• 4 minutes Will We Ever See 100$+ OIL?
  • 8 minutes Iran downs US drone. No military response . . Just Destroy their economy. Can Senator Kerry be tried for aiding enemy ?
  • 11 minutes Energy Outlook for Renewables. Pie in the sky or real?
  • 52 mins Shale Oil will it self destruct?
  • 19 hours Berkeley becomes first U.S. city to ban natural gas in new homes
  • 9 hours Today in Energy
  • 17 mins Iran Captures British Tanker sailing through Straits of Hormuz
  • 17 mins Oil Rises After Iran Says It Seized Foreign Tanker In Gulf
  • 5 hours Drone For Drone = War: What is next in the U.S. - Iran the Gulf Episode
  • 1 day Mnuchin Says No Change To U.S. Dollar Policy ‘As of Now’
  • 1 day Populist, But Good: Elizabeth Warren Takes Aim at Private-Equity Funds
  • 2 days Migration From Eastern Europe Raises German Population To Record High
  • 2 days Washington Post hit piece attacking oil, Christians and Trump
  • 24 hours Why Natural Gas is Natural
  • 2 days Excellent Choice: Germany's Von der Leyen Secures Powerful EU Executive Top Job
  • 20 hours LA Solar Power/Storage Contract
Alt Text

Expect Mine Closures In This Key Gold Mining Nation

Major gold mining nation South…

Alt Text

This Key Gold Producer Sees Its Production Slump

Africa’s second gold producer Ghana…

Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

More Info

Premium Content

Miners Shun Top Class Gold Assets In Egypt

I wrote in November about Egypt’s first gold licensing round in seven years. Noting that the geological potential is very strong in this under-explored part of the Arabian-Nubian shield.

But news this week suggests Egypt’s bid round is turning into a textbook of problems in the mining industry. Which may cause the licensing to draw zero bids from the global mining community — despite the big upside here.

Egypt’s biggest gold miner Centamin Plc confirmed to Bloomberg that it won’t make any bids in the licensing round. With fellow Egypt mineral operators Thani Stratex Resources and Aton Resources also saying they are unlikely to pursue new acreage.

The reason? Fiscal terms.

Sources said the new Egypt gold concessions are being offered under production sharing contracts with Egypt’s government. An arrangement very common in the global oil and gas industry — but exceptionally rare in mining (one of the only other nations holding onto production sharing in mining, Myanmar, recently scrapped that requirement as part of its 2015 mining law overhaul).

Egypt’s miners said that production sharing results in “an effective tax rate that is by far one of the highest for mining globally.” Making projects here unattractive — especially when exploration risk is layered on top of development burdens.

Reports also emerged of other big financial demands from the Egyptian Mineral Resources Authority (Emra), which is running the bid. Including up-front costs for data, as well as six-month bond of $50,000 required in order to submit a bid. Related: Why Cheap Natural Gas Is History

The contracts also reportedly require bidders to offer a series of bonus payments to the government. Including an upfront “assignment bonus” of $1 million.

That’s a very tough requirement, given that on-ground exploration expenditures for many projects total only a few million dollars in the initial years. Thus, the bonus payment effectively increases overall budgets by something like 25-50%.

This looks like an example of tough terms holding up exploration on good ground. Watch to see if any offers come in before the April 20 submission deadline — and to see if the Egyptian government will soften its stance should no one join the party.

Here’s to being reasonable.

By Dave Forest

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play