Iron Ore: Canada to be a Top 5 Producer

Iron Ore: Canada to Be a Top 5 Producer by 2020

Iron Ore Stocks…  Is the bottom in?

Iron ore has been a major growth theme over the past 5 years with global production doubling in the first decade of the millennium.  China has been a main driver behind demand for iron ore with global steel production increasing from 55Mt per year to 600Mt per year from 2001 to 2010.  China accounts for nearly ~45% of global steel production.  Iron ore is a commodity that will continue to see strength as steel is the main building block needed to build skyscrapers, bridges, roads and the necessary infrastructure that ties it all together.  Over the next 5 years, another 300Mt of capacity will be added to steel blast furnaces around the globe, with most of this capacity coming from China.



While last year’s sell off has been extra hard for some materials companies with many gold stocks trading close to 2009 lows, iron ore companies remain resilient trading well above 2009 lows.  Adrianna Resources ADI-V $1.06 is 5 times the $0.20 share price it was trading at in March of 2009.  Labrador Iron Mines LIM.TO $5.00has lost nearly a 1/3 of its value since April of 2011, and is still trading 5 times 2009 lows of $1.  Iron ore prices remain elevated approaching $150/t after correcting briefly in October to around $120/t which is still two to three times 2009 lows of $50/t.   This is all due to very tight supply constraints for iron ore which is forecasted to be in a production deficit well into 2015.

One thing for certain is that iron ore stocks have been in a correction for 12 months along with most other materials stocks.  They look like a very attractive group to buy on a relative value basis as the industry’s growth prospects and continuing supply deficits for at least the next three years make investing conditions favorable.  Iron ore is the foundation building material for 5B people around the world trying to live a “developed world lifestyle” where governments see a solution to poverty problems by urbanizing their populations en masse.  With these types of conditions driving growth over the first half of the century, iron ore is the one commodity other than graphite whose growth prospects far outweigh the current mines in production.

Iron Ore Seen Rallying as China Lending Policy May Boost Demand - Businessweek

Global Iron Ore Demand is expected to double in 15 years

Iron is the world’s most commonly used metal and is the 4^th most abundant element on the Earth.  So why are we having supply constraints of an element that is one of the most abundant on the planet?

Simply put…China’s insatiable appetite for iron ore

China consumes most of the world’s iron ore resources for steel production while having limited supply of this raw material for the amount of steel they produce.  This means they are constantly importing iron ore from abroad, and unfortunately for China, the choice of suppliers is limited with the majority of the world’s production coming from only a few countries and a few major iron ore producers.   Another factor that puts even more pressure on this market is other developing nations are also increasing steel production for their own needs.  This takes any additional supply off the market from other developing nations like Brazil and India.

74% of the world’s iron ore production comes from 4 countries; Australia, Brazil, India and China.  3 major producers control the majority of iron ore coming out of those countries; Rio Tinto, Vale and BHP Billiton.  China accounts for almost half of the world’s steel production and is a large net importer of iron ore which creates a huge imbalance in this market.  To feed China’s massive steel industry, they consume two thirds of global iron exports.

At the height of the global recession in 2009, iron ore demand dropped 21% outside of China.  Inside China? Demand for the raw material grew by 13.5%.  A large portion of this was due to restocking and taking advantage of low prices in 2009, but even in the face of rising prices in 2010, 2011, and now in 2012; demand has remained constant from the Asian economic powerhouse.  In March of 2011 China slowed down on its push to buy iron ore as prices approached $200 indicating buyer exhaustion nearing $200.  Prices subsequently dropped marginally the first 8 months of 2011, but remained above $150 even as China cut back on purchases.  Iron ore prices only dropped dramatically when fears of a 2009 repeat gripped the market in late September of 2011.  Demand will generally continue to outstrip supply on a macro scenario until at least 2015 when a lot of the planned projects come online to meet increasing steel production by China and the rest of the developing world.

BIG 3 and China 

Vale, Rio Tinto and BHP Billiton make up the Big 3, a mini-cartel like CANPOTEX in Saskatchewan.  They control most of the existing supply and are responsible for most of the new supply on the market.  Iron ore projects require extensive capital to develop which severely limits any new entrants to the industry.  Vale, Rio Tinto and BHP Billiton have no incentive to raise production until prices get so high that steel makers try and find their own sources of the commodity or the project economics become so lucrative that the barriers to entry disappear due an extremely favorable investment environment.  We are at that point in the industry where supply/demand/price dynamics are making both these conditions come together at once.

