09-01-11

American Bonanza Gold (ABGFF or BZA.TO) Production in Late October

"mngoldsilver" reports on the BZA.TO message board on Yahoo that , American Bonanza Gold (ABGFF or BZA.TO) production will start in late oct according to jim bagwell (investor relations). They will be pouring gold 1st qtr of '12. Stock is so cheap! Buy and hold for big $.

I second that emotion. Don't get caught on the sidelines on this one.

09-01-11

Centrex Metals (CTXXF) doubles its 67.8% Fe magnetite estimate at the Fusion Project!

Iron Ore Action Heating Up --- Iron Ore price is at $180 per ton!!!

Centrex Metals (CTXXF or CXM.AX) 40% and Wuhan Iron and Steel 60% joint venture partnership known as Eyre Iron Pty Ltd
 increase their magnetite estimate 200% at Fusion Project.

The world’s second largest iron ore producer Rio Tinto says around 100 million tonnes per annum of new supply will need to come online every year for the next eight years to satisfy a “staggering” increase in demand.

CHINESE steel major Wuhan Iron & Steel (WISCO) and Centrex Metals (CTXXF or CXM.AX) have boosted the total mineral resource for their Eyre Peninsula joint venture iron operation by 200% after posting an initial resource estimate of 319.4 million tonnes at a concentrate grade of 67.8% iron for the Fusion magnetite project in South Australia.That is a magnificent iron ore deposit. Centrex Metals has huge iron ore deposits that surpass most others in quality. Can you imagine over 600 tons of 67.8% pure Fe? That is just one of their many projects on the Eyre Penninsula in South Australia. The joint venture partnership between Centrex Metals and Wuhan Iron and Steel (WISCO) is known as Eyre Iron Pty Ltd.

08-26-11

Hathor Exploration (HTHXF) gets a $3.20/shr takeover bid from Cameco

Hathor Exploration (HTHXF or HTH.V) target of $520m hostile takeover bid by Cameco
Fri 9:09 am by Deborah Sterescu

The 2Franks agree that the $3.75/shr Cameco offer needs to be much higher. The 2Franks are
not in favor of giving away Hathor's uranium deposts, among the richest in North America, for nothing.

08-24-11

Don't trade your mining stocks like you would the physical commodity they produce.
Gold mining stock prices are not perfectly correlated with the price of physical gold.

American Bonanza Gold (ABGFF or BZA.TO) stock price will probably rise when they pour
their first significant quantity of gold this year regardless of the price of physical gold - PROOF OF PRODUCTION

There have been a lot of questions about why the price of gold mining exploration stocks have not followed the meteoric rise in the price of physical gold.

Physical gold is treated in the financial world as a separate asset class. It does not behave like other commodities or equities. It has historically been very volatile with spectacular rises and falls and decades long periods of no movement. The 2Franks believe that the function of physical gold as a global reserve currency is emerging as a much more important determinant of its value than it ever has before. This transition from a precious metal commodity to a global reserve currency has to be tested in the meat grinder of financial evolutionary natural selection known as the free market. The 2Franks believe that volatility in the price of physical gold will diminish over the long term making gold a more stable investment.

In the mean time you can be glad that the price of the mining stocks is not perfectly correlated with the price of physical gold.

The main reason, in our view, is that "the goods in the ground" or the untapped resource whether gold, iron, vanadium, niobium, lithium, coal or whatever is not included in any value calculation of the company. Speculators like The 2Franks use various calculations of NAV, IRR, payback time and other metrics that include the measured resource to roughly estimate the revenues at various hypothetical price points and production levels.

The long development time and risk involved in bringing a mine into production is also a factor. It takes 3-5 years to bring a gold mine online. It may take 5-12 years to bring a potash, phosphate, manganese, molybdenum, magnesium, niobium, lithium, REE or uranium mine into production. Sometimes that time interval can be shortened by a Direct Shipping Ore (DSO) project in which the mining company digs up the ore, dumps it into a railroad car or ore barge and ships it off to a big producer of that resource for processing.

While the prices of the resource as evidenced recently by the rising price of gold and potash does have some effect on the price of the miners it is not as strong as you might expect. Before financing and construction on a mine can begin a feasibility study must be completed. In many cases the feasibility study is completed long before the construction of a mine begins. The feasibility study uses a resource price determined long before mine development begins. For example, most gold mines scheduled to come online in the next year or two probably used a gold price of $900/oz. or less to determine economic feasibility. Do you think it matters to a company whether the cost of physical gold is $1500/oz. or $1800/oz. or $2500/oz. when the mine has been shown to be feasible at $900/oz? Iron ore, potash, REE, and uranium have all had similar rises in price over what was probably used in their feasibility study.

Metal, mining, and mineral companies usually go up in price as they reach certain milestones along the road to production. Better than average initial quantity and quality of resource discoveries, expanding existing resource estimates, progress through the permitting process, acquisition of financing or binding commitments for financing, joint venture partnerships, take-off agreements or options to buy resources can all have a much more dramatic effect on stock price.

One factor that usually causes a dramatic rise in stock price is the imminence of production. When Consolidated Thompson Iron Mines started stockpiling ore at the port of St. Illes the stock price skyrocketed. We expect the same thing to happen when American Bonanza Gold (ABGFF or BZA.TO) announces they have poured their first significant quantity of gold this year.

Established producing mining companies are valued like industrial companies on the basis of production and earnings. Agnico-Eagle Mining is such a quality company because it consistently grows earnings, revenues, and reserves no matter what the price of gold happens to be.

08-19-11

BZA and AEM
up big today!

Agnico-Eagle Mining (AEM) closed at USD $65.64/shr up 3.22%!!!!!! Agnico-Eagle Nov 19 $65 calls were up $1.10 or 22%. Agnico-Eagle Nov 19 $72.5 calls were up $0.85 or 38.2%.

You almost have to short treasuries (TBT). The panic driven flood into treasuries has been unprecedented. Sooner or later they're going to realize they have bought bonds at the highest prices in history and are now holding bonds with a negative real interest rate and priced to drop like a rock.

08-19-11

CNBC and Bloomberg TV..stimulating and enlivening

CNBC faves Fast Money, Mad Money, Money in Motion and Options Action are four of the most educational television shows I've ever watched. Cramer keeps us in the game. His tireless enthusiasm is contagious and uplifting. As a result of watching tonight's Options Action hosted by Melissa Lee (a tireless genius) I am going to collar my AEM shares for free. As repulsive as Larry Kudlow's in your face Democrat bashing partisan Republican politics are, his show is a must watch just to get an education from some of the best economists in the country. Watch the show just don't pay any attention to Larry.  I hope Kudlow is registered as a political lobbyist.

08-18-11

Agnico-Eagle Mining (AEM) Dividend Yield Higher Than Treasuries

Did I mention that Agnico-Eagle Mining (AEM) pays a dividend with a yield of 1%?

Agnico-Eagle has been raising the dividend. So now you can take the advice of the CNBC talking heads and buy a stock with a dividend, growth potential, super fundamentals, a great balance sheet AND get into the safe haven of gold. What could be a better investment in this environment?

A good gold company digs inflation protected cash out of the ground. Each of those big five-ton front-loader shovelfuls is an ounce-and-two-thirds of gold (at 10g/t) worth $2700 (at $1800/oz) of inflation protected cash. My choice is Agnico-Eagle Mining (AEM). I own it and I.m buying more of it and I'm not going to sell it.

Or you can park your money in cash, lose value to inflation, miss the snap-back rally, and chase everything up because you're not nimble enough to get back in fast enough. Or you can buy treasuries and lose your ass when the exodus out of treasuries drives the prices of treasuries into the sub-basement and you're too slow to get out.

The Chinese will probably prop up the treasury market in the short term. They aren't going to bite the hand that feeds them. But, don't kid yourself they have heard the wake-up call. Paper and promises don't cut it anymore. They have to diversify. They are out there spending a trillion US$ on hard commodities - they are buying the goods in the ground financed by the debt service we are paying them. They know the simple truth - population is growing rapidly creating increasing demand and competition for finite resources that are necessities - the price of goods is going up.

