AAR - Astral Resources

[IGO4IT]

Hi Guys,

Can anyone help me with an estimated date for production in Koongie park? or at least an estmiated year ?

Cheers,

 

[kyrondgm]

Any explanation for the sharp drop in share price for AAR over the last month or so? Need more positive announcements!!

 

[hangseng]

Any explanation for the sharp drop in share price for AAR over the last month or so? Need more positive announcements!!

AAR is oversold, the RSI has well and truly confirmed this. The company was trading into a positive trend just prior to the 28/2 and has not recovered since. It is seemingly off the radar so to speak.

There is no fundamental reasoning for AAR being sold down today. If you have close look at the trades you will see all we have is very small trades and less than $250k total sold, you can make your own assumptions on that.

A company with excellent cashflow, gold remaining unsold, high grade gold continuing to be mined at Mandilla and Koongie Park that has already had literally millions spent over many years proving it up. Koongie is in the best recognised Zinc country in the Kimberley region (see WA Govt Geo) and has shown excellent inferred resource results.

My view, I hold and an (unexpected) opportunity to increase my holding has presented itself. Fat Prophets has also made there position clear on AAR.

 

[kyrondgm]

Cheers for ur wrap-up hangseng...
What exactly were fat prophets saying about AAR? I checked the website but didn't manage to come up with anything.

 

[hangseng]

Re: AAR - Fat Prophets' buy recommendation of the week

Fat Prophets Mining has a highly enthusiastic write-up of AAR in their weekly newslettter today.

They said members should 'await a buying opportunity', which could come "any day now" on the back of an announcement re the Koongie Park Pre-Feasibility Study results.

Personally I think AAR will be out of reach "any day now", so I got in this morning.

(Tho it went up at the open from .063 to .064, which means it's still cheap.)

It's only FP Mining's second buy recommendation of 2007. Some quotes:

FP believes AAR is 'very modestly valued', and 'should certainly be on the radar screen of those Members wanting base metal exposure'.

'Given the clear and sustained break above the 6-year base formation, the long term outlook for AAR is positive.'

'Given our bullish stance on base metals, we are constantly on the lookout for new, undervalued oportunities for members. We believe that Anglo Australian Resources represents one such opportunity. We believe the upside is enormous.'

And on to describe AAR's Mandilla gold project in WA, whose 'first gold production has exceeded all expectations'. Mandilla 'is expected to generate $8-10 million nett cash after costs this year'.

'When we look at the mammoth share price performances from our previously recommended emerging base metals opportunities like Fox Resources, Terramin Australia and Copper Strike, we believe AAR has a lot of potential upside, with no significant downside.'

Then to describe AAR's second signature project:

'AAR owns 100% of the Koongie Park Project, which comprises an advanced lead-copper-zinc deposit at Halls Creek... AAR has completed extensive work worth around $7 million on the project and we await the release of results any day now from a Pre-Feasibility Study.'

'The surge in base metals prices in recent years has undoubtedly boosted the development economics of the project.'

'Our back of the envelope calculations suggest a possible production scenario could generate 30,000 tons of zinc metal annually with a cash operating cost of .08c per pound. This wuld generate a very healthy operatiung margin indeed, compared to a current spot zinc price around $1.90 per pound.

'Accordingly, we keenly await the release of the Pre-Feasibility Study.

'AAR could receive a substantial re-rating on the back of the development potential of its Koongie Park project."

Etc etc. It is the most glowing write-up published by Fat Prophets since well back into 2006 IMO.

Fat Prophets are saying as per Robroy above and I believe you will see a substantial re-rating of AAR very soon.

Also see the Troy Resources posts recently regarding the recent capital raising of TRY. I may be way off the mark but a lot of coincidental information is in both the AAR and TRY past reports and with John Jones on the board of both companies, I can't help but think there is something to this.

I first thought the trading halt of TRY was also related to the trading halt of TGS, but this has proven otherwise.

AAR now overdue to provide updates on both Koongie Park and Mandilla. Now we have TRY with far more cash than they required. I am completely speculating, but also searching to see if anyone knows of anything more substantial.

 

[hangseng]

I am of the firmly of the opinion that AAR is now primed for a takeover.

Reasoning:

• low market Capitalisation of $29m
• trading at p/e of approx 17:1
• no indicated debt
• $1.7m cash on hand as at Dec 2006
• forcast to have over $10m cash in 2007
• self funded PFS for Koongie Park
• unhedged Gold reserves from Mandilla
• unhedged Zn resource at Koongie Park
• Koongie Park with and estimated Zn resource value of over US$800m
• Koongie Park with and estimated Zn resource value of over US$400m
• Mandilla indicated as having expansion potential
• very low current sp
• I haven't placed a value on the indicated Ag resource estimate. However at 29.6 g/t of a total indicated resource of 4.5Mt and Ag at around US$14oz the value is obvious.

Source: AAR report Jan 2007:

[*]Sandiego Deposit - 2.4 Mt @ 5.3% Zn, 1.3% Cu, 0.5% Pb, 26.2g/t Ag

[*]Onedin Deposit - 2.3 Mt @ 4.9% Zn, 1.1% Cu, 1.0% Pb, 32.8g/t Ag

[*]Virtually all Mineral Resources are classified under the JORC Code as
Indicated Resources

[*]Total Indicated Resources are 4.65 Mt @ 5.2% Zn, 1.2% Cu, 0.8% Pb,
29.6 g/t Ag

In my view AAR at .058cents is clearly undervalued and a prime target for takeover or at minimum will attract a significant investor to develop Koongie Park. Will it be TRY? I really don't know. What I find interesting though is two of the board members of TRY are also board members of AAR, who would be clearly aware of AAR potential and real position and TRY is cashed up for some reason from the recent cap raising. I see a re-rating about to occur.

Fundamentally AAR is a classic shares investment opportunity at ground floor level with the potential of significant returns on capital.

 

[champ2003]

I am of the firmly of the opinion that AAR is now primed for a takeover.

Reasoning:

• low market Capitalisation of $29m
• trading at p/e of approx 17:1
• no indicated debt
• $1.7m cash on hand as at Dec 2006
• forcast to have over $10m cash in 2007
• self funded PFS for Koongie Park
• unhedged Gold reserves from Mandilla
• unhedged Zn resource at Koongie Park
• Koongie Park with and estimated Zn resource value of over US$800m
• Koongie Park with and estimated Zn resource value of over US$400m
• Mandilla indicated as having expansion potential
• very low current sp
• I haven't placed a value on the indicated Ag resource estimate. However at 29.6 g/t of a total indicated resource of 4.5Mt and Ag at around US$14oz the value is obvious.

Source: AAR report Jan 2007:

[*]Sandiego Deposit - 2.4 Mt @ 5.3% Zn, 1.3% Cu, 0.5% Pb, 26.2g/t Ag

[*]Onedin Deposit - 2.3 Mt @ 4.9% Zn, 1.1% Cu, 1.0% Pb, 32.8g/t Ag

[*]Virtually all Mineral Resources are classified under the JORC Code as
Indicated Resources

[*]Total Indicated Resources are 4.65 Mt @ 5.2% Zn, 1.2% Cu, 0.8% Pb,
29.6 g/t Ag

In my view AAR at .058cents is clearly undervalued and a prime target for takeover or at minimum will attract a significant investor to develop Koongie Park. Will it be TRY? I really don't know. What I find interesting though is two of the board members of TRY are also board members of AAR, who would be clearly aware of AAR potential and real position and TRY is cashed up for some reason from the recent cap raising. I see a re-rating about to occur.

Fundamentally AAR is a classic shares investment opportunity at ground floor level with the potential of significant returns on capital.

How can you have a P/E when the company isn't earning making any money? You can't!

 

[hangseng]

How can you have a price P/E when the company isn't earning making any money? You can't.

You should read the December 206 report displaying earnings of .34cents per share and $1.7m profit.

I suggest you also look at the recent gold sales from Mandilla production in 2007 and unsold processed gold.

All quantifiable and indicated in company reports.

 

[speves]

Your quite right..if it isn't making money then there can't be a PE Ratio.

But it is making money......gold producer.

 

[hangseng]

Your quite right..if it isn't making money then there can't be a PE Ratio.

But it is making money......gold producer.

Oh so true speves and lots of money at that.

 

[speves]

Which is adding to the puzzle of why such a low SP. The market never lies, in that the SP always reflects market sentiment rather than actual company value; but you have got to wonder why sentiment is not been with this stock.

There are explorers out there that have a significant higher SP with a much less estimated resource that are not even producing

 

[champ2003]

You should read the December 206 report displaying earnings of .34cents per share and $1.7m profit.

