Investing Success - Resource Sector Trading & Investing Advice / Trading Notes

Back in 2002 when I was just starting in the brokerage business in Saskatchewan, CANADA there was a stir of activity in the central part of the Province when it was announced that an OTC listed company called Uranium Power Corp had acquired some land leases in what is called the Pasquia Hills. The game plan - to pursue oil shale.

Oil shale - what the hell was that? we all muttered.....an OTC listed company !! we gasped.....Surely this must be a dud. After all Oil was trading at the $26/barrel level and as far as we Saskatchewan-ites were concerned Oil was something that came from Alberta, not from some fancy oil shale deal in the Pasquia Hills.

That OTC listed company morphed and grew and today you will recognize it by the name of Oil Sands Quest. But, Oil Sands Quest along the way opted to neatly tuck the Pasquia Hills project onto the back burner until the time was right.

Now, at last the time appears to be right. The former CEO and founder of Oil Sands Quest Christopher Hopkins now plans to leave Oil Sands Quest to start a new venture to be called Can Shale. Oil Sands Quest will ultimately retain about 15% interest in the newly created company. The deal is contingent on Can Shale raising $12.5 million in IPO financing. The assets of Can Shale will be the Pasquia Hills properties.

This shale project comes with a fair bit of history already attached. Back in 2004 a player in the Pasquia Hills called Western Petrochemical had drilled 45 holes in the area and determined that over a very small footprint there was 117 M bbls oil measured, 350 M bbls oil indicated and 3.9 B bbls inferred. Assays at the time also included a high benzene content plus styrenes and napthalenes.

The pay Pay zone was noted to be 70 feet deep, 150 feet thick with a very nice strip ratio of 0.65:1. In other words, the shale material was amenable to open pit strip type mining. Uranium Power Corp went on to merge with Western Petrochemical, the resulting product being CanWest Petroleum and ultimately OilSands Quest.

In 2005 Nova Chemicals started to study the project with intentions of maybe funding development in exchange for an offtake agreement. But Oil was sub-$50 at the time and the cost of extraction and processing was pegged at something nearer to $35/barrel. So, not quite juicy enough for the folks at Nova Chemicals.

Also in 2005 the US Dept of Energy stepped in and carried out some research as did a laboratory in Alberta. The result of this was the conclsuion that an existing process called the Alberta Taciuk Process could be used to liberate the oil and the other hydrocarbons. I will refrain from a long diatribe on the Taciuk Process at this juncture. Do a Wikipedia Search and you will find enough to keep your curiousity whetted for some time.

So fast forward to today. With Oil trading in the $70-$80 range and I might add showing no signs of collapsing under the steady barrage of gloom and doom, the time for Oil Shale in Saskatchewan has come.

Can Shale is just now starting to market its financing. I for one plan to jump in with both feet in this one. Once I obtain more information, I will post it in another Trading Note, but I already have enough information to make an informed decision. Can Shale hits the ground running with measured and indicated resources of 460 M barrels. At 10 cents a barrel in-situ, this means Can Shale should demand a market cap of $46 million. Issuing $12.5 million on the first round of financing says that there is plenty of near term upside to this deal.

Talk to your Advisor and ask about CanShale. There should be both flow through and hard dollar product available.

InvestingSuccess

TRADING NOTE

June 9, 2010

Endeavour Financial (TSXv:EDV) - trading at less than 1 x earnings !!

At a time when the price of gold is soaring, most gold producers are getting increasingly rich valuations. It’s getting hard to find bargains. But one of the most profitable gold related companies on the Toronto Stock Exchange is trading at less than 1x earnings. The company in question is Endeavour Financial.

Endeavour Financial (EDV-TSX) announced on Tuesday May 11 its 9 month earnings to date are $2.88 per share. The stock now trades just below that.

Most gold producers are now trading at a hefty premium to NAV (Net Asset Value) – often 1.5 – 2.5 x NAV, but Endeavour remains perhaps the most compelling deal out there –even though it has already doubled in price in the last 12 months.

Endeavour is trading at 0.6 X NAV – a 40% discount. EDV currently trades at $2.46 at this time of writing – a 43% discount to its Net Asset Value of $4.39 per share. The company has tripled its NAV in the last year.

To be fair, Endeavour is not a pure gold producer. But its track record in creating value for shareholders is actually much better than most producers.

Endeavour is a merchant bank focused on the natural resource sector. It creates new gold producers, and is also involved in the financings, mergers and acquisitions of junior gold mining companies. It also has an advisory service, where it helps junior gold companies grow.

As the global economy continues to tremble and occasionally have grand mal seizures – the “flight to safety” gathers momentum. According to the World Gold Council, “Investors bought 5.6 net tonnes of gold via exchange traded funds (ETFs) in Q1 2010.” Total gold in ETFs hit a new record of 1,768 tonnes, about $60 billion worth. If you think gold is just a fad, consider that it is estimated that less than 3% of active investors currently own bullion.

John Doody, publisher of the Gold Stock Analyst, states, “Governments are creating a lot more paper and more inflation is going to come out of that. Until your taxi driver starts telling you to buy gold, you are safe buying it."

Gold junior mining companies are popular gold investment vehicles for risk-tolerant investors. Instead of paying $1,200 an ounce for the bullion, you pay anywhere from $30 to $180 an ounce for gold that is still in the ground. The challenge is to identify companies that are most likely to get the gold out of the ground at the lowest possible cost.

This is Endeavour’s niche. In a May 12 web-cast headed by CEO Neil Woodyer, EDVs balance sheet and financial strategies were revealed, reporting revenue of US$241 million and net income of US$213.5 million or US$2.20 per share for the nine months ending March 31, 2010. The financial performance was centered on gold strategy investments valued at US$454 million and general merchant banking investments of US$59 million.

During the quarter ended March 31, 2010 the Corporation implemented its second strategic gold investment and invested US$132.8 million to acquire 920,195,430 common shares representing 43% ownership of Crew Gold Corporation (CRU-TSX).

In October 2009, EDV paid US$58.3 million for 55% ownership of Etruscan Resources (EET-TSX) – a West African gold miner. They facilitated debt restructuring, reduced the gold hedge and provided working capital. Endeavour occupies 4 of 8 Etruscan board seats. The Value of Endeavour’s Etruscan investment at quarter end was approximately US$71 million.

So, in a nutshell, think of TSX:EDV as a gold company with an aggressive approach to life. It finds gold-rich companies and applies financial muscle and strategic expertise to make those companies more appealing to investors and other gold mining companies. Endeavour’s stated plan is to have a controlling interest in a 1 million ounce gold producer. Their investments in CRU and EET are the first steps in that strategy, and if they manage to achieve that - thereby creating an intermediate-sized gold producer – it will likely drive their higher valuation multiples, further increasing Endeavour’s NAV and stock price.

: Gold Juniors Outperform the S&P500.

: EDV Surges on Gold Buying

InvestingSuccess

TRADING NOTE

April 6, 2010

Fieldex (TSXv:FLX) - makes a Rare Earth acquisition...

Hybrid cars, amusement park rides, electric guitar amps, speakers, iPod earphones, cordless tools, computer hard drives, computer circuitry, high speed mag-lev trains, particle accelerators, ball mill linings for the mining industry.

Magnets – Our World Depends on Them

What do all these diverse things have in common? The answer is something that we all perhaps take for granted. The answer is something that we all at one time or another have perhaps played with in science class in school. If you guessed the answer to be MAGNETS, you are correct.

Alnico, Ferrite and Rare Earth Magnets

Now try to imagine life without these items and the many other applications that all depend on magnets. As you are trying to envision this, let me briefly explain how magnets are made. There are three basic types of magnets in use today: ferrite magnets, alnico magnets and rare earth magnets. Alnico magnets are made of a sintered mix of Aluminum, Nickel, Cobalt and Iron. Problem is, their magnetic properties are such that large dimensional sizes are needed to function effectively, thus making them ineffective for many of today’s small scale hi-tech applications. Ferrite magnets are hard, brittle ceramic compounds sintered from iron, manganese and zinc. A typical fridge magnet that you use in your kitchen is a ferrite magnet. The magnetic properties of ferrite magnets are not nearly good enough for many of today’s hi-tech applications. Rare earth magnets are typically Samarium-Cobalt or Neodymium-Iron-Boron compositions. Rare Earth magnets have substantially better properties than Alnico or ferrite magnets thus making them ideal for many of the applications listed at the outset of this article. At the risk of getting too technical, let me just say that Rare Earth elements ( #57 through #71 on the Periodic Table) have unpaired electrons in their f-shell orbitals which imparts a magnetic moment and thus some excellent magnetic properties. In addition to Samarium and Neodymium, other Rare Earth elements of interest to magnet makers include Cerium, Lanthanum, Praseodymium and Gadolinium.

Imagine Life Without Magnets

Now, back to my proposition. Try to envision life without Rare Earth magnets and the many things they are used in. Could such a scenario ever unfold? You bet it could and in fact it may well be unfolding quicker than we care to think.

China – Are They Running Out of Rare Earth ?

You see, China controls 95% of the world’s Rare Earth minerals thanks to its huge Bayan Obo deposit. But, something may be wrong at Bayan Obo. China for the past 6 months has been rumbling that it may seek to curb exports of Rare Earth minerals to the rest of the world so as to ensure its own domestic supply. These rumblings now seem to be getting more frequent and louder. The Chinese, in my opinion, are signaling that they have a problem. Bayan Obo may well be running out of ore.

The USA is Worried over these Chinese Threats

This dark scenario of supply restrictions being created by China’s threats have sparked a frenzied rush in North America to locate viable domestic sources of Rare Earth minerals. In fact, in the USA President Obama has directed the House Sub-Committee on Science to investigate the entire US dependence on Rare Earth and report back to him with recommendations in April - this month.

The Markets Have Taken Notice

The Investment Banking and Brokerage communities have also both taken note of this developing trend. Already several investment conferences catering to the notion of Rare Earths are popping up on the calendar and companies seeking investment dollars to pursue Rare Earth projects are having little trouble finding working capital.

So as an investor seeking to participate in this trend, what does one do? Where does one invest?

Here is a Company to Look at

One junior company to consider is that of Fieldex Exploration. Fieldex just announced the acquisition of the Michikanats Property along the Quebec-Labrador border. In particular take a look at the area around 54, 30, 00 North, 64, 30, 00 West on your favorite mapping program. This project is situated some 100 southwest of Quest Uranium’s Misery Lake project and some 220 kms south of Quest’s Strange Lake project as the map following this article shows. Quest Uranium has identified some very excellent Rare Earth geology and there is no reason to doubt that the Michikamats Project is any different geologically. The geology of this area appears to be one of granitic intrusives that have brought with them Rare Earth mineralization. Geochemistry done to date on the Michikamats Project shows some very intriguing anomalies.

Pangea and the Arc of Alkalic Intrusives

If one goes back 300 million years in geological time, the continents at that time were coming together to form one giant supercontinent called Pangea. Geologists have now determined that within Pangea there was an arc of alkalic intrusive volcanic activity. This arc extended south from the area that is today known as Mountain Pass, California east to Wyoming, south through Colorado and into New Mexico to include the Gallinas Mtns and Pajarito Mtns. This arc then turned up and headed north and east through Nebraska, Arkansas and then into upper New York state and ultimately into what today is Quebec and Labrador. The arc then continued even further extending into to what is today known as Greenland and Norway. Today, smart investors recognize this geological arc as being the most highly prospective area in North America for Rare Earth mineralization. Companies having projects along this arc are receiving a good deal of investor attention.

And...as it happens...the Michikamats Project is right along this ancient geological arc and is thus well situated to deliver some very interesting results.

Fieldex is headed up by Martin Dallaire, an engineer with considerable junior company experience. The Fieldex Board is one with considerable mining and resource exploration experience. At this time of writing, Fieldex has 58 million shares outstanding and is trading at or near 20 cents.

Pay Attention to Fieldex

Rare Earths are more than just a passing fancy in today’s markets. Investors with a serious interest in Rare Earths should take a harder look at Fieldex. The Mitchikamats Project could prove to be very lucrative. Fieldex trades on the TSX Venture Exchange under the ticker symbol FLX and on Frankfurt under the ticker F7E. As Fieldex conducts more work on this intriguing project, I shall be writing follow up articles. Stay tuned.

: Mitchikamats Map

The most lucrative resource oportunities are often found in parts of the world that have been held back from development due to political or cultural reaosns. Case in point - Albania. Here is an emerging nation that has a growing economy and that has wishes to even join the European Union. Problem is, Albania for many years was severely mismanaged for 40 years by paranoid Stalinist dictator Enver Hoxha who was so "xenophobic" (afraid of foreigners) that he refused to even allow airborne geophysics surveys lest the data be sold to his enemies. When Hoxha was booted from power in 1992, Albania slipped into a decade long period of anarchy that made it impossible for foreign companies to do business.

