Monday, April 21Monday, April 21
So much for saying "hope this is the last post on Ecuador mining"
https://incakolanews.blogspot.com/2008/04/so-much-for-saying-hope-this-is-last.html
Total madness in the markets this morning over this Ecuador story, and almost impossible to be a small voice of reason with all the shouting that's going on. I'd honestly forgotten how shark-like the Canadian brokerage houses could be when they smell blood. Amazing to watch, and I pity the retail investor who reacts to their devious ways. Haywood in particular should be ashamed of themselves. In a note today they dropped their target on ARU to C$1.40, down from the $6 they called Friday (which itself was dropped from $12) This is:
1) playing ambulance chasing with the market prices (which coincidentally are set by the big Canadian houses and their pre-market bids...go boyz go)
2) spreading fear among the little players with statements that DIRECTLY contradict the Ecuador government (see comments below). Haywood says that Ecuador could nationalize and expropriate, while every single statement from every single person in authority in Ecuador says that is not true.
3) picking target figures out of a hat. Why $1.40? Why not $2? Or $0.50? Or $5.23 and a half? They justify it with a 1.0X price to net asset value calculation...why not 2.0X? ...Or if they really think Ecuador is nationalizing and expropriating, it should be 0.0X, no?
Pathetic. It's another day to remind yourself the disadvantages of being a small fish in a big pond. Personally I'm not selling a single share, even though I'm so underwater I'll need scuba gear soon.
Minister of Mines and Petroleum, Galo Chiriboga, is holding a press conference right now. In the press conference he is apparently presenting the new draft mining law to the world. Meanwhile, so far today we've had these comments from him (and he seems to like the word "absolutely"):
"What the decree is looking for is to adequately regulate the present situation of absolute dis-control, the absolute lack of criteria in the granting of concessions (up to now)...."
"...there have not been any confiscations...we are not nationalizing (the industry). We have taken absolutely nothing from these companies. What we are going to do is organize ourselves in a way that the wealth favours all Ecuadorians...."
(The country's mining industry is) ".....a fundamental industry, but it has to be adequately regulated and with mechanisms of competition and not favouritism....."
Chiriboga also mentioned this morning quite clearly that the current producing mines are the ones that will be allowed to continue during the 180 day period, and not the exploration mines like ARU. I'll repeat here that the mining decree still has a clear loophole in it (article 8, para 2), and it matters not what the intention was on this part. However, the gov't has the miners so nervy now that they'll probably play it meek and comply with the spirit of the decree rather than try any hardball tactics.
Finally, I've mentioned before how I admire the Coffin brothers for what they do. I don't want to reprint everything they wrote in their newsletter dated today and entitled "Left Field Rising..." because they run a subscription service and fair is fair. However here's a small part of what they said about Aurelian (there are plenty more words of wisdom from them about Ecuador in the newsletter)
"..Holding or buying ARU at this point is a bet
on the Ecuadorian government being
sensible going forward, and neither more nor
less than that for the time being. Events
have knocked the price back to our initial
coverage, but well below later buys. FDN is
a target for bulk underground mining that
would have a relatively small development
footprint. We still think FDN is likely to be
mined, and to be mined by ARU. We
wouldn’t try to guess where the stock will
bottom, but would expect that to happen in
the coming week. Trading down costs would
make sense, but with a realization that gains
are not likely until more is on the table from
the Ecuadorian government..."
Labels: (ARU), (ARU.to), ARU, ARU.to, aurelian, chiriboga, Ecuador, mining law