gatherings.

Human Rights Watch has documented that the Egyptian military has unlawfully evicted tens of thousands of North Sinai residents since 2013 under the pretext of battling an Islamic State-affiliated armed group.

On October 15, security forces detained at least 10 men and 3 women after dispersing hundreds of teachers who gathered in front of the Education Ministry in the new administrative capital east of Cairo to protest the mass disqualification of thousands of teachers who applied for public school jobs, according to social media videos and media reports. The reports said that security forces beat protesters, used water cannons to disperse them, and forced female teachers into buses to remove them from the protest.

https://www.hrw.org/news/2023/11/01/egypt-dozens-peaceful-protesters-detained

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Truth be told Sisi cares nothing for either - dictators treasure 1 thing & 1 thing only - power

Tuesday 31 Oct 2023

Egypt lowers natural gas supply to fertilizer companies amid severe shortage.

The news came amid media reports that gas supplies to fertilizer companies had been cut by 30 percent. The news led to a sharp decline in the stocks of petrochemicals companies including Kima, Misr Fertilizers Production Co (Mopco), and Abu Qir Fertilizers (ABUK), which dropped 11.82 percent, 13.11 percent, and 11.49 percent, respectively.

El-Mahdy said there is no cause for alarm, suggesting the market will self-regulate.

“Affected petrochemical companies might have backup plans for such shortage. Also, the lower supply of fertilizers will result in higher prices so the profitability of these companies will likely double,” El-Mahdy added.

Egypt is suffering a severe shortage of natural gas supplies after Israel’s war on Gaza led to the suspension of gas supplies from Israel, down from 800 million cubic feet per day.

As a result, Egypt extended the duration of gas-saving daily power cuts -

many Egyptians complained on social media that power cuts are exceeding four hours -

Other users have complained of twice-daily blackouts lasting nearly two hours each.

https://english.ahram.org.eg/NewsContent/3/12/511318/Business/Economy/Egypt-lowers-gas-supply-to-fertilizer-companies-am.aspx

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Let's see, major Egyptian manufacturers given the middle finger from government in the midst of a growing energy shortage - and saying to those companies they might have back-up plans? and if that fails 'be happy, you'll make double when there is a shortage of fertilizer to sell' is just ignorance on top of insult

CEO Horgan would be wise to read these tea leaves before trusting in Egypt's energy grid

2023-10-31 | 05:58

In a resolute statement from Sinai, Egypt's Prime Minister, Mostafa Madbouly, affirmed the nation's unwavering commitment to protecting its land and sovereignty.

He declared, "We are prepared to sacrifice millions of lives to ensure that no one encroaches upon our territory."

The Prime Minister reaffirmed that Egypt will never allow any imposed situation or the settlement of regional issues at its expense.

https://www.lbcgroup.tv/news/middleeastnews/731828/egypts-prime-minister-from-sinai-we-are-ready-to-s/en

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Egyptians, ever the masters of hyperbole.

However, the important question is, whose millions of lives are they willing to sacrifice? Palestinians, Jews or Egyptians? An aptly creepy statement for Hallowe'en -

Ahram Online , Monday 30 Oct 2023

The Egyptian government is planning to create around 800,000 new jobs during the fiscal year 2023/2024, according to a report by the Ministry of Planning and Economic Development on Sunday.

The new jobs will be provided mainly in agriculture, construction, retail, and manufacturing sectors, the report said.

The government plans to increase female contribution to the labour force from 16 percent to 25 percent in the current fiscal year.

https://english.ahram.org.eg/NewsContent/3/12/511262/Business/Economy/Egypt-plans-to-create-,-jobs-in-FY.aspx

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Is there any leader more full of themselves than Sisi? Mr Horgan came close today - but seriously, if creating jobs was as simple as issuing a press release...

And somebody tell Egypt's women to get a move on - they got to mobilize an additional 9% in a jiffy

I sent in 2 comments during the event. Which I was pleasantly surprised Alex had the tenacity to put forward to Mr Horgan, uncomfortable as I bet it was for the CEO :

#1 Paying laborers & legal fees while exiting BF is one thing but the 2022 annual report show a $2,000,000 license renewal fee that was paid in 2022. That's the bigger amount that doesn't make sense.

