Centamin Rebounds 25% As Egyptian Mine Fuel Supply Resumes

Published in Company Comment on 14 December 2012

Suspension lifted on Centamin's (LSE: CEY) Egyptian mine.

Centamin (LSE: CEY) has announced that its fuel supplier Chevron is able to resume supplying fuel to its Sukari mine in Egypt. Shares in the company promptly rose over 25% on the news this morning, after crashing 61% yesterday when the mine was placed "on care and maintenance" until the issues were resolved.

The gold miner received the notification from the Egyptian General Petroleum Corporation and lifted the suspension on Sukari, which was implemented yesterday due to an "illegal retrospective claim" from the Egyptian General Petroleum Corporation for fuel supplied between December 2009 and January 2012. The claim had amounted to $65m but, as things stand, no retrospective payment is currently due.

The shutdown had been blamed on a lack of diesel supplies and "unforeseen and arbitrary" red tape halting sales. The hike in diesel pricing that Centamin experienced from local to international in January 2012 is currently before the courts, and the case will also deal with any retrospective claim.

Rebounding to 34.67p at the time of writing, the share price has yet to regain all of its value prior to the plunge following the initial suspension, and the question whether the potential for recovery makes Centamin a 'buy' remains your decision.

Indeed, you may wish to consult this free Motley Fool report, which explains how betting on battered shares can provide wonderful gains… if the underlying company recovers. To put a possible turnaround into perspective, Centamin's shares reached a peak of 197p before the Egyptian troubles erupted.

Anyway, if Centamin is tempting you today, please click here to read the Fool's exclusive 'millionaire' report before you hit the 'buy' button.

> Sam does not own any share mentioned in this article.

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drfuzz 14 Dec 2012 , 11:21am

I am unforunate enough to own these shares.

The situation with CEY is a great example of political risk. The company itself ticks all the boxes. Good management with a significant holding, history of delivering to its promises, good financials and outlook for profits good.

However, all this analysis of the company, including wonderful things such as Discount Cashflow Forecasts completed in calmer times (when Egypt was considered a long standing stable country), cannot predict the recent chaos which is now going on in Egypt. And this chaos has in turn created this crazy operating environment for CEY which changes on a day to day basis, and CEY's share price changes with it.

Buy in at your own risk. You might be tempted by the potential profits, but unless you have some insight into how the situation in Egypt will play out, you might be just as well off putting some money on Man City not winning at St James Park this weekend!

TMFDriveBy 14 Dec 2012 , 11:56am

Alan Pardew *has* said his team will be going on the attack against City...


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