They always say hindsight is 20/20 but us ex-ARU shareholders have dodged one hell of a bullet when Kinross took us over. This mining legislation is garbage. These Equadorian politicians are in La La Land if they think they're going to develop a flourishing mining industry with the structure being proposed here. I always thought Correa was pragmatist at heart but with what he's doing with the oil industry, what he's proposing to do with the mining industry and his sabre rattling re: debt default this guy is leading his country down the road to unmitigated disaster. His true colours are showing and he is an socialist ideologue not a pragmatist.

I view Correa as a cornered pragmatist whose actions are more a measure of how much he fears the green/socialist factions, than how much he agrees with them. This is a natural fear coming from a populist who rode these groups to power, but who doesn't really follow their line.

It's kind of like feeding bears. Mother bear shows up with a couple of cute little cubs so you give them something to eat. Next day there they are again, and before you know it, they're in your house ripping the door off the fridge. That's the position Correa's in. Once you start feeding bears, there's no end to it.

Maybe Patsy Anderson wasn't such an idiot as many (myself definitely included) thought. Methinks I may owe this guy an apology and I can be a big enough man to admit it.

The only credit I give Anderson is for being a clever opportunist. He is Salieri to K. Barron's Amadeus... a tragic-comedy which, thankfully, I no longer have to endure.

I hated the ARU deal at the time but gave Kinross credit for pulling it off. Now, at least short term, I'm not so sure how bright Tye Burt really was in pulling this trigger.

Tye Burt is from the "you bet the company" school of management. His type are hailed as geniuses while their strategies succeed, but sooner or later they blow up and take a lot of people down with them. This particular strategy seems predicated on the notion that Correa will blow up before Kinross does. Not a bet I'm willing to make, which is why I sold (1).

Maybe things will turn out OK in the long run as even with Correa's recent political victories I think his days are numbered as Equador slides down a slope into economic chaos. Equador doesn't have the financial wherewithal of a Venezuela to implement a utopian socialist agenda (and the jury is out on Chavez as market conditions continue to deteriorate).

If you believe, as I do, that the drop in oil prices is a temporary phenomena (crisis induced unwinding, pushed along by intervention for political ends) then you have to recognize that Chavez can not only sustain Venezuela, but Ecuador as well. This is Correa's ace in the hole, which I'm sure he'll play if push comes to shove, ie. soft loans to tide them over, a merging of trade policies, perhaps a pan-Bolivaran energy company based on a merger of PetroEcuador and PDVSA. Let's see the greens oppose that..LOL!

At this point I guess the great unknown is how lucrative would the service contacts be if miners opted for that type of agreement. I doubt many miners will want to opt for that structure though.

To me, the service contracts are a tacit admission of the fact that no one wants to make large capital investments. Gee...I wonder why?

The irony of this whole fiasco is that the only companies likely to take on the risk of operating in Ecuador are the very same "Transnationals" the far left is opposed to. If they'd left well enough alone they'd have had a more diversified industry based on smaller, more easily controlled companies. Too late for that now. Probably too late to get Vale or Rio Tinto interested as well - they have other more pressing issues to deal with. Oh well, there's always the Chinese... uh... right?

ebear

(1) I still own the warrants as a flyer, in case anyone was wondering why I'm posting to a board where I no longer own the stock.