Political risk in EritreaThe more I find about Eritrea the less I like what I read. Besides the fact that they do not have agreed borders yet, since Ethiopia has not accepted the ruling of the international commission yet and these two countries continue to be on the edge of war, the government of Eritrea seems to believe in a socialist version of the future where the bulk of the country's businesses are owned either by the government or the ruling party. Not a good backdrop for an investment.
So we seem to have Nevsun as a company with a market value of about US$200 million on the verge of starting up a fully paid mine in Mali. While this mine will be profitable, it cannot support the market value of Nevsun alone. The huge find in Eritrea needs to have some value in the future to justify the stock price. With the risks in investing in such a country becoming ever more obvious I suspect that Nevsun will not have a clear run at raising the capital for a mine in Eritrea and even if they succeed, in such a country you cannot rely on the the government allowing them to repatriate the profits. So I suspect shareholders will have to factor in new blows such as last September's sudden blow from Eritrea and that will keep this as an underperformer for quite a while.