AngloGold Ashanti Acquires Centamin in $2.5 Billion Deal

AngloGold Ashanti⁢ has agreed to acquire Centamin in a deal valued at approximately $2.5 billion, giving AngloGold control of the Sukari mine in Egypt, one of the world’s largest and most ​important gold‌ mines.

According to Amr Hassouna, CEO of Sukari ⁢Gold Mines ⁣and Centamine Egypt, the Egyptian government has received ⁣over ⁤$1 billion in direct revenue from the Sukari mine in profits and royalties since the ⁤project’s inception.

History of the⁤ Sukari Mine

The Egyptian Mineral Resources Authority signed an ‌agreement in 1994 for gold mining ⁢with Pharaonic Company, a subsidiary⁤ of Centamin,⁢ and ⁢commercial release ⁢was announced. ‍The Sukari Gold Mines Company was established as a joint entity between Centamin⁢ and the Authority,⁣ and began ⁤production in ​2009.

Geologist Omar Towaima,‌ former head‍ of the ⁣Mineral Resources Authority, stated that⁢ Egypt began‍ sharing profits from the Sukari mine in 2016, when the Sukari Gold Mines ​Company ⁢reported to the Egyptian Mineral Resources Authority‌ that it ‍was to review ‌all exploration and⁣ exploitation costs.

Profit Sharing and Royalties

The exploitation agreement included Egypt ​receiving 50%‍ of the mine’s ⁤profits in ‌exchange for 50%​ for the company. Egypt⁤ is also entitled to royalties of up to⁢ 3% of gross sales revenue from Sukari mines.

A government ⁣official stated ​that the deal is binding on the ​Egyptian government and Centamin and is based on a system of ‌royalty and ⁤profit sharing, not sharing production like oil.

Determinants of​ State Income

Responsible sources revealed that determining⁢ Egypt’s share of annual profits is difficult due to ⁤factors such as planned production volumes and⁤ global gold prices. A fall​ in​ global prices will‌ reduce ⁤government⁣ revenue from profits and vice versa.

Sources attributed the ‌decrease in⁤ the⁤ size of profits of the Egyptian Mineral Resources Authority in some⁤ years to‍ managing and pumping a part of‍ the total profit for the benefit of new projects​ in the mine.

Centamin Acquisition Agreement

The Centamin deal comes as a fresh sign that major gold companies‍ are looking ​to‌ acquire smaller competitors, especially​ with gold trading⁣ near ​its highest historical ‌levels.

By adding the Sukari mine⁢ to its assets, AngloGold​ will increase production by approximately 450,000 ounces annually, bringing its total annual production to over 3 million ounces.

AngloGold explained that the cash offer and stock contribution constituted a 37% premium to the closing price of Centamine shares on September 9. Upon completion of the deal, AngloGold ​shareholders will own approximately 83.6% of the enlarged company, while Centamine shareholders will own 16.4%.