The Iron Ore Boom!

Last week I posted a blog about iron ore and it quoted a Rio Tinto executive among others, who were predicting strong future demand for iron ore.

Today I cam across an article about Brazilian iron ore giant Vale, and the observations from this company are also worthy of noting:

He said that Vale was operating close to full capacity after restarting mines that had been shut down due to weak demand stemming from the economic downturn. Vale is able to produce about 300 million tonnes of iron ore annually.

"The recovery has been very fast, faster than we could have expected," Mr Neves said. He also said the company was building 16 vessels with a capacity of 400,000 tonnes each. They were expected to be delivered by the end of 2010 or the beginning of 2011.

And there is this:

Vale last year ordered a dozen 400,000 tonne bulk carriers, also known as very large ore carriers, or VLOCs, from China's Rongsheng Shipbuilding and Heavy Industries, at a cost of $1.6 billion.

If there is one particular sector to focus on right now I would be sticking to iron ore.

Lots of other commodities are also rallying like gold, oil, and gas as well as emerging technology driven commodities like lithium and rare earths but iron ore in my opinion iron ore will be the most rewarding sector.

Iron ore is abundant! It is easy to find, and more importantly it is easy to mine, so there will be many small explorers that will actually bring their projects into actual production!

Iron ore is the sector to focus on!

Minemakers (MAK) - Key Resistance Line Broken!

It has been quite some time since I have blogged about Minemakers (MAK) and as you can see from the above chart there has not been much to write about even though the company has been making good progress in developing their Wonarah Rock Phosphate Project.

One of the main reasons why the share price has remained stagnant has been the collapse in phosphate prices with the financial crisis wreaking havoc on fertiliser demand and as the chart shows Minemakers share price has consitently traded below a major resistance line at 40c.

Yesterday, the company announced a market update which showed that Environmental Impact Statements was being prepared, bulk sampling was near completion, and marketing efforts were showing encouraging signs with visits planned for December by potential customers.

When that announcement was made I warned felow forum members to wait for a clean break above the major resistance line at 40c and that price level did get broken yesterday, but then the share price fell back on dumping, which has been a regular occurance with speculative stocks recently.

That all seemed to change today however with the market depth changing to the buyers favour and the share price breaking through 40c and continuing to rally strongly into the close.

Minemakers closed at its high of 44c today for at 14% gain. We could see another pullback but this time I think share price will continue north with good signs across the world of a solid economic recovery underway.

The last two paragraphs from yesterday's announcement also suggest that there will be yet another demand squeeze for fertiliser product.

Overall markets and prices remain weak but the industry expects them to rebound. Difficult harvesting conditions in North America, and poor weather in India and Pakistan are causing current concern about crop yields and grain prices have risen strongly recently. The world has been under-fertilising since the bubble in prices last year and will have to increase application rates so as to maintain optimum nutrient levels and maximise yields.

Wonarah is on track to be in production in mid 2010 to sell into this anticipated demand increase cycle.

Black Fire Energy (BFE) - Lithium!

At the beginning of this year I posted a blog about the emerging trend of electric motor vehicles, their use of lithium batteries, and the emerging technological advances of faster charging times of those batteries, making the possibility of mass produced electric powered vhicles a reality! In that particular blog I mention one particular lithium explorer called Galaxy Resources (GXY) .

Since then the share price for Galaxy Resources has risen five fold and those who took the chance and vested their money here would be sitting very pretty!

I expect the share price for Galaxy Resources and a number of other lithium explorers to continue higher but my preference is to jump onto stocks at a very early stage, and most of the big gains have already occured for Galaxy Resources.

So it was with great interest to me when Black Fire Energy (BFE) announced on Thursday that they had secured a lithium project called the Karibib Pegmatite Lithium Project in Namibia.

As you can see from the above chart, the intial reaction was strong but the share price collpased soon afterward with nervous traders taking quick profits.

Thanks to a fellow forum member, we were alerted of a turn around on Friday and the share price recovered most of the previous days fall to close at 16.5c.

The risks are very high here, but the project looks like it has serious potential and we should see strong gains being made here. For the longer term Black Fire Energy offers a multi bagger potential for those willing to take the risk and jump on early!

Golden West Resources (GWR) - High Grade Iron Ore

Following my most recent blog about predictions of iron ore demand exploding as the world economy emerges from the global financial crisis, I picked up on Golden West Reources (GWR) making the following announcement on Thursday evening after the market had closed about the company's Joyners Find project continuing to deliver high grade iron drilling results and plans to  begin production by the end of next year.

As you can see from the above chart, there was already a very bullish pattern emerging before the announcement was made, most probably as a result of strengthening iron ore spot prices, so a very positive announcement was most likely to drive the share price even higher.

On Friday the market reacted strongly sending Golden West Resources share price 26% to close at 52.5c.

Expect the share price to track higher over longer term!

Iron Ore Demand Set To Explode

Here are a few quotes an interesting article about iron ore demand from China.

China is expected to use more iron ore in the next five years than Australia, the biggest exporter, has produced throughout its history, Rio Tinto Group said this month. The Asian nation’s economic growth is projected to accelerate to 10.5 percent this quarter, according to a Bloomberg News survey, as stimulus spending boosts demand for automobiles and fridges.

 And this.........

“China’s appetite for iron ore will continue to be very strong,” said Michael Heffernan, a client adviser with Austock Securities Ltd. “While the rest of the world has been floundering around looking for lifeboats, China just keeps on surfing. Its growth is improving again.”

