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Strategies & Market Trends : Ride the Tiger with CD -- Ignore unavailable to you. Want to Upgrade?

To: PaperPerson who wrote (51687)	5/13/2006 12:36:23 AM
From: ogi	Read Replies (1) \| Respond to of 313036

Hi Michael: I am just winding down for the night and can't check into your good question at the moment. However, assuming your numbers are accurate and I believe they are let me just make a couple of comments. The "weakness" in a share structure you wish to be vigilant about in an investment, I think of as "sloppiness". Certainly the more shares the more the pie is divided but that does not have to mean sloppiness or weakness. What is pertinent is the relationships between the number of shares and the assets, the amount of cash brought into the company upon exercise of the warrants and who owns the shares and warrants. In the case of Aurcana, they have purchased a fully operational 800 tpd mine, with a defined resource around a mil tons and lots of blue sky. They did this as a .25 cent stock and the dilution was unavoidable. Keep in mind though that the whole transaction was a fait accompli from the moment it was announced. That means there are very strong hands involved in these shares, not weakness. Who are the principles and what is thgeir track record? Will it churn? Yes. Will the shares be distributed in the process of warrants being exercised? Yes.Once that distribution is done, warrants exercised etc then the stock will be ready to rise again. In a situation like this the additional shares can actually create a more orderly market. Meanwhile, what is the value of an exploration company that goes from sinking holes in the hope of finding ore grade material, to an operational miner with defined reserves in 3- 6 mos? Currently the market is valuing Aurcana at a total market cap of about $26 million. Dirt Cheap and not representative of a weak share structure, just necessity. Take a look at GGC, a mil ton resource, upside exploration and and a 300 tpd mill with a current mkt cap of approximately $85 mil.Closed at 2.37 today. Suggests to me that AUN with 2.5x the mill capacity could be an easy triple from here, maybe more. Once in operation their mine will be evaluated by its actual performance. The risk at this point is in the vagaries of being a miner, there are lots of possible roadblocks to success or just bumps along the way but the risk reward ratio is very very good.IMHO Lots of companies issue too much stock as part of a planned self enrichment exercise, achievement is not critical to those types, thus weak shares.Under achievement and being forced to issue excess shares cheaply because of a depleted treasury is another warning sign that weak shres are a problem. That is not what I am seeing. Hope these thoughts are helpful. Ogi