US Sanctions on Nicaragua Cause Mining Co. Stocks to Plummet

Miners laboring at the “Estrella” Mine in Siuna, property of the Canadian Condor Gold Company. Photo from the Condor Gold website.

Share prices of stock in the Calibre Mining and Mako Mining Companies dropped 40.8% and 33% respectively. Condor Gold and the “Mineros” Group also suffered losses.

By Ivan Olivares (Confidencial)

HAVANA TIMES – Share prices for four of the five largest mining companies that operate in Nicaragua dropped sharply, after the US Treasury Department announced on October 24th a packet of sanctions targeting the country’s gold industry.

This year, the value of Nicaragua’s gold exports could reach $956 million dollars, with approximately three-quarters of these exports destined for the United Sates, according to statements from Ricardo Zuniga, deputy assistant secretary for the US State Department’s Bureau of Western Hemisphere Affairs. The statistic has also been ratified by the Nicaraguan Central Bank and the Nicaraguan government’s Center for Exports (Cetrex).

Before the latest sanctions were announced, stock prices for the five companies trading in the Toronto, London and Colombia financial markets had sustained normal levels of fluctuation, with increases and decreases reflecting the customary dynamic of supply and demand. Such mining stocks are normally considered secure investments, or “defensive stocks”, given the value of gold, especially in times of financial turbulence.

That changed when news of the US action reached the investors. They began selling off their shares, fearing unforeseen repercussions.

“We all know that there’s nothing more ‘nervous’ than a million dollars,” an economist remarked to Confidencial. The financial expert is following the behavior of the stocks of one of the affected companies.

Another professional with experience in the Nicaraguan mining industry stated that he couldn’t discount the possibility that, following the initial shock to executives, they may be weighing the convenience of seeking other, more secure, horizons for their capital.

“Of course, that could lead to the closure or withdrawal of some of those companies. I’ve yet to analyze the legal implications of this announcement, but some will try to leave. The announcement of this measure could lead to their not even being able to sell their assets, but having to leave them abandoned, left for “others” to control, who must now be rubbing their hands in glee.”

Caibre and Mako Mining Company shares dropped 40.8%  and 33%

We summarize here, in dollars, the market behavior of five mining industries in the financial markets of London, Bogota and Toronto, based on prices posted on Tuesday, October 25. Although prices here are noted in US dollars, the percentages are based on the variation in the original currency.

Calibre Mining Company fared the worst. At the moment markets opened on Monday, October 24, before the US Treasury sanctions were known, their shares were selling for US 71 cents each. They closed at 42.3 cents each on Tuesday, October 25 – a drop of US $0.29 per share, and an accumulated loss of 40.8%.

This company, which operates on Canadian capital, also has a mine in Nevada.  A minor partner, B2Gold, controls around 40% of the Calibre shares, and the company owns Desminic which operates a mine in La Libertad in Chontales, Nicaragua. Calibre also owns the Triton Mining Company, which exploits the El Limon mine in Leon. It recently acquired yet another company, CXB Nicaragua.

In a statement posted on their website, the Calibre Mining company affirmed they were “proactively reviewing” the US Treasury Department’s announcement, before contacting that US government entity “to guarantee our full compliance with these provisions.”

“Calibre reaffirms its commitment to continue complying with all relevant international laws and restrictions. The Company will provide a market update once it has additional information, following discussions with its advisors and the United States Treasury Department,” the statement promised.

Also Canadian-based, Mako Mining Company operates the San Albino mine in Nueva Segovia, Nicaragua. Of the five affected companies, Mako Mining is the one holding the least amount of land area in concessions – three mining concessions with a total of 17,617 hectares. However, it was the company whose stock prices suffered the second biggest drop.

The value of Mako shares on the Calgary stock market – a subsidiary of the Toronto Stock Market – fell 33%, going from US 13.1 cents a share to US 8.8 cents between market opening on Monday, October 24, and the closing bell on October 25.

According to the company’s information, they began operating in the second trimester of 2021 and were hoping to broaden their areas of extraction in several zones, where they were seeking new gold veins.

British Company Condor Gold

The English Condor Gold Company is registered on the London Stock Exchange and also in Toronto. They reported large losses in both markets.

Due to the time differences, the company’s stock prices remained stable on the London markets all day Monday, October 24, only to drop US 2.46 cents between closing time on Monday and the next day’s close. The drop represented 16.4% of the stock’s value. On the Toronto Stock Market, the stocks fared worse, with shares losing 24.1% of their value.

Condor Gold operates the La India mine in the Nicaraguan department of Leon.

The Colombian “Grupo Mineros”

This company operates with Colombian capital and is registered with the Colombia Stock Exchange in Bogota, as well as in Toronto.

Over the last five days of operations, the South American entity demonstrated a minimal loss in share values of 3.26%. Prices in Colombia remained nearly unchanged after the US announcement on October 24th. Their largest loss was on the Canadian Stock Market, where share prices of Mineros dropped 11.9%, from US 61 cents to US 54 cents each.

The Mineros Group began operating in Nicaragua in March 2013, when it acquired 90% of the stock of  Hemco Enterprises, which operates in the Nicaraguan town of Bonanza. They currently hold 24 mining concessions, amounting to 190,605 hectares of Nicaraguan land, and representing 21% of all the territory Nicaragua has opened to mining concessions.

Mineros also operates three other mines in Colombia, Chile and Argentina. In 2020, they reportedly employed 3,100 employees and produced 270,000 ounces of gold.

Blue Stone Gold Mining

Yet another Canadian company, Blue Stone Gold, remained largely unaffected on the stock market. The value of their shares increased by fractions of a US cent on Monday, then fell for a few hours on Tuesday, but quickly recovered. They closed at the same level as at the beginning of the week.

In 2014, Nicaragua’s Ministry of Energy and Mining granted Blue Stone Gold Mining a 25-year concession for mining exploration, extending over an area of 25,692 hectares between Prinzapolka, Siuna and Rosita in the North Caribbean Autonomous Region.

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