A Few Updates with Analysis

Ur Energy: So it seems that investors are beginning to realize just how undervalued Ur Energy was, as the stock has recently taken off due to some land deals that have added pounds-in-the-ground to their holdings in Wyoming. The stock is up about 33% the last week, and we expect further gains in the future. At this time we cannot comment on what exactly are the pros and cons of their land transaction in Canada, but that will be pondered as soon as we know something for sure. This is a stock that we are going to look at accumulating should it have a decent pullback or begin to consolidate.

Canalaska: What was one of our best performers has recently given back nearly half of its gains. This is leading up to the news of their drilling results, which were supposed to be out this month but due to delays will be released in May. So we wonder if someone knows something that we do not, or if this is just the speculators not wanting to take further risks. At this point, we are sticking around for the drilling results, and may contemplate adding to our positions. However this will be only if there is a buying opportunity before the drilling results have come out seeing how we just grew our holdings by 25% somewhere near the beginning of this recent pullback. This is one to keep an eye out for as it could easily double on good results, and get cut down to somewhere around the $.35 area on disappointing news.

Cameco: The keystone to a balanced uranium portfolio due to its industry leader status and the fact that it produces uranium as we speak. This is a hold as of right now, and we expect the stock to start building a base around this $40 area as oil is retreating.

SXRuraniumone: If Cameco is our Keystone, this is right next to it. It should become the next junior to produce which will instantly begin to line its pockets with cold hard cash. This is very important as the company will have the ability to leverage and the money to build at Honeymoon and its other projects in the future without diluting its current owners' equity. This was proclaimed "Our next Blue Chip" and it has hit a new 52 week high this trading week.

Paladin: Watch this stock, as it will have a mine opening up shortly after SXR. It may earn itself into that elite club of future blue chip status. It has also had a nice run lately, and we are looking to add on any dips.

Canwest: The stock seems to have its support around $6.50 area, +/- a few cents. Every time the stock approaches or closes at those levels it seems to have a decent percentage run from that area. I am no TA, and am not supporting day trading of this stock, but if we were going to add to our holdings at this time that is the area we would wait to add to our positions at. Also the newswire has been awfully quite from the company recently, and this should end sometime. Drill results should be out sometime soon, and if they are half as good as past results then it should provide some nice upside to the stock. Our last article may have sounded negative about the potential for loss of the oil shale holding, but that is not the case. Remember we own shares in this so we are looking for significant upside on the oil sands alone. This is after all the reason most got into this stock, an absurdly cheap play on the black sands of Canada. Regardless, down here in the States people are beginning to speak of the vast oil shales of the West. It will take years to develop that area to produce, but it is moving the spotlight to that area. It seems that the second play on CWPC is coming into play early (Oil Shale). This stock could take off once it is on the AMEX and people begin to discover all the plays on unconventional oil it possess. On the Hills alone (assuming the oil is in the shale as supposed, and it is economical to get it out) the company is grossly undervalued. The stock could go to $21 in a year if the Hills really do possess 3.4 billion barrels of oil within them and the company decides to move forward with the project. We eagerly await the news that is inevitably due out within the month on this stock (There is soo much potential here, it is almost unheard of).

Lundin: The stock set a new 52-week high shortly after our story, and also set a new intra-day high in the same day. It has since backed off, but still has not crossed south of that ever important 100 mark (remember that we are not dealing with Dollars here). This stock should track oil until they begin drilling in Sudan after the wet season, if the situation in the south allows them to that is.