Both Chinese and Indian steel makers are breaking normal supply chain avenues looking for new supply and the unexploited monster iron ore projects in the Labrador Trough have become extremely lucrative despite the remoteness of the locations in Northern Quebec due to high iron ore prices.  Any price over $100/tonne makes these monster iron ore projects in the Labrador Trough some of the most lucrative development projects in mining.  Until someone does something about the supply issue and brings on supply outside of the BIG 3, the BIG 3 will only increase production just enough to keep prices elevated.

It’s funny, usually you hear about China controlling supply of commodities and restricting exports like rare earths and graphite.  In this situation, the roles are reversed and the Chinese are the ones paying over-inflated prices for a commodity that is vital for one of their main industries. Chinese government funded projects through 2015 include 36,000km of highways, $901B of roads, bridges and ports, $101B on railway construction, $43B on subways and 36 million economical housing units.  In 3 years the Chinese plan to build the equivalent of 1 home for every person there is in Canada, a massive undertaking to say the least which will require a lot of commodities.  China sees its way out of several social problems by urbanizing its population.  It is one of the greatest undertakings that any nation has ever done, urbanizing 1 billion people within 30 to 50 year timeline.

This supply issue is also hampering other developing economies like India who have already restricted supply of their own iron ore exports.  The real issue here is the price of development.  At current iron ore prices, it is too expensive to bring their populations en masse into even a semi-urbanized society.

Chinese Are Investing Billions in the Labrador Trough

Chinese steel makers have had enough of the consortium, the price fixing, and lack of supply.  They are trying to develop their own supply chain of this vital commodity for urbanization. They have had enough of being held for ransom and have brought a new dynamic to the industry.  They are going outside the normal supply chain of the BIG 3 and are creating their own.  They have created unprecedented opportunities in an industry with huge barriers to entry by removing the one advantage the BIG 3 had, the multi-billion dollar investments that many of these projects require.  This made it impossible for anyone outside a major miner to develop these projects.

 This situation has created a great investing environment for promising iron ore projects.  Steel makers are looking straight at areas like the Labrador Trough to source iron ore production from.  Chinese (WISCO) and Indian (Tata Steel)are going straight to the source and partnering with Canadian junior resource companies like Adrianna Resources ADI.V (50Mtpa/$12.9B cap-ex)  and New Millennium NML.TO (22Mpta $4.4B cap-ex) to develop mega iron ore projects in the Labrador Trough and secure a stable supply of iron ore for the next 50 years.

Partnerships like the ones being developed over the last few years between Asian steel makers and Canadian resource companies will continue as steel companies see no other alternative but to secure new supply by spending billions developing their own source of iron ore.  With projects that show good profitability at a long term prices of $90 - $120, there is no reason for Chinese steel makers to pay much more than $100/tonne over the long run term. 

The Labrador Trough Positions Canada to be a TOP 5 Global Iron Ore Producer.

In 2009 global production of iron ore was 1.6Bt.  China 234Mt, Australia 394Mt, Brazil 300Mt, and India 245Mt making up 74% of global supply.  Canada produced a mere 32Mt in 2009. Production has almost doubled around Labrador City in Southern area of the Labrador Trough highlighting the areas ability to ramp up production at a cost effective price.  

Labrador City (Southern Labrador Trough)


This is current where all the current production is focused because it has the most available infrastructure.  Consolidated Thompson’s Bloom Lake Mine came online and was promptly bought out by Cliffs Natural Resources.  Alderon Resources ADV-VKami Project is set for production in late 2014 near Labrador City and Champion Minerals CHM-TO Fire Lake is another high value producer in the Trough.

1. Cliffs 18 – 22Mt con/year
2. Rio Tinto 17Mt con/year
3. ArcelorMittal 13 - 19Mt con/year

Schefferville (Central Labrador Trough)


Labrador Iron MinesLIM-TO started production at the James Mine in June of 2011 near Schefferville.  Schefferville is north of Labrador City and requires a bit more infrastructure spending is further from the Port at Sept Iles.  It is where the monster projects lie and where most of the Labrador Tough’s untouched capacity is.  New Millennium, Cap-Ex Ventures and Century Iron Mines all are developing very large deposits in the area.  At $5 a share, LIM is an extremely attractive investment opportunity being the first producer in the area of Schefferville giving them first mover status.  LIM topped out at over $14 in April of 2011.  The share price of LIM is typical of any mining company entering into production.  The company has suffered a steep sell-off after the dramatic rise in the second half of 2010.  It certainly doesn’t help that LIM was looking for a large sum of money at the same time they were consolidating forcing them to raise more than $71M at $5 per share.  LIM has tremendous leverage for a junior mining company entering into production in an industry where valuations for projects a rarely less than $2B NPV.