Today, the story is much brighter. In 2009 Albania had the best growth rate in Europe. Foreign investments have increased 59 percent in the past two years, Albania is now a NATA member, Prime Minister Sali Berisha and his parliament have raised salaries, lifted Albanians out of poverty and radically improved the education system. Even tourism has seen a boost, growing 30% in the past five years. Investment too is on the rise. With a 10 percent flat tax rate, many Western European companies are now seeking out investmentopportunities in Albania. Even the international financiers have taken note. JP Morgan Chase and Deutsche Bank are now managing the sale of a $600 million Eurobond with a five year maturity.

In addition to mineral potential, Albania also boasts serious oil and gas potential. Canadian based energy company Bankers Petroleum was one of the first movers in Albania as the economy improved. From pennies a share, Bankers (TSX:BNK) has risen to the $9 range.

Now another group has established their footprint in Albania. Petromanas (TSXv:PMI) with the backing of Endeavour Financial (TSX:EDV)-advised by noteworthy figure Frank Guistra and also with the backing of private merchant bank Penninsula, controlled by legendary financier Sam Magid.

The website www.world-petroleum.org/slovenia/pdf/albania_oil_sector.pdf shows that the Albanian oil industry is divided into an assortment of blocks namely Blocks 1 through 8, and Blocks A through F.As a matter of interest, the largest onshore oilfield in Europe - Patos Marinza is located within Blocks 2 and 3. Petromanas has acquired land interests totalling 1.7 million acres within Blocks A, B, D , E, 2 and 3. All of these Blocks have identifiable geolgical structures that are highly prospective for the hosting of oil and gas.

To date, Petromanas has been diligently working on geology, geophysics and seismic processing on its holdings. The first wells to be drilled will be on Block E and Block 2 sometime towards the end of this year.

Petromanas is well funded and ready to perform on its substantial landholdings.Could Petromanas be another Bankers Petroleum? Could it deliver serious upside results for shareholders?

In the opinion of the team here at InvestingSuccess, we think so. We have taken a position in Petromanas at the 55 cent level and plan to add to this position on any price dips that may occur.

All too often when the markets are chaotic it is hard to see clearly, hard to think, hard to function. The media drones on and on about the AIG hearings, the prospects for a Bernanke re-appointment to the Fed top job, the shortcomings of the Obama administration a year into the job and so on and so on. Its enough to make the most emotionally hardened of us want to crawl into the corner and assume the fetal position.

But, during the bleak times when the markets are correcting, if you peel back the layers of onion and dismiss the dismal rants of the TV talking heads all too often amidst market chaos there can be seen a shining light, a guiding beacon of sorts, a signal of things to come.

As I struggled to wake up this morning to what I was sure would be another day of gut wreching market gyrations, I flipped on CBC Radio and what I heard quickly propelled me out of bed and into action. The news headline that stirred me - BHP Billiton was stepping up to the plate to buy out Athabasca Potash in all all cash deal. As I fumbled around the kitchen

making my morning coffee, the pieces of the puzzle started to fall into place. BHP acquiring another Saskatchewan potash project after just having announced last week its intent to advance its Jansen project in the Province towards production. Vale Inco buying some phosphate fertilizer assets from agri giant Bunge. Amazing...I thought to myself. Absolutely amazing. Amidst all the market gyrations, here was the harbinger of things to come. The guiding light. The signal of things to come. Crop nutrients were back in play.

To understand why crop nutrients are coming back to the fore, all one need do is take a closer look at some world statistics. I distinctly recall that the July 4, 2009 edition of the Economist magazine carried a brilliant article on the subject of global food. At the moment, the global population stands at some 6.7 billion souls and is growing (albeit slower than in past) at the rate of about 750 million people per year. By 2050, it is reckoned that the global population will hit 9 billion and then plateau from there.

To keep pace with this growth, global food production will have to increase. Add to this stark reality the notion that people are no longer just eating grains. Each year in India and China, 40 million people rise to attain

“middle class status”. That’s more than the population of Canada – every year! With this increased prosperity comes a greater demand for an improved diet with more vegetable and meat protein. As the population grows and as

living standards on balance improve, the need for mobility also enters into the fray. People in developing nations are starting to own automobiles in greater numbers. Certainly oil is a source of energy to power the growing

numbers of autos, but so too is grain based biofuel. The competition to use grain as a food and as a fuel remains alive and well as a theme in itself.

So, where is this additional agricultural output to come from? The drive to global prosperity over the past decade has seen vast tracts of agricultural land swallowed up in order to build factories, assembly lines, chemical plants and what have you. China has now given up so much agricultural land it is on the verge of becoming a Corn importer for the first time in its history. China is already a big importer of Soybeans which along with Corn is vital for livestock and poultry feed so that enough pork and poultry can be produced to feed the masses. Problem is, China cannot start importing all its foodstuffs. It has got to produce more and grow more from the agricultural land that remains.

In India, food production has not kept pace with food demand. As well, shifting weather patterns are affecting global agriculture. Whether we are in a period of global warming remains open to intense debate ( are you listening Al Gore ??). But what is for sure is the notion that we definitely are in a period of profound climate change that stands to seriously affect annual agricultural output. Politics too is present at the margins of the agricultural story. With Europeans still refusing to accept genetically modified grains (GMO), Brazil has stepped up to the plate to supply more non-GMO grains. In addition the Brazilians are also major producers of ethanol from sugar cane. Put it all together, and you see that Brazil too is under pressure to increase its agricultural output. So how do you attain greater crop output from your land so as to provide bio-fuels, feed for animals, and grains and vegetables for human consumption? The answer is simple. You fertilize the land to enhance its vitality. Which brings us full circle in this argument.

Crop nutrients like Potash and Phosphate are enjoying a strong market because the world needs these products as a major source of fertilizer. Back in 2003 potash prices were $250/tonne. Today, the world price is in the nieghborhood of $460/tonne which is a profitable price point for the major producers. Phosphate fertilizer prices have largely followed potash prices. In 2009 prices for these nutrient products approached $1000/tonne. For sure - a sign of things to come.

The big major corporations can clearly see what is happening on the agri-business front and thisis why they are driving hard to get their piece of the crop nutrient pie right here and right now.

In a January 27, 2010 press release Vale elaborated on its purchase of the Bunge assets in Brazil. Here is part is what was said:

"Vale will acquire 100 percent of Bunge Participacoes e Investimentos SA, which owns phosphate rock mines and assets in Brazil, and Bunge’s 42.3 percent stake in Brazilian fertilizer producer Fertilizantes Fosfatados SA, or Fosfertil, the Rio de Janeiro-based company said today... Vale, the world’s biggest iron-ore producer and second- largest nickel miner, is seeking to diversify from iron ore and boost investments in fertilizers throughout Latin America as Brazil aims to reach self-sufficiency in crop nutrients after prices surged. The company plans to become a global fertilizer supplier, Chief Financial Officer Fabio Barbosa said Aug. 4."

So....the world's biggest iron ore producer wants to reposition itself as a global fertilizer supplier. Interesting...

Last week, mining giant BHP announced it is proceeding with the environmental studies on its now 100% owned Jansen project near Saskatoon, Sask. BHP acquired full ownership of the Jansen project with its recent full takeover of junior potash player Anglo Potash.

Now, BHP is now making its second foray into the Province of Saskatchewan. Here is a portion of the news release:

"Global mining giant BHP Billiton said on Thursday it has agreed to acquire Canadian potash explorer Athabasca Potash (API.TSX) for C$341 million in cash, expanding its asset base in the potash-rich Canadian province of Saskatchewan. The bid further illustrates BHP's commitment to the sector. It bought Anglo Potash in 2008 and plans to invest $240 million in 2010 to develop its Jansen potash project in the province. BHP said it agreed to pay C$8.35 per share in cash for Athabasca, a 25 percent premium to Athabasca's closing price of C$6.70 on Wednesday..... BHP has repeatedly expressed an interest in becoming a major player within the potash industry".

So...another global major mining company seeking to lock down a position in the crop nutrient sector in a big way. Intriguing...

The big major mining corporations can clearly see the road ahead and the road ahead is paved with crop nutrient fertilizer.

So how do we as an individual investors take advantage? Well, consider investing in some of other the junior potash players that have staked a presence in Saskatchewan. As more attention is brought to bear on the investment theme of crop nutrients, you can be rest assured that these junior players will be "feeling the love". One story in particular that I do like is Encanto Potash which trades under the ticker EPO on the TSX Venture Exchange.

I recently wrote a more detailed TRADING NOTE on Encanto and I do encourage you to take the time to read it thoroughly on www.investingsuccess.ca.

Encanto is trading in the 21 cent range and as you can read in my TRADING NOTE, my rough calculations show that Encanto is worth somewhere closer to $1 a share. I have no doubt that those larger global players seeking to nail down a piece of the crop nutrient pie are waiting with eager anticipation for Encanto to start releasing its assay results. The time to buy Encanto is right now. Right now while everyone else is running for cover and Advisors are cowering under their desks with fear.

Don't let the negative hype surrounding this market correction depress you. Follow the guiding light. Follow the big major mining companies. Follow the serious money. Follow the crop nutrient story.

One potash story we have been following here at InvestingSuccess is that of Encanto Potash (TSxv:EPO), www.encantopotash.com.

Encanto should be out quite soon with some assay results on its Muskowekan and Day Star projects, located not too far from Regina, Saskatchewan, CANADA.

As a precursor to these expected assay results, Encanto has just released some news that it has completed the logging of some old historical oil wells proximal to its project area (see press release of Jan 15,2010). This logging exercise picked up on the 3 potash bearing members that define the Prairie Evaporite Formation in Saskatchewan, namely the Patience Lake Member, the Belle Plain Member and the Esterhazy Member. Logs clearly show the thickness of these zones. These old oil wells are situated several kilometers distant from the project area, but the logging data is quite valid given the uniformity of the potash beds in Saskatchewan.

I have taken the liberty of doing some of my back of the envelope mathematics on the information provided by this logging exercise. A word of caution - these back of the envlope ciphers have both won me praise and also contempt in the past, so please don't bet your entire portfolio on what I am about to show..

From the claims map included with the logging report, I reckon the Day Star project area to be about 36 sq. miles or 93 sq. kms.

The old oil well logged shows the Patience Lake Member to be on average 4.2 m thick, the Belle Plaine Member to be 4 m thick and the Esterhazy Member to be 1.2 m thick. I am going to assume that the Esterhazy Member is too thin to be solution mined.

So,let's go with 93 sq. kms x 8.2 meters of mineralization= 762.6 million cubic meters.

762.6 million cubic meters x 2.14 tonnes per cubic meter = 1.63 billion tonnes of potash mineralization.

Now, industry standards call for application of a 25% reduction factor on inferred resources to account for any underground anomalies which leaves 1.22 billion tonnes of resource.

Next, when solution mining, only about 34% of the material can be removed. If you think about it, if all the potash bearing material were removed, the ground would collapse and the local land owners would be some irate !!

Next, industry standards call for the application of an 80% efficiency factor which leaves 333 million tonnes.

Lastly, standards call for a 5% further efficiency reduction which leaves 316 million tonnes.

From the claims map included with the logging report, I reckon the Muskowekan project area to be about 45 sq. miles or 116 sq. kms.

The old oil wells logged shows the Patience Lake Member to be on average 4.2 m thick, the Belle Plaine Member to be 3.6 m thick and the Esterhazy Member to be 2.4 m thick. I am going to assume that the Esterhazy Member is solution mineable in this case.

So,let's go with 116 sq. kms x 10.2 meters of mineralization= 1.183 billion cubic meters.

1.183 billion cubic meters x 2.14 tonnes per cubic meter = 2.53 billion tonnes of potash mineralization.

As described above, industry standards call for application of a 25% reduction factor on inferred resources to account for underground anomalies which leaves 1.9 billion tonnes of resource.

Next, as outlined above, when solution mining, only about 34% of the material can be removed. Applying this figure leaves a resource of 646 million tonnes of resource.

Also, as noted earlier, industry standards call for the application of an 80% efficiency factor which leaves 516 million tonnes.

Lastly, standards call for a 5% further efficiency reduction which leaves 491 million tonnes.

So, in total, these rough calculations hint that Encanto could be sitting on a recoverable resource of 491+316 = 807 million tonnes of potash mineralization.

Valuations are always tricky. A quick glance at a company called Potash One shows me that it is trading for about 21 cents per tonne of resource in the ground. Now, to be fair, Potash One is a bit further advanced than Encanto.

Given that Potash One is a bit more advanced, I am going to use a figure of 18 cents per tonne of resource in the ground. Applying this metric to Encanto says that with 807 million tonnes of resource based on my quick and dirty calculations, Encanto should sport a market cap of $145 million.

As I said at the outset of this Trading Note, don't rush out and drop your entire net worth into Encanto shares based on my scribblings and cipherings.

Do however, start to pay more attention to Encanto. It is clearly worth a heck of a lot more than the 22 odd cents a share it is presently trading at.

The assay results expected out soon will go a long way towards supporting a higher share price as will news of any future infill drilling on the project areas. A proper 43-101 Technical Report will eventually give the analyst crowd something to hang their hats on as they confirm a higher valuation on the stock. But, as for right now, I think this logging exercise was a brilliant move by President Jim Walchuck and his team. I am not going to sit idly by and wait for the analyst crowd to tell me what I already know. Encanto at 22 cents is undervalued. I will be taking a meaningful position in Encanto in the coming days to catch what I think will be a serious move higher in share price.

