Court Case Q&A

Updated on 25 March 2014


Who brought the original case in respect of the Sukari Concession Agreement?
The case was filed by a private individual Engineer Hamdy El Fakharany, who appears to have an independent political agenda and was in the Egyptian courts in 2010 over property deals done under the Mubarak regime.

 

Why did he bring this case?
Since he has no direct economic interest in the Sukari mine we believe his motivations for bringing the case are political.


In what court was the original case held?
The case was heard in the Administrative Court, from which appeals are possible.

 

Why did you not expect an adverse decision from the administrative court on 30 October 2012?
On 4 September 2012, the State Commissioner’s Authority (an advisory sub-committee of the court), recommended that the administrative court had no power to entertain claims relating to the Sukari Concession Agreement. We were advised by our legal counsel that there was no reasonable cause to expect any other outcome to the case.

 

What is the background to the 2005 decision to convert the Sukari concession area from an “exploration” to “exploitation” lease?
Following “commercial discovery” of the Sukari deposit, Centamin’s wholly owned subsidiary, Pharaoh Gold Mines NL (“PGM”) and EMRA were required, under the terms of the Sukari Concession Agreement, to agree an area to convert to an exploitation lease which would then be subject to the approval of the Minister of Industry based on the feasibility study. A period of lengthy discussion and arbitration with EMRA then led to an eventual settlement agreement in 2005, where it was agreed that the lease be granted over an area of 160km2, which is where it stands today. At all times Centamin and its subsidiaries followed the appropriate procedures as laid down by Egyptian law and the terms of our Concession Agreement. The 160km2 lease was signed by the Minister of Petroleum (who had superseded by the Minister of Industry by the time the agreement was made) and other interested parties and we have an executed original lease document in our possession.

 

What was the 30 October 2012 court ruling?
The Administrative Court rejected any request to terminate or treat as invalid the Sukari Concession Agreement. The Court also made it clear that due process had been followed, to the extent that evidence was presented, in order to apply for an “exploitation” lease under the terms of the Sukari Concession Agreement. However, the Court went on to say that sufficient evidence had not been submitted to it in order to demonstrate that the requisite ministerial approval had been obtained with regard to the grant of the 160km2 “exploitation” lease.

 

Do you have the exploitation lease with the appropriate ministerial approval?
Yes. Centamin is in possession of the executed original lease documentation which clearly shows that the Minister of Petroleum (the successor to the Minister of Industry at the time when the 160km2 lease was signed) granted the necessary approval. The Company is therefore surprised that this document was neither listed in the documents supplied to the Administrative Court, nor requested by the Court itself.

 

On what basis does the Company believe that the Sukari Concession Agreement is still valid in spite of the court case?
The Concession Agreement was issued as Egyptian Law 222 of 1994 which was approved by Parliament and was properly executed through the correct channels/procedures, and not by President Mubarak or any individual Minister acting alone. We have at all times acted in compliance with both Egyptian law and the terms of the Sukari Concession Agreement. We have not been made aware of any reasonable argument by reference to which the Sukari Concession Agreement could be deemed invalid, and the court on the 30 October 2012 reached the same conclusion.

 

How is Egyptian Law No.222 similar to, or different from, any other contracts awarded to international businesses in Egypt at that time?
The model agreement on which Law 222 of 1994 is based was an Oil and Gas Concession Agreement and also the agreement used by BHP and Minex when they were exploring in Egypt. Some of the particulars regarding cost recovery and royalty rates differ slightly, but the agreement is in the main the same as the Oil and Gas agreements.

 

When was your appeal lodged?
We filed our appeal with the Supreme Administrative Court (“SAC”) on 26 November 2012.

 

What is the court process for the appeal? 
The appeal process involves, in the first instance, the SAC receiving advice from the State Commissioner’s Authority before the SAC commences its own substantive hearings.  The State Commissioner’s non-binding advisory report has now been handed down and the substantive hearings before the SAC have commenced.  There have been a number of adjournments for the parties to make further submissions and this means that it is still likely to take some time before the matter will be finally resolved by the SAC.

 

What is the likely timeline for the appeal process?
We do not yet know when the appeal will conclude, although we are aware of the potential for the process in Egypt to be lengthy.  The appeal process is concerned with the merits of the appeal itself and we will continue to update the market with any new material information as it emerges.  We anticipate a number of further hearings and adjournments before a decision is reached and do not at this stage expect a resolution before the year-end.

 

Has the “missing evidence” been submitted to the appeal court?
The exploitation lease document has been provided to the SAC, which on 20 March 2013 ruled to suspend execution of the 30 October 2012 decision.  In its ruling the presiding judges of the SAC unanimously held that, “on the basis of the copy of the exploitation lease executed by the Minister of Petroleum presented to SAC, the annulment of such lease by the Administrative Court was likely to be cancelled upon the issuance of a judgment on the merits of the case.”  As such the Company is confident that this matter will be resolved during the appeal process and that, based on legal advice, the appeal is now a matter of procedure.

 

Will mining operations be halted at Sukari as a result of the court case?
No.  As noted above on 20 March 2013, the SAC reviewed the exploitation lease and other submissions and ruled to suspend the initial decision, thus providing assurance that normal operations will be able to continue whilst the appeal process is underway.  Not only did this mark important progress in the appeal,  we believe, the outcome provided positive indication that the SAC remains focussed on the key facts and arguments.

 

Does EMRA share your view regarding the merits (or lack thereof) of the case?
We have common purpose with, and the full support of, EMRA which lodged its own appeal against the decision of the Administrative Court on 30 October 2012.

 

Have any other appeals been lodged with the court?
The Minister of Petroleum has also lodged a robust appeal in support of our appeal. Also, in early 2013 the Minister publicly stated his belief that the terms of the Sukari Concession Agreement were fair, that the “exploitation” lease is valid and that he is sure the appeal ruling will be in our favour. In addition he stated his view that Egypt is not yet ready to do mining alone and needs the investment and expertise that Centamin brings to the country.

As might be expected, the claimant, Mr El Fakharany, has lodged papers with the court objecting to our appeal, though nothing new of substance has been raised by him.

 

Is the matter likely to be dealt with under international law?
We do not currently see the need to take the matter to courts outside Egypt as we strongly believe that the appeal in the Egyptian court will rule in our favour.