#2 Appreciate you asking the difficult question Alex, Props to you. However, MH left out the fact that Centamin received a letter from BF in December 2021 saying the license was non-renewable. So to believe Centamin would send 2million to a country who didn't ask for the renewal fee (as per BF letter) and under a coup is questionable

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Final Thoughts

We should have had Alex on the Centamin board these last several years - I bet things would have turned out better for shareholders

Panama president asks voters to decide on contentious First Quantum mining contract

PANAMA CITY, Oct 29 (Reuters) - President Laurentino Cortizo said on Sunday Panama would hold a referendum to decide whether to scrap a contract with Canadian miner First Quantum's local unit following days of protests by thousands of people opposed to the open pit copper mine project.

The vote will take place Dec. 17 and its result would be binding, Cortizo said in a video message.

"I've respectfully listened to those who oppose the contract with Minera Panama," Cortizo said, using the name of First Quantum's local unit.

Neither First Quantum nor Minera Panama immediately responded to requests for comment.

Panama's government and the miner had agreed on a contract which would guarantee the Central American nation an annual income of $375 million while allowing First Quantum's local unit to operate the Cobre Panama project, an open-pit copper mine, for at least 20 years.

Protesters have criticized both the deal and the mine's environmental costs, even after Cortizo on Friday issued a decree rejecting all new mining projects.

In a statement late Sunday, Cortizo's office noted that the contract was first established in 1991.

After Cortizo's announcement, Panama's main workers' union said its members will keep protesting in the streets until the contract is annulled.

"There's no maneuver in this fight that will deceive the people," a union representative said.

The Cobre Panama mine's activity accounts for nearly 5% of the country's economy, and last year represented about half of First Quantum's EBITDA.

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Talk about extreme measures. FQ shares down 30% so far today...

October 29, 2023

Daily nationwide power outages across Egypt have begun to last longer, with the government cutting the electrical current off from homes across the country for an hour and a half or more each day.

The power outages began in July, with Prime Minister Mostafa Madbuly saying that normal coverage would resume by mid-September at the latest. But the cuts continued into the first weeks of October and lengthened over recent days.

Behind the cuts are a reduced domestic supply of natural gas

Longer power cuts began on Saturday, Cabinet Spokesperson Sameh al-Kheshen said Sunday. He pointed to an increase in consumption as well as “a decrease in the quantities of gas supplied from outside Egypt, from 800 million cubic feet of gas per day to zero.”

Though Kheshen did not mention in his Sunday statement the normal source of Egypt’s gas imports, Egypt was formerly receiving around 800 million cubic feet of gas per day from Israel

More mazut could have been used to supply the deficit in natural gas resources and avoid nationwide power cuts, said a member of the House of Representatives Energy Committee while speaking to Mada Masr on condition of anonymity in July. But, they continued, “there was not enough mazut available, which is probably due to the lack of foreign currency.”

https://www.madamasr.com/en/2023/10/29/news/u/longer-power-cuts-as-gas-imports-drop-to-zero-says-cabinet-spokesperson/

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Here's a damn good question to ask CEO Horgan - is now a wise time to switch to Egypt's electrical grid to power Sukari?

EGYPT: DARK PROSPECTS

10/16/2023

Egypt’s management of external accounts, which consists of buying time thanks to external support between two drastic exchange rate readjustments, is reaching its limits. The persistence of a significant external financing need, notably due to the amortisation of external debt, and international creditors (Gulf States and the IMF) who condition their support on painful and politically costly reforms, have led the Egyptian economy to a dead end. The banks’ net external position is deteriorating at an alarming rate. Restrictions on foreign currency transactions are increasing, with negative consequences on activity in a country highly dependent on imports.

