ARU Management making all the right moves (long post)
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Aurelian Resources Was Stolen By Kinross and Management But Will Not Be Forgotten
The company whose shareholders were better than its management
Message: The Mine Card
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I wonder what the anxiety level is in the boardrooms of the corporations that are eyeing ARU for take over? Do we wait and pay more or do we move now? A few months ago gold was 20% cheaper, the CDN dollar was 11% cheaper, Ecuador was perceived as being high risk and although ARU had lots of potential it was trading cheap at $6.50+/-. In fact there appeared to be a concerted effort drive down price. With the credit crunch in full swing a lot of potential suitors would have had to sit on the side lines if it had been put in play. I expect that if someone had made a move on ARU they could have got it for a steal. What a difference a couple of months makes or in our case, even a couple of days. With the release of the resource estimate there is now a very conservative starting point for a deposit that is still open and expanding. In-situ gold value, based on 90% recovery is roughly around $10 billion USD. During the past week public statements and more importantly public action supporting those statements have been very supportive of mining companies that follow the rules/guidelines that Ecuador believes they should (see Corriente Resources Inc – TSE: CTQ and Salazar Resources Ltd. TSX VENTURE: SRL ). As Fearless implied in his “News” posting the mining climate in Ecuador is looking starting to look pretty good, certainly no worse than anywhere else in south america. Taken together, the drop in the US dollar, the increase in gold prices and positive government action, and people are starting to look at Ecuador and say that it’s a place you can invest in mining. The result is that the share price of ARU is on the move. Up about 50% since it was beaten up in late August. Now ARU is making the right moves to further reduce uncertainty around the FDN deposit. Everything that they do to move the project towards mining increases the value of ARU. When someone buys it they will want to bring the mine on stream as fast as possible. The proposed adit not only gives them access to the deposit for drilling it also provides access for drifting into the deposit to check inter-hole grade consistency to prove up the statistical model, allow for bulk metallurgical testing to tighten up the 85 to 95% recover estimate, and to shift inferred resource estimates to reserves. These moves alone will add billions of dollars to the share value of the company. Add to this that the company is moving forward with permitting, drilling off the deposit and testing high priority exploartion targets. Things are looking very very very good for us ARU longs and we should all be sending hugs and kisses to the management at ARU for what the job they are doing to increase the value of the company. Now back to the anxiety level of the majors that are sitting in their boardrooms trying to figure out if they should wait and see how much risk can be driven out of an ARU/FDN acquisition before they make their move. Every day that the dollar slides, the price of gold goes up, that resources estimates/reserves go up, that another target is drilled, or that perceived risk decreases the cost of acquiring ARU will go up. At some point soon we are going to get to the point where the cost of waiting exceeds the risks associated with acquiring. My hope is that this doesn’t happen for another year (give or take) so that ARU management can continue on the path of getting the company ready for sale and so we can get over the royalty bump in the road. Then again it could be any day (especially if those investment bankers want it counted in their 2007 bonus cheques). Assuming no BIG but pleasant surprises (like another discovery or significant change in resources/reserves) my off the cuff estimate is that we will see the company sold at around the $35 to $40 mark. It wouldn’t bother me at all if some of the more aggressive estimates posted on the site come true.
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