for those interested ...

Warm greetings to all! ...
: )

For those interested, an overview on AAR ...
Anyone that's gone through the recent quarterly can acknowledge the substantial upside the company is facing if but a few boxes get ticked over the coming couple of quarters.
The quarterly reads very well portraying a snapshot of a junior at a crucial moment of metamorphosis & with production commencing from the Mandilla Project & drilling commenced at Koongie Park, the bell has been rung for market attentions to come into play.
Assets can be simplified; the primary being the Koongie Park base metal project with all others being of secondary status, (current & future gold production inclusive).

Gold assets.
The West Mandilla Project, (W.A.-100%), a small pit expected to be completed in the next 7-8 months with a reserve of 70,100 tonnes @ 7.52g/t Au for 16,960 ounces gold. Please note that this is a reserve measure that can be assumed to be conservative understanding that using a 100g/t top-cut disallows the nugget/free gold effect in this sort of ore, ie 3m @ 250.07g/t Au (inc. 1m @ 739.76g/t Au).

Management have stated that the project will deliver a 'minimum after tax operating profit of $4 million with potential to achieve double that level'.
Costs kept to A$350-400 per ounce identify that the company will receive net cash flows in excess of A$7m by the beginning of Q207.
A new model of the East Mandilla indicates a target open pittable resource of 130,000t @ 6g/t Au for a total of 25,000 ounces (sub 60m) exclusive of a new very high grade zone recently identified (sub 85m).
Detailed resource drilling for the East Mandilla Project in the current quarter is expected with multiple other structures (ie Selene) indicative of a continuous mining operation exploiting highly profitable, small, shallow, high-grade ore-bodies with significant upside existing when the time comes to hit the ground at depth.
Current cap at Friday's close of 4.2c is a little over A$20m - at 6.2c a little over A$30m, ... Just covering one class of secondary assets, the company has A$3m cash in the bank, an assumed A$7m+ in eight months time via mining at West Mandilla & possibly A$10-12m+ via East Mandilla in the following twelve to fifteen months with upside potential.
There are other highly prospective secondary assets the company has that one would encourage people to be aware of but my attention is focused on the gold to highlight the financial independance stage the company is now at; ie no more capital dilution, cash flow positive for the next couple years to throw a lot of drills in the ground on some major assets to see what they have ...

An example of other highly prospective secondary assets is the Feysville Project, (W.A.-100%), excerpt is from the Q206 quarterly;
'The Feysville Project consists of all mineral rights attached to two mining leases located
16km SSE of Kalgoorlie. The project is situated in the geological / structural corridor,
bounded by the Boulder Lefroy Fault that hosts the world class deposits of Kalgoorlie and St
Ives as well as other substantial deposits in the New Celebration, Kambalda and Hannans
South areas. The project also contains an extensive strike length of an ultramafic unit which
may correlate with the ultramafic horizon that hosts nickel sulphide deposits at Kambalda
30km to the south.
Exploration in December quarter tested three ground EM anomalies with four RC holes
totalling 492m. A copper rich zone (8m @2.87% Cu, 26.5g/t Au and 0.31g/t Au) was
intersected at the Michelangelo Prospect (Anomaly J) while off hole conductors were
recorded at Anomaly A and the Raphael Anomaly. Planning is in progress for a follow-up
drilling program.'


Moving on ...
The primary asset is the Koongie Base Metal Project, (W.A. - 100%).
The Koongie project, (copper-zinc-lead-silver), gross in situ values at +/- 0% to spot for this asset is currently in excess of A$1,750m, (A$1.75b).
Management believes that in light of current commodity values that the project now possesses substantial economics & are pursuing pre-feasability.
The Koongie resources currently;
5.58Mt @ 1.24% Cu, 1.22% Pb, 4.62% Zn, 40.0g/t Ag and
0.08g/t Au for 69,000t Cu, 68,000t Pb, 258,000t Zn, 6.95Moz Ag and 13,700oz Au.
'These estimates were based on diamond and RC drill holes spaced at 40m x 40m. Careful
cross sectional methodology was used by competent geologists. It is anticipated that following
a careful review of the geological models and minor conformation drilling, these resources
will be converted to JORC compliancy.
Geological consultants CSA Australia, a firm specializing in base metals, have been contracted
to assist advance the Koongie Park Project.
This drilling is designed to provide sufficient samples of the representative ore types at both Onedin and Sandiego to enable definitive metallurgical testing to be carried out on the two prospects. In addition, potential strike extensions of mineralisation will be tested at Sandiego and testing of a new mineralised shoot will be undertaken at Onedin.'
From the SPP announcement, 23/03/06; 'It is now considered as potentially one of the best undeveloped base metal projects in Australia.'

