Aton Resources Inc. – The CEO’s View on Mining Reform in Egypt
31 January 2020 - 8:52AM
Aton Resources Inc. (
AAN: TSX-V) (“Aton” or the
“Company") is pleased to share the thoughts of its President and
CEO
Mark Campbell on the announced changes to
Egypt’s Exploration and Mining Regime.
“I have been recently asked if I could give my
views on the landmark amendments to the Mining Law and Executive
Regulations, as well as my views on what remains to be done,” said
Mark Campbell President and CEO. Here is my take on these
changes.
The Mining Law of 1956 is still the current law,
but has been amended twice in the last 5 years, the last time in
August 2019. The law itself does not specify the fiscal regime or
the actual terms and conditions to be included in grants of mineral
rights, as these are left to the authority responsible, which is
the Egyptian Mineral Resources Authority (EMRA), under the Ministry
of Petroleum and Mineral Wealth (MOP). With the latest amendments,
new Executive Regulations have been issued that give the broad
outline of the fiscal regime and provide some terms &
conditions, such as royalties, rent during the exploitation period
and an eight year exploration period. Within the Executive
Regulations sit the “special Regulations” and this is where the
more detailed terms and conditions remain to be laid out. Why that
will be the case, is unclear, but as far as I am aware, these are
being worked out now by the MOP and Wood Mackenzie.
The key now is to attract exploration companies
to come and spend money and not to worry about mining, which could
take 10-15 years before a mine of any type is even built. Unless
there is exploration that creates the potential for finding a
commercial ore body, there is no chance of building a mine(s) and
no chance of income from mining for Egypt. But the money spent by
exploration companies during the exploration period does actually
produce indirect income to Egypt. The Government has realized that
the very high-risk exploration work is undertaken by small
exploration companies and not by large mining companies for the
most part. They will come later, once a major commercial or
potential major commercial deposit is found.
To me, the epic change here is the Government
getting rid of the oil & gas Production Sharing Agreement (PSA)
and going to a tax, rent and royalty regime. There are still other
policy issues remaining to be addressed, but the MOP and Wood
Mackenzie are diligently working on these, and I am confident that
they will get these parts right. Developing a real exploration, and
one day a mining industry, that allows for competitive terms and
conditions here in Egypt was predicated on doing away with the PSA
and Egypt has done that now. One huge result of scrapping the PSA,
which never recognized the differences between the industries in
terms of economics, is that it gets rid of the 50% JV and the
involvement of the Government in companies businesses. Junior
exploration companies are the venture capital arm of the mining
industry, and require constant financing over the long period of
exploration. If you are starting out with a 50% partner from day
one, you only really have one option, to turn yourself into a
mining company, as Centamin did. By getting rid of this exploration
investment-destroying regime, the Government has really taken a
huge step forward in being in a position to attract investment.
This is a seismic shift in thinking and approach
and Tarek El Molla deserves all the credit for this. There are
those of us who have been lobbying the Government for 25-30 years
to get rid of the PSA and move to a globally acceptable tax, rent
and royalty regime. The Minister has been able to make that happen
in less than two years. He has also elevated the importance and
profile of mineral exploration to the Ministry by creating the new
position of Deputy Minister in charge of Mineral Wealth and
appointing the ex CEO of ENPPI, Alaa Khashab, who ran one of the
most successful businesses in Egypt until his retirement last
October, ENPPI. ENPPI had been working from March of 2018 on the
reform of the mining regime in Egypt, so the new Deputy Minister
has been at the forefront of these changes.
The Executive Regulations specify that the
royalty on gold is 5% and that zinc is 6% and copper is 8%, and I
know people will look at these with some horror as being too high.
But just in terms of gold, though on the high side, 5% is neither
unworkable nor unheard of. What must be remembered by policymakers
is that mining being a margin business, the front-end loading of
costs like royalties, carried interests, rent, etc. means that most
projects and especially those that are marginal or small, may never
get built. Mining companies may have many projects all in different
jurisdictions and they will evaluate, which jurisdiction has the
best chance of making the highest return. It’s a matter of basic
economics.
What is happening now is the creation of an
environment that will compete with the rest of the world to attract
exploration companies like Aton to invest in Egypt. The big
take-away is the death of the PSA and the creation of a fiscal
regime where if the terms and conditions that are applied are
competitive with the rest of the world, with the result that Egypt
will see a bright future in mineral exploration and mining.
The most important thing for the authorities to
keep in the forefront of their minds is transparency and
consistency in applying the terms and conditions.
Aton has persevered over the years, because we
believe in Egypt, which has a great story to tell and abounds with
opportunity. Egypt boasts world-class infrastructure, a strong and
educated work force along with a strong, safe and stable
environment, which are qualities many countries cannot claim. Now
all it needs is to attract the investment needed for companies to
explore. This will be a significant boon to the Egyptian economy
and employment for generations to come. And so far from what I see,
they are on the right path.
As for Aton Resources, our immediate goal is to
start the required work on our phase one development of an open
pit, heap leach gold mine at our Hamama project and to continue our
exploration at Rodruin and our other 17 exploration targets, on
which we have done quite bit of work already. We are very excited
by the changes so far and those to come and what they offer to Aton
in the future. Maybe we will all see Egypt at PDAC this year and
hear more.”
About Aton Resources Inc.Aton
Resources Inc. (AAN: TSX-V) is focused on its 100% owned Abu
Marawat Concession (“Abu Marawat”), located in Egypt’s
Arabian-Nubian Shield, approximately 200 km north of Centamin’s
world-class Sukari gold mine. Aton has identified numerous gold and
base metal exploration targets at Abu Marawat, including the Hamama
deposit in the west, the Abu Marawat deposit in the northeast, and
the advanced Rodruin exploration prospect in the south of the
Concession. Three historic British mines are also located on the
Concession at Sir Bakis, Semna and Abu Gharida. Aton has identified
several distinct geological trends within Abu Marawat, which
display potential for the development of a variety of styles of
precious and base metal mineralisation. Abu Marawat is over 596 km2
in size and is located in an area of excellent infrastructure; a
four-lane highway, a 220kV power line, and a water pipeline are in
close proximity, as are the international airports at Hurghada and
Luxor. |
|
Qualified personThe technical
information contained in this News Release was prepared by Javier
Orduña BSc (hons), MSc, MCSM, DIC, MAIG, SEG(M), Exploration
Manager of Aton Resources Inc. Mr. Orduña is a qualified person
(QP) under National Instrument 43-101 Standards of Disclosure for
Mineral Projects.For further information regarding Aton Resources
Inc., please visit us at www.atonresources.com or contact: MARK
CAMPBELL President and Chief Executive Officer Tel: +202-27356548
Email: mcampbell@atonresources.com |
|
Note Regarding Forward-Looking
StatementsSome of the statements contained in
this release are forward-looking statements. Since forward-looking
statements address future events and conditions; by their very
nature they involve inherent risks and uncertainties. Actual
results in each case could differ materially from those currently
anticipated in such statements. Neither TSX Venture Exchange nor
its Regulation Services Provider (as that term is defined in
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release. |
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