Centamin Egypt Ltd - multi million ounce gold deposit

I am sure Tom of T1ps will not mind if I copy the following as it seems to be a point of confusion for some...


Tom: Okay. In terms of putting a value on the deposit, obviously there are numerous imponderables and things which could change so I'm guessing as much in the dark as most people. A question again from John, just wondering if you can clarify how the joint company structure works with the state and what the state take will be on the profits. Could you just remind us what that is again?
Josef: The government takes a 3% net smelter royalty, so whatever the gold price is we get 3% less. Then there's a split that comes out of an operating vehicle in Egypt and it's split 50/50 but it's important to know that you only split it after you've recouped all of your exploration expenditure, all of your development expenditure, all future exploration, all future capital and, because it's in the operating entity, then you do charge a percentage for the management company being Centamin over the top of it so you get $1.20 or $1.30 back for every $1 that you spend. It's a typical joint venture where the manager gets a premium for his money spent. So often there's this perception that we only have 1.5 million oz, not 3 million oz, and that's not the way to view. We have modelled it, everyone in the petroleum industry models it differently because they have lived with these agreements and it's in place of a tax that you give the profit share and also we're exempt from all other taxes. If we work in Australia, we would pay 30% corporate tax. It doesn't mean if we had a deposit of 10 million oz we'd only be given credit for 7 million oz. And on top of that 30% tax then there's a huge amount of payroll taxes, fuel in Australia is taxed - you get about 50c/l in tax on fuel whereas in Egypt fuel is sold at cost at 10c/l so the comparison is ... you can't chop it in half, basically.