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Friday
Nov192010

Stuck for a Christmas present for someone dear to you?

You can make this purchase without even leaving your seat, its different, valuable, inexpensive and could prove to be beneficial to them for years to come.

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Or you could battle through shops for hours and buy a cardigan, make sure that they like colour before you flash the plastic. Please check our trading record here.

Thursday
Nov182010

LAM Up 5.29%, MGA Up 5.19%, URE Up 8.81%, URZ Up 8.65%, UUU Up 6.24%, CCJ Up 2.94%, CXX Up 16.13%

LAM Chart 19 Nov 2010.JPG

Another cracking day for uranium stocks with most of them putting on excellent gains and in some cases they have doubled in three months which is terrific for those who are in a position to acquire some of these beaten down stocks.

The above chart shows Laramide Resources Limited (LAM) up from a $1.00 in August to $2.20 as we write and it now appears to be in a steady upward trend. The STO has just turned positive and from a low level which is nice to see, hopefully an indication of things to come.

The chart below depicts the spot price for uranium which we can see is also trending north and lets hope that it continues as many investors are under water with stocks acquired at much higher prices. This is the second week in a row that the price has moved higher, we could see some serious action if uranium can push on to the $65/lb level.

Uranium Spot chart 19 Nov 2010.JPG

A snippet from TradeTech as follows: November 12, 2010–The spot uranium price continued its climb upward for the second consecutive week, but failed to break through the $60.00 price barrier. Additionally, the pace slowed with TradeTech’s Uranium Spot Price Indicator moving higher by $1.75 to $59.25 per pound U3O8, as compared to the $5.50 and $4.00 per pound increases posted in recent weeks. A total of six transactions were concluded this week, with traders and financial entities purchasing the bulk of the material sold. China and its appetite for uranium supply continues to attract attention from market participants and the investment community, with the announcement today that China Guangdong Nuclear Power Group signed a contract with Kazakhstan’s Kazatomprom. Delivery timing continues to be a significant factor in the spot market. Near-term uranium supplies for delivery by year-end are extremely thin, and the emergence of significant mid- and long-term demand, combined with buyers competing to purchase material, continues to exert upward pressure on prices


Over in the options trading pit the team have just updated the progress chart to includes yesterdays closed trades, now 51 winners and out of 53 trades, the latest two trades will be written up on gold-prices later today.

sk chart 19 Nov 2010.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today?


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Wednesday
Nov172010

Crosshair Exploration and Mining Corporation Up 24% Today

CXX Chart 18 Nov 2010.JPG

We kick off with a quick look at todays chart for Crosshair Exploration and Mining Corporation (CXX) which is another uranium stock that has doubled since July, gaining 24% today on heavy volume when 2.4 million shares changed hands. The RSI is a touch high at the moment so we might get a breather might be on the cards. The MACD and the STO are also up there too which may entice chartist to take profits.


Having purchased this uranium stock at $0.25 on 6th January 2009 with the view to participating in its recovery we are pleased to see it close at $0.31 today, to show a paper profit of around 24%.



This is what the chart looked like back then:

CXX Chart 5 Jan 2010.JPG


A summary of their activity is as follows and can be found on their web site:



Crosshair is a dominant player in the exploration and development of gold, uranium and vanadium in the US and Canada. Crosshair continues to advance its gold projects in Newfoundland. The company recently completed 7,220 m of drilling and has a bulk sampling program that is set to commence Q3 2010. Stantec Consulting Ltd. has recently been contracted to prepare an Environmental Compliance Plan and design a method of removing the overburden for the trenching that is anticipated to begin September 2010.

The Bootheel Project is located in uranium mining friendly Wyoming and with its in-mining potential and initial NI 43-101 uranium resource estimate of 1.09 M lbs indicated and an additional 3.25 M lbs inferred, the project has exceeded the minimum mining threshold and is designed for near term production.

The CMB Uranium/Vanadium Project is located in Labrador, Canada and Crosshair has demonstrated the multi-deposit potential of the project by successfully developing four currently defined resources -- C Zone, Area 1, Armstrong and Two Time Zone. All four resources are open for expansion.

Vanadium, already irreplaceable in several industries including aerospace, aviation and construction due to its unrivaled ability to strengthen steel, has also become very important in the advancement of battery technology and its use for connecting large-scale power grids. Phase 1 of the Vanadium Resource Expansion Program is complete and Phase 2 is set to commence at the beginning of July 2010.

Crosshair currently trades on the Toronto Stock Exchange as CXX and the NYSE Amex as CXZ.

Crosshair's market capitalisation is $40.76 million with 131.48 million shares outstanding, the 52-week high is $0.32 and the 52-week low is $0.10 and is trading at $0.31 as we write.

Over in the options trading pit the team have just updated the progress chart to include last weeks closed trades as follows:

sk Chart 14 November 2010.JPG


The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today?


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Tuesday
Nov162010

Josh Young Finds Value in Oil and Gas E&Ps


Source: Brian Sylvester of The Energy Report 11/16/10
http://www.theenergyreport.com/pub/na/7876

Josh Young.JPG

Josh Young, a portfolio manager with Los Angeles, California-based Young Capital Management, is a value investor on the hunt for undervalued companies in the oil and gas space. He launched his fund in September, has earned enticing returns so far, and in this exclusive interview with The Energy Report, discusses some of his hedge fund's equity holdings that are poised to get some love in the market.

The Energy Report: Josh, What makes your hedge fund different from others?

Josh Young: We're focused on oil and gas investments, and we make those investments generally through oil and gas (O&G) equities. We focus on companies that are generally under-followed and find companies which are trading at a big discount to their intrinsic value, with identifiable catalysts that are going to unlock that value.

On the short side, we find companies with some sort of fraudulent reporting or with very high valuations that are in fundamentally challenging situations that they are unlikely to work out.

TER: You're a true value investor.

JY: Yes, I am philosophically a value investor. I focus on the oil and gas space because there's a lot of volatility and there are lots of changes and catalysts. With the right approach to managing the commodity risk, there are regularly opportunities to generate significant returns and invest at the sort of discount to intrinsic value that can't be found in other sectors these days because there's so much investment competition.

TER: You mentioned that you buy companies that are trading at a large discount to their intrinsic value and that have identifiable catalysts for further growth. Do you have much trouble finding those companies in the energy space? And what are some catalysts you like to see?

JY: The opportunities are there, but it takes a rigorous investment process to exploit them. It's an incredibly labor-intensive process to identify those companies, research them and make sure they are, in fact, undervalued and that the market is missing something. The risk-adjusted returns from this space, and that I've generated running the strategy, justify the effort.

I identify catalysts as a part of my investment process. I look for companies that have already announced that they're going to sell assets or that they're going to do an equity raise that will help them finance substantial growth. Those are some examples of catalysts.

TER: What about drill results? Would you consider those catalysts?

JY: Yes, but those are generally harder to predict and so I don't focus on them as much. Sometimes it's possible to figure them out before the market does, and sometimes the market does not immediately price in meaningful drilling results. But I'm not generally looking to make investments in anticipation of wildcat exploration drilling prospects.

