prashant,

 

 

 

Any way none of these two explanations are accurate and are more probablistic in nature; this is so becasue there are no right answers for short term movement in prices..

Any Views..

 

 

 

Here is the chart : http://www.fullermoney.com/content/2006-10-12/wCRBRawIndustrialRINDindex.png - Link

 

On the otherhand there is anther report by "BIS Sharpnel" says that commodities like copper could fall by as much as 59% By end 2007. http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=6F64B81C-17A4-1130-F5FBCCE6F98789DA - Link

 

Guys...Welcome to this commodities RollerCoaster.

 

On the other hand there are sites who give historical deailed reports on this by are chargeable.  any ideas?

I would be very intrerested to know about the commodities you mentioned along with Cobalt and Radium. If someone knows any link please post it.

While this is a good link for Uranium, it does not have any details on tthe metal prices that I am looking for , namely zirconium, titanium and hastelloy.

If any boarder has any info. on sites which contain prices of these metals, do post it please....

 

2007 Expected Commodities Price Changes

a) Strong dollar - most of the commodities are shown as going down

b) Bad for commodities stocks and particular markets as Russia and to some extent Brazil. (Russia is mostly oil as far as I can recall.)

 

Lead for one is very very volative on LME and it is advised not to trade in it. Copper is a SELL according to my studies on Daily Charts and a Buy on Weekly charts. If i would trade copper....i would be holding moderate short positions.

 

I for one am NOT looking for a "Strong Dollar" anymore in 2007. However the real downside would come only if 80 goes on the "Dollar Index". Till that breaks... there could be a drift. Note that since 2002 the Euro is up 60% against the Dollar, while the Yen is UP "only" 10%.

 

This has resulted in the world with 2 week currencies ... (Dollar and Yen)... and Euro is taking the brunt. The Europe ministers are not too happy with that situation and just yesterday "French PM called that if ECB does nothing to stop the strength in Euro... they might have to go back to the French Franc" , which is unlikely to happen. This is surely throwing the world of currencies in a Tizzy.....

 

If indeed the commodities do fall... then this would be the worst news for commodities stocks. Rembember ..... commodities stocks can go to zero but the underlying commodities would not do so.

An underlying weakness in Commodities would effet ...  Australia (Base Metals -- Rio Tinto, Zinifax, BHP) , Canada (Base Metals), Russia (mainly Oil), Brazil (iron).

 

Major benefits of weak commodities would be to US (Base Metals), Japan (Oil) , Europe (Oil), China (Everything) .

http://www.minyanville.com/articles/index.php?a=11779 - Here is an interesting analysis of Copper. The interesting thing is that currently Copper is a SELL on my daily charts as well. (buy on Weekly). The big question now comes is that will the Weely charts turn to a sell as well.

On the Local exchange MCX... a break below Rs 291 (Low 14-July) would trigger a full blown rout.

 

Zinc is in bad situation. There are not lot of big projects coming online. Only 3% zinc is needed for galvanizing so even if zinc price doubles, cost goes up by 3%. And there is no substitute unless you paint the structure. So zinc price is going to stay strong for few years. In last six months inventory went down by 300,000 tons. Current stock in warehouses is 86,000. So I don't know how zinc price can go down.

 

Ignore Metal consensus completely. IN 2005 consensus for copper price was to go down, it went through the roof. Metal price also depends on rain!! Mining need huge amount of water. So even if there is mine, if there is water shortage, production goes down. Nothing you can do. There are powerful unions who strike to take advantage of price. Sometimes mine collapses. Only drought is not the problem. Flooding can be problem too. And environment. Sterlite mine was closed in Zambia for environment problem.

 

People say that CHina will slow down. Slower growth will be lets say 7-8% which is still huge. India is growing. Brazil has not invested in infra. for years and there is pent up demand for these metals. Chile plans to double power generation capacity by 2020. So demand is going to be strong for many years.

 

Lead:

http://www.kitcometals.com/charts/lead_historical_large.html#lmestocks_6months - http://www.kitcometals.com/charts/lead_historical_large.html#lmestocks_6months

 

stock went down from 110,000 to 40,000 in six months. What would happen in next six months? Is there subsitute for lead? Higher Zinc price is bad for lead because lead is seldom found alone. Mostly it is found as byproduct with zinc. Higher zinc price leads more zinc production so more lead production. So is moly found in copper. Many small metals are found as byproduct.

 

Uranaium: I wrote abt U before so wont repeat.

 

Finally read this interesting article:

http://www.nytimes.com/2006/12/14/business/14pennies.html?_r=1&adxnnl=1&oref=slogin&ref=business&adxnnlx=1166202193-gMeKyPOOJwEE+mtI65IyYw - http://www.nytimes.com/2006/12/14/business/14pennies.html?_r=1&adxnnl=1&oref=slogin&ref=business&adxnnlx=1166202193-gMeKyPOOJwEE+mtI65IyYw

Russia has almost everything in metal. But problem is they are going back to govt control so not many investors are willing to put money.

