News

February 13, 2008

Time For Uruguay Minerals To Come Up With Some Excitement

By Charles Wyatt

Did nobody ever tell Tony Shearer, chairman of Aim and TSX-listed Uruguay Minerals Exploration, that buying back the shares of one’s company is seen as an indication that the board have run out of ideas as to how best to spend money in the interests of shareholders? In January his company bought back 50,000 shares at a price of C$3.46 having announced its intention to spend up to C$2 million in total on buybacks. The shares were immediately cancelled and the price is now C$3. To be fair, chief executive David Fowler, who’s based with his team in Uruguay, explains that the whole C$2 million may not be spent. The planned buybacks are more in the way of hoovering up loose stock. In any case the company can certainly afford it as it’s generating plenty of cash from its Minas de Corrales gold operations.

Even so, given that Uruguay Minerals has stated its intention to try to acquire a near-production 500,000 ounce plus gold property in South America if it can find one, the buyback looks odd.  But it’s not fair to lumber David with the responsibility - the interpretation in London is that the prevailing strategy is a trade-off between Shearer the banker and Fowler the mining-oriented former finance director. The buy-in appealed to the banker, while the mining man liked the opportunity of...