As an investor it is important to look for trends. Trends are everything, as I have learned, sometimes so much so that a stock can gravitate upwards for no reason other than they are in a trendy industry. Everyone remembers the 'internet craze' (companies with no revenues or profits with stock prices levitating to the stratosphere because a .com was at the end of their name) and the energy 'traders' (they traded a lot of energy, but it was sold between the same companies for the same $), but these are not the only trends that exist. Sometimes there are trends within trends, such as the uranium trend within the energy trend. That takes it below the surface, but what about trends within uranium? Well this is how money will be made, big dollars. You just have to find them, and already I have found a few. The one I find most intriguing at this time is what I want to call the 'Dines Phenomenon'. If you do not subscribe to his newsletter (personally not a subscriber) you can visit the various message boards and discover what some of his picks are. Well looking carefully many of his stock picks fair much better on big down days for uranium companies. Now this is not because he is a far superior stock guru than the rest of us, its simply that his followers listen to what he says, and he has stated that hes in this for the long haul, not trading if you listen to his readers on the message boards. So his people are not only holding the stock as it goes down in sympathy with its peers, but at the same time buying on the dips! This adds support to the stock and stems losses.

Now I have been told through the comments on this site that maybe I should listen to Dines and like some of his stocks. Ok, great. But when I take a stock like Fronteer Resources Group (FRG) and state the reasons I would not buy it after a big run-up, that's my opinion. The stock went from $3.50 to over $7 in a short period, and was due for a pullback. I truly believe that your resources are better put to work elsewhere as this company will be working on bringing its projects online (nonuranium by the way). If you love gold and silver, which I think is a good investment at this point, then this may be a stock for you. But this brings up another concern for me which I will undoubtedly receive criticism for. Check out the bottom of the Mexican gold and silver release..."Fronteer may earn a 100% interest, subject to a Teck Cominco back in right, in both of these projects by spending a combined total of US $2.0 million over four years on exploration to be divided between these two properties." Now that back in right, what exactly are the terms? Well you cannot find it on the company's website or in the rest of that press release, so I think this may be a subject to do some Due Diligence on. I agree that it would be great to gain 100% of this project, but what if the Mexican entity can exercise that right and steal back majority ownership of this discovery...? This is why I am not an FRG fan, and because of that I cannot be an Aurora fan with the taint of its parent company on it. Plus we want stocks that do not have parent companies behind them, because if they have parent companies behind them then they are not our investment vehicles, but rather the investment vehicles of their parent company. AND THAT IS WHAT AURORA IS. The name of this game is ASSET ALLOCATION, and we must wisely allocate our assets in order to get the highest rate of return on our capital.

Another Merger in the Uranium Patch

It seems that the 'Uranium Patch' is starting to heat up with another merger announced. This time it is between two diverse Canadian Juniors that will create a new Junior company with extensive land holdings (to say the least) around the world. Also, the combined company will have nearly $11 million in the bank to use exploring their land holdings.

In case you missed it, which we must admit we nearly did if it had not been for someone far wiser than us, the merger I am talking about is between Bayswater Ventures and Pathfinder Resources. Bayswater will be the acquiring entity with Pathfinder shareholders receiving .588 shares, for each share currently owned, in the new company. Separately, and not contingent on the deal being completed, Pathfinder will hold a private placement of which Bayswater will be the sole buyer of $2 million in shares which will come to a total of 3,333,333 shares. That means that the cost per share will be $.60 and this will now form a 'basement' price should the deal fall apart.

The new company will possess some very interesting prospects around the world, with most being within 2 of Canada's most prolific Uranium exploration areas. The company will control a 100% interest in 1 million acres in Labrador, Canada. This land borders the Labrador holdings of Aurora Energy Resources (the recent spinoff of Fronteer Resources - Ticker-FRG) which holds "Measured and Indicated Resource of 22.2 million pounds with an additional Inferred Resource of 13.4 million pounds". Their Labrador holdings will be the largest in the district which logic would indicate that they have a good chance at finding uranium with the large reserves known to be in the Central Mineral Belt (CMB). The company will also control 33% of the land in the Thelon Basin. This holding encompasses nearly 2 million acres where the company will attempt to find Athabasca type deposits. Their last holding in Canada is the Newfoundland holding where they control land that covers half of the Hermitage Uranium Belt. This holding is only 88,000 acres, which is small compared to its other holdings yet poses another potentially large project. In Niger the company has applications for 100% interest in 2 million acres. Niger is the fourth largest Uranium producing country and open for business due to the huge need for jobs in that area of the world. As other uranium companies are finding out, the problems are not getting the permits and building these mines, its securing the resources to run them (i.e. water and power). We feel that the country will take care of this infrastructure problem as it receives the royalty payments from the mines that will be opened in the next few years starting in 2007.

