Shares in South Boulder Mines jumped more than 16 per cent yesterday after
the company appointed corporate advisors to help handle negotiations with
the Eritrean Government over the sale of a 30 per cent stake in its potash
project in the African nation.
The WA-based company said on Monday that Eritrean state-owned miner ENAMCO
had elected to take up its option to up its stake in the Colluli potash
project to 30 per cent, and yesterday South Boulder appointed Azure Capital
to help value the project ahead of the formal start of negotiations. While
the 15.5¢ jump to $1.12 will be welcomed by investors, the former market
darling has a long way to go before it reaches the $6 mark its shares
commanded this time last year.
There's little doubt the company's potash project is big and potentially
lucrative but Eritrea has become an increasingly uncertain investment
destination over the past year. The small nation has been threatened with UN
sanctions after being accused of sponsoring al-Qaida-linked terrorist group
Al Shabaab, which operates in Somalia. Tensions with neighbouring Ethiopia
have also risen in recent weeks, after Ethiopian troops mounted attacks on
Eritrean-based guerilla groups accused of mounting cross-border raids.
South Boulder's experience with ENAMCO mirrors that of Chalice Gold Mines,
which agreed to sell an extra 30 per cent stake in its Eritrean gold project
last June to boost the state-backed miner to a 40 per cent holding. The WA
gold company won't see the bulk of the $US34 million agreed price until the
end of June, and elected to quit the project late last year, allowing
China's SFECO to conduct due diligence on a sale of the remaining 60 per
cent for up to $US100 million.
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Received on Fri Mar 30 2012 - 17:31:01 EDT
