(Photo by Mahmoud Fekry/DNE File Photo)
The government is aiming to finalise the executive rule of the mineral resource law to be applied, to attract new investments for Egypt’s mining sector. Daily News Egypt interviewed the Chairman of Pharaoh Gold Mines, Joseph El-Raghy, a company affiliated to Australia’s Centamin, which operates Sukari Gold Mine.
What is the company’s plan to increase production in Sukari Gold Mine in the next few years?
Centamin plans to increase gold production to around 500,000 ounces a year by 2017. Sukari Gold Mine will be one of the major 25 gold mines in the world in terms of production. Sukari Gold Mine will also provide good liquidity, despite the decreasing gold prices in the global markets at roughly $1,200 per ounce. We expect global prices per ounce of gold to increase again in the coming period, to be between $1,500 and $1,600. The mine’s production will increase to 420,000 ounces starting from this year, with a total cost of $950 per ounce, and for every ounce a revenue of $250 would be gained as per the current global prices.
How would you estimate the mine’s reserves?
Sukari Gold Mine’s reserves are estimated at 15.7m ounces of gold, one of the highest reserve rates in the world. The mine’s age is estimated to be 20 years, double the average age for mines in Africa. There are growth opportunities through constant exploration operations.
When will the mine’s revenues be shared with the government?
We will start sharing revenues with the Egyptian government by 2017, according to the current prices of gold, at $1,200 per ounce. The government will acquire roughly $3bn in the form of production.
How much is the company’s revenue worth since the start of Sukari production?
The company’s total income since the start of production in Sukari Gold Mine in 2010 until March 2015 is $2.017bn, for selling around 1.43m ounces of gold, equivalent to 44.5 tonnes. The operation costs for the mine reached $1.226bn since the start and until March 2015. The government has acquired around $84m so far, divided into $60m from the mine’s production, and $24m for sharing future revenues.
Income from the surplus of exporting production amounted to $707m, of which Centamin got $100m, within the repayment of exploration costs done before the start of production. These costs amounted to $470m. A total of $607m was spent on executing expansion operations in the Sukari Gold Mine to increase gold production rates. We spent roughly $1.1bn of investments and the total operation costs with Egyptian suppliers for the mine so far. Around 270 Egyptian companies supply us with regular goods and necessary services for the gold mine.
How many Egyptian companies deal with Pharaoh Gold Mines to implement the gold mine’s operations?
More than 1,100 Egyptian companies offer products and services to the Sukari Gold Mine since its operations started. Many local suppliers invested in the production facilities to fulfil the needs of the mine.
How much would you estimate Australian Centamin’s investments in the Sukari Gold Mine so far?
Centamin invested roughly $1.1bn in the Sukari Gold Mine so far, and it is committed to develop sustainable mining in Egypt. The company spent $470m prior to production, in order to finish the first and second phases between 1994 and 2010. Centamin invested roughly $607m to apply expansion operations in Sukkari Gold Mine in the last four years since 2010. Expansion spending was divided into $16m for Phase III operations, $331m for Phase IV, $70m exploration costs, in addition to $94m for purchasing stone transport equipment, and $96m for building the infrastructure, as well as other development costs.
What is the importance of Sukkari Gold Mine compared to other gold mines worldwide?
Sukari Gold Mine is one of the 120 historic gold mines in Egypt. Centamin wishes to expand in Egypt’s mining industry, which is one of the important untapped and undeveloped areas in the world, with many known mining areas awaiting development. Sukari Gold Mine is the first modern gold mine in Egypt. There are many areas in Egypt in which new mines could be discovered, and some of them may have the same volume of Sukari. The gold mine will be officially opened after the removal of around 1.3bn tonnes of stones.
What are the details of the research and exploration agreement signed with the Egyptian government?
The articles of the agreement on privilege, issued through Act 222/1994 signed on 29 January 1995 grants work rights, exploitation, and development for the Sukari Gold Mine Agreements of privilege were issued by presidential decree after the approval of the People’s Parliament, as per the Egyptian Constitution, and Law 61/1958. As per the Mines and Quarries Act 68/1956, the ministry can give the right to parties to undertake research and exploitation work for mining materials in Egypt.
The agreement of privilege with the government stipulated that Pharaoh Gold Mines fund the Sukari Project alone, but the company will have the right to retrieve the cost and spending from the income from purchase. The company also has to give the Egyptian Mineral Resources Authority (EMRA) a 3% of the production. After paying the 3% and deducting the refundable costs, the revenues will be shared 50/50 between EMRA and the Pharaoh Gold Mines, represented by Centamin. An additional 10% of the Pharaoh Gold Mines revenues will be paid in the first two years and another 5% in the second two years.
How many workers are there in Sukari Gold Mine?
There are 1,300 direct workers at Sukari Gold Mine, of which 95% are Egyptians. We also have more than 3,000 indirect workers in the supply industries, and manpower in the mine has increased by around 130% since 2009.
How do you see Egypt’s mining sector?
The modern mining sector needs highly trained manpower. Egypt’s mining industry is not modern. We provide our employees with training on the most modern technologies and international systems. We also cooperate with Egyptian universities to develop studies in colleges related to the field.