This accusation was viewed particularly well by the shareholders of Bayswater with the stock rising over 16% after being unhalted for the news pending. Shares in Pathfinder rose a more modest 7%. Our opinion is that as long as the acquirers in these acquisitions can experience this much upside, then they will continue to make these purchases as it clearly benefits their shareholders. Our outlook longterm has not changed, being that we believe that those companies that can establish at least one mine that will be operational before 2008 will be the acquirers in the years following. They will pick off the most promising juniors, or those with the best drill results to date (not today, but in the future) and this will allow for more focused development in exploration and bringing mines into production. So start looking for the best companies that are bringing mines into production soon and pay careful attention to the drill result announcements.

Updates:

Cameco: Company recently started to ascend from its recent levels where it was consolidating no doubt due to oil rising above $75. If oil can stay above $70 (which will depend upon Iran and an Ethanol shortage) then this stock makes a run above $45.

CanAlaska: Recent article in the Globe and Mail has the company's CEO talking about a recent visit from the Chinese. Supposedly they discussed CVVLF's extensive land holdings in the Athabasca region, but our bet is they were more specific than that. Shortly after we read this article, the company released its field study on the large acreage that is split by the Saskatchewan/Manitoba border which revealed extensive evidence that Uranium exists throughout. The big question is: Are the Chinese going to foot the majority of the bill in order to form a Venture here?...that will be the big question, and if they do we believe that CVVLF will double much as Urasia did after their Chinese announcement. Do not expect this stock to move much until after its announcement of its recent drilling next to the McArthur River Mine due out sometime in May (early May at the earliest is what the company's IR stated).

CanWest: Rumors have also been swirling about this company as well. There have been reports that helicopters have recently picked up activity around their oil shale holding-Pasquia Hills-which they own 90% and Nova Chemicals owns 10%. Nova is NYSE listed and had $4 billion USD in revenues in 2005 alone. To feed gasoline to this fire, it is also rumored that a drill rig has been seen being mobilized by the property. Nova is the operator of this project due to its 200 engineers that it has pledged and a research facility, and CanWest's IR is saying that the company was told "we will tell you something when we think you need to know" by Nova. So either Nova is pushing forth with the drilling of the 75 hole program, and then going to send CWPC the bill, or the lease has expired and a new aggresive company (maybe Shell) is trying to discover what lies beneath. This is a possibility given that the operator is in charge of renewing the lease, and CWPC will not know anything until given a heads up by Nova. This could offer some upside to the stock should Nova's drilling program confirm both companies' assumptions of 2.4 billion barrels of oil within the ground. But should the company lose the holding, it will be a minor setback that in my honest opinion should not weigh the stock down.

LUPE.ST: This stock broke above SEK$100 for the week finishing at a new all time high of SEK$106.50. This stock will perform as oil does, so as oil goes so goes Lundin...that shall be our mantra until they begin to drill add production in Sudan and their other holdings...maybe Venezuela or Norway too?

Hidden Gem in Sweden

A few years ago I owned some shares in a relatively small oil and gas company operating all over the globe with some very promising prospects. It was Lundin Oil, and traded OTC. They owned assets in such areas of the world as Sudan, Albania, and South Asia with assets in stable areas of the world in the North Sea and other parts of Europe. Well Lundin Oil was purchased by Talisman Energy (NYSE:TLM), a company in which we currently own shares in and are a fan of, in 2000 for all cash. However, Mr Lundin (who owns most of Lundin Group), wanted to keep the assets in Sudan because he viewed them as "world class"(this view really applied to Sudan because of his strong belief in the basin). So each shareholder was given cash by Talisman and then 1 share of Lundin Petroleum which would hold the Albania and prized Sudan assets and be traded on the Stockholm junior exchange. The catch was that because the company also had an option to buy an Iranian concession and took ownership before the deal closed all their American stockholders were forced to sell because the company at that time owned over 51% of its operating assets in 'blacklisted' countries by the US State Department. Unfortunately I was forced out along with many others and watched in awe (and some jealousy) as the stock subsequently rose from 10 Kroners (the price I was forced to sell at) all the way to its new price of 95 Kroners. Quite a run, that I believe all can admire.

