Centamin Egypt said it made a recommended 7.48 million pound ($12.0 million) offer for a small gold exploration company operating in Ethiopia, expanding its reach outside of Egypt.

Sheba, which is quoted on the UK's PLUS market, owns and operates three gold and base metal exploration licences in Northern Ethiopia that lie within the resource-rich Arabian Nubian Shield, also host to Centamin's flagship Sukari gold project.

"The strategic acquisition of Sheba marks the broadening of our asset portfolio beyond Sukari, as well as heralding our entry into Ethiopia, a highly prospective gold district where we believe the Sheba licences represent some of the most prospective in the country," Centamin Chairman Josef El-Raghy said on Monday.

Centamin's cash and share offer is a 124 per cent premium to Sheba's closing share price on Friday.

Sheba said the offer represented a fair valuation and recognised that a company of its size would struggle to raise the significant increase in expenditure required to fully develop and exploit the licences.