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The agreement started in 2017.
The CBE gives Centamin 50 million Egyptian pounds a month, and in returns, Centamin gives the CBE gold worth the equivalent amount in US dollars according to the international price of gold and according to the USD/Egyptian pound exchange rate.
This agreement gives the CBE the opportunity to increase the national gold reserve, while paying in local currency, so it does not affect the foreign currency reserve.
Also Centamin is not losing anything as it needs local currency anyway to pay the workers and all the local expenses.
In 2021, this amount increased to 80 million Egyptian pounds per month.
With the current exchange rate, this comes to around 2.5 million dollars a month..
And yes, it will cost the CBE double the amount of local currency now to purchase gold, or they will get half the amount of gold for the same money due to the Egyptian pound devaluation..
I have no idea about any outstanding balance owing.. we are talking about the CBE.. They could always print Egyptian money to purchase gold!!
Hi Cowichan..
It's me again.. and here are my replies to all your recent posts about Egypt..
6th Aug: Egypt's public schools..
Private tutors and lessons in Egypt have been a well known thing for decades now.. I took some when I was in school in the 80s.. and so did my brothers and sister before me.. I can't understand what the issue or its significance is now, or how this is an indication about Egypt's current economy situation, or how even this could affect Centamin..
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9th Aug: Egyptian expats can buy off their mandatory military service obligations by paying $5,000 in US dollars..
And? It's actually a good income for the country and a good opportunity for some expats.. Egypt's population is around 110 millions.. the army doesn't need all the mandatory numbers.. some expats will be happy to pay to get the exemption.. my nephew is one of them.. and they asked for the payment to be in Abu Dhabi because Egypt is entering in a contract with UAE worth around 400 million dollars to buy wheat.. for those who don't want to pay, then nothing has changed.. I myself have completed my mandatory military service in Egypt.. I might have chosen to pay if I was offered an exemption at the time..
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10th Aug: Egypt does not have the dollars to import needed fuel..
That was your chosen title for your post, while the actual article you posted stated (Egypt's PM said: It is an additional burden that the country will be able to provide).. Also I don't know if you are still following the situation in Egypt, but the electricity shortage situation is getting better, not worse.. it's still not good of course, and they are still cutting the power supply, but not as bad as before.. my mum used to get the electricity cut 3 hours a day in July, now it's one hour..
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15th Aug: Coventry University’s Egypt..
Could you explain to me in figures how the Egyptian pound devaluation would push CEY's AISC upwards, when CEY's income is in US dollars?
In the example you are using, in Coventry University’s Egypt site it states (No annual increase applied on the tuition fees for the 2023/24 academic year. Any difference in the fees is only due to the ongoing devaluation waves of the Egyptian Pound).. so it's the same amount in English pound (or dollars)..
https://tkh.edu.eg/tuition-coventry/
so while the value of the Egyptian pound has halved, do you think Centamin has doubled the wages of the Egyptian workers who get paid in Egyptian pound? Of course not.. would you class that as a saving for Centamin whose income is in dollars?
Once again, I'm not saying the situation in Egypt is good, not at all, Egypt is a 3rd world country, the economy is bad, and has been getting worse, and people are suffering.. I'm just putting the facts right without exaggeration..
Siko
Cowichan,
I was going to reply in details about this "amendment" to Trident contract/law that you mentioned, because whoever brought it to your attention as an example of Egypt changing laws/contracts, does not have a clue!!!
but then, I decided to step away, because I noticed I was getting dragged in a conversation that states Egypt is bankrupt, Egypt will nationalize companies, Egypt will change laws/ contracts to shaft companies, and then referring back to links from 1991 about Egypt and the gulf war!!!
Too much for me.. I explained simply what I wanted to explain.. I never wanted to go that deep.. so I will leave it here..
Cowichan,
By the way, I stated many times before that I don't hold any Centamin shares as I don't have the money to do so, hence my posts are only replies to comments regarding Egypt and the things that could be misunderstood or misrepresented about what goes on in Egypt.. I'm Egyptian, I love my country and will defend it when appropriate.. saying that, of course there are many bad things in Egypt, very bad indeed..
You will see that I don't reply to comments like (share price will go down) or (management of Centamin is bad), because that has nothing to do with me..
