Aur, Louvem stocks perk up as analysts flash buy signals

On Sept 25, Ray Goldie, metals and minerals analyst at Richardson Greenshields of Canada, concluded in his report that Aur’s common shares could double in value to around $19 per share within 12 months. On the same day, Alex Doulis of McNeil, Mantha put out an even more bullish projection, stating that on a present value basis, each Aur share is worth $39.89, assuming a 75% interest in the project.

That kind of talk has sparked another round of buying in the shares of Aur, Louvem and St. Genevieve Resources (TSE), Louvem’s controlling shareholder. Aur has advanced from around $9.60 when the two reports were written, to $11.13 at presstime. Louvem and St. Genevieve have rebounded to $7.50 and $2.30 respectively.

The bulk of the new buying immediately following publication of the research reports, has been institutional, a trader with Burns Fry told The Northern Miner.

Both Goldie and Doulis completed their valuations based on a reserve base far in excess of that being reported by Aur. Based on drilling completed before holes 58 and 66 — Aur estimated geological reserves of 18 million tons grading 2.8% copper and 2.8% zinc with precious metal credits.

Doulis takes a simple block measuring 150×2,000×1,400 ft — a block which includes the area around holes 58 and 66 — applies a tonnage factor and gets 40 million tons with a net smelter return of $150 per ton.

Goldie conservatively estimates reserves of 18.4 million tons utilizing the polygon method to delineate reserve blocks. He notes that the potential is excellent to double these reserves and as a result, Aur’s share price should appreciate. Goldie calculates a net smelter return — the revenue received by the company after deducting transportation, smelting, refining and handling charges — of $84 per ton.

Holes 58 and 66, drilled down plunge toward the east, intersected 235.4 ft grading 3.66% copper and 130.6 ft assaying 6.98% copper. Combined, Goldie estimates the holes, which were released on Sept 20, added 8.7 million tons.

“There is no question that we’re looking in the order of 25 million tons and still growing,” Howard Stockford, vice-president of Aur told The Northern Miner. Although the company has been reluctant to recalculate reserves, especially after hitting in holes 58, 66 and 53B, Stockford concedes th at those holes “added significantly to the reserves.” The downdip projection along the eastern plunge is a high priority drill area, Stockford says. “The zone is getting wider and better grade down plunge.”

The 40-million ton figure is not new. Last August, when Teck Corp. and Cominco Ltd. plunked down $35.5 million for a 16% interest in Aur at $10.75 per share, both companies envisaged a play with the potential for hosting more than 40 million tons.

At the site, drilling continues to encounter deviation problems, especially at depths below 2,000 ft. “We’ve had to abandon a few holes and then restart them. That results in delays.” Stockford remains hopeful, however, that the next batch of drill results will be available by the end of October.

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