₪ David Pescod's Late Edition December 5, 2006
AURELIAN RESOURCES (V-ARU) $30.29 -0.60
CORRIENTE RESOURCES (V-CTQ) $5.30 -0.06
IMA EXPLORATION (V-IMR) $0.57 -0.02
The surprise (at least to some of us) election of Rafael Correa in Ecuador has meant quite a correction in several mining stocks which have much of their exploration based in Ecuador.
Some of the major ones of course are Aurelian Resources and Corriente Resources (CTQ), but also there are companies with names like Lateegra Gold (LRG) Coastport Capital (CPP), Goldmarca (GML), etc. The chart on Aurelian shows you just how big the correction has been. Many wonder when the correction bottoms out.
One analyst however, is surprised that they didn’t get clobbered much more as Jim Dartnell of Wolverton Securities suggests he would have thought some of them could have been
swacked as much as 50%. Ouch!
In the last few days, Correa has already made moves suggesting that the oil and gas people are in for much tougher times and has reiterated his call for renegotiating Ecuador’s national debt, which of course has swacked Ecuador’s debt markets as well as its currency. So far no word as to new policies on mining, but that could be next.
Meanwhile, analyst Dartnell suggests, “one just has to be careful which South American or Central American country one is in, but there is enormous mineral wealth being and yet to be discovered.” Some of his favorite countries remain Peru, Chile and Mexico and beware, he suggests, of Ecuador and of course, Venezuela who just re-elected Hugo Chavez for another six years of excitement.
As far as stock picks, Dartnell is a fan of Northern Peru Copper, but also points out that this is the time of year that one should be looking at tax-loss selling. While many are looking at their tax situations and going to be throwing out some of their stocks that haven’t worked well, and they are no longer fond of, some of those situations, Dartnell suggests are going to get hammered. But some of them, he also thinks, might well be buying opportunities.
One of those he’s looking at is IMA Exploration, the company which got hammered because of the court decision which meant they lust the Navidad property in Argentina, but Dartnell suggests that the company now has about 75 cents a share in cash between cash on hand and cash coming their way from Aquiline and figures they will find a new project and something to do with it.
He also suggests (although he doesn’t have big hopes for it) there is always the chance the courts could reverse their decision or change it somewhat.
CGX ENERGY (V-OYL.U) $0.60 +0.10
One learns over time the old phrase “timing is everything” and just how important it might be. It was almost six years ago that we hosted a “Beer and Pizza” gathering and featured Kerry Sully, the former boss at Ranchman’s Resources who is now President of CGX Energy and had pulled off (almost single-handedly) the impossible.
Little CGX Energy had single-handedly managed to obtain a rig and finance drilling an offshore well that was about to start within 24 hours. And then the day after the Beer and Pizza that we hosted, one of the worst possible things that could happen, happened.
The Surinamese sent out a gunboat, not a very big one mind you, but bigger than anything Guyana had and all of a sudden, a border dispute started between Guyana and Suriname. That border dispute has been going on now for six years and talks finally start in a few days that just might end that border dispute. As a result, CGX never did get to drill their preferred target.
Meanwhile, CGX Energy has 9 million acres offshore Guyana, much of it prospective with 13 to 15 significant targets. The prime one however, is still in the disputed area and it is still one of their favorite targets.
Meanwhile, lots of things have happened as huge oil and gas discoveries have been made around Trinidad, which isn’t that far away as well as offshore Venezuela, which is also very close by some of their major offshore holdings.
With talks about to start with Suriname and Repsol about to spend $100 million drilling two test wells offshore Suriname next July/September, it looks like CGX Energy is starting to, once again, attract a little attention in the markets.
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