a penny for your thoughts, page-2

Thompsjs69

I share your thoughts on ARE.

And it will be interesting to see which spec plays are still around in 12 months time? … and lets not kid ourselves, ARE is a spec play!

IMO, I believe that ARE will withstand the share market battering that is going on at the moment; and for the following reason ….. ARE is unfashionable, ARE is un-hyped and ARE is miserly!!!

And to survive the next few years, any spec play needs 3 things … CASH, CASH and more CASH … not credit lines, not share placements … but CASH ON HAND.!!!

And from a financial perspective :-

a) ARE was fortunate to get the $12m placement last year … So they actually have money in the bank!!!

b) ARE are getting a huge "bang" for their dollar spend in their Laos play for gold/nickel, where costs are extremely cheap

c) Straits Resources are doing the Torrens drilling at no direct cost to ARE (SRL spending $7m for 70%)

d) Hillgrove Resources are doing the Alford drilling at no direct cost to ARE (HGO spending $4m for 70%)

e) ARE’s Kroombit drilling is at the final stages towards a PFS (after which cash spend diminishes) .

f) There is also a note in their Annual Report of a $500k purchase of a new Head Office in Sydney (not a Perth address in Ledger Road, Balcatta … like the other 100 spec plays on the ASX)

They appear to be doing things methodically and cautiously!

I get the impression that they are going to put a “bow” around Kroombit for a later time … because, as stated in their Annual Report “the initial results from this drilling have exceeded expectations … we are completing our program towards a PFS so we are well placed to move quickly once the inevitable upturn in prices becomes evident”

They further state in their Annual Report that they are “making sure to use those funds wisely and for the purposes intended, namely, to explore the Laotian and Australian areas in a considered and thorough fashion”.

And drilling in Laos is scheduled towards the end of 2008 and early 2009 … and as already stated in an earlier thread, with gold probably being the one resource that will appreciate in value in the coming months, good gold results in Laos could be the “bolter” to get ARE moving up again!

As for the $2.5m embezzlement … I would put that one to rest … nil chance of getting any monies back from “gambling addicts” … it happens to many companies, but they choose to keep it in-house … and looking at the figures in their Annual Report, it appears to be a "one-off" to have negated another "one-off" ... the proceeds from the sale of Kanmantoo to Hillgrove Resources. … oh well, sh%$ happens!!!

Anyway, will ARE be able to weather the current financial storm? … I think so! … They appear to have enough cash … and a plan … to give themselves enough time to “pull the rabbit out of the hat”!