AAR - Astral Resources

[hangseng]

Still reading the report however it looks pretty good so far imo. 900 m Gold bedrock at Mandilla West, Onedin 60% increase in the copper resource, significant advancement at Koongie.

Still digesting the numbers and hopeful that a few others more skilled at determining the geological data will post.

Report is here http://asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00838139

Abyss
AAR have just confirmed that Koongie Park is not only an economical project but also a significantly profitable one. The 60% upgrade of the Onedin deposit significantly increases Cu, Zn and Ag with the very high silver grades add to an already exciting project.

The grades of the extension at Atlantis and Neptune also highlight how significant the Koongie Park project is now becoming. This in simple terms means the costs to mine will be lowered. They have now delineated an open pit mine and the metallurgical testwork is clearly successful and nearing completion.

I can't do anything but feel this project is a lot closer than we now believe it could be. AAR remains with no debt, over $6m cash and more to come from Mandilla.

I haven't done my numbers yet but I have no doubt in my mind that AAR is not only undervalued as stated by the company, it is way undervalued. AAR will not remain at these levels for much longer, especially once the roadshow commences.

Nothing but consistently positive news has come out of AAR. I have waited a long time for this and I am going to enjoy every moment.

 

[Scuba]

...feel this project is a lot closer than we now believe it could be.

Hi hangseng, I agree with alot of your interpretation and loved the sentiment...
However, when reading the announcement there were a few things that occured to me even though I haven't read the report entirely (just over lunch at work)...

Top of page 3 (PFS heading)

...and construction of a 500,000 tpa processing plant.

Is there alot of infrastructure in such a beast HS? If so, labour will be an issue if what I'm hearing at the moment is true...

Top of page 4 (Onedin open pit studies)

...techniques to successfully treat the transition mineralisation has been challenging and time consuming............. before any progress can be made to the open pit option........ Alternatively,...........

Seems to indicate there is alot more work to be done if Onedin is to be included...

On archeaology and heritage...
From AAR website...

The Koongie Park project, an advanced copper - zinc project consisting of 2 mining leases, two exploration licences and 15 prospecting licences is located 25km south-west of Halls Creek in the Kimberley region of Western Australia.

An ASF thread link; ABC article "Kimberley threatened by mining boom"
Or this link; the ABC article itself...

I hope Anglo are as sensible as their approach so far has historically indicated....

 

[hangseng]

Hi hangseng, I agree with alot of your interpretation and loved the sentiment...
However, when reading the announcement there were a few things that occured to me even though I haven't read the report entirely (just over lunch at work)...

Top of page 3 (PFS heading)
Is there alot of infrastructure in such a beast HS? If so, labour will be an issue if what I'm hearing at the moment is true...

Top of page 4 (Onedin open pit studies)

Seems to indicate there is alot more work to be done if Onedin is to be included...

On archeaology and heritage...
From AAR website...


An ASF thread link; ABC article "Kimberley threatened by mining boom"
Or this link; the ABC article itself...

I hope Anglo are as sensible as their approach so far has historically indicated....

Hello Scuba, how's things?
I hope this helps.

"Is there alot of infrastructure in such a beast HS? If so, labour will be an issue if what I'm hearing at the moment is true..."

What you are hearing is true and yes only if they develop a new process plant and they don't select the right design/construct contractor. This is now highly unlikely and I am firmly of the belief that a deal will be struck for the recently closed Pillara plant. All that will require is modification to fit the CPS design that Kwan will specify. I know of three 'niche' companies in Perth capable of early delivery of this from design to construct. One in particular I regard as the best in this field in WA and they are capable, ready and willing. Ever heard of JR Engineering?...they are now GR Engineering and they have simply the best engineers, especially plant design and process. They will under promise and over deliver, of that I have no doubt. I just hope AAR management know of them, I am sure they will know of AAR. No, I don't work for them but I know the team very well an would drop everything to work with them on this project if they got it.

