Canadian junior mining company Sun Peak Metals (TSXV: PEAK) witnessed a significant surge in its stock price on Wednesday, reaching its highest level in nearly three years. This remarkable increase followed the company’s announcement of its intention to resume exploration activities on the Shire project in Ethiopia, despite the region’s recent history of conflict.
The Shire project, focused on copper and gold exploration, was halted in November 2020 due to civil unrest in the Tigray Region. Sun Peak Metals invoked force majeure on all four exploration licenses associated with the project at that time. These licenses cover an area of approximately 900 square kilometers within the prospective Arabian Nubian Shield in northern Ethiopia, sharing geological similarities with nearby mining operations in Eritrea.
In a press release issued on Wednesday, Sun Peak Metals revealed its plan to restart exploration activities on three of the licenses in the first half of 2024. This includes conducting drilling operations to test multiple copper-gold Volcanogenic Massive Sulfide (VMS) targets previously identified by the company. The remaining license, along with two additional licenses totaling 550 square kilometers, are expected to have force majeure measures lifted at a later date.
CEO Greg Davis expressed optimism about the resumption of activities, citing the return of stability and peace to the Tigray region. He praised the resilience and dedication of the company’s Ethiopian team and emphasized the support received from various governmental and non-governmental agencies.
Sun Peak Metals also disclosed the completion of a comprehensive security and safety assessment, which indicated low levels of risk in the licensed area, affirming the feasibility of planned exploration drilling operations. Moreover, the company stated that it currently holds approximately C$6.4 million in cash, eliminating the need for immediate financing to fund the planned drill programs.
Following the announcement, Sun Peak Metals’ stock experienced a significant uptick, trading 50.3% higher at C$0.50 per share by 3:30 p.m. ET. This surge marked a new 52-week high and represented the highest trading level since early 2021, propelling the company’s market capitalization to C$42.5 million. Investors responded positively to the company’s plans to resume operations in Ethiopia’s conflict-affected region, reflecting renewed confidence in Sun Peak Metals’ prospects and contributing to the notable increase in its stock value.
The decision to restart exploration activities in Ethiopia underscores Sun Peak Metals’ commitment to leveraging its valuable mineral assets and advancing its strategic objectives despite challenging external circumstances. As the company prepares to embark on its exploration initiatives in the Shire project, it remains poised to capitalize on the region’s significant geological potential and contribute to the sustainable development of Ethiopia’s mining sector.