My guess is that the Chinese are also stealthily  buying energy goods in the ground as fast as they can without creating a speculative frenzy. Didn't we learn anything from the Rare Earth Elements and Manganese stories? Fortunately we have lots of energy goods on hallowed ground - on good old sovereign American soil.

08-18-11

John Paulson bought 700,0000 shares of Agnico-Eagle Mines (AEM)  worth $44.2 million as of June 30
(Widely reported old news worth repeating. This quote from an Aug. 15 posting on 247wallst.com  )

Billionaire and hedge fund manager John Paulson of Paulson & Co. and of Paulson Management is a widely followed equity hedge fund manager for whale watchers.

Read more: John Paulson’s Big Stock Changes (BAC, C, AEM, AU, COF, GFI, GRFS, JPM, LIFE, NYX, RAH, THC, WFC, GLD, NWSA) - 24/7 Wall St. http://247wallst.com/2011/08/15/john-paulsons-big-stock-changes-bac-c-aem-au-cof-gfi-grfs-jpm-life-nyx-rah-thc-wfc-gld/#ixzz1VO3r7rs8

08-17-11

Bill Fleckenstein and Fred Hickey have added to their positions in Agnico Eagle (AEM)

"...gold miners like Agnico-Eagle Mines (AEM) and Newmont Mining Corp. (NEM) are achieving
such increased  cash flows, higher dividends to shareholders and dramatic earnings beats
 in the second half of the year are just around the corner. "          Inflection Point Investing LLC

Bill Fleckenstein a widely respected hedge fund manager became one of the first big investors to warn against the dot.com bubble in the 90s. He would probably be aware of any bubble formation in gold.

Bret Jensen, Seeking Alpha contributor wrote in an article on Aug. 9 that:

Bill Fleckenstein made the case in the last week to purchase gold miners, as their reserves are vastly undervalued compared to the current price of gold. Fred Hickey has been making this case for quite some time as well. Let's examine the three gold miners they recommend.

Agnico-Eagle Mines (AEM): Agnico-Eagle Mines Limited, through its subsidiaries, engages in the exploration, development, and production of mineral properties. It explores for gold, silver, zinc, copper, and lead. The company holds interests in the LaRonde mine, the LaRonde mine extension project, the Goldex mine, and the Lapa mine in the Quebec region; and the Meadowbank mine and the Meliadine project in the Nunavut Region in Canada, as well as the Kittila mine in Finland; and the Pinos Altos mine located in northern Mexico.

Overview: Agnico-Eagle has held up well in the last week of the market rout, but it is down some 35%% since its highs of late last year.

5 factoids on AEM:

1. It is in the bottom of its historical valuation range based on P/E, P/B, P/S and P/CF despite the huge run up in gold prices.
2. It has quintupled its dividend payout over the past five years and now yields 1.2%. Cash flow more than quadrupled from FY2008 to FY2010 and cash flow growth in the first two quarters of 2011 continues to accelerate. Future dividend growth seems promising.
3. AEM sells for over 30 times trailing earnings. However, based on 2012's consensus EPS it is selling for just 15.5 times earnings.
4. Gold production is scheduled to be up 20% in the second half of 2011 and AEM's mines are in safe mining districts.
5. At $57 AEM is under some analysts' price targets. Credit Suisse has a price target of $77 on Agnico-Eagle. TheStreet is at $64.

Read Bret Jensen's article in its entirety in the Aug. 9 edition of Seeking Alpha at: http://seekingalpha.com/article/285904-hickey-s-and-fleckenstein-s-favorite-gold-miners-evaluated?source=email_portfolio

Inflection Point Investing LLC looked at Fred Hickey's, a member of Barron's Roundtable,  gold recommendations in their article in the Aug. 7 Seeking Alpha. This is what they wrote:

In Fred's view, the gold miners are the new opportunity of gold's secular bull market, due to the heavy institutional interest they should garner over the next few quarters. By his calculations, gold miners like Agnico-Eagle Mines (AEM) and Newmont Mining Corp. (NEM) are achieving such increased cash flows, higher dividends to shareholders and dramatic earnings beats in the second half of the year are just around the corner.

Read the entire Inflection Point LLC article in Seeking Alpha at:  http://seekingalpha.com/article/285386-fred-hickey-s-inflection-point-call-on-gold-miners

It is summer an no one is watching the talking heads on CNBC. They are desperate to keep you watching so they can get ad revenues. They will say the most controversial scary stuff they can dream up to entice you to watch. Ignore hyperbolic claims that gold is in a bubble. Do your own research and survey a consensus of objective forecasters to develop your own decision.

The 2Franks have positions in a lot of gold mining companies but do not own physical gold. Most of our companies are in the early stages of exploration and will increase in price as they increase the quality and quantity of their in-ground resources and advance towards production. Short term swings in the price of gold are not part of our strategy. But, we are not averse to making a little quick profit here and there. The 2Franks agree that Agnico Eagle with a six handle is an opportunity to make a nice gain.

The 2Franks are not hedged in gold at this time. We unabashedly talk our own book, not because we care if you buy or sell, but because we think we've picked good companies with a high probably of success. Agnico Eagle is our favorite mining stock. We are long Agnico Eagle so our analysis is probably not the most objective. We believe as do a lot of other analysts that gold mining stocks are cheap relative to the price of gold. If there is a bubble in gold and it bursts we will probably not sell our gold miners. We might sell some shares that are at or near their 52-week highs so we can buy them back more cheaply down the road. The 2Franks have conviction in their belief that gold is here to stay as a currency. Most of our companies used $900/oz. in their feasibility studies and will be very profitable if the price of gold stays above $1500/oz.

08-16-11

According to many well established inflation adjusted models gold should be between $2000-$2500/oz.

As we begin to approach $2000/oz. gold there will probably be an increase in attempts to create panic and drive investors out of gold by funds that deal in competing investments. You will hear that gold is in a bubble about to burst and other variations on Chicken Little that "...the sky is falling" with respect to gold prices. The more forceful and certain that dire predictions about the impending fall of gold prices are the more you should ignore them. NO ONE KNOWS FOR SURE WHAT THE PRICE OF GOLD IS GOING TO DO.

The 2Franks try to rely on a consensus of legitimate well established forecasters with a good track record and an unbiased impetus to get it right. Many of the most trusted forecasters do not believe that gold is in a bubble and that gold prices will go higher. According to many unbiased trusted inflation adjusted price models gold should be in the range of $2000-$2500/oz. There is no guarantee but  a consensus of sophisticated well informed unbiased models probably has a better chance of being correct than uninformed biased demagoguery.

Another good indicator is the action of investors. Central banks of sovereign governments around the world, funds, and big individual investors have been buying gold.

BNN, Baltic News Network, reported on August 3rd that over the last two months the Bank of Korea bought gold for the first time purchasing 25 tons of gold. The largest purchases this year are China (454 tons), India (200 tons), Mexico (99 tons), Russia (181 tons), and Thailand (9.2 tons).

Large sovereign bank purchases are usually long term investments. China has called for a new global currency as an alternative to the U.S. dollar. Any global currency will most probably include gold. Gold is already included in the calculation of a nations foreign exchange reserves and is accepted as payment for commodities contracts and investment purchases on large international exchanges.

Andrea Hotter reported in the WSJ last week that:

Morgan Stanley, ANZ, UBS, MF Global and Barclays Capital l ... all upgraded their gold price forecasts, while producers like Barrick Gold (ABX), AngloGold Ashanti (AU) and Randgold Resources (GOLD) have been making bullish statements in support of further rises in recent days.

Dow Jones Newswires reported on Aug. 8th that Goldman-Sachs raised their 12-month gold forecast 7.5% to $1860/oz.

Andrea's article in the WSJ also pointed out that:

JP Morgan said it isn't just gold that will benefit from the financial malaise. Commodities geared toward Asia... will outperform commodities anchored more to the growth prospects and local supply chains in the U.S.

There is some evidence that global investment in industrial metals by China will continue.  Advanced Exploration Inc. (ADEXF or CVE:AXI) and Adriana Resources (ANARF or CVE:ADI) both on The 2Franks 200x2020 List have moved up in price because of investments by Wuhan Iron and Steel, Xinjing Pipes Inc., Tata Steel, and Shandong Fulun Steel in Canada iron ore.