Back on July 19, we introduced to you a new potash player - Allana Resources and its Ethiopian potash play.

Over the past few months, Farhad Abasov and his team at Allana have been....shall we say....kicking ass and taking names....

But more importantly, Allana has been negotiating with a Chinese partner who was proposing to fund a goodly portion of the project construction costs in exchange for an equity stake in Allana. This firm has now completed its technical due diligence and has recieved Chinese government approvals to go ahead and execute the formal agreement.

But, hold the bus !! Allana as of a couple days ago has now recieved what it is calling "multiple unsolicited offers" from other players who want a piece of the action.

All this activity has seen a huge increase in share price (over 50% in October alone) and daily trading volumes have also surged as well.

Management is now reviewing these unsolicited offers and I expect to hear more soon. Once the dust settles, I plan to have Mr. Abasov on one of my podcasts to provide more details. Stay tuned....

Is there oil in Colombia? You bet there is....in a big way. Consider the following geological facts:

The Cordillera Oriental is one of three main mountain ranges that divides the Andes Mountains of Colombia. The western part of the Cordillera Oriental belongs to the Magdalena River basin, while the eastern part includes the river basins of the Amazon River, Orinoco, and Catatumbo.

Important hydrocarbon deposits exist within Tertiary and Late Cretaceous reservoirs in all of these basin areas.

During late Triassic (248 to 206 Ma ago) to Early Cretaceous (146 to 65 Ma ago) the area underwent an episode of rifting and basin formation. During this Early Cretaceous time, up to 5 km of sedimentary rocks accumulated in the Bogota Basin which covered the central and northern portion of the Cordillera. During Paleocene time (65 to 54 million years ago), marine black shales were laid down.These shales today are the source of hydrocarbons.

In the Magdalena Valley, which lies between the Cordillera Oriental and the Cordillera Central, there is evidence for the onset of compressional deformation during this Paleocene time. From Late Eocene to Early Miocene (38 to 24 million years ago), a new episode of basin subsidence affected a large region extending east. This subsidence was driven by tectonic uplift and denudation which started about 20 Million years ago. The sandstone of the Mirador Formation, the principal hydrocarbon reservoir of the eastern foothills of the Cordillera Oriental, was laid down at the onset of this stage.

Get used to hearing about Mr. Giustra's latest project - Petroamerica Oil Corp. This upstart company has boldy taken a stance in Colombia and here at InvestingSuccess, we are looking for great things to happen.

Petroamerica, (formerly Cantrell Capital Corp.), resumed trading recently after a three-month halt. It issued 60 million shares to three vendors for a one-half interest in four prospective Colombian oil claims and completed a 180-million-share private placement to raise $45 million for working capital.

Petroamerica has acquired all of the issued and outstanding shares of Imore SA in consideration for these 60 million issued shares. Imore has the right to acquire 100% Participating Interests in exploration contracts comprising over 220,000 hectares in the Oriental Cordillera Basin, the Llanos Basin, and the Middle Magdalena Basin, of Colombia. In order to acquire the initial 50% working interests, Imore was required to pay US $1 million and was required to fund a US $43 million exploration program over 36 months (including US $15 million over the first 17 months). Imore has already paid $8.5 million to support guarantees for the exploration commitment and has also funded US $6.5 million of the exploration budget. Imore also acquired an option to acquire the remaining 50% balance Participating Interests in these contracts. The option was acquired at a cost of US $3 million (which was satisfied through the issuance of 12,742,800 million shares) and the option can be exercised by payment of US $50 million. So, with the $45 million raised, Petroamerica can now easily assume the more near-term of Imore's obligations.

Patroamerica and Petro Vista SA have also agreed on a farm-in to one-half of Petro Vista's 50% participating interest in the Morichito Block located in the Llanos basin in Colombia and will also farm-in to one-half of Petro Vista's 50% participating interest in Block SSJN-5 located in the Lower Magdalena basin in Colombia ("Block 5"). In order to farm-in to the Morochito interest, the Company is required to pay Petro Vista's cost of a planned well (to a maximum of US$2.5 million) and in order to complete the Block 5 farm-in, the Company has agreed to fund 100% of Petro Vista's share of the costs of certain seismic program obligations. After the Block 5 farm-in, the Company can acquire Petro Vista's remaining 25% interest for US $3 million, payable in cash or shares. In conjunction with these farm-in arrangements, the Company agreed to purchase 25,000,000 shares and warrants of Petro Vista by way of private placement at a cost of $5 million.

Petroamerica is by no means alone. Petrominerales (TSX:PMG - a 67% owned division of Canadian firm Petrobank TSX:PBG) is a serious player in the area as it Pacific Rubiales (TSX:PRE).

Damn straight they have. Take a look at the press releases for Petrominerales and you will see what I mean. The wells tend to be deep at 12,000 feet, but the flow rates can run between 6000 and 10,000 barrels a day. Yes...I said per day.... It doesn't take too many of these wells and you have a winner of a stock on yoru hands. Petrominerales is now a $16 stock and Pacific Rubiales a $13 story, both after humble beginnings several years ago.

Some say this is a detriment. Some view it as a positive (as do we at InvestingSuccess). The share structure on any of these Guistra led deals tends to be quite high. In the case of Petroamerica, we are talking over 300 million. But, this also means that the story is a liquid one. One can trade in and out and pick off the smaller moves to make a bit of profit if thusly inclined.

Keep your eye on this story. It could prove very interesting indeed. I say this for 2 reasons - first it is a Guistra led deal and these tend to be quite dynamic and second this area of Colombia is prolific to say the least as evidenced by the other players in the region. At this time of writing, PTA has just closed the day at $0.71 on volume of 480,000. Watch closely.....

"The greatest challenge to the world is not US$100 oil; it's getting enough food so that the new middle class can eat the way our middle class does, and that means we've got to expand food output dramatically,"

I've been expecting this for two years. The food system is entering a period of very significant restructuring, the first since the years after the Second World War. We may look back at the second half of the last century as an era of cheap food.

As discussed in a TRADING NOTE penned back in August, we at InvestingSuccess have been ardently following the traditional resource industry for some time now. But, as the quotes offered above indicate, food in itself is a resource even more precious than gold or silver. Without it, mankind cannot survive.

Scroll down on this page and you can read my August TRADING NOTE in which I discuss a new start-up company called Agrimarine.

Agrimarine has now placed its first fish tank into operation in China. This is a key step forward as it shows the management group is executing the business plan as they said they would.

Shares are trading in the 25 cent range today. Probably a good time to start accumulating a position in this stock. China is a fast growing economy and one in which people are demanding more and more protein in their diets.

Agrimarine is in a unique space with unique opportunities. As the world evolves, mark my words - food will come to be considered a resource and the food sector will evolve into something that investors clamor over.

The smart money out there already knows this. Here at InvestingSuccess we intend to scour the marketplace for other "food resource" opportunities. But in the meantime, we have our sights set intently on Agrimarine. This is going to be a winner....

Ballooning deficits, a staggering debt, unfunded Social Security and Medicaid libailities - a sure recipe for the printing of more dollars. Dollars that will fuel inflation and propel gold prices higher. As I pen this Trading Note, gold is hovering right near the $1000/oz mark and threatening to power its way higher yet.

One very prudent way is to invest in gold mining companies that have tightly controlled production costs combined with a pipeline full of future production

projects. And when I say tightly controlled, I am looking for costs below $400 per ounce.

In a Trading Note issued just recently in August, we reminded readers to take a hard look at an up and coming company called Rusoro Mining (TSXv:RML).

Here at InvestingSuccess, we like Rusoro - in fact since we first started following the company in 2007, Rusoro has gone on to transform itself from being a well positioned explorer to being a producer with a well established pipeline of growth projects. In addition to its two operating mines (Choco 10 and Isidora) Rusoro now has a significant land position in all of the major gold mining districts in Bolivar State, Venezuela. In fact, Rusoro has a stable of 10 exploration projects, ranging from early stage to advanced

stage. Bolivar State boasts first class geology and gold potential within an identical setting to some of the world's largest mining districts including Ashanti in West Africa and Kirkland Lake in Canada. Rusoro has developed and accumulated resources of more than 7.0 million ounces Au in the Measured and Indicated category and more than 7.0 million ounces Au in the inferred category.

Think about this for a moment....14 million ounces. How many junior companies have a resource of that magnitude so early in their history?

Here at InvestingSuccess, we like to say that Rusoro is a shining example of a stock where the growth pipeline is already laid out but not yet priced in. This is exactly the type of situation that investors should always be on the look out for.

Just recently, Rusoro was on the recieving end of some more good news. The Venezuelan government ( Ministry of Basic Industry & Mines ) has now granted Rusoro an Exploitation Permit to begin mining at its 100% owned Increible 6 gold deposit. Increible 6 is located approximately eight kilometres from the Company's Choco 10 Mine and Mill where ore from the Increible 6 will be processed.

The grant of this key permit keeps Rusoro on track to realize production from Increible 6 in 2009. The Increible 6 deposit is host to 1,587,000 ounces indicated (23.5 Mt @ 2.11g/t Au) and 1,100,000 ounces inferred (17.5 Mt @ 1.95g/t Au)

Rusoro is on track to produce some 180,000 ounces of gold this year at an average cash cost of near $330 per ounce. This very impressive operating cost figure shows that Rusoro is running a very efficient operation. This reputation for efficiency goes a long way towards explaining why the Increible 6 Exploitation Permit is the only such permit granted in Venezuela this year.

When people hear mention of Venezuela, they immediately get worried about Hugo Chavez. The granting of this key permit shows that Rusoro is well regarded in the country. Combine this with the fact that Rusoro's major shareholders are from Russia and that Mr. Chavez has cemented some excellent relations with Russia and it soon becomes clear that the usual Venezuelan politics will not pose an obstacle to Rusoro's future growth plans.

Rusoro shares trade at or near 42 cents today. As we mentioned in our August Trading Note, it is unusual to get a company with compliant resources of 7.1 million ounces in the Measured and Indicated category (87 Mt @ 2.5 g/t) and 7.0 million ounces in the Inferred category (111.2 Mt @ 1.9 g/t), with $60 million cash and over $20 million in annualized positive cash flow at such a discounted price.

With in-the-ground value, clearly defined plans for expansion, and now a key permit for the Increible 6 project in hand, here at InvestingSuccess

We liked Rusoro Mining in 2007 when we first introduced the story to our readers and we continue to like Rusoro today.

Add Rusoro Mining (TSXv:RML) to your quote screen today. Visit their website at www.rusoro.com for more details.

The Lithium sector of the junior resource market has seen huge gains in the last month. OK, let's not be coy. The Lithium space is experiencing investor mania.

Look at some of the gains. Canada Lithium (TSXv:CLQ) is up 30% in a month on over 7 times its usual volume. Lithium One (TSXv:LI) up 300% in 2 months from 50 cents to $1.50, and First Lithium up 300% from 8 cents to 24 cents in just 1 week. Tell the world that you have a piece of moose pasture with Lithium on it and junior exploration companies will beat a path to your door in no time like a herd of stampeding cattle.

The tipping point for this surge higher was a CNBC report aired on August 13 2009 that spoke about the brilliant future ahead for Lithium thanks to the growing demand for Lithium-ion batteries. This was followed by Barrack Obama giving $2.4 billion in stimulus money to the electric vehicle industry and Ontario Premier Dalton McGuinty offering up $16.7 million for battery research. But caveat emptor....buyer beware - these lithium stocks have gotten a tad too expensive too quick. Piling in to Lithium stocks at this juncture may invite trouble to your portfolio.

But the growth in lithium is happening, with General Motors planning to unleash its new VOLT electric car in 2010, with Diamler AG having just acquired a 10% interest in electric car maker Tesla and with Toyota having recently announced that its 2010 model Prius will now use Lithium-ion batteries instead of Nickle-Metal-Hydride batteries. So what should investors do? Where can one find value? The answer may surprise you.

Consider investing in cobalt. You see, what has been overlooked in this investor stampede into Lithium stocks is the notion that Lithium-ion batteries use cobalt in the chemical make-up of the battery. A Lithium-ion battery consists of a Lithium-cobalt-oxide cathode (positive electrode) and a Lithium carbide graphitic anode (negative electrode).

One of the main advantages of a Lithium-ion battery is its high energy density. That is, a lot of charge can be stored in a small area. This is precisely why your laptop computer, your camcorder, your cell phone and your iPod all use Lithium-ion batteries. Combine this with the long run time and the notion that Lithium-ion batteries have no memory effect ( that is, they hold their charge for a long time once charged up), and you can begin to see the popularity of this type of battery.

