Interesting interview with Bruce Duncan from Bolero Resources: http://www.cfra.com/chum_audio/Biz@Nite-Bruce.Duncan.Nov7.07.mp3

A few highlights from the interview (tinted by my bias):

  • Bolero is developing big molybdenum deposits, and also have a huge undeveloped deposit with the Silver Creek acquisition.
  • They did a smart thing securing a loan as opposed to doing a Private Placement to pay for the Silver Creek acquisition. Otherwise, they’d have to do some serious share dilution because share price wasn’t high enough.
  • Their properties are in the U.S. (Montana and Colorado) which means they will benefit from the exchange rate: Canadian dollar will go farther in development; wages are cheaper than anticipated.
  • They are the cheapest Molybdenum company on the Canadian market and possibly in North America

Full disclosure: I’m long BRU.

There are some very conflicting reports out there on how much physical metal there is on the exchanges.

Take zinc for example: in one source …

Zinc stocks stand at more than 77,000 tonnes — more than two days of global consumption. Coupled with expectations of oversupply in the next few years prices dived to their lowest in 19 months.

(2 days doesn’t seem like much?!) Yet another source – article published on the same day – says…

“stocks of refined zinc are currently at less than half of their 30-year average.”

Neither article really defines how much zinc supply is a lot or too little. It’s all in the language and in innuendos, for us to assume.

Here’s the actual picture on LME:    Zinc spot price action:

Whatever mechanisms are bringing the price of zinc down, it’s clearly not due to oversupply. There’s an expectation of increased zinc supply next year which looks (to me) like a faulty speculation at this point. A lot of the big mines are reducing production of zinc, instead concentrating on refining other metals that are more lucrative at the moment.

For the time being, I stay invested in Blue Note, Canada’s newest zinc and lead producer. Very curious to see how the zinc story plays out next year, when Blue Note is expected to ramp up its production to full capacity.

1. The key to identifying the next profitable sector is often to look for what’s been beat up and “under the radar”. Natural gas has been out of favor and on the down slope for a couple of years now.

2. Found at Financial Sense University (click chart to enlarge)

nat_gas1.gif

Commitment of Traders has been steadily rising for natural gas, and they say it’s wise to follow the “big boys” aka “the smart money”.

So I’ve placed a bet on this dark horse, and purchased a few shares of UNG (UNITED STATES NATURAL GAS FUND, LP). More details on this “kind of ETF”

In addition, we’re still holding Vault Energy Trust units. Vault Energy derives 69% of its revenue from natural gas. It’s expected that VNG.UN will cut the distribution on the upcoming meeting on August 15, so the unit price has been falling recently. I don’t think this is the bottom yet, but will probably average down our position once the price levels off some.

As emailed on July 22, 2007 by Lorne Woods, Investor Relations person:

“Hello we believe the C1 cost to be in the mid-60’s.”

C1: Direct cash cost of sales (C1) per pound includes operating costs such as mining, processing, administration, smelter treatment refining, marketing, …

Full disclosure: I’m long BN.V