The 2Franks believe that gold prices will continue to hold as long as the U.S. has a mountain of debt, there is uncertainty in the economies of the Eurozone, governments around the world are printing lots of cheap money, and China is calling for an alternative to the U.S dollar as a global currency.

08-11-11

Fertilizer Stocks on Rampage

According to an article entitled Potash Corp leads fertilizer stocks on rampage Frik Els in the Aug. 15 Mining.com potash RSS Feed, "A string of positive developments have lit a fire under North American potash stocks..." In the article Els mentions The 2Franks faves Allana Potash (ALLRF or CVE:AAA) and Western Potash (WPSHF or CVE:WPX).

In the article Fritz Els reports:

Stock in speculator favourite Allana Potash Corp which is advancing a project in the Danakil Depression, Ethiopia added just over 5% in heavy volumes on Monday brining its gains to 10% over the last five trading days. On Wednesday the company announced a new chair and that it is applying for a listing on the Toronto main board.

Els article also says:

Western Potash has clawed back 20.4% since last Tuesday but is still down 10.9% on its TSX listing price of mid-July. The company is in the pre-feasability stage of its Milestone Project in south Saskatchewan where it hopes to mine almost a billion tonnes of potash using the solution mining method.

08-11-11

Agnico Eagle Mining (AEM) Stock Price Rises 12.5% In One Week.

Agnico has moved from a low of $57.50 on Tue. Aug. 8 to close today Mon. Aug. 15 at $64.71 a $7.21 or 12.5% move up in one week! Roll the Nov 19 $57.7 calls up to $72.50 and leave the $65 calls where they are. 

Agnico has $139 million in cash. Agnico-Eagle expects production of approximately 1.08 million ounces of gold for the full year 2011 at total cash costs per ounce of approximately $495.

Agnico-Eagle has invested C$70 million in the common shares of Rubicon Minerals Corporation (RBY) in a non-brokered private placement. As a result of the transaction, Agnico-Eagle will own 21,671,827 shares of Rubicon, or approximately 9.2% of the basic shares outstanding. Agnico acquired the shares of Rubicon for C$3.23 or US$3.29 each. Rubicon stock closed at US$4.09 today. Agnico plans to enter into a technical services agreement with the goal of advancing Rubicon's Phoenix gold project in Red Lake, Ontario. Memories of the Newmont - Fronteer agreement.

AEM could have a record breaking quarter If the price of gold continues up towards the J.P. Morgan forecast of $1800-$2500/oz. of gold by end-of-year 2011. The 2Franks agree that AEM should move close to $80/shr by November and through $100/shr in 2013 if gold holds above $1600/oz..

08-11-11

Agnico (AEM) investment in Rubicon (RBY) may boost AEM to top gun in North American gold production

Frank1 Predicts  that Agnico-Eagle (AEM) Will Become the Largest Gold Producer in North America

Frank1 has focused his virtual prospecting system on Agnico Eagle's $70 million purchase of Rubicon Minerals (RBY) in the Red Lake District of Ontario, Canada. His intial reports point to the possibility that the Rubicon investment may boost Agnico Eagle into the top spot among gold producers in North America. With its present holdings Agnico Eagle is on track to produce over a million ounces of gold in 2011 and plans to double that to two million ounces in 2014. The investment in Rubicon Minerals will push Agnico Eagle gold production way beyond their planned two million ounces in 2014 according to Frank1's model.

08-10-11

Let's do another rough calculation on American Bonanza Gold with some sloppy rounding to make it easier but still in the ballpark. Using a float of approximately150 million shares times the share price of $0.40/shr resolves to $USD 60 million. If you believe that $60 million is a rough estimate of the market cap of American Bonanza Gold and believe that the $1.0 billion is a rough estimate of the value of the gold in the mine you've got to be impressed. You, whoever you are, are probably going to miss the boat.

Did I mention that BZA is on schedule to produce 46,000 ounces of gold per year for the first three years. Let's do that calculation using a conservative $1550/oz. as the price of gold. So 46,000 oz. multiplied times $1550/oz. resolves to $USD 71.3 MILLION per year for the first three years. There are stocks out there selling for over $10/shr that don't have those kinds of metrics. I am loading the boat and I'm talking ore barge not a canoe on this one.

Using the premises of the above calculation, but substituting a very conservative forecast for the price of gold at $1500/oz. the value of the 400,000 ounces of gold in the ground would be roughly $USD 600 million ---- ten times our rough estimate of the share value of the company on the market today.

08-10-11

08-09-11

Neil Goffet reported today in the Newcastle Herald an Australian newspaper that, "Chinese banking officials visited Perth last month and declared the country (China) had $US1 trillion to invest in global resources..." Goffet reported that an RBS Morgans equities adviser said, "We are still seeing Asian companies investing in resources..."

Dennis Rockford of GeoVest in an interview with The 2Franks said, "The Chinese are making a smart investment when they buy mining companies now. Mining companies are selling below their historical  correlation with the price of the resources. The value of the measured resource is not included in the market value of the companies' shares. They will look like the bargains of the century a few years from now."

China also indicated that it would probably hold off on any rate increases until next year.

Both of these items bode well for natural resources and basic materials.

GeoVest's Rockford also agreed  with The 2Franks that American Bonanza Gold (ABGFF or CVE:BZE) with production imminent any week now at the Copperstone Mine is going be an upside surprise to a lot of investors. American Bonanaza Gold has approximately 400,000 ounces of gold in ore that averages 10.3 g/ton! What is 400,000 oz. x $2500/oz.? My arithmatic, which I hope is better than the S&P rating agency, resolves to $USD1 BILLION! Not bad for a $0.39/shr mining stock.

There are also steel shortages in India due to an iron ore scandal and subsequent bans on iron ore mining in parts of India. But worldwide slowdown in manufacturing will probably cause iron ore prices to drop.

China may want to acquire a couple of big iron ore deposits while the prices are down. There are four iron ore companies on The 2Franks 200x2020 List  that are in late stage development with enormous proven high quality ore deposits. These companies are bargains at today's share prices!

Adriana Resources Inc. (ANARF or CVE:ADI) Quebec, Canada; Advanced Exploration Inc. (ADEXF or CVE:AXI) in Nunavit, Canada; New Millennium Iron (NWLNF or CVE:NML) in Northern Quebec and Labrador, Canada; Centrex Metals Ltd. (CTXXF or ASX:CXM) on South Australia's Eyre Penninsula; and MMX Mineracao e Metalicos (MMXMY or SAO:MMXM3) one of Eike Batistia's companies in Brazil all have enormous very high quality iron ore deposits, are working towards huge annual production targets, and have most of their ore sold for the next ten years.

Centrex Metals Inc. in Southern Australia is the closest to China. Advanced Exploration Inc. has a joint venture partnership with China's Xinjing Pipes Company. Adriana Resources is negotiating a deal with Wuhan Iron and Steel. MMX Mineracao e Metalicos has 60% of its production sold for the next 5-7 years. New Millennium Iron, probably the most promising, has a partnership agreement with TATA Steel which includes a binding agreement in which TATA has agreed to put up $US4.85 billion for the development of NML's Taconite DSO project.

08-09-11

LIKE YELLING "FIRE" IN A CROWDED THEATER WHEN THERE IS NO FIRE - S&P YELLING "BAD CREDIT" WHEN THERE IS NONE SHOULD BE A CRIMINAL OFFENCE.

If an individual stands up in the middle of a crowded movie theater and yells "fire" when there is no fire the individual can be charged with a crime. It seems to me that the S&P credit downgrade is analogous. They stood up in the multi-trillion dollar theater of the economy and yelled "bad credit" when there was none. By yelling "bad credit" when there was none they caused unnecessary panic and huge amounts of financial damage and loss. I can only imagine that like "the boy who cried wolf" their motive was self-aggrandizement.

There is clear and reasonable evidence for the suspicion that S&P cried "wolf" in an attempt to be first to issue a headline-making pronouncement and beat their competitors Moodys and Fitch to the punch. The evidence could easily lead to the suspicion that they acted to put themselves in the spotlight and acquire for themselves a type of financial-world celebrity status in the belief that it would erase some of the well disserved discredit they suffered as a result of bestowing AAA credit status on worthless toxic sub-prime mortgage derivatives for years.

