Grandich Client Sunridge Gold and Tracking List Nevsun Resources

Sunridge and Nevsun closed down 14% and 18%, respectively yesterday on heavy volume. This was trigged by an article that the UN Security Council was considering imposing sanctions against Eritrea and specifically targeting the mining industry and submittals by diaspora (funds sent back to Eritrea from Eritreans living abroad). Eritrea is one of the poorest countries in the world and the mining industry has been crucial for the development of their economy.

The reported sponsor of the resolution is Gabon, a small country located on the west coast of Africa (Not anywhere near Eritrea but it’s been suggested they have done so on behalf of Eritrea’s foe, Ethiopia). The story appears to be “leaked” to the press (this has happened before) and as of now the resolution has not been officially tabled. It is important to note that Gabon is a non-permanent member of the UN Security Council and Gabon’s term is set to end this year. It is unclear why Gabon would take an interest in Eritrea, as they are in completely different regions of Africa. In the event the reported resolution does make it to a vote, it would need unanimous acceptance by the 5 permanent members of the UN Security Council which includes China. China is traditionally opposed to such resolutions and is a strong economic partner to Eritrea and Chinese mining companies are currently working in the country.

Several mining analysts that cover Nevsun have stated that the sell-off has been overdone and created near term buying opportunities. For both Sunridge and Nevsun, nothing has changed in terms of the projects themselves.

Sunridge management tells me that they are still on track to complete the current Bankable Feasibility Study at Debarwa early in Q1 2012 and the Pre Feasibility on the Asmara North Deposits is expected late Q1 2012. Sunridge should be a different company as they should be able to report “reserves” instead of “resources” and expect to report NPV’s of their 4 deposits which are expected to be many multiples above their present market capitalization.

I’ve been trading Nevsun shares and re-entered the buy side yesterday near $4.50. With gold down sharply this morning and many first learning of this news after yesterday’s close, I suspect NSU shares can see further weakness today. My personal plan is to buy more shares but save some of my buying power in case the shares fall back all the way to the 200-Day M.A. around $3.20

My ‘Mamma Mia” stock looks far more like “Holy %^&% and yet I can’t fault management as they continue to deliver on the development side of things. The shares have come down all the way to where they first started to climb shortly after the financial crisis a few years ago. Here, too, I look to add to my position and plan on doing so more and more if and when it gets more and more below $.30

Click here to read Haywood Securities Radar Flash on NSU.

Posted in A Grandich Company by Peter Grandich.