Canadian junior has high hopes for Egypt

CAIRO - Tiny Canadian mining company Nuinsco Resources Limited hopes to seal a concession agreement in Egypt's Eastern Desert before the year-end, allowing it to explore an area where pharaohs once dug up gold to gild amulets and sarcophagi.

Egypt's gold mining industry, dating back to the days of Tutankhamun, faded in the twentieth century largely because of curbs on foreign investment imposed by President Gamal Abdel Nasser but changes to Egypt's mining code in 2008 renewed interest.

Firms such as Nuinsco and Centamin Egypt Ltd. are betting now that there is more gold beneath the pharaoh's relatively shallow trenches.

"If they were finding gold in a trench that was being dug down to six feet, there's no reason to think that the gold ended at the bottom of that trench," Nuinsco president Paul Jones told Reuters in a telephone interview.

Nuinsco, a junior with a market capitalization of just $12.8-million, must spend $2-million on exploration in its first year under the terms of the Bukari concession agreement, Mr. Jones said. The firm plans to begin some early sampling, prospecting and mapping next week.

"We'll be hitting the ground running," he said. "In order to spend $2-million on a licence such as this, which has effectively got no previous work on it, we have to be moving very quickly right from day one."

Gold prices have risen 28% in the last 12 months alone -- and hit record highs of just below US$1,300 an ounce earlier yesterday -- largely on the back of concerns over the outlook for the global economy, sovereign debt levels and the consequent stability of paper currencies.

Nuinsco, based in Toronto, is also involved in projects in Turkey. It explores mostly for gold, copper, zinc, uranium.

The Bukari agreement gives Nuinsco four years to explore the concession. If the firm finds a deposit big enough to extract, they are allowed 20 years, with a possible 10-year extension, to get it out of the ground.

Mr. Jones said he expected a second agreement for Umm Samra to be completed after the Bukari agreement is finished.

The Eastern Desert, where both concessions are located, shares geological characteristics with mineral-rich areas in Australia, Russia and Canada, bolstering the company's confidence it will strike gold, Mr. Jones said.

"What you're doing is comparing similar rocks with similar rocks, with similar rocks. And there's no reason that the rocks in Egypt don't have the same mineral wealth that they do elsewhere in the world," he said.