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Stockbullz.com Weekly Stock Newsletter #7

April 28, 2006

 

“It’s my opinion but it’s your money!”

 - Anonymous

Dear Canadian Stock Investor,

I have a tiny confession to make. Some of you may have read my short comment in response to a question on Thursday on what my position is with Nova Uranium. I said that I sold it but that is not the case. I am still holding on to my position. I have a very solid gain but I think that Nova still has room to move…especially after the recent tough times. (Yes I did say that you should always have a 25% stop loss but I am doing this as an experiment to see what happens when I don’t obey my stop loss.)

I had the chance to speak with Michael Moore, the man in charge of drilling for Nova at the Calgary Resource Conference last week for close to half an hour. He said everything is going ahead as planned with the drilling. There were some delays but some of Nova B’s drill samples are in the lab. He said it might take a while to get the lab results because all of the labs are overflowing with samples they have to analyze. They are drilling Nova B before Nova A because of logistics. So we will need some patience to get the best of the results I feel.

I think it is very unfortunate that Nova has been in a downtrend after all the euphoria of how undervalued they are. If this was a rational market, I think Nova should be flat lining until the drill results are released. If they turn out to be good, the stock should continue to go up. If they turn out to be not good, the stock should go down.

But alas, the market is never rational! My theory is that many smaller investors are getting scared about the worst case scenario and they are selling early. I don’t know if some of the larger brokers like Canaccord have anything to do with this but I would not be surprised if they were intentionally bringing the price down only to buy themselves at lower prices. Remember that Nova’s market cap is still only around 50 million so it doesn’t take very much to pull it down or push it up.

I personally feel that this selling is overdone and right now could be a good entry point into the stock. Having said that, I am not buying more right now. I am simply holding on to my current position. Remember that this is a speculation on good drill results. If we hit nothing but dirt, the stock will go lower.

Silvercorp’s recent price movements could be described as flat. They are trading very tightly within a 2-3 dollar range. I think this is good because it gives us some consolidation and builds up a solid base for future gains.

I am going to maintain my $56 target for them because of several reasons. At the conference, Cathy said that they are in negotiations with the owner of the TLP silver mines inside the Ying property which currently produce around 3 million ounces of silver per year. They also have a 150 million ounce resource. There is another acquisition that they are working on but more details will be released later.

Cathy was telling all the investors coming to the Silvercorp booth that the goal for 2006 is to make $45 (USD) million in revenue and $29 (USD) million in pure profit. But keep in mind that those estimates are based on much lower metal prices than we have now so I would not be surprised to see those figures replaced with larger ones.

In addition, Cathy said that 2006 is a critical year for Silvercorp in their quest to become the “most profitable silver producer in the world”. At the beginning of the year, they had 3 goals:

1.       mining permit

2.      increase in resource

3.      AMEX listing

So far only the first has been attained but the other two are being worked on and should be finalized quite soon.

So I am still very bullish on Silvercorp. Perhaps the easy money has been made already but there is still a lot of upside to go. The next leg’s buying will be primarily done by Mutual Fund Managers I think.

The one company you should put on your watch list for sure is NUX – New Pacific Metals. They have the same people running it as Silvercorp. The only problem is that they don’t have a property! They are pretty much a shell so it is very risky. I am not going to recommend it until they get a property and I see if it’s good or not. But do keep it on your watch list because the management team is superb.

Now let me tell you about some of the notes I made at the Calgary Resource Conference last weekend. (Make sure to listen to the audio recordings I made at the show if you haven’t done so already.)

Eric Coffin, at his workshop, said that he thinks we are in the middle innings of the commodity cycle. The game is now starting to become that of relative value. He said one of the keys to success would be to stay on top of the movements and to “take money off the table” when your stocks are going up fast. He mentioned the same picks that you can hear from the audio recording. When asked if he could only pick one stock for the next year that would perform the best he answered Silvercrest. He said he hates that question but that’s his answer.