TER: Most of my experience is on the mining side. I noticed when I was combing through your research, a lot of the companies you follow have small share floats compared to mining companies at similar stages of development. Is there a certain range you look for in terms of the float size? For example, if a company has more than 50 million shares outstanding and isn't as far along the development path as a comparable company with 30 million shares, is that a red flag for you?

JY: I'm less concerned with the number of shares outstanding and more concerned with the percentage of shares outstanding that are in the free float versus percentage held by one or more major shareholders, especially when those major holders might have to liquidate some or all of their holdings. I definitely watch for that. But I honestly don't care if there's 1,000 shares or a billion shares outstanding. I care about the fundamentals of the investment and the liquidity of the stock.

TER: So, you don't like companies that are held largely by a handful of shareholders? Is that what you're saying?

JY: It depends on the situation. Let me explain. One of the companies I follow, Gastar Exploration Ltd. (NYSE:GST), had several large shareholders, and the share price suffered as those large shareholders exited their positions. In 2008, about 20%–25% of Gastar stock was held by a hedge fund that dissolved and the Gastar stock got dumped into the market as a part of the dissolution process. That substantially hurt its stock price. More recently, another investment fund that held more than 10% of Gastar also dissolved its energy fund. There were a number of other factors but that, essentially, led to Gastar's stock price falling from $6. to below $3. even though the company was doing better than before. That said, it's actually another catalyst in that when a major shareholder is no longer a shareholder it can create a really positive environment for the stock and allow it to start appreciating closer to its fair value.

TER: During a recent conference, Barclays VP of Commodities Biliana Pehlivanova said the equity markets like seeing gas production growth from companies because the markets consider it a measure of success. She added that the market rewards gas producers for the metric and, further, investors won't punish companies for low commodity prices because they figure it's beyond any one company's ability to correct the situation. Do you believe that's what's responsible for the growing disconnect between share prices and commodity price in the natural gas space?

JY: I think it's complicated. I'm not sure that's necessarily the answer. A few big things have been happening. First, companies have been drilling into a low gas price because they're hedged. They view their hedges as locking in high prices and, even though gas is selling at $3.50 or $4, they make another $2 or $3 on their hedge contract. They're basically producing gas at $7. Investors see the earnings and cash flow as if the company was actually achieving a $7 gas price.

In other cases, companies spent a significant amount of capital on leases in the Haynesville Shale or elsewhere and they're drilling to hold those leases and retain some of the value in relation to the high prices they paid for them. In those cases, companies are growing their gas production by default. I think a lot of the current oversupply in natural gas is actually coming from those first two factors.

The third factor is that the general market wants to be long on natural gas. Retail investors believe in natural gas. They believe in commodities. They're concerned about quantitative easing 2 (QE2), and the general growth of the money supply. People want to be long on natural gas but they've lost money on the natural gas ETF, UNG, so they've been buying natural gas companies. One of the only ways a retail investor can access natural gas is by buying these natural gas companies through either ETFs or directly owning shares. I think that's where some of the disconnect comes from. The people trading natural gas futures aren't necessarily the same people as the people buying the stocks.

TER: Do you think investors should just ignore the low gas price and invest in companies with good balance sheets and solid management, or are there better places for their capital right now?

JY: I'm not sure I should be telling investors what they should and shouldn't do. What I'm doing is finding companies that are trading at a discount to their intrinsic value at the current gas price and on the current forward curve. I intend to benefit both from the undervalued stock price of the company, as well as any uplift they might get from rising gas prices. So I'm not ignoring the gas price completely, but I'm not letting it drive my investment decisions. It's been a headwind and it will be a tailwind at some point going forward, driving additional return for some of my investments.

TER: Let's talk about some of your fund's equity holdings. One company in your hedge fund is Cabot Oil & Gas Corp. (NYSE:COG). It's trading at around $35, which already exceeded a target price set by Macquarie Equities Research. J.P. Morgan has a target of $50, but Oppenheimer has mixed opinions about Cabot. What do you see in the company, and how high do you think it could go?

JY: Cabot has traded down a lot over the past few months, after receiving a lot of negative press about its operating activities in Pennsylvania. My understanding is that the company's operations are not substantially different from other Pennsylvania operators. Cabot just happens to be in Susquehanna County, an area with a very high visibility, and the people there are concerned about the water supply. I think that negative news about Cabot has scared investors. Large investors are reducing their positions or not increasing their positions as much as they would have relative to Cabot's intrinsic value.

Cabot is really in the core of the dry gas window in the northeast. It's in an area of the Marcellus Shale where it and the operators around it have achieved some of the highest and most impressive initial production rates on their wells. Cabot is highly economic even at current gas prices. It has high-quality management, too. I think it's attractive just because it's been picked on so much. To be able to buy a low-cost natural gas producer in the U.S. at a discount to its intrinsic value is extremely rare.

TER: Are there some catalysts there that you're eyeing?

JY: There are a few things going on. First, there's industry consolidation. Atlas Energy, Inc. (NASDAQ:ATLS) recently got bought out by Chevron Corporation (NYSE:CVX), and EXCO Resources Inc. (NYSE:EXCO) is in the midst of a take-private transaction that may not close but is priced much higher than Cabot's current market valuation. There have been a number of deals in the Marcellus, joint ventures (JVs) and acquisitions over the last few years at generally increasing prices. Cabot hasn't done a JV yet in the Marcellus, but it may at some point. The company may even get bought out—it's in the core of the Marcellus. If I were a big multinational oil company and I wanted a large position in the core of the Marcellus, I would buy Cabot or go to the company and make a really attractive JV offer. That's a harder to predict catalyst from a timing perspective; it's something I think may happen over the next couple of years.

Nearer term, it looks as though Cabot is going to monetize a portion or all of its Haynesville acreage. Based on other transactions happening there, I think that would be very positive and provide the company with additional liquidity.

Cabot's acreage is in great locations in the Eagle Ford Shale, and it looks like the company should expect some high return wells there. They are also in the Heath Shale in Montana and the things I'm seeing in the Heath Shale are positive so far. But I don't attribute a lot of value to Cabot's Heath positions right now. Like I said, I don't really invest based on exploration prospects; but it's always nice to have the upside. It's possible that the company could pull in a few good wells in the Heath and that would significantly differentiate it and possibly lead to positive movement in the stock.

TER: You mentioned Gastar earlier. That's an exploration and production (E&P) company with a market cap of about $200 million. A recent Canaccord Adams research report said, "Gastar is an attractively priced Marcellus producer given its relative growth potential." Canaccord has a buy rating of $4.50 on it. Meanwhile, Rodman & Renshaw has a target of $5.50 on Gastar. What are some of the catalysts there?