Although there have been huge gains here, it is in my opinion that this stock could still double from its current price. Although they sold their 40% interest in Block 5a (right next to Talisman's old concession) they still retain an undeveloped block. Block 5B is further south than any of the other Blocks in this region, but has fewer risks associated with its development in regards to infrastructure. There is now a pipeline (built by the Talisman concession group) that runs to the Port of Sudan, and Lundin would only have to build a pipeline to connect to the already in place port pipeline and then pay a royalty to its owners.

Lundin owns 24% in Block 5B and will drill 3 holes in 2006 on their old seismic results and do another 1100Km of 2D seismic testing as soon as the wet season is over. This will also depend upon the political situation as there is a Civil War going on, but no one ever seems to know whether the peace is for real or for a short period of time to please the West. Regardless, Mr. Lundin believes that this area is going to be huge, and he has stated this before there were any discovered reserves, those reserves now stand at 1 billion barrels plus, so I would say he is right on.

This company is no one trick pony. It currently has projects near or at production in Algeria, France, Indonesia, Ireland, Netherlands, Nigeria, Norway, Sudan, Tunisia, United Kingdom, and Venezuela. Their proven and probable reserves stand at 146.1 million barrels of oil equivalent with a forecast 2006 production at 36,000 boepd (barrels of oil equivalent per day). The company will experience higher profits in the next year as some of their hedged contracts(which were a necessity as they sold forward production in order to finance acquisitions) expire.

The company is traded on the Stockholm Stock Exchange under the ticker symbol of LUPE, and can be viewed on Yahoo Finance under the ticker symbol LUPE.ST to get a quote. Our prediction is that the stock has the potential to double should any positive drilling results be released from the Sudan project, as well as decent upside potential with the de-hedging of its production capacity. With Mr. Lundin, who is an experienced oil man with over 30 years at the helm of the Lundin Group as well as his years at Shell where he helped discover large gas resources in the Persian Gulf, you have man who knows how to run an oil company and build it from the ground up. He also has ties to many governments around the world and has friends in high places. He controls 34.2% of the company through 2 family foundations and I suspect that he will fallow the same blueprint which worked so successfully for Lundin Oil, sell only when the price is rich enough.

There are a few things that I have learned while investing, and one of the most important is that you stick with those people who have vast knowledge and know how to apply that to enriching their shareholders. Mr. Lundin is one of those people, and one in which holds a considerable stake along with his shareholders. He only wins when you do, and he is not one to want to lose.

Now added to our portfolio:
LUPE.ST SEK$95

Fair Warning to All

With my various memberships at websites related to uranium and precious metals as well as other resources, I get tons of mail in my inbox to sift through. As with all investing material I sift through it to find the hidden gems, as I am sure most investors do. However as more and more people get wind of “The Uranium Movement” I have noticed that more and more of the information that they provide is not true. The other day I was following through with some Due Diligence and realized that what this newsletter was saying about this company was one sided. They stated all of the best case scenarios, yet failed to mention the repercussions if the company should for some reason fail to succeed. And I must point out that on any of the projects, should they not follow through with what they planed they risked filing for Bankruptcy. Well I went and checked out the large shareholders in this company and the investment company this letter came from was actually listed as holding a fairly large stake. Now it is not my knowledge as to what they did with that stake, as I decided at that time not to follow through with that research anymore, but it brought up what I thought was something quite important to speak to you all about.
I think that now it is more important than ever to watch the pump and dump specialists, and perform even more due diligence. These guys remind me almost of the worst lawyers…you know personal injury lawyers, divorce attorneys, mesothelioma litigators (from asbestos), and the like all mixed into one (funny how we have so many names for one profession in this country). They are simply in it for the money, and my fear is that as they make more and more of it off of their scams, they will provide further “newsletters” or “news bulletins” much like the way every city’s personal injury lawyers have done. As their practice has become more and more profitable through advertising, what do they do, put more of the filth on the airwaves. So as your nest egg grows with the rise in the price of uranium stocks, be ever more careful with where you get your information and remember to always do due diligence of your own before investing in a great idea.