"...techniques to successfully treat the transition mineralisation has been challenging and time consuming............. before any progress can be made to the open pit option........ Alternatively,..........."

Onedin will be included. All that is required is the final CPS testwork to prove this up. So far all tests have resulted in high recovery rates. Page 4 of the report is what you should focus on, especially the highlighted sections. Note the Zn recovery will not increase from Onedin but the Cu and Ag content will. The price of both copper and silver will rise and silver is already well above the original estimates. Onedin will occur and will be a sigificant part of this project.

"...and construction of a 500,000 tpa processing plant."

I have spent most of my days since 2001 involved with PFS, DFS and BFS and FEED process plant/mine studies. What Holly mining are doing in their PFS mining study is estimating the cost of constructiing a plant. This doesn't mean they WILL construct a plant, this information will be utilised to compare if it is more beneficial to construct or negotiate for Pillara or otherwise. This is an important aspect to monitor but not one I am concerned with.

In summary I now believe AAR will be producing within a couple of years, maybe even by mid/early 2010. This is my view only. One thing I am sure of now is that Koongie Park will go ahead and will be a significant project.

 

[Scuba]

Well thanks hangseng, and you? Always a pleasure to read your posts, very helpful with regard to my continuing research...
With regard to page four and the other tables, it's quite an entertaining report, I started looking at some of the amounts tonight as I was posting last. Those ARE some big numbers!
With regard to when, like I said in a previous post "KP is already on the WA Gov mining map..."

 

[hangseng]

Well thanks hangseng, and you? Always a pleasure to read your posts, very helpful with regard to my continuing research...
With regard to page four and the other tables, it's quite an entertaining report, I started looking at some of the amounts tonight as I was posting last. Those ARE some big numbers!
With regard to when, like I said in a previous post "KP is already on the WA Gov mining map..."

It will be on a lot more maps soon Scuba, and analysts desks I am sure. A long time since I felt this positive and I can tell you it feels great.

 

[Miner]

Hello Scuba, how's things?
I hope this helps.



What you are hearing is true and yes only if they develop a new process plant and they don't select the right design/construct xxxxxxxxxxxxxxx Ever heard of JR Engineering?...they are now GR Engineering and they have simply the best engineers, especially plant design and process. They will under promise and over deliver, of that I have no doubt. I just hope AAR management know of them, I am sure they will know of AAR. No, I don't work for them but I know the team very well an would drop everything to work with them on this project if they got it.

Mate

First of all thank you for your very informative note. They are helpful.
I could not however stop commenting on your observation on JR Engineering vs GR Engineering.

JR Engineering originally promoted by Joe Ricardo - a top class engineer.
However he and Tony Patrizi sold the company to Roche (Part of DOwner EDI stock code DOW). Both of them ex WMC. After few years Joe Ricardo left his company and now joined Mineral Resources (MIN) as a director.
JR Engineering used to be a very constructor and good base in process engineering. They are not the same as GR ENgineering. JR Engineering is very good but I will not call them as the best or one of the top 5. Off late JR ENgineering has faced serious turn over of their top notched managers and some of them have joined hands with Joe and TOony.
So where your sentiment and upbeat for AAR is understandable but in a close competitive world uplifting JRES (Roche JR) or DOWNER Engineering as best is slightly oversold in my opinion. I have utilised JR ENgineering Services at a number of occasions and found them very good however.

 

[hangseng]

Hello Scuba, how's things?
I hope this helps.



What you are hearing is true and yes only if they develop a new process plant and they don't select the right design/construct xxxxxxxxxxxxxxx Ever heard of JR Engineering?...they are now GR Engineering and they have simply the best engineers, especially plant design and process. They will under promise and over deliver, of that I have no doubt. I just hope AAR management know of them, I am sure they will know of AAR. No, I don't work for them but I know the team very well an would drop everything to work with them on this project if they got it.

Mate

First of all thank you for your very informative note. They are helpful.
I could not however stop commenting on your observation on JR Engineering vs GR Engineering.