The fact that an S&P top manager could go on CNBC and give an interview dismissing any notion of S&P malfeasance by saying, "...it just means things are a little worse than they were..." is evidence of their criminal negligence. Hey, they'll, "...think about that tomorrow."

At the very least the S&P rating agency deserves to be the target of numerous law suits and governmental investigations and hounded into obscurity. It would not be unreasonble to determine whether the S&P downgrade included any legal violations. Their careless action will have dire life and death consequences for a long time. The sovereign United States of America should not be subject to the judgement of some dinky-donky private corporate rating agency with an unreliable past performance.

08-09-11

Gold could
rise to $2500/oz
by year end
 

The 2Franks strategy ignores short term swings in markets. We look for exploration companies that will be bought out by a major production company at a high premium,  will have a big rise in share price due to the discovery of a bonanza resource deposit, or will increase earnings by bringing a mine into production.

08-09-11

Most of the new companies are very promising start-up companies that have lots of projects  with promising exploration results that indicate resource deposits of above average quantity and quality. Our surface area coverage in terms of hectares of mining claims is huge resulting in a very high probability of many bonanza strikes.

Frank1 is a tireless prospector with an uncanny ability to find good companies in areas where the presence of resources has been shown. Frank1 is a shoe-in to win the 2011 Golden Shovel Award. If Frank1 wins the award this year it will be a "threepeat." Did you know that NBA hall of famer Pat Riley has a copyright on that word and is entitled to a royalty for its use.

08-08-11

Reasons for the play:

1. Real interest rates on Treasuries are negative. If you're in treasuries, you're LOSING MONEY.
2. The S&P downgrade like the debt ceiling debacle will be seen as an unnecessary silly political stunt by a bunch of Republican assholes who cost the good people of the United States of America a lot of money.
3. Several Chinese analysts  on Bloomberg TV last night predicted that China will not raise rates again this year.
4. Chinese manufacturing grew by 15% this quarter and inflation slowed (metals and minerals are looking better and better).
5. The Bernak(e) will probably say something in his speech today to stem the nose dive in stocks.
6. The big hedge fund guys have got to be getting sick of playing these silly little Republican political-loser games to drive the economy down and make Obama look bad. They're pros and have to make money and show gains by years end or lose business.
7. The S&P 500 is now selling at 9-10x or less earnings which are growing.
8. Options do better when volatility is high.
9. The Proshares ultrashort bond ETF symbol TBT goes up (2x) as the interest rate on 20yr bond goes up when investors are selling treasuries. The price of the TBT goes down when investors are buying treasuries.
10. The price of a share of TBT has dropped from $34.63 on Jul 1 to $26.35 today as investors have been buying treasuries.
11. A share of TBT should go back up from $26.35 to $35 as investors lose $$$, stocks bottom and become more attractive, investors realize it is a  mistake be in treasuries , and move out of treasuries back into stocks.
12. Whether Bernake does or does not signal contined easing and low rates tomorrow the price of treasuries is way high and has to go down and rates up. Investors will sell to move into stocks (at a loss). The question is when will they move back into stocks.
     

Here's the play. Since we can't afford many shares of TBT stock we  buy cheap call options as close to being in-the money as we can. I like the TBT Dec 17 $29 calls for $2 each. The total cost for 1000 calls (10contracts) would be $2000.The strike price is $29. So for every dollar over $29 on the price of a share of the TBT stock one of our call would go up a dollar $1. We make $1000 for every dollar above $29 on the price of a share of the TBT.  If TBT goes back up to $35 ($35 - $29 = $6/call x 1000 calls = $6000) we make $6000.

08-08-11

GoldWalker asks, "Isn't S&P the
same outfit
that gave
$billions in toxic, worthless, sub-prime mortgage derivatives a AAA rating for years?"
 

The 2Franks have downgraded S&P to a Credibility Rating of -FFF.

Why would anyone pay any attention to a bond rating made by a company that gave a AAA rating
 for years to all those worthless toxic sub-prime mortgage derivatives
and then took the AAA rating away from the United States of America?

The joke is that investors are fleeing into treasuries in total contempt of the S&P downgrade.
There are charges that S&P made a $2 billion math error in their calculations.

Why does CNBC continue to report the S&P downgrade as though it is credible.

Haven't heard a peep out of the talking heads on CNBC about the credibility rating of S&P. I would downgrade S&P's credibility rating to FFF - worse than crap.

I hope some regulatory agency is investigating S&P to make sure there is no market manipulation going on here.
It would serve them right if they were trying to get short treasuries.

08-06-11

The 2Franks most promising impending prospects:

1. Agnico Eagle Mining (AEM) announced in the June 27, 2011 news release that it expects production of approximately 1.08 million ounces of gold for the full year 2011 at total cash costs per ounce of approximately $495. In the Q2 2011 conference call Sean Boyd, CEO of Agnico Eagle, predicted lower production costs, an increase of 20% in production, and an increase in the dividend. On average, analysts predict that Agnico-Eagle Mines Limited will post $0.76 EPS next quarter versus and estimate of $0.47 for Q2! The average analyst price target for Agnico Eagle in 2011 is $73.50/shr. Since Agnico recently dipped near its 52-week low in the mid $50 range, I bought some in-the-money calls with a Nov expiration date. The stock could hit $80/shr. Do that calculation!
   
    
2. American Bonanza Gold (ABGFF or BZA.TO) will be producing gold from its Copperstone mine sometime in the next three months. ABGFF or BZA.TO has $.12 per share in cash,  a book value of of approximately $0.29 (not including the value of the 400,000 ounces of measured gold from ore averaging 10.3 grams/ton which at $1600/oz. gives a rough estimate of  $640 million) and it is selling for $0.39/shr! You've gotta be shittin' me. You can own 20,000 shares for $7800. YOU WILL TRIPLE YOUR MONEY IF THE STOCK GOES TO $1.17. I expect the stock to head north of $2.00/shr by Q2 2012. Copperstone is in Arizona.
   
    
3. Allana Potash (ALLRF or AAA.V) just expanded their resource estimate to almost two billion tons completely contained in a high temperature evaporite solution deposit in Ethiopia. They will be producing potash in 2014. This is on the heels of the Canpotex (Mosaic, Agrium, Potash) big boys whining that "the cupboard is bare" - they are running out of potash at a time when increasing crop yield is the only way to produce more food. The mine is in Ethiopia below the Suez Canal and the Straits of Hormuz on a short beeline transport to India and China where the potash is needed most. The Chinese are fast tracking a railroad to get the goods to the port. One analyst has a target price of $10/shr on the stock. Canpotex analysts predict that potash prices will reach $700 per ton by the end of 2011!
   
    
4. Western Potash (WPSHF or WPX.V) located in Saskatchewan, Canada is the only junior potash company left in North America with close to a billion tons of recoverable KCl. The same tailwinds that apply to Allana will be driving Western Potash.
   
    
   The Western Potash Scoping Study has both technically feasible and financially positive results. Some of the highlights include:

   • an NPV(10)of $5.22 billion USD,
   • an IRR of 27.3%,
   • with a production rate of 2.5 K²0 per year,
   • a 40 year mine life,
   • a total CAPEX $2.51 billion CAD, and
   • a reduction of production costs by 8.5% due to the high formation temperatures
      

   Canpotex analysts predict that potash prices will reach $700 per ton by the end of 2011!

    

08-06-11

It is time to for the 2Franks to resume sharing their metals, minerals, and mining hypotheses.

My guess is that the big hedge funds with the help of government ineptitude and the Chicken Littles on CNBC have scared the shit out of everybody and driven stocks and commodities down far enough so they can buy them on the cheap and show big gains by the end of the year. Is this deja vu or did it play out exactly the same way last year also? Enough about Wall Street shenanigans. It is time to get down to business.

The 2Franks are counting on a lightening rally by the Bulls starting in mid-September and continuing into Q1 2012 with gold leading the way up to around $1800/oz.

