Diamonds North Resources Ltd V.DDN

Hi Folks

[cautious36]

Just in case it wasn't completely obvious that I was making a joke, I will once again swear my undying allegiance to "pumping" Diamonds North. For anyone who has not heard of him, Rick Rule is a legend in resource investment world, and founder of Global Resource Investments, the preeminent resource investment company in the U.S.. His philosophy is that "you are either a contrarian or a victim", it is easy to see why he would chose a company like DDN. Here's a little blip from the Agora Wealth Synposium. Straight Talk ***************************************************** August 14, 2007 ***************************************************** “Prospect Generators” Can Be Profit Generators There was no question who was “The Man” at the Agora Wealth Symposium in Vancouver last month. That honor was clearly won by Rick Rule, the resource analyst and one-time geologist who is founder of Global Resources Investments. As I mentioned in my previous article about that conference (click here to read that column), Rick was the hardest-working guy in the place. He gave two main-session speeches, hosted two working lunches, and spoke at four workshops. Each session was packed – both with attendees eager to learn and with ideas on making money. At the end of the show, attendees demonstrated how much they appreciated his presentations by voting him the #1 speaker there. At the beginning of one talk, Rick asked the crowd how many considered themselves conservative investors. Most of the attendees raised a hand. Smiling knowingly, Rick said, “Don’t kid yourselves. Most of you are wild-eyed speculators. I know you are, or you wouldn’t be sitting in this room.” The secret of success in this business, he went on to explain, is to speculate intelligently. There are lots of stories out there about a tiny, unknown company whose share price soared from pennies to dollars – sometimes many dollars. But those grand-slam home runs are most definitely the exception, not the rule, he cautioned. Out of 3,000 companies that get started in the exploration drilling business, Rick told the crowd, only one will ever build a profitable mine. Yes, that one will see its share price go up 1,000% or more. But the odds are 3,000-to-1 of having a 10-to-1 winner. “The only people these odds will appeal to probably flunked third-grade math,” Rick warned. So how do you put the investment odds in your favor? You’ll be happy to learn that Rick had a very specific suggestion for the audience, which I’ll share with you today. The way to do that is by spreading your bets among several entities known as "prospect generators." “Prospect generator” is a relatively new term that’s used to describe a very specific kind of natural-resource company. The strategy of a prospect generator is to lock up rights to several properties with specific mineral targets, do enough drilling to confirm there’s something there, then to farm out the development of them. “A prospect generator finds a potential mine, then invites others to do the financial heavy lifting,” Rick explained. This strategy does not produce overnight successes, Rick cautioned the crowd. It usually takes two full seasons for an exploration/development company to know for certain what’s in the ground and for the market to respond accordingly. You should plan to hold these companies for 18-24 months. A Strategy for Risk Management One of the most important secrets for investment success, Rick said, was risk management. “If the reason to own a particular company goes away, sell your shares,” he advised. “And if the stock happens to hit your price goal early, take some profits.” “Never pass up an opportunity to take some of your risk capital off the table,” Rick urged the audience. “The point of no concern is always better than the point of no return.” As an example, if a stock has doubled or tripled, consider selling enough shares to get your original investment back. “Your remaining investment has cost you nothing — you’re betting with the house’s money,” he pointed out. Mark Twain once famously described a gold mine as “a hole in the ground with a liar at the top.” But there’s even more wisdom in the reverse of this adage, Rick said. If you put your money on management that has consistently produced winners in the past, you will skew the investment odds substantially in your favor. Rick called this his “bet on the best jockeys” strategy. Once you’ve found a nag with an attractive track record, Rick said, look for one that will be in several races. Own multiple companies, each with multiple opportunities to hit a winner. “If you own 10 of these companies, and each one has four projects underway, that gives you 40 chances to own a winner,” Rick explained. With that, Rick said there were several companies in the exhibit hall that would make his short list of recommended prospect generators. He urged attendees to spend time visiting each one. Since that’s not possible today, I’ll share that list with you now, along with the appropriate contact information. * Almaden Minerals Ltd. (AMM.TO). Almaden has an extraordinary record of spinning off winners. The company currently has 40 projects underway in Canada and Mexico, with 15 of them already matched with joint-venture partners. (www.almadenminerals.com) * Altius Minerals Corp. (ALS.TO). Altius