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Centamin to pursue further opportunities in Ethiopia

29th May 2013

By: Chanel de Bruyn

Creamer Media Senior Deputy Editor Online

  

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JOHANNESBURG (miningweekly.com) – Egypt-focused gold miner Centamin, which is facing ownership challenges at its flagship Sukari mine, could diversify geographically and was considering further opportunities in Ethiopia.

Aim-listed exploration and development company Alecto Minerals, which owns the Wayu Boda and Aysid-Metekel gold projects, in Ethiopia, announced on Wednesday that it had entered into a nonbinding heads of terms and strategic alliance with Centamin regarding a proposed joint venture to pursue opportunities in the African country.

Alecto stated that the alliance underpinned both parties’ commitment to identifying and developing projects in a country that is quickly emerging as a highly prospective destination, particularly for gold.

“This is a potentially transformative deal for Alecto that endorses the work we have completed and the quality of our portfolio in Ethiopia. If the JV agreement is signed, with Centamin’s investment and technical input, we believe we can rapidly advance the Wayu Boda gold project, and potentially our Aysid-Metekel project, to create value for our shareholders. We look forward to working with Centamin to explore our land package,” Alecto Minerals MD Damian Conboy said in a statement.

If the formation of a JV company were to be concluded, Centamin would contribute $1.8-million in funding to earn an initial 51% stake in the 945.5 km2 Wayu Boda project in the Adola greenstone belt in southern Ethiopia.

Thereafter, it had the option to contribute a further $6-million to increase its stake in the project to 70%.

The Aysid-Metekel project would also be considered as a potential JV project, subject to further diligence by the JV committee. If included as a JV project, Centamin would contribute $1.2-million in initial funding and could elect to spend a further $5-million on the project at a later stage.

LSE- and TSX-listed Centamin also agreed to, as part of the deal, subscribe for 15.6-million shares in Alecto at 1.6p a share for a total consideration of £250 000.

London-based equity analysts SP Angel said in a note to clients on Wednesday that it believed the Wayu Boda and Aysid-Metekel projects offered good potential for significant discovery.

Joseph El-Raghy, Centamin’s CEO, has always had an interest in the geology and potential of the [Arabian-] Nubian Shield [which extends into Egypt, Ethiopia, Eritrea, Sudan and Saudi Arabia] and it is good to see the company follow this interest at a low cost but with the offer of potential discovery," the analysts noted.

Centamin had already gained an interest in four exploration licences in Ethiopia through the 2011 acquisition of Sheba Exploration.

“Centamin has all the more reason to look to expand outside Egypt with a number of challenges to its ownership of the Sukari gold mine since the [Hosni] Mubarak government fell. We are not intimating any connection with the Mubarak government but Egypt has become a less certain place since the change of regime,” SP Angel added.

Centamin was currently involved in a court battle in Egypt regarding its exploitation lease for the Sukari gold mine.

The company reported earlier this month that the Supreme Administrative Court of Egypt would, on June 19, hold the first hearing into its appeal against the Egyptian Administrative Court’s October 2012 decision, which declared the company’s exploitation lease for its flagship Sukari gold mine invalid.

Operations at Sukari were ongoing, pending the outcome of the appeal process.

Edited by Creamer Media Reporter

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