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And so it came to pass on the third day that Centamin (LSE:CEY) issued another RNS insisting that the new Islamofascist regime in Egypt had not after all stolen its Sukhari gold mine. The shares remain suspended because the truth is that no-one has the foggiest idea what is going on. Not even Centamin by the sound of it. If these shares return from suspension what, I wonder, are they worth?
In today’s statement Centamin says that it has still not received a written judgement from the court but:
“it will be delivered in due course. Until that time it is difficult to know the precise scope of the Court’s decision, though it is understood that the Court is not asserting that the Concession Agreement as a whole is invalid. Centamin repeats its view that the Concession as law 222 of 1994 remains valid and that the Court does not have jurisdiction to cancel it.”
Well er… up to a point Centamin. I remind you of the direct quotes from Reuters on Tuesday:
“The court rules as invalid the contract to exploit the Sukari mine,” Judge Said al-Qusair said, adding the court also ruled that a decision by the authorities to offer a 30-year contract and to allow it to be renewed was also void.
The court ruling can be appealed. Centamin officials could not immediately be reached for comment.
“The ruling brings back Egypt’s gold back (home),” said lawyer Hamdy Fakharany, who filed the case against Centamin, adding that Egypt’s returns from the mine were not high enough.
Fakharany was also behind other cases that have challenged contracts selling state land to real estate companies during Mubarak’s era.
“We will take an official copy of the ruling and inform the government, the mine should be closed now. This is a very positive ruling in favour of the Egyptian people,” he told Reuters by telephone.
You can read more on that & my comments from yesterday here
So the Judge says his Court has ruled to take away the asset and has power to do so. Centamin says that the Judge has not taken away the asset and has no power to do so anyway although it has not actually seen the ruling yet. I am sure you appreciate that both cannot be correct in their assessment.
Moreover the lawyer who brought the case ( and has won similar cases) seems to think that the Court has authority over the Government. Centamin seems to think that the Government is on its side and can over-rule the court stating today:
The Company is working in co-operation with the Egyptian Mineral Resource Authority (EMRA) and the Ministry of Petroleum in taking vigorous action to both defend its rights to continue to extract gold from the Sukari mine in the short term and to challenge the written decision should this be necessary. This includes lodging a notice of “objection to enforcement”, which has the effect of “staying” for a short period the implementation of any judicial decision. Furthermore, the Company will, if necessary, use that time to prepare and mount a substantive legal challenge. Any such challenge would be accompanied by a further request for the decision to be “stayed” pending the outcome of a final court hearing.
Well I cannot say that the situation is any clearer which is why, presumably, the shares remain suspended. So what is Centamin worth if the shares are unsuspended. There are three scenarios.
- It loses the mine. It is then a cash shell with 5p per share cash and so is worth c5p.
- It gets s stay of execution and can continue to mine and generate cash. That will add to the cash pile and so then either it loses the mine and is worth 5p per share plus the cash generated or it over-rules the Court and wins back full rights in which case it is worth the same as option 3
- Centamin works quickly to over-rule a Judge who does sound a bit on the mad side and gets its mine back. At that stage supporters would say that fair value based on the NPV of Sukhari etc is 150p per share.
But can you ever trust the new Muslim Brotherhood regime and MB driven judiciary in Egypt again? I warned you all here on July 29th that they were Ismalmofascist nutters and it has not taken long for me to be proven right. Generally mad regimes in this part of the world start fairly mad and get worse rapidly. This one has started as 10 out of 10 nutters from day 1.
As such Centamin shares will – if they return from suspension – from now onwards trade at a spectacular discount to fair value. If you were able to sell them under scenario 3 for more than 50p per share you should look to do so at once and switch into a safer gold play operating somewhere other than Egypt.
I offer you five such high quality gold stocks to buy right now here
Back already and UP 17%. Great call so far Tom!
Harry?
Harry Enfield?
I think it must be – no-one is seriously that clueless, are they?
“I offer you five such high quality gold stocks to buy right now here”
Oh so it’s just a sales pitch – you don’t want to buy that, you want to buy this, look I’ve got a case of them in my boot, come on, round the back.
All the “ooh it’s an islamofascist regime” “ooh I don’t know what’s going on” rather unmakes the case that this guy is credible, though, and why is he offering stocks himself? Is he a broker now? Or a bucket shop?
Sorry, Harry.