Dual-listed Centamin has welcomed the fact that Egyptian Law No 32 of 2014 has been upheld as Constitutional by the Egyptian Supreme Constitutional Court (SCC) on January 14, having been under challenge since 2014.

CEO Martin Horgan says the company is now in a position to apply to set aside the 2011 third-party challenge to the validity of the exploitation licence issued under the Sukari concession agreement, for the Sukari gold mine, in Egypt.

Law 32 provides that third parties are prevented from lawfully challenging contractual agreements between the Egyptian government and an investor, such as the Sukari gold mine concession agreement.

The SCC judgment gives Centamin the right to request the Supreme Administrative Court (SAC) to rule that the 2011 challenge to the concession agreement is now legally inadmissible on the basis that the original complainant had no capacity to bring the claim as he was not a party to the concession agreement.

As per the provisions of Egyptian Civil Procedures Law, Centamin’s subsidiary, Pharaoh Gold Mines (PGM), will imminently submit an application to the SAC to resume the appeal proceedings and request the SAC to reject the original case in its entirety in accordance with the provisions of Law 32.

Operations at the Sukari gold mine remain unaffected and continue as normal.

BACKGROUND

The concession agreement between the Egyptian government, the Egyptian Mineral Resource Authority (EMRA) and Centamin’s subsidiary, PGM, was enacted by the Egyptian Parliament under special law No 222 of 1994.

On September 29, 2011, a private Egyptian individual issued proceedings in the Administrative Court against the Ministry of Petroleum and Mineral Resources (MoP) and EMRA, in which the individual sought nullification of the concession agreement.

On October 30, 2012, the administrative court, as the court of first instance, held that, although the concession agreement was valid, insufficient evidence had been presented by the MoP and EMRA to demonstrate that the 160 km² exploitation lease between PGM and EMRA had received approval from the relevant Minister as required by the concession agreement.

In November 2012, PGM immediately joined proceedings and filed, with EMRA and the MoP, an additional appeal against the judgment and submitted a copy of the Sukari exploitation lease which shows that the 160 km² exploitation lease was approved by the MoP.

On March 20, 2013, the SAC unanimously decided to suspend the lower court’s decision until a ruling was made by the SAC on the appeal.

On June 28, 2016, the appeal was stayed indefinitely pending the outcome of the SCC’s ruling on the constitutionality of Law 32. On the basis that the constitutionality is upheld, an application will be made to dismiss the proceedings.

EGYPTIAN LAW NO. 32 OF 2014

In April 2014, Law 32 was enacted by the former interim President Adly Mansour. The law prevents third parties from challenging contractual agreements between the Egyptian government and investors.

The law applied to all prospective cases and any active cases in front of the courts where no final judgment had been given.

Following delays, in July 2014, nongovernmental body the Egyptian Centre for Economic and Social Rights challenged the constitutionality of Law 32 before the Egyptian SCC.

On January 14, the SCC rendered its judgment considering that Law 32 is Constitutional, meaning third parties have no legal standing to challenge contracts between the Egyptian government and investors. A copy of the judgement will be made available in due course.