StockBullz.com

Stockbullz.com Weekly Stock Newsletter #8

May 5, 2006

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

- Anonymous

Dear Canadian Stock Investor,

The buzz on StockBullz this week for sure Capstone Mining. I don’t know how many of you decided this would be a wise investment but if you did buy, at this point you may be feeling a little uneasy.

Well I am too! I have a 29% paper loss. But I would hate to sell my shares at levels this low. Since my mention on Monday, Copper is up about 16%, Silver even, and Zinc up about 3%. So why is Capstone down?

Well of course it is partly due to the fact that it had to trade down because of the special Silverstone dividend. I still don’t know what that will be valued at but I think it will be able to appreciate in value extremely quick because there will only be around 20 million shares out. Plus  we will get our bonus warrants that will help us cash in extra if the shares do well.

In case you don’t know, Silverstone has 4 excellent looking properties in Mexico. Any Silver company in Mexico is doing great right now and I think Silverstone will do great as well.

OK, so Silverstone’s good but what about Capstone? Well in my humble opinion, Capstone is lower risk because they will begin production within months at their Cozamin project in Mexico. Could Capstone have declined because of political risk? I don’t think so; Mexico is a very stable and mining friendly country. So to be totally frank with you, I don’t know why Capstone is moving down so much lower apart from the obvious dividend factor.

I hate to think that I am smarter than the market because I’m not but let me do the profit scenario once again with updated prices to show why I’m sticking with Capstone right now:

Revenue: 16 million lbs copper x $3.49 = $55,840,000 revenue

              700,000 ounces silver x $13.90 = $9,730,000 revenue

              4 million lbs zinc x $1.56 = $6,240,000 revenue

                    Total Revenue = $71,810,000

Costs: $9,953,000 - capital costs, construction etc

          $32.80 (per tonne milled) x 350,000 tonnes during year = $11,480,000

                     Total Costs = $21,433,000

Profits: $50,377,000/63,600,000 shares = $0.79 profit per share!

So if I divide share price by profits, I get a forward P/E of only 2.23!

So as you can see compared to one week ago, because the share price went up, the costs stayed the same and metal prices went up the forward P/E has dropped significantly.

Of course, keep in mind that I am quoting you the forward P/E. That means I am assuming that Copper, Silver and Zinc stay the same price for the next year. If they drop, Capstone’s profits will drop too.

But the higher the prices go, the more Capstone makes. Every move higher is pure profit for them. And with the supply/demand situations with all metals right now I have to think that metals can only go higher for the next couple years.

So if you can’t tell, I am still very bullish on Capstone. You have your own choice to make whether you agree with me or not but I have stated my case and now it’s up for you to decide what you want to do with your money. The commodity experts at the Calgary Resource Conference kept telling people to buy on the dips and this looks like that sort of opportunity to me…

I’m still very bullish on Silvercorp. The two coming catalysts will be the AMEX listing and the updated resource estimates. I have heard many people complaining about how illiquid Silvercorp is and how easy it is to bring it up or down. When Silvercorp hits $30, I think it would be smart to do a 3-1 split to increase the liquidity.

Nova has come back to life quite nicely over the past week. It seems like most of the weak and nervous hands have been bought out by more confident people. Of course everybody is just speculating but nevertheless I think most of the drop was done by panic selling. I still feel that Nova will come through with nice drill results and the stock will move higher. Keep in mind that Nova has a very tight float so rumours can work both ways. If somebody starts putting out rumours that the drill results are fantastic, the stock could move a bunch very fast. Of course it could happen the other way around too. We are purely speculating and there is no way to tell what will happen.

Silver Quest has still not acquired their so-called “flagship property” but the stock moved up more than 18% today on much higher than average volume. Why? I have no clue but maybe somebody knows something we don’t! This is a pure speculation but I’ll keep it on my watch list because I am very interested to see how it plays out.

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!

Stock	Date Recommended*	Price Then ($)	Price Now ($)	Return (%)
Top 2 Picks
SVM	Jan. 26, 2006	5.82	17.20	+196
NUC	Dec. 23, 2005	1.60	3.34	+109
Solid Growth
SLW	Jan. 3, 2006	6.85	11.98	+75
Speculation
MSV	Mar. 5, 2006	3.84	4.24	+10
SQI	Apr. 14, 2006	0.59	0.57	-3
Ideas
PDN	Dec. 8, 2005	1.70	3.95	+132
UUU	Dec. 22, 2005	1.93	3.44	+78
ABG	Jan. 4, 2006	1.73	2.97	+71
POE	Dec. 17, 2005	2.22	3.90	+76
American Ideas
USGL	Apr. 14, 2006	8.19	8.70	+6

*Note: Many 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.