Egypt says Endeavour tilt at Centamin will encourage foreign investment in mining sector

EGYPT welcomed Endeavour Mining’s bid to merge with Centamin, saying it would encourage foreign investment in the country’s mining industry, Reuters reported.

Centamin rebuffed the £1.47bn all-stock takeover proposal on December 3, saying it did not offer enough value to Centamin shareholders. Endeavour Mining now has 28 days to “put up or shut up” in terms of UK Takeover Panel regulations.

Centamin’s assets include Egypt’s Sukari mine and Cleopatra project, as well as exploration projects in West Africa, said the newswire.

In a statement cited by Reuters, Egyptian petroleum minister, Tarek El Molla, said the government had no role in the bid, but added that “… we welcome new investment by international companies in exploring gold and mineral wealth”.

He said the bid would “… give a positive message about the desire of an international company to be present in Egypt … and encourage other companies to come to Egypt”.

Egypt introduced a new mining law this year, but has yet to publish the executive regulations, said Reuters. The government wants to unlock investment in Egypt’s mineral wealth, which has stalled under what explorers say are discouraging terms.

In rejecting the merger proposal, Centamin said its shareholders would own 47% of the combined unit, but contribute 100% of the free cash flow and dividend distributions, based on historic performance.

“The board strongly believes that Endeavour’s proposal significantly increases financial and operating risk without any material benefits to our shareholders,” said Josef El-Raghy, chairman of Centamin in a statement. The company had paid out $500m to shareholders since 2014 whereas Endeavour had not yet approved a dividend policy.