Sunday, June 15, 2008

Weekend reading and strategy update.

Some profit is taken on Puts positions, puts on LEH, BAC, MER, C and GM were on fire this week. All three major indexes are in a Bear flag formation as we read it. Calls were accumulated further on SLW, SSRI, AUY and LMC.
Juniors are trying to raise their head: among strongest in our stable are Suramina Resources SAX.to with new drill results, latest PP at 1.2CAD was taken by Lundin family; Nevsun Resources NSU.to "one year old rumour of Lundin interest", Roxmark Mines RMK.v has showed some life finally with new drill results.
With Congo contract negotiation process announced to start from mid July Lundin Mining LMC LUN.to is still a wild card. The guys in that African country with their contract review are treating time differently from our perception of always slipping away treasure. "Very soon and very fast" was introduced in Feb and now they will start half a year later. Lundin Mining has became trading situation now: we are watching closely formation of Double Bottom reversal and taking more Calls under 7.o USD. Protection from downside is in PUTs at 7.5USD strike. Investment positions are reduced. Lukas Lundin is coming back into spotlight with a little bit reduced ambitions for market capitalisation of Lundin Mining in a 4-5 billion range in two years time instead of 10 billion "goal" last summer. Russia as always showed its own game and apparently J/V partner there is not strong enough to protect from "consolidation in the industry" and strategic resources game announced with new legislation coming. It could be a good news if not for Lundin Mining itself then for other considerable Zinc projects. Disposition of Ozernoe with 150 mil tons with combined Zinc&Lead grade of over 5% from Lundin's book will free company's ambition in other parts of the world. Price paid for 49% of Ozernoe in Russia is putting Mantle Resources MTS.v in a very favorable position with its Akie deposit in BC Canada. Lundin Mining holds 10% in the company. Lundin also has announced that they are going to sort out their Junior mining plays and will be looking for some acquisitions again. We are closely monitoring developments in Sanu Resources SNU.v and Sunridge Gold SGC.v. Nevsun Resources NSU. v has shown some accumulating interest and could be still an acquisition play. Conerstone Capital Resources CGP.v has exited market with recent developments after fiasco in Ecuador.
Sterling Mining SRLM.ob SMQ.v has announced departure of Ray De Motte, stock was a pure disaster and is hitting new lows: more dilution is coming, but there could be still some potential so it is on our close watch by list.
TNR Gold TNR.v is continuing its careful strategy of building value from its option agreement with Xtrata Copper behind the scene of Minera Andes MAI.v recent announcement of extension of Los Azules mineralised zone. Rock bottom valuation of this company always makes us think about the most important question in investing "Are we gonna be embarrassingly rich in the future or we are already incredibly stupid?" As usual Gods will decide with our help.
Good technical observations as usual from Adam Hamilton:

http://www.gold-eagle.com/gold_digest_08/hamilton061308.html

We liked the adrenaline in the process of making money in investment banks' hang over and invested some time in a better understanding of the game:

The Accidental Investment Banker

It is good that it is a weekend: first emotion was to buy as much Puts on all these egomaniacs as you possible can, but we will proceed with usual care and cynical analyses of the future developments.

Our general observation for this week is that you can be very unhappy when prices of your beloved companies are going down only in two cases:

1. You are already fully invested at much higher levels.

2. You do not have a real understanding and/or true believe in your own judgement.

P.S. always ask yourself a question...

No comments: