Since January 2011 the share price of Bougainville Copper has gone downhill. Up until today the stock has lost about 75 percent of its worth and is currently quoted at a level not seen since the discontinuation of the ADR (American Deposit Receipt) programme. Australians were hit particularly hard. Europeans, Americans and owners of Singapore Dollars were less affected because of the increasing strength of the Aussie Dollar.
The so-called Euro-crisis and the announcement of the huge debt burden of the United States have shaken the financial centers of the world to the bone. Contradictory messages about the future demand of copper in China and home-made political power plays in Papua New Guinea have added to further volatile markets.
2012 has started with all imaginable negative factors already priced in. However, investors should not forget to include all positive developments of the recent months into their investment strategies.
Here is a preview of what to expect in the coming weeks:
1. Once the hysteria over the situation of the Euro-crisis countries will have slowly subsided because initial sensational reports are no longer of any interest to the population. The stock markets once again will reflect more of a scenario shaped by reality rather than horror stories.
2. The price of copper as well as the gold price will continue to rise slowly.
3. The Australian Dollar will also continue to rise, since it is the safe haven for holders of U.S. Dollars, UK Pounds and Euros.
4. The political situation in Papua New Guinea will surely settle down after the upcoming emotional parliamentary elections in the summer. The current Prime Minister Peter O'Neill has a good chance to be elected prime minister after approaching popular topics such as combating corruption, eliminating school fees and a comprehensive free health care programme. In addition, the population seems to have tired of the selfish policy of his predecessor, Sir Michael Somare and his clan. While Somare was considered a friend of China, it is said that O'Neill stands closer to Australia.
5. The soon to be held joint supervisory board meeting (JSB) in Buka and the subsequent National Executive Council meeting in Arawa will also help to give additional attention to Bougainville. Furthermore, ABG President Momis has announced the impending visit to Panguna of a high-level delegation headed by Prime Minister Peter O'Neill. This also suggests that additional steps towards the reopening of the Panguna mine will be discussed and decided. Presumably, in this context, the first official visit of John Momis to Panguna will also take place. It can further be assumed that this will also mark the beginning of the review of the Bougainville Copper Agreement, as was announced by ABG Vice President, Patrick Nisira a few weeks ago.
6. After years of deliberations, the Panguna Landowner have drafted a "New Deal", one that is likely to accelerate the reopening of the mine.
7. Thereafter, representatives of Bougainville Copper probably make first visits in order to take stock of Panguna.
8. Consequently, the opening of a Bougainville Copper representative office at Arawa would be on top of the agenda.
As a logical conclusion from the above hard facts, the following can be summarised: The real value of the Bougainville share price can certainly be assessed in a more realistic way. This means that at the first sign of good news the stock will possibly hit the high levels from last year, or even surpass them. From today's perspective (AUD 0.74 on 02.03.2012) it appears that a doubling of the current price is a sure shot and a scenario of tripling or even quadrupling is not unrealistic!
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