 

It will affect the companies you mentioned, but low prices are already considered. Valuations for Copper mining compnies are as if copper price is $1.80/lb. PCU is traded at forward p/e of 7 and has yield of 10%. And it is 17B company not unknown one. Last it was trading at half of current price and yield was 14% then!!

---------

Metal price also depends on rain!!

--------

 

Thanks for that information and a compeletly new view for me.

 

Russia has everything.... but the stock market index (RTS) has mainly Oil. It is 80% if i am correct.

 

You are never sure about govt there... they even banned the entry of the people of the biggest overseas investor ( http://www.hermitagefund.com - www.hermitagefund.com ) in the country. There was a "No Entry" to the CIO of the fund.

 

 

In US the Copper has already broken below the $3.00 handle yesterday.

 

The world was particularly Ruthless to the commodities pack yesterday. While the whole equity land was celebrating....the whole commodities world crumbled with Copper and Crude leading the fall

 

Copper repetatily hit lower Circut on the MCX yesterday. My view was exactly bang on...

 

But still I had no solace for the Bulls.....who were caught on the wrong side of the market.

 

 

 

 

 

 

Here is the chart of that ...Look a NEW ALL TIME HIGH Yesterday Showing Commodity Bull is alive and well 

 

 

 

http://www.cameco.com/investor_relations/ux_history/index.php - http://www.cameco.com/investor_relations/ux_history/index.php

 

 

I am sure this would have been much jaggerred if there had been an active futures market for it.

 

On a sidenote ... The Volumes on the Nickel Futures have picked up recently on MCX.

 

 

 

Importantly, this is a linear price move as Uranium does not have an official "Futures" market. Spot market is also very small !!!

 

No wonder Australian Dollar is at a 17 year high against the USD.

 

But other metals are also doing very well. Coppoer @ $3.5 is good but IMO it will find substitute at this level. But never mind, copper mining companies are minting money even if copper is @ $2. Hard fact is that metals are booming since few years and there is not enough supply. Look at lead. It is at historical high, inventories very low and a mine that produced 3% of golabl production is shut down.

 

See the genius of Jim. Nobody saw this situation as clearly as he did.

 

I am always heavily interested in Copper. . And the copper thieves are back. We have got lots of news that the recent rally was all china's diversification. What do u make of Zinc, as I think that is due next.

 

 

 

Not that I always make money. The mine gets shut down(temp), delayes, machinary break down etc are real temporary risk factors. But in gerenal losses is fewer and smaller compared to profits. Juniors are rollercoster rides and not for everybody but works really well for me. Basket aproach works better here.

 

Thanks. As someone who is directly interested via base metals futures, I can clearly vouch for your statement..."returns really good and not as risky as most think".

 

According to Friday's Nuclear Market Review [NMR], many market participants were left stunned by the recent record jump in the weekly spot uranium price. The market has increasingly diverged between those who have U3O8 and those without. Utilities with existing supply contracts "are heaving a sigh of relief," NMR editor Treva Klingbiel wrote. And those trying to find uranium in today's climate "are forced to face the reality of a seller's market," she said.

Is there pity for one market participant, who is now scrambling for 'very near term delivery' of nearly 500 thousand pounds U3O8? Probably not. This buyer must compete with 7 others hoping to secure about 3.2 million pounds of U3O8 equivalent.

NMR reports, "Sellers remain reluctant to sell significant quantities today." By waiting longer, sellers expect to get a higher price for the material they hold. After the previous week's astonishing price jump, the spot uranium market "was exceptionally quiet," according to Klingbiel. The spot uranium price indicator remained unchanged at US$113/pound. (TradeTech posts changes in the weekly spot uranium price on the consulting service's http://www.uranium.info - website .)

Utility Pricing Climate

Utilities remain skeptical about the long-term pricing of uranium. This weekend's Barron's article, about the crisis nuclear utilities face, quotes Exelon Corp's ( http://seekingalpha.com/by/symbol/exc - EXC ) Tom Malone and Entergy's ( http://seekingalpha.com/by/symbol/etr - ETR ) Frank Rives. Both believe uranium pricing should 'settle down.' Malone quoted a long-term uranium price of $40/pound. Utilities accustomed to lower pricing levels and wishing for uranium's return to a more advantageous price level for themselves, may be waiting for more than a few years. In conversations we had with TradeTech's Gene Clark, equilibrium might not take place until 2017.

We provided TradeTech's Uranium Price Forecast through 2008 in Chapter Two of our soon-to-be-released Uranium Outlook publication. Going out further, uranium production should not reach 230 million pounds U3O8 until about 2017. And there are many disturbing developments in numerous areas, which could substantially lower this production forecast. Foremost are the difficulties BHP Billiton ( http://seekingalpha.com/by/symbol/bhp - BHP ) may have in transforming Olympic Dam into an open pit uranium mine.

