Hi Rick / Thomas
Here is part of a report by Kaiser in Oct 97. In Dec 97 he put on a sell...stating company needs reorgainization...Sound like it's underway. Rick got stuck with ARB.. Thomas why are you following this one?
Regards Don
Although Aranlee was launched in 1995 by Yorkton as a Labrador exploration financing vehicle, the company's future has since been tied to projects in northwestern Argentina and Kazakstan. Most of Aranlee's Labrador projects were concentrated in the Staghorn Lake area and joint ventured with NDT. Aranlee has spent about $1.5 million on Labrador with poor results. The Argentine initiative started in late 1995 when Tony Williams of the Dragon Group and Barry Rayment, formerly of the Bema group, assigned a portfolio of properties in the Juyjuy and Salta provinces they had optioned from Jorge Darocca. The terms were quite stiff, with the flippers (Starcross Properties Ltd) collecting US $550,000, retaining a 30% carried interest, receiving 1,600,000 shares in stages, and sticking Aranlee with underlying option payments of US $7 million by 2001. In addition Aranlee has an option to acquire 100% of the Pairique project for US $3,190,000 in stages by 2002.
Darocca has become infamous for his ability to describe incorrectly certain property claims in Salta, file a complaint when another party claims what appears to be open ground, and obtain rulings declaring his claims valid. The most famous case involves the Cerro Samenta project of Mansfield Minerals, which tentatively belongs to Corriente while a legal dispute between Mansfield and Darocca works its way through the courts. Aranlee is the beneficiary of Darocca's magic in two cases involving RTZ. One is the Pairique prospect in Juyjuy, and the other is the El Acay in Salta. The Parique is a 10,000 ha block that covers a collapsed caldera that hosts a number of strong alteration zones. This property falls within the Juyjuy province's mineral reserve. RTZ initially had a deal with the government on this property, but was kicked out by the mines ministry on default grounds that RTZ disputes. Darocca, who is politically very well connected in this part of Argentina, subsequently was awarded the project. The Pairique project is presently bogged down in litigation. In the case of El Acay, RTZ applied for a claim covering a large alteration system interpreted as a major porphyry system. Darocca had applied for the same ground, but recorded the wrong coordinates. Darocca was able to persuade a judge that as an experienced prospector he was obviously applying for the alteration zone, not the moose pasture his coordinates described, and his claims were adjusted and declared valid. After RTZ lost two rounds of appeal it threw in the towel and did a deal with Aranlee on October 14, 1997 whereby RTZ will pool the non-overlapping part of its Saladillo claim with Aranlee's 4,800 ha El Acay claim and option 100% of the combined property. To earn its interest RTZ must assume the underlying payments of US $830,000 due over 4 years, a US $1 million payment within 180 days of a bankable feasibility study, a minimum US $2 million exploration over five years (this part looks mandatory), and complete a bankable feasibility study within five years. Upon delivery of a bankable feasibility study Aranlee will have 180 days to back in for a 40% interest by reimbursing RTZ 1.75 times its exploration costs. This is excellent deal for Aranlee, and reflects the world-class potential RTZ sees in the El Acay project. If RTZ walks away after spending US $2 million because the system isn't as big as it thought, Aranlee will receive title to the Saladillo claim. Aranlee hopes to work out a similar deal with RTZ on Pairique, but that will probably not happen until the legal system has beaten up RTZ some more. Aranlee has also acquired directly through claim application a number of prospects generated by its geological crew.
As if Aranlee didn't have its hands full funding both exploration and an onerous property payment schedule, Tony Williams and Barry Rayment decided that diversification into Kazakstan would be a strategic move. In February 1997, before the Busang Bust destroyed the junior financing market but after the market had already become leery about doing business in Kazakstan, Aranlee agreed to acquire 67% of a Kazakstan company called Agadir from Kazakstan Minerals Corp (KMC.U-T: $0.79) for US $700,000 and 2,200,000 shares. The first US $350,000 payment will be due within 180 days of the deal closing, which has not yet happened. Agadir holds 100% of the 970,000 ha Agadir license and a pending application for the 200,000 ha Balkhash license. These are grassroots licenses with numerous documented mineral occurrences.
The market has shunned Aranlee for obvious reasons. Tony Williams and his Dragon group are managers of two London-based Yorkton deals that have turned into disasters for investors: Kazminco and Arian Resources Corp (ARA.U-T: $$0.85 ). These stocks are down substantially from their highs prior to Frank Giustra's abrupt departure from Yorkton last year over a dispute with the Calgary office about how to run the brokerage firm. Kazminco is focused on Kazakstan, while Arian is focused in Far East Russia. Both companies were cobbled together on the Canadian Dealing Network before listing on the TSE, and both are controlled by two offshore trusts called K Trust and Crescent Trust (officially owned by Sergey Kurzin) and the Yorkton-related Ophir Investment Fund. Although these two companies apparently have healthy treasuries, investors seem unimpressed, and there is no sign yet of a bottoming price trend. One has to suspect that there are squabbles going on behind the scenes. In comparison to these two companies, Aranlee's balance sheet is a disaster. The Dragon group and Carlo Civelli's Clarion Finanz took down a private placement of 1,500,000 units at $0.46 in June 1997, but the June 30/97 quarterly shows zero working capital plus a US $1.4 million current debt owed to Dragon Management. According to director Stephen Kay, the current management group owns about 1.5 million shares out of the 18,052,468 shares issued. That is not much of an equity stake. When you consider that heavy option payments start to kick in during 1998, you have to wonder where the money is going to come from to pay Darocca. In the post-Busang environment Aranlee's move into Kazakstan really stretches the market's credulity. At this point none of Aranlee's projects in Labrador, Argentina or Kazakstan has anything approaching a discovery, and in the absence of working capital that allows the junior to keep plugging away, the only hope for any joy comes from farmouts. Admittedly the Dragon group can keep reaching into its pockets and advancing the money, but what happens when they run out or decide enough is enough? Aranlee is vulnerable to losing a good portion of its Argentine portfolio through payment default, or suffer heavy dilution when the Dragon group decides to convert Aranlee's debts into paper. At the moment Aranlee's main hope is the El Acay farmout to RTZ, but because this is a grassroots play, it will be a while before we hear anything that might attract investors and move the market up. Aranlee is a stock begging for a corporate reorganization and crystallization of a more precise focus. Aranlee has 20,651,757 shares fully diluted not counting the 3.4 million shares issuable for the Argentine and Kazakstan assets. Until we see Aranlee's balance sheet cleaned up and financing in place to carry on exploration, this stock looks like a big opportunity cost for bottom-fishers. Kazminco and Arian might be better bottom-fishing candidates, though I have not yet checked them out. Aranlee does have a very good web site, with my only complaint being that the most recent quarterlies have not yet been posted even though they are out. I wouldn't want to own Aranlee, but it will be worth keeping an eye on this company to see what the Dragon group does to turn it around. |