Here are the reasons for our hypothesis:

1. The U.S. economy is in much better shape than it seems. The fundamentals are improving. Now that the embarrassing debt ceiling squabble is over the focus will hopefully shift to job creation. The big funds succeeded in making it seem bad to drive down prices so they could get in low and show big gains at the end of the year when their performance is scrutinized in the media. The market should rally shortly.
2. U.S. companies are bloated with cash - as much as $4 trillion by some estimates not including cash being held off-shore.
3. Over 90% of the S&P 500 companies that have reported have beaten earnings estimates. Corporate earnings are growing.
4. The S&P 500 is selling at an historically low multiple of around 12-13 times earnings.
5. The Federal funds rate is low and is probably going to stay that way for a two more years. Chairman Bernake may swoop in with some more quantitative easing.
6. The decline of global growth from emerging economies is way over blown. The Economist magazine shows that China's current account balance is up from +3.1% to +3.6% of GDP June - August 2011.
7. Japan is making a miraculous recovery from the Tsunami and earth quakes so the manufacturing supply chain will be restored.
8. Hopefully the Chinese will not raise borrowing rates for the rest of the year.
9. Best of all, oil prices are going down and the correlation between oil and other commodity prices is decreasing. So, oil can continue to go down without dragging other hard commodities and natural resources with it.
10. The European central banks may have realized that they have to do something accommodative to stabilize their economy.
11. The Index of Leading Economic Indicators rose 0.3% in July after dropping 0.3% in June.
12. The demand for gold is growing. Central banks are increasing reserves, large funds are adding gold to their portfolios, retail investors are buying, and we are about to enter the gift giving season particularly the wedding season in India. The gold supply is declining. The fact that gold prices held up after the ECB said it would cover sovereign debt in Europe shows that gold is a fiat currency. Higher reliance on gold as a fiat currency by sovereign banks, the approval of bullion as payment for large energy and commodities contracts on major exchanges,  and the availability of cheap and accessible hedges against losses will combine to take a lot of the volatility out of gold.
13. Canpotex analysts have projected that potash prices will reach $700/ton by the end of the year. Agrium, Mosaic, and Potash Inc. have all said potash production is dwindling.

Who's not ready?

08-06-11

Since our last post on April 15, 2011, The 2Franks have done a lot of buying. There are now 125 companies on the list. Since the original goals for the year 2020 have been exceeded in less than three years the goals have been doubled. The The 2Franks 100x2020 List is now The 2Franks 200x2020 List. When Frank1 and I first discussed the goal of having positions in 100 metal, mineral, and mining companies by 2020 it seemed unattainable. I think we had six companies at that time in 2008.

Each of the companies on The 2Franks 200x2020 List averages five projects with mining options covering tens of thousands of hectares of land in the most promising mining locations in the world.

The article in the May 11, 2011 in the New York Times Magazine entitled "Gold Mania in the Yukon" by Gary Wolf inspired us. According to the article, Shawn Ryan and Cathy Wood have acquired 35,000 mining claims in the Yukon territory of Canada. The claims cover an area bigger than Samoa.

The 2Franks hold the same basic premise. The more claims you own in promising resource areas, the better are your chances of hitting a bonanza strike. Our means of acquiring the claims is quite different. We want a piece of the action - a share of "the goods in the ground." Buying shares of mining exploration companies is the same as buying shares of mining claims.

1. locations with proven deposits near the mines and mills of major production companies. Frank1 (Nanook of the North aka The Prospector) spends hours scouring detailed maps of the locations of candidates for The 2Franks 200x2020 List. Frank1 owns Nunavut and the Yukon. He has an amazing understanding of the locations of mining properties in the northern territories of Canada.
2. large portfolios of properties and projects covering large areas in promising locations
3. aggressive well funded exploration and assessment programs
4. joint venture partnerships, take-off agreements with end-user manufacturing companies, or joint development agreements
5. secured financing for the development of their projects to feasibility
6. clean balance sheets with cash and little or no debt
7. experienced management teams
8. resources that are part of the global growth story with positive supply-demand dynamics.

08-06-11

Permit me to vent a little.

I am disappointed that reasonable and moderate Democrat and Republican representatives elected by the majority of U.S. voters would let a small minority of extremists undermine the full faith and credit of the United States of America. In the process they have belittled our democratic government and capitalist economy in front of the entire world. A fundamental tenet of democracy is majority rule not minority tyranny. If there ever was a time when the moderates of both parties could have stood together to override tyranny by a minority it was at the beginning of this contrived catastrophe.

The performance of the Tea Party in the debt ceiling debacle was like the behavior of a spoiled petulant child throwing a tantrum in the super market in order to get a parent to buy candy. What parent in their right mind would stand for that? No candy for the spoiled little Tea Party brats and if they can't play nice they should be grounded and sent to back to their home state without any supper (especially the bacon). Grow up - you're running the most powerful government in the world. You're not doing a very good job, I might add.

To add insult to stupidity, GoldWalker pointed out that the S&P ratings agency that downgraded U.S. credit from AAA is the same bunch of morons that gave AAA ratings to ,"...all those worthless bundled toxic mortgage derivatives." GoldWalker suspects that the S&P downgrade is pure political retribution for the spanking they're getting from Dodd-Frank.

Mickey Edwards article "How to Turn Republicans and Democrats into Americans" in The Atlantic magazine for July/August 2011 would be a good place to start thinking about how dysfunctional our government  was in this instance (let's not over-generalize). Before I read it I was expecting more of the same partisan sniping because it was written by a Conservative Republican. What, me agree with an extremist? No way. But as I read more I couldn't believe how much I agreed with a guy who during his 16 years as a Congressman was one of the three founding trustees of the Heritage Foundation and national chairman of the American Conservative Union, and served for five years as chairman of the annual Conservative Political Action Conference.

My understanding of his premise is that American government functions, "...not as a collective enterprise but as a battle between warring tribes." He claims that , "Ours is a system focused not on collective problem-solving but on a struggle for power between two private organizations." Perhaps his most troubling insight is that, "Congress functions as competing armies, determined to dominate and destroy."  I particularly agree with his call for a government that is, "...open to intelligent and civil debate about competing ideas rather than programmed for automatic opposition to another party's proposals."

Maybe there is some hope that we can climb out of, "...the trenches of hyper-partisan warfare." How refreshing to listen to a politician that offers such a reasoned, balanced, presentation that invites civil discourse rather than incites political bickering.

03-15-11

The 2Franks think that the most obvious lesson of the three Fukushima Daiichi nuclear reactor explosions is that the failure to replace obsolete primitive 1970s era nuclear reactors with newer safer ones would be criminally negligent. Those old reactors should have been replaced 15 years ago.  There are ten reactors at the Fukushima Daiichi plant in northeastern Japan. Six of them are 1970s era GE reactors that may be in danger of meltdown after the catastrophic earthquake and tsunami. And 31 old GE reactors of the same design -- 23 of them with Mark I containment systems and eight of them with Mark II--continue to operate in the U.S. Those old reactors must be replaced now with new state-of-the-art safer reactors.

The U.S. produces 20% of its electricity using the heat from more than 150 nuclear reactors without polluting the atmosphere with greenhouse gases. The 2Franks do not want to return to to the coal-fired brown smog atmosphere filled with nitric and sulfuric acid vapor of the 1970s. Why not replace the dirty-bomb-waiting-to-happen old reactors with new ones now?

Next week the resilient Japanese will embark on a huge rebuilding effort requiring huge quantities of steel, copper, and other base metals. They need to repair and rebuild electric generating, sanitation, potable water, communications, transportation, defense, and housing infrastructure. Japan has no natural resources of its own. The global demand for metals and minerals is not going to decrease.

03-15-11

Advanced Exploration Inc. (ADEXF or CVE:AXI)., based in Toronto, Ontario, is a resource development company that currently focuses on developing its flagship Roche Bay Iron Ore Project, in one of the world's largest developing iron ore districts. The project is located proximal to a natural deep water harbour on the coast of the Melville Peninsula in Nunavut, Canada giving it many logistical advantages.