I stayed around after Eric’s presentation with a group of 5 or 10 other investors and we started asking Eric about companies. Somebody asked him about Minera Andes. Eric said it has a huge property potential. And “every time they go in, they seem to find good results.” About McEwan’s recent financing, Eric said that “McEwan’s got something up his sleeve.”

Somebody else asked about McEwan and his Cortez investments. Eric said that McEwan will for sure merge them together. He did say that it is a brilliant merger for McEwan but not so great for the retail investor. Eric said that McEwan might be running up US Gold to use as paper. Eric thought that US Gold is overvalued for what it has. But he did admit that McEwan is very smart and the “McEwan Factor” is inevitable.

I asked Eric about Silvercorp to which he replied that he “wished he got it earlier. The grades are through the roof. They will have no problem making money.” But if he would be a buyer at this price, he wasn’t too sure.

Somebody that I had the opportunity to listen to speak for the first time was Dave Skarica. He’s quite young but very sharp and intelligent. He reminded the crowd that bubbles always end with a bang. So he said that in the last year of the commodity boom, Gold could go from $1,000 to $3,000 or something like that.

Some of Dave’s favorite plays were Fortuna Silver (lots of ounces in the ground), Capstone Mining (production this summer, silver spin off company Silverstone coming soon), Full Metal Minerals (biggest landholder in Alaska), Paramount Gold Mining, Simba Mines, Consolidated Spire Ventures, Macmillian Gold (cheap silver in Mexico, takeover target or joint venture possibilities), and Mawson Resources (as a uranium play). Dave said his mentor is Jim Dines and the book “Mass Psychology” is a classic every investor should read.

Overall, I really enjoyed myself at the Calgary Resource Conference. I either spoke to many of the newsletter writers or got a chance to hear them speak. Out of my observations I would say the themes were:

-         Take some money off the table after you get large gains

-         We are still in early phases of this commodity bull market which should go on another approximately 10 years

-         Buy on dips, sell into spikes

That’s about it for this week. Thank you for taking the time to read this and I wish you luck in your investing decisions,

Mike

P.S. Please feel free to forward this to all your investor friends. I don’t advertise but I think I provide a lot of content and research you won’t find anywhere else on the web so I need you to do me a favor and spread the word!

P.P.S. I updated the layouts on the latest sites. They really look professional right now. Please check them out: Start by going to http://latesturanium.com/, then you can follow the links to the other 3 pages from there!

Stock	Date Recommended*	Price Then ($)	Price Now ($)	Return (%)
Top 2 Picks
SVM	Jan. 26, 2006	5.82	19.28	+231
NUC	Dec. 23, 2005	1.60	2.99	+87
Solid Growth
SLW	Jan. 3, 2006	6.85	12.56	+83
Speculation
MSV	Mar. 5, 2006	3.84	3.93	+2
URA	Mar. 24, 2006	0.65	0.48	-15
SQI	Apr. 14, 2006	0.59	0.54	-26
Ideas
PDN	Dec. 8, 2005	1.70	3.95	+132
UUU	Dec. 22, 2005	1.93	3.25	+68
ABG	Jan. 4, 2006	1.73	3.00	+73
POE	Dec. 17, 2005	2.22	3.70	+67
American Ideas
USGL	Apr. 14, 2006	8.19	8.95	+9

*Note: Most of these picks were recommended on my old blog first.

Disclaimer: This letter is merely someone’s opinion. It should not be taken as investment advice. Through viewing this publication or accessing our site, you agree to hold Stockbullz.com, its operators, owners and employees harmless and to completely release them from any and all liability due to any and all loss (monetary or otherwise), damage (monetary or otherwise), or injury (monetary or otherwise) that you may incur. It’s your money, so you are ultimately responsible for any gains/losses you may incur. Do your own due diligence! Writer may own positions in some of the mentioned stocks.