News

April 25, 2008

Broker Valuations For Ecuador’s Mining Companies Yo-Yo As Politicians Talk Tough

By Charles Wyatt

The price of Canadian listed Aurelian Resources is C$3.30, after the shares fell from C$8.50 almost in the blink of an eye. Brokers CIBC World Markets thinks the shares are worth C$12 each, while a rival outfit, Haywood Securities, thinks they’re worth C$1.40. That being the case the ideal solution is for all the clients of Haywood to agree a price half way between these targets and sell their shares to clients of CIBC Markets. All of them would then, presumably, think they had got a bargain. Whether or not they had, only time would tell, but in the meantime it’s amusing to ponder why two fairly reputable firms of brokers should have such extreme and diametrically opposed views.

Both have done their sums on Aurelian’s Fruta del Norte high grade epithermal gold-silver deposit, which holds an inferred resource of 58.9 million tonnes at 7.23 grammes per tonne, giving 13.7 million ounces. It’s on the radar screen of every producer and these will have been encouraged by the potential for further resource upgrades, and because gold recovery looks pretty simple.

Both brokers have also known that from the moment he was sworn in as president of Ecuador on 15th January 2007...