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Albania Economy Surges with Canadian Resource Investment

Commodities / Resources Investing Nov 10, 2011 - 05:22 AM GMT

By: Submissions

Commodities

G. Joel Chury writes: According to Albanian Prime Minister Sali Berisha, Albania’s economy increased during the first 9 months of the year, fueled by increased exports of goods and resources. Though the country still has a long road ahead of it in terms of living up to its growth potential, and before it joins the EU in 2015, this emerging economy is being stoked by outsiders, including a pair of first-movers from Canada looking to bring new methods of development to old resource discoveries.


While skepticism may be directed towards Albania’s forward-looking success, Canadian Finance Minister Jim Flaherty yesterday painted a slightly bleaker outlook for Canada’s economy. Amidst these two differing stances, the unseemly relationship between the two countries was addressed last week at the first ever Canadian-Albanian Business Forum held in Tirana, Albania, which welcomed Canada’s primary first-movers in the Albania resource sector: Banker’s Petroleum [BNK – TSX] (oil and gas) and Tirex Resources [TXX – TSX.V] (VMS minerals).

Two months on the heels of the first US-Albania Investment Forum held in New York City, the Canada/Albania connection was celebrated and reinforced with appearances by Abby Badwi (CEO of Bankers Petroleum) and Bryan Slusarchuk (CEO of Tirex Resources), whose companies’ actions better represent a new era of resource sector development in Albania. While Badwi and Slusarchuk typically face scrutiny from prospective investors back home, their companies have each received an unlikely vote of confidence from the European Bank for Reconstruction and Development (EBRD).

The EBRD represents an accumulative business volume of $20B invested across 29 countries from central Europe to central Asia, but within Albania’s natural resource sector, only two investments have been made: Bankers in oil and gas, and Tirex in mining. In fact, of the 3,268 projects the bank has participated in since 1991, the $10.5 million investment by EBRD in Tirex’s Mirdita Project is the bank’s first support of the mining exploration industry.

Initially the EBRD’s stance on mining has been heavily risk-averse since its inception, straying away from speculative sectors and preferring companies capable of generating cash flow. But, in this case the EBRD played its hunch successfully, as Tirex has announced it is targeting commercial scale copper and gold production within the next 90 days. All this was done through fast-track plans that didn’t require a corresponding share dilution.

The strategy for both Bankers and Tirex hasn’t necessarily been overly creative or unique. Bankers built itself to $1.5B market capitalization by simply bringing modern exploration and development techniques to develop the Patos-Marinza and Kucova heavy oilfields, first discovered in 1929. Conversely, Tirex at a $60 million market cap is 12-18 months behind Bankers as far as advancing technically in Albania, but its strategy is similar in that it is conducting modern exploration and development in a VMS district containing copper-zinc-gold-silver that was worked on by Albanian state-run programs between the 1940s and 1980s. Only time will tell whether Tirex can achieve the same success in mining that Bankers has so far in oil and gas.

Tirex’s copper and gold production is right around the corner, with help not only from the EBRD, but from a $1 billion/year mining partnership with Ekin Maden (a private Turkish mining company). Over its huge land package hosting 17 known historical deposits, 9 of which were former producing mines, Tirex has to-date invested $25 million in the project, including: flying Albania’s first ever airborne geophysical survey, identifying more than 110 geophysical anomalies (most of which have never been drilled), drilling 3 areas of the land package and carrying out significant ground geophysical and geochemical work.

With work being done by the likes of first movers like Bankers Petroleum and Tirex, Albania’s natural resource sector stands to gain from direct investment and present-day technological advancement. While still one of the poorest countries in Europe, Albania’s development is riding a wave of growth echoed by Berisha’s statements last week. Boasting a flat tax rate of 10%, a membership in NATO and an upcoming 2015 entry into the EU, confidence among Albanians regarding the future of their country is riding high.

Whether foreign markets reflect that sentiment is still undecided. As well, an ongoing evaluation of the country’s ability to become a resource industry leader is being updated with each news release coming out of the country. It is likely that through the actions of Tirex and Bankers the market will see whether each company’s belief in Albania’s potential is not only merited, but whether Albania is indeed the next European resource leader.

G. Joel Chury
ProspectingJournal.com

Disclaimer: The author does not currently hold any shares of any of the companies mentioned in the article. However, some members of Cordova Media Inc. which owns the ProspectingJournal.com, may or may not have interests in one or more of the companies mentioned at the time of publication. Staff members from the Prospecting Journal reserve the right to acquire interests in any of the companies mentioned after 36 hours have elapsed upon initial publication of this article. West African Iron Ore is a sponsor of ProspectingJournal.com.


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