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Toronto show: It's so heavy

Thom Calandra Thom Calandra, www.thomcalandra.com
0 Comments| September 30, 2009

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TORONTO – Sandwiched in between next week’s New Orleans Investment Conference and last week’s Spokane Silver Summit, Cambridge House in Toronto provided evidence (a rarity among junior miners) about prospectors’ most promising trenches.

Topic mentioned most at cocktail parties and on panels? Those streaking shares of rare-earth element companies (germanium, rubidium, dysprosium and terbium and maybe 12 or 13 more in the heavy-earth category).

“I am, honestly, shell-shocked by how sudden this has been,” D.S. Don Bubar told me over a sparkling water. Outside the hotel lobby, the T-shirts, shorts and discarded socks of that morning’s Toronto Marathon were splayed across the pavement.

Click to enlargeMr. Bubar is CEO of Avalon Rare Metals (TSX: T.AVL, Stock Forum), a darling of resource investors this year. He and his once-shunned company are getting so much attention even public relations-types butt their heads into interviews, looking to pitch services.

Good thing for Mr. Bubar, he’s a Canadian who loves football. So he knows how to block, run, and tackle.

As attendees of the resources conference filled the lobby, Don Bubar continued, “Shell-shocked at the speed of it, when it happened, yes. But remember, I’ve been at this 10 years after we shifted the focus of Avalon. Best we could do back then in say ’97 was capitalize on all of the capital racing out of the gold market because of Bre-X (scandal) and raise a wee bit of money for our non-gold company. People might forget but most of that time was a bear market for rare elements. It’s been a bit of a grind.”

Don Bubar, 54, says he is enjoying the attention. Avalon raised money the other day, about $17 million Canadian. Its Thor Lake property in the Northwest Territories of Canada has a shot at being among the first new rare earth mines to strike its hammer and compete with existing or mothballed rare earth mines in China and Australia.

I do not own any rare earth element companies. But I hear several merchant banks, including Tom MacNeill’s Forty Nine North Resources (TSX: V.FNR, Stock Forum) in Saskatoon, are accumulating positions here and there in non-gold producers and prospectors. Mr. MacNeill, we learned at the Cambridge House show, is in Kuala Lumpur speaking about the virtues of Saskatchewan, potash, uranium, rare earths and how to tie a profitable square knot in a treacherous Bermuda triangle.

Click to enlarge

Avalon’s Mr. Bubar, by the way, is not afraid to conjecture just what sparked this entire investor craze over rare earth metals. Now that The New York Times is writing about some of the select companies that actually have been in the rare earths field for years – Avalon, Saskatoon’s Great Western Minerals Group (TSX: V.GWG, Stock Forum) and Rare Earth Resources (TSX: V.RES. Stock Forum) – Don figures we’ll see some choppy action in coming months.

“You know, I agree with John Kaiser (the Bottom Fish newsletter writer). There is no shortage of rare earth elements right now. But keep this trend going toward accelerated technologies, smaller and smaller gadgets, hotter and hotter temperatures for those gadgets and so on, and in five years, or seven, or four, who knows, there is going to be a severe shortage.” That’s Don Bubar talking, before we are interrupted by one of those public relations types looking for business.

One thing on Mr. D.S. Don Bubar’s radar screen is the rare earth investor rush (sounds like hallucinogenic mushrooms doesn’t it?) Companies are coming out of the woodwork to declare themselves elemental seekers of rare earth elements, the ones that go into Blackberries, mobile phones and all sorts of handheld and micro-sized gadgets.

The one legitimate move this week came from Lynas Corp., the Australian company that had mothballed its Western Australian Mt. Weld property. Lynas, which trades in Australia, says it will raise money by selling shares, then kick-start the Mt. Weld property that it calls the richest collection of rare earth ores (niobium, tantalum, zirconium and so on) in the galaxy, or at least on earth.

The Australian government last week blocked the sale of a majority stake in Lynas Corp to a Chinese state-owned company. China, which already produces almost 99% of the rare earth elements in the world, said earlier this summer that it was mulling a ban on exports of REEs.With a likely stratospheric growth in demand for the elements, players from governments to Cambridge House investors are looking to plunk funds into these developing plays.

“So you know, this is a lot like an area play,” he says to me. “You got something real and huge in copper or gold or silver in Mongolia or Africa or wherever, sure enough, you’ll get the area-play hounds staking ground all over the place. Do investors make money in those kinds of Jimmy come-latelies? Rarely, and if they do, it is for a nano-second. It is the promoters who make out.”

Are rare earths for real? “Alloys, magnets, cleaner machines, smaller machines, hotter machines that need to conduct heat and disperse it … yep, it is all real. But investors in the paper will get hurt.”

What else did we learn at the Cambridge House Conference?

