RE: Gold Price5 Jul 2019 13:25
You keep going on about the profit share, albeit a seemingly generous when compared to what mining companies pay in other counties, but in reality it is now only 5% higher than when it first kicked in!
Like it or not if it weren't for the profit share there would be no gold mining now at Sukari!
Cant see Lord El Nagy ever setting up there!
So let's have a look at profit share-
The profit share will be what the profit share will be – the joint venture partner, ie the government, sits in the 50% owned subsidiary Sukari Gold Mines.
The management board of this subsidiary has representatives of the government and an equal number from Centamin.
All of the investment into the Sukari mine is audited, with Sukari Gold Mines very much being a part of this process. Similarly, all gold sales go through Sukari Gold Mines, where the operating surplus will be divided 50/50 between the government and Centamin, once the original capital has been repaid back to Centamin and its shareholders. The 3% royalty has been paid to the Egyptian Treasury ever since production started (this also goes through SGM).
With the above in mind, there is no issue with regards to the money that has been ploughed into Sukari, particularly the costs of Stage 4 (from memory (c.$400m-ish) – this was recouped before any of this operating surplus could be shared.
Just to clarify-
There is no dispute between Centamin, the Egyptian government and/or EMRA, nor the 50/50 Sukari Gold Mines subsidiary.
Al Fakharany's claim(court case) is a political game more than anything, as the deal is the deal (in fact Centamin have advanced the country a few million dollars as a demonstration of their faith in this deal – this will also be recouped out of future operating surpluses due to the government).
Some plus points that are often missed!
What is wonderful is that very few people seem to understand what this 50/50 deal is – it is effectively a 50% tax on free cash flow.
The initial profit share was 45% increased to present 50%, although to counter this there is no VAT, no corporation tax, no other taxes to pay all beyond the above and the royalty, which on a blended rate compares reasonably well with other 1st world mining jurisdictions (like the US, Australia, Northern Europe etc).21/11/2017
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