Some utilities are again taking the wait-and-see attitude about higher uranium costs. This strategy has backfired over the past year because a number of countries planned to increase or add civilian nuclear power programs. Now the Arab Gulf States want nuclear energy, adding to the number of countries seeking to obtain uranium. "Everybody's going for nuclear programs," Jordan's King Abdullah II told an Israeli newspaper.

Against the advice of some experts, we included a special section in our publication, "Investing in the Great Uranium Bull Market," predicting a rise of civilian nuclear energy in the Middle East. Turkey plans three nuclear reactors, hoping to start construction later this year on the first one. After Russian President Putin visited Saudi Arabia in February, offering 'nuclear aid,' will U.S. utilities now also be forced to compete for Kazakh uranium against the Arab Gulf States? It appears global deals are being arranged on a country-to-country basis, and U.S. utilities are coming up short.

Environmentalists: Nuclear Friend or Foe?

This past week, Jim Marston, the Texas director of climate initiatives for Environmental Defense told the 'Living on Earth' environmental show, "We have come to the conclusion that the threat of global warming is so severe and the time for action is so short that we have to look at all low carbon options again including nuclear." His comments were broadcast on more than 300 public radio stations in all fifty states across the U.S. The show's theme was entitled, "TXU Turns Nuclear."

Does this mean environmentalists are switching to nuclear energy? No. Some still cling to atavistic attitudes. One environmentalist interviewed compared a switch to nuclear on par with giving up cigarette smoking and taking up crack.

But, environmentalists influenced TXU's ( http://seekingalpha.com/by/symbol/txu - TXU ) business model, eliminating the construction of eight new coal-fired power plants. According to the show's news reporter, "Environmental groups opposed to the utility's plan for new coal plants launched a fierce legislative and legal campaign. That drove down the price of the company's stock, and made TXU a tempting takeover target." And taken over it was, but the company also negotiated with environmentalists by offering renewables, energy efficiency incentives and mandatory caps on greenhouse gases.

TXU spokesman Tom Klekner was also interviewed on this radio show. He pointed out that TXU's power reserve margins were below the minimum of acceptable levels. The spokesman insisted five new nuclear plants were needed. After TXU was taken over, the company announced plans to build the two largest nuclear reactors in the U.S.

Across the country, in New Jersey, state environmentalists are arguing about the NRC's plans to grant a twenty-year license extension to Exelon Corp's Oyster Creek Salem 1 and 2 plants. They are demanding the state revise its nuclear emphasis on the Corzine Administration Energy Master Plan. The plan calls for obtaining twenty-year extensions on all of the state's nuclear power plants. As one alternative, they suggested building more windmills off the Jersey shore by 2020. A wind farm currently operates in often-breezy Atlantic City, where casinos are also located.

Oyster Creek is the country's nuclear plant still in service, according to the U.S. Energy Information Administration. Nuclear energy generates about one-half of the state's electricity. More than 25,000 million kilowatt hours are generated each year through New Jersey's four nuclear reactors. It is likely environmentalists will do little more than argue about nuclear as New Jersey also has plans to use more coal.

The news media climate about nuclear has rapidly changed over the past five years. Hardly a significant news item was a transformer fire about 40 miles north of New York City at Entergy's Indian Point 3 reactor. The reactor could be offline for about two weeks, and the NRC plans on tightening their plant inspections. This was the fourth unplanned shutdown since July.

Another step back for Entergy could be a Sunday deadline to pass NRC muster on their emergency siren warning systems. Only 31 of 150 sirens in three counties failed the test, but that's not good enough for the NRC. The regulatory agency demands a 90-percent success rate. While the utility can request another 75-day extension, NRC spokesman Neil Sheehan announced approval would not be automatic.

These evidences confirm what we have suspected for some time. Regulatory agencies, not the environmental movement, have stepped in to prevent a Three-Mile Island repeat. Over the past thirty years, regulation of nuclear power has evolved above the level of Homer Simpson satire. Engineering developments and safeguards are steeped in sufficient layers of protective bureaucracy to avoid another serious nuclear accident. Science has replaced rhetoric when bringing about changes in the nuclear industry.

With this in mind, environmentalists could better serve the citizenry by focusing their attention on coal-fired power plants, which reportedly exude more radioactivity than nuclear plants. Yes, coal beds commonly have uranium in their composition. No 'nuclear safeguards' have yet been applied to burning coal. Perhaps environmentalists should chase this ball of yarn if they are indeed sincere about carbon emissions, global warming and abrupt climate change.

