Exeter Resources stock drops due to ban on new mining permits in Argentine province

Exeter Resources‘ (XRC-V, XRA-X) shareholders were quick to sell after a Dec. 13 announcement by the government of Mendoza province, in Argentina that new mining-related permits would no longer be issued until a new environmental plan could be implemented.

Exeter’s stock price plummeted about 20% on TSX Venture Friday, hovering around $2.06 with a volume of 781,584 shares at press time. On Dec. 13 the stock closed at $2.95.

Exeter chair Yale Simpson says the suspension of permits came as a surprise.

“It really came out of left field for us,” says Simpson. “It’s unfortunate that there hasn’t already been an environmental plan put into place.”

Simpson says the company fully supports the implementation of an environmental plan. He says the company will be a proactive as possible in encouraging the plan’s development.

Exeter is in the middle of definition drilling at its La Cabeza project, which should be completed by the first quarter of 2007. The moratorium on new permits does not affect current permits.

A Nov. 28 report by Dundee Securities discussed the positive results of the company’s drill program. New drill results have put mineral inventory estimates at nearly 2 million oz. of gold — twice as much as the current estimate. Dundee gave Exeter a “market outperform” rating and estimated its stock would rise to $3.80 per share within a year.

A Dec. 15 newsletter by Casey Research recommended shareholders to cut their losses now because of the uncertainty Exeter’s ability to move ahead on La Cabeza.

The newsletter says it’s unlikely the provincial government will have its environmental play ready in less than a year.

“This is a good company, making steady and very positive progress on an attractive project but (Exeter) shares could be dead money for the next year,” the report said.

Exeter has other projects outside of La Cabeza including the Cerro Morro drill project in the mining-friendly Santa Cruz area and some projects in Chile.

Mining is fairly new to Mendoza – a large wine producing area exists in the northern part of the province – giving reason for environmental concerns.

Simpson could not forecast how the suspension of new permits would effect La Cabeza’s timeline, which had the first bar of gold being poured by 2009, but thought he would know more in a few weeks.