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Jim Letourneau's Blog

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Canadian Miners Halted in Eritrea

Nevsun Resources Ltd. (NSU/TSX), Sanu Resources Ltd. (SNU/TSXV) and Sunridge Gold Corp. (SGC/TSXV) jointly announce that they have today each received a letter dated September 2, 2004 from the Minister of Energy and Mines for Eritrea instructing the companies to halt all mineral prospecting and exploration work and related activities in Eritrea until further notice. No reason was given for this instruction in the letter.

The companies have sought further clarification and will provide further information as it becomes available."


At this point very few people know what the issue at hand is. Perhaps a "small fee" needs to be paid to someone for an additional "permit". It could be a security issue, last April a Nevsun field geologist was murdered in the field.

For background you can check:
CIA Word Factbook on Eritrea
GlobalSecurity.org

A Google search on "Eritrean Government" yielded Eritrean Government Closes Churches and Eritrean government forbids cell phone use. I've had cell phones go off 3 times during presentations this year so I can see where they are coming from. If you think these are isolated incidents you can read the source of this quoteAfter three decades of a deadly war for independence from Ethiopia, Eritreans now find themselves in the claws of a maniacal dictator who has dashed their hopes of paradise.

It is customarily straightforward to do business with authoritarian governments. I'd be surprised if Eritrea stopped an enterprise that could lead to an important source of income. Only a maniacal dictator would do something like that.

In addition, the Eritrean government has been asserting itself in dealings with the UN lately. Non Government Organizations (NGOs) are all over Africa. Jim Rogers has this to say about their role:

"Most foreign aid winds up with outside consultants, the local military, corrupt bureaucrats, the new NGO administrators, and Mercedes dealers. There are Mercedes dealers in places where there are not even roads."

Either the Eritrean President/Dictator Issayas Afewerki wants them out as they are inefficient or he wants them out in order to initiate military conflict.

Nevsun was in a nice uptrend since being recommended on ROB TV. I've had a couple of my mining stocks fall prey to the political battleaxe. It goes without saying that it is a good idea to geographically diversify your resource stock portfolio.

Not Advice
Courtesy the Big Picture Speculator