Investors join forces online to protest Aurelian merger

PETER KOVEN, Canwest News Service

Published: 10 hours ago

For the past few years, Aurelian Resources Inc. was the darling of retail investors. But some of those same people are mobilizing online against the company's proposed $1.2-billion merger with Kinross Gold Corp., an effort that shows how the Internet has brought retail investors together and given them common causes.

A message board on the Agoracom website has become the venting ground for furious Aurelian shareholders who are watching Kinross buy out their company at a considerably lower price than it was trading at earlier this year. They have sent an angry letter to analysts and news organizations decrying the deal, and the companies themselves have taken notice.

The retail crowd cites a number of alleged problems with the Kinross arrangement, but the main argument involves the investment climate in Ecuador.

Aurelian shares were flying high until April, when the government put a temporary halt on its mining sector with the infamous "Mining Mandate." The stock almost immediately lost more than half its value.

Conditions in Ecuador have improved, and the investors argue Kinross is taking advantage of lingering political uncertainty to steal Aurelian and its world-class Fruta del Norte gold deposit at a bargain-basement price before Ecuador establishes its Mining Law. The fact that Kinross shares have dropped nearly 15 per cent since the deal was announced (thus lowering the value of the share offer for Aurelian) enforces that belief.

Patrick Anderson, Aurelian's chief executive, said in an interview it's not so easy to dismiss the political risk that has weighed down his stock.

"I think a lot of people are thinking of our share price in terms of what it was six months ago, or even a year ago - or even before the election of the current administration in Ecuador, when we didn't have such a significant political risk discount," he said. He called the retail investor letter a "pretty skewed document."

© The Gazette (Montreal) 2008