Worries around the fate of SolGold’s (LON, TSX:SOLG) projects in Ecuador escalated this week after President Lenin Moreno, whose austerity measures set off violent protests, fled capital Quito and sought refuge in the southern port city of Guayaquil, triggering rumours of a coup d’État.
The Australian miner has seen its value halved since May, when a proposed referendum on mining casted doubts on the future of its projects and assets. From the 37.60 pence its shares were trading on May 1st in London, they have fallen 17.20 pence as of Thursday morning, leaving it with a market cap of only 317.57 million pounds (about $393 million).
The copper and gold explorer, which holds 72 mineral concessions in Ecuador through four subsidiaries, tried calming investors on Thursday by saying its operations remain unaffected.
“The safety and security of SolGold employees is of paramount importance, and the company has taken all necessary precautions and actions to ensure this is maintained,” it said in the statement.
While SolGold expects protests to continue in the short-term, it also believes the government will be able to restore order soon.
The company noted is on track to finish a third mineral resource estimate for the Alpala deposit on Cascabel copper-gold project, which will be published before year-end. A pre-feasibility study, in turn, would be ready in the first quarter of 2020.
“The Cascabel project is a key project in Ecuador’s developing mining industry and a critical driver for the future of Ecuador’s economy in the view of the government,” the company said.
Major miners seem to agree. BHP (ASX, NYSE:BHP), the world’s largest mining company, last year acquired a 6.1% stake in SolGold, as a way of boosting its exposure to copper.
The move pushed Australia’s largest gold producer, Newcrest Mining (ASX: NCM), to up its holding in the company, consolidating its position as SolGold’s top shareholder.