JY: Well, Gastar just did an acquisition but the stock doesn't seem to have priced in the value creation from that acquisition. The company hasn't announced the metrics on the transaction; but, based on the understanding of some of the research analysts that I've spoken with and some back-of-the-envelope math, Gastar just bought north of 50,000 acres at $1,000 an acre or less in the Marcellus. They bought it in the dry gas area, but in a very good area of West Virginia. That's tremendously positive for the company. There are some big questions, though. What is the exact price Gastar paid? How will they finance the acreage acquisition and development? And did their existing JV partner decide to participate with it in the acquisition, or will they seek an additional JV partner?

Gastar recently sold acreage to its joint venture partner at more than $4,000 an acre, and here it is buying similarly high-quality acreage at $1,000 an acre or even less. That's huge, especially for a company as small as Gastar. Gastar is now likely the most levered company in the Marcellus by enterprise value, at least among those that are publicly traded.

Gastar has really transformed itself to a certain extent into a Marcellus acreage play, and an extremely attractively priced one at that. This catalyst has already played out and it's just a question of the price the company is paying. I think the market will be further surprised by other additional upcoming catalysts, such as the results from their oily Eagle Ford and Glen Rose wells in East Texas—you could see upside to the $5.50 price target that Rodman & Renshaw put out, and I really respect the analysts at both Rodman and Canaccord. Rodman recently upgraded RAME and raised their price target, and I suspect that could happen for Gastar as these catalysts play out.

TER: You mentioned earlier that Chevron took out Atlas. The deal hasn't closed yet, but it's all but done. Atlas has a huge position in the Marcellus. Is that transaction affecting companies like Gastar? Are people adding a little extra value to such companies given the transaction?

JY: I think they should. I think it has affected companies like Cabot and Range Resources Corporation (NYSE:RRC), but I don't think it's affected companies like Gastar yet. I think it's important, even if I don't expect Chevron to buy Gastar or any major oil company to come in and buy a company like Gastar. It is important because Chevron's Atlas takeover is a validation of the play. I think it will give private equity firms and domestic and international oil companies more confidence in doing JVs in the area and buying companies to access their assets. I think it helps highlight Gastar's intrinsic value in the asset market even if it hasn't yet translated into a higher share price.

TER: Another company in your fund is GMX Resources Inc. (NYSE:GMXR). GMX increased proven reserves by about a quarter in fiscal year 2010 (FY10). And it recently subleased a number of drills to cut back on drilling in the Haynesville in order to reduce its capital costs. C.K. Cooper & Company has a hold rating on GMX, whereas both MKM Partners LLC and Stifel Nicolaus have buy ratings with a $6. target. Tell us about your outlook for GMX.

JY: GMX is interesting to me because it has a tremendous amount of proven natural gas reserves on its books and is in the process of reducing the cost of adding additional reserves. Relative to the company's enterprise value, you pay less than $1. per 1,000 cubic feet of proven natural gas reserves. A large portion of those proven reserves are developed and producing. The company is profitable right now—primarily because of its hedges—but it is profitable.

GMX has done a couple of things that have substantially increased the company's value and the value of its assets. First, it has significantly increased the amount of reserves it accesses per Haynesville well drilled. At some point couple of years ago, GMX was booking 3–4 billion cubic feet (bcf) of reserves per well. Now it's up to somewhere around 6–6.5 bcf per well in reserves, with associated higher production. Based on the type of improvements the company is achieving, it could get reserves as high as 7–8 bcf per well, comparable to some other places in the Haynesville historically considered more "core" than GMX's area. These are $9 million wells, so GMX's finding costs are pretty low. It's not the lowest-cost producer, but the company has definitely improved its cost structure. That's one really big positive.

Another big positive is that it did a deal with Kinder Morgan Energy Partners, L.P. (NYSE:KMP), one of the big pipeline companies. GMX sold a minority interest in its gathering system in East Texas for more than $40 million. I think it was a 40% stake or somewhere in that range. GMX still has the majority ownership in that system. Valuations on mainstream and gathering assets have gone up a lot in since that transaction. So GMX has what's probably a $60–$70 million asset that no one seems to be giving them credit for. The company's valuation is very low because people are worried it will outspend its cash flow. Yet, it has this asset that it will be able to sell to fund its development, increasing expected future reserves and cash flow. When GMX sells that gathering asset, it's really going to unlock value there. It will highlight how discounted the stock is relative to its fundamental value. And this is the kind of discount I look for and the kind of misunderstanding I take advantage of for my fund.

TER: What are some of your other holdings that you'd like to talk about, Josh?

JY: One of my largest positions that has done fairly well recently, but still has a lot of upside potential, is RAM Energy Resources (NASDAQ:RAME). RAME has a number of more mature oil assets, primarily in Texas and Oklahoma. They also have an oil field that they recently did some exploration work on and achieved some really positive results. Their stock is attractive because it is trading at a large discount to its proven reserve value, at a low cash flow multiple, while benefiting substantially from the above $80 price of oil. RAME's enterprise value/BOE is effectively ~$11/BOE, or $11 per barrel equivalent of energy in its proved reserves, which is substantially lower than the going rate for other oil stocks and in the asset market.

On the surface, RAM appears to be overleveraged, but it recently did an asset sale for more than $40 million. The asset they sold appears to have been one of the company's weakest assets. It was a high-percentage natural gas field that was providing a relatively small amount of cash flow to its value. Even though RAM announced positive exploration results on a trend where SandRidge Energy, Inc. (NYSE:SD) and Chesapeake Energy Corp. (NYSE:CHK) have been very successful a couple of counties west in Oklahoma, RAM's stock has not received much credit for the substantially improved liquidity position nor the recent exploration success. And given that the majority of RAM's reserves are in oil, the company continues to trade at a substantial discount to its proven reserve value, which was calculated at a lower oil price. So, there's even more value there that should be recognized in the market at some point.

TER: Any others?

JY: One more is Lucas Energy, Inc. (NYSE.A:LEI), a micro-cap company. It's a small position for me, partly because it is not the most liquid stock and is a small company, but it's definitely one of the more interesting oil and gas companies. The company is entirely in the Austin Chalk formation and the Eagle Ford Shale. Lucas did a JV with Hilcorp Energy Company, a private company, whereby Hilcorp is going to drill a number of Eagle Ford oil shale wells. Lucas is getting carried on the first couple of wells, and they are going to maintain a 15% interest.

Lucas is currently producing 120 barrels of oil per day (bpd), so it's a very small amount of production. These Eagle Ford oil wells are coming on at anywhere from 500–1,000 bpd, so the company should have one well in production before the end of the year; and it should have a couple additional wells in the first quarter of next year. Lucas could more than double its oil production just from these first wells that Hilcorp is bringing on. And it has a number of other locations that Hilcorp will be drilling over the next several years, and has recently acquired additional Eagle Ford acreage at prices that were likely compelling. At oil prices north of $80, Lucas' oily Austin Chalk wells should be highly economic. You could expect the company to accelerate drilling there and increase production at very attractive margins in a play that was less attractive at that lower oil prices. Even though it's still very small, it's still an interesting company.

