Aur rides the copper highway inspite of a few bumps

With the firing of its chief financial officer and the announcement of a new listing on Chile’s Santiago Stock Exchange, it has been an eventful week for Aur Resources (AUR-T).

But as long as the price of copper continues on its strong run, analysts say the metals price will be the most determinate factor in the Toronto-based company’s share price.

Still the dismissal of a company’s CFO who’d only served for roughly one year — at a time when the books looked so strong — can be interpreted as a red flag by some.

But the copper pure-play company’s vice-president of corporate affairs, Peter McCarter says the dismissal of former CFO John Knowles had nothing to do with any “financial, accounting or integrity issues.” Instead, McMarter says, the firing was simply a personnel move.

Toronto-based Orion Securities’ analyst Pierre Vaillancourt says he was surprised by news of the firing.

“Knowles was generally well regarded by the analyst community,” he says. “It was unfortunate that he was there only one year.”

Another analyst who doesn’t want to be named says the firing had to do with a personality clash between Aur’s chief executive, James Gill and Knowles.

“Jim Gill is a prince of an operating guy,” the analyst says, “but he’s difficult to work with. (Knowles and Gill) are eminent professionals. It came down to a personality conflict.”

McCarter wouldn’t give a timeline as to when a new CFO would be brought in. In the mean time vice-president Ed Guimaraes will take on the role.

However long Guimaraes’ tenure runs, he won’t have to worry about a lack of funds to preside over. Currently the company has about US$360 million in cash and working capital.

With that kind of financial clout Aur is able to push ahead with exploration at its Andacollo mine in Chile.

While Andacollo is already one of the company’s major copper producing mines the other being Quebrada Blanca a significant sulphide resource lies beneath the ore currently being mined.

McCarter says Aur expects to have a feasibility study completed “hopefully by next month.”

A pre-feasibility study, carried out in 1998, indicated that a capital investment of US$280 million could bring the mine into production of 174 million lbs. of copper and 55,000 oz of gold annually for 15 years.

As it stands now, the resource contains roughly 311 million tonnes of ore at an average grade of 0.46% copper and 0.15 grams per tonne of gold.

The operating mine at Andacollo is already producing roughly 46 million lbs. of cathode copper annually. Aur owns 63% of the mine together with partners Compaa Minera del Pacfico who hold 27% and ENAMI who hold the final 10%.

As for its other major asset in Chile — Quebrada Blanca — the open pit mine produces roughly 176 million lbs. of cathode copper annually.

Aur has a 76.5% interest in the mine.

When taken with coppers high price, such enviable assets have fuelled a rebound from Aur’s shares slump in early February.

At the time, the Globe and Mail quoted BMO Nesbitt Burn’s analyst Victor Lazarovici as saying Aur’s 2006 copper shipments would fall 13% to 167 million lbs. in 2006 from 2005 levels because of the closure of the Louvicourt mine, near Vald’Or, Quebec in July, 2005.

But with Aur’s Duck Pond project in Newfoundland coming on line in the fourth quarter of this year at a cost of roughly $79 million, the production lost with the closure of Louvicourt should be made up.

Duck Pond is expected to be a 1,500 tonne per day mining operation, which would generate an average of 32 million lbs. of copper and 53 million lbs. of zinc annually over an eight year mine life.

While Louvicourt turned out a much higher amount of copper — 4,300 tonnes of ore per day and 86 million lbs of copper 39 million lbs of zinc a year — Aur only held a 30% interest in the mine. Teck Cominco (TEK-T) held a 25% stake and Novicourt (NOV-T) held the final 45% stake. Aur holds a 100% interest in Duck Pond.

In other news, the company announced it will become the first Canadian company to list on the Santiago Stock Exchange. It says the listing will address both institutional and retail investment interest in the South American Country.

Vaillancourt says the listing is not of major significance to the Street.

“If it can generate more investors and make them more well known than there’s nothing wrong with it,” he says. “But generally, it’s a minor thing.”

In Toronto on Apr. 21, Aur’s shares closed up 2.8% or 45 at $16.47 on roughly 1.2 million shares traded.