CIBC Highlight PageAurelian Resources Inc.
Scarcity Has A Price And It's Higher Than Here
As of Jan. 24, we are initiating coverage of Aurelian Resources with Sector
Outperformer-Speculative rating and a PT of C$20. Although we can
quantify the value of its deposit and assess its upside, we cannot predict the
actions of the Ecuadorian government and hence our speculative qualifier.
Our investment thesis on ARU is simple. It holds the rights to a very large
profitable gold deposit in an era where there are few similarities. We think
that there will be the potential for multiple bidders for the company as gold
producers have outgrown Mother Nature's supply capabilities.
The biggest question remaining in our mind is when a suitor might show up.
With the likelihood of Ecuadorian Constitutional Reform coming in 2008, we
think the prospects for heightened corporate activity is within our
investment horizon of 12- to 18-months.
The FDN deposit is unique among gold occurrences for its size and the
speed at which this discovery has grown. While the term world class has
often been overused, it certainly is not in this case. Prospects for increased
resources appear excellent both regionally and at the main deposit.
Stock Price Performance
Sector Outperformer –
Speculative
Sector Weighting:
Overweight
12-18 mo. Price Target $20.00
ARU-TSX (1/23/08) $7.20
Key Indices: None
3-5-Yr. EPS Gr. Rate (E) NM
52-week Range $5.55-$10.23
Shares Outstanding 134.6M
Float 110.0M Shrs
Avg. Daily Trading Vol. 820,000
Market Capitalization $969.1M
Dividend/Div Yield Nil / Nil
Fiscal Year Ends December
Book Value NM
2007 ROE (E) NM
LT Debt NA
Preferred Nil
Common Equity NM
Convertible Available No
Earnings per Share Prev Current
2006 ($0.04A)
2007 ($0.22E)
2008 ($0.10E)
P/E
2006 NM
2007 NM
2008 NM
Cash Flow per Share
2006 ($0.01A)
2007 ($0.03E)
2008 ($0.03E)
P/CF
2006 NM
2007 NM
2008 NM