In the Footsteps of the Pharaohs

03/02/2010 12:01 am EST

Focus: GLOBAL

John Snowden

Contributor, The IRS Report

London-listed Egypt miner Centamin is finding lots of gold the sun gods missed, writes John Snowden in The IRS Report.

Sami El-Raghy visited Egypt in 1992. He had graduated 30 years earlier from the University of Alexandria before relocating to Australia and working in the mining sector. The purpose of his journey was to look at the Rosetta Mineral Sands deposit to investigate ilmenite (iron titanium oxide) and zircon. Whilst in the offices of the Egyptian Geological Survey and Mining Authority, he noticed on the wall a print of the oldest known geographic map in the world.

The original 3,200-year-old map was found in Luxor in 1820 and showed the locations of the Pharaonic mines in the Fawakhir district between present-day Edfu and Marsa Alam. Intrigued by the map, Sami made a 600-kilometer visit to the site in the Eastern desert, which is littered with long-dormant mines, where he found a rich mineral deposit in an area of proven mineralization.

Three years later, this led to the creation of Centamin Egypt (London: CEY, Toronto: CEE). This company has been exploring and proving up deposits by taking more than 173,000 core samples from the southern end of Sukari Hill.

The Pharaohs mined this area near the Red Sea, but lacking modern technology they hardly made a dent in the deposits lying in the ground. Interest in this prospect, well known in Egypt, all but disappeared when in 1956 President Gamal Abdul Nasser kicked out all the British miners.

Centamin has been exploring for gold in this region since 1995. By February 2007, a definitive feasibility study was completed showing a low-cost operation for a 4-million-ton-per-year processing plant with an initial production of 200,000 ounces of gold per annum.

The current resource at Sukari Hill is 10.29 million ounces with 3.45 million ounces inferred. There are currently eight rigs on site, and ongoing drilling activities are expected to add significantly to the proven resource.

This year, the company has achieved another milestone. On January, 10th [it] announced that it was commencing gold exports, becoming the first commercial gold mine to be operated in Egypt in modern times.

The chairman and founder Sami El-Raghy stepped down from his position and handed the leadership over to his son Josef.

The group has kept high standards, always working closely with government officials. The government has reciprocated, and this project has become a reality that could help revitalize Egypt’s economy. Centamin is already a sizeable £1-billion company and will continue to grow strongly for the foreseeable future.

The company is now a producer and not just an explorer, with the share price founded on hopes and dreams. Serious investors are replacing the speculators, and I suggest that if the gold price stays within $100 of its current level, Centamin Egypt will become a major independent player in the gold market.

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