Centamin Set To Bring Gold Mining Back To Egypt

After a long hiatus, Egypt is on the cusp of getting a new major gold mine.

Centamin Egypt (CEE-T, CEY-L) has started blasting rock at its Sukari gold project with the aim of stockpiling ore in the same area where Pharaohs once ordered gold to be mined some 5,000 years ago.

Word of the blasting came at the end of what was an eventful week for the Australian-based miner.

First, on Feb. 10, it announced the closing of a bought deal that netted it $69 million to be put towards building Sukari. The buyer is San Francisco-based Thomas Weisel Partners and it purchased a block of 106 million shares at 65¢ per share.

Then, two days later, it announced a resource estimate that added to what was already a world-class gold deposit.

Using a cutoff grade of 0.5 gram gold per tonne, Sukari now has a measured and indicated resource of 191.1 million tonnes grading 1.53 grams gold for 9.39 million oz. — an increase of 376,582 oz. or 4% over its previous estimate.

Inferred resources also saw a marginal gain. The category now stands at 64.3 million tonnes grading 1.7 grams gold per tonne for 3.5 million oz. — 174,355 oz. or 5% better than previous estimates.

Along with the resource update, Centamin released individual assays that came from the drilling used to upgrade resources. Highlights from the program included impressive intersects of 189 metres grading 2.51 grams gold and 66 metres grading 4.8 grams gold.

To date, the company has drilled more than 380,000 metres and it says drilling is ongoing with eight drill rigs onsite.

And while exploration and definition drilling continues, the most pressing order of business is the completion of the processing plant, which the company says should be done by the second quarter of this year — when production is slated to begin.

Centamin says ore will be hauled to the run-of-mine pad next to the processing plant and either direct tipped to the crusher or stockpiled for future reclaim at an initial throughput rate of 4 million tonnes per year.

Once up and running, Sukari will be the first large-scale gold mine Egypt has seen in modern times.

To get to this stage, Centamin has logged serious hours in the North African country. It began exploring in Egypt in 1995 and in 2005, received a 160-sq.-km exploitation lease over the Sukari Hill gold project.

Construction got under way in early 2007 at the project, which is in the Eastern Desert, roughly 23 km southwest of the Red Sea coastal town of Marsa Alam and 750 km by highway from Cairo.

At presstime in Toronto, Centamin shares were trading at $1.02 — up 18¢ since the news began to flow on Feb. 10. The company has 880 million shares outstanding and its share price has moved between $1.60 and 43¢ over the last year.