Sun Peak shares rise as it looks to resume exploration in Ethiopia

Shares in Canadian junior miner Sun Peak Metals (TSXV: PEAK; US-OTC: SUNPF) rose to their highest level in nearly three years on Wednesday after announcing it’s prepared to resume exploration on the Shire project in Ethiopia.

The flagship copper-gold project has been on hold since November 2020 after a civil war broke out in the northern Tigray Region, which spurred the company to invoke force majeure on all four of the project’s exploration licences.

Together, these licences (Nefasit, Adi Dairo, Terer and Meli) cover about 900 sq. km. of the prospective Arabian Nubian Shield in northern Ethiopia. The licensed areas are located in the same geological environment as both Zijin Mining’s Bisha mine and the Asmara projects to the north in Eritrea.

In Wednesday’s news release, Sun Peak said it will restart exploration at Nefasit, Terer and Meli in the first half of this year. Proposed work includes drilling to test multiple copper-gold VMS targets previously developed by the company.

“We are very happy that the Tigray region is again peaceful and stable,” Sun Peak CEO Greg Davis said in the release. “Our Ethiopian team based out of Addis Ababa and Shire are available and supportive for a return to exploration activities. Multiple governmental and non-governmental agencies have been supportive of re-entering the region. We worked hard to keep our in-country technical team together, and we’re proud of our team’s resilience and dedication to the company.”

Sun Peak’s plans come as other companies including Allied Gold (TSX: AAUC) and  Kefi Gold and Copper (AIM: KEFI) also seek to restart their projects amid the post-war climate. Allied aims to build its US$500 million Kurmuk gold mine, while Kefi is preparing to build the US$320-million Tulu Kapi gold mine, both in western Ethiopia. 

Sun Peak’s remaining licence (Adi Dairo), as well as the two licences covering 550 sq. km and which the company had applied for prior to the conflict (Adi Mendi and Wokemba), are expected to have force majeure measures lifted at a future date, it added.

The company noted that it recently completed an extensive security and safety assessment that confirmed low levels of risk in the licensed area and for the type of exploration drilling planned.

As for funding, Sun Peak said it currently has about $6.4 million in cash, so no near-term financings are required for the  drill programs.

Company shares were up 44% to 47¢ apiece before markets closed on Wednesday, valuing the company at $40.9 million. Earlier in the day they were up 50.3 to 50¢ apiece, a new 52-week high and the highest since early 2021.