I suggest you also look at the recent gold sales from Mandilla production in 2007 and unsold processed gold.

All quantifiable and indicated in company reports.

Appologies, you are right in saying that they are making money due to production.

 

[hangseng]

which is adding to the puzzle of why such a low SP. The market never lies, in that the SP always reflects market sentiment rather than actual company value; but you have got to wonder why sentiment is not been with this stock.

There are explorers out there that have a significant higher SP with a much less estimated resource that are not even producing

speves, one word accumulation and I also add to the potential benefit of an entity.

Would it not be to the benefit of TRY (or any other suitor) to have the sp as low as possible? If in fact I am right on the t/o assumption.

Completely speculating, why is there such a delay in any update of Koongie Park PFS and gold production out of Mandilla? Not having excellent news continually flowing is of benefit to nobody but TRY (or any other suitor) as it aids in maintaining a low sp.

I may be completely wrong in my assumptions and I am not suggesting that any information is being withheld. I am suggesting that accumulation is going on and the trend channel since last October supports this in a general sense.

I am definately suggesting that AAR is on the verge of a significant upward re-rating, which I believe is inevitable as AAR has only excellent future prospects and positive cash flow to report.

 

[speves]

To be honest I haven't really looked at the takeover aspect. It seems way to early in development to be a takeover target IMO....but happy to be proved wrong.

There has been much accumulating for sure , some by me...I think the term is "averaging down". Not a strategy that I would ordinarily subscribe to...but at less than 6c and producing unhedged AU I too am of the opinion there may be some price manipulation going on......

Time as always will tell.......

 

[hangseng]

True speves time will tell.

I am just extremely interested to see what TRY are going to do with the additional $12m they have raised that they clearly don't need. The investors who came in at $3.10 will be expecting a valued asset and some sort of premium though.

I just think this is more than just a coincidence and I actualy think AAR is ripe for a t/o as it offers excellent value at a low cost. It will have to offer AAR shareholders something substantial if in fact this is the case.

 

[bvbfan]

P/E of 17 isn't cheap!

Even for a resources bull market

 

[hangseng]

P/E of 17 isn't cheap!

Even for a resources bull market

I am not sure of the current materials average but in Nov 06 it was 15.5 and I did state AAR was at a slight premium to that.

Having now poured and sold further gold to the tune of A$9m and a futher A$1m remaining unsold and potentially another A$10m gold to be poured the p/e will very likely come down below the 15.5 mark.

Now have a look at the fact that a load of "bull market" resources companies fail to even indicate a p/e as they aren't producing anything at all.

Just because a market sends speccie shares rocketing does not make them a good investment long term. They are just that speccie stocks with no earnings. Don't get me wrong I utilise this as a means of earnings, but I don't regard them as an investment long term.

AAR has excellent earnings and also a quality Zinc/Copper project in the making with Koongie Park. Which is currently self funded at the study stage. AAR is an investment and at curent prices an excellent one at that.

I am pleased AAR has a p/e of 17:1 instead of showing nothing at all.

 

[bvbfan]

I'd rather look at a company of cashflow multiples or future projections, if its 8 or under then not too bad.

 

[hangseng]

I'd rather look at a company of cashflow multiples or future projections, if its 8 or under then not too bad.

Initialy I am going to be very pleased with an increase in sp, overall a return on equity is my ultimate on any stock.

I do agree that 17:1 is not fantastic but it is far better than a lot of others running on nothing but hot air at the moment.

However, going from losses to profit in 6 months and beyond looking even better is an excellent effort for a company that has also spent a considerable sum on Koongie Park to reach the stage of Jorc 'Indicated' resources and looking like having over $10m in the bank this year.

With gold, zinc, silver and copper rising AAR is looking better every day.

Bullish and fundamentally sound is the only way I describe my view of this company. Ultimately this is what makes companies, not unsustainable hype such as some U stocks. When the U bubble bursts watch people come flocking back to companies like AAR. By that time though AAR would have already run and they would be too late.

I am not saying al U stocks are bad, far from it. However a considerable number of them are going to fade away, along with peoples money.

 

[TheAbyss]

Quarterly just released confirms that all looks to be progressing well. Has anyone had a chance to review? Any comments?

Current production plus exploration projects point to a healthy long term outlook inmy view plus there is a sweetener regarding some potential U308 in WA.

Would be great if some analysis could be put up