What really intrigues me is the recently announced move by Toyota to gravitate to Lithium-ion batteries. There are 3.2 lbs of cobalt in the Nickel-Metal-Hydride battery of an older model Toyota Prius. The lithium-ion battery in the new 2010 Prius will have over eight pounds of cobalt - more than twice the cobalt content of the older Nickel-Metal-Hydride battery. The new 2010 Toyota Prius with this lighter weight, more efficient Lithium-ion battery will save 70% of the braking energy of the car vs a 30% energy savings on braking with a heavier, bulkier nickel-metal-hydride battery. This means the miles per gallon will jump up from roughly 50 MPG to near 70 MPG.

It’s hard to play cobalt directly, in that it is mostly a by-product that comes out of copper refineries and nickel refineres. But, there is one stock that represents an excellent way for value oriented investors to position themselves in this strategic metal. Geovic Mining - which trades on the TSX under the ticker GMC (and on the OTC market under the ticker GVCM). GMC is trading in the C$0.70 cent range right now. This price point places it at just over its cash value per share as the company has $60 million in the bank. As the Lithium mania has unfolded, Geovic has risen only from 60 to 70 cents. Daily trading volume was higher than normal which tells me this price move was all about the smart investors getting well positioned for what they feel will be a move higher.

Geovic (www.geovic.net) has one of, if not the largest, primary cobalt deposits in the world in the African nation of Cameroon. On one of its projects, Geovic has a measured and indicated resource of 54.7 million tonnes at average grades of 0.25% cobalt, 0.69% nickel, and 1.33% manganese. A second nearby deposit has an inferred 154 million tonne resource.

Smaller players in the cobalt space include Formation Capital and newcomer Puget Ventures. Formation Capital (FCO-TSX), continues to work towards getting its Idaho Cobalt Project (ICP) in Idaho,USA into production. This project contains 3.7 million tonnes of ore grading 0.559% cobalt and 0.559% copper. But, Formation cautions it does not know exactly when the US Forest Service will formally approve its Plan of Operations. Add to this a bizarre argument that Formation is having with Xstrata who owns an adjacent property and the picture gets even murkier. Until these issues are resolved, project financing will be hobbled. Formation’s stock has been in a very tight trading range around 35 cents, though volume is picking up. There are 240 million shares outstanding. Puget Ventures, (PVS-TSXv), aims to place an old cobalt mine – Werner Lake West - in northwestern Ontario, Canada, back into production. The Werner Lake West copper-cobalt mine includes historically reported reserves and resources (not NI 43-101 compliant) totalling only 1.1 million tonnes of 0.31 per cent cobalt, 0.29 per cent copper and 0.011 ounce per ton gold in all categories.The company says that with minimal additional work, a production decision could be made. After completing its current $3.5 million financing, there will be roughly 20 million shares out and $3.5 million in cash.

We have now seen what the future prospect of more Lithium batteries has done for the Lithium stocks. As Lithium-ion batteries containing cobalt gain more attention - ask yourself - can the cobalt stocks be far behind?

Here at InvestingSuccess we have been ardently following the traditional resources that investors are well acquainted with - copper stories, gold stories, potash stories and the like. But the two quotes that appear above should serve as a stark reminder that food in and of itself is also a resource - and one that we can no longer take for granted.

While we can do without acquiring more gold and silver, each of us on a daily basis needs food in order to survive.

The junior company space in our financial markets is flush with firms chasing exciting geological prospects. But ask yourself this - how many junior firms are there that are aggressively pursuing growth opportunities in the food business? You will be hard pressed to find very many.

The next time you go to your favorite grocery store to purchase some fish or other seafood products, ask yourself - where does this stuff come from? If you are tempted to answer that it came from the wild blue ocean, you had best think again. The past number of years have seen a shift to aquaculture - the captive raising of marine species.

Global aquaculture is an $85 billion industry that now exceeds 66 million tonnes per year of output and China accounts for over 50% of this output. In fact, aquaculture is the fastest growing food production sector in the world with a growth rate over 9%. We had all best make room in our vocabularies for the term aquaculture.

Aquaculture as an industry has its proponents, but also its fair share of detractors too. Environmental problems in aquaculture can stem from the use of pens made from netting. Fish raised in these netted compounds can escape and intermingle with wild species. Wild species swimming nearby these netted enclosures can be subject to pollution and disease emanating from the netted population.

For years now, organizations like the Suzuki Foundation along with various First Nations groups in BC have been lobbying the aquaculture industry to adopt more sustainable approaches. Go to www.davidsuzuki.org/Oceans/Aquaculture/Salmon/ and read more. The David Suzuki Foundation believes that the fish farming industry around the world, must move away from using netted cages to using safe, fully enclosed systems that trap wastes.

Pressure to initiate change can often lead to innovative new business approaches.

And so it is with Agrimarine Inc (TSXv: FSH), a recently launched Canadian firm that has just completed its qualifying transaction with the acquisition of privately held Agrimarine Industries Inc. This newly minted publicly traded firm is about to showcase a closed containment technology that stands to revolutionize the aquaculture industry. Agrimarine Inc. is advancing a solid-wall containment system that comes complete with a waste removal function and an oxygen system that will provide an optimal growth environment for the species being raised. Agrimarine Industries Inc (the firm acquired in this transaction) is no stranger to aquaculture. For many years it was engaged in the traditional raising of salmon using netted pens on Canada's west coast. Several years ago, Agrimarine was selected by the B.C. government to study a solid-wall containment fish-farming system located on Vancouver Island. The Company proved, after a four-year trial period, the viability of raising healthy salmon in a solid-wall containment system. But, this trial was based on a containment system established on land and after factoring in land acquisition costs etc...it was determined that although the technology worked exceedingly well, having these systems located on land was not viable. Agrimarine subsequently took the technology, adapted it for use within a marine setting ( ie a body of water) and patented it.

The marine based version of this proven technology is about to be showcased in Canada near Campbell River, BC. But the real growth opportunities for the company are not in Canada, but rather in China with its growing population who are demanding ever more protein in their diets. Agrimarine has purchased the Benxi Salmon and Trout Hatchery Center in Liaoning, China. Feasibility studies have now been completed and tanks (3000 to 5000 cubic meters in size) are now being installed to raise steelhead trout. Each tank will be capable of holding 50,000 to 100,000 fish. Plans are currently being explored to expand the operations to include species such as tuna.

At this time of writing, Agrimarine has 26 million basic shares outstanding and just over 33 million fully diluted. Revenue and operating projections show that 2010 revenues based on 24 operating tank units (20 of these in China) are projected at $17.5 million with a $5.18 million EBITDA. By 2013 once optimum efficiencies are realized, revenues are projected at $117 million with an EBITDA of $46.75 million.

Certainly some impressive projections and ones that will launch Agrimarine on a trajectory away from penny stock status.

Smart investors around the globe are well aware of the looming food issues alluded to by Donald Coxe and others. The launch of Agrimarine Inc. (TSXv:FSH) heralds a unique investment opportunity for the rest of us. For readers of this report with a 3 year time horizon and an ardent belief in the importance of sustainable food supplies, a lucrative opportunity is now at hand to realize some excellent potential returns by establishing a position in Agrimarine at some very cheap share prices.

TRADING NOTES are protected by copyright law. Corporations, websites, newsletters or individuals seeking to copy, distribute or otherwise disseminate the contents of this report or any of our other writings in part or in whole are welcome to do so upon obtaining our prior written permission and paying a reproduction fee of US$500. Anyone seeking to avoid doing so is ‘itchin for a nasty fight. The information contained herein does not necessarily constitute a solicitation to buy or sell. Consult with your financial advisor to ensure any securities mentioned herein meet with your investment objectives. Principals of www.investingsuccess may or may not hold any securities mentioned herein.

In a Trading Note issued way back in May 2007, we introduced an up and coming company called Rusoro Mining (TSXv:RML).

We took a liking to Rusoro because it had positioned itself very nicely in Venezuela, had a resource in the ground of 4 million ounces of gold at the time and had serious growth potential.

Since this 2007 introduction, Rusoro has gone on to transform itself from being a well positioned explorer to being a producer with a well established pipeline of growth projects. In addition to its two operating mines (Choco 10 and Isidora) Rusoro now has a significant land position in all of the major gold mining districts in Bolivar State, Venezuela. In fact, Rusoro has a stable of 10 exploration projects, ranging from early stage to advanced stage. Bolivar State boasts first class geology and gold potential within an identical setting to some of the world's largest mining districts including Ashanti in West Africa and Kirkland Lake in Canada. Rusoro has developed and accumulated resources of more than 7.0 million ounces Au in the Measured and Indicated category and more than 7.0 million ounces Au in the inferred category. As part of Rusoro's aggressive growth strategy, it has drilled more than 220,000m in 2007 and 165,000m in 2008. 2009 has seen continued drilling.

These drill results will see future expansions and upgrades to the current 14-plus million ounces of resource.

One of the best situations for investors in resource companies is to buy a stock where the growth pipeline is already laid out but not yet priced in. With all that it has accomplished so far, Rusoro Mining (RML-TSXv) is a shining example of this type of situation.

Rusoro recently completed a positive Preliminary Assessment(PA) on its Choco 10 mining and milling operation. The PA outlined favourable economics for a significant expansion from 170,000 oz Au/yr (2009 estimated production) to over 500,000 oz Au/yr of production at cash cost of US$331/oz Au over the life of mine. A bankable Feasibility Study has now been initiated to further examine this significant expansion at Choco 10 as well as an expansion at the nearby Incredible 6 gold deposit. This Feasibility Study is expected to be completed in the first half of 2010.

At a discounted US$700 gold, the Preliminary Assessment(PA) for the proposed Choco 10 expansion showed an average $77 million in annual after tax cash flow. At current $900 gold prices, this cash flow number goes up by almost 90%. The payback on the $200 million cost to expand the mine would be paid back in 2.1 years.

Without a doubt, some very compelling numbers. But, of course, the usual politics in Venezuela continue to keep a tight lid on Rusoro shares and valuation metrics.

Rusoro shares trade at or near 40 cents today. When investors buy a 40 cent junior resource stock, they are usually buying a high risk company with a low probability of finding anything. It’s unusual to get a company with compliant resources of 7.1 million ounces in the Measured and Indicated category (87 Mt @ 2.5 g/t) and 7.0 million ounces in the Inferred category (111.2 Mt @ 1.9 g/t), with $60 million cash and over $20 million in annualized positive cash flow at such a discounted price.

With in-the-ground value and clearly defined plans for expansion, here at InvestingSuccess we say that Rusoro Mining is a stock that warrants attention. Growth and solid economics will ultimately trump politics as far as we are concerned.

We liked Rusoro Mining in 2007 when we first introduced the story to our readers and we continue to like Rusoro today.

Add Rusoro Mining (TSXv:RML) to your quote screen today. Visit their website at www.rusoro.com for more details.

At www.investingsuccess.ca, we have long regarded the US debt auction system as something of a black box best left to the experts on Wall Street. But, lately we have taken it upon ourselves to delve further into the mysteries of debt auctions and we are pleased to report that we have gained some interesting insights that are worthy of sharing.

This Treasury Direct site gives you all the results of recent auctions for all debt products right up to the 30 year bond.

We have discivered that one metric the Street watches closely is the bid to cover ratio.

For example, suppose the Gov't is seeking to raise $10 billion in ten-year notes with a 5.125% coupon, and at the auction the bids come in as follows:

The total of all bids is thus $19.5 billion and the number of bids accepted would be $10 billion - the amount wanting to be raised - therefore leading to a bid-to-cover ratio of 1.95.

A low bid to cover ratio means that there were not many bidders. Looking back to the above hypothetical example, if the bidders at the auction had bid a total of $30 billion, the ratio would be a stronger 3.0.

The past few days have seen the US dollar take a haircut which has been a boost for commodity prices and hence for resource type stocks in Canada that trade on the TSX and TSXv. Why has this happened you ask?

Well...Treasury Direct tells us that on July 29 there was a 5 year note auction that sported a bid to cover ratio of 1.92 - the lowest in a very long time. Bidders simply did not show up at the party. Why buy debt instruments when you are uncertain of the issuers' credit worthiness?

The next event to watch is a 30 year Bond auction on August 5. The bid to cover ratios for the past 5 auctions have been 2.02 (Feb), 2.40 (Mar), 2.14(May), 2.68 (Jun) and 2.36 (July). If the August 5 event produces a bid to cover ratio less than 2.0 - look out !! as panic will start to set in.....

I plan to keep a close watch on these bid to cover ratios. Now that I have shown you how to do it, I suggest you also take the time.... The US Gov't has to issue trilions in new debt going forward. If the buyers decide not to show up at the party - higher interest rates could be coming our way which will clip the legs out from under this feeble recovery we have been enjoying of late. This will send the big boys running and the rally we have been enjoying will go up in smoke.....

InvestingSuccess

TRADING NOTE

July 19, 2009

Allana Resources (TSXv:AAA) - Ethiopian Potash ....

Potash – The Little Talked About Commodity

At www.investingsuccess.ca, we have been quite literally pounding the table for quite some time now to remind people that despite all the bleak news surrounding stock price meltdowns, ponzi schemes, job loss statistics, bank failures, auto company rescues and the like, the global economy is still in the throes of a powerful, albeit very volatile, “commodity supercycle” – the likes of which has never been seen before.

