Centamin Suspends Egyptian Mine and Crashes 61%
The shares of Centamin crashed 32 pence, or 61%, to 20 pence during early London trade this morning after the gold miner said it had been forced to suspend operations at its Sukari mine in Egypt.
Centamin blamed the shutdown on a lack of diesel supplies and "unforeseen and arbitrary" red tape halting sales.
The firm said the lack of diesel was due to an "illegal retrospective claim" from the Egyptian General Petroleum Corporation for fuel supplied between December 2009 and January 2012. The claim amounts to $65 million.
Meanwhile, the red tape involves customs officials seeking approval to permit further gold exports from the Egyptian Minister of Finance.
Centamin admitted that its Sukari mine had been placed "on care and maintenance" until the issues were resolved.
Today's news follows a disastrous 2012 for the Centamin.
Back in March, Centamin was forced to suspend its Sukari mine for a week due to "illegal labor unrest" about salaries among part of the firm's workforce.
Then in July, the company was quick to dismiss Egyptian press reports claiming it had breached various agreements with the Egyptian authorities. July also witnessed another strike, which shut the Sukari mine for a further week.
And during October, Centamin suspended its shares for two days following comments from an Egyptian administrative court that prompted speculation its mining concession agreement had been suspended.
Prospective "knife catchers" looking at Centamin today may be tempted by the valuation upside should the Sukari mine ever recommence production.
During the first nine months of the year, Centamin's profits reached almost £100 million, suggesting the current £231 million market cap is valued at about twice trailing profits.
Furthermore, cash, bullion and investments on the balance sheet last stood at around £114 million, while debt was zero.
Of course, whether the hapless Sukari mine, today's price plunge and potential for recovery make Centamin a buy -- or the equivalent of a "pyramid" investment -- 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 197 pence 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.
The article Centamin Suspends Egyptian Mine and Crashes 61% originally appeared on Fool.com.Maynard Paton has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.