Ungaava Bay (North Labrador Trough)

The government of Canada has committed port expansion near Sept Iles of 50Mt to 60Mt with up to 100Mt eventual expansion.  That is not nearly enough for port capacity for all of the planned projects in the Labrador Trough. It is enough capacity for the projects near Schefferville and south of that location, but not for more northern projects like Lac Otelnuk.  What it does is open up the potential for the government to examine other logical port locations including construction of a large deep water port in Ungaava Bay with 50Mt to 100Mt capacity to support the massive projects in the north part of the Labrador Trough.  According to FEO’s PEA, shipping from Ungaava Bay is $6/t to $7/t which dramatically reduces shipping costs by rail.  Costs and project economics for Adrianna’s Lac Otelnuk may be dramatically reduced shipping their product north to Ungaava Bay than south to Sept Iles.
 

The Labrador Trough is the last major iron ore belt in the world that has untouched iron ore capacity.  It is an area in the world that could easily see in excess of 200Mt of production per year over the next decade vaulting Canada onto the global stage as a major iron ore producing country.  Canada has huge capacity to increase global production if the infrastructure is in place.  With only 32Mt produced in 2009 and an estimated 50Mt to 60Mt per year in 2012, Canada is an iron ore resource rich country that has shown it is capable of increasing iron ore production from the massive iron ore deposits in the Labrador Trough.  These deposits have been unexploited since their discovery in the 40’s and 50’s that will give Canada greater than 200Mt production capacity when the infrastructure is laid.

The remoteness of the Labrador Trough was one of the main reasons why these massive deposits have remained unexploited for years.  More iron ore is needed for increasing global steel production and countries like Brazil and Australia are nearing capacity and have no incentive to increase capacity.  There is no other concentrated area in the world that has the potential of the Labrador Trough.  5 projects in the Labrador Trough once in production over the next 10 years will produce 100Mt – 120Mt per year between the 5 of them.

Deposits slated for production by 2016...

1. Adrianna Resources ADI-V $1.06/WISCO- Lac Otelnuk 50Mt
2. Oceanic Iron Ore Corp FEO-V $0.40- Hopes Advance 20Mt
3. New Millennium NML-TO $2.44/Tata Steel- Lab Mag 22Mt
4. Alderon Resources $3.09- Kami 8 -16Mt
5. Champion Minerals CHM-TO $1.68- Fire Lake ~9Mt

In addition to these potential producers, there have been several significant discoveries in the Labrador Trough. Century Iron Mines FER-V $1.97 Attikamagen looks to be a large high value iron ore project,Cap-Ex Ventures CEV-V $0.98 has made a big discovery on Block 103, and Zone Resources ZNR-V $0.10 is on to a material discovery on Girard.



Follow the money… in this case its Chinese and Indian steel maker money!!!

Iron ore projects are the most capital intensive projects in the mining industry.  They depend on billions of dollars of infrastructure which is a major barrier to entry in the industry.  Exploration is not as big of a risk as financing is for an iron ore project.  The big money is going into development of projects in Canada’s Labrador Trough with Chinese and Indian steel companies committing the billions in capex needed so these projects can be built.  China does not want to be hamstrung for iron ore for the next 15 -25 years while it continues to develop and urbanize the countryside.  Steel companies see Canada as a big opportunity to secure future long term supply at reasonable prices which are currently much less than the spot price.

India is restricting exports of iron ore.  Australia is China’s only major reliable source for iron ore and Australia’s short term supply is limited by port capacity.   Their reserves are also being depleted at a more rapid rate than anticipated and are not being replenished.  Australia’s current reserves are estimated to last no more than 60 years and was the discovery back in the 60’s and 70’s that brought Canada’s iron ore production to a screeching halt.   With that in mind, there are limited options for the Chinese to increase supply.  The logical choice of course is Canada’s largely untapped and underexplored iron rich lands of the Labrador Trough where if the Chinese put up the money… the supply is all theirs.

So to answer the original question, is the bottom for iron ore stocks in?  It is a sector that is showing signs of strength, especially in the price of the commodity.  It is in an industry where pressures are clearly not abating anytime soon.  When looking at share price performance, some companies like NML and CEV have rebounded close to 2011 highs while other companies trade near year lows. The sector is showing some signs of life, but there seems to still be good value to be had with names like Labrador Iron Mines LIM-TO and 2012’s big discovery on Girard Zone Resources ZNR-V trading close to year lows. 

Keys to success in investing in future iron mines.