Next month, the number of U.S. nuclear reactors should increase by one to 104. The dormant Unit 1 reactor at Browns Ferry in Alabama will get its final inspection. TVA Group hopes to restart the reactor in May. The nuclear unit has not been operational for more than two decades. The nuclear renaissance is alive and well in the U.S., not just overseas.
Australian and Canadian Uranium Stock Indexes Set Record Highs

Matthew Smith of TheInvestar reports his Australian uranium stock index closed at an all-time high this past week. The Canadian uranium stock index closed a few points below its record high set earlier in the week.

Smith observed AREVA's (ARVCF.PK) developments in Australia. In an email, he wrote:

With AREVA being so active right now in Australia this tells us:

They think the 'Three Mines Policy' will be overturned at the end of the month.

There is a higher risk for the Athabascan mines than Cameco ( http://seekingalpha.com/by/symbol/ccj - CCJ ) is letting on. Therefore, AREVA (whose subsidiary is an owner, through joint ventures, of many of the mines there) is diversifying and spreading their risk over many future deposits and mines.

They see increased demand in a large way down the road. AREVA would not be buying if they could not justify this. The larger miners are generally very conservative. American and Australian deposits are where the big boys will go first when buying. Then, they will gradually gravitate to the more speculative plays in Athabasca and elsewhere.

Article was co-authored by Julie Ickes and James Finch, with comments by Matthew Smith of InvestStar.

 

Copper Commodity Report: Chinese demand to sizzle copper

Tarang Bhanushali / Mumbai Apr 13, 2007 10:02

The world demand is expected to rise by 6.4% in CY2007 to 18.11mn tons while the supply is expected to rise by 8% to 18.9mn tons in CY2007.

Demand drivers in China only getting stronger, demand in CY2007 to rise by 10.8-13.5% to 3.9-4.1mn tons  Current inventory levels at 3.5 days of cover, not enough cushion to drop in supply  Demand from Europe to surprise on the positive side  US demand for copper to continue further  Market back to backwardation on increased demand  Outlook: We expect copper prices to remain strong in the near term as inventories are low and consumers are looking for opportunities to buy. A combination of the above factors will support the rise in copper prices. The world demand is expected to rise by 6.4% in CY2007 to 18.11mn tons while the supply is expected to rise by 8% to 18.9mn tons in CY2007. The majority of the rise in the copper supply is expected to come in the last quarter of CY2007 and not before that. Thus, the gap between the demand and supply in the first half of the year is expected to keep prices in the range of US$7000-7500 in the first three quarters of CY2007.  Recommendation: BUY The bearish phase in copper witnessed in Q4CY2006 was a buying opportunity for the market players. Copper prices are expected to remain firm on account of increased capital flows moving into commodity market and demand is expected to outpace supply. Although an increase in global copper stocks is possible in CY2007, holdings will remain relatively low. While growth in refined copper production is expected to be faster than that of refined copper consumption, majority of the new projects are expected to come online in the last quarter of CY2007 or beyond. We expect the current rise in the seasonal demand from China to push prices towards the US$8000 and then towards US$8500 levels in CY2007.  Technical recommendation: The long term trend of copper is positive and the fall witnessed in the last quarter of CY2006 and January 2007 from the high of Rs398 was only corrective in nature. We expect the rally in copper prices will continue further and may see a new high in the next couple of months. MCX COPPER (April) is expected to rise to Rs360 and if this level is broken, prices are expected to rise further to Rs380. Click below for the detailed Copper Commodity Report: http://www.indiainfoline.com/content/rep/Special_Reports/2007/4/1242007/Commodity%20Report%20-%20Copper.pdf - http://www.indiainfoline.com/content/rep/Special_Reports/2007/4/1242007/Commodity%20Report%20-%20Copper.pdf

I will add few interesting points here:

 

As against general belief, radiation itself is not harmful. On the contrary, it is good for health like warm water is good. Only the high level of radiation is bad like hot water.

 

Any material has some degree of radiation but U has very high of that.

 

After millions on years of radiation, U decays and turns to lead.

 

One source that possibly come to mkt is from stock piles of atom bombs. If Utilities go out of power, some countries may convert bomb grade U to utiliy grade U. A company called USEC Inc has technology for that and they are already converting russian bombs. They may get some US bombs too. Infact that conversion process itself played major part of first U bust and then U boom. It sent so many comapnies out of business.

 

Our nuclear power plant is running at lower capacity because of lack of material. We can get U in ground but past govts has not encouraged private sector in any kind of mining.

 

Cameco CCJ has poor management but best assets. I invested in it with WMC. THey have huge hedge book. Once their mine got flooded because of somebody's stupidity, they had to buy it from open mkt at higher price than what they contracted it for!!

 

I mentioned abt Western Keltic Mines  in previous report. Its mkt cap is abt $40m USD and will get diluted. But look at the fact sheet.

 

http://www.westernkeltic.com/i/pdf/factsheet.pdf - http://www.westernkeltic.com/i/pdf/factsheet.pdf

 

Copper price $3.5/lb, Zinc $1.6/lb.

So copper sale 75mx3.5 + Zinc 60mx1.6 = 358m+silver+lead.