is cash-rich, with more than C$100 million in the bank and a royalty interest in the Voisey Bay nickel district. The company has exposure to gold, base metals, and uranium and is also exploring energy-related resource opportunities. (www.altiusminerals.com) * Diamonds North Resources Ltd. (DDN.V). Diamonds North, as its name implies, was formed in 2002 to search for the precious gemstone. It has evaluated over 300 million acres in the Northwest Territory and currently is focusing on three specific properties with strong indications of kimberlite deposits. (www.diamondsnorth.com) * Eurasian Minerals Inc. (EMX.V). Eurasian is searching for precious and base metals in some of the world’s most under-explored regions, including Turkey, Eastern Europe, the Kyrguz Republic, and Haiti. (www.eurasianminerals.com) * Full Metal Minerals (FMM.V). Full Metal Minerals is confirming one of Rick’s favorite adages: The best place to find gold is in a gold mine. (And silver in a once-active silver mine.) The company has 13 active mineral projects in Alaska and has already made three significant discoveries. (www.fullmetalminerals.com) * Helio Resource Corp. (HRC.V). Helio is exploring 19 prospective gold, base-metal, and diamond properties in Africa, including projects in Namibia, Botswana, Mozambique, and Tanzania. (www.helioresource.com) * Lara Exploration (LRA.V). Lara’s goal is to build a portfolio of mining and royalty interests in South America. Current projects include copper in Peru and gold, tin, and nickel in Brazil. (www.laraexploration.com) * Mansfield Minerals Inc. (MDR.V). The company is focusing its attention in northwestern Argentina, where it’s searching for gold and copper. (www.mansfieldminerals.com) * Motapa Diamonds Inc. (MTP.V). Motapa is searching over nine million hectares in Africa, hunting for diamonds in Botswana, Gabon, Lesotho, Mozambique, Namibia, and Zambia. The company also has uranium, gold, and manganese interests in Gabon. (www.motapadiamonds.com) * Riverside Resources Inc. Riverside is a new company with successful, experienced management. It says it plans to “acquire quality projects that have solid potential for large discoveries.” The company is not yet publicly traded. (www.rivres.com) * Sanu Resources Ltd. (SNU.V). Sanu is part of the extraordinarily successful Lundin Group of companies. It is exploring for gold in Africa, specifically western Eritrea and Burkina Faso. (www.sanuresources.com) * Strategic Metals Ltd. (SMD.V) Strategic staked over 15 properties in western Canada last year and has extensive holdings in British Columbia, the Yukon, and the Northwest Territories. (www.strategicmetalsltd.com) So there you have it – an even dozen “prospect generators,” with multiple projects in North and South America, Eastern Europe, Africa, and even part of Asia. Only one of them trades on an American stock exchange. All of them are based on the Toronto Venture Exchange (formerly the Vancouver stock exchange). As Rick Rule loves to say in every talk I’ve heard him give, “If your broker can’t buy these for you, it’s time to get a new broker.” So let me include his contact information here: Global Resource Investments, 7770 El Camino Real, Carlsbad, CA 92009, 1-800-477-7853, www.gril.net. Are these “prospect generators” a guaranteed route to profit generating? Of course not. Few things are more uncertain in this uncertain world than mining. Metals are hard to find and even harder to extract. But with that warning noted, let me end this section with one of Rick’s pithier recommendations: “It’s better to own a quarter of a watermelon than all of a raisin.” Here’s hoping that the seedlings you select become some large and juicy watermelons. This Week in History Was it just 25 years ago? Yep, on August 12, 1982 the stock market hit the bottom of a decade-long bear market. The DJIA finished the day at 776.92. The S&P 500 Index also hit a low that week of 102 – almost dropping to double digits. Investor sentiment back then was the most pessimistic since the Great Depression, with many concluding that America’s “economic malaise” was permanent. From mid-1979 to the end of 1982, there were 14 quarters of net negative growth. The Prime Rate hit 21.5%, unemployment reached 11.2%, and inflation soared to 13% in 1980. Of course, a time of greatest pessimism is often the time of greatest opportunity. After two consecutive closes at 777, the Dow turned around and headed higher on Friday, August 13, 1982. (A note for the superstitious: Friday the 13th has been an awfully lucky day in the stock market. Since that August in 1982, the Dow has gone up 66.7% of the time the 13th has fallen on a Friday.) Within five years, the market was up 250%. Thirteen years later it had climbed 15-fold. I hope this helps soften the blow of the market’s recent trillion-dollar loss. Until next time, keep some powder dry. Chip Wood ************************************************* Straight Talk is a weekly commentary written by Chip Wood. For many years Chip was the host of an award-winning radio alk show in Atlanta, Georgia. He is the founder of Soundview Publications and serves as an MC at several investment conferences. His weekly rants and raves are free for the asking at www.straighttalkletter.com. Copyright © 2007 Soundview Communications, Inc. 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