03-13-11

Pinguino is Argentex's most advanced property in terms of exploration and drilling with 30,028 meters (98,517 feet) of drilling completed to date.  Detailed drilling has defined a significant mineral deposit in the discovery area of Marta Centro and Marta Este while reconnaissance drilling has discovered other sulphides veins in the vicinity.  Drill results from the 2007-2008 program include unprecedented intervals of high-grade gold as well as the longest high-grade base-metal intersection recorded to date at Pinguino.  In addition, the company intersected  high-grade silver-zinc-lead at approximately 400 meters below the top of the Marta Centro  mineralized zone. Argentex believes that this may be the deepest and thickest mineralized intercept within the entire Deseado Massif of Santa Cruz province.  Argentex has so far documented over 37 miles (60 kilometers) of veins.

03-13-11

Lightning may strike a third time!

03-04-11

The lightning bolt is on the way.

Tata Steel has made a positive investment decision by exercising its option to acquire an 80% interest in the Corporation’s Schefferville Direct Shipping Ore (“DSO”) Project. As part of the Joint Venture (“JV”) agreement, Tata Steel will reimburse NML for 80% of NML’s cost to date on the DSO Project; arrange funding for up to CDN $300 million of capital costs for the Project to earn its 80% share of the JV and commit to take 100% of the DSO project’s iron ore products of specified quality, at world market prices, for the life of the mining operation.

New Millennium Capital Corp. (“NML” or “the Corporation”) (TSX-V: NML) announced that it has completed its previously announced bought deal public offering of common shares. In addition to the 15,714,286 common shares the underwriters initially agreed to purchase, the underwriters, led by Jennings Capital Inc. and Credit Suisse Securities (Canada), Inc. and including CIBC World Markets Inc. and Haywood Securities Inc., purchased 2,357,143 common shares pursuant to their exercise in full of the over-allotment option for aggregate gross proceeds of the offering to NML of approximately $63.25 million.

In addition, Tata Steel Global Minerals Holdings Pte Ltd. ("Tata Steel") purchased 6,739,956 common shares of NML under its existing pre-emptive right at $3.50 per share for gross proceeds to NML of $23,589,846. This will maintain Tata Steel’s interest in NML at approximately 27.2% of the total shares outstanding immediately following closing.
Robert Martin, President and CEO of NML, said, "Closing this offering not only provides NML with a substantial cash position that will allow us to advance our projects, it also provides further evidence of the increased enthusiasm among investors for our projects."

03-04-11

02-25-11

Canada has oil sand reserves approximately equal to the world's total reserves of conventional crude oil. As a result of the development of Canadian oil sands reserves, 44% of Canadian oil production in 2007 was from oil sands, with an additional 18% being heavy crude oil, while light oil and condensate had declined to 38% of the total.^[12] Because growth of oil sands production has exceeded declines in conventional crude oil production, Canada has become the largest supplier of oil and refined products to the United States, ahead of Saudi Arabia and Mexico.

Connacher Oil & Gas (CLLZF or TSE:CLL) anticipates combined bitumen production from Pod One and Algar to average 8,450 bbl/d in 2010, with an exit rate of between 14,500 bbl/d and 16,000 bbl/d and has forecasted combined bitumen production of between 14,500 bbl/d and 16,500 bbl/d for 2011.

Connacher Oil & Gas (CLLZF or TSE:CLL) holds a 100 percent interest in approximately 98,000 acres of oil sands leases near Fort McMurray, Alberta. The company’s first notional 10,000 bbl/d steam-assisted gravity drainage (“SAGD”) oil sands project at Great Divide Pod One (“Pod One”) commenced commercial production in March 2008, just four short years from our first purchase of lands in the region. Algar, the company's second notional 10,000 bbl/d SAGD oil sands project at Great Divide was completed in April 2010, ahead of schedule and anticipated under budget, with commerciality achieved effective October 1, 2010.

02-25-11

1. locations with proven deposits near the mines and mills of major production companies. Frank1 (Nanook of the North aka The Prospector) spends hours scouring detailed maps of the locations of candidates for The 2Franks 200x2020 List. Frank1 owns Nunavut and the Yukon. He has an amazing understanding of the locations of mining properties in the northern territories of Canada.
2. large portfolios of properties and projects covering large areas in promising locations
3. aggressive well funded exploration and assessment programs
4. joint venture partnerships, take-off agreements with end-user manufacturing companies, or joint development agreements
5. secured financing for the development of their projects to feasibility
6. clean balance sheets with cash and little or no debt
7. experienced management teams
8. resources that are part of the global growth story with positive supply-demand dynamics.

02-25-11

 A CNBC commentator just described the rise in the price of gold over the last ten years as the "meteoric rise of gold." Descriptions like "inflationary bubble" and "...resources have had their run" and "...the steep run up in materials futures..." are commonly used on CNBC to describe the progression of prices of equities and futures contracts in the materials/resource sector. Their job is to get your attention.

The 2Franks are not saying that you shouldn't watch CNBC although Bloomberg TV has a much more balanced delivery of the facts. CNBC has created an exciting and interesting media platform for the financial sector. Both CNBC and Bloomberg present an enormous volume of timely data, expert analysis, and news about the financial world. We love them both. But, CNBC commentators frequently exaggerate and misinterpret  data and attribute a cause and effect relationship where none exits. As I am writing this sentence Maria Bartiromo, one of my media faves, is stating there is a disconnect between the increase in equity prices and commodity inflation and an improvement in the real economy. Fortunately the guest has challenged and refuted Maria's declarative statement of "fact" citing major improvements in the real economy.

Yes, there is sector rotation.

Yes, gold and much of the material/resource sector have been increasing in price since Dow 6500 in March of 2009. But if you compare the current price per share of the companies on The 2Franks 200x2020 List with their highs before the March 2009 crash, The 2Franks believe that there is still room for price growth in the sector. Charts based on a conservative inflation adjustment project that the price of gold should be over $1800.

But basic materials/resource costs are not usually a big percentage of finished goods. There has been an increase in the standard of living of hundreds of millions of people in developing countries creating competition in demand for materials and resources.

According to Frank2 the world is rising to a higher level of global economic activity to support a higher standard of living for a growing global middle class.

So don't panic, don't listen to what Cramer calls the "doom and gloom naysayers." If your feeling gloomy about the economy watch an episode of Jim Cramer. He will reassure you and cheer you up.  If you are freaking out and think everything is going to tank, buy some cheap puts on an index fund or sector EFTs for protection. Keep a lot of dry powder in case the market does collapse and you want to pile in.

Don't forget what the winter months are like in many mining districts in the far north or in countries like China and Russia. It is very cold. Mining and exploration activities slow or come to a stop. Processing plants go into a state of hibernation.

When spring rolls around the diamond-head drills will be discovering expanded NI43-101 Measured and Indicated resources and billions of dollars in new found resources. The ten-ton per scoop front loaders will be digging up mountains of valuable ore to be dumped into processing mills or 350,000 ton barges to ship to Asia. Profitable quarters will be reported and you will be glad you hung in there. The global population is going to grow. Demand for finite resources and materials is going to expand. The price of materials and resources will continue to climb and be profitable.

02-25-11

1. AMEX Exploration (AMXEF or CVE:AMX)
2. Connacher Oil & Gas (CLLZF or TSE:CLL)
3. Hinterland Metals (HNLMF or CVE:HMI)
4. Stratabound (SBMLF or CVE:SB)

The number of global metal, mineral, and mining companies on The 2Franks 200x2020 List is now sixty-one.

02-19-11

Envia's High Capacity Manganese Rich Cathode improves Lithium batteries

Evnia's new High Capacity Manganese Rich Cathode (HCMRC) battery was all over the news. Again our friend and follower was ready to dump his lithium plays for American Manganese (AMYZF or CVE:AMY). Again we had to explain that the cathode is only the positive terminal of a lithium battery. It improves lithium battery performance it does NOT replace lithium batteries.

If you look for Li on the periodic table you will see that it is element number three an alkali metal. The elements are listed in order of increasing atomic number. The atomic number is highly correlated with the atomic mass. So an element with a low atomic number like Li also has a low mass (or weight here on Earth). It is the lightest metal in the universe which is why it is used in mobile applications where weight is a factor. A piece of Manganese with the same number of atoms as a piece of Lithium would weigh about 8 times as much. It is unlikely that Lithium will be replaced as the primary metal in batteries for mobile applications where mass (weight) is a concern.