1. Product – There are several different products that an iron ore operation can produce
   1. Direct Shipping Ore (DSO) High grading Hematite requires little beneficiation and can be shipped directly to the steel plants in China. There are huge premiums on companies who have defined 10 – 20 years production of DSO (50Mt -100Mt). The major advantage is dramatically reduced capital costs and ability to fast track production in comparison to the $3B to $10B taconite projects in the Labrador Trough. E.G. Labrador Iron Mines LIM-T DSO projects around Schefferville.
   2. Iron Ore Pellets – This is one of the most ‘finished’ products that an iron ore operation can produce.  Premium pricing in the industry, but requires the most amount of capital of any type of iron ore mining operation. E.G. Adrianna’s ADI-V Lac Otelnuk.
   3. Iron Ore Concentrate -   This is an unfinished product that would be shipped to a refiner. The major benefit is reduced capital costs when compared to producing pellets.  Most projects tend to ship concentrate.  E.G. Oceanic Iron Ore FEO-V Hopes Advance Project.
2. Financial Partner - Asian steel companies are investing in at least 25 - 50 years of supply of iron ore -securing deals with the right partners will ensure financial viability low dilution and long term success.
3. Grade – if it’s not DSO then the highest grade magnetite deposits are the next best thing.  Greater than >30% vs. less than <30% are factors that need to be considered.  A deposit grading 25% vs. a deposit grading 35% is a material difference.
4. Location – in mining location is everything.  Climate, infrastructure, close to shipping lanes all become very important when considering you are shipping 10 – 50 million tonnes of ore a year.  Near an existing mine and infrastructure whare rail and power is readily available or near deep sea access are preferable locations for new iron ore mines.  Rail lines can be an expensive capex cost and adds to shipping costs.  Landlocked remote locations can make a project prohibitive.  Some alternatives to consider instead of rail would be a slurry pipeline.
5. Scale – BIGGER is BETTER!!! A company that has reserves and resources for 100 years at 50Mtpa and can take advantage of scale will be worth more 10 years from now because of  ability to ramp up production.  
6. MGMT– Building relationships and making billion dollar financial deals is vital for success and minimizing pre-production dilution.

Company	Project	Owner-ship	M & I	Fe %	Inferred	Fe %	Market Cap (FD)	Pre-tax NPV	Production
Adriana Resources ADI-V	Lac Otelnuk50Mtpa	40%	4.89Bt	29.0%	1.56Bt	29.6%	$177M (165M shares)	$15.2B NPV 20% IRR 8% Risk	50Mtpa @  $100/t $12.9B capex
New Millennium Iron NML-T	Lab Mag Ke Mag 22Mtpa	80% 80%	4.6Bt 2.45Bt	29.5% 31.2%	1.15Bt 1.01Bt	29.3% 31.2%	$464M (190M shares)	$8.5B NPV 25.2% IRR 8% Risk	22Mtpa @ $90/t $4.4B capex
Oceanic Iron Ore FEO-V	Ungaava Bay 20Mtpa	100%	462Mt	32.0%	1.03Bt	32.3%	$86M (216M shares)	$10.4B NPV 34% IRR 8% Risk	20Mtpa @ $115/t  $3.7B Capex
Alderon Iron Ore Corp ADV-T	Kami 8 - 16Mtpa	100%	490Mt	30.0%	598Mt	30.3%	$357M  (116M shares)	$3.1B NPV 40% IRR 8% Risk	8Mtpa @ $125/t $1B Capex
Champion Minerals CHM-T	Fire Lake	82.5%	400.1Mt	30.6%	661.2Mt	27.7%	$180M (108M shares)	$4.0B NPV 41.5% IRR 8% Risk	8.7Mtpa @ $115/t $1.37B Capex
Century Iron Mines FER-V	Duncan Lake Sunny Lake Attikamagen	65% 60% 60%	30Mt - -	23.8% - -	821Mt - -	24.5% - -	$180M	N/A	N/A
Cap-Ex Ventures CEV-V	Block 103	100%	-	~30%	-	~30%	$117M (120M shares)	N/A	N/A
Zone Resources ZNR-V	Girard Lake Moor-Ross	100%	-	~35%	-	~35%	$10.5M (116M shares)	N/A	N/A

Christopher Skidmore

Beat the Market Stock Picks

Sector Volume Alert - Bio Techs!!!

Sector Volume Alert - BIO TECHS!!!


I am a volume guy when I look for themes that look attractive for the year.  It worked extremely well identifying the tech theme last year with companies like INT, SCG, FSW, OPL etc. going on massive runs and this year I have identified Bio Techs as a place you want to park your dollars.  This sector looks to be coming alive from what has been a prolonged slump for many companies.  If you look at chart after chart of these junior Canadian companies, it clearly shows that this often ignored sector in favor of materials and energy is finally getting a bit of attention.  