 

Their grade is exceptionally high and mine is not very deep open pit, cash cost can be as low as 20-25%.

 

 

 

 

Sorry ..The Lures for finding a "top" is too hard to resist. May be I am beating myself.

 

1.Price of competing alternate fuels( which depend a lot on crude oil prices).

2.As Manish has said, any major development in the recovery platforms from Atom Bomb resudues.

 

As against that there are many factors which can pull off Uranium from here....bubble, I beleive metals like Uranium, molbdenum, Titanium are not classic metal plays....they can blow all tops and send them for a toss.

 

It may be irrelevant for this post, but I will give you one example what cyclicals are capable of. If you can get any shareholder of a company by the name of Orissa Mineral Development Corporation, ask him what dividend he has received in last 2 years.... its a piblic company listed on CSE....as Manish says, this is an area for the brave and the enterprising and as far as reward goes, trust you me, if you ever get into this area and become successful, you will never go for regulars and non-cyclicals.

 

Manish, do you any idea to offer on Canadiam Natural resources????

 

Regards,

 

Vivek

it is hard to call top. Show me the supply unless Govt(US and others) start converting bombs. Production of U is actually only 50% of consumtion, rest is depletion in stock pile. Metal is too strategic to give away in anticipation that price will fall - particularly in current situation. Whenever it falls, will fall big time but dont know when.

 

One possibility of price stabilization is - If WMC and other big mines start selling U in contracts big way.  But if you see the way China is bulding nuclear plants, there is no short term solution.

 

Vivek,

No clue on Canadian Natural resources. Sorry.

 

WB mentioned that they failed to make profit out of commodity boom. They don't regret(rightly so) but then they confess that is was(and may  be is) big opportunity. Any big turnaround business makes huge money. As per article in fortune, after boom in corn prices income of farmers went up 10 times(!!).

 

Submitted by Bill Allen

About two weeks ago, former http://en.wikipedia.org/wiki/Barry_McCaffrey - General Barry McCaffrey , a West Point professor and veteran of Vietnam and the first Gulf War, http://www.washingtonpost.com/wp-dyn/content/article/2007/03/27/AR2007032701923.html?reload=true - released
the results of his report on the current conditions in Iraq and
recommendations for future strategy.  I encourage everyone to read http://media.washingtonpost.com/wp-srv/nation/documents/McCaffrey_Report_032707.pdf - his findings .  Not surprising to those following the Iraq War, the main takeaways from the report included:

1) US troops, extremely http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2007/04/02/national/w110831D72.DTL - overworked and undermanned , have performed heroically amidst a "low-grade" civil war operating environment involving foreign and terrorist forces. 

2) The US cannot leave without likely creating near perfect conditions for a regional war, and the current effort requires a long-term monetary and political commitment to rebuild the military to increase readiness for non-Iraq threats. The US cannot rely upon the current deterrent of "overwhelming" Air Force, Navy and nuclear weapons power as a permanent solution to underinvestment in personnel and equipment.

3) Most importantly, the US should quickly begin discussions with Iraq's neighbors and other Middle Eastern nations to establish a "neutral and permanent political forum in which Iraq's neighbors are drawn into continuing cooperative engagement."

These challenges will require a long-term political and financial commitment, and the well-being of US forces and Iraq's citizens remains of paramount concern. The report's takeaways, however, have significant implications for the energy industry, especially the reliability of oil supply and the continuing effect of elevated prices on inflation levels.

While high refining capacity utilization may alone prevent any price relief, investors may have underestimated the lack of real supply growth for oil. Not only could continuing volatility in the Middle East potentially create supply disruptions, but many of these nations have severely under-invested in their exploration/production infrastructure.

Although ethanol supply may grow in the next decade as a partial substitute for gasoline, global demand will continue to increase for conventional petroleum products. As the WSJ http://online.wsj.com/article/SB117511572635452301.html?mod=todays_us_page_one - notes , private equity firms have allocated billions to help resuscitate the automotive parts and car industry, capitalizing on demand from a growing global middle class. Tens of millions of automobiles will consume oil-based gasoline well into this century, and global construction firms such as Foster Wheeler ( http://seekingalpha.com/by/symbol/flwt - FLWT ), Fluor ( http://seekingalpha.com/by/symbol/flr - FLR ) and Bechtel will remain busy designing and building refining facilities. These stocks are expensive and will likely become more so.

Let me offer some caveats. While it may threaten the West with nuclear technology, Iran has satiated its public with inexpensive, imported gasoline, and possesses little domestic refining capacity. It requires Western technology to bolster oil production and construct refining facilities, currently benefits from the increased cash flow associated with higher prices, and potentially could begin selling its supply to China and India. However, by choosing to destabilize the energy markets by withholding oil shipments, Iran risks domestic instability and international backlash.

