LONDON (AFX) - Chaco Resources PLC said it is proposing the reverse takeover
of two Paraguayan companies -- Amerisur SA and Bohemia SA -- from Candey SA and
Daniel Sztern in exchange for 27,322,404 new ordinary shares in the company.
It also plans to raise up to 750,000 stg before expenses in a placing of
36,585,365 new ordinary shares.
The company's shares were suspended on Sept 3 and it said it expects this to
be lifted today. It has called an EGM for Nov 15 to approve the acquisition and
placing plans.
Amerisur holds two oil and gas prospecting permits in Paraguay and is the
registered applicant for exploration and exploitation concession contracts over
the same permit areas. Bohemia holds registered applications for an oil and gas
prospecting permit in Paraguay and for an exploration and exploitation
concession contract over the same area.
The exploration areas covered by these three applications comprise a total of
approximately 48,000 square kilometres of the Curypayty and Parana Basins.
Chaco said these basins extend respectively into Bolivia and Brazil, where
commercial oil and gas production has been established for many years from
similar geological sections.

Good luck to all holders today!

A few loose holders taking profit, but still nearly 2 for 1 ratio in favour of buyers, await the RNS, let's hope it's good news.
2517

Similar tree shake to the last few days- hold firm RNS due soon!

I found this article interesting, relevant and informative - from Money Week:

How to value mining exploration stocks

30.01.2006

We looked at how to value mining companies last week. Since these companies have real assets (mines), cash flow, and even perhaps earnings (if we're lucky), putting a value on them is fairly straightforward. Exploration companies are a completely different story.

Exploration companies don't have assets, cash flow or earnings. They typically only have a management team, sometimes a bit of cash, and one to several properties.

The cash will get spent, usually a lot quicker than anticipated. Their projects aren't assets: they are liabilities where the cash is going to get spent. That leaves us with management, and management is absolutely an exploration company's biggest asset - if not its only asset.
Promoters of these stocks will tell you their company's management has a superb track record, but the reality is that there aren't even enough mediocre management teams to run the thousands of exploration companies resident in Vancouver alone.

If an exploration company's only asset is management, how do we put a value on it?

Unfortunately the answer is "with difficulty". There is no easy way to put a value on exploration companies. It is easy to spot a really good deal when it stares you in the face, and it is equally simple to see when a stock is overvalued, but the nature of the business does not readily allow for valuations that one can use for short-term trading or "value investing".

Exploration is risky business. Buying exploration stocks is tantamount to gambling, and there are two safe bets when it comes to any exploration company. One: it will spend the money it has and two: it is highly unlikely that it will make a discovery.

Yet I personally invest essentially all of my net worth in exploration stocks because I believe that there are ways to mitigate the risks and to shift the odds of success in my favor. Fortunately this part is straightforward.

The Nineties were rough for mining and there are now very few new exploration geologists graduating from school. To make things worse, most of the graduates of the past decade want desk jobs, making their odds of discovering anything very slim.

When the major mining companies downsized their exploration efforts during the Nineties they not only curtailed exploration expenditures, they fired most of their geologists, closed regional offices and let many of their projects go. This caused a shift in exploration demographics - the more innovative and experienced exploration professionals got together and formed new junior exploration companies, and picked up many of the projects the majors dropped. As a result, major mining companies now lack the human resources needed to explore for new ore deposits.

Still, mining is a depleting business - the more you mine, the less you have left to mine and without exploration, mining will cease very rapidly. The mining companies know they need access to good exploration projects and, more importantly, good exploration teams. We know it too.

We need to look for companies whose managements have the ability to generate new exploration projects and the business acumen to joint venture those projects to major mining companies. A joint venture partnership allows the junior exploration company to use its intellectual capital to generate exploration ideas but the mining company's financial capital to test them. It is absurd to think that the average exploration company has but the remotest chance of making a discovery given how much money and time it takes. The only rational way to approach exploration is to marry the innovative skills of quirky, and often unsocial, exploration geologists with the balance sheets of mining companies in a win-win partnership.

In a typical deal the exploration company will generate an exploration idea, acquire the ground and perhaps spend a little bit of money to confirm that the geologic model it is proposing has merit by looking at soil geochemistry, geophysics and good old-fashioned geological mapping. Thereafter it will attempt to get a mining company to commit exploration funds to test its ideas in return for earning a percentage interest in the project. Typically the mining company can earn up to 70% to 80% by completing a bankable feasibility study or even financing the project to production.

This means that if our company is successful, we will end up owning 20% to 30% of a mine, whereas if it is unsuccessful it would have lost some time and a little bit of money because the mining company footed the heavy bills. This way an exploration company can use its limited cash resources to generate numerous projects, all funded by joint venture partners. It increases the life expectancy of the exploration company and by enabling it to generate and test more projects it also increases the probability that it will eventually be successful. I would much rather own 30% of a successful project than 100% of a dud.

There is something else that happens here. With this model the exploration company has to convince the geologists working for the mining company that its projects have merit. Not only do they need to have merit, they need to have sufficient merit to compete with the exploration projects generated internally by the mining company and all the other exploration projects being presented to the major by other juniors. This is a lot more difficult for a junior to do than to convince doctors, lawyers, dentists and taxi drivers that its projects are one drill hole away from changing the world (with all due respect to doctors, lawyers, dentists and taxi drivers).

I therefore avoid exploration companies that tell me they are going to spend millions of dollars drilling on their wholly owned projects, unless there are very, very, very compelling reasons.

We also have to look at what kind of projects the exploration company is looking for. You will be surprised how many times I have sat through presentations only to learn at the end that the geological target is unlikely to ever be economic or, if it might be, that it is likely to be so small that no major mining company will have any interest in it. The only thing we are interested in is making world-class discoveries.

This brings us to the next part: you should have access to a critical and well-seasoned exploration geologist. I am not a geologist yet I have to sift through geological evidence every day and decide whether to accept or reject the risk of exploration. I work very closely with a consulting geologist, and without access to a consultant I can trust it would be almost impossible to succeed in this business.

If an exploration company consistently comes up with new projects and continues to get exploration funding from major mining companies then this is a business I am interested in owning. I view stocks as fractional ownership in a company, not as trading cards. So if I find a business I would like to own I often watch it for several years, waiting for an opportune time to buy.

First published on Kitco.com (www.kitco.com)

By Paul van Eeden

Paul van Eeden works primarily to find investments for his own portfolio and shares his investment ideas with subscribers to his weekly investment publication. For more information please visit his website (www.paulvaneeden.com). If you would like to read more from Paul, you can sign up to get his weekly commentary at http://www.paulvaneeden.com/commentary

Inevitable after yesterday, but it doesn't alter the prospect of yesterday's rise in the sp's likelihood of being dwarfed by what will happen when an RNS is released. To date the company has always been very careful to refrain from issuing an RNS until it is absolutely certain that all possible ambiguities in the documents have been resolved. Better that, than discover a loophole at a later date. The more weak holders of this stock that are shaken out the better it will be later in my view. A good number must have ceased to be shareholders yesterday.

Some Tree Shake!

Thanks Schiff, very useful

#1480 was in answer to 1478. As for the article posted by Schiff, I think that is regularly posted and contains some very good points, particularly as regards the need for good management and partnership deals. The article might have added local knowledge, good local connections and a measure of good luck. I think that Chaco survives on all those criteria.

Textbook stuff, small percentage shake, just enough to get the weak ones out but not quite enough with the spread to make much if you closed at the highs.

Starting the shake at 13:30 on the dot's not exactly subtle though. Not quite sure who'd fall for it again especially as we had the same scenario a few days ago.

Another note, I would have expected chaco to have been forced into making an announcement regarding recent share price movement. The fact that they have said nothing indicates to me that the news we are waiting for is in fact due shortly but are double checking/getting signatures etc.

In my previous experience, when a company goes quiet it is usually a good indication that the rumour is true.

WDBM back on high bid, shake looks to be over.

MPH agree with you. Regrding the company having to explain sp movements, I think AIM stocks are under fewer obligations on that front even if some still do voluntarily try to follow the rules governing FTSE stocks. I am sure that they are so close to this announcement being capable of being made that they have taken the view that they may as well say nothing for the sake of 24/48 hours wait.

Normal service resumed until RNS that is!

1,000,000 buy at 12.40 just gone through from yesterday....

Interesting day so far,slight tick up first thing to suck people in then back to 12p. Buys outnumbering sells 3 to 1 and no increase,but nobody seems to bailing out in a hurry, all waiting with baited breath.Have we found a new support level,hope so.

Sharesure hi, do you think the rns will be announced early doors or later in the day,and what are the advantages of these two scenarios if any.
Cheers pisces.

Pisces, you credit me with more than I can answer! It would be good to see this RNS whenever they can announce it - sooner rather than later as some folk get very easily bored or distracted. If I had to make a prediction I would say mid morning Thursday but I wouldn't stake anything on that being right. More likely I shall be wrong.

Built yourself a bit of a reputation there sharesure!

Held its own today but some buys at the end may give a boost to the opening and then if RNS!!

Seems like every stock I hold at the moment has imminent news coming......

Whats the odds on getting them all at the same time???????

Are there any doctors in, would my head explode??????????

dibbles - over half my holdings have all shot up to new spikes recently - what if they all come down together?!?!?

sd