Dundee Ducks

Sukari Concession Agreement


Oct 21


What is “Law 32” and what about the appeal? We believe the company will ultimately benefit from Law No. 32 of 2014, which came into effect in April 2014 and limits the opportunities offered by third parties to challenge contractual agreements between the Egyptian government and an investor. This law, although in force and ratified by the new Parliament, is currently being revised by Egypt`s Supreme Constitutional Court. In 1995, Pharaoh Gold Mines NL (PGM), an unlisted Australian limited company, entered into an agreement with the Egyptian Geological Survey and Mining Authority and the Arab Republic of Egypt (The Eastern Desert Concession Agreement) on the search for gold and base metals in egypt`s eastern desert. This agreement was introduced into Egyptian Law 222 for 1994 and entered into force on 29 January 1995. Centamine was founded on 24 March 1970 in South Australia and on 8 October 1970 listed on the Australian Stock Exchange. The company had several gold, base metals and diamond projects in Australia and currently holds a licensing agreement on the Nelson`s Fleet gold project near Kambalda. The concession contract is in fact a profit-making contract. As part of the agreement, Centamine`s 100% subsidiary, Pharaoh Gold Mines, will cover all historical and ongoing exploration and operating costs. After recovering them, the winnings are shared 50:50 with the Egyptian Mineral Resources Authority (EMRA). To what extent does Egyptian Law No.

222 come close to or differ from other contracts awarded at that time to international companies in Egypt? The model agreement on which Law 222 of 1994 is based was an oil and gas concession agreement, as well as the agreement used by BHP and Minex for exploration in Egypt. Some of the details around cost coverage and royalties differ slightly, but the agreement is substantially the same as the oil and gas agreements. What is the context of the 2005 decision to transform the Sukari concession area from an exploration lease to an exploitation lease? Following the “commercial discovery” of the Sukari deposit, Centamine`s 100% subsidiary, Pharaoh Gold Mines NL (“PGM”) and the Egyptian Mineral Resources Authority (EMRA) had to agree, in accordance with the terms of the Sukari concession contract, on an area to be converted into an operating lease agreement, which would then be submitted to the Minister of Industry for approval on the basis of the feasibility study. In 2005, a lengthy discussion and arbitration procedure with EMRA resulted in a possible settlement agreement granting the lease on an area of 160 km2, where it is located today. Centamine and its subsidiaries have at all times followed the procedures provided for by Egyptian law and under the conditions of our concession contract. The 160 km2 lease was signed by the Minister of Petroleum (who had been replaced by the Minister of Industry at the time the contract was concluded) and other interested parties, and we have in our possession an original executed leasing document. The person responsible for publishing this communication on behalf of the company is Martin Horgan, CEO. ยท The Group`s adjusted free cash flow of $36 million was realized on the 3rd (YTD: $137 million), following investments of $39 million (YTD: $90 million) and $64 million was distributed to the Egyptian government in incentive bonuses and accumulated royalties (YTD: $178 million) Cost of capital recovery includes interest on up to 50% of investments, which have been hosted by financial institutions that are not related to PGM; Provided that PGM will do everything in its power to obtain the most advantageous interest rate, do not exceed LIBOR + 1%.

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