JR Engineering originally promoted by Joe Ricardo - a top class engineer.
However he and Tony Patrizi sold the company to Roche (Part of DOwner EDI stock code DOW). Both of them ex WMC. After few years Joe Ricardo left his company and now joined Mineral Resources (MIN) as a director.
JR Engineering used to be a very constructor and good base in process engineering. They are not the same as GR ENgineering. JR Engineering is very good but I will not call them as the best or one of the top 5. Off late JR ENgineering has faced serious turn over of their top notched managers and some of them have joined hands with Joe and TOony.
So where your sentiment and upbeat for AAR is understandable but in a close competitive world uplifting JRES (Roche JR) or DOWNER Engineering as best is slightly oversold in my opinion. I have utilised JR ENgineering Services at a number of occasions and found them very good however.

All of my positive comment related to the 'old' JR's and the new GR's, not the constrained Roche/Downer model.

GR Engineering has only been founded recently, by none other that Guiseppe 'Joe' Ricciardo (not Ricardo). JR Engineering sold to Downer and became Roche Mining JR about 7 yrs ago, this honeymoon fell apart in 2005/06. All worthy of being in the original JR team are now GR Engineering that was formed in 2006. Not some of them, most of them.

GR Engineering is the 'old' JR's as we knew them best (not Downers Roche JR's). The process engineering team is simply quality as are the design/drafting project management team.

If GR ever listed (which they won't) I would by loads.

hmmmmmm 'Mate' maybe I know you

 

[YOUNG_TRADER]

Hey guys,

Hang Seng nice work there mate, some really good info, I think its safe to say as we've always known production is a matter of when not if,

I realised that a few weeks months back and thus decided to break my holding up into 2 acc's one core bottom draw position which won't be touched, the other is a trading position ie buy dips sell the peaks,


I think in time AAR will turn out to be like JML is just a matter of time and thats why I will hold a core position, the fact that this year will also be a year of PROFIT because of the gold production only helps things along, if they can keep making profits from Mandilla while working on getting Koongie into production then we'll all be laughing all the way to the bank

 

[hangseng]

Hey guys,

Hang Seng nice work there mate, some really good info, I think its safe to say as we've always known production is a matter of when not if,

I realised that a few weeks months back and thus decided to break my holding up into 2 acc's one core bottom draw position which won't be touched, the other is a trading position ie buy dips sell the peaks,


I think in time AAR will turn out to be like JML is just a matter of time and thats why I will hold a core position, the fact that this year will also be a year of PROFIT because of the gold production only helps things along, if they can keep making profits from Mandilla while working on getting Koongie into production then we'll all be laughing all the way to the bank

Good to see you again YT, always a good sign.

I am going to do another valuation of Koongie on the weekend. I would also be interested in yours, you always put quality numbers together.

One matter I am sure of, is that we will both come up with a much higher valuation.

Cheers
Hangseng

 

[TheAbyss]

Spoke to AAR again today. The owners of the Pillara plant are reviewing their options for post 2009 at the moment howver he did take the time to point out that Pillara is not a fait accompli in any way as they have no ownership at this time.

Also a point of interest is that the pillara plant requires no modifications for AAR to use as it will not be used for gold.

Holly are looking at a few different options for AAR and will make their recommendations within their PFS which is due in July.

The silver will be paid as credits form the milling process rather than directly dug out and sold.

Should be two analysts reports this month also. Probably Intersuisse and Fat Prophets based on history.

If you can go by enthusiasm and conviction then AAR is looking good.

 

[hangseng]

Spoke to AAR again today. The owners of the Pillara plant are reviewing their options for post 2009 at the moment howver he did take the time to point out that Pillara is not a fait accompli in any way as they have no ownership at this time.

Also a point of interest is that the pillara plant requires no modifications for AAR to use as it will not be used for gold.

Holly are looking at a few different options for AAR and will make their recommendations within their PFS which is due in July.

The silver will be paid as credits form the milling process rather than directly dug out and sold.

