Sukari gold mine production increased to 551,036 gold ounces in 2016, representing a 25.5% year-on-year increase from 439,072 ounces in 2015, according to the annual report of Centamin.
The total sales of the mine reached 546,063 ounces in 2016, compared to 437,571 ounces in 2015.
Youssef El-Raghy, chairperson of Pharaonic Gold Mines, a subsidiary of Centamin, expected additional increase in the mine’s production in 2017. The report added that the production cost is estimated at $580 per ounce.
The report noted that the production cost of ounce dropped to $513 in 2016, instead of $713 in 2015.
It attributed the lower cost of production to the drop of mine and fuel prices.
El-Raghy said that his company will begin sharing profits with the Egyptian government in 2017, after the board of directors’ approval, estimated at a minimum 30% of the net proceeds of the company.
Reuters quoted the company on Thursday saying that it expects to pay about $100m in the first year of profit-sharing with the government scheduled in 2017.
The agreement between the two sides includes paying a concession fee of 6% and sharing production by at least 50% after recovering part of costs, in addition to three grants to the Egyptian General Authority for Mineral Resources, one of which amounts to minimum $1m.
The report added that the company believes it has a strong legal position in the case of concession agreement and fuel supply filed against the Egyptian government, pointing out that they will benefit from the Law No. 32 of 2014.
In January 2016, the parliament had approved Law No. 32 of 2014, related to the organisation of appeal procedures against the state contracts, which provides immunity to the contracts against appeals except by one of the contractors.
The annual report pointed out that the fourth quarter of 2016 witnessed a decline in local production costs, after the liberalisation of the exchange rate on 3 November.
It added that the flotation of the Egyptian pound may affect the company due to the increase of fuel and raw material prices, which implies an increase in wages of employees to face the high inflation rate.