Update on Negotiations
Reposted from bman1 at Agoracom ARU thread
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part 1
"Some more Gold Show info
Posted by: bman1 on January 21, 2008 07:14AM
In response to: Gold Show.... by hawkman2
Met Marla, Tim, and Patrick as well. Visited with Marla for a while and then went around to as many Ecuador companies as possible. They all seemed extremely positive. With that said, when we went to companies based out of Peru/Chile/Argentina, etc. they were very skittish about Ecuador.
I asked both Aurelian and Dynasty the same question on why ARU and CTQ were the first to enter discussions instead of Dynasty considering that Dynasty will be in production by next quarter. **WARNING, my personal gut feeling** There's more to this story than what's on the surface. After speaking to both of them, I'm really starting to get the feeling that they are both (CTQ and ARU) going to be targets of a takeover by the same company. I think it was ebear who said those two together could be potential takeover targets. . Obviously nobody could confirm/deny the story as they are very tight lipped, but that's just the feeling that I got.
On a postive note, after I made some jokes about our good friend Soto over at Reuters, Patrick did say that he is starting to fact check a bit more with the companies before he writes any articles. Funny what a few death threats do to a person's bias.
In one way its frustrating that they are so tight about information, but at the same time you have to have respect on the way ARU is running their ship. That confernce was full of some sleezy salesman. Saying a lot of things that should never be said and I found ARU and DMM to be very professional on what they said. The show is basically broken off into two tiers, the serious companies and the companies with sleezy salesman and showing off eye candy girls. The funny thing is I used to teach a few years back at a local college and I noticed one of my former students working for an unnamed company. This girl failed three of my classes twice and she is going to try to give me investing advice????? Afterwards, went up to a hospitality room for one of the companies and was talking to some of the VP's of this company. Best advice I heard was from one of the guys up there...."Be careful downstairs, you have to weed out who is putting your money into the ground and who is putting your money into their pocket."
part 2
Re: Some more Gold Show info
Posted by: bman1 on January 21, 2008 07:39AM
In response to: Some more Gold Show info by bman1
Can't believe I forgot the most important info
I asked Marla about the negotiations. She said ARU meets every Tuesday and Thursday with the government. CTQ and ARU are handling their negotiations separately but are in touch all the time to make sure they are presenting a united front.
Apparently, ARU brought in a 3rd party to the process. An independent mining analyst that is very respected in the industry who is trying to show Ecuadorian officials what a windfall tax did to Papa New Guinea's and Mongolia's mining industry. Brilliant move #1.
They have also started giving the Ecuadorian officials analyst reports on the stock. This way the officials can see how investors view their country and the risk vibes they are sending out there. Brilliant move #2.
My next question was in regards to this so-called Canadian mining expert that Ecuador was bringing in to negotiations. She said he hasn't entered the discussions yet, but they know who he is and he is very positive on a non-windfall system.
Negotiations should, key world should, be done in the next few months. The mining laws shortly after.
Here's another kicker, the negotiations are for FDN only, and the rest of the concessions will fall under the new mining law. That's kind of where my hunch from my previous post about CTQ and ARU getting bought out together started from.
ARU has no problems of paying a tax, but would prefer it to be a royalty base. Even if it equals out to whatever the windfall tax, it's just so much clearer to work on a set percentage, than a floating system. I asked her what happens if gold goes up, does the windfall start point change, she said yes and that's exactly why they'd rather have a set system than a windfall. Also made it very clear that the ministry of mines had no idea a windfall was being proposed, it came from the tax department.
One more question I asked is that it seems that the Ecuadorians are very pro-mining in negotiations and face-to-face meetings, but send out completely different vibes when they make their laws or news releases. Does she believe that they are just not knowledgeable about the industry and making mistakes or could there be a different motive here by the government? ARU's belief is they are very raw to the mining industry and they are trying to apply oil and gas knowledge to the mining industry. Marla did say there's a geologist within the Ecuadorian side and he definitely understands the mining side, but the rest of them they are trying to help them understand.
Personally, the Ecuador government I think needs to be shown that costs in mining are almost 20-25 times more than in oil and gas. Once they see this, we should have an agreement in place. I feel confident that is what ARU and CTQ are trying to show them.
I'm sure I'm forgetting things, so I'll put out more info as I remember it. I know I'm all over the map in my posts but I’m trying to give you as much information as I got today."
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