In addition, through possessing the largest global, "long life" oil reserves, the Saudi government also has great interest in providing a secure oil supply to the US with minimal price volatility to discourage any focus on alternative energy sources. However, with other nations willing to purchase their supply with very little political/diplomatic requirements (see China-Sudan), they may be less sensitive to US influence.

All said, I believe this uncertainty points to higher, near permanent future oil prices for everyone. While I join many others as a strong supporter of conservation and hybrid technology, the largest nations, including the US, have yet to make a significant commitment to the reduction of fossil fuel utilization. Ethanol and biofuel production/use will mitigate some of these concerns and become a boon to Midwestern farmers, seed and fertilizer providers, and equipment manufacturers.

However, on an international level, without much more significant investment in alternative fuels and dedication to conservation, the "new" oil will likely remain oil, and one of the best investments may be a North American energy producer, Canadian Natural Resources ( http://seekingalpha.com/by/symbol/cnq - CNQ ). The firm holds long-lived oil sand assets (40-year life) in a politically stable Western nation, possesses excellent management, and as Chuck Goldblum of http://www.hurleycapital.com/ - Hurley Capital notes, has 30 times the insider ownership of company shares versus Chevron ( http://seekingalpha.com/by/symbol/cvx - CVX ). In a nod to stockholders, CNQ noted on a recent conference call that it remains flexible in the sale and development of its existing properties with a focus on profitability.

CNQ has assumed several billion in additional debt to make a timely http://www.cbc.ca/money/story/2006/09/14/canadiannatural-anadarko.html - purchase of Anadarko's ( http://seekingalpha.com/by/symbol/apc - APC ) Western Canada natural gas assets and to initiate the first of three phases of oil sands production in 2008. However, the firm has much of its production growth ahead of it, likely reaching several hundred thousand barrels in five years, and has not diluted existing shareholders with equity issuance/financing. Management recently announced a slowdown in natural gas drilling to better manage equipment and services inflation while continuing strong output at its existing wells, securing sales prices through hedging contracts. CNQ also owns a partial stake in a dedicated oil pipeline, providing a competitive advantage as the US seeks to replace overseas supply with North American production.

The firm will battle emissions and other environmental challenges and equipment cost concerns as it develops its oil sand properties, but as technology enhances its yields and oil prices rise, free cash flow should increase dramatically. Although its stock has appreciated significantly in the past month, its energy resource holdings and management team are worth much more than its current valuation. You can also own the stock through the Fairholme Fund [FAIRX]. CNQ's future and assets remain too valuable to miss.

 

Submitted by Thomas Kelly:

 

Yesterday I added a small piece of Purepoint Uranium (PUMGF.PK) to my portfolio at a price of $1.18. This is in keeping with my strategy to add several junior uranium explorers to my portfolio as part of a basket to provide upside exposure to the uranium boom. I may scout a few more junior explorers in the near future, but at the moment my speculative uranium plays are confined to Purepoint and Northwestern Minerals.

Why I like Purepoint

Purepoint operates exclusively in the Athabasca Basin of Saskatchewan, which has yielded a number of prolific uranium deposits including Cameco's new Cigar Lake mine. The region has produced the world's highest grade uranium mines, with grades regularly being double that of most other producing regions.

Purepoint was one of the first junior explorers to purchase exploration rights in the region (back in 2002), giving them a significant edge in site selection. Their 100% owned Turnor Lake project, on which the company has recently begun to be exploratory drilling, possesses many of the same geological characteristics as previous super-deposits in the region. In fact, the company was deemed to have the best prospects in the basin according to Northern Prospector magazine.

In addition to Turnor Lake, the company has several other properties that will be the subject of exploration, and is also involved in joint ventures with Cameco and Areva Resources to develop several more properties. This involvement provides Purepoint with some legitimacy, and might also set the stage for a potential takeover if the JV produces good exploration results (as we have recently seen with the Paladin takeover of Summit Resources).

Finally, the company has recently closed on a $16 million financing deal in order to finance project development. The price per share for the PIPE was $1.45 (Canadian, I believe), which means that my basis is essentially at the same level as the PIPE. For a company with excellent exploration prospects, getting in at the same price as the PIPE is very rare, and represents a very interesting opportunity.

All in all, Purepoint has all the components of a good junior exploration company: sufficient cash; good exploration prospects; joint ventures with industry leaders. The current market cap of $60 million appears to be quite low in relation to the exploration prospects (especially when compared to many other junior explorers), and the company's drilling schedule for 2007 provides the opportunity to move the stock substantially higher as results are reported. I am content to buy and hold the stock in anticipation of those results, and I am looking forward to more drilling reports in the rest of 2007.

 

Then I think He would have.

 

Uranium Broke above a 10 year Base at $17.00 (Approx) in 2004 and has been in a Consistant "uptrend" since then.

 

In 2004 it started hitting a 52 week highs from $10 (Approx), so that "Buying on a 52 week high strategy" would have clearly worked!!!