Against this backdrop, the currency shortage is reflected in multiple rationing, the development of a parallel exchange market, a deterioration in the net external position of the banking system and, as a last resort, a sharp depreciation in the exchange rate. The Egyptian pound has depreciated by more than 50% since the beginning of 2022, while the exchange rate on the one-year offshore market has now reached more than EGP 50 for one USD, representing a gap of more than 50% compared to the official exchange rate.

Further deterioration in the external situation of the banking system and a widening of the gap between official and offshore exchange rates can be expected in the coming months. The planning of the presidential elections in December 2023 makes an exchange rate adjustment before the end of 2023 unlikely.

Furthermore, access to private external financing deteriorated, particularly following the downgrading of the sovereign rating by Moody’s, which mechanically led to that of the country’s main commercial banks being downgraded, given the link between the banking sector and the government. Public banks hold approximately half of the total banking assets, and government debt accounts for approximately 50% of the total assets of all public and private commercial banks. Government access to the international capital market has been closed for several months given the level of risk premiums (greater than 1,500 basis points)

https://economic-research.bnpparibas.com/html/en-US/Egypt-Dark-prospects-10/18/2023,48999

Last week, Prime Minister Mostafa Madbouly held a press conference to unveil an ambitious plan aimed at combating the country’s surging inflation and the relentless rise in food commodity prices.

During the conference, Madbouly announced that the Egyptian government has agreed with producers and retailers to cut prices of several food commodities by 15% to 25% for six months starting Saturday, October 14.

These commodities include beans, dairy products, white cheese, mixed cooking oil, pasta, sugar, lentils, poultry products, eggs, and rice.

Madbouly pointed out that the government will exempt manufacturers and retailers from customs duties imposed on these commodities as well as speed up customs clearance procedures at ports for the next six months.

https://www.millingmea.com/egypt-boosts-strategic-reserves-with-250000-tons-of-rice-to-tame-the-ongoing-shortage-crisis/

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Any semblance of free market activity is quickly fading. Farmers cannot just absorb the high cost of inflation while at the same time sell their products for less. Same with importers & shopkeepers. If general investors don't yet understand the threat to their holdings in Egypt based companies - they soon will.

Thaer Mansour

Egypt - Cairo

26 October, 2023

One US dollar is officially equal to about 30.90* Egyptian Pounds (EGP), whereas its value against the local currency black market ranges from 45 – 47 EGP at the time of publication, leading the prices of basic commodities, mostly imported, to rise tremendously.

"Israel-Gaza war is one of the factors taking a heavy toll on the Egyptian pound, bringing it down to a record low. But this is not the sole reason behind the declining value of the local currency," economic researcher Ahmed Abdel-Thaher told The New Arab.

"Perhaps Egypt is on top of the countries in the region influenced by the ongoing fighting between the Palestinian Hamas faction ruling the Gaza Strip -Hamas as the war has increased the geopolitical risk for the country," he explained.

https://www.newarab.com/news/us-dollar-value-egypts-black-market-rises-amid-gaza-war

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Centamin receives the official rate* in local currency as per its monthly gold sales 'agreement' with Egypt's Central Bank - thus, Centamin is being shortchanged as Egypt's currency isn't as valuable as the Central Bank pegs it

The essentially forced sale of gold to Egypt's Central Bank warrants a rethink , it represents a threat to Centamin's balance sheet, on several levels besides the pegged rate

19h ago

- Egypt's economy is deeply in crisis, with inflation, unemployment, & emigration out of the country all on the rise. The deal struck with the IMF nearly a year ago remains in deadlock as #Egypt has failed to meet many of its conditions.

- military ownership over state assets and companies in Egypt is a way for the military to hold power over politics, leaders and the population, while treating their workers poorly and amassing wealth for themselves.

- the trajectory of Egypt's military from being a moderate economic power in the country to then gaining "an exceptional and exponential increase in that power."