Mention “commodity supercycle” and visions of copper, nickel, steel, soybeans and what have you all spring to the minds of investors. But there is a commodity item out there that many investors hear little about as they tune into their favorite television business shows. That commodity….is potash.

Potash…What is it ?

Simply stated, potassium is the seventh most abundant element in the earth's crust, and is a major plant and crop nutrient. The main potash fertilizer products include potassium chloride (KCl), potassium sulphate (K2SO4) and potassium nitrate (KNO3). About 95% of world potash consumption is used in agricultural fertilizers.

Why the Strong Market for Potash ?

To understand why potash fertilizer is enjoying a strong market, all one need do is take a closer look at some world statistics. The July 4, 2009 edition of the Economist magazine carried a brilliant article on the subject of global food. At the moment, the global population stands at some 6.7 billion souls and is growing ( albeit slower than in past) at the rate of about 750 million people per year. By 2050, it is reckoned that the global population will hit 9 billion and then plateau from there. To keep pace with this growth, global food production will have to increase. Add to this stark reality the notion that people are no longer just eating grains. Each year in India and China, 40 million people rise to attain “middle class status”. That’s more than the population of Canada – every year! With this increased prosperity comes a greater demand for an improved diet with more vegetable and meat protein. As the population grows and as living standards on balance improve, the need for mobility also enters into the fray. People in developing nations are starting to own automobiles in greater numbers. Certainly oil is a source of energy to power the growing numbers of autos, but so too is grain based biofuel. The competition to use grain as a food and as a fuel remains alive and well.

So, where is this additional agricultural output to come from? The drive to global prosperity has seen vast tracts of agricultural land swallowed up in order to build factories, assembly lines, chemical plants and what have you. China has now given up so much agricultural land it is on the verge of becoming a Corn importer for the first time in its history. China is already a big importer of Soybeans which along with Corn are vital for livestock and poultry feed so that enough pork and poultry can be produced to feed the masses. Problem is, China cannot start importing all its foodstuffs. It has got to produce more and grow more from the agricultural land that remains. In India, food production has not kept pace with food demand. As well, shifting weather patterns are affecting global agriculture. Whether we are in a period of global warming remains open to intense debate. But what is for sure is the notion that we definitely are in a period of profound climate change that stands to seriously affect annual agricultural output. Politics too is present at the margins of the agricultural story. With Europeans still refusing to accept genetically modified grains (GMO), Brazil has stepped up to the plate to supply more non-GMO grains. In addition the Brazilians are also major producers of ethanol from sugar cane. Put it all together, and you see that Brazil too is under pressure to increase its agricultural output. So how do you attain greater crop output from your land so as to provide bio-fuels, feed for animals, and grains for human consumption? The answer is simple. You fertilize the land to enhance its vitality. Which brings us full circle in this argument. Potash is enjoying a strong market because the world needs potash as a major source of fertilizer. Back in 2003 potash prices were $250/tonne. Just this month, Canadian marketing agency Canpotex signed a deal to supply S. Korea and Taiwan with potash at $700/tonne through the end of 2009. Russian supplier Silvinet, thought to be facing financial distress, recently signed a small contract to sell to India at US$460/tonne, but this price point is not expected to hold up when China begins serious negotiations with global potash players. In other words, the strong market for potash will continue going forward and investors would do well to take note.

Allana Resources goes to Ethiopia

When one thinks of Potash, certainly one of the last places that comes to mind is Ethiopia – but believe it or not Ethiopia has a colorful history of potash exploration and now Canadian based Allana Resources (TSXv:AAA) is looking to pick up where past players have stopped and carry the ball across the finish line. There is a unique geological feature in the NE part of Ethiopia called the Danakil Depression which was formed in Tertiary geological time when the Arabian block rifted and separated from the African continent. Over time, thick beds of salt evaporate formed in the area. The Depression itself is a 200 km long feature running approximately parallel to the Red Sea which is situated some 70 kms to the East. The Danakil Depression is bounded to the West by the Ethiopian Plateau and to the East by the Danakil Alps. The map found at the end of this report illustrates this geography more clearly.

In 1906 an Italian concern ( Pastori Co.) found a surface deposit of potash in the Danakil area and worked it using camels for transportation until 1926 when political issues resulted in the project being stopped. In 1955 the Ralph Parsons Company from the USA undertook an extensive drilling program and identified two potash deposit areas. A total tonnage (proven + probable + possible) of 171 Million tons averaging 32.48% KCl was identified and from this it was estimated that over 30 Million tons of potassium chloride (KCl) could be recovered at a gross profit of $16 per ton. Potash at that time was selling on world markets at about $27 per ton. Ralph Parsons reckoned that a 3 year payback on capex could be attained. An exploratory shaft was sunk and a 1970 report from Shell International indicates 2640 feet of tunneling was undertaken to obtain bulk samples. These samples were taken to the Colorado School of Mines in the USA for flotation studies and it was during one of these periods when exploration personnel were off-site that a freak flooding took place resulting in the shaft filling with water. Efforts to attract a joint venture partner to resume project development proved unsuccessful and sadly the project was abandoned in 1968.

Little happened in Ethiopia in the decades that followed, but as agricultural issues rose to the fore in 2007, Ethiopia once again came into people’s radar screens. Mining giant BHP has since taken a serious interest in the Danakil Depression as has Indian mining giant Sainik. In fact the Sainik group is pushing hard to get a potash mine up and running in the Danakil Depression.

… and comes up with the prize

Ralph Parsons Co. unfortunate luck in 1968 has turned out to be Allana Resources’ good fortune. In September 2008, Allana Resources acquired 150 sq. kms of land concessions (called the Dallol Project) which encompass a goodly portion of the ground formerly worked by the Parsons Company. The historical data from the Parsons Company was re-examined by German consultancy ERCOSPLAN and what emerged from the data study was a 43-101 compliant inferred resource of 31.3 million tonnes of potassium chloride (KCl) grading 25.5% and a further 73.9 million tonnes of kainite grading 18.8% equiv. KCl. Crunching these numbers further shows that the total inferred amount of potassium chloride contained in the area drilled off by Parsons is some 21.84 million tons. In addition, what makes this project even more interesting is the fact that the mineralization is in beds roughly 125 feet to 750 feet deep. When one compares this to the much deeper deposits currently being mined in western Canada, it becomes abundantly clear that this Dallol project possesses some very compelling economics. By any stretch, the Allana team under the guidance of CEO Farhad Abosov has made a superb start to what is no doubt going to evolve into world class potash project. Not to put too fine a point on it….but…..investors really need to take a hard look at Allana Resources right now…

Allana recently completed a private placement financing to raise $2.5 million which will be used to further advance exploration efforts on the project. Allana currently has 80.5 million shares outstanding (112.4M fully diluted) which command a market cap of just over $12 million. At www.investingsuccess.ca, we generally refrain from trying to place a fair value on stories we follow, but one thing appears certain with Allana Resources – if one assigns even a nominal economic value to this inferred resource, it does not take long to see that the market capitalization of Allana Resources falls well short of reflecting the value of what is contained on the Danakil project. As a drilling program gets underway in Q3 and as the inferred resource is upgraded to proven and probable, the share price will come to reflect this.

Share prices right now are in the 15 -18 cent range as the following chart shows. Technically, price action of Allana has formed a very nice pennant formation. Generally these pennant type formations resolve themselves to the upside. A move through the upper axis of the pennant (18.5 cents) will signal that such a breakout is getting underway.

Here at www.investingsuccess.ca we will be watching the Allana story with piqued interest This is not some grass roots project with a hit or miss proposition. This project area has been thoroughly drilled off by the Parsons Company in the past. The geology is well understood already at this juncture. Higher share prices are not a question of “if” – they are a question “of” when. Slowly the Allana story is being disseminated to the investing public thanks to a well managed investor relations program. The time to get in is now, for when the Allana story gains too much traction and drives away on you, you will be left wishing you had acted sooner.

APPENDIX

Map taken from the 1970 Shell International report showing the location of the Danakil Depression relative to the Red Sea.

After watching Bill O'Rielly and Glenn Beck last night on Fox take a stab at the whole global warming argument, I spent some time digging up some temperature research of my own. Here are my brief thoughts on the subject :

Pay attention Al Gore - the folks at www.longrangeweather.com have come up with a long term global temperature chart that makes a mockery out of your Inconvenient Truth. True, global temperatures may be warmer than in the past centuries. But, temperatures are not skyrocketing upwards as the media would have us believe. In fact, as I write this Note here in Saskatchewan on July 15, 2009 I can tell you we are having one of the coldest summers that I can remember. This follows a bitterly cold winter that verged on nasty.

At this juncture, I am still pondering the implications for the financial markets. My initial thoughts are that energy consumption will increase as consumers attempt to keep their homes warmer in winter months. This should be a net positive for Oil prices and Nat Gas prices. As for the grain markets, the impact of generally cooler temperatures could mean higher grain prices. So far, crops across Western Canada this year are far from stellar due to lack of heat and farmers are girding for a lower yield. In addition to cooler temperatures, we also seem to be experiencing a lack of precipitation in various areas around the globe (including western Canada) which will also result in lower grain yields and hence higher grain prices.

So, as the media blathers on about global warming, don't just accept their arguments as gospel truth. Take the time to study the chart that follows. Make your own observations of temperature and rainfall where you live. Step away from the herd mentality that pervades our society. Global warming is not what it has been made out to be....

InvestingSuccess

TRADING NOTE

July 9, 2009

Watch the 10 Year Note Market.....

Everywhere I turn I hear people reciting the same idea - buy gold, buy gold, buy gold. While in the longer term I do agree with this idea, in the shorter term we should pay close attention to the 10 Year note market for clues as to what is happening with gold. (the 30 year Bond market is also a useful proxy)

Recently the US Government has been enjoying good success at its debt auctions. From this we can infer that Bond and Note investors are not overly concerned about inflation at the moment. If they were, they would not be flocking to these debt auctions in droves to lap up offerings like cats lapping up milk.

What is driving these debt auctions is new demand created by an increase in savings and a shift by pension plans to more debt instruments. As an aside, I read today that the Shriners organization may have to scale back activity at 6 of its Children's Hospitals in the USA due to $3 billion in losses incurred in the recent market collapse. You can be rest assured the managers of the Shriner's endowment fund are probably now shunning equities in favor of debt instruments. The average consumer is deathly afraid of the concept of a prolonged recession/depression and according to some reports, savings rates are approaching 5% of disposable income in parts of the US. As I write this article, I am in Vancouver and Victoria in British Columbia and I can tell you the consumer in this part of Canada has for sure pulled back. Tourist traffic at this time of year should be running at its most frenetic pace of the year. Sadly, crowds are thinner than even I expected to encounter and the SALE signs in shop windows speak volumes, loud and clear.

As the above chart shows, prices of the 10 Year Notes have been trending generally higher over time since mid-2007. The message is loud and clear - investors in the debt markets are not overly worried about the economy having a run-away. Going forward, we will know that a serious economic recovery (along with inflation) is building when this uptrend line is broken.

The above chart presents a closer-up view of price action on the 10 Year Note. In particular I want you to look at the lines I have super-imposed on this chart. Look at the price increases that occured during August-September 2008, November-December 2008, February - March 2009 and recently from June to now.

Now, I want you to look at the above chart of gold price action. Look at what gold prices did as prices of the 10 Year Note moved higher. During the Aug-Sept 2008 period, gold prices dropped from $950 to $750. During the Nov-Dec 2008 period, gold prices again fell hard. During the Feb-Mar 2009 10 Year Note price rise, gold prices rose, but could not hold and then slipped backwards. During the 10 Year Note price move that started in June, gold has slipped from $980 to a recent low of $906.

I am watching gold prices intently and as I have mentioned in previous blogs on this site, there is a small period of seasonal strength that often occurs from late July to late August and then there is a period of seasonal strength that occurs from October through to early December.

As I see 10 Year Note prices break their current small uptrend, I shall be making a move into gold. I suggest you too watch these 10 Year Note prices and wait for Mr. Bond Market to play his hand.....

InvestingSuccess

TRADING NOTE

April 6, 2009

Ventana Gold (TSX:VEN)

- Don't Let This One Get Away -

Mention gold exploration and development in Columbia and one company that will enter the conversation is Greystar Resources and its Angostura deposit which hosts some 11.5 million ounces of Gold and 60 million ounces of Silver.

But, there is another story that investors should put on their radar screens too. Ventana Resources (TSX:VEN) is working a project right now that appears to be a geological extension of the Greystar property. In fact, Ventana's flagship property shares a common boundary with Greystar's Angostura.

Ventana’s calls this flagship property La Bodega and while it only measures 184.8 hectares in size, its appears to pack quite a punch. La Bodega is currently held by Ventana as a mineral exploitation concession, but Ventana can own 100% of La Bodega by paying and issuing US$7Million and 1 million shares to one property owner and paying US$350,000 to a second property owner.