Should be two analysts reports this month also. Probably Intersuisse and Fat Prophets based on history.

If you can go by enthusiasm and conviction then AAR is looking good.

Spot on Abyss.

I have been informed that only very minor modifications would be required for the CPS process. Other than that it is a useable plant in excellent condition.

No definately not a fait acompli, but they will be keen to do other than let it sit there going to ruin.

You can bet on it that FP will report on AAR, they have already indicated they like it a lot and have had it as a watch for some time. They are only waiting on confirmation of the PFS, which now is getting closer by the day.

Out of interest to all who read my post on GR's/JR's the new GR's are the same clever people who designed and constructed Sally Malay. They were with RMJR at the time but it was the original JR team who designed and constructed. They know this location well.

 

[reichman]

Hangseng - you posted last Friday that you were going to do another valuation of Koongie over the weekend.

I, amongst many others, are looking forward to reading the results.

Regards

Reichman

 

[hangseng]

Hangseng - you posted last Friday that you were going to do another valuation of Koongie over the weekend.

I, amongst many others, are looking forward to reading the results.

Regards

Reichman

I didn't need to, all I needed to do was catch up on reading. The company had already done so http://www.anglo.com.au/_content/documents/565.pdf

However you need to look at this in context with the 1/5/08 Qtrly report as the resource for Onedin has been upgraded by 60% and the copper recovery estimate is up by 30%. With Cu prices rising and Zn prices expected to rise it is not difficult to work out how valuable Koongie Park potentially is.

No debt, self funded growth and another 34.8 thousand onces of gold to come from Mandilla, this company has all the hallmarks of success. They only spent $338,200 in the last qtr, despite all of the activity.

Seems AAR is unloved again, silly people have no idea of long term value. I do

 

[enigmatic]

I agree with you hangseng AAR is a good long term plenty of nice things in the pipeline. I'm actually slightly glad the market hasn't come aware of the potiential of AAR. dont have any spare cash to put in the market now and I'm hoping to get more in this specy.

 

[reichman]

So, Hangseng was "going to do another valuation of Koongie on the weekend" (the weekend past). Given his detailed and seemingly credible posts for a lengthy period, I and presumably many others waited with great interest for his response.

A full week later Hangseng replies to my query with "I didn't need to, all I needed to do was catch up on reading. The company had already done so".

The "reading" Hangseng was referring to was the April 18 Investor Presentation. A presentation that EVERY serious AAR investor would surely have read well before the recent quarterly came out.

So, I ask again. Hangseng - what is your valuation of AAR in cent/dollar terms. If you don't wish to pass this information on to people who view this site, then you shouldn't indicate you will.

Credability is hard won and easily lost and when you and others indicate that "another 34.8 thousand ounces of gold is still to come from Mandilla", you make out like it is a fait accompli.

The AGM told all in attendance that getting said gold by itself will not be cost effective. They need to get more from their exploration of East Mandilla to make it viable. It may indeed turn out to be very viable, but by itself, the 34.8 thousand ounces would stay in the ground.

My ultimate point is this. Whilst having a favourable view of the only stock I own, fellow owners of AAR should be mindfull of not only posting accurately, but when they say they will do something but then dont, they actually not only hurt their own credability, they make out to readers that maybe when they crunched the numbers, they didn't like what they saw.

Be like the people involved in AAR. Investigate fully. Don't half-do something.

Regards Reichman

 

[Scuba]

...edited for brevity...
Credability is hard won and easily lost ...
...edited for brevity...

Thankyou Reichman, I appreciated your point about the AGM

......telling all in attendance that "getting said gold by itself will not be cost effective......"

BUT... Really think a bit rich, the expressed indignation toward hangseng.
Possibly Reichman, you might get a quote from a stockbroker for such valuations or maybe even learn to do them yourself?

In reply, as "a reader and holder", I appreciate the information and research he has chosen to share thus far and hope he will choose not to take umbrage at Reichman's sentiment and continue with his contribution to the pool of knowledge we are creating here...