But to be honest, and as my personal view, and I could well be wrong, if you are not going to invest in Centamin untill Egypt reboots (as you stated before), then you will be waiting for years.. so you may as well move on and look for other better opportunities to invest in.. it's just very strange that you can't find one positive thing about the company, and you are still interested in it..
Cowichan,
Is that lawyer aware of the details of law 222 year 1994 (Centamin concession agreement) which clearly states Centamin' exemption from any taxes? I posted here before a link to the full details of the law/concession.
Does he know it's a law? Which requires parliamentary agreement to change any of its details, and that was why the Administrative Court did not even consider Alfakharany's request to cancel it?
I understand of course he is a specialized in the tax subject in Egypt, but he may not be aware of Centamin's law because tax lawyers in Egypt would not come across it.
Also in Arabic, Point (K) is clearly talking about determining the cases in which dividend (profits) distributions are subject to taxes, so this will affect people's income, not the company. (Companies' profit share) in that sentence, in Arabic, is reflecting the dividend that the share holders would get, not the(profit share) as the 50/50 between Egypt/Centamin..
Hi Cowichan,
This law is talking about income tax of individuals who get dividends or shares from a company's profit..
Centamin is exempt from any taxes imposed by the Egyptian government on the revenues generated from Sukary as per law 222 year 1994..
One more point in his interview... Mr Samih Sawiris said (Actually for my tourism projects in Egypt, I pay less expenses now because the tourists pay me in dollars, and I pay my expenses in Egyptian pound, and as the value of the Egyptian pound has halved, so it's costing me less dollars to pay for things like electricity).. and he was very happy for that..
Which is exactly what I said about Centamin.. it's income is in dollars, while many expenses are in Egyptian pound, so the company is actually paying less for many things..
Hi Cowichan,
I'm back again as you are talking about Egypt :)
This article and the headline are completely misleading, incomplete and taken out of context..
The full interview with Mr Samih Sawiris is in this link..
https://arabic.cnn.com/middle-east/article/2023/05/03/samih-sawiris-inviestments-egypt-saudi-future
The reporter was talking to him about the dollar situation in Egypt, then she asked him (Have you stopped entering in new projects in Egypt for the time being due to the current dollar exchange rate/situation?)
He replied (Yes of course, I can't calculate any profits in this situation, so everyone is "waiting")..
Then, later in the conversation, she asked him (You showed interest before in Saudi Arabia.. Do you have any plans for projects in Saudi?)
He replied (Yes, I'm looking at a few things in Saudi and already in negotiations because Saudi is very promising and the recent development there is like a revolution because they have changed everything and it's up to date now and in a few years Saudi will be the biggest place for investment).. that's it!!
I can't see anything wrong with that.. a businessman found an opportunity for a few projects in Saudi Arabia.. that does not mean he is relocating.. Even football players are going to Saudi now because of the huge financial potential there.. it does not mean the premier League and La Liga are finished..
When Mr Naguib Sawiris started his gold company outside Egypt, this was not relocation.. it was an opportunity outside Egypt..
The 3 Sawiris brothers are by far the richest family in Egypt.. their huge projects and investments are everywhere.. they know how to make money in Egypt..
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Regarding (Public sector = loose money = corruption), Mr Sawiris was replying to someone asking him in a tweet (What are the reasons behind EgyptAir losses?)..
So his reply was because it is a public sector company with its finance not monitored which led to corruption.. He was not talking about (Egypt economic misfortune), and you could go back to the original tweet you posted..
You really need to take it easy on looking for something and blow it out of proportion to show that it's the end of Egypt and Centamin.. Of course there are many problems and negatives in both, I admit that, but it's not the end of days as you are making it..
One last question to you Cowichan.. what did you mean by (The end could be sooner than shareholders think) ?
Thanks for this healthy exchange which is useful for other shareholders and readers..
Siko
Hi Cowichan,
I was only addressing the nationalization point. You are of course not happy with many other points regarding Egypt and centamin, but these are not for me to comment about..
Politics, Centamin contracts with Capital Drilling, West Africa, management performance, and your decision not to buy now even should the SP cut in half.. All these points I think other holders could respond to, but as a non-holder, this is not my area...
