RE: New Shalateen, EMRA & Lucky Investor Profit Share Agreement10 Apr 2023 13:44
Hi Cowichan,
Thank you for this posting this latest announcement, in view of your observations and comments I thought it may be useful to remind everyone of the existing Sukari concession agreement which I posted after an inaccurate announcement in the Egyptian media
15 July 2014 News floated today that profit sharehttp://images.intellitxt.com/ast/adTypes/icon1.png would start June 2015. It also contains a few comments from Mr-AlRajhi and an official at the ministry of petroleum.
The second link -from a couple of days ago- contains comments from the president of EMRA, who said according to the settled accounts, profithttp://images.intellitxt.com/ast/adTypes/icon1.png share should start January 2015.
www.akhbarak.net/articles/15892110
www.akhbarak.net/news/2014/07/09/4665760/articles/15856436
Subject: Profit share & 500 Million disagreement?
Official Response Tue, 15 Jul 2014
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).
There is no issue with regards to the money that has been ploughed into Sukari, particularly the costs of Stage 4 (c.$350m) – this needs to be recouped before any of this operating surplus can be shared. This is not due to kick in until later this year, or possibly in Q1/Q2 next year. It is all a function of the ramp up in production and the gold price.
There is no dispute between Centamin, the Egyptian government and/or EMRA, nor the 50/50 Sukari Gold Mines subsidiary. this is likely some people declaring that they want profit share now. This 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). 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. In fact the 50% will not kick in until 2016, as in 2015 this will be 45%. To counter this there is no VAT, no corporation tax, no other taxes to pay at all beyond the above and the royalty, on a blended rate compares reasonably well with 1st world mining jurisdictions (like the US, Australia, Northern Europe etc).
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