In case you missed the news Bolivia is threatening to nationalize it's miners.
High fliers like CDE and PAA got a beating today. In after hours the shares were up a little based on low volume trading so expect more selling before the bell if there is no good news or settlement.
In case you don't know Bolivia has everything going for it. Huge mineral resources and oil and gas to boot. It is said that Bolivia built the Spanish empire with it's silver.
Bottom line here is that Bolivia is one of the worlds sixth largest silver producer.
The people are pissed and are willing to express that unlike the Anglo world.
This is all bullish unless you happen to own stocks with exposure to Bolivia. It's bullish for Silver and it's bullish for Silver miners outside of South America as everyone jumps ship from Bolivia (and other South American miners possibly) and seek exposure in other producers.
This is just the start. One revolution leads to another as we have seen in the middle east.
PAA is definitely in the line of fire.
I would suggest reading the following article thoroughly to get an understanding of the underlying festering sores that make up Bolivia.
http://bermudaradical.wordpress.com/2010/08/20/two-takes-on-the-bolivian-uprising-in-potosi/
"For example, a recent study of a Canadian subsidiary, Pan American Silver, operating in the department through a shared-risk contract with the state company COMIBOL (COMIBOL effectively controls about 30% of the project), shows that the company will pay merely 17% taxes and royalties on projected gross sales value over the next 30 years. The taxes going to the municipality where the company is located, one of the poorest in the country, are just over 0.5%. This is straightforward looting. By comparison, in various shared risk contracts in Chile (hardly a socialist haven) taxes and royalties going to all levels of the state amount to up to 51%, whereas, in Peru, it’s on the order of 26%"
From Reuters;
Coeur d’Alene Mines Corp. (CDE) and Pan American Silver Corp. (PAA) shares plunged today after Bolivian President Evo Morales announced plans to expropriate mines amid protests for wage increases.
Coeur fell $2.68, or 7.9 percent, to $31.08 in New York trading, the most since May 20. Pan American slumped C$3.69, or 9.3 percent, to C$35.89 in Toronto.
State mining company Comibol may rescind contracts with companies including Coeur, Pan American and Glencore International AG, La Paz-based newspaper La Razon reported yesterday, citing Comibol President Hugo Miranda.
Since taking power in January 2006, Morales has seized gas fields, oil refineries, pension funds, telecommunications companies and Glencore’s tin smelter in a bid to increase state control over Bolivia’s industry. Morales told reporters in La Paz on April 12 that he plans to release a decree on May 1 overturning the privatization of state mining assets.
Coeur’s property rights are not the subject of expropriation, company spokesman Tony Ebersole said in an e- mailed response to questions.
“Our surface mining and silver production from San Bartolome is under way now as usual,” Ebersole said.
Pan American spokeswoman Kettina Cordero said in a telephone interview from Vancouver that the company hadn’t been notified by the Bolivian government. Glencore spokesman Simon Buerk declined to comment.
Protesters battled police, blocked roads and surrounded Morales’s residence in La Paz today as a general strike for higher salaries entered its eighth day, Radio Panamericana reported.
More info here on the miners that may be effected;
http://www.vancouversun.com/business/Bolivia+plans+expropriate+mines/4610801/story.html#ixzz1JXApVhiC
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