  • Guyana, the Democratic English speaking one, is looking structurally sound to several venture-making geologists. Sandspring Resources is one company with a legacy project that is actually producing gold at a 50-person camp. Abe Drost, formerly of Sabina Silver, says he has plans for the property’s Toroparu concession once a reverse-transfer (RTO) is completed in Canada.
  • Award (my own) for the most compelling and concise booth presentation: Osisko Mining (TSX: T.OSK, Stock Forum), whose Quebec team is making every single timeline about its Malarctic Gold Project a reality, including community approvals and mill construction. This is why the family-oriented Montreal company has raised more money via equity placements and (a just-completed) $150 million debt offering than any non-producing junior on the Toronto Stock Exchange.
  • Ticker Trax™

    Thom Calandra produces Ticker Trax, a newsletter for investors. Thom helps investors negotiate a quagmire of choices in the areas of mining, natural resources and life sciences. He co-founded and was the editorial spirit of CBS MarketWatch. His 9 Ticker Trax Planetary Prospects are for an audience comfortable with extreme risk-reward dynamics … and special situations. Thom has just returned from tours of properties in Nevada, British Columbia, Mexico, Ghana and California. Ticker Trax is published and distributed by Stockhouse of Canada.
  • Party-hour bonus points for candid comments of a CEO: Avalon Rare Metals’ D.S. Don Bubar. Mr. Bubar in a revealing interview discussed the rare-earth phenomenon gripping metals investors and even gave his opinions about producing rare metals in several years. He actually rated Great Western (GWG) as a serious competitor now that James Engdahl is getting the GWG mining act together.
  • Said Mr. Engdahl: “The Lynas thing I believe will be good for the overall interest as it shows an unbelievable demand for a sector that is very small with lots of money chasing it. We are getting unbelievable attention in the last few weeks and that is escalating. Not sure how much more it can escalate.” (Oh, I am. James Engdahl was quoted this week in the New York Times. Next stop: Esquire Magazine, er, I mean the magazine that investors really must read to grasp all of this rare earth stuff: The Northern Miner.)
  • Finally, bean-bag award for the most off-the wall prediction on a Cambridge House panel? The assertion that silver in one year will be trading at 15 percent of the price of gold vs. its present 1.8 percent or so slice of a gold bar. The idiot who made that forecast at the Toronto show also said the gold price in exactly 12 months will reach at least $4,000 U.S.

(Please see: Thom Calandra’s Stockhouse articles.)

The New Orleans Investment Conference: Not to attend is unthinkable – if you can spare the time and the fees. Click for a discount: The New Orleans Investment Conference. I’ll be presenting a no-holds barred Q&A workshop, participating in a panel with Rick Rule and others and discussing “Our Own District 9: Mexico, Ghana, Silver & Moly” at this year’s gathering (Friday afternoon). Go ahead and ask me about that $4,000 gold prediction. Yes, that is $4,000 per ounce, maybe more. Call me an idiot.

Brien Lundin of The Gold Newsletter produces the conference, which runs October 8-11. This year will bring an excellent crop of counter-clockwise and contrary thinkers in the areas of mining, emerging markets, commodities and life sciences, including Great Panther’s (TSX: T.GPR, Stock Forum) Robert Archer, Avalon’s D.S. Don Bubar and others. Mr. Lundin has just added political maverick Ron Paul. If you are interested in a discounted rate, please visit this link for registration.

Ticker Trax™
Please see tickertrax.com to learn more about this wealth service and its 9 Planetary Prospects. Also, see its breakout feature examinations of two Ghana gold prospectors. Subscribers, please click here for password-secure Ticker Trax.

HOLDINGS: Thom’s holdings are listed for all Stockhouse members on www.Stockhouse.com under the “portfolio setting” for user TCALANDRA. It is public and free to view. He and his familyown recently minted gold and silver coins and shares of a number of public and two private companies. With the exception of Great Panther Resources, he and his family own none of the companies’ shares mentioned in this article.

THOM CALANDRA of Ticker Trax helps his audience find value in a quagmire of investment choices. Thom co-founded CBS MarketWatch and MarketWatch.com. As the voice of Thom Calandra's StockWatch and The Calandra Report, Thom pegged $300-ounce gold as a long-term hold.

Ticker Trax™ is published by Stockgroup Media Inc. Ticker Trax is an information service for subscribers and neither Stockhouse nor Thom Calandra is a broker or an investment advisor. None of the information contained therein constitutes a recommendation by Mr. Calandra or Stockhouse/Stockgroup Media that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Ticker Trax does not purport to tell or suggest the investment securities subscribers or readers should buy or sell for themselves. Subscribers and readers of Ticker Trax should conduct their own research and due diligence and obtain professional advice before making any investment decisions. Ticker Trax will not be liable for any loss or damage caused by a reader’s reliance on information obtained in the reports. Subscribers and readers are solely responsible for their own investment decisions. Opinions expressed in Ticker Trax are based on sources believed to be reliable and are written in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. All information contained in Ticker Trax should be independently verified. The editor and publisher are not responsible for errors or omissions or responsible for keeping information up to date or for correcting any past information. Ticker Trax does not receive compensation of any kind from any companies that may be mentioned in the report. Any opinions expressed are subject to change without notice. Owners, employees and writers may hold positions in the securities that are discussed in Ticker Trax. PLEASE DO NOT EMAIL THOM SEEKING PERSONALIZED INVESTMENT ADVICE, WHICH HE CANNOT PROVIDE. Copyright 2009 all rights reserved.



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