Morning CommentsThis week was a crazy week with Greece going down, riots in China, riots in Vancouver, triple witching Friday, the market fighting capitulation, rim going into the tank....and on and on and on...
It gave way to AAA testing three support lines: 1.98, 1.95, 1.87...all of which did not occur.
As a seasoned Trader, I would have bet the farm that with a week like this past, AAA would have at least tested 1.95, while many of my trading buddies were thinking more like 1.87
We barely got a trade at 2.00 before the buying came in and the best I could do was to get between 2.02 to 2.04
Little panic run ups at the end of each day was typical as many did not want to be out, just in case the report came out the next day.
So on a week where many are questioning their portfolios and wondering what the heck it going on again, AAA basically outperformed the market.
Imo, this speaks volumes as to the validity of this play and its potential.
There is no insider selling occurring at these prices and infact the opposite is true. Again, speaks volumes when you are sitting on 20 cent paper and the stock is sitting at 2 bucks. Very rare if ever have I not seen selling when the returns are so amazing which tells me that they are as confident in the upcoming resource estimate as most of the Brokerages following this play.
In today's new world, Brokerages are not so anxious to give a company a buy rating without doing extensive investigation into the validility of the company they are referring too.
I have had my own discussions with my group of investors and we all come to the general consensus that the numbers will substantiate at sp of $2.70 bases on 400mt and anything more than that would push the sp over the $3.00 level.
Here is a copy of a previous Brokerage estimate.
The post below was from May with Dundee giving a buy rating and target of $2.50. With the recent drill results, is there an updated recommendation and target from Dundee?
Eric Lam May 27, 2011 – 9:31 AM ET | Last Updated: May 27, 2011 9:33 AM ET
Allana Potash Corp.‘s Dallol potash project in Ethiopia got a major boost this week after India committed US$300-million towards an Ethiopia-Djibouti railway line expansion, a move that may be part of the rapidly growing country’s strategy in negotiations with Canadian potash suppliers.
Richard Kelertas, analyst with Dundee Capital Markets, said in a note the railway, expected to be complete in five years, will give Allana access to the port at Djibouti for export of its future potash production.
“Allana will be able to use the transportation network to rail its potash from Addis Ababa, the capital of Ethiopia,” he said.
The Ethiopian government has also committed to building road infrastructure leading to the Dallol property.
Of course, this news comes as India and potash producers continue to negotiate a new potash supply contract, after failing to come to terms at the International Fertilizer Association’s annual conference in Montreal this week.
Indian negotiators led by U.S. Awasthi, managing director of the Indian Farmers Fertilizer Cooperative Ltd., demand a discount on current spot prices and claim Indian farmers can skip a year of potash applications if need be.
Meanwhile major potash players such as Potash Corp. of Saskatchewan are wary of giving India too much of a break as other countries will likely demand similar treatment.
“We view these comments as more of a scare tactic than anything else and believe a deal between the producers and India will be tabled within the next couple of months,” Mr. Kelertas said.
Of note is that Mr. Awasthi highlighted Ethiopia specifically as a greenfield site for future production.
“In our view, India definitely has no loyalty to Canpotex whatsoever and could seek to secure potash supply independent of the big marketing conglomerates,” he said.
India needs more than 7 million tonnes of potash, but many of these projects other than Ethiopia are a long way off from production, he said.
Mr. Kelertas maintains a buy rating with price target of $2.50.
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Happy Trading all,
Mediascan