One point though, there is a huge difference between (Sisi is going nowhere as people understand that the country can't afford another revolution) as I put it, and (Sisi regime and the Egyptian people's willingness to support him) as you put it.. They (have to) get on with things as they are, because the other choice would make things a lot worse for them, but that doesn't mean they (support) him.. A big difference..
Siko
Of course the financial situation in Egypt is bad.. very bad indeed.. and the main problem is the lack of foreign currencies.. especially the dollar.. but if you think about it, this is due to the lack of foreign investments and exports.. so the last thing the government wants to do in order help the situation is doing anything that would deter investments, and foreign investments in particular..
a) and b).. inflation and pound devaluation are problems, but inflation in Egypt is mainly linked to the pound devaluation.. so for Centamin it's not a problem, because the company's income is in US dollars, so for example, while the value of the Egyptian pounds nearly halved in the last few months, Centamin pays employees in Egyptian pound, has the company doubled the wages in Egyptian pound? Of course not.. so it costs less to pay in dollars.. and most other increases in expenses, linked to the pound devaluation, are protected by the company's income in dollars.. Of course there is a percentage increase in expenses, but that would be the normal international inflation like the rest of the world ..
C) Sisi is going no where as people understand that the country can't afford another revolution.. this is very clear to everyone.. and people understand now that (the grass is always greener..)
Sisi needs the IMF loans and relies on them, so he is following the IMF conditions to cut subsidies.. of course people suffer more, but they totally understand that any move trying to get rid of him thinking this would make things better, it would make things financially worse for them.. so they are angry as suffer, but are getting on with it..
By the way, life goes on in Egypt by people helping each other.. you have not seen anything like it.. everyone with money helps everyone without.. you won't understand it until you see it.. my mum's door bell never stops.. genuine people come asking for financial help, and my mum is constantly handing out money.. me and my brothers give my mum money every month just for this purpose.. we have families who get monthly allowances from us.. and believe me nearly all Egyptians, who could afford , are doing the same.. it's our nature.. I talked here before about what me and my friends do in Egypt, and this was the main reason for me getting out of the stock market, which was only Centamin for me. Making money is good, but it's much better to spend it in a way that makes you feel better, and nothing is better than knowing that you are making a difference in people's lives..
Hi Cowichan,
(Will foreign assets be safe in Egypt?)..
(Will Egypt nationalize foreign companies?)..
(Nationalization of gold reserves could be a real option)..
(Are Centamin's gold reserves actually safe ? It's a big unknown)..
I noticed that you keep repeating the same hint over and over, and I don't know why!!
I know that you are not a holder at the moment, the same as me, but why do you keep repeating this assumption??
Could you please direct me to one single report talking about Egypt MIGHT be nationalizing any asset? Or even thinking about it? Or any reporter thinking that this could happen because of the current financial situation in Egypt?
If you Google (could Egypt nationalize), you will only get results about the Suez Canal in 1956..
As you are posting here, so I take it you are still interested in this share, as I'm sure you are not posting here only to protect other investors and enlighten them.. and of course you are looking to buy again either at a price that attracts you, or subject to certain news being released, which is absolutely fine and fair, but while your are waiting for either to happen, I don't think there is any need to post things about nationalizing Alsukary, while it's only coming from your unfounded assumption, and you never mentioned this when you were a holder..
As an Egyptian and know a lot about Egypt, I could tell you that nationalization is not on the table at all.. full stop.. and it does not need an expert to tell you that..
Sorry if any of my assumptions are wrong..
Cowichan,
My point is that nationalization does not even get mentioned in Egypt now, despite all the financial troubles.. let me know if you find any recent article taking about it..
Those companies mentioned in the report, this was a tricky issue followed 2011 revolution, it was not initiated by the government.. just like Centamin court case..
As to the Suez Canal... Let's not even go there because I don't want to talk politics, history and occupation..
Is nationalization of Sukari a real possibility?
No.. nationalization of any company in Egypt is not on the table at all.. and it never gets mentioned.. not even as a rumour..it's actually the opposite.. Egypt is pushing for privatisation.. Egypt is aiming for the mining sector to increase its contribution to the country's income from 0.5% to 5% by attracting international companies.. Egypt is not planning to mine through government owned companies.. they can't.. they know it.. and they are not planning to do it..