A personal thanks from me to hs, YT and other posters to this thread, you have given my research some valuable and much needed direction. Not to mention some foundation for understanding some of the concepts involved in fundamental analysis...

With gratitude,
Scuba

 

[reichman]

Dear Scuba and all

Not to make this a slugfest, but don't misconscrue my words or my meaning.

The "expressed indignation toward Hangseng", as you put it, was me simply stating a fact. Hangseng made a statement that he then proceeded not to take to its full conclusion.

Like yourself, I too have been appreciative of past posts of Hangseng, and actually sent him a private email in months past.

But if you, me, Hangseng, Young Trader or anyone else for that matter are going to contribute "to the pool of knowledge we are creating here", why not do it fully and frankly!

When probably our most respected poster implies he is going to do another valuation but then doesn't post said valuation, wouldn't you think it fair to ask why?

I did and when I was then given a "nothing" answer, I posted what most fair-minded people would have been thinking.

How could Hangseng take umbrage at my sentiment? All I asked for was a follow up to what he wrote and I would like to think that when he reflects upon these posts, Hangseng will see that by not following up fully, he did himself and AAR a disservice.

Scuba - I've sung Hangseng's praises in a previous post, but if we don't question people we respect, we cease being part of the pool of knowledge and we become a mindless follower.

Regards Reichman

 

[hangseng]

Point taken Reichman however your methods leave something to be desired. Strange as it may seem I did state I would do a valuation, I never stated I would post it. That remains an assumption on your part. What I was really hoping for was YT's valuation as he does better than I do in more detail. If he/she so chooses not to then so be it. As for the week later, I have more to do in my life than meet an online forums/your timeline. I am a normally polite and placid person, I dislike rudeness and arrogance in any form.

As for your credibility comments, you simply do not know me, nor do you know the effort/cost I put into researching any company prior to placement of funds. I choose to share my views/findings, I have no obligation to. Yes it could be viewed that I didn't post as I didn't like what I found, quite to the contrary I assure you.

Like Buffets comment "In the short term the market is a popularity machine, in the long run it is a weighing machine". I will be weighed once AAR performs or otherwise, I am not here to become popular I am here to share and receive information. I will say no more than that.

For what it is worth I have not changed the resource size as indicated by AAR, I have left it at 4.65m/t. As they stated the Zn value has not changed despite the 60% increase in resource size it made no sense to do so. I have increased the Cu recovery value by 30% as they indicated would be the case. Note the Ag and Pb values would rise with the 60% increase in resource size, this would only increase the value considerably. I have not taken this potential increase into account.

Add in Mandilla Au recovery, the Atlantis and Neptune extensions, the fact that the resource is open at both depth and to the North (expanding the resource), No debt/good cash position and AAR becomes a very valuable company. VRD can be added to all of this. I have assumed an AUD/USD rate of $0.90.

I believe AAR has suffered as the Zn price has dropped 50% in the last 2 years. What "the market" (whoever that is) hasn't been able to calculate or take into account is that Koongie Park has excellent recoverable Cu, which has risen significantly over the same period. KP remains a very valuable project and the Zn price will rise, work out what that will do to the value.

This remains my view only and nobody should make any decision based on this information.

p.s. thankyou for the kind words Scuba.

 

[reichman]

Hangseng - Thankyou for responding.

Like you, I am also not here to become popular and just like you have shown in your most recent post - you do indeed share the need for credibility.

I always suspected you were a person who would respond to a firm but fair request for clarity.

Integrity is espoused by many and followed through by few.

Best wishes to you and fellow holders

Reichman

 

[hangseng]

Hangseng - Thankyou for responding.

Like you, I am also not here to become popular and just like you have shown in your most recent post - you do indeed share the need for credibility.

I always suspected you were a person who would respond to a firm but fair request for clarity.

Integrity is espoused by many and followed through by few.

Best wishes to you and fellow holders

Reichman

My pleasure, now let us get back to what we are here for. To share information on one of the best value buys in the market.