Since getting involved with the La Bodega project in 2006, Ventana has undertaken an aggressive campaign of geochemical sampling, mapping and geophysics to define drill targets. The first drill hole, which was collared in August 2006, proved to be the discovery hole with an impressive intercept of 106.45 metres averaging 7.81 grams per tonne of gold starting at a depth of 29 metres. And Ventana has not looked back since....

By the end of 2008, 105 core holes totaling 25,500 metres had been completed. Analysis of drilling results has now shown that La Bodega is a high sulfidation gold deposit situated astride a major, northeast trending, mineralized fault zone several hundreds of metres wide. Interestingly enough, the folks at Greystar have now released their pre-feasibility study and it shows that this high sulfidation ore can be economically heap leached for under $400/ounce. With Gold at the $900 level and threatening to surge higher, the economics of this type of ore are robust indeed.

The La Bodega project is actually divided into 4 zones, namely the La Bodega, the La Mascota, the La Rosa and the Las Mercedes.

The La Bodega zone has been tested over a strike of 350 meters (to a depth of 300 meters) and I am very impressed with the results so far. When I see intersects like 112 meters of 3.14 g/t, 61 meters of 3.16 g/t, 54 meters of 4.17 g/t and 51.6 meters of 7.85 g/t I have to infer that this zone has all the makings of a future mining project.

La Mascota has been tested over a strike of 500 meters (to a depth of 100 meters). Assays of 81 meters at 2.65 g/t, 49 meters at 3.52 g/t and 20 meters at 11.62 g/t likewise suggest serious potential at hand here too.

The La Rosa zone lies in an area of steep topogrphy and to date only a limited amount of drilling has been done.

Las Mercedes has been tested over a strike of 200 meters to a depth of near 200 meters. Assays of 38 meters of 2.41 g/t, 16 meters of 6.19 g/t, and 11 meters of 6.37 g/t are cause for further excitement.

The 2009 drill program will see 3 drills turning, so investors can look forward to some good news flow. With more assays like the ones noted above, Ventana shares should do very well.

Ventana currently has ~75 million shares ouitstanding (~90 million fully diluted). On March 30, 2009 Ventana announced a $6 million financing (@$1.40 a share) with Lumina Capital LP. Lumina is controlled by one of the most successful mining entrepreneurs in the world - Ross Beaty. With this financing, Lumina Capital LP will up its position in Ventana to 12%. Mr. Beaty has an almost perfect track record in the mining business. He and his team have started nine mining companies, one of which is the pure-play silver giant Pan American Silver Corp. The other eight were sold for major premiums. Between 2006 and 2008 alone, he sold four companies for a total of $1.2 billion.

If a serious player like Mr. Beaty is upping his poosition, investors out there should sit up and pay attention.

There is a reason Mr. Beaty is getting involved now. 2009 is going to be a pivotal year for Ventana. Once the preliminary resources estimates for La Bodega start to "slip out" into the public domain, the current market cap of $120 million may never again be seen. In fact, given Mr. Beaty's track record in the mining business, his contacts and his penchant for the "deal" , I would not at all be shocked to see a major mining firm seeking to further its stance in Columbia buy out Ventana lock, stock and barrel.

I have always said - follow the serious players in the game and you will enjoy success. And here you have it - a hugely successful mining personality in the form of Ross Beaty upping his stake in Ventana Gold. Follow his lead and give serous thought to taking a position in Ventana right now, before its too late.

InvestingSuccess

TRADING NOTE

April 5, 2009

Western Goldfields (TSX:WGI) and New Gold (TSX:NGD) to Merge

Back on March 4, 2009 - New Gold Inc. ("New Gold") (TSX and NYSE Alternext - NGD) and Western Goldfields Inc. ("Western Goldfields") (TSX - WGI and NYSE Alternext - WGW) announced that they had entered into a definitive agreement under which New Gold would acquire by way of a plan of arrangement all of the outstanding common shares of Western Goldfields in exchange for one New Gold common share and CDN$0.0001 in cash.

Once approved by shareholders and regulators ( ~end of May 2009), the new company will boast the folllowing features:

Diversified gold production base from three gold mines in mining-friendly jurisdictions with forecasted gold production of approximately 335,000 ounces in 2009, expected to grow to over 400,000 ounces in 2012

Strong cash flow to fully fund the development at the New Afton gold-copper project in British Columbia

Experienced management teams and boards of directors. The new executive management will consist of Randall Oliphant, Executive Chairman; Robert Gallagher, President and Chief Executive Officer; Brian Penny, Executive Vice President and Chief Financial Officer; and James Currie, Executive Vice President and Chief Operating Officer. The board of directors will be a combination of six current directors of New Gold and four current directors of Western Goldfields..

Mineable reserves totaling 7.6 million gold ounces within a measured and indicated resource of 12.2 million gold ounces

The combined company will have a pro forma balance sheet at December 31, 2008 with cash of $171 million, long term investments in Asset Backed Commercial Paper of $77 million and debt of $275 million, consisting of $7 million of short term borrowings, $154 million face value of Senior Secured Notes, $45 million face value of Convertible Debentures and $69 million of project financing. All pro forma figures are based on the unaudited December 31, 2008 balance sheets of Western Goldfields and New Gold, adjusted for New Gold's repurchase of CDN$50.0 million face value of Senior Secured Notes for CDN$30.0 million on January 9, 2009.

The assets of the newly formed entity will consist of:

Mesquite Mine - California

Mesquite is a gold mining operation in Imperial County, California, which commenced production in 2008. In 2009, the operation is forecasting production of between 140,000 and 150,000 ounces of gold at an estimated total cash cost between $530 and $540 per ounce. Capital expenditures in 2009 are expected to be approximately $1.5 million.

Cerro San Pedro Mine - Mexico

Cerro San Pedro is a gold-silver, heap leach project located near San Luis Potosi in central Mexico. In 2009, the operation is forecasting production of between 90,000 and 100,000 ounces of gold and between 1.1 million and 1.3 million ounces of silver at an estimated total cash cost of between $550 and $570 per ounce of gold net of by-product sales. Capital expenditures in 2009 are expected to be approximately $2.8 million.

Peak Mines - Australia

Peak Mines is a gold mining operation located in the Cobar Gold Field of Central West New South Wales, Australia. In 2009, the operation is forecasting production of between 90,000 and 100,000 ounces of gold and between 13 million and 15 million pounds of copper. Total cash cost is expected to be in the range of $370 to $390 per ounce of gold net of by-product sales from production associated with the Chesney and Perseverance ore bodies. Capital expenditures in 2009 are expected to be approximately $24.5 million.

New Afton Development Project - Canada

New Afton is a gold-copper development project located in Kamloops, British Columbia, Canada. Full production is currently expected to commence in the second half of 2012. New Afton will be an underground mine, which will produce an annual estimated average of 75 million pounds of copper, 80,000 ounces of gold and 214,000 ounces of silver. In 2009, expenditures at New Afton are expected to be approximately $59.2 million.

El Morro Development Project - Chile

El Morro is a copper-gold development stage project located in northern Chile. New Gold owns a 30% interest in the project with our joint venture partner and project operator, Xstrata Copper which owns the remaining 70%. El Morro entered the permitting stage with the submission of the Environmental Impact Study in the fourth quarter of 2008. It is anticipated that the permit will be obtained within 12 to 18 months of its submittal.

Assumptions used in the 2009 forecasted cash cost for the Peak and Cerro San Pedro mines include copper and silver prices of $2.00 per pound and $10.00 per ounce, respectively, and Australian dollar and Mexican peso exchange rates of $0.70 and $12.00 to the U.S. dollar, respectively.

So, in short - the new entity will pack quite a punch and investors should take note....

But, it turns out there is one more feature to this combination - call it an invisible guiding hand if you will. We have turned over a few stones as it were and talked with several folks in our network of contacts about this merger.

We have learned that Randall Oliphant, planned Executive Chairman of the newly formed merged entity also sits on the board of Franco Nevada (FNV-TSX, $27). And Franco Nevada is the baby of Pierre Lassonde. Recall that Mr. Lassonde and business partner Seymour Schulich started the old Franco Nevada in 1985 when they bought a royalty stream from Barricks’s new Nevada operations, the Goldstrike mine. Few people gave Barrick much credit for mining ld back in those days, but the assets performed remarkably well and turned Barrick into a major mining company. And it showed Lassonde and Schulich that buying royalties was very profitable – they got all the cash credit and did not have to deal with any of the costs.

The old Franco Nevada was one of the best performing gold stocks of the 1990s, and made so much money that Newmont Mining of Denver Colorado merged with them in 2001 in a $4.2 billion deal – at the bottom of the cycle - and made Lassonde the boss. In 2007 Newmont spun out the new Franco Nevada with much the same assets as the old. Bottom line - few people in mining have consistently created the shareholder wealth that Lassonde and Schulich have.

We have also been told that one of the components of this planned merger - New Gold - was actually the 3 way merger of Frank Giustra’s Peak Gold, Lassonde’s Metallica Resources, and New Gold. Lassonde was one of the largest shareholders of Metallica. He now owns something close to 6 million shares of New Gold. He is on the board of New Gold. His partner Schulich owns 25 million shares of New Gold. In other words, New Gold shareholders have two of the top wealth creators in the industry firmly committed to the company.

Mr. Oliphant is not on the board of Franco Nevada because of his relationship with Western Goldfields. From 1999 – 2003 he was CEO of Barrick Gold Corp. He is, in his own right, one of the most powerful men in the industry. But the fact he knows Lassonde well enough to be on the board means their relationship is solid, so getting a deal done between Lassonde’s New Gold and Oliphant’s Western Goldfields should come as no surprise.

So...Lassonde & Schulich are much more involved than the market probably realizes. These guys have done literally dozens of large and small mergers over their career. Maybe that’s why nobody else is doing what New Gold is doing – merging companies. Investors should take comfort knowing that Mr. Lassonde and Mr. Schulich continue to work behind the scenes.....

Let's all keep our eyes on this pending transaction. The newly formed entity promises to be a good one...

InvestingSuccess

TRADING NOTE

March 24, 2009

Commerce Resources (TSXv:CCE)- Tantalum and Niobium Potential

When investors talk about the metals markets, they generally get swept up into conversation about copper, nickel and so forth - the popular metals.

Here at InvestingSuccess, there is more to the metals sector than just the popular ones. In fact, we often tend to watch the lesser known metals for unique trading and investing opportunities.

Our adventures of late have put us onto a Canadian story involving Tantalum and Niobium in the Province of British Columbia.

Niobium (or as some would call it Columbium) is consumed mostly by the global steel industry in the form of ferro-niobium which acts as a powerful alloy strengthener. Superalloys represent the other major end use for Niobium. Tantalum is primarily used in the manufactire of capacitors for the technology world. Next time you use your cell phone,or your iPod you are doing so thanks to Tantalum based capacitors.

What intrigues me most about Niobium is the notion that Brazil is sitting on the majority of future global supply. Any time one country is sitting on the bulk of a supply source, I get intrigued. Right now Brazil is pro-western in its ideology, but what if political sentiment changes? What if Brazil goes down the path of Venezuela, Ecuador and Bolivia ?

Australia has been a major supplier of Tantalum but earlier this year, the Aussie's shut down a major Tantalum operation for economic reasons. And with that, 30% of global supply has been affected. The Democratic Republic of the Congo (DRC) is also a source of tantalum but given the political instability of this region, end users would be foolish to place any dependence on the DRC as a supplier. Hence, the future for Tantalum could be interesting indeed.

Against this backdrop, it appears logical to conclude that there may be an opportunity at hand for a Canadian player to develop a new supply. And this is where Canadian based COMMERCE RESOURCES enters into the picture. Commerce trades as CCE on the TSX Venture.

The Blue River Tantalum-Niobium Project is the focus of the team at Commerce Resources and excellent progress is being made on the Upper Fir portion of this project. In fact, Commerce has now stated that it is sitting on an indicated resource of 14.68M tonnes of ore at a cutoff grade of ~1/3 of a pound per ton (150 g/t). Averge Tantalum grade on the deposit is 190 g/tonne while average Niobium grade is 1300 g/tonne (~ 2.6 lbs per ton).

These grades and indicated quantities suggest that Commerce is sitting on the makings of something that could someday be an operating mine. With Niobium trading at $20 per pound and Tantalum trading at about $45 per pound, each ton of ore would have an economic value of about $65 which should be sufficient enough to economically support a mining operation assuming these prices hold.

In terms of valuation, market cap of Commerce Resources right now is about $20 million. Shares are trading for cash in the bank plus about $7 million in value assignable to the Blue River project.

Although Niobium and Tantalum prices have held together quite well of late, from here the team at Commerce needs to offer the markets some clarity on future milstones. For example, further drilling information to move this indicated tonnage into the proven category would be well recived by the markets. In addition, Commerce needs to provide information on feasibility to clearly show investors the economics of the project as well as projected capex to put an operation into production. Lastly, Commerce needs to make some advances on the environmental front to satisfy investors that environmental hurdles will not hobble the project. Commerce is well cashed up to accomplish these goals. Financial statements as of Jan 2009 show $13 million cash in the till.

Once this clarity is offered, I dare say the markets will embrace the Commerce story and send the share price higher. A move above 25 cents will signal that a move has started. Watch carefully.

