The political risk in Ecuador IS surely overstated. However, there also IS an unfolding constitutional crisis in Ecuador (which has had 8 presidents in the last 10 years). The atmospherics and theatrics will likely roil ARU's stock price from time to time.

Recently, I've seen on Univision, violent rioters outside the Ecuadorian congress. Half the law-makers were recently fired (in line with Pres. Correa's attempt to re-write the constituion as Chavez did in VZ.)When a Judge suspended the firings, HE was fired by Correa. On Apr. 15th, voters will decide whether a constitutional convention should be convened. I wouldn't be surprised to see rioters on TV -- this time on mainstream networks.

Ultimately, Aurelian will be able to do business successfully with Ecuador's government. Like Chavez, Correa wants to create jobs and export earnings. (Ecuador's oil is MUCH less than VZ's, and its need for export earnings much greater).

Correa is not irrational. He's also more sophisticated than Chavez internationally, and in substance. Correa is a US-trained economist, with a Masters from Univ. of Illinois, Urbana.

Correa, Chavez, Morales in Bolivia and Kirchner in Argentina are (understandably) exploiting their publics' frustration at the failure of "washington consensus" free-market policies from the 90's.

Correa's politics will likely get more visibility -- probably allowing purchase of ARU at much lower levels, and requiring active trading on the way towards full valuation of ARU's find.

hmmm, Jock...

is it not possible that ARU will get taken out? I wonder how long a horizon exists for share prices at much lower levels.

Within the past few months, I have heard a number of money managers opine about a takeover within 2 years, including Robert Cohen (Dynamic Funds), Jean-Francois Tardif (Sprott Asset Management, who said also - from my notes - 'lots of companies kicking the tires now...Eric Sprott, John Embry and others agree'; he said he thinks the takeout will be priced at $200/oz. of reserve)- don't I wish? - and Brendan Kyne (Leeward Hedge Funds).

the following is a link to Brendan Kyne's enthusiastic commentary last wednesday...it's the 1:25 time slot on BNN:

http://www.bnn.ca/shows/past_archive.tv?day=wed

btw, I'm long ARU.

This all sounds interesting. I noticed lately that in Sprott Gold and PM Fund Annual Report, dated Dec 31, 2006, ARU is listed as their largest holding at 6.57%. Might see if this changes in future fund quarterly updates. I think they usually are really on top of their major holdings.

Also long ARU.

Joey -

You could be right. Maybe a strategic buyer marches in, negotiates at the highest levels, gets comfort on key issues and does an early deal. I'm suggesting above all that there are reasons to expect public shareholders to be skittish as events unfold. BTW, from what is known of him, Correa could end up dominating the situation and staying in power a long time. His move on the Congress early in his term is a smart move.

Jock, I appreciate these and other posts of yours, as you seem to me to be well informed and insightful.

Tim47, could you tell me, please - since you appear to have at hand the Sprott Gold and Precious Metal Fund Annual Report (managed by Embry) - is Crystallex (KRY) a holding? I suspect not; but, if it is, how big is the position %age wise?

I have no position in KRY (because I have shares in MUN; and one miner awaiting permits/licences/approvals is enough for me!)

Joey

Kry is not on their list. The top five are: Aurelian, Silver bullion, Southwestern Resources, Silver Standard and Tournigan Gold Corp.

Thank you, Tim47.
yes, I knew that from the Globeinvestor fund site; where top holdings only are identified.
I thought you had the Annual Report where all holdings are listed.
Anyway, no matter...
My recollection is that Embry said he liked the KRY deposit; but wouldn't buy shares because of the political climate.
By contrast, he has a significant holding in ARU. I assume, then, that in Embry's view, Ecuador offers a tolerable investment climate.

Thank you, Tim47.
yes, I knew that from the Globeinvestor fund site; where top holdings only are identified.
I thought you had the Annual Report where all holdings are listed.
Anyway, no matter...
My recollection is that Embry said he liked the KRY deposit; but wouldn't buy shares because of the political climate.
By contrast, he has a significant holding in ARU. I assume, then, that in Embry's view, Ecuador offers a tolerable investment climate.

Thank you, Tim47.
yes, I knew that from the Globeinvestor fund site; where top holdings only are identified.
I thought you had the Annual Report where all holdings are listed.
Anyway, no matter...
My recollection is that Embry said he liked the KRY deposit; but wouldn't buy shares because of the political climate.
By contrast, he has a significant holding in ARU. I assume, then, that in Embry's view, Ecuador offers a tolerable investment climate.