 

The chart which I am reffering for Uranium is http://www.uxc.com/review/uxc_g_price.html - here.

Oil sands are good leverage on oil price. Their cost is very high so @$50-60 oil, they dont make much money. But if or when prices goes to 100 they will make killing. So CNQ you have to play on price. Oil from oil sand is good news for nickel and mining eqp companies like JOYG.

 

PUMGF.PK:

It is too junior. They dont have even reseres under the ground. They plan to find U so it is like buying lottery ticket. U juniors and even majors are way too expensive for comfort level. Other metal juniors are better. For comparison Wester Kaltic already has metal of $5B in ground and mkt cap $40m. PUMGF.PK has no reserve and mkt cap $60m. Now everybody is desperately looking for U and remember it is small mkt only 230m lb even if this company finds U, by the time it comes to mkt. U price may have crashed. But ofcource, any news of U finding can send stock soaring. But I stay away from bubble territory, no matter how much fancied.

 

Note this is a PDF document and you need to look page 16. Hopefully, this should remove everyone's doubts about TA.

 

 

A person relying more on fundamentals would never like his stock to move up till he has accumulated a sufficient quantity. So, they are more pleased to their stocks being hammered down....and most people in this market wont be able to digest that and hence they are lured by the promise of technical analyst.

 

Bubble, as far as your case for fullermoney goes, may you kindly state the target which they offered when they identified the break-out @20 dollars. I am not saying TAs are ineffective, all am saying is that their targets dont make any sense.

 

Very interesting report for somebody interested in natural resources.

 

 

 

 

 

 

Do you track a company by the name of redhill energy Incorporated? I beleive it is sitting on coal  and uranium reserves in mongolia....and my friend says, appear a very very wonderful bargain.....the symbol is RH...

 

Any clue as to that?

 

Regards,

 

Vivek

 

Regards,

 

Vivek

 

It is all about payback period. If I find something with 1-1.5 years payback(mcap/e) with lead/zinc/copper, and 3-4 years payback with U I wont go after U. U is not bargain anymore.

 

In commodities price movements change payback dramatically. So best situation is beaten up stock with good assests in beaten up commodity with good potential.

 

Now would you ever invest in companies like Rio Tinto, Vedanta or only in small unknown names?

 

 

BTW, whats your opinion on ONGC. It has a a replenishment to production ratio of  greater than 1.....has a beautiful company bythe name of ONGC Videsh limited , which though is lagging far behind than Chinese oil producers in acquiring overseas blocks but is still doing so reasonably aggressively. I beleive, its still one of the most undervalued frontline stocks when you look it as an energy stock....

 

 

 

 

 

 

 

 

I am already wishing to learn more about Commodities (specially Base Metals) from you!

 

Yes Manish Ji.....still the rates in Brasil is still 12%, and the currency is appreciating inspite of declining rates becuase it is a high yielder!

 

Do you see any impact of Appreciating Currency on Sugar Prices, as Brasil are the biggest Sugar player globally! Also, a rise in their currency increases the price of Sugar globally for Sugar Importing Countries.

 

This goes along with your view on Agro Commodities. Any analysis on Impact of these developments on sugar stocks in India?

 

 

 

-------------

source: moneycontrol.com

-------------------

 