As you can see, my investment process entails finding value and taking advantage misunderstood opportunities, and there are a number of attractive opportunities that I've found recently in the oil and gas space. It takes a lot of research and involves developing an understanding of the companies, but it is worthwhile in terms of the opportunities it generates for attractive risk-adjusted return investments like some of the ones I've mentioned.

TER: Thank you, Josh for your time today.

Joshua Young is the founder and portfolio manager of Young Capital Management, LLC, which launched Young Capital Partners, LP in September 2010. He previously served as an analyst at a multibillion-dollar single-family office in Los Angeles, which was nominated for single-family office of the year by Institutional Investor magazine in 2008. At the family office, he was involved in the sourcing, evaluation, purchase and sale of primarily public equity investments in a value-oriented long/short equity strategy. He also led the energy investment effort, evaluated third-party investment managers and assisted in the development of this relatively new, multibillion-dollar family office. Prior to that, he was an investment analyst at Triton Pacific Capital Partners in Los Angeles, a middle-market private equity firm. Prior to that, he was a corporate strategy consultant at Mercer Management Consulting and DiamondCluster in Chicago. He graduated with honors from the University of Chicago with a BA in economics. Josh can be reached at josh@youngcm.com.

Want to read more exclusive Energy Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Expert Insights page.

DISCLOSURE:
1) Brian Sylvester of The Energy Report conducted this interview. He personally and/or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Energy Report: Atlas and Ram.
3) Josh Young: I personally and/or my family own shares of the following companies mentioned in this interview: Cabot, Gastar, RAM Energy, GMX Resources and Lucas. I personally and/or my family am paid by the following companies mentioned in this interview: None. I reserve the right to buy or sell any stocks I have mentioned here at any time.
Streetwise - The Energy Report is Copyright © 2010 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.
The Energy Report does not render general or specific investment advice and does not endorse or recommend the business, products, services or securities of any industry or company mentioned in this report.
From time to time, Streetwise Reports LLC and its  directors, officers, employees or members of their families, as well as persons interviewed for articles on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.
Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.
Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.
Participating companies provide the logos used in The Energy Report. These logos are trademarks and are the property of the individual companies.
Streetwise Reports LLC
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Tel.: (707) 282-5593
Fax: (707) 282-5592
Email: jmallin@streetwisereports.com

Over in the options trading pit the team have just updated the progress chart to include last weeks closed trades as follows:

sk Chart 14 November 2010.JPG


The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today?


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Monday
Nov152010

Hyperion Power Key Member of New Nuclear Maritime Consortium

Hyperion Logo 20 Nov 09.JPG

Just in is this missive from Hyperion Power regarding the possibility of future commercial shipping being powered by small modular reactors:

Shipping and power experts join forces to explore the potential for nuclear power to propel future generations of commercial tankers

Members of new research consortium, which includes Lloyd's Register, Enterprises Shipping and Trading, Hyperion Power Generation and BMT, to examine the marine applications for small modular reactors (SMRs).

LONDON - November 15, 2010 - A consortium of British, American and Greek interests have agreed to investigate the practical maritime applications for small modular reactors as commercial tanker-owners search for new designs that could deliver safer, cleaner and commercially viable forms of propulsion for the global fleet.
 
The Strategic Research Group at Lloyd's Register, Hyperion Power Generation Inc, British designer BMT Nigel Gee and Greek ship operator Enterprises Shipping and Trading SA are to lead the research into nuclear propulsion, which they believe is technically feasible and has the potential to drastically reduce the CO2 emissions caused by commercial shipping.
 
"This a very exciting project," said Lloyd's Register CEO, Richard Sadler. "We believe that as society recognises the limited choices available in the low carbon, oil scarce economy and land based nuclear plants become common place we will see nuclear ships on specific trade routes sooner than many currently anticipate."
 
The agreement for the joint industry project was signed today at the offices of Enterprises Shipping and Trading in Athens, Greece. Enterprises' Victor Restis, commenting at the signing said, "Despite the fact that shipping is the industry that contributes much less in the World's atmospheric pollution compared to other shore based industries, we believe that no effort is enough towards safeguarding a better world for the future generations. We are extremely honored and proud to be part of this consortium at this historic event as we strongly believe that alternative power generation is the answer for the shipping transportation."
 
The consortium believes that SMRs, with a thermal power output of more than 68 megawatts, have the potential to be used as a plug-in nuclear 'battery'.
 
The research is intended to produce a concept tanker-ship design based on conventional and 'modular' concepts. Special attention will be paid to analysis of a vessel's lifecycle cost as well as to hull-form designs and structural layout, including grounding and collision protection.
 
"We are enthusiastic about participating in the historic opportunity presented by this truly groundbreaking consortium," said John R. 'Grizz' Deal, the CEO of Hyperion Power. "In addition to fitting the basic requirements as the model for studying the application of SMRs in commercial naval propulsion, the Hyperion Power Module [HPM] can also help to set new nuclear maritime standards. The HPM's design includes a non-pressurised vessel, and non-reactive coolant. These features, among others in the HPM, should encourage the industry to strive for even higher levels of inherent safety in their models."
 
International shipping has been identified as a significant global contributor to greenhouse gas emissions, and it is under mounting pressure to contribute to overall emission reductions. There is an ongoing debate about how much the sector will be able to reduce those emissions, while continuing to support the forecast expansion in world trade that it enables.
 
"Nuclear propulsion offers the opportunity for an emissions-free alternative to fossil fuel, whist delivering ancillary benefits and security to the maritime industry," said Dr Phil Thompson, Sector Director -- Transport, for the BMT Group. "We look forward to using our wide range of maritime skills and expertise to identify the through-life implications, risks and potential for developing and using SMRs in the civilian maritime environment and to provide a framework for its safe and reliable introduction and utilisation."

So there we have it, they do appear to be making excellent progress.

Over in the options trading pit the team have just updated the progress chart to include last weeks closed trades as follows:

sk Chart 14 November 2010.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today?


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.
Monday
Nov152010

SK OptionTrader Closes 13 Trades, Banking 43% to 100%

Our premium options trading service, SK OptionTrader, has opened and closed 13 trades since our last update, banking an average profit of 63.67% on these trades.

The highest profit was a 100% gain in 6 days and the lowest was a 43% gain in 14 days.

This brings our total of closed trades to 51, with 49 winners.

Our average return per trade is 46.89% in 44.8 days.

A subscriber who had invested $1000 in each of our 51 trades would have accumulated profits of $23,913.60.

SK OptionTrader Closes 13 Trades, Banking 44% to 100% In Profits

Please note that these are closed trades, profits that we have taken and are in the bank, not paper gains in a portfolio that can vanish as quickly as they arrive.

We understand that what matters to investors and traders more than anything is the bottom line. Therefore our focus is on producing profitable results, and we feel we have achieved that. Our full trading record can be viewed here, which contains a complete record of all 51 of our closed trades.

Not just our best 51 trades, not a handpicked selection of 51 trades, but all 51 trades that SK OptionTrader has recommended and closed.