Yes the Egyptian pound is doing very bad.. and could do worse.. but default is not going to happen.. when the government struggles, they borrow more.. the Egyptian pound sinks.. prices go up.. Egyptian people suffer.. but don't worry, it won't affect your investment.. actually it's better for centamin, as while its income is in US dollars, it pays employees in local currency, so it actually pays less in US dollars as the wage increase is nothing compared to the currency devaluation..
June 2022, US dollar was 18 Egyptian pound..
June 2023, it's official listing price is 31, but you can never get it for that price, its actual price in the market is 38.. I was in Egypt recently and sold dollars for 38.50.. so the currency has more than halved in one year.. and prices of everything nearly tripled if you add normal inflation..
Hi mrtibble,
You don't need to translate the concession as it's already in English. If you open the link and go down, there is a window with the concession file uploaded, one page in Arabic, and one page in English, and so on..
https://manshurat.org/node/32087
The concession does not state that Centamin gets subsidized diesel.. it does not mention the diesel supply at all.
The subsidized diesel, according to the order of petroleum minister in Egypt, applies to investment projects under law 230 year 1989 which covers bricks, Cement, lime and pottery.
Any other companies pay the international price, including oil companies.
This link contains the actual concession agreement (in english).. it's very informative:
https://manshurat.org/node/32087
Hi Rebess,
Law 32 states in clause 2 that it applies to any active cases in front of the courts where no FINAL ruling has been given, including cases and appeals which started before the issuing of the law.
Centamin's INITIAL ruling was delivered by the first administrative court, and this is not a final ruling, it's the lowest degree in courts in Egypt, that was why EMRA and Centamin appealed against it in the SAC.
It's the SAC that delivers the final rulings.
As the SAC knew that law 32 applied to Centamin case, that was why the court decided to suspend the case pending the ruling of the SCC on law 32.
This link has the wording of law 32 (in Arabic).
https://qadaya.net/?p=9538#:~:text=%D9%85%D8%B9%20%D8%B9%D8%AF%D9%85%20%D8%A7%D9%84%D8%A5%D8%AE%D9%84%D8%A7%D9%84%20%D8%A8%D8%AD%D9%82%20%D8%A7%D9%84%D8%AA%D9%82%D8%A7%D8%B6%D9%89,%D8%A3%D9%88%20%D8%A7%D9%84%D8%B7%D8%B9%D9%86%20%D8%A8%D8%A5%D9%84%D8%BA%D8%A7%D8%A1%20%D8%A7%D9%84%D9%82%D8%B1%D8%A7%D8%B1%D8%A7%D8%AA%20%D8%A3%D9%88
Sorry to see you going Cowichan.
I actually did the opposite, and got back in Centamin last week after staying out of it for years for financial reasons, and even now I'm not in with a large amount, but it's what I could afford. I don't know how long I'm staying in for as I normally need the money before my trips to Egypt, but I'm in for now.
For me, Centamin "should not" have problems in Egypt anymore, the petroleum minister always uses Centamin as an example in all his talks about mining in Egypt, last week in Saudi Arabia'd conference he said Egypt was working with Centamin to increase production and to finalize licences to expand work around sukari area.
As to the court case, the way the legal system works in Egypt is that once the court suspended a case for a reason, and in our case it was for law 32, and once that reason is clarified, the court does not restart the case by itself, the request has to come from one of the two sides, and of course it will be the side which thinks it will win that would submit the request, and that's why it's Centamin that will apply to restart the case. Alfakharany's side would never ask for the case to restart, that's if they are still around. There is no ifs and buts, and it's not up to the judge, law 32 is crystal clear.
As long as Centamin does not come up with any production surprises, all should be good and improving from here.
Siko
Mr Amr Hassona (CEY country manager-Egypt) to the Egyptian media:
The SCC ruling is considered a ruling on the validity of the license of Centamin to own and manage the Sukari mine.
We are waiting for the ruling to be published so we could go to the SAC to request cancelling the case based on the ruling of the SCC.
https://alborsaanews.com/2023/01/16/1621693