AAR - Astral Resources

[hangseng]

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

My quick summary:

Firstly I believe many positives have come out of this update which in my view has understated the potential of this company.

• $5,220,000 now in the bank and it just keeps coming.
• Nil debt position continues
• Testwork on Koongie Park has moved from Pre-feasibility to definitive comprehensive stage. This is a major advanced move and display of confidence by management.
• The complex mineralisation requires additional processing to extract the best grades possible for Zn and Cu.
• Enlisting Kwan Wong, arguably one of the best metallurgists in the country (the inventor and acknowledged expert in CPS), to conduct the selective flotation testing. They could not have made a better decision.
• The Controlled Potential Sulphidisation (CPS) method of flotation is a proven and widely utilised successful method of extracting high % returns from complex mineralisation and oxidised deposits such as the surfical deposit at Onedin. If this will be successful then Kwan Wong will be the person to definitively prove it. This will confirm the Koongie Park prospect in the eyes of experts and will make the s/p move upward exponentially. I say again, great move AAR management.
• The majority of the Koongie Park mineralisation is indicated as unoxidised at depth in the high grade primary and transitional zone and will probably be extracted using conventional flotation techniques.
• Mandilla has proven to be a major cashflow producer and continues to be so.
• Mandilla is indicated high grade gold mineralisation at depth and expansion is highly likely in my view and the company is indicating this.
• Underground mining is almost a certainty to occur. Recommending progressing to DFS to prove this is not done lightly.
• Open cut will occur easily if the testwork of Kwan Wong is proven.

Summary:
Excellent update and I see mainly significant positives to move AAR to a higher level. The only negative to come out is the (not unexpected) oxidised surfical deposit.

Both Mandilla and Koongie Park are displaying excellent company making qualities. Basically AAR is indicated as going from strentgh to strength and is now showing a 1c per share earning, at .06 s/p this now places AAR at a 6:1 P/E and is clearly looking at having over $10m cash in the bank this year.

I also believe that AAR has had discussions with TeckCominco over the possibility of processing through the Pillara plant at Halls Creek. This concurs with John Johns public statement on boardroom radio that they were looking at processing options with a nearby plant 26kms from Koongie Park.

If the definitive testwork is proven as expected and the Pillara plant is utilised then I believe AAR could be mining Koongie Park as early as mid 2008.

Where is all this heading is anyones guess, however I am firmly of the opinion that AAR will now clealry be in the sights of Troy Resources and even possibly TeckCominco or other suitors. TRY have to do something with the recent $12m raised and they didn't raise this purely for working capital when they alreay have over $56m in the bank already. $12m would obtain TRY approximately a 44% controlling holding over AAR. This paragraph is completely my view and please realise I am speculating on this aspect. I just believe it is a real possibility especially now AAR is displaying so many consistently positive outcomes. Or possibly the 12m will provide additional funding for the development of Koongie Park

The market still has not identified with Koongie Park but this will come. I am a long term holder of AAR so I can wait for for what I believe will be a significant re-rating in the not to distant future.

I have purposely discounted the uranium mention and will not speculate or provide comment on this. I believe it is irrellevant to the positive current position of AAR.

 

[IGO4IT]

Hi Hangseng,

If the definitive testwork is proven as expected and the Pillara plant is utilised then I believe AAR could be mining Koongie Park as early as mid 2008.

Could you pls let us know how did you come up with that avg. date?

I hold a small parcel for long time & I truely can't see any current indication to any date AT ALL to when Koongie Park could be starting. I actually think that if date for Koongie park is given to market then AAR will start to move.

cheers,

 

[hangseng]

Hi Hangseng,



Could you pls let us know how did you come up with that avg. date?