This drill program began 3-4 weeks ago, an example of the Sandiego deposit is the 1996 drill hole 'SRCD 7 roughly in the middle of the deposit which intersected 77m @ 1.65% Cu, 1.48% Pb. 9.7% Zn, 60.7 g/t Ag and 0.54 g/t Au (200-277m) and 20m @ 3.2% Cu, 0.05% Pb,
0.14% Zn, 16 g/t Ag and 0.31 g/t Au (292-312m).'
Any new intersections identified remotely similiar to the above will draw major sustainable market attentions to this asset.

Management.
Director fees of $32,500 for the half year (ending 31/12/05) in this environment is a refreshing sight combined with their interests in the company:
Mr John Load Cecil Jones - (direct) 2,291,250 fp, (indirect) 13,291,625 fp.
Mr Christopher Hugh Fyson - (direct) 1,658,000 fp, (indirect) 9,154,899 fp.
Mr Angus Claymore Pilmer - (direct) 2,100,000 fp, (indirect) 4,900,000 fp.
Dr Denis Edmund Clarke - (direct) 825,000 fp, (indirect) 2,885,000 fp.
Collectively equals 37.1m fp or 7.5% of the company.
Mr John Load Cecil Jones is also Chairman of Troy Resources, a proven recognised character in the industry that when the time is right, the money will follow.

Technically on daily volume candles, the strong consistent volume cluster from last week's activities makes for a very attractive chart.
Those observing intraday action would have noticed the absence of intraday momentum pressures whilst the off-screen buying strength was consistent & impressive - channeling levels with true absorption indicative of accumulation & a market re-rating in process.

The new levels now brings true the term 'the ceiling becomes the floor' with anticipated volume confirmation early in the coming week expected to make the 4.2 macro support forming a good base for further sustainable upward price pressure in reflection of fundamental & spec values.

Price targets.
I see a strong possibility of an interim 4-6 week target cap of A$35-40m (7-8c) being probable based on current activities & growing collective awarenesses with 4-6 month possibilities at & greater than A$60-70m (12-14c) not unreasonable if the Koongie asset development remains favourable & the company embarks on a major communication strategy to the investment community.
If the market really embraces this ... well, when the boutique boys pumped CQT to 51c, the diluted capitalisation was A$109m (allowing A$15m cash from options) on a gross in situ non-JORC resource value of A$696m ...
Diluted m/c of CQT = A$83.5m (A$15m cash from options plus A$1.5m).
Diluted m/c of AAR = A$20.7m (A$3m cash plus gold production).
Apples & oranges I know but sometimes that is what we do from a starting point ...

All this is merely an opinion & a firmer heads up to those still in consideration to look a little deeper into this company whilst the trend is only just beginning, this could indeed be a sleeping giant ... Views from some of the forum competents (Tastarga) relating to Koongie metallurgical specifics would be appreciated by many as always.
A thing I really like is that there's no house-broker in play at the moment, that will change I believe in time when the company begins to communicate the assets & the business plan to the market but till then there is an attractive opportunity for lower risked gains ...

On a cautionary note, macro-economic considerations should be present in any new positions this week with US July PPI Tuesday night & US July CPI on Wednesday. This data is going to be either bad or worse with oil trading a chunk of the month between US$74-78bl.
Having said that, the market sometimes makes exceptions, I think AAR may be one of those - in an environment of risk, this appears to be a very balanced junior that the market may only just be in the process of recognising, we shall see ...


Warm regards to all & best of luck in any & all positions ...
: )






N.B.- Disclosure & sentiment covered in the above ...