Is AUR undervalued?1. Currently has about $3.50/share NET CASH (HBM, by comparison, has no net cash);
2. Sells its copper for an LME registered Grade A premium to spot of about 8 cents extra;
3. Each 5 cents over $2/pound that AUR sells ITS copper for will add at least 8.5 cents/share to Earnings of $1.79. A $3/pound average in 2006, for example, will result in earning of at least $3.49/share with cashflow around $5/share and NET CASH in the bank around $6/share.
4. Duck Pond comes on stream in Q4. A full year of this 100% owned less than zero cents/pound producer will at about $1.50/share in earnings BY ITSELF to what is earned by AUR in 2006;
5. Andacollo expansion (Final Feasibility due any day) will help AUR to almost double production to near 400 million pounds while decreasing costs to around 50 cents/pound (has 60,000oz/year gold by-product) by 2009/10;
6. AUR has about 12 Billion pounds of reserves, not counting the reserves that would be found in its developmental properties (I am only counting operating mines by 2009);
If you believe that the copper bull market will continue and that copper will avergage over $2/pound going forward than AUR is the BEST stock when held to the standard of upside potential v downside risk as they are increasing production and decreasing costs going forward. Buy with confidence and hold with conviction.