With a 6 month subscription costing just $199, and the average return on a trade being 46.89%, one would only need to have invested $1000 in just one average trade to have paid for the cost of subscription more than twice over!

You can subscribe to SK OptionTrader by clicking one of the buttons below and following the instructions. You do not need to be a member of Paypal, all you need is a valid credit card or bank account.


Subscribe for 6 months - $499

 

Subscribe for 12 months - $799

 




SK OptionTrader is not merely another gold investment letter that aims to perform well solely when gold prices increase, but to perform, period. This is an active trading service which aims to make money in all circumstances, whether gold be going up, down or even sideways.

With our model portfolio being 80% cash at time of writing, we have been formulating a strategy to deploy this cash and expect to initiate a number of trades imminently. To find out what they are sign up to SK OptionTrader now by clicking one of the buttons above and get on board for what should be some very profitable trading ahead.
Thursday
Nov112010

Cameco Corporation Up 3.14% Today

CCJ Chart 12 Nov 2010.JPG



Cameco Corporation (CCJ) has put in another good day with a gain of 3.14%. However, there is a gap opening up between the 200dma and the stock price which needs to be watched. The RSI is standing at 83.14 which suggests that a breather is on the cards, along with the MACD and the STO which are also in the overbought zone.



On the 9th October, 2010 we wrote the following about Cameco's progress:

Also worthy of note is the 50dma which looks set to cross over the 200dma, in an upward motion. This cross over when it occurs is usually a positive indicator for the stocks progress.

As we can see on the chart at the top of the page this crossover has now taken place with the resultant positive effect.

Recent results for Cameco have also come through with some good news for investors such as production is up 17% year to date and the average unit cost of production has decreased by 13% The 2010 uranium production forecast has increased to 22 million pounds, Cigar Lake is on track and McArthur River and Key Lake have signed a four-year collective agreement.

Cameco CEO Jerry Grandey commented as follows on the results as follows:

"This year's operational success has continued into the third quarter, Production volumes are 17% higher than in 2009, while production costs are lower. Our $US realized prices have also risen, illustrating the strength of our contract portfolio.

As we advised earlier this year, revenues were lower in the third quarter due to the timing of uranium deliveries. We expect about one third of our uranium sales will be delivered in the fourth quarter.

We are on track to double our annual uranium production from existing assets by 2018. Our growth strategy is in place to ensure we remain among the world's leading uranium suppliers to those who choose to use safe, clean and reliable nuclear power."


Uranium production is expected to be 22 million pounds this year, compared to our previous estimate of 21.5 million pounds, with increased production at Rabbit Lake and Inkai.

To read this news release in full please click here.



Cameco Corporation trades on the NYSE under CCJ and on Toronto under the symbol CCO with a market cap of $14.70 billion. It has a P/E ratio of 26.41 and 52 week price range of $20.70 - $38.56.

On the skoptionstrading front some of our 'stops' were triggered this week sending us back into cash with some good profits, we will update the chart on the skoptionstrading site this weekend.


SK Chart 23 Oct 2010.JPG


The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today?


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.


Wednesday
Nov102010

Strathmore Minerals Corporation: Up 20% Today

STM Chart 11 Nov 2010.JPG


Strathmore Minerals Corporation (STM), like others in this sector has doubled in price since September 2010. Note the heavy volume over the last three days. The indicators suggest that STM is now overbought so a pull back may be on the cards.

Strathmore has been a uranium company since 1996. Its goal is to become a leading uranium producer in the United States. The Company's uranium property acquisition strategy was initiated when the uranium price was between US $7-15 per lb. Strathmore was successful in acquiring advanced uranium projects in the two largest historical uranium producing regions in the United States: the Gas Hills Uranium District in Wyoming and the Grants Mineral District in New Mexico. Many of these projects were extensively explored and advanced to the mine planning stage, but were later abandoned due to prolonged weak uranium prices. In 2005, Strathmore opened operations offices in Riverton Wyoming and Santa Fe, New Mexico. Projects were reviewed and prioritized, and permitting efforts were initiated. Strathmore's Management and Technical team led by CEO David Miller, has over 200 years of uranium exploration & development, and mining experience in the United States

Strathmore Minerals Corporation trades on On the Toronto Venture Stock Exchange under the symbol TSX-STM.V, has a market capitalization of $100.20 million, with a 52 week trading range of $0.41 to $1.19.

For disclosure purposes we do own this one.

On the skoptionstrading front some of our 'stops' were triggered yesterday sending us back into cash with some good profits, we will update the chart on the skoptionstrading site this weekend.


SK Chart 23 Oct 2010.JPG


The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today?


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.


Monday
Nov082010

DNN Up 11.55%, CCJ Up 7.46%, KRI Up 35.80%, URE Up 10.83%, URRE Up 31.43%, URZ Up 15.26%

URRE Chart 09 Nov 2010.JPG


What a cracking day for uranium stocks as we can see most of them have put in a brilliant performance today bringing some respite to long term suffers and putting a smile on the faces of those who have recently taken an interest in this beaten down sector and bagged a few shares.

Using Uranium Resources Incorporated (URRE) as an example, we can see that it has doubled in a matter of weeks from $1.17 to $2.30, also note the recent increase in the volume of shares traded, which is another positive sign for the stock. The technical indicators are in the overbought zone, which suggest that a pull back is on the cards, however, they could stay there for some time as renewed interest in this sector buoys the stocks.

As you know our focus has been on the silver sector where we have made excellent profits particularly with our options trades with Silver Wheaton Corporation. The best performer being closed out for 212% profit and our most recent purchase gaining 35% in one day. However, the uranium sector looks as though it is coming back life and the possibility for generating profits via a few well placed options trades is upon us. For us, its time to dust off the drawing board in an attempt to unearth a few gems.

Uranium Spot Price Chart 09 Nov 2010.JPG

To answer some of the emails that you have sent us we are pleased to tell you that over in www.skoptionstrading.com we currently have 13 gold and silver related open positions, up between 66% - 131% with an average gain of 86% on each of these trades, which were all opened in the last 18 days. Those who joined us three weeks ago are doing very well indeed.


Please dont forget to take a look at our options trading service, www.skoptionstrading.com where our total of closed trades is 38, with 36 winners. This means that a subscriber who had invested $1000 in each of our 38 trades would have banked profits of $15,636.00. We have just posted a set of charts demonstrating the importance of timing in any trade on gold-prices, please click here if you are interested.


SK Chart 23 Oct 2010.JPG


The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today?


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.


Thursday
Nov042010

Marin Katusa Values Viable Technologies and Leadership

Marin has a few interesting points to make about uranium so dont miss them!

Source: Karen Roche of The Energy Report  11/04/2010
The Energy Report http://www.theenergyreport.com/pub/na/7782

Marin Katusa.JPG

Casey Energy Opportunities Senior Editor Marin Katusa shares his perspectives and predictions on the direction in which the energy sector is headed—from popular green alternatives like geothermal, run-of-river hydro and natural gas to the oil sector all the way to the less-popular, but very viable, uranium sector. The Energy Report caught up with Marin at the New Orleans Investment Conference for this exclusive interview.