- By 2018, the military was responsible for about 1/4 of all govt-funded public work projects in #Egypt, & it was able to take advantage of all the protections it naturally has so that it would be able to out-compete all civilian companies,

- the military not being subject to customs taxes or highway tolls, and generals now sit in committees that design strategic plans in key areas of growth in the economy

- When generals get involved, they deprive civilian actors in the public and private sectors of jobs without actually increasing the Egyptian state’s profit, given that the military keeps all the income from their economic activities

-Out of 2 million enterprises in Egypt, only 1% are considered medium or large, "so we are talking about a private sector that is 99% small businesses," Usually economies have a pyramid structure with more middle-sized companies and a small # of large ones.

- closes saying "The outlook is grim and it doesn't get better.

https://twitter.com/TimepDC/status/1717634533644747049

turkey's central bank hikes key interest rate to 35% to curb inflation

the turnaround began in june, when turkey's president recep tayyip erdogan — who spearheaded the controversial policy stance — appointed former wall street banker hafize ***e erkan as new central bank governor.

erkan, turkey’s first female central bank chief, was a former managing director at goldman sachs and co-ceo at first republic bank.

she is also turkey’s fifth central bank governor in four years.

https://www.cnbc.com/2023/06/09/turkeys-erdogan-appoints-hafize-***e-erkan-as-central-bank-governor.html

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egypt's inflation rate isn't far behind.

economically speaking, egypt's pres. sisi is known for promising economic action but never pulling the trigger - and appointing friends and associates from the egyptian military - often for life instead of folks with pertinent experience. which strategy will win in the end, i wonder?

Egypt's gas production dwindled by 10% yoy in the first 8 months of 2023, a decline of 4.5 bcm in absolute terms. this steep decline is reflective of the country's aging gas fields and growing upstream issues.

the ramp-up of Israeli piped gas (up by 50%) partly compensated for the lost domestic production, adding just over 2 bcm to Egypt's gas supply mix.

with the Tamar field now being shut for almost a month, Israel's own gas production plummeted by an estimated 40% (or 0.8 bcm) in October, leading to lower piped gas exports to Egypt.

according to media reports, Israeli piped exports to Egypt dropped by 70-80% compared to the first eight months of 2023, translating into a decline of over 0.5 bcm month-on-month.

lower Israeli piped gas deliveries will ultimately weigh on Egypt's export capabilities this winter. Egypt exported around 4.5 bcm of LNG to Europe during the 2022/23 heating season.

considering the upstream issues in the country and the reduced Israeli piped gas availability, Egypt's LNG exports are most likely to dry up this winter, adding to a tighter winter gas balance in Europe.

what is your view? how will Egypt's gas and LNG production evolve this winter? how could be Tamar impacted by a prolonged shut-in?

https://www.linkedin.com/posts/greg-moln%C3%A1r-38601171_gas-lng-ttf-activity-7123200352794898432-UPos

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a Q for CEO Horgan - is the risk of switching to Egypt's electrical grid worth the upfront costs and threat of sporadic disruption/escalating costs? The ESG benefit is negligible as Egypt produces 90% of its electricity from fossil fuels (mostly oil, some gas)

time to forget about optics, and think about adding value for shareholders

✅ Our first Eastern Desert Exploration (EDX) drill campaign is now complete! The 16,000 metre programme focussed on the Nugrus block, immediately adjacent to our #Sukari Gold Mine.

👏👷 Kudos to our dedicated #exploration team for their hard work and unwavering commitment to #health and #safety, resulting in an incident-free campaign.

We look forward to sharing the results soon!

👀Read about our #EDX project: https://loom.ly/lK4Ropg

#CEY #Growth #People #Protect #Gold #Geology #NubianShield #Egypt

https://www.linkedin.com/posts/centamin-egypt-pharaoh-gold-mines_eastern-desert-exploration-edx-centamin-activity-7123216658998923264-dHVC

PhD project: Structural control and geological evolution of the Sukari gold deposit in Egypt

ECONOMIC GEOLOGY - MINERAL EXPLORATION

The position will be available from 1 January 2024.

BACKGROUND:

The proposed PhD project will focus on the Sukari gold deposit and involves detailed mapping of underground and open pit levels, diamond core logging, petrography and a variety of geochemical analyses in order to:

Establish a lithostratigraphic model for the deposit and the surrounding rocks which make up the Sukari Melange.