A Future Blue Chip

This whole "Uranium Movement" that you see happening right now is in the early stages of what will most likely be looked back upon as one of the best investing opportunities of a generation. In all likelihood it will make the internet craze of the late 90s look like K2 compared to Uranium's Mount Everest. See the internet was based on promise, much as uranium is, however uranium has real fundamentals and real demand. These two facts also equal real money as the explorers/miners are dealing with a real product that will forever be demanded. Think about it like this, every time a customer was not pleased with their online experience for one reason or another they could simply just not use the internet for their buying, selling, or searching needs. With Uranium, that is not the case because once China or India build a Nuclear Power plant they must forever use uranium fuel to power the reactor...In short the demand will never drop below a certain threshold once a plant and its reactors are completed. Thus demand will not shrink unless other sources of power (coal or some new breakthrough) become cheaper.

With that said, we are constantly on the lookout for great companies with even better stories. During the dot-com era everyone wanted to find the next Microsoft, but now that "The Uranium Movement" is underway I am sure many will want to find the next Cameco. Well based on history its more likely that you will find the great companies in an industry near the beginning of the boom as opposed to near the middle to end. Think eBay, Yahoo, AOL, Amazon, and the exception being Google. Well if you want tomorrow's Cameco start by looking for companies who are even more diverse than them with assets that are close to producing.

Now look at SXR Uraniumone. This company was created by the merger of Southern Cross and Aflease recently. Their combined portfolio gives them assets in Africa and Australia where they hold 100% stakes as well as the Athabasca region of Canada through a partnership with Pitchstone Exploration Ltd. The company's mine in Africa (Dominion Rietkuil) is due to open within the next year (first quarter of 2007), and will also produce a significant gold by-product. Their Honeymoon project in Australia is the only undeveloped mine in that country that is at this time "legal" as the country has not totally opened up to uranium mining as a whole. Also the projects that they are partnered with in the Athabasca with Pitchstone Exploration Ltd. Appear to be top of the line properties, with their proximity to McArthur River and Cigar Lake. Although the company has promising properties, its African property will produce 2 million pounds of Uranium until production is expanded in 2011 to 4 million pounds. So they will shortly be a producer of Uranium and then they will be working on building their Honeymoon project in Australia which is widely already believed to be one of the best projects coming online in the world in the near future. Now there is no telling what the company may or may not find with Pitchstone, but from our perspective that will just be an added extra for the company with the potential to give it atleast one more world class mine.

This is a company that in our opinion is one of the early industry leaders, and will use their stable of close to production mines to build upon their holdings in the future. This will most likely be done through acquisitions, but there will be more to follow on that later. SXRFF will be added to our portfolio as of today, and should be considered as safe as International Uranium (IUCPF) and a step below Cameco.

On a closing note, the recent flooding that has taken place at Cameco's Cigar Lake should not necessarily be viewed as a negative. Yes it will cost the company 10% more in construction costs, however it should do them more good than harm. In six months the price of Uranium could jump more than 10% which would make this great for Cameco because they are not selling their product at a cheaper price than they could get later. Also, this event will force utilities and foreign countries to purchase Uranium from other sources, and my guess is that they will go after the easiest source to tap around...Russia's dismantled nuclear weapons! By using these stores up, the utility industry will forever be forced to purchase from the miners from that point on, which will most likely be the time when the mainstream investing community gets wind of the extent of the shortage of Uranium. At this point in the future there will be no more Uranium sitting around in storage for east access, and every pound that comes out of the ground will go straight to a mill to be processed and then taken directly to the plant that purchased it. This shortage will last for at least another decade, and possibly longer, if the plants that are on the drawing board around the world come onto production as planned. U308 has the potential to hit $100 a pound in the coming years, especially as certain countries (France comes to mind first with 78% of their production coming from nuclear power, and then China as it will become ever more dependent on nuclear power in the near future) will require the nuclear solution as they have no other source of power to fall back on.