Casey Energy Opportunities Senior Editor Marin Katusa shares his perspectives and predictions on the direction in which the energy sector is headed—from popular green alternatives like geothermal, run-of-river hydro and natural gas to the oil sector all the way to the less-popular, but very viable, uranium sector. The Energy Report caught up with Marin at the New Orleans Investment Conference for this exclusive interview.

The Energy Report: Marin, one of the things you mentioned here at the New Orleans Investment Conference and at the Casey Conference is that the current focus on gold means a lot less attention for the energy sector. Can you talk about the overlooked energy stocks you have found?

Marin Katusa: Let's start with the geothermal sector. Two years ago, geothermal was the buzz and hot sector in the junior resource sector. Today, nobody's talking about it. That's beautiful and fine by us because now these companies have developed projects and explored at a much lower cost of capital for present investors. But the investors got bored and sold the stocks. Now these companies are 50% cheaper than they were 16–18 months ago, but they have so much more value today than they did 18 months ago.

TER: What's unique about the geothermal?

MK: Of all the green energies, geothermal is by far the most economic. It makes sense. It works without government subsidies. But, when you include the government subsidies, it's like taking candy from a baby (or from Obama, not sure which is easier). The government's providing the construction loan guarantees and refinancing the projects at around 4% debt versus a year ago when companies were doing it at +14%. That's a big difference on the bottom line for cash flow. You can cheaply buy geothermal companies that actually have positive cash flow. I think it's the cheapest sector today—period.

TER: One of the downsides of geothermal is it's a relatively small sector. There aren't a lot of players in it. What will really take it to the next level?

MK: That's actually the upside. Because there are so few players and it is so front-CAPEX extensive, consolidation will have to happen to create the size. The key number to get the attention of a big firm, such as MidAmerican Energy Holdings Co. (NASDAQ:MDPWM; OTCBB:MDPWM), which is Warren Buffet's energy company, is 500 megawatts (MW) of production. Whether it's Ram Power Corp. (TSX:RPG) taking over Nevada Geothermal Power (TSX.V:NGP), Nevada Geothermal taking over Ram, Nevada taking over Magma Energy Corp. (TSX:MXY), Magma taking over Nevada or a merger between Ram and Magma—there's going to be consolidation. But the question of who will be the consolidator is still up in the air.

You want to be in the company that's going to have the largest upside. We put Nevada Geothermal, Ram and Magma as buys because they're run by excellent people. They're undervalued compared to a year ago. In January, Nevada Geothermal was over $1. We recently wrote about it trading in the $0.50 range. Now the company's refinanced its debt and had a recent equity financing in which very smart money like Rick Rule participated in (as did we). It's producing close to 50 MW now and will be growing production in the very near future; and, better yet, Ormat Technologies Inc. (NYSE:ORA) just bucked up some big money to farm into one of its other projects. A year and a half ago, it wasn't producing; so it's so much cheaper today and is a much better company.

TER: We've seen some consolidation. Over a year ago, you had Ram and Magma. . .

MK: Ram was created when Polaris Geothermal and Sierra Geothermal Power Corp. merged with Hezy Ram's private company. Magma is purchasing a lot of the Iceland production and it purchased Soda Lake in Nevada. Consolidation is going to continue.

TER: Why haven't these consolidator plays seen any market appreciation since the IPOs?

MK: Well, frankly, a lot of upside was already priced into the IPO of those two. We stated very clearly to be patient and wait until the "mojo" and "excitement" of the IPO weakened and both companies hit our buy targets, which they are currently at; both are great buys today. There's a lot of sex appeal to these companies.

Geothermal is a very difficult business—you have to produce results. It's not like gold where you can do some geophysics, some trenching, pop a couple of holes and say, "I think I've got 5 million ounces of gold here," then wave your hands and have a +$100 million market-cap company. In geothermal, when you pop in that hole it's going to cost you US$4–$6 million per well and you know what you have.

Ross Beaty and Ram raised hundreds of millions of dollars and they had all these huge projects with a lot of potential. There was a lot of hype built into the price and a lot of expectations. I told people just to be patient and not buy the stocks. That was a very frustrating period for me because we had subscribers asking, "Why can't we buy it now?" It's a funny thing, we got a lot of grief for telling subscribers to "BUY under $X" but it was EXACTLY the right thing to do. So, the price and timing of your purchase are just as important as selecting the right company in which to invest.

I was on a panel with Ross Beaty at a Casey Conference in September 2009 when the stock was about $2.25. Somebody on the panel asked what I thought. My answer was: "Be patient. Buy under $1.50." Within six months, it got to $1.35. That's because the big institutions had unrealistic expectations, got bored and, more importantly, didn't understand the geothermal sector. A lot of mining investors invested in the geothermal sector, but their timeframe was much shorter than that needed for the geothermal sector. Geothermal today is the uranium sector in 2004. Today, gold is hot and the investors took their money and placed it elsewhere. Geothermal is getting no love. Like I said before, we look for undervalued "unloved companies and sectors." And a patient investor will make a lot of money in a few years by investing today in the geothermal sector.

TER: What are the good buys in geothermal?

MK: Right now, we have three buy recommendations: Nevada Geothermal, Ram Power and Magma.

TER: The big 800-pound gorilla in the geothermal sector is Ormat. Does it fall into the buy category?

MK: No. It has some issues with the regulators right now. It's a big company that has undergone a management change. I believe you have much more upside owning Magma than you do owning Ormat. But I do believe you will see Ormat involved in the consolidation of, or investment in, other companies' projects like the one it just announced with Nevada Geothermal, which by the way, is a fantastic deal for Nevada Geothermal shareholders.

TER: Magma and Ram are already consolidation plays, but Nevada Geothermal is not. Does that make Nevada a better opportunity?

MK: If you compare Ram and Nevada, the big difference is that no one expects Ram to be bought out today. Ram doesn't have enough production. The beauty of Nevada Geothermal is that not only is it going to be growing these projects, but also President and CEO Brian Fairbank and his team are very good and very well respected on the technical front. They built the plant and will increase production on Faulkner. The Blue Mountain Faulkner 1 is the largest plant built in Nevada in more than 20 years and it's one of the largest plants built in the U.S. over the last 10 years. He will not only increase the production of project, but he has three phases coming.

A lot of people are wondering if Magma, Ormat or Ram will buy the company out. So not only is there near-term growth within the company, but you also have the speculation: "Will it get bought out?" That gives you a double-impact speculation. The "hot" money hasn't even figured out this play yet, but it will. With Ram, it is just growth. That's the difference between the two.

TER: You also said that oil is ripe for a correction. Can you explain why you think that?