Construct a structural database and framework that allows the 4-D geometric reconstruction of selected gold lodes and the deposit.

Constrain the paragenetic evolution of hydrothermal alteration including hydrothermal veins based on, and in conjunction with, the structural evolution of the Sukari gold system, and the chemical controls on gold deposition.

Establish relative and absolute timing of hydrothermal alteration/mineralization/fluid events based on the relative timing established by mapping and petrography and absolute timing by geochronology, and

Establish a genetic model for the evolution of the entire Sukari gold system that can be ** translated into a robust and cost-effective exploration model **at the mine scale. The latter is aimed at the identification of extensions or concealed gold lodes in the deposit and surrounding area.

Samples for geochronology, hydrothermal alteration and fluid investigations will be selected based on detailed mapping and core logging within a mineral system framework.

Start date: As soon as possible

Fixed term: 3 years PhD plus 6 months extension (if justified)

Salary: The candidate is asked to apply for a UWA PhD scholarship

Place of work: Perth, Western Australia

https://www.earthworks-jobs.com/mining/uwa23101

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Not a bad idea to enlist a PhD candidate for free. They'll have unfettered access to the geophysical survey data (and more!) Centamin shareholders have yet to see (don't think we'll ever)

But surely this in-depth analysis to develop an exploration model for greater Sukari could, should, would have been done by now, no ? Or perhaps this will be a sober (& cheap) second opinion ?

Another way to anticipate the year end cash balance is to look at historical precedence -

from the same page as last post :

https://www.centamin.com/media/2940/centamin-ar22.pdf

Centamin's cash and cash equivalents :

at the beginning of the year 2021 $ 291,281,000

end of year 2021 $ 207,821,000

2021 burn $ 83,460,000

at the beginning of the year 2022 $ 207,821,000

end of year 2022 $ 102,373,000

2022 burn $ 105,448,000

end of year 2023 $ ???

2023 burn $ ???

Forecast estimate taken from page 161 of Centamin's 2022 Annual Report here:

https://www.centamin.com/media/2940/centamin-ar22.pdf

The scenarios and impact on liquidity is as follows:

- Base case: No change to parameters, expected closing cash balance of US $52 million

- Fuel price increase to US $1.25/litre: resulted in a closing cash balance of US $9 million

- Processing capacity reduction by 20%: resulted in a closing cash balance of US $ 10 million

- Processing plant recovery rate reduction to 85%: resulted in a closing cash balance of US $37 million

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My Thoughts:

Centamin's current cash burn rate is high, even given a no problem base case being met. What if it doesn't meet 130k in Q4?

A potential Q for CEO Horgan next week , what is the plan to reverse the cash burn rate ?

Granted the Capital waste moving contract is scheduled to end mid-2024 and could help the burn, however, the Capital contract may be extended, to deal with escalating waste stripping ratios now baked into the new LOM

"There is a precedent of sorts for Cairo winning favors as a regional war raged.

Egypt secured forgiveness of half its $20.2 billion debt owed to the US and allies in 1991 — one of the most generous incidences of debt relief creditor nations have granted — in exchange for support for the anti-Iraq coalition during the Gulf war."

"The US wanted to reward Egypt’s President Hosni Mubarak for his pivotal role in lining up Arab nations against Saddam Hussein and to reimburse Egypt for heavy financial losses in the war. Egypt also sent armed forces to participate."

"Replicating that scenario would be difficult though. Back then there was general consensus that since Kuwait had been invaded, it needed to be supported, and while Egypt’s participation “was not met with any great joy in military circles, it was not a particularly hard sell and the debt relief was an immense added incentive,” according to the Middle East Institute’s Mabrouk"

https://fortune.com/2023/10/22/will-egypt-take-palestinian-refugees-from-gaza-israel-hamas-war/

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Too often in life picking sides, showing compassion, spreading hate - comes down to $$$ and not principles or religious convictions, as the case may be