There are other competing battery technologies besides lithium-ion. But, most of those technologies have major problems to be overcome. Zinc-air batteries have been introduced into the discussion but no one seems to be able to overcome the limited number of charge-recharge cycles of those systems.

For now it seems that lithium batteries with some help from nano-wires and manganese doped cathodes are firmly in the lead in effective battery technology. So it looks like a bright future for lithium (Western Lithium WLCDF, Canada Lithium CLQMF, and Mesa Uranium MSAJF) and manganese (American Manganese AMYZF) .  But a completely new battery technology could emerge at anytime. It is obvious that investors venturing into the battery realm need to be well informed and up-to-date about  the technology when making investment decisions.

02-18-11

02-18-11

Ground control to American Bonanza, commencing countdown engines on.

American Bonanza Gold is our favorite story. BZA has got true grit. They found a used processing plant, dissembled it, dragged it from Illinois to the BZA Copperstone Mine site in Arizona,  and reassembled it! All that to keep from going into debt.

BZA has just purchased a Nordberg P1008VF Portable Jaw Plant with ST1008 Jaw Crusher (32" x 40"), a 16 foot x 44" Vibrating Grizzly feeder, a Kent Model KHB-86 Rock Breaker with 16' Boom and an associated control tower. The crusher has a capacity of up to 200 tons per hour and will easily crush all of the coarse run-of-mine mill feed for the planned mining operations. Delivery for the equipment is expected in 2-3 weeks. The only remaining major equipment to be acquired for the gold processing plant is the secondary crusher, and the Company anticipates that acquisition soon.

It won't be long before BZA will be stamping out gold ingots. Don't be surprised if BZA expands their NI43-101 Measured and Indicated resource shortly after going into production. Who's not ready?

02-07-11

Good as Gold

with TSE exposure to the LSE

Forget what the reporters and journalists are telling you about China's need to slow their economy because China doesn't care. Their actions continue to speak louder than words. China spent more money than ever last year with investments into Canada's natural resources. Less than a few months into 2011, China has already begun more spending by making the largest gas deal ever with Canada.

I would add the Adriana Iron (ANARF or CVE:ADI) joint venture with Wuhan Iron and Steel (WISCO)  to support the statement.

The article goes on to explain how gold is being accepted as payment for resources. According to the article:

As of November 22, 2010, clearing house ICE Europe began accepting gold bullion as initial margin for crude oil and natural gas futures trading.

The article claims that:

The only form of collateral allowed by ICE before was cash, and government securities. But with this announcement, ICE has effectively made gold equivalent ot cash and government bonds.

A quote in the article says:

Exchanges in New York, Chicago, and Europe recently agreed to accept gold as collateral for certain trades. And the World Gold Council also is gaining traction in its push to have the Basel Committee on Bankiing Supervision accept the precious metal as a Tier - 1 asset for banks, along with government bonds and currencies.

The article speculates that the recent consolidation of the Toronto Stock Exchange and the London Stock Exchange, "...will create the world's largest mining and exploration exchange and that will mean investors in Canada will have access to tremendous amounts of capital that they didn't have before."  The article hypothesizes that the duel listing on the TSE/LSE will give Canadian mining stocks more exposure in Europe, give European investors more choices for investing in resource based stocks, and will lift the sector by inducing new capital into the market.

The article concludes that easier access to the TSE will prove to be extremely bullish for the resource sector.

If you go to the Intercontinental Exchange (ICE) website and do a site search on "gold" you will get links to all of the ICE bulletins on covering futures with bullion.

02-07-11

The fine-grained concentrate is ideally suited for low-cost pipeline transport from the mine to the pellet plant at Point-Noire and Sept Illes. This makes NML potentially the lowest-cost North American pellet producer.

NML has a joint-venture partnership agreement with Tata Steel,the world’s 8th largest steelmaker. Tata Steel owns 27.4% of NML and is required to purchase at the prevailing world price, 100% production during the life of mine. Tata Steel has exercised its exclusive option to acquire an 80% interest in the NML Direct Shipping Ore (DSO) project, by investing up to C$300 million.

Tata Steel Europe, Europe’s second largest steel maker requires 30 million tonnes of iron ore a year. In addition to DSO production. Tata would probably have need for additional iron ore from the NML Taconite Project.

Production startup is planned for Q3 2012 with near term cashflow.

02-04-11

02-02-11
Frontier Gold acquired by Newmont Mining

Under the Plan of Arrangement, shareholders of Fronteer Gold will receive Cdn$14.00 in cash and one  common share in a new company ("Pilot Gold"), which will own certain exploration assets of Fronteer Gold, for each common share of Fronteer Gold.  The cash consideration represents a premium of approximately 37% to the closing price of the common shares of Fronteer Gold on the TSX as of February 2, 2011 and equates to a value of approximately Cdn$2.3 billion for Fronteer Gold (excluding Pilot Gold).

The following companies from  The 2Franks 200x2020 List have been acquired for substantial premiums in the last 18 months:

1. Comaplex Minerals acquired by Agnico-Eagle
2. AuEx acquired by Fronteer
3. Baffinland Iron Mines acquired by Arcelor Mital
4. Riversdale Coal acquired by Rio Tinto
5. Consolidated Thompson Iron Mines acquired by Cliff's Natural Resources

The strategy of owning lots of companies seems to bolster the defensive aspect of The 2Franks 200x2020 List by diversifying within the metal, mineral and mining sector. It also seems to  increase the chances of buyouts. We are still committed to our strategy of expanding the list to 100 companies as soon as possible.

The 2Franks agreed that with their holdings on Helilaga in Turkey and exclusive ownership of Long Canyon, Fronteer was on its way to becoming a premier gold producer.  Fronteer will be hard to replace.

The 2Franks welcome Pilot Gold to The 2Franks 200x2020 List. The 2Franks are anxious to find out which of the Fronteer properties will be retained by Pilot Gold. All of the spinoffs acquired from buyouts have shot up in price. Once the price is set, the 2Franks will probably be adding to their Pilot Gold position.

02-02-11

01-31-11
While others are chasing Lithium the 2Franks are looking for Vanadium.

Vanadium Redox Batteries have huge potential (pun intended).

Appella's Vanadium-Titanium-Iron project in central Quebec assay results yielded grades as high as 1.34% V2O5, 16.8% TiO2, and 76% Fe! Appella has the majority interest in the Lac Dore deposit known as the second largest Vanadium deposit in the world.

01-27-11

 Phoscan Chemical (PCCLF or CVE:FOS ) which plans to mine and produce ammonium phosphate NH4PO4 is ideally suited to supply nitrogen and phosphorus. Phoscan has filed an NI43-101 measured and indicated resource(on Anomaly A only):62.2 million tonnes averaging 23.55% P2O5, 0.34% Nb2O5 and inferred resource: 55.7 million tonnes averaging 21.87% P2O5,0.34% Nb2O5. In case your not a chemgeek, the Nb2O5 is the much in-demand rare earth element Niobium which Phoscan intends to recover as a secondary product. Phoscan has a target production rate of 2 million tonnes phosrock and 4 million kilograms (2.2lbs. = 1 kg) niobium.

Phoscan's primary project is their wholly owned Martison Phosphate Project 70km N.E. of Hearst, Ontario, Canada. Some competitive advantages of the project are (from www.phoscan.ca):

•High quality, low cost phosphate concentrate
•Long-life resource
•Possible niobium by-product credit
•Railroads (ONR, CNR and CPR) provide net back advantages to target markets
•Agrium’s Kapuskasing mine to end production in 2014
•North America is a net importer of phosrock
•Infrastructure, natural gas, power
•Labour pool

Phoscan's Martison Phosphate Project is located a couple of miles from an Agrium phosphoric acid plant. Agrium is the largest fertilizer company in the U.S. and one of the largest in the world. The feedstock for the Agrium phosphoric acid plant comes from Agrium's nearby phosphate mine at Kapuskasing. The Agrium phosphate mine at Kapuskasing is scheduled to end production in 2014. The Phoscan Martison Project might be a good replacement to supply feedstock to the Agrium phosphoric acid plant.

Phoscan Chemical currently has approximately $60 million  USD in cash on their balance sheet! Rumors about Phoscan as a take-over target popup occasionally.