InvestingSuccess Trading Notes are protected by copyright law. Corporations, websites, newsletters or individuals seeking to copy, distribute or otherwise disseminate the contents of this report or any of our other writings in part or in whole are welcome to do so upon obtaining our prior written permission and paying a reproduction fee of US$500. Anyone seeking to avoid doing so is ‘itchin for a nasty fight. The information contained herein does not necessarily constitute a solicitation to buy or sell. Consult with your financial advisor to ensure any securities mentioned herein meet with your investment objectives. Principals of Investingsuccess may or may not hold positions in securities mentioned herein.

InvestingSuccess

TRADING NOTE

January 25, 2009

Donner Metals (TSXv:DON)- Positioned for Success

It’s very rare – I’ve never seen it before – where the first resource calculation of a new discovery is big and rich enough to be a mine all on its own, no more drilling needed.

But that’s what Donner Metals has done with partner Xstrata Zinc Canada at their Bracemac-MacLeod deposit in the Matagami camp of Quebec.

The Matagami Camp dates back to the 1950's, but few investors have ever heard of Matagami because it has been overshadowed by its more famous sister - Rouyn Noranda located 200 kms south. The Matagami Camp has hosted TEN producing mines since 1963. There is only one left – Perseverance, operated by Xstrata - and it is due to run out of ore in 2013. Faced with this reality, Xstrata is keen to get a second orebody ready before Perseverance runs out. And this is where the Donner Metals story begins....

Back in 2006, Donner Metals entered into a Joint Venture Agreement in the Matagami Camp on some 800 sq. kms of mineral claims. Pursuant to the terms of this JV, Donner stands to earn a 50% interest in this project area by expending $20 million by May 2011 on exploration. In addition, should a new mineralized deposit be recognized, Donner is committed to spend a further $5 million.

A total of 90,185 meters of drilling has since been carried out with a goodly portion of this directed at a new discovery called Bracemac McLeod. Donner has just about satisfied its expenditure obligations under the JV. Once Donner vests for its 50% of the project, Xstrata Zinc can earn in for a further 15% interest (leaving Donner with 35%) by spending up to $20 million for a feasibility study.

This past week, Donner issued a press release which caught our attention here at InvestingSuccess.

The press release detailed how Donner and Xstrata have come up with an initial indicated and inferred resource, that is already bigger than most of the deposits that have already been mined at Matagami. The release noted an Indicated resource of 3,648,000 tonnes grading 11.09% zinc, 1.55% copper, 31.34 g/t silver and 0.48 g/t gold. The inferred portion was a further 528,000 tonnes grading 1.25% Zinc, 1.79% copper, 11.51 g/t silver and 0.18 g/t gold.

The press release went on to say that Xstrata is now conducting a scoping study focused on metallurgical testing, preliminary engineering studies using ramp access and capital cost assessment all to provide an initial evaluation of the viability of mine development and the feasibility of production at the Bracemac-McLeod deposit.

If Bracemac-MacLeod was one of the 10 historical mines in the Matagami Camp, it would rank 5th in size, 4th in zinc grade, and 4th in copper grade. To illustrate this point, take a look at the following table I have roughly assembled from data I found on the Donner corporate presentation found on their website.

Deposit	Prodn	(Mt)	%Zn	%Cu	Ag	Au	Depth(m)
Matagami L.	1963-88	25.64	8.20	0.56	20.91	0.41	30-228
Orchan	1963-82	4.51	9.84	1.02	37.03	0.51	31-366
Isle Dieu	1989-97	3.05	17.85	1.01	76.63	0.46	320-610
Bell Allard S.	1968-70	0.23	9.24	1.14	37.03	0.51	18-70
Bell Allard	1999-04	3.59	13.67	1.25	40.55	0.69	950-1025
Perserverance	2008-?	5.12	15.82	1.24	29.00	0.38	30-300
Norita	1976-97	3.89	3.94	1.83	25.84	0.59	10-689
Norita East	1992-96	1.08	10.21	0.80	41.42	0.74	600-900
New Hosco	1963-70	1.83	1.73	1.73	10.29	0.34	9-305
Garon Lake	1968-70	0.47	2.17	1.46	10.29	0.34	15-250
Radiore 2	1979-80	0.14	1.34	1.57	8.57	0.31	surface

Bracemac-McLeod	Indicated	3.65	11.09	1.55	31.34	0.48	50-900
	Inferred	0.52	1.25	1.79	11.51	0.18

** Ag and Au in above table are in units of g/tonne

So if history is any indication, the Bracemac-MacLeod discovery will be a mine – particularly as Xstrata has very low capital costs. Its capital costs are low because it already has a producing mill (some 6 kms away) which is currently processing the ore from the Perserverance deposit. To access ore from Bracemac McLeod, all Xstrata will have to do is build a ramp under the Bracemac-MacLeod mineralized zones. The amazing part about this projected plan is that the ramp's portal will be only 2 kms from the mill !

Let's face it - the past year has been a brutal one for base metal producers. Many Zinc operations around the globe have been shuttered. But not the Xstrata operation at Matagami. This tells me that Xstrata must have a firm grip on its per pound operating costs. This certainly bodes well for the outcome of the scoping study currently underway. In addition, inflationary forces in our economy have been muted so costs are no longer going through the roof - in fact it is likely that costs are actually falling right now. This further bodes well for a favorable outcome to the scoping study.

Investors have not made the same discovery as management. While I can’t say Bracemac McLeod is a PROVEN economic deposit just yet, the history of the Matagami Camp is certainly suggestive of this conclusion. The fact that Xstrata has managed to keep producing through a very nasty cyclical downturn is evidence that a deposit like Bracemac McLeod could "make it".

The following chart shows price action on Donner stock of late. Pay close attention to the downtrending line that dates back to mid-2008. Once the scoping study is released and once we break above this downtrending line, the ensuing price action could be explosive indeed. Investors who are as intrigued with Donner as I am, should give hard thought to taking a position now. To read the Donner story in its entirety, be sure to visit their website at www.donnermetals.com.

For more information on Donner Metals, be sure to call Keith Schaeffer at Vanguard Shareholder Solutions. Keith can be reached at (604) 608-0824. Give him a call and tell him you read about Donner Metals on the InvestingSucess website.

InvestingSuccess

TRADING NOTE

January 22, 2009

Has The Cobalt Price Hit Bottom ?

Analyst calls for $8 cobalt - Supply Destruction in Congo Continues

Market tops and market bottoms are often made by egregious analyst calls. Remember when Goldman Sachs said oil was going to $200 last year? That was the top.

Well, that has me thinking that BMO Nesbitt Burns in Canada may have set the bottom for cobalt, calling for a long term price of $8 per pound in a January 2009 review.

Cobalt was trading at $20 per pound a couple years ago, spiked to $50/lb last year and is now sitting back just below $20/lb. Cobalt is a private market, and sales have been recorded as low as $14/lb.

But an $8 long term price is difficult to believe. Now, they did hedge themselves by forecasting a price of $16.50 this year and $20 in 2010. Significantly, the $16.50 price was unchanged from before October collapse in world financial markets.

Almost all – more than 95% - of cobalt is produced as a byproduct of copper or nickel. Nickel prices have dropped from $20/lb to $5, so new production is being delayed worldwide.

Copper prices have dropped from $4 per pound to $1.40. About two thirds of the expected increases in cobalt production over the next 3-4 years are projected to come from large copper projects in the Democratic Republic of the Congo, or DRC – new mines like Katanga, Camec and Kolwezi.

But the DRC is having huge economic and social problems. Civil war is breaking out again. Between that and low metal prices, one media outlet (http://www.articlebase.com/) reported that 45 of 75 copper and cobalt treatment facilities have shut down in Congo's southern Katanga Province mining heartland, which has been broadly spared the violence continuing in eastern Congo despite the official end of a 1998-2003 war.

Output forecasts for 2009, which had included major projects meant to come on-line during the year, have had to be revised.

Congo's mines ministry now expects 2009 copper exports of 365,000 tonnes, down from the pre-crash prediction of 410,000 tonnes, but still up from 2008's projected 289,169 tonnes due to expansions that have already come on-stream.

Cobalt exports are due to fare even worse with forecast 2009 output more than halved to 32,000 tonnes from a previous 65,000 tonne forecast and 25% from projected 2008 output of 42,449 tonnes.

The DRC was one of the last big areas of the world to jump on the bull market for copper bull market bandwagon. Billions of dollars in construction and development poured into the country, with mining promoters and operators telling themselves the political risk was waning; it was not that bad.

And for awhile, they were right. Production increased, prosperity flowed, money was raised. But now it’s a different story. Katanga was supposed to be the largest cobalt producer in the DRC, producing 40,000 tonnes/year by 2011. Today they are almost bankrupt, with metals giant Glencore of Switzerland trying to take them over for pennies on the dollar.

Cobalt has come a long way this metals cycle. It and molybdenum were the two minor, strategic metals that gained mainstream investor attention, to the point where the London Metals Exchange is bringing a listed contract on each of them to their board sometime in 2009.

True, there is widespread demand destruction on metals, and cobalt is no exception. But few metals will see the same supply destruction as cobalt, unless the DRC is able to end its newly rejuvenated civil war. The widespread social unrest combined with low copper prices makes for a very real possibility that almost two thirds of the expected cobalt supply increase will be reduced to something close to zero.

So $8/lb cobalt? I think that’s as close to ringing the bell at the bottom as possible. All we need now is for Time Magazine to echo the call on their cover and we can all pile in.

For more information on publicly traded companies that can give you direct exposure to the Cobalt market, be sure to call Keith Schaeffer at Vanguard Shareholder Solutions. Keith can be reached at (604) 608-0824. Give him a call and tell him you got his contact info from the folks at InvestingSuccess.

InvestingSuccess

TRADING NOTE

January 9, 2009

Orsu Metals (TSX:OSU) – Varvarinskoye Update

To refresh your memory on Orsu, scroll down a few pages and take a read of my late September 2008 Trading Note in which I introduced Orsu to InvestingSuccess readers.

It’s hard to believe, but its true – Orsu Metals was one of the best performing stocks on the board over the last month, up over 400%. This reasonably liquid stock has gone from a low of 3.5 cents to 15 cents!

So why the dramatic price action?

Investors clearly thought that the company would go bankrupt on Jan. 1 2009 if it could not meet its Dec. 31 US$16.65 million principal debt payment on its producing Varvarinskoye gold copper mine. This debt repayment tranche represents the 2008 amount owing on its $61M bank facility with Investec/Nedbank/Natixis. As fears mounted, the stock price got hammered down to 3.5 cents.

But, Orsu is too well backed and too well supported to just up and fail. On Jan. 8, 2009 the company announced a conditional extension of this bank liability to March 31,2009 while they, along with financial advisor Endeavour Financial, re-structure Orsu’s full $61 million project debt. Orsu made the approval of this extension sound like a formality, as the final sign-off already had received technical and credit committee approval, with board ratification delayed only because of the Holiday Season.

While this dramatic unfolding of events answers some investor concerns, the market was clearly hoping for more information which explains why price action sold off a tad on this news release. For example - What is current production? What are the cash costs? Is the company producing enough gold to meet its hedge requirements? These are all questions the market was looking to have answered.

Interestingly, the new January 2009 investor presentation on Orsu’s website (www.orsumetals.com) appears to give some answers – and shows that Orsu could actually improve on original estimates for the mine.

The new powerpoint says they are now producing at 80% capacity, with 100% capacity scheduled for Q1 2009.

Their remaining hedge book is about 70,000 ounces annually or roughly 5800 ounces a month – half of forecast annual production for the next 5 or so years. Forward hedge price according to Q3 statements is $574/oz. I can already hear what you are asking. Why would Orsu forward hedge at such a ridiculously low price? The answer - the bankers made them do it. I could go off on a wild rant about bankers at this juncture, but I shall take a deep breath, collect my composure and politely refrain.

The bottom line is - now that Orsu has got things running smoother, it will steer itself through this hedge issue and it will deal with its bankers. At 80% capacity Orsu should be producing 11,667 ounces a month - more than enough to meet their hedge requirements and still enough to allow them to sell gold for their own account at today’s price of about $850/oz. In fact, the Jan 2009 presentation calls for 2009 production of 147,000 ounces of gold and 30 million pounds of copper. With things now running smooth, it does appear as if the company will no longer have to buy gold in the market to satisfy its hedge requirements (as it did in Q3, 2008). So the financial bleeding can stop.

Here at InvestingSuccess, we are maintaining our support of Orsu Metals. Stay focused on this section of the website for future Orsu updates. With what is transpiring in the economy these days, we at InvestingSuccess feel that higher gold prices are a future certainty. In conclusion, we recommend using any off-days in the market to add to your position in Orsu so as to average yourself down.