MK: There's a lot of speculation in the oil markets. In the summer, we published a research report in the Casey Energy Report, which showed that when the BP spill happened, it took 15% of America's supply offline. You would have assumed the spot price of oil would've corrected upward. What actually happened when all offshore drilling was shut down in the Gulf was the spot price of oil dropped 20%. What does that tell you? The speculators didn't know what to do, so they just got out. They took the money off the table. There's a speculation premium in the oil markets right now. However, on the other side, you need to look at how low oil can go. It's a reflection of the economy and speculation. China will buy up all the oil it can get at US$40/barrel.

TER: Isn't it more a reflection of supply because you're hearing all about peak oil?

MK: Yes, there's the peak oil concept. Look at natural gas. America's been so successful in unconventional shale gas technology, but that's just starting to hit Europe. The Middle East hasn't even started doing unconventional exploration. You've got these great, cheap world-class producers that have been producing the same way they did before I was born over 30 years ago that haven't seen modern American technology. When the American innovation hits the Middle East, you will see a lot more of this supply come online.

TER: To what technology are you referring?

MK: The unconventional shale primarily uses fracking techniques. The hottest thing in Europe right now is the unconventional shale sector. Big funds like the one run by George Soros are investing millions of dollars in the sector—these wells cost more than US$8–$15 million per well. But people are worried because each frack uses 2–5 million gallons of water.

In the old days, when you drilled a well for gas, once you spud—you produce. There's no way to contain it; you have to sell it. So, you dump it into your pipelines and get the price going at the wellhead. Today with the shale technology, you can frack it and it takes you about two days to complete the well. That way, you know how much gas you have and it's a new natural storage facility. You don't have to pump it out. The reservoirs can triple—quadruple if they're successful.

TER: What's the timeframe for getting this unconventional technology into Europe and the Middle East?

MK: It's already starting in Europe. In fact, Casey Research wrote the first research report in the business on the potential of shale gas in Europe. In the Middle East, I think the best potential right now is a company called East West Petroleum Corp. (TSX.V:EW). It has the people, network, connections, experience and knowledge. I haven't been as excited about a company as I am about East West since Cuadrilla Resources Ltd. (which was the leader in European shale and got bought out) and Copper Mountain Mining Corp. (TSX:CUM) before that.

TER: East West's property is mostly in the Middle East?

MK: Nope, it has a project in Alberta that is producing. It also has four blocks in Romania in the Pannonian Basin—a very hot area right now. I'm hoping the company gets in early and uses other people's money (OPM) with the Romanian projects. I've met with the management and it intends to joint venture (JV) that out and get someone else to spend more than US$60 million on the project. After that, East West will take a free ride over the next four years.

When we do our due diligence, we always focus on people. If you look at the management team, President and CEO Dr. Greg Renwick spent more than 10 years in the Middle East. That's where he was an integral part of Centurion, which Dana Gas (ADX:DANA) bought out. I believe that you go where you know what to do and are effective at what you do best. Our big speculation here is that Greg is going to do something big in the Middle East. With people like Herb Dhaliwal and Dr. Marc Bustin on the board, he's built an amazing team. Dr. Bustin is one of the best minds in the business and probably one of the world's top experts in the unconventional oil and gas sector. Dr. Bustin was the one who educated me on the potential of the European shale gas sector, and investors can make a lot of money following him. Remember, the best companies are always built by great people.

TER: When we spoke at the Casey Conference in San Diego, you recommended Africa Oil Corp. (TSX.V:AOI) as one of your top picks at under CAD$1. The company was trading in the low $0.80s when you recommended it. You put out a Casey Energy Confidential alert on Africa Oil at CAD$1.05 and told the audience the company was a perfect example of taking the Casey Free Ride. It's gone up so much in such a short period, but you're still recommending it. Also, could you explain the Casey Free Ride concept again for our readers who might not be familiar with it.

MK: Sure. Casey's Free Ride is when returns make you feel you want to take a profit, always take your initial investment out or more if you want. What remains invested is like playing with the house's money in a casino. At that point, you can't lose.

And as far as Africa Oil, I went on national TV, in the newspaper and our newsletter saying, "Buy under $1." It was trading in the $0.80 range and today it hit over $2. In four months, our subscribers had a gain of more than 100%. The people at Africa Oil are amazing and have a pattern of success; perhaps they have different DNA, but it's in their blood (success, that is). Both Lukas Lundin and Keith Hill are part of our Explorers League. They've had success after success; they know what they're doing.

Then you've got Tullow Oil plc (LSE:TLW), which is the largest African oil explorer to come in and farm into its projects. That's what East West is going to do. You come in early and see what no one else sees. You develop these projects to the point where a major can come in and spend hundreds of millions of dollars on them, and you've just conserved your share worth. You haven't diluted your shareholder. It increases shareholder net worth by doing OPM or the JV model. That is what Africa Oil is doing so successfully, and it's going higher.

Another example is Stream Oil and Gas (TSX.V:SKO). In one of our publications, we recently told subscribers to take profits on that and we're at a 500% gain. We did the same thing with Amir Adnani, the CEO of Uranium Energy Corp (NYSE.A:UEC). Our subscribers' gains were over 1,000% on that specific investment. You have to take some profits off the table. But the story got so good that we just put it as a buy again. Amir Adnani is a name people should definitely watch; it's in our "Top 10 Under 40 list," which can be read for free at www.caseyresearch.com.

TER: Is Africa Oil to the point where institutions are coming in yet?

MK: It's starting to get the institutions in. The company is now attracting the attention of the biggest and smartest institutions in the world of oil exploration.

TER: You also wrote about uranium making a comeback. There are several uranium companies in the booths at this conference. Please tell us about what you're seeing.

MK: The most recent recommendation in our newsletter was Denison Mines Corp. (TSX:DML; NYSE.A:DNN). We said buy under $1.30. The company popped over $2.30. Most recently, we said to take a Casey Free Ride. We've had big success with Hathor Exploration Ltd. (TSX.V:HAT). And Uranium Energy has been a free ride.

Some of the best management teams in uranium are Ted Trueman with Pitchstone Exploration Ltd. (TSX.V:PXP) and Rick Kusmirski with JNR Resources Inc. (TSX.V:JNN). These guys have spent their lives in uranium. But they are not good promoters—they're good explorers. They will make a discovery; it's just taking time, but that's the exploration game.

Uranium is still not loved. It's unpopular but we've had big success with Hathor, which is a free ride. But if I were to buy a uranium company today, it would be the small micro caps like JNR and Pitchstone.

TER: What do you see for JNR, which is still looking for uranium, compared to Hathor and Denison, which are producing?

MK: Hathor's not producing. Denison has facilities in the Athabasca and in Utah. I see the next near-term producer being Amir Adnani's Uranium Energy Corp. It's going to start out producing about 1 million pounds (Mlb.) uranium a year. Within three or four years, it'll get to 3 Mlb.

Unfortunately, JNR and Pitchstone have uranium but not in large economic numbers. Until they get to the magnitude of Hathor, which found a great discovery, JNR and Pitchstone won't get that type of promotion or value in their stock. Right now, Pitchstone is trading 2x–3x cash in the $0.36 range.

