After declining as much as 20% on Friday, shares of Aurelian Resources Inc. (ARU/TSX-V) closed down only 5%. A news report stating that Ecuador’s government is considering high taxes for miners was to blame, but the minister responsible for the comments was apparently referring to possible changes for the oil and gas sector and only mentioned mining.

Aurelian reportedly contacted this minister and a clarification is expected on Monday.

His comments were made to Agence France Press, but the report that seemed to spark the selling came from Stratfor news service. The exact meaning appears to have been lost in translation given the mining-friendly environment Ecuador has apparently created.

“The comment seemed to counter the positive support and overtures that the newly elected President and his officials have made to several mining companies, including Aurelian,” Blackmont Capital analyst Don Poirier said in a note to clients.

He has a “buy” rating on Aurelian shares, while his $48.35 price target represents upside of more than 50%.

But Aurelian wasn’t the only victim, shares of other companies working or with interests in Ecuador also suffered on Friday. Corriente Resources (CTQ/TSX) dipped 3.5%, Dynasty Mines & Metals (DMM/TSX-V) was down 1.8%, International Minerals (IMZ/TSX) fell 2.2% and IAMGOLD (IMG/TSX) declined 1.5%. Cornerstone Capital (CGP/TSX-V) was down 1.5% and Coastport Capital (CPP/TSX-V) was unchanged.

“The rapid reaction to an erratic Internet-sourced comment highlights the current market condition and necessity for common sense,” Wellington West analyst Catherine Gignac said in a note to clients.

While the political rumours spread quickly on the Internet, so too should any clarification. Then the market will see if Friday was a great buying opportunity or a reaction to valid concerns.

Jonathan Ratner
jratner@nationalpost.com