Ever since the announcement made by Chalice Gold Mines about the signing of a non-binding letter of intent to sell its 60% stake in the Zara gold project Eritrea, rumors started to run fast in the capital markets to find out who could be that lucky counterpart since Chalice did not disclose the name of the potential acquirer.
The first suspect was Canadian Miner Nevsun Resources who owns and develops the highly profitable Bisha gold mine in Eritrea. This is because a couple of months back, the company announced that it was looking to buy advanced-stage copper-gold projects that had some kind of economic assessment, either a PEA (preliminary economic assessment) or greater, which Chalice fits well with all those conditions, in the Americas, Europe or Africa.
Senior analyst, Peter Grandich, however, has a different clue about the possible potential buyer.
He suspects Chinese mining companies because, as he put it bluntly, they have always been sniffing in Eritrea
A couple of months back, the stranger west African country of Gabon, that is about to lose its temporary seat at the Security Council this month, tried its craziest and miserably failed plot to put a halt to all foreign mining investments in Eritrea. At that time, Grandich argued, the Chinese were about to announce a series of acquisition as they have always looked at Nevsun, Sunridge and others.
After the Gabon plot failed, the Chinese has simply backed down but put a watchful eye on every new discovery and drilling results issued by the more than dozen junior minors in the country.
It was at this time that Chalice expressed it intent to sell its 60% share to a certain undisclosed partner.
Grandich says, “Once the Chinese take a foothold in Eritrea, all that crap in the UN will come to an end,” he said “because they’re the next big thing economically.”
Once that happened, he said “the worst in Eritrea is going to be behind us.”
Below is part of the interview he made with Kevin Michael Grace of Resource Clips about Chalice and Sunridge:
Q: Do you think there any particular stocks that will do well in 2012?
A: I don’t think people have recognized yet how strong this developing iron-ore play in Quebec is. There are companies I work with like Alderon TSX:ADV and Cap-Ex Ventures TSX:CEV that are really advancing up the corporate ladder and had tremendous years in 2011. Then there are companies that make no sense in terms of how advanced their projects are versus their market caps. I can think of no better story that meets that criterion than Sunridge Gold TSX:SGC.
In the next three to six months, we’re going to see prefeasibility and final feasibilities on multiple projects of theirs that are going to make their net asset value multiple times more than their total market cap. If I had to pick one stock whose price is totally out of whack, that’s Sunridge. Why is that? A significant part is where they operate, in Eritrea. Despite it being actually a very good place to operate, the perception is still very bad. If that starts to change a little, and they continue to have great success as they have on the corporate front, we could see a dramatic re-evaluation of their stock.
Q: I’m very interested in this because the Canadian media has been very hostile to Eritrea.
A: What happened was this little country, Gabon, which is on the other side of Africa, was about to lose its seat on the Security Council, and they leaked this story they were about to force everything to stop in Eritrea. One of the things that’s going to change this story is you’re going to see the Chinese announce an acquisition in Eritrea.
There’s a current company out there that won’t say who it’s involved with, but it’s in talks with a major partner. The Chinese have been in Eritrea sniffing around; they’ve looked at Nevsun TSX:NSU and Sunridge and others. Once the Chinese take a foothold in the country, all that crap in the UN will come to a halt, because they’re the next big thing economically. The worst in Eritrea is going to be behind us.