Until our next installment, good luck and happy trading...

Another Reason to Invest in Uranium

Many of you have most likely heard of Bill Gates and Warren Buffett taking large positions in the Euro and shorting the US$. It is apparent that these to brilliant investors see a correction (fairly large I'd say, or else they would not be taking part in this trade) in the price of the US$ on in world terms. Although I am not in the same boat as these two investors in the belief that the Euro will be a better investment than other world currencies, I do agree with the general thesis. The US $ will inevitably have to come down as we run such high "twin" deficits (our domestic budget and with our trading partners) and are forced to earn our money back. Also our Federal Reserve is due to at a minimum slow the pace of our interest rate increases, which will take a lot of the strength out of the US$ versus other currencies.

Now one interesting way to make this same trade as America's richest billionaires, and hopefully make more money doing it, is to invest in foreign stocks. Now these stocks could go down, thus ruining any gains in your currency play, but it is a risk worth taking in my opinion. So, one way to play this is to buy Canadian and Australian uranium producers on their homeland exchanges. This will allow you to convert your expensive US$ (remember, our thesis is that they are expensive now and will be worth less against these currencies in the future) into Canadian and Australian $s. Now it appears Uranium is in a bull market that at this point seems poised to run for at least a decade with China and the rest of the world's plans to build nuclear power plants to fuel their energy demands. Thus, we can arrive at the conclusion that we can make money off of the falling US$ as well as the appreciation of the foreign stocks! This is better than what the Billionaires are doing, because as the uranium stocks appreciate in value, they are worth more in the foreign currency that they trade in. As the US$ decreases, as we think it will, your foreign currency then becomes worth more in US$ terms.

This is almost like a currency trader taking all of his gains from a trade, and reinvesting it. Think of it like this, if you were to have bought Google at $98 when it had its IPO, and all the way up used margin to reinvest your paper gains to get more stock, not only would you have your gains from the original shares, but from the reinvested shares as well. Those actions would have added a large % to your overall gain, possibly even doubling it. This trade in the foreign uranium producers can do the same thing as they will surely rise in price as the general investing public realizes the shortage of this soon-to-be vital resource, and stampedes into the market. At the same time if the US$ is falling against the foreign currencies of Australia and Canada, then you will be pocketing the currency gain when you finally decide to take your profits.

Now should for some reason the US$ rise, then the worst case scenario is that you lose a few % points off of your gain in the stock to the currency convesion after you have sold your position. This is a risk that I am more than willing to take, as well as one that has a potential to deliver you better gains that 'The Billionaire Club'.

Recently some of our recommendations have pulled back a bit, and in some cases we have ended right back where we started...sad, but we realize that we must not sell, stay our course, and continue to accumulate shares in these companies that have the promise to deliver huge returns to our portfolios.

-theinvestar's Portfolio
Past Recommendations

CWPC...........$4.90..........$6.88.......+40.4% *
CCJ...............$35.91........$39.21.....+11.14%
IUCPF..........$5.45..........$5.54.......+1.7%
PALAF.........$2.77...........$3.59.......+22.84%
STHJF.........$2.25...........$2.32.......+3.1%
CVVLF.........$.449..........$.58..........+29.18% *
TUEFF.........$2.11..........$2.58........+22.78%
UREGF........$1.73...........$1.75........+1.15% *

*Denotes a company in which I own stock in before this article has been posted on the blog.

We are proud to point out that our Energy Portfolio is up 18.9% in less than a month. Quite impressive, and we hope that this continues in order to prove correct our thesis regarding the energy sector. Happy Stock Picking...