Last week iron ore spot prices broke through US$100 per ton and they are still going higher with prices being quoted this morning at $108 per ton.

Stimulus Wasted On Useless Projects!

I have written a few blogs about the incompetent use of tax payer funds by our current Labor Federal Government when they splurged out on ill considered economic stimulus programs and I still get very angry about the lost opportunity whilst the imbeciles in government like Wayne Swan our current Treasurer, still insist that they took the correct course of action.

There are others out there making the same criticism as I am and as I pointed out in a recent blog post, you could simply look to China to get an idea of what should have been done with regards to worthwhile stimilus spending.

The Australian's Robin Bromby, has also picked up on the incompetent lack of foresight and has written a very nice article that points out the obvious. He's a bit more diplomatic than I am but also a lot more amusing with some very sharp use of the English langauge.

Here's the first few paragraphs of the article:

THE bullet-proof economy we may be, but we don't have deep pockets.

Or so it would seem from the fact that our resources companies continually turn to Asia for the money they need. The serious money, that is. Local investors will stump for a $2 million share purchase plan, and the institutions will divvy up for a placement provided they have the reassuring presence of some overseas counterparts. But Australia, by and large, is in the chump change category. And so we have to keep on selling the farm.

Don’t look to Canberra for help. True, there may be $2 billion available to bring various dodgy characters out of the woodwork to install insulation batts. There’s more than $400m for consultants. And we’ve lost count of the squandering for the first-home buyers’ scheme (wait till that blows up in Canberra’s face when interest rates keep rising), the green loans and the school halls. Start of sidebar. Skip to end of sidebar. End of sidebar. Return to start of sidebar.

Note one common characteristic: none of these improves the international competitiveness of Australia.

I hope that imbecile Wayne Swan reads the article in full! He might clue up a little!

C @ Limited (CEO) - Potential 10 Bagger

C @ Ltd (CEO) is yet another failed technology stock that is now looking to move into the resource sector and on Thursday last week trading was suspended when the company had announced that it had entered into a Heads Of Agreement to acquire two very prospective iron ore prospects located near Sundance Resources' multi billion tonne iron ore project in Africa.

With a tight market cap, the forum was hopeful that the stock would not take off today and luckily today's gains were modest, thus allowing us to acquire the shares on the cheap!

There are 220 million shares on issue here, the current market valuation at today's close of 1.8c is less than $4 million! The projects being acquired look like they will contain multi billion tonne reserves of iron ore but bear in mind it is still very early days, and nothing has been proven yet!

The risks are extremely high here so don't go mortgaging grandma's house! 

But if you decide to buy a small parcel of shares and hold on, the potential returns could be 1000% or greater as this stock still seems to be flying under the radar with most people still unaware of the opportunity being presented here.

TPL Corporation (TPL) - Multi Bagger Potential

TPL Corporation (TPL) is a small technology stock that recently announced the appointment of a director with mining experience and also signed an agreement to facilitate the application of coal tenements in WA. When that particular announcement was made in late October, the share price was hovering between 1c and 1.4c and it was identified as a high risk opportunity that could present multi bagger gains.

As you can see from the above chart, the share price has since doubled and on Thursday evening the following short statement was released to the market:

Applications Lodged for Tenements Prospective for Coal


TPL wishes to inform the market that its wholly owned subsidiary, Canning Basin Coal Pty Ltd, has lodged applications for 58 tenements prospective for coal in the Canning Basin Region of Western Australia.

The coal tenements are located near Rey Resources' (REY) tenements, which is currently in the process developing a large coal resource and is actually a stock I have been following and blogging about for some time.

With Rey Resources leading the way, there have been a number of other small explorers following their footsteps in what could become a major coal province for WA. TPL Corporation is obviously starting at a very early stage and the risks are high, but so is the potential! The forum members who acquired this early on are already sitting on 100% gains and we will most likely see further gains in the short term.

This could become another 10 bagger for those who are willing to take the risk and buy and hold!

Yes a 1000% return is possible here!

Somnomed (SOM) - Resistance Broken!

Somnomed (SOM) is a small biotech that is involved in the sleep disorder market and up until recently it was a stock that I warned against investing in. My view towards this company changed when the company announced to the market that market leading blue chip, Resmed (RMD) had entered into the aural appliances market, a sector of the sleep disorder market that Somnomed is focussed on. As the announcement observes, that particular development gives credibility and validity to Somnomed and its products.

The announcement included the following statement from Somnomed Chairman Dr. Peter Neustadt:

“We welcome ResMed, the second largest maker of CPAP machines in the world, into the dental sleep medicine market. For the\ last five years SomnoMed has diligently built a position as the global leader in dental sleep medicine, often encountering skepticism and confronting arguments against the use of oral appliances to treat sleep disordered breathing. We see ResMed’s acquisition of Laboratoires Narval as a very important, further confirmation that oral appliance treatment has been fully recognised, is here to stay and is bound to occupy an important position in the treatment of SDB patients, in particular for the many patients who cannot or will not use CPAP machines.”

Since that particular announcement Somnomed's share price pushed higher and started to test upper resistance at 4c. Late in October the company announced that it had become profitable and since then the key resistance line at 4c was broken with a solid break higher occurring on Friday with a close at 4.7c.

This is still a very risky investment in my opinion, but over the mid to long term it should continue higher as the company gains further credibility as a viable business.