Allana Resources Inc. (ALLRF or CVE:AAA) has fast-track development status from the Ethiopian government for a potash evaporite mine in Ethiopia. Allana plans to bring the160 km² land package staked in Danakil Depression into production by 2014. The inferred historical resource is 105 million tonnes of 20.8% KCl. Mineralization at the Danakil Evaporite Basin has similar geology and twice the size of the world class Urals Basin. Allan has a $12.3 million strategic investment by Liberty Metals and Mining Holdings (17 % ownership of Allana) and a $2 million strategic investment from a Chinese group. Allana has entered into off-take/financing agreement talks with the same Chinese group to cover 35% of the construction costs.

The shipping port on the Red Sea is close to China and the barges do not have to pass through the Suez Canal or Straits of Hormuz resulting in lower dry bulk shipping rates for Allana.

Advantages of a project in Ethiopia are:

• Stable democratic government with a commitment to foreign investment
• Revised mining laws to promote development of natural resources
• Among the top 5 countries in the fastest GDP growth, Ranks ahead of Russia, Brazil and India in Doing Business Survey
• Ethiopia is a member of the Multilateral Investment Guarantee Agency (MIGA) and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States
• Reasonably developed infrastructure: 18 airports, hydro and geothermal power plants
• Close relationship of Allana to government

The recent steep run-up by Allana may have you thinking that it's too late to get in. The 2Franks think Allana has a huge upside between now and the target production date of 2014.

01-27-11
Will lightning strike twice? Raise that lightning rod as high as you can.

Will lightning strike twice? The probablity may be higher than you think. Adriana Resources Inc. (CVE:ADI or ANARF) is next door to our revered Consolidated Thompson (CLMZF).  Adriana controls at least a dozen iron ore projects totaling approximately 35,000 hectares within the Labrador Iron Trough in Quebec, one of the largest ore belts in the world. Adriana will be using the same rail line and port at Saint Ille as CLMZF  and Adriana recently entered into a joint-venture partnership with Wuhan Iron and Steel (WUHAN) like CLMZF. Adriana is surrounded by the same handful of the largest iron mining and steel producing companies in the world as CLMZF. Load up the trucks. Pile on the shares.

Here are some facts about two projects from the Adriana website at http://www.adrianaresources.com:

Lac Otelnuk Project, Nunavik, Québec, Canada (100% interest)

• Largest iron ore deposit in Canada with the potential of becoming one of the largest in the world
• Defined resource of 6.3 Billion Tonnes with the potential in excess of 15 Billion Tonnes
• Potentially able to produce 50 Million Tonnes of concentrate for 75-100 years
• Will produce high grade (67 – 69% Fe) pellets

Iron Ore Port Development, Brazil (60% interest)

• The Company received the “IT” technical instruction for an environmental permit on September 15, 2010 to construct a deep sea terminal with annual throughput of 45 Mtpa

01-21-11

Source: Plexus Asset Management

01-21-11

Does anyone believe that the demand for metals and minerals generated by global growth is not going expand? If you doubt the momentum of global growth consider:

1. Growing population and strong economies in developing countries has increased demand and economic competition for metals and minerals.
2. Advances in agriculture, electronics, military defense, and medical health technologies has dramatically expanded the number of things that are necessities for the survival of modern societies. They all require rare metals and minerals.
3. Increasing scarcity has reduced the availability of metals and minerals.
4. Advances in geophysics, geophysical engineering and technology, computer modeling of the cost and pricing of resources has diminished uncertainty associated with metal, mineral, and mining exploration and development.
5. Transportation advances have made it possible for massive quantities of raw material to be moved inexpensively around the globe.
6. Quick low-cost online stock trading, the availability of inverse and inverse leveraged ETFs and ETNs, and puts on the GLD make it easy and inexpensive for the small retail investor to hedge the price of hard commodities.
7. The automobile industry will increase output by 200,000 vehicles in 2011.

The 2Franks agree that the correction in precious and industrial metals prices might be an opportunity to pile on potash (ALLRF, ICPT, MSAJF, WPSHF) and ammonium phosphate (PCCLF).

01-12-11

BIMGF's Mary River project was on one corner of a global "iron triangle" according to Liu Yikang, an official in China's Ministry of Land and Resources. The 2Franks have another project in Nunavut but do not have a position in it yet, so it will remain unnamed. The other corners of the global "iron triangle" are Brazil's Carajas region, the location of MMX Mineracao e Metalicos (MMXMY) and Australia's western Pilbara, the location of Centrex Metals (CTXXF).

Interest in metals and minerals in the northern corner of the global "iron triangle" in Nunavut is probably being stoked by low dry-bulk shipping rates which have fallen to a two-year low. Flooding in Australia may also be driving demand in Canada. Some analysts are predicting that iron ore prices will continue upwards towards $250 per tonne. Canada is already the iron-ore hub for North America and Europe. If iron ore prices remain high and dry-bulk shipping rates low there will probably be continued diversification of Canadian iron ore into Asia.

 For a more detailed analysis of the CLMZF buyout read Cliffs-to-buy-consolidated-thompson-to-tap-china-iron-ore-growth.html-cmpid=yhoo by Natalie Doss on Bloomberg.com.

01-11-11
CLMZF bought for $17.43/shr

$0.79 per shr on Jan. 02, 2009
to
$17.43 per shr on Jan. 11, 2011

PINCH ME - I MUST BE DREAMING. The 2Franks number one fave that closed at $0.79 per share on Jan. 02, 2009 (not a misprint $0.79/shr) was sold today Jan. 11, 2011 for $17.43 per share.

Consolidated Thompson Iron Mines (CLMZF CLM:TSX) was one of Frank1's (The Prospector) original mining stocks. He's been on CLMZF since it stated up at $0.29 per share.

There can be no doubt about Frank1 retaining The 2Franks "Golden Shovel" award for 2011. The old prospector cannot be beaten. He has an uncanny ability to ferret out the best mining stocks in the world.

 The 2Franks are now paying considerably more attention to Centrex Metals (CTXXF) another iron ore project in Australia which has a story similiar to CLMZF including joint-venture partnerships with Wuhan Iron and Steel and Baotou. Back up the trucks and shovel in those shares.       

01-08-11
We're piling on this one!

ABG is in a proven gold producing area. The original mine was very shallow. Advances in resource modeling and mine engineering will allow ABG to expand the mine size with very little additional cost.

Here is what ABG has to say on their website:

Bonanza's main objective is to bring the advanced stage, 100% owned, Copperstone gold property in Arizona into production during 2011. A substantial milestone in this process is the recently completed feasibility study which indicates a robust economic profile associated with building and operating the mine.

The Copperstone property contains a 10.3 g/t oxide gold resource with 313,000 ounces of gold in the Measured and Indicated categories and 256,000 ounces of gold in the Proven and Probable Mineral Reserves category. Results from the feasibility study indicate pretax cash flow from the mine operation totals US $104 million. The potential to expand the gold deposits at Copperstone near the underground mine workings is excellent.

01-07-11
Happy New
Year!

• The 2Franks passed the halfway mark for the goals of The 2Franks 200x2020 List.
• The 2Franks 200x2020 List beat the S&P 500 index by over 350%
• Riversdale Mining (RFLMF) was purchased by Rio Tinto for $3.9 billion or $16 per common share
• Baffinland Iron Mines (BIMGF) is the object of a bidding war between Arcelor Mital and Nunanvit Iron Ore Acquisition Ltd. Current bid $1.40 per common share
• AuEx Ventures (AUXVF) was purchased by Fronteer Gold (FRG) for FRG shares, cash, and Rennaisance Gold (RSNGF) spinnoff
• Agnico-Eagle Mines Ltd. (TSX: AEM.TO) purchased all shares of Comaplex Minerals Corp. (TSX: CMF.TO) for shares (AEM), cash and and Geomark Energy (CVE:GME) spinnoff
• All but eight of the 59 companies on The 2Franks 200x2020 List finished in the green for 2010. None of the 59 companies lost a large percentage of their value.
• Consolidated Thompson Iron Mines (CLMZF) went into production and started shipping iron ore to Asia. The share price of CLM went from $0.79 per share in 2009 to over $14 per share this year.

Click here to view all of The 2Franks entries for 2010