TER: Another company is Ur-Energy Inc. (NYSE:URG; TSX:URE). When I spoke with the company, I learned that, in the U.S., we've burned something like 55 million tons (Mt.) of uranium. We produce only about 12.5 Mt., so a lot of that uranium is being imported.

MK: The year 2013 will be a very important year in the energy world. That is when the HEU Agreement for uranium will be renegotiated. It is also when the government will take another look at the American Recovery and Reinvestment Act for the green energy companies.

The HEU Agreement involves the Russians taking their nuclear warheads, blending them down and converting them into fuel. People forget that the U.S. has 3x the number of warheads as Russia. Will America down blend its own warheads? I don't know. America doesn't have the actual physical, logistical infrastructure to do it within the country. Russia has that infrastructure. America would have to send its warheads to Russia to get uranium back. What a funny result of the Cold War. But in all seriousness, I think you're going to see uranium going sideways. If you're a long-term investor, start picking up these companies on the cheap because they are cheap right now.

TER: If the U.S. decides to downgrade its nuclear weapons, wouldn't that drop the bottom out of the uranium price?

MK: It would; but, as I said, the infrastructure is not in place to do so. I'm pretty sure that every American is going to stand up and say, "No, we're not sending our weapons to Russia to get down blended."

TER: If we're importing most of our uranium, is there any distinct investment advantage to investing in U.S. uranium?

MK: Yes, there is. Look at Uranium Energy Corp. When we first recommended the company, it was $0.25. It's at $4.45 now. That's a nice win. Why? Because Uranium Energy Corp. is going to be America's next in-situ recovery (ISR), low-cost producer.

America's problem is that most of the prior production was conventional hard rock. That costs about US$40–$45 to produce. ISR is unconventional; it's an unconventional technique. You can do it for under US$30/lb. There's upside there. You will see a lot more of the word "unconventional," which means it's not the standard or "old" way of doing things. Rather, it uses new, more-proven modern techniques and, eventually, the newer unconventional techniques will replace the older ones.

You look at Denison's White Mesa Mill, and the company can't really make money at $40/lb. uranium. That's its cost. What's saving Denison is the vanadium byproduct—it's getting quite the upside there. So you're completely right. You want to invest because companies like Denison and UEC are going to be the cornerstone of American production. But, at US$50/lb., Denison starts making some real money—especially with its vanadium as a sweet kicker.

TER: A theme throughout our discussion is unconventional technology. You mentioned Reservoir Capital Corp. (TSX.V:REO), which has run-of-river hydro, the last time we chatted.

MK: That's not really unconventional; run-of-river hydro has been around for a long time. It's an old technology—a proven technology. Run-of-river is my second favorite green energy. It's also economic without government subsidies. The difference between run-of-river and geothermal is that geothermal has a larger baseload. However, run-of-river is a lower upfront cost.

We had a very successful run with three run-of-river companies in our newsletter. Plutonic Power Corp. (TSX:PCC) was a more than 100% gain; Swift Power Corp. got bought out at a nice gain and Reservoir also has been a huge success. We've more than doubled our money in Reservoir and recently recommended the company again through our alert service and our newsletter. Reservoir is a run-of-river developer in Serbia with geothermal projects in Bosnia and mining projects in Serbia. The company will likely spin out its mining projects, as well as its geothermal. The big upside for Reservoir Capital will be when it signs its power purchase agreement (PPA). If it can do that within the next six months, you will see a lot of institutional interest in the company.

So what do you invest in? You want to invest in juniors that don't really have the attention of the big institutions because, when institutions come in, it'll be like Africa Oil, Copper Mountain or Cuadrilla. These companies will be 4x, 5x, 6x or 7x the value because the institutions come in and want to do a big financing. If that happens, Reservoir will be well north of $1. I could see it doing the next institutional financing north of $1.50 if it can get a good PPA.

TER: How close is Reservoir to a PPA?

MK: I think you'll see that within the next six months; but, really, I have no idea as these things can take a long time.

TER: What's the probability that it won't happen?

MK: These juniors are all high-risk ventures. What is the risk? Well, I think there's a better chance that it will happen than it won't.

TER: One of the pieces of advice you give investors is to sell and take a Casey Free Ride. But you also say to play only with money you're willing to lose. So, what do you put your money in if it's not in the risk part of your portfolio?

MK: It's difficult for me to compare myself to someone who doesn't live, eat and breathe this business the way I do. Outside of my real estate holdings, I have cash. All the rest is in junior resource stocks. I believe that if you invest in companies that don't yet have the institutional interest but do have great management and people, you will do well. That's the key. You have to invest with people who've done it before and who invest heavily in these companies personally. When you look at the winners like Ross Beaty, Lukas Lundin or Robert Friedland, they are always the largest shareholders in their deals. That's what winners do. It's important to follow that formula.

TER: Very good Marin. Thank you for your time.

Investment Analyst Marin Katusa is the senior editor of Casey's Energy Report, Casey's Energy Opportunities and Casey's Energy Confidential. He left a successful teaching career to pursue what has proven an equally successful—and far more lucrative—career analyzing and investing in junior resource companies. With a stock pick record of 19 winners in a row—a 100% success rate last year—Marin's insightful research has made his subscribers a great deal of money. Using his advanced mathematical skills, he created a diagnostic resource market tool that analyzes and compares hundreds of investment variables. Through his own investments and his work with the Casey team, Marin has established a network of relationships with many of the key players in the junior resource sector in Vancouver. In addition, he is a member of the Vancouver Angel Forum, where he and his colleagues evaluate early seed investment opportunities. Marin also manages a portfolio of international real estate projects.

Want to read more exclusive Energy Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Expert Insights page.

DISCLOSURE:
1.) Karen Roche of The Energy Report conducted this interview. She personally and/or her family own shares of the following companies mentioned in this interview: None.
2.) The following companies mentioned in the interview are sponsors of The Energy Report or The Gold Report: Ram Power, Nevada Geothermal, Copper Mountain, Uranium Energy Corp and Reservoir Capital.
3.) Marin Katusa: I personally and/or my family own shares of the following companies mentioned in this interview: Copper Mountain, East West Resources, Nevada Geothermal, Reservoir Capital. I personally and/or my family are paid by the following companies: None.
The Energy Report - http://www.theenergyreport.com - a unique, free site, featuring summaries of articles from major publications, specific recommendations from newsletter writers, analysts and portfolio managers covering the fossil, nuclear, renewable, and alternative energy sectors. We welcome your comments mailto:newsletters@theenergyreport.com
The Energy Report is Copyright © 2010 by Streetwise Inc. All rights are reserved. Streetwise Inc. hereby grants an unrestricted license to use or disseminate this copyrighted material only in whole (and always including this disclaimer), but never in part. The Energy Report does not render investment advice and does not endorse or recommend the business, products, services or securities of any company mentioned in this report. From time to time, Streetwise Inc. directors, officers, employees or members of their families may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise. Streetwise Inc. does not guarantee the accuracy or thoroughness of the information reported.
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SK Chart 23 Oct 2010.JPG


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