For more information on the Orsu story, be sure to call Keith Schaeffer at Vanguard Shareholder Solutions. Keith can be reached at (604) 608-0824. Give him a call and tell him you got his contact info from the folks at InvestingSuccess

InvestingSuccess Trading Notes are protected by copyright law. Corporations, websites, newsletters or individuals seeking to copy, distribute or otherwise disseminate the contents of this report or any of our other writings in part or in whole are welcome to do so upon obtaining our prior written permission and paying a reproduction fee of US$500. Anyone seeking to avoid doing so is ‘itchin for a nasty fight. The information contained herein does not necessarily constitute a solicitation to buy or sell. Consult with your financial advisor to ensure any securities mentioned herein meet with your investment objectives. Principals of investingsuccess may or may not hold positions in securities mentioned herein.

InvestingSuccess

Trading Note

January 08, 2009

Tirex Resources (TSXv:TXX) - It's a Buy

Resource and Commodity stocks of all descriptions have been badly mauled in the recent global market meltdown and Tirex Resources (TSXv:TXX) has been no exception. For shareholders who have endured this meltdown, the experience has no doubt been painful. But, opportunity and vindication may now be at hand. Prices of various many resource type equities appear to be basing and posturing for a breakout. And rightly so.

You see, this market mayhem of late was all about fear, panic and liquidity. Shareholders were not selling off portfolios of resource stocks because they no longer liked the resource sector. No, not at all. They were selling out of abject fear. The kind of fear that keeps you awake with gut churning worry at night. The kind of fear brought on by the use of words like “Depression” and the use of references to the “Dirty Thirties” in the mainstream media. The kind of fear brought on by seeing hedge fund after hedge fund implode as credit markets seized up.

Here at InvestingSuccess, we think the worst of the selling may be soon over. We also think that the Commodity Supercycle that got underway about 7 years ago has a lot further to run. The next chapters of this Supercycle are going to be fueled by Gov’t led stimulus and by demand from the 6 billion inhabitants of this planet, many of whom reside in the developing nations. Let’s face it, the people of these developing nations want to live like we do in North America do. Case in point – automobile sales in Q4 2008 in China were up sharply. The coming confluence of global stimulus initiatives and consumer demand will re-invigorate demand for commodities of all descriptions. The recent abysmally low metals and commodities prices, may not be seen again for a good long while.

So how then does one take advantage?

The answer – buy good quality resource stocks at the current beaten down prices.

Case in point – Tirex Resources.

Here at InvestingSuccess, we have been following Tirex Resources for quite some time. At a time when many resource type companies are trying to line up individual projects, the team at Tirex has boldly gone into the Southern European nation of Albania and secured 344 sq. kms right in the heart of the traditional Albanian mining district. This kind of bold, brazen thinking is what has attracted us to Tirex Resources.

The district that Tirex has acquired has some serious, (and I mean serious!!), potential for precious metal rich VMS mineral deposits. A quick look at the company website (www.tirexresources.com) clearly shows that drilling to date has intersected some very good looking grades of Copper, Gold and Silver.

And Tirex has not gone un-noticed. A few months ago, the European Bank for Reconstruction & Development became a significant shareholder in Tirex Resources. This development adds significant value to Tirex in terms of increased capital, increased expertise in relations with Albanian Government officials and greatly enhanced efforts to further community and environmental relations.

Investors who have already established a position in Tirex should take immediate steps to add to their position to average down their cost base. Investors looking for excellent investment opportunities in these beaten down markets right now should give some serious thought to establishing a position in Tirex Resources (TSXv:TXX).

Here at InvestingSuccess, we rely heavily on technical chart analysis. Take a look now at the following charts which show without doubt that both Tirex Resources and Copper futures prices have both turned a very significant corner on the charts.

Copper futures prices have recorded a sharp v-bottom. Price action has now penetrated the 50 day moving average, RSI has climbed up and through the critical “50” level and the Wilder DMI has recorded a buy signal. All very important signs that usually represent the notion that a bottom building process has begun. This most certainly bodes well for companies like Tirex with its exposure to Copper mineralization that comes along with the excellent gold grades posted to date.

With the powerful move higher in recent trading sessions, Tirex has now broken out of its downtrend. The 50 day moving average appears to be turning to take on a positive uptrending slope. RSI has moved above the critical “50” level and the Wilder DMI is now in positive territory. All significant developments that lead to the conclusion that Tirex Resources should be immediately bought at these levels.

For more information on Tirex Resources, be sure to call Arlen Hanson at Kin Communications in Vancouver. Arlen can be reached at (604) 684-6730. Give him a call and tell him you got his contact info from the folks at InvestingSuccess.

InvestingSuccess Trading Notes are protected by copyright law. Corporations, websites, newsletters or individuals seeking to copy, distribute or otherwise disseminate the contents of this report or any of our other writings in part or in whole are welcome to do so upon obtaining our prior written permission and paying a reproduction fee of US$500. Anyone seeking to avoid doing so is ‘itchin for a nasty fight. The information contained herein does not necessarily constitute a solicitation to buy or sell. Consult with your financial advisor to ensure any securities mentioned herein meet with your investment objectives. Principals of investingsuccess may or may not hold positions in securities mentioned herein.

InvestingSuccess

Trading Note

December 16, 2008

Potash One Inc. (TSX:KCL) - Buy Signal is Close

Resource and Commodity stocks of all descriptions have been badly mauled in the recent global market meltdown and Potash One (TSX: KCL) has been no exception. For shareholders who have endured this meltdown, the experience has no doubt been painful. But, opportunity and vindication may now be at hand. Prices of various potash equities appear to be basing and posturing for a breakout. And rightly so. In April 2008 when I first issued my buy rating on Potash One, I noted the following:

• Each year in India and China, 40 million people attain “middle class status”. With increased prosperity comes a greater demand for an improved diet with more vegetable and meat protein. This drive to prosperity has seen vast tracts of agricultural land swallowed up in order to build factories, assembly lines and chemical plants. China has now given up so much agricultural land it is on the verge of becoming a Corn importer for the first time in its history. China is already a big importer of Soybeans which along with Corn is vital for livestock and poultry feed so that enough pork and poultry can be produced to feed the masses. Problem is, China cannot start importing all its foodstuffs. It has got to produce more and grow more from the agricultural land that remains. This will require fertilizer being applied to farm land.

• In India, food production has not kept pace with food demand. Shifting weather patterns are affecting the traditional monsoon rains that have been so vital to the Indian traditional farming methods. India too has got to squeeze more productivity out of its land through the application of fertilizer.

• With Europeans still refusing to accept genetically modified grains (GMO), Brazil has stepped up to the plate to supply more non-GMO grains. In addition the Brazilians are major producers of ethanol from sugar cane. The combination of non-GMO grains and a booming ethanol industry means Brazil is under pressure to increase its agricultural output.

Has any of this changed? Not a chance. People have got to eat. It’s just that simple. And with 6 billion people on the planet, agriculture related stories will be front and center in the years to come.

Potash One had positioned itself right in the heart of the Potash action in the Province of Saskatchewan with its 97,400 acre Legacy Project which immediately adjoins the Belle Plaine potash solution mine operated by The Mosaic Company (N: MOS). Belle Plaine has been in continuous production since 1964 and from all appearances, the Potash One Legacy property shares the same general geological characteristics as the nearby Mosaic Belle Plaine solution mine. A 43-101 Technical Report prepared in June 2007 suggests this property could host an indicated resource of 36.8 million tonnes and an inferred resource of up to 360 million tonnes of Potash. Potash One is well positioned with $27 million in working capital and engineering firm SNC Lavalin has now been retained to commence work on a pre-feasibility study.

Investors who have already established a position in Potash One should take immediate steps to add to their position to average down their cost base. Investors looking for excellent investment opportunities in these beaten down markets right now should give some serious thought to establishing a position in Potash One (TSX:KCL).

Take a look now at the following charts which show without doubt that opportunities in the agricultural nutrient sector are now at hand.

Price action on both Mosaic Co. and Potash Corp has crossed above the 50 day moving average. RSI has now moved above the critical “50” mark. The Wilder DMI in both cases is about to deliver a buy signal.

As price action on the large Potash players continues to form up, Potash One will follow suit. Price action on Potash One is very, very close to crossing up ad through its 50 day moving average. RSI is very close to crossing up and through the critical “50” mark and the Wilder DMI is setting up to deliver a buy signal.

For more information on Potash One, be sure to call Arlen Hanson at Kin Communications in Vancouver. Arlen can be reached at (604) 684-6730. Give him a call and tell him you got his contact info from the folks at InvestingSuccess

InvestingSuccess Trading Notes are protected by copyright law. Corporations, websites, newsletters or individuals seeking to copy, distribute or otherwise disseminate the contents of this report or any of our other writings in part or in whole are welcome to do so upon obtaining our prior written permission and paying a reproduction fee of US$500. Anyone seeking to avoid doing so is ‘itchin for a nasty fight. The information contained herein does not necessarily constitute a solicitation to buy or sell. Consult with your financial advisor to ensure any securities mentioned herein meet with your investment objectives. Principals of investingsuccess.ca may or may not hold any securities mentioned herein

InvestingSuccess

TRADING NOTE

Sept 27, 2008

Orsu Metals (TSX:OSU) – Varvarinskoye has Arrived

Orsu Metals ( TSXv:OSU) was formed in June 2008 by way of the amalgamation of Lero Gold and European Minerals Corporation.

London based Orsu operates the Varvarinskoye open pit copper-gold mine in northern Kazakhstan and is moving quickly to advance mineral deposits in the Tien Shan gold belt located in the Kyrgyzstan Republic and in the Rudny Altai copper belt in Kazakhstan.

Since being formed in June 2008, Orsu’s main focus has been ramping up operations at Varvarinskoye. Varvarinskoye is the first new mine to open in Kazakhstan since the nation became independent in 1991. President Nazerbayev has even visited the site several times in a show of his support. Here at www.investingsuccess.ca we too have been watching this story with piqued interest as well.

You see, anytime a new mine goes into production, the entire industry watches. Getting a mine into production can take a decade or more of exploration, development, financing, construction and so on. There are so many variables – commodity prices and the market for financing being the primary two – that can delay a new mine or even kill it. So it really is a big deal to see a mining project move forward.

To underscore just how big a deal it is to see a mining project move ahead, all one need do is take a look back at the history of this particular project. Mineralization on this property was first discovered in the 1930’s. A publicly traded entity in the 1990’s advanced the project forward and even traded as high as $20 a share. But in the late 1990’s as metal prices slumped into what many described as a nuclear winter for mining stocks, the share price of this entity collapsed to pennies. So when we say there are many variables that can affect a mining project, we really mean it.

The most recent efforts by European Minerals to advance this project against a backdrop of strong and improving metals prices also had its challenges and some would even say bad luck. Mid-way through mine construction, management had to change the construction contractor when it looked like the contractor was headed for financial problems. This put the entire project behind schedule by about 1 year. This delay meant that European Minerals would not be able to meet its hedge commitments (half of the first eight year’s production, or 70,000 oz per year at $574/oz. So European Minerals had to merge with Lero Gold and that is how Orsu came into being.

With the project now starting to fire on all cylinders, the broad array of institutional and retail investors in Orsu (as well as many people in the mining industry) are all watching closely.

Orsu recently provided a progress update, and it appears the mine is on track to be in full production at the start of 2009. As usual, you have to read deep in the press release to get the salient points, which are:

-mining and milling is operating at 80% capacity

-mill throughput capacity has now increased by 17% from 4.2 million tons per year to 4.9 million tones per year

-forward hedge positions were recently bought back at a gold price which was close to the low for the 3rd quarter

- mill design has been improved and a low cost mill expansion program has begun that will eventually see gold production rise to 163,000 ounces annually. A $66M financing earlier this year means Orsu has a string balance sheet to see this expansion program through to completion.

Orsu has produced in total so far during the operational ramp up, 26,000 ounces of gold and 5,000,000 pounds of copper for total revenue of $35 million.

Orsu believes it can produce $200 million in sales revenue in 2009 (140,000 ounces and 40 million pounds of copper) with very low cost per ounce. If operational cash flow comes in at say $100 million, that will equate to about 22 cents a share cash flow. The stock price of Orsu last week was 22 cents, or a paltry 1 x multiple to future projected cash flow. I hope you now understand why we follow this company. As the junior mining sector recovers ( and it will !!), Orsu will come to trade at a more substantial multiple to cash flow. Investors getting in now, or adding to current positions now will be sure to reap the rewards.

Varvarinskoye has arrived. 70 years after first being discovered. 14 years and two economic cycles after going public. The value is compelling. We are initiating coverage of Orsu with a strong buy rating. The junior sector will recover. In fact, we may now be seeing the bottom on many junior mining stocks. Take a hard look at Orsu and start building your position.

InvestingSuccess Trading Notes are protected by copyright law. Corporations, websites, newsletters or individuals seeking to copy, distribute or otherwise disseminate the contents of this report or any of our other writings in part or in whole are welcome to do so upon obtaining our prior written permission and paying a reproduction fee of US$500. Anyone seeking to avoid doing so is ‘itchin for a nasty fight. The information contained herein does not necessarily constitute a solicitation to buy or sell. Consult with your financial advisor to ensure any securities mentioned herein meet with your investment objectives. Principals of investingsuccess.ca may or may not hold any securities mentioned herein