Companies that I have identified big volume days in the last 2 months that show accumulation in this sector and willingness to buy in VOLUME...  

1. Chemaphor - CFR-V $0.095
2. Medex Health Corp - MDX-V $0.235
3. Sirona Biochem Corp - SBM-V $0.125
4. Miraculins Inc. - MOM-V $0.15 

Other companies volumes have increased significantly over the last year including... 

1. Neptune Biotech - NTB-T 
2. biOasis Technologies - BTI-V  

In Neptune's case, they are an industry leader and their volume really started increasing early on in 2011.  The company has corrected in a very nice pattern and looks to be moving up to previously established highs in 2011.  Biotechs, pharmaceuticals and health care stocks in general are the next big Investing Supercycle. Mining has been great, nor is it over... but over the next few years you want to be moving some cash over into this sector because of relative value. I expect Biotechs to eventually perform just like the Tech bubble did in the nineties. 


BIO TECH Watchlist...

MDX-V MedX Health Corp - MoleMate - Skin Cancer Imaging System - Health Canada Approval $7.8M market cap.

CFR-V Chemaphor - Oximunol chewables - Oxidized Beta Carotene - 3 Stage Commercialization... $7.5M market cap

1. Animal health 2012
2. Livestock Indsutry 2013 - potential to replace antibiotics in the feed industry
3. Human health 2014 - enchanced immune function 

MOM-V Miraculins - PreVu POC Test - Reads skin Cholesterol and helps evaluate a patients risk for coronary Artery Disease CAD. FDA Approval $10M market cap.

SBM-V Sirona Biotech Corp - Specialize in producing carbohydrate based molecules. which maximizes the commercial value of carbohydrate based drugs. Apply technology across a diabetes therapeutics, cosmetic agents and biological ingredients. $7M market cap

VRS-V Verisante Technologies - Verisante Aura - Non-invasive cancer detection devices taht offer physicians immediate results for many common types of Cancer. $41.3M market cap

FLU-C Abattis Biologix - Neutraceutical product development company - Krill Oil / Nitric Oxide / DefenZall / FastFlu / Saskatoon Berries / Acai - $3.6M market cap


NTB-T Netpune Technologies and Bioressources Inc - NKO - Krill Oil. Company is purely krill oil. $151M market cap

APO-V Acasti Pharma Inc. - Neptune's pharma division developing safe and effective pharmaceutical and medical applications with an initial focus on cardiovascular disease by leveraging the intellectual property, clinical data and know how developed by Neptune Technologies. $155M market cap.

BTI-V biOasis Technologies - Transcend - combines Transcend with other drugs to break the Blood Brain Barrier. $49M market cap

KLH-V Stellar Biotechnologies - KLH - KLH is an important protein used in wide-ranging therapeutic and diagnostic markets. Vital component for vaccines (cancer, autoimmune and infectious disease) and an antigen for measuring immune status. $17.5M market cap

Abattis Biologix Update...
CNSX:FLU  $0.06

Abattis Biologix CNSX:FLU signs definitive agreement to close on a key acquisition... Animo Wellness. The company will have over 75 NPN's (natural health product licenses) with this acquisition and over 100 different licenses once all the deals the company is working on closes and the current pipeline products licensed.  

The Stock Market, Canadian Stock Exchange | TMX Group

The company is working in several high value areas with each product having potential of multimillion dollar revenue streams within 24 months... Abattis pipeline includes... 

• Nitric Oxide,
• Krill Oil,
• Acai Products,
• Saskatoon Berries,
• DefenZall Daily Immune Support which contains (Spirulina, Astaxanthin, Hemp Protein, Kelp, Reishi).

The company is also working on the FASTFLU shot... the world's first painless FLU shot which is recommended to be taken when sick and is designed to help aid with the severity and duration of the FLU.  It is a proprietary blend only known to Abattis with two powerful natural ingredients including the Elderberry in a Saskatoon Berry juice. 

Abattis hands out 2,000 FASTFLU shots at the Wellness Show

Abattis Biologix made a successful entrance in the public arena debuting a wide range of products at the Wellness Show held at the Vancouver Convention Center.  It is a very popular consumer event. The company made a big impression on many people passing by the booth and created such excitement that I found myself handing out FASTFLU shots alongside Dr. Phil Hardy.  Over the 3 day event, we served more than 2000 FASTFLU shots to people who stepped up to the “bar” and drank “A Shot of Good Health.”  This delicious Saskatoon berry-based drink is Abattis’ wellness beverage and was a huge hit among all who took a FASTFLU shot with many people stopping by the booth for seconds and even a third shot.  Abattis’ DefenZall Liquid is a special blend of Elderberries, Saskatoon “Sassy” Berries, ginseng, green tea extract, and Abattis’ proprietary DefenZall formula specifically designed to both stimulate immune function and suppress viral activity in the body.

