It may not be entirely coincidental that the rising pattern in that chart above largely concurs with growing crisis in Peru, which commenced on December 7, when the former president Pedro Castillo was removed from office, resulting in protests in the mineral-rich southern regions of that country.
This rapidly evolving situation could have significant implications for the Variscan share price, and so I think it is worth mentioning it briefly here.
Over recent days, the aformentioned crisis in Peru has resulted in three major mines in the country suspending operations. Last Thursday, Minsur suspended operations at its San Rafael Tin mine. On the same day, Glencore opted to evacuate its workers from the Antapaccay Copper mine, after the water plant at the site was damaged by protesters.
And over the weekend, reports emerged that MMG have halted work at the Las Bambas copper mine in Peru as a result of safety concerns.
One point to bear in mind is that Peru is a major producer of non-ferrous metals, and in particular, copper and zinc: it is the second largest producer in the world of both these metals.
Variscan of course is sitting on hefty deposits of both these metals, in its tenements in Spain and Chile.
Currently, Variscan's market capitalisation is just 5 million or so.
Thomson Resources - the exploration company that Variscan used to own a stake in- currently sits at three times that. I don't believe that the assets of Thomson are superior to those of Variscan, although it must be noted that Thomson has a larger footprint, controlling more tenements.
On the other hand, Thomson recently entered into a rather desperate-looking agreement with the Lind Fund, whereby the receive funds from the group in exchange for tranches of shares.
This is likely to put a cap on the share price of Thomson for a considerable period, with Lind likely to periodically dump their newly-minted shares on the market whenever the opportunity presents itself.
The Variscan share price was under pressure in the second half of year, as some significant holders headed for the exits, but the signs are that those who wanted out, are now, 'out'. This should remove the overhang that was compressing the share price.
In summary, if we do start to see a commodity supply-squeeze in Peru as a result of the political crisis in the country, it would be reasonable to expect the VAR shareprice to rocket northwards. Given the pitiful market cap of the company at the moment, VAR would probably very quickly double in such a scenario.
One poster stated here last month 'This is gone'. I wonder if that poster might have inadvertently called the bottom.
After all, when everyone is throwing their hands up in the air and giving up on a stock, there can't be much of a downside left for the share price.
VAR Price at posting:
1.9¢ Sentiment: None Disclosure: Held
