Some investors rushed to get rid of East Asia Minerals Corp (CVE:EAS) (PINK:EAIAF) stock after the company announced they cannot conduct mining operations on Miwah project as the land resides within a government protected forest.
EAS share price lost over 30% on Tuesday and showed only minor signs of recovery since. The trading volume remained close to 1 million shares for the past two sessions as some investors tried to get rid of the stock while other used the dip as a buying opportunity.
On December 13 East Asia provided an update related to their Miwah project in Indonesia. The company said some of their mining business licenses are still valid but only allow for limited activities on the property until additional permits are acquired.
Despite the obstacles the company retains hopes to proceed with an exploration plan in 2012. East Asia owns 85% indirect equity interest in this project. The current mining business licenses were obtained through partnerships with other businesses.
Licenses allowing for mining activities will have to be acquired separately and, in EAS case, will require a forestry access permit from the Ministry of Forestry of the Republic of Indonesia. These generally have to be renewed every two years as well.
The catch is that the forest on the site of Miwah project is now designated as primary forest and is protected by the law, allowing only for underground drilling activities at best. The company has initiated discussions with the Governor of Aceh province to have the forest re-designated, but it will clearly require a lot of effort and odds of success are not favorable.