The idea of Elderberries positively affecting Colds and Flus was well received at the show with many attendees acknowledging its unique properties in helping to suppress Colds and Flus by both relieving intensity and duration of symptoms.  The Sassy berry flavoring was also a hit and opens up multiple potential revenue streams for Abattis in the future potentially becoming a producer of a made in Canada product (Saskatoon Berry Juice) that has similar potency to Acai and Blueberry juice.  Saskatoon Berries are loaded with polyphenols and anti-oxidants comparable to Acai which are believed to aid in the fight against cancer causing free radicals.

What is the BIG DEAL about “free radicals?”

"Free radicals are highly reactive compounds that are created in the body during normal metabolic functions or are introduced in the environment.  Free radicals are inherently unstable, since they contain “extra” energy.  To reduce their energy load, free radicals react with certain chemicals in the body, and in the process, interfere with the cells’ ability to function normally.  Antioxidants work in several ways: they may reduce the energy of the free radical, stop the free radical from forming in the first place, or interrupt an oxidizing chain reaction to minimize the damage caused by free radicals."

pg. 467, The Natural Pharmacy, Alan R. Gaby M.D., Healthnotes, 2006

The book goes on to explain that free radicals are believed to play a role in causing more than 60 different health conditions including the aging process, cancer and atherosclerosis and that increasing intake of antioxidant nutrients has the potential to reduce the risk of free radical-related health problems. 

Is the Saskatoon Berry Canada’s answer to Acai? 

Mike believes Saskatoon Berries are at the point scientifically and commercially that Cranberries were 100 years ago in the early 1900’s.  If so, a company that is on the ball in this area would be tying up all production of this crop for the next 10 years in order to control the market from 'barriers to entry' to 'product and pricing.'  Ocean Spray built a multibillion dollar business out of Cranberry Juice and the potential with Saskatoon Berries lies somewhere between the Acai and Cranberries.  Obviously, if Saskatoons take off, more crop space will be needed to keep up with demand.  Currently there is limited Saskatoon Berry crop which is good at start-up point with Abattis tying up the entire crop thus creating barriers to entry in this specific industry which will be a key competitive advantage mentioned above.

The FASTFLU shot is expected to be licensed as a natural health product in Canada in June/July setting the stage for an aggressive product rollout in time for the start of 2012 FLU season in September. There is still debate as to how this product will be marketed, but the best idea seems to be a 2oz FASTFLU shot similar to the 5 hour energy drinks available and possibly a larger 8 to 16 oz. bottle. 

Abattis’ FASTFLU SHOT passes TWO KEY retail product marketing tests…

From a marketing standpoint testing a new product…  Watching consumers drink in Abattis FASTFLU shot….  It passed the two major hurdles for a new product.   

1. Consumers readily accepted the product as a FLU protection (believability)
2. Consumers knew of the Elderberry and its effects(education)

From a lesser point… the taste appeal of the product was also rated extremely high giving chance that Abattis FASTFLU product will not only be sought out as a FLU protection, but as a tasty everyday wellness drink.

The Dr. Oz Weight Loss Diet Includes Acai 

Abattis has key natural weight loss product Acai. Acai extract helps speed up the metabolism for people with slow metabolic rates.  This is common cause of wight gain for many people who are just not active.  Abattis (Sci-Naturals) products which is now under the Abattis umbrella has a product similar to the one featured in the link below.  

http://newschannel8.ru/

NOW IS THE TIME TO BUY...  BIO TECHS could be the Next Investing SuperCycle.

BABY BOOMERS AND THE PERRENIAL FOUNTAIN OFF YOUTH COULD START OFF SOMETHING NOT SEEN SINCE THE TECH BOOM.

The Never Ending Quest for the Fountain of Youth

You hear rumblings about the health craze coming on... especially in the natural health / prevention area of medicine. Baby Boomers are aging and the biggest quest in the last half of life for many individuals is the Fountain of Youth. Yes that is an imaginary fountain... but over the last decade, serious development of products and scientific advances in this area have proven that nutritional supplements and living healthy in general will dramatically effect the quality of one's life and most likely extend it. 


