Aum Copper Bull Takes A Breather

The Age

Thursday July 6, 2006

BARRY FitzGERALD, RESOURCES EDITOR

AUSTRALIAN Mining Investments' bull run has been stopped in its tracks by a trading halt. But it was not before shares in the junior explorer, which claims to have made a big copper find in north Queensland, traded briefly at $10 a share, up 2530 per cent on its price a month ago of 38? a share.

The trading halt came in early in trade yesterday and, according to the Australian Stock Exchange, the company requested it, pending the release of an announcement, expected tomorrow.

While that fuelled wild speculation that the company was about to strike a deal with Xstrata or cash in on its booming share price by making a placement, the more sober assessment was that the company was responding to pressure to provide more detail on its claimed discovery.

AUM shares began to surge last week after the group claimed that its Las Minerale deposit at its Rocklands project, near Cloncurry, contained an inferred resource of 59 million tonnes grading 2.04 per cent copper equivalent (it gives the cobalt and gold an equivalent copper value).

The ASX said yesterday it had not formed any opinion on AUM's recent announcements. An ASX spokesman said AUM had "until Friday morning to release whatever information they intend to to the market".

"All else being equal, you would expect it to return to trading. We haven't formed any opinions. We'll see what they say on Friday," he said.

Despite AUM's share price surge - the company was valued at nearly $1 billion when it traded at $10 a share - analysts not associated with the company or its promoters have continued to warn that it is too early to declare that "El Dorado" has been found in north Queensland.

They argue that the ASX should have acted last week by calling on AUM to provide a comprehensive report on how it arrived at the 59 million tonne resource estimate, announced to the market last Thursday. Confirmation that the value-boosting cobalt could in fact be extracted would also be welcomed.

Despite those uncertainties, day traders have piled into the tightly held stock, encouraged in part by bullish comments by the company and over-the-top commentary by stock promoters. Online brokers CommSec and E*Trade accounted for 25 per cent and 11 per cent respectively of trade in the stock yesterday.

Those prepared to back Rocklands home as the next big thing took the stock to $10 a share in early trade, up from its Tuesday closing price of $5.25.

But that level was short-lived and the stock fell back to a last sale price of $7.11 before the trading halt took hold. In the space of one hour, AUM was the day's best-performed and worst-performed stock. Yesterday's closing price was still $1.86, or 35 per cent, higher than Tuesday's. At yesterday's closing price, the personal holding of AUM executive chairman Wayne McCrae was worth about $56 million, excluding his options position.

Subject to shareholder approval at a meeting on Wednesday, Mr McCrae and two directors are to receive a total of 10 million new options to buy shares at 50? each by June 2008. They would be in the money to the tune of $66.1 million based on yesterday's closing price. But if AUM holds on to much of its boom share price, the options issue could come under pressure to be recast, if not pulled.