Coming qtr to see order book at Rs 200 cr: IMP Powers

http://www.moneycontrol.com/india/stockpricequote/electric-equipment/imp-powers/15/54/IMP02 - has bagged an order for supply of power transformers worth USD 1 million to Zambia. It has also bagged orders worth Rs 25 crore and Rs 20 crore from http://www.moneycontrol.com/india/stockpricequote/electric-equipment/sunil-hitech-engineers/16/35/SHE - Sunil Hitech and Gujarat Energy Transmission Corporation, or GETCO, respectively. http://www.moneycontrol.com/mccode/news/searchresult.php?search_str=Ajay%20Dhoot&datesel=2">Ajay Dhoot , MD at IMP Powers, said their http://www.moneycontrol.com/mccode/news/searchresult.php?search_str=order%20book&datesel=2 - order book currently stands at Rs 130 crore. The company is targeting an order book of Rs 200 in the coming quarter and a http://www.moneycontrol.com/mccode/news/searchresult.php?search_str=turnover&datesel=2 - turnover of Rs 150-170 crore in FY08. Excerpts from CNBC-TV18's exclusive interview with Ajay Dhoot: Q: What is the current order book situation and the total value of recent orders that you got – USD 1 million from Zambia, Rs 25 crore from Sunil Hitech, Rs 20 crore from GETCO? When do these accrue to your company? A: The order book position is placed at a healthy Rs 130 crore. We have received orders from Sunil Hitech, Zambia and from various other state electricity boards. We have also bagged an order from state-owned Power Grid Corporation of India, or PGCIL. We expect another Rs 80-100 crore in orders from various state electricity boards in the next quarter. We should have an order book bank of Rs 200 crore in the coming quarter. Q: Over how long is this entire order book of Rs 130 crore executable and what sort of average margins would you enjoy across the board? A: We should be in a position to deliver the Rs 130 crores in the next six-nine months because we are looking at a next year turnover of about Rs 150-170 crore. Q: Is it for FY08? A: Yes, because we are a June year-end company and will be closing in June ’07. So, from July to June, we will be executing the entire order in about six-nine months.    Q:  Regarding the tract of land that you have in Kandivali West, what is the area that you own, the plans that you have and will the development be undertaken under IMP Powers or under some subsidiary? A: The developments will definitely take place under IMP Powers. At Kandivali, we have about 20,000 sq ft right now, where we are making meters but the transformers are made at Silvassa. We have gone into digital meters in Kandivali, we are going into digital KWS meters and will shortly also be going into transducers. Q: How soon will the 20,000 sq ft development at Kandivali take place and what kind of development could we be looking at? A: We already have land there. We were basically in Kandivali and from there, we shifted to Silvassa. We have ongoing working unit there. Our workers and the entire team is there. Q: Are you saying that you are not going to be making that into a residential or a commercial space? You are not going to be either leasing or selling that land? Your own unit is going to be operating there? A: Yes, presently because the demand is there and we will be definitely continuing with our products. Q: What is Stressed Assets Stabilization Fund? Is that a promoter-driven company or a local investor? A: That is a part of IDBI. Two years ago, we had taken the CDR route and that is why the IDBI loan converted into Stressed Asset Stabilization Fund.

 

I am watching it, but it looks like the market has blinders on!

 

Ferrous: Company with own mine is more valuabe.

Non-Ferrous: Only Sterlite is there in India. Hindalco is more of smelter. Aluminium is more cheap energy play than metal price play. Junior miners are best play if you have stomach for wild rides and some understanding of mining industry.

Cement: Demand visibility is high. Import fear is hoax. Supply we need to watch and agin it is regional mkt.

 

Sugar: If you see historical charts, Sugar bull markets are infrequent and very strong. Oversupply overhang will be there for atleat two years but probably it is already priced. Sugar mills are only processors.

 

Don't follow agrotech. But again they are just processor. Real profit will go to owners of resources.

 

Kindly elaborate " Aluminium is more cheap energy play than metal price play"

 

Aluminium is available abundantly at accesible places and close to surface. So it is neighter scarce nor tough to mine. But conversion from ore to metal makes electricity big component in price. Coal doesn’t work there. So if you have just Al mine but don’t have really cheap power you are not much competitive. But if you have cheap power, you can purchase ore from third party and still be competitive. For example, Saudi has extra gas that they can not sell. So they are planning huge Al smelter. Rio Tinto purchased Alcan not because they have Al mine, but coz they have access to cheap hydel power.

 

Some may find this shocking but not long time back(<200 years), AL was considered as precisou metal. Now it is the cheapest of even base metals. It was more expensive than Silver, Gold and Platinum. Some of the Kings were serving their guests in Aluminium plates!! Even top of Washington Monument is made of Al. All changed after invention of electricity and subsiquently process of extracting Al from ore. If you go to old homes in small villages, you will find utensils of copper and bronz but not Al. This tells you how important electricity is for Al.

 

 

If you want to live like king start eating in Al dishes.

Mr. V,

 

Mostly metals are found as oxides. Making pure metal is a CHEMICAL process. It is not just you melt the ore and metal will go to bottom and residue on top. When you melt ore, you get melted ore not metal. So coal also works as chemical agent in making iron. It is very difficult to remove Oxygen from Al. They have to use  very low voltage(<10V) but very high ampere(as high as 200,000amp). Electricity cost in smelting is more than 35%.

Congrats if you are still holding Red Hill Energy. It is up 45% today. And there is strong possibility of 100% gain in 3 months from here.

 

Instead of dozing off, I should have paid more attention during the meta lectures

 

I wanted to go to canada so that I can learn more about energy and metals. Redhill was told by one of my bummies who is tracking metals and energy at one of the reputed international brokerages. My brother in law who is with bechtel, is quite optimistic about Conoco. As of now, I have to be satisfied with Sesa and Tiscos, Hindalcos and Nalcos. Am quite angry with myself for having missed GMDC. I also liked the way ONGC has provided for such a huge sum in liability for abandonment cost. Infact the liability stands taller than the Fixed Assets they have. God knows what earning potential they hold........

 

       I have read some of your posts, and wanted some help regarding one script.

 

      I too have some knowledge about it, but you are master in it. NMDC National Mineral Development Corporation which is in Z group and can be taken in lot of 100's. I am watching it from last 3-4 months, according to me it is fundamentally strong company. If possible can you tell me about the future prospectus, your views and growth of the same.

Exellent posts .

Can u briefly give idea