Seriously... who wants to die?  The idea may sound romantic to a depressed teenager... but in all reality, aside from the moodswings of depressed and confused teenagers... no one wants to die.  Teenagers romanticize about it b/c the concept of death is very foreign to them at that young age and everyone young has the feeling of invincibilty.  This is the one sector I see Boomers throwing endless amounts of dollars at...  All to chase the fountain of youth.  


Buy them while they are cheap!!! Baby Boomers are the largest demographic in history and if they are going to spend their money on anything and everything related to health... it will be chasing the Fountain of Youth!


The odds of finding a $0.05 to $5 company are much better in a sector that has yet to start its major investing supercycle.

Risk/reward lies heavily in your favor as there are no more ARU type discoveries in the gold industry.  On top of that there is a struggle for growth. The chance of a $0.40 to $40 high grade gold discovery is approaching 1 in a million odds and there have been no significant high grade gold discoveries since this dramatic 20M oz discovery in Ecuador. Everyone is chasing a finite resource in the gold industry.  While in the Bio Tech sector, the potential for uncovering a product that will return $100M/year in cash flows on an infinite timeline is much greater.  It makes no sense why companies with real potential are ignored and struggle to find funding, while $99 out of $100 in the exploration industry goes to nothing of value except to confirm that yes indeed... another prospect is uneconomical and will never be mined.  Common sense should tell you that the massive sector potential brewing is not in commodities with a population bust impending this century.  


The mining sector has run for 11 years straight and is relatively overvalued when compared to other unloved sectors that remain extremely cheap when valuing venture capital opportunities.  The massive sector potential lies in sectors like Bio Techs, which are extremely cheap.  The fundamentals in the industry are setting the stage for huge market growth stories surrounding aging baby boomers in an industry that continues to grow in leaps and bounds sicne the early 2000's.  Baby Boomers are the largest market demographic in history and have the most disposable cash out of any demographic.  In fact no other generation will have it as good as babay Boomers do.  This is an industry that is going to take off like the TECH BOOM did in the 90's.  With the most disposable income out of any demographic, this is a sector opportunity that will only come around once... kinda like the tech boom and now the mining supercycle.  


CNSX:FLU is a $0.05 to $5 possibility if history repeats itself like Tim Fealey's previous company, Martek.  Abattis has the high impact products with potential for multi-million dollar sales.  Over the next 6 -18 months Abattis will be executing on its plan in rolling out these products to the public.  Putting high value property/ip into the company giving Abattis a real competitive advantage and executing on partnerships to build a high value neutraceutical product development company that has multiple platforms.  Krill Oil/Fish Oils, Astaxanthin, Nitric Oxide, Acai, Saskatoon Berries, Fruit and berry pumous and much more.  The potential of this company limitless.  It might take 5 years to build the giant I am talkign about with multiple product platforms earning multi million sales, but this is a company that has everything in place from product development to distribution to  to be a real contender in a rapidly growing industry.   

What is the risk??? There is no much with a current entry a $0.05, it won't get any cheaper and if it does this could be the Bio Tech buy of this decade.  No on e has a business plan like Abattis is putting forth and rolling out this year. 


Christopher Skidmore


Beat the Market Stock Picks

Dow Roars to Multi-Year Highs on Positive Economic News

Markets put Greece to bed.  

Finally... the RIP YOUR FACE off day that bulls have been expecting for weeks finally happened and markets around the world exploded to the upside.  The DOW has been hung up on 13,000 points for the last few weeks tossing and turning back and forth and traders pulling their hair out whether to go short or long.  The bearish selling pressure in the market abated late last week in one last head fake to the downside.  The party was short lived for the bears as it was a place where many shorts covered.

YOU JUST CAN'T HOLD THIS MARKET BACK IN 2012.   It is an end of the world bull.  Investors are not getting any money in yield on debt, unless they are holding European paper.  So the thought this year is that if the world is truly going to end... you might as well buy something where you can get a capital gain.  Most often the $SPX is the preferred technical tool to read but in reality both markets need to be charted and it was this big barrier between 13,000 and 13,071 that the market has had a tough go of it for the last 3 weeks.  Since it was such a tough area of resistance to get through... expect a bit of propulsion/momentum from this point and with a 200 point day on the US markets... we saw the propulsion that we were looking for.  Ultimately there will be a correction and test of the 13,000 level, but it is clear that this market is going up.  It is a year for oversold and beaten up names to come back.  US financials, energy and other odd sectors that have lagged, it is the year for these companies to run.

Give it any excuse you want... but this market is cheap!   Valuations of low multiples makes this market extemely cheap for this stage in the American economic recovery and should move up a couple points on average in valuation.  Maybe 1 point per year for the next two.   You've got ultra low yields for the foreseeable future, you have a recovery under full steam in the US and you have European fears that are subsiding for the meantime.  You have the conditions in place for a BULL RUN to REMEMBER.  Call it a face ripper or wife pimper or whatever... this is a market you don't want to miss out on... although it seems for the Canadian markets that this is an odd year for certain sectors with Oil and Gas and Graphite stocks leading the way on the Canadian side when it comes to commodities.

Read my article foreshadowing this break...

Beat the Market Stock Picks: One Step Closer to German Unification of Europe

It continues to remain a tough sell for many materials companies that are in extended consolidation periods and will probably do so until an extreme relative value point happens sometime this spring/summer which should coincide with a China rebound.  Lets not fool ourselves.  Without China buying millions of tonnes of commodities.  Anything on the TSX that has gone up 1000% to 10,000% over the past 3 years is a tough sell on a relative basis without the strength of China behind it.  I expect this (materials) theme and the unloved gold sector to bottom this spring/summer.

In the meantime... for materials...  it is RISK ON which means game on for risky assets.  The best gains in this market sector are finding undervalued companies that are exploring material assets that have the potential to create great value when compared to its peers.  




Oil and Gas Stock Update...

Tag Oil Ltd.TAO.TO $10.05 is still going to be a screamer... It just broke $10 for the first time today which is a very big psychological level. TAG Oil can run a long way from here now.  They recently spudded another well on Cheal that is flowing 1,100 BOD a day.

The Stock Market, Canadian Stock Exchange | TMX Group

Americas Petrogas BOE-V $3.96 on a great run of at least 50% when first mentioned in January.  They raised a ton of money  $60M bought deal at $3.50 after the company announced that Exxon and Americas Petrogas cased the first well with in the Vaca Muerta Shale with a thickness of 343 meters of oil shows.  The potential of the Vaca Muerta is unmatched.  It is why I think Marifil is one of the most mispriced assets on the market.  They are sitting on the same formation.  Not being O and G guys, they have completely overlooked this potential.  

The Stock Market, Canadian Stock Exchange | TMX Group

Canacol Energy CNE-TO $0.98 remains a strong buy announcing a 227% increase in revenues.

The Stock Market, Canadian Stock Exchange | TMX Group

New Oil and Gas picks!!!  

1. Mart Resources MMT-V $0.96 - Mart is on track to be a major O and G producer in the Umasadege oil field in Nigeria.  The company is in process of expanding its facilities to handle 35,000 barrels a day and is also in talks with a subsidiary of Royal Dutch Shell to gain access to their export facilities.  The discovery in Nigeria is so good, the problem that MMT has is tying in production and expanding facilities as it looks like the potential of MMT's UMU-9 well is well beyond current expansion designs. The Stock Market, Canadian Stock Exchange | TMX Group
2. Hart Participasoes em Petroloeo S.A. HRP-V $3.69  - Hart is a highly prospective explorer with the former Petrobras team.  It has been a decent bottom fishing pick in January mentioned between $2.50 and $2.30 in January.  This company is at an earlier stage than the others above, but are exploring some very large producing oil fields.

Most materials stocks will continue to lag...  

In the materials sector, without the Chinese economy confirmed to be rebounding... this area continues to be a stock pickers market.  You need to focus on companies that are cheap and creating de-risked or low risk value through early drilling programs.  Certainly in the gold market this is very true... POG has broken its downtrend but still has a bearish bias with it testing the trend it broke as support.  POG can work its way down along the other side of the trend in a range bound motion until it finds support.  If it goes under $1600, that would be where I would have to put money to work on a buy point.  The global economy may be recoverying, but it is recovery based on monetary debasement and FREE MONEY.  The short term positive sentiment puts gold in no man's land until it finds a place where investors and traders see value.  To me that looks like somewhere under $1600.  Not being able to hold $1700 late last week and early this week was key that the momentum is still rangebound and sideways at best.  Problem is that the range on gold is between $1550 and $1800.  That is a very wide range.  One thing of note is that many gold stocks are extremely oversold and currently the gold stocks and POG have little correlation to each other.  Esepcailly when looking at the big picture of wehre gold is on a year over year basis and where the stocks are.  A 10% to 15% correction in gold means a 50% correction in the stocks with really little jsutification for the material drop in price.

But that is the stock market for ya.

 I am a pattern watcher and one pattern that I see shaping up that gold seems to follow is the Inverted Head and Shoulders Pattern.  Currently I ama  buyer at these levels and not a seller although I see no conviction to the upside in gold.  Not yet.



This already seems like an off year for many materials companies, especially those that went on BIG RUNS in prior years.  Gold and materials in general is an industry that you still need to be very selective until Chinese economy bottