Update on Sukari gold project
Centamin Egypt Limited
02 April 2004
Centamin Egypt Limited ('the Company')
Update on Sukari gold project
Independent Report of the Attorney General of the Arab Republic of Egypt ('ARE')
The Company has been advised by its Egyptian Lawyers, that as a result of
allegations made by EGSMA and the Minister for Industry, (subsequent to the
failure by EGSMA to renew security permits required for the staff and
contractors operating at the Sukari Gold Project), the Attorney General
initiated an investigation into those allegations.
The Attorney General's investigation was centred on the allegations that the
Company continued to operate at Sukari illegally, while awaiting renewal of the
security permits.
The Attorney General has concluded the investigation and has affirmed there was
no evidence that the Company had acted illegally and that no action was to be
taken against the Company.
The Company is delighted that the Attorney General's findings support the
Company's stated position that at all times the Company has acted in accordance
with the laws of the ARE and within the terms and spirit of the Concession
Agreement with EGSMA and the ARE.
The Company is currently determining with the relevant military authorities
whether security permits may be renewed on the basis of the Attorney General's
report, thus allowing an immediate return to drilling and exploration
activities.
The Administrative Court Action
The Company's lawyers have advised that the Court will not make a judgement in
the Company's current proceedings against both EGSMA and the Minister for
Industry, as the Concession Agreement requires disputes with EGSMA to be
submitted to a specified arbitration process. As previously announced, the
arbitration process has already commenced.
Elements of the Company's Court case will therefore be resubmitted to the Court
and will focus the proceedings specifically on the Minister. Resolution of the
Court proceedings will therefore be delayed, but the Company's legal advisors
consider that the amendments to the proceedings place the Company in a strong
position for a successful outcome.
The Company's lawyers have also strongly recommended that the findings of the
Attorney General be included in the renewed proceedings as additional evidence
demonstrating the proper conduct of the Company and that the actions of the
Minister have been without foundation.
The Cairo Regional Centre for Commercial Arbitration Action
As previously advised, the arbitration process with EGSMA is in progress.
Furthermore the findings and the report of the Attorney General will also be
submitted as part of the arbitration process.
The first determination sought by the Company in the arbitration is for the
immediate enforcement of Article XXIV (h) of the Concession Agreement which
states 'Pending the award (of arbitration), the operations and activities
hereunder shall not be discontinued.' Following the determination, the Company
will seek the issue of the security permits by EGSMA, the incorporation of the
operating company in accordance with the Concession Agreement and all other
formal documentation required to progress the development of the Sukari Project.
The arbitration proceedings should be completed in the current quarter, and the
arbitrators' determination is expected to be delivered in July.
Again during this quarter the Company held discussions with several members of
the Egyptian Parliament, other Ministry officers and senior Egyptian government
officials. Many of these meetings have led to positive outcomes. It is also
important to note that there is a large amount of support within Egypt for the
Company's activities and endeavours.
It should be noted that the Court, Arbitration and discussions with the military
are independent of each other and a positive outcome from any of these processes
being pursued by the Company will result in a prompt return to exploration and
development activities at Sukari.
For Centamin Egypt Limited
Josef El-Raghy
Managing Director
02 April 2004
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