...of the financial post today. In it he dicusses the fate of various companies who fought takeover bids and ultimately retained their own identity. Yahoo refused $31 from microsoft and now trades below $20. Novagold turned down $16 from Barrick and trades for half that today and Iamgold refused $9 from Golden Star 4 years ago and now trades for $6.71. Now I'm no windtalker but I think I can break this code. While we believe as a group that a better offer or offers will be coming, if one DOESN'T appear then Peter's telling us we should be taking a long hard look at this one.

Either that or he's cherry picking data to make his point. Rather a small sample to draw conclusions from, isn't it? And what's Yahoo doing in there? I didn't know they mined gold?

I think we have taken a long hard look at this one, haven't we? I know I have. I may be the only one around who still thinks this way, but I tend to break investments into two categories: "S" for short term speculative, "A" for long term appreciative. I believe Aurelian has the potential to cross over from S to A. Those kind of opportunities don't come along very often, and are usually only recognized in hindsight.

The proper comparision here is not who got bought out at what price, but the long term growth prospects compared to the long run market average. If you sell Aurelian now, you still have the problem of where to put the money - money which is losing value against gold and other commodities. So, unless you use the money to buy gold, you have to find another A type investment with the same long run potential as this one, or try to stay ahead of the market by trading S type investments along with every other shark in the pond.

Anyone who's spent any time in the markets will tell you that the serious money is made by indentifying the A situations early, then sticking with them for the long run. The only decision you have to make is how much to add and when, and you can eliminate that problem through dollar cost averaging. You never pay taxes because you never sell, and you only incur brokerage fees when you add to your position. Naturally, all dividends are reinvested.

Granted, this isn't the modus operandi of this industry, but there are some players who think that way or you wouldn't have any Newmonts, Barricks or Goldcorps.

So then, what are the specific features that make this a potential A type investment? Obviously not the directors. No vision there, so unless we toss them, we may as well hand the prize to Kinross and be on our way. OTOH, maybe there's enough of us A types around to tip the balance? We'll find out soon enough.

So, here's my case.

We have a huge deposit in a friendly jurisdiction. Hardly anyone realizes just how friendly, and therein lies the opportunity. I've made the case for Ecuador many times over, so no need to repeat myself - we all know the story or we wouldn't be here. If others want to assign higher risk, fine. By the time they realize their mistake we'll be fully operational, and they'll never catch up. They'll have to come to us if they want in.

What we're looking at here is the chance to be a long term partner with a govt. that can provide financing (from oil revenue) to develop not just one mine, but an entire industry. We don't need to involve Bay St. at all. They're not doing us any favors, so to hell with them. Frankly, I trust Ecuador more, and I'm willing to give them a chance.

But it's not just Ecuador. You also have Colombia and Venezuela with undeveloped mining potential. Thinking down the road, why not leverage our Ecuador position to expand into those markets?

It's a different business model is all. One that Bay St and the big miners don't want to try. So fine. We'll show them how it's done, and they can gaze on us with envy five or ten years from now when it's too late and no one in Ecuador, Colombia or Venezuela needs them.

For that matter, who needs the TSX? These countries all have nascent stock markets. Let's help them consolidate, and take the TSX's listings away. You'd have a cleaner market because you'd put serious controls in place from the get-go. Now you're cooking with oil, because in addition to Canadian and other global investors, you just opened up the market to domestic investors as well. Once you have Ecuadorian, Colombian & Venezuelan investment banks, pension funds, insurance co's, mutual funds, retirement accounts etc involved, you can say good bye to political risk. Most of the political risk people squawk about is nothing more than the resentment that grows from not being cut in on the deal. So cut them in already. Duh.

ebear