• 3 minutes Electric cars may make driving too expensive for middle classes, warns Vauxhall chief
  • 6 minutes Natural gas mobility for heavy duty trucks
  • 12 minutes Colonial pipeline hack
  • 2 hours U.S. Presidential Elections Status - Electoral Votes
  • 39 mins Texas Power Outage Danger Until June 18th. Texans told to conserve energy!
  • 8 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 13 hours Will Liquid Metal Batteries Become the Standard for Large Batteries?
  • 5 hours Succession Planning in Human Resources for Vaccinated Individuals in the Oil & Gas Industry
  • 2 days Federal Judge Says Biden Probably Wrong for Halting Drilling on Federal Land
A Looming Decision From The Fed Could Send Gold Soaring

A Looming Decision From The Fed Could Send Gold Soaring

The European Central Bank (ECB)…

The War On Gold Has Begun

The War On Gold Has Begun

There’s a major overlooked risk…

Could This Be One Of The Most Exciting Gold Discoveries Of 2021?

Could This Be One Of The Most Exciting Gold Discoveries Of 2021?

An up-and-coming gold exploration company…

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




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News