Egypt-focused gold miner Centamin said a new law could result in the dismissal of a legal case which has put the licence of its only operating mine in jeopardy, boosting its shares by as much as 15 percent on Thursday.
Centamin rises on hopes new Egypt law could dismiss legal case
Friday ,25 April 2014
In 2012, an Egyptian court ruled that Centamin's right to operate its Sukari mine was invalid, the latest in a string of difficulties the company has faced in Egypt.
Centamin, in the middle of an appeal against the ruling, said a new law introduced in Egypt on Wednesday could result in the case being dropped.
"Centamin continues to discuss with its advisers the process by which the original claim in relation to the Sukari concession agreement ... may be dismissed under the provisions of this new law," it said in a statement.
Shares in FTSE-250 company climbed to as high as 66 pence, their highest level for over a year, on hopes the legal uncertainty which has been hanging over the company for 18 months could be resolved.
At 0915 GMT, the stock was up 9 percent at 60.4 pence.
"While by no means certain this could well squash the legal case and remove the stone around Centamin's neck," Numis analysts said in a note.
The new Egyptian law prevents third parties from challenging contracts made with the government and could include Centamin, as the challenge against it was brought by a third party.
The law, long-awaited by businesses and investors, is meant to revive investment hit by political instability over the last three years.
Instability in Egypt since 2011 when an uprising toppled autocratic president Mubarak, plus the suspension of fuel subsidies and delays with export permits, have all taken their toll on Centamin's share price.