Sunstone Metals (ASX: STM) shares are up 21% STM shares are up coincident with the political violence - that assassination - in Ecuador where the potential mining operations are located. No, we are absolutely not suggesting that pushing up the share price was the cause of the violence. Mining is a pretty rough and tumble business but not that much. However, alongside the upcoming presidential and congressional elections there is a referendum on allowing, or not allowing, mining in certain areas of Ecuador. This will obviously have an impact on the value of a miner hoping to operate in Ecuador.
The two Sunstone projects: “ Sunstone Metals Ltd (ASX: STM) is pleased to announce outstanding assays which highlight the potential for a significant increase in the overall size and grade of the Mineral Resource estimate at its Bramaderos project in southern Ecuador.” and “Sunstone Metals Ltd (ASX: STM) is pleased to announce assays from drill hole EPDD026 at the T3 porphyry target within its El Palmar porphyry gold-copper project in northern Ecuador.” That may or may not be directly affected by the referendum question. But it is in the right sort of area, near Quito, that is under discussion. So, if the referendum passes we can imagine the protection - the no mining here idea - might be expanded in future.
Sunstone Metals share price from Google Finance
The issue is as follows: “Ecuador is to hold a mining referendum on the same day as the country’s general election on 20 August. The referendum announcement comes amid an ongoing dispute over mineral exploitation of the Choco Andino Biosphere Reserve. The referendum, long sought after by environmental groups and local inhabitants, will determine whether mining in the Choco Andino area north-west of Quito will be prohibited.” and “There are around 12 copper, gold and silver mining concessions in the region, in early stages of exploration. In the referendum, voters will be asked if they agree to ban metallic mining in the Nono, Calacalí, Nanegal, Nanegalito, Gualea and Pacto areas.”
And then comes those shocking violent events: “Fernando Villavicencio, a presidential candidate in Ecuador, has been shot and killed as political violence threatens the country’s upcoming election.”
Note, again, that we are not, in the slightest, implying that mining led to the violence. Rather, that markets are shockingly unsentimental in processing information about what prices should be in markets. The timing of the election itself is now in doubt, let alone the results of it. We can assume that the result of the referendum is also rather more up in the air than it was. Thus the price of someone hoping to mine in Ecuador changes.
