what am i missing

AAR - market cap at .57c = approx $28.5 million.

Currently profitably mining gold at west mandilla. Looks pretty likely they'll make a $10 million + profit from these operations. I base this on the fact that they initially predicted they'd make between $4 and $8 million profit based on 70,000 tonnes at circa 7g/t. So far grades have consistently been above 11g/t and they're less than halfway through the total predicted ore reserve but have already clocked up 12,000 oz's of gold. Also gold price in model was predicted to be $800/tonne but avg price so far is $820/tonne and they also say that good grade control is allowing them to achieve better head grades - this should also mean savings on $/oz cost. So who knows what they'll make from this operation - there's definitely some upside.


So lets justify the other $18.5 million of market cap.

East mandilla. One of their old reports predicted they had about $24koz's of gold in 'shallow dipping lodes'. Recent reports state that drilling up of this has found extensions to the north and also confirmed this shallow dipping lode model. So its quite possible that another profitable gold mining operation will occur at west mandilla. Now east mandilla started with a predicted 16koz - so if west mandilla is starting with a predicted 24koz, is it reasonable to expect that another $10 million profit or more may possibly be achievable from the east mandilla mining?

Koongie park. Drilling has confirmed a high confidence level, JORC indicated status base metal (zn/cu/pb/ag/au/mo) resource with an in-ground value of well over $1 billion. At a very conservative 1% of in-ground value this is worth over $10 million.

Then - teck cominco and xstrata have re-opened the pillara zinc mine and mill down the road (>200km) and the JV has also indicated they've spent a $5 million on exploration in the area last year and have $6 million more for exploration earmarked this year. And currently the mill is only going to be operating at less than 50% capacity (read this stuff in a govt mining magazine report recently).

So where's the downside? The most glaring ones I can see are - maybe east mandilla won't be a go-er, zinc price outlook, possible transport costs for koongie, possible difficulties negotiating a milling agreement for koongie ore, possible difficulty coming up with economical mine plan and ore reserve for koongie given the complex nature of the deposit.

Will one of the above downsides eventuate? - based on current share price one might think so but so far nothing's been announced to indicate anything but a positive outlook for all three projects.

Until I see an announcement or information to the negative I'll keep thinking the glass is half full on this one.