Terms being offered “result in an effective tax rate that is by far one of the highest for mining globally,” Centamin chairperson Josef El-Raghy said Monday by e-mail after a request for comment on the proposed tender. “With the exception of Sukari, Egypt’s mineral wealth remains under-explored and undeveloped and this will continue to be an unfortunate lost opportunity for the people of Egypt until there is reform to the mining law.”
“I would be very surprised if anyone participated in this bid round with the current terms,” David Hall, CEO of Virgin Islands-based Thani Stratex Resources ., which is exploring for gold in Egypt’s Eastern Desert area. Aton Resources Inc., based in Vancouver, would rather focus on existing projects it has in Egypt, CEO Mark Campbell said.
Some companies have expressed an interest in participating in the tender, Omar Taima, chairman of the Egyptian Mineral Resources Authority, said in an interview, declining to identify them. “What I need are productive companies generating revenues in the country,” he said.
Thani won’t be bidding for the new tender because terms call for production sharing with the government, while the company has to carry the full expense of exploration, Hall said. “Egypt has an excellent geological potential, and this potential could create a very serious mining industry which could benefit the country and generate jobs and foreign currency. But a change is needed.’’
“This can only work for oil investors, because they can recover their costs in a much shorter timeframe,” Hall said. “In the case of gold, this doesn’t simply work: high operational cost combined with a high mineral exploration risk.”