I hold a small parcel for long time & I truely can't see any current indication to any date AT ALL to when Koongie Park could be starting. I actually think that if date for Koongie park is given to market then AAR will start to move.

cheers,

IGO4IT
This is my assumption only. Firstly the CPS testwork is expected to be completed within 3-6 months. The definitive study for mining, if commenced already as recommended then this also should be completed by the end of the year. DFS does not take long with the right people, I am actually on one currently that is almost complete and it took 4 months for one of the largest current iron ore projects (PFS took over 6 months).

Assuming that the CPS testwork is successful then surface mining could commence almost immediately following these stages, subject to environmental approvals. The environmental approvals will be submitted well in advance of testwork completion and would be expected to be granted for this location.

If the CPS is not definitive Koongie Park would be developed only as underground, which would not expedite mining commencement in 2008. This would more be like 2009-10.

Again these are my assumptions only based on my own experiences and those I draw on for technical advice.

 

[kyrondgm]

Market seems to have acted negatively to the latest announcement...down from 0.06 to 0.058 today...
Could mainly be due to the poor timing of the announcement, released after market close on Tuesday and because of the public holiday for ANZAC day many people might not even have seen it...anyone else think the same?
It's disappointing cos I don't think this was by any means a 'bad' announcement.

 

[Ruprect]

You are possibly right - this might take a couple of days for the market to take full notice. I have a lot of faith in AAR.

 

[hangseng]

You are possibly right - this might take a couple of days for the market to take full notice. I have a lot of faith in AAR.

Well I must say I am completely dumfounded. This announcement displays a forward and extremely positive direction of AAR and the market lets it go to the keeper. Yet people will jump the slightest sniff or mention of uranium, regardless if the company has any capital or if any drilling has been done.

AAR are earning extremely well with excellent cashflows, no debt, excellent resources, advanced PFS and now moving to DFS for Koongie Park and the probability of expansion of Mandilla.

Well it seems all AAR have to do now is to scrap the Mandilla and Koongie Park projects and only put out a specific report of identified uranium anomolies at Dalgaranga up it will fly like the other U stocks have. Throw in some U rock chip samples and we will have a company maker. I might go and ask the local deli owner or the bus driver what the next hot tip is. AAR could place a big yellow neon sign at the offices at West Perth "no money but we have uranium". Sorry but I just can't believe this was overlooked.

It seems basic economic and commercial company fundamentals and common sense have gone completely out the window, with hype now king. Wake up is all I can say, or we are heading down a very dangerous and risky path.

I am a long term holder of AAR so I'm not that fussed however market psychology and risk taking never ceases to amaze me.

 

[constable]

We I must say I am completely dumfounded. This announcement displays a forward and extremely positive direction of AAR and the market lets it go to the keeper. Yet people will jump the slightest sniff or mention of uranium, regardless if the company has any capital or if any drilling has been done.

AAR are earning extremely well with excellent cashflows, no debt, excellent resources, advanced PFS and now moving to DFS for Koongie Park and the probability of expansion of Mandilla.

Well it seems all AAR have to do now is to scrap the Mandilla and Koongie Park projects and only put out a specific report of identified uranium anomolies at Dalgaranga up it will fly like the other U stocks have. Throw in some U rock chip samples and we will have a company maker. I might go and ask the local deli owner or the bus driver what the next hot tip is. AAR could place a big yellow neon sign at the offices at West Perth "no money but we have uranium". Sorry but I just can't believe this was overlooked.

It seems basic economic and commercial company fundamentals and common sense have gone completely out the window, with hype now king. Wake up is all I can say, or we are heading down a very dangerous and risky path.

I am a long term holder of AAR so I'm not that fussed however market psychology and risk taking never ceases to amaze me.

Hi hangseng whether the market's right or wrong the market's always right!
Not that it counts for anything but i was impressed by the company's balance sheet and fundamentals. Never heard of them until today but did a bit of research. Latest ann hasnt been factored in imo, but regardless of that this seems to be a very sound clear cut operation! dyor c

 

[hangseng]

constable I happen to agree with you, just venting my spleen a little at the silliness of the current market.

When the U bubble bursts, and it will, people will come back to the realisation that the AAR types are where they should be in speculative stocks, not in U companies that have nothing but a sniff of U. Not saying that all U stocks are bad but a vast majority will go by the wayside.

At least my money is safe and has a real prospect of increasing significantly over time. I remember the likes of KZL and others going through similar early pain, look at them now.

 

[sleeper88]

I agree, the market can be irrational at times, but its always right. I've been tracking AAR for quite a while now but never actually bought it. The closest i got to getting them was when i was tossing up between AAR and MLS. I got on MLS and made a quick 300%

I must admit, from the time i started tracking this one, it hasn't moved much, which can be said as disappointing. Considering its gold operations are coming to an end soon (approx by year end unless they prove up more reserves), it goes back to a developer/explorer, but a cashed up developer/explorer.

As for the management, they seriously need to consider doing some PR, atleast get a decent, updated website going so people atleast now who they are. Also, i've been digging around for their last investor presentation, result was, there isn't any that i know of.

Another factor to consider is the fact that zinc prices have retreated from all time highs, the most zinc stock have pulled back sharply, therefore why buy AAR when other zinc producers are not too expensive (KZL, CBH, PEM).

Having said that, this is one of the potential stocks to fly when the market re-rates it (primarily on their zinc deposit). But in current market conditions, all they need is the "U" word in any announcement and off they go

 

[speves]

I too have been following AAR for some time but unlike you I couldn't resist buying in. Markets don't lie and I have to admit feeling frustration at buying into a stock that has not performed as the fundementals/analyists have indicated.

I must be a slow learner because I couldn't resist buying up more today at 5.8c.....at this rate I will own the company soon.

 

[hangseng]

I too have been following AAR for some time but unlike you I couldn't resist buying in. Markets don't lie and I have to admit feeling frustration at buying into a stock that has not performed as the fundementals/analyists have indicated.

I must be a slow learner because I couldn't resist buying up more today at 5.8c.....at this rate I will own the company soon.

You did well speves, I have also taken another opportunity recently to increase my holding. I won't own AAR but I am now feeling very comfortable with the future of the company and my invested funds, regardless of what market is doing presently. I believe this will be the best superannuation source I have eventually.

 

[constable]

That was one huge order going through (@10.59am) totalling 1,750,000 units approximately 100k worth!
Sorry if this doesnt meet the 100 word quota but i think this transaction was of interest and buggered if i know how to expand on it!

 

[hangseng]

That was one huge order going through (@10.59am) totalling 1,750,000 units approximately 100k worth!
Sorry if this doesnt meet the 100 word quota but i think this transaction was of interest and buggered if i know how to expand on it!

Yes although AAR has seemingly not been noticed it does seem someone has.

AAR will have it's day, fundamentally it simply must. FAT Prophets still like AAR so I don't think I am the only one watching closely.

 

[hangseng]

I agree, the market can be irrational at times, but its always right. I've been tracking AAR for quite a while now but never actually bought it. The closest i got to getting them was when i was tossing up between AAR and MLS. I got on MLS and made a quick 300%

I must admit, from the time i started tracking this one, it hasn't moved much, which can be said as disappointing. Considering its gold operations are coming to an end soon (approx by year end unless they prove up more reserves), it goes back to a developer/explorer, but a cashed up developer/explorer.

As for the management, they seriously need to consider doing some PR, atleast get a decent, updated website going so people atleast now who they are. Also, i've been digging around for their last investor presentation, result was, there isn't any that i know of.

Another factor to consider is the fact that zinc prices have retreated from all time highs, the most zinc stock have pulled back sharply, therefore why buy AAR when other zinc producers are not too expensive (KZL, CBH, PEM).

Having said that, this is one of the potential stocks to fly when the market re-rates it (primarily on their zinc deposit). But in current market conditions, all they need is the "U" word in any announcement and off they go

Sleeper88 also some perspective on the Zn price is warranted. The 5 year Kitco charts below say it all of the price and LME stocks. The price remains very high and the stocks remain very low, this is forecast to continue.

Investor presentation, you didn't look to hard. Boardroom Radio and the AAR website (which badly requires updating, very pathetic attempt this website) "ANGLO AUSTRALIAN RESOURCES NL, Wed, 08 Feb 2006 9:30AM, Chairman's Update on Koongie Park Project". A long time ago I might add. http://www.brr.com.au/AAR/anglo-australian-resources-nl

In fact the website is so poor, you are far better off using Boardroom radio as this is at least up to date.

You also say primarily on the Zn deposit AAR will be re-rated. I don't entirely dsagree with you however Mandilla is also set for expansion into further very high grade, easy dig paleochannel deposits. Mandilla also has extremely high grade mineable deposits at depth. I add that a little research on the NT Victoria Downs location is worthwhile and would indicate AAR could be re-rated due to the combination of this lease and Koongie Park.

The recent discussions between AAR and Teckcominco is what I am interested in though. This is what I believe will re-rate AAR short term.

 

[hangseng]

Large single volume buys going through this morning. Someone is taking out everything placed at 5.9 at present and all in one big chunk each time.

Chart clearly showing positive changes occurring and breakout from the descending triangle. Confirmation is required however this is a very positive sign.

MACD, DMI turned positive and volume building slowly. Not shown on this chart but the RSI, Williams and money flow have all turned strongly upward as well over the last for days.

 

[speves]

Nicely spotted HS....great finish today plenty of rumours bouncing about on this stock. Feeling much better about topping up at 5.7c.....

 

[hangseng]

Nicely spotted HS....great finish today plenty of rumours bouncing about on this stock. Feeling much better about topping up at 5.7c.....

Yes I added to mie holding and took a few more yesterday and today. I took todays at market at 5.8, 5.9 and some at 6.0 and I am so glad I did. Istarted buying at 5.5 so I have a good average now and a nice holding. Fundamentally I still hold this is the best value stock on the market by far. So this comes as no surprise to me at all.

I just posted this in breakout alerts.

AAR has finally moved up and in excellent fashion today. Somebody seemingly tried hard to hold it back at 5.8 but someone else had a different agenda and took all from 5.9 through to 6.4 in the last part of trading today on a volume of around 6m in minutes.

The chart says it all:

• confirmed breakout from the descending triangle
• Volume increase to over 10,000,000
• MACD and DMI strongly turning to positive
• 30, 60 and 90 day MA breached
• gap created on the 28/2 almost completely taken up

Once the gap is breached the uptrend will be confirmed, as I believe will be done easily on Monday.

 

[hangseng]

I don't often do this but in my analysis this morning and based on the strength of this rebound I believe AAR will easily reach 7.5 on Monday and potentially with a solid re-rating back to .085 and beyond within a week. I am firmly of the view now that some form of arrangement is about to be announced between TeckCominco and/or Troy Resources. TRY has raised significant funds (that they don't need with over $50m in the bank) and will need to do something with them as I have discussed previously. The question must be asked, what was discussed between TeckCominco and AAR this year at Pillara? They have had discussions but what about? I am watching this very closely for any hint of what may occur. Why did John Jones mention the Nicholsons Find Plant?

 

[Lucky_Country]

Is AAR ripe for a takeover at these low prices surely they cant lose buying this co now.
A jv would help Teck Cominco secure their place in the project and also safegaurd against any other company taking a shot at AAR.
Troy resources now that could be a different matter AAR would fit in nicely into there portfolio with already management links too one another this could be an interesting stage in AAR history but also a very exciting one
Personally I hope AAR go it alone

 

[BUY&SELL]

I'd like to know peoples opinons on whether just a joint exploration is imminent or an all out take-over is more on the cards? If a take over is on the cards what price would you put on the company going on simalar style and sized companys? 40-50 million? and the big question what would a speculative share price be?