The Major Holdings consist of Humboldt’s investment in four junior resource companies. During 2009 the market value of Humboldt’s investments in these companies recovered from their low point in 2008, and increased by $6.9 million to $9.8 million including an additional investment of $921,000.
Humboldt’s investments in these companies have been evaluated at their market value, based on the bid prices of the securities held at the end of the year. The actual value for these holdings, when realized, may vary significantly from the carrying value.
Humboldt’s investment in Diaz Resources Ltd. remains the largest individual holding in the Company’s investment portfolio, representing approximately 12.5% of Humboldt’s net asset value. During 2009 Humboldt participated in a Diaz treasury offering and purchased an additional 5.0 million Diaz treasury shares at
.10 per share. Together
with shares purchased in the market this increased Humboldt’s investment in Diaz by $558,000. This value of the investment has increased by $4.6 million since the beginning of the year. Humboldt owned 32% of the outstanding shares of Diaz at December 31, 2009.
Diaz is an exploration and production company with assets in Alberta and Saskatchewan, in Canada and in Texas, in the United States. For the year ended December 31, 2009 Diaz reported cash flow from operations of $1.9 million,
or
.03 per share and production averaging 642 BOEd.
The carrying value of Humboldt’s investment in Sharon Energy Ltd. represents 3% of the Company’s net asset value at December 31, 2009. Humboldt owned approximately 24.5% of the outstanding shares of Sharon.
At the beginning of 2009 Sharon was a junior exploration company in the early stage of its development. During 2009 Sharon sold its US subsidiary in exchange for 2.3 million shares of Magnum Hunter Resources Corporation, a rapidly growing Texas based exploration and production company. The Magnum Hunter shares have subsequently
increased in value and have a market value of over $10 million at the end date of this report. Sharon is being managed by the Diaz management and plans to focus its exploration efforts on horizontal oil prospects in Alberta and Saskatchewan.
Humboldt’s holding in Tuscany make up 5.3% of Humboldt’s net asset value. Humboldt currently owns 38.5% of the outstanding shares of Tuscany.
Tuscany is an early stage junior exploration and production company mainly focused on oil exploration in Alberta and Saskatchewan. For the year ended December 31, 2009 Tuscany’s production averaged 120 BOEd and the company reported cash flow of
.6 million. Late in 2008 Tuscany made a significant oil discovery with a horizontal
well in the Dina formation under its existing shallower oil production at Evesham, Saskatchewan. In order to finance the development of the play Tuscany issued 8.7 million shares at $.06 per share, through a rights offering and In the