The Way We See It...
Wednesday, January 03, 2007
The final quarter of this year has been quite impressive
from an investors standpoint, as many of the uranium stocks have nearly doubled
in price and many are trading near their highs for the year as well. It seems
that we rushed everyone into the Labrador Exploration companies right before
they were 'discovered' by everyone else (we realize that one was recommended by
another newsletter writer, but a gain is nevertheless a gain!). We will be
paying close attention to the rest of the world's uranium mining districts to
find which area will have the next spike upwards, and at that time will notify
you, most likely in the same format as last time.
We have an end of year newsletter due out soon, and we will
be sure to notify everyone when that is ready (we expect it to be out by January
10). This will cover the past year and our expectations for the year to come (a
very broad market commentary). At this time it looks highly unlikely that we
shall have any new picks by that time, however shall a buying opportunity
emerge, we will quickly jump at the opportunity.
Looking at what happened today on the Toronto, we see that
there is the possibility that investors will begin to 'bargain hunt' among the
uranium stocks that have not experienced the dramatic run-up as their peers. We
believe that these companies are not of the same quality as some of our
favorites, but realize that they are probably better than the garbage that will
eventually be offered to investors through IPOs in the future. This trend of
bottom fishing has begun in earnest, and shall escalate as investors strive to
leave no stone unturned in their quest to find the next big discovery. Our
advice is that you should follow the established explorers around and discover
the hidden gems within their exploration groups. Think of this as a sort of
derivatives play in which you buy the cheaper security for the same total price
and hopefully get a larger proportional share of the company you invest in.
Please remember that we like to invest in companies that have low share floats
and many promising projects.
Please do not think that this is a new idea that we are
just presenting to you, because it is not. This has been one of the fundamental
rules that we have been investing by since we began this foray into the uranium
miners. We chose Pitchstone over Triex because Pitchstone was one of those half
off sales (compared to Triex on market cap at the time) and had what seemed to
be two times the number of properties for exploration, not to mention the
quality of the properties. It must be noted that both of these companies own a
project together, and split it down the middle...but one was worth two times the
amount of the other at the time! It was one of those strange situations when the
best company was undervalued even though it had better properties and was not
spending a penny on the majority of its exploration stage projects.
The trend carries on, think Santoy, Monster Copper, and
Silver Spruce. That was the order we believed them to be worth from greatest to
least, and amazingly that is the order in which investors have discovered them.
If you simply scratch the surface on the CMB (Central Mineral Belt) in Labrador
you would have discovered Santoy and realized that it was more than a one trick
pony (most investors would have been perfectly happy with this discovery).
However if you would have taken the discovery process to the next stage you
would most surely have found Monster Copper and realized that maybe this was an
interesting play as they had half the properties that Santoy possessed in the
CMB and were not paying a dime on the exploration costs, in fact they were
getting paid to let Santoy explore the land! This admittedly made us quite smug
with ourselves, but we were still intrigued by Silver Spruce, and kept watching
it. The more we watched it, the more we realized that it tracked the rest of the
CMB pretty well, but there was a bit of a lag. This figured perfectly into our
plan and thus the recommendation. Silver Spruce was that small Las Vegas style
bet we placed knowing that when investors found the CMB that it would rise
regardless due to its properties held there. So far it has lagged behind Santoy
and Monster as its projects have not been blessed by a certain newsletter
writer, but we believe that they will have their day as they play catch-up.
Our returns from this trade stand at (as of January 1,
Santoy Resources: 120%
Monster Copper: 61.54%
Silver Spruce Resources: 27.27%
These were our recommendations on November 3, 2006 and in
two months these are the rewards reaped from our work. We believe that this is a
taste of what the future holds in beating the herd into the best of what the
uranium mining industry has to offer.
For those of you willing to do your research, we have been
very intrigued with some of the small partners of Energy Metals. Many of them
possess the small floats desired as well as projects with actual historic
deposits. These small companies will be gobbled up first and when they are
partnered with large companies there is always the possibility of getting taken
out. These companies may be where the next run is, but as stated earlier we are
not sure when or who we shall will recommend what we perceive as the next group
to push forward.
We hope that the new year ushers in the same type of gains
as experienced this year by all those investing in uranium. We hope that this
Holiday Season was as good for our readers and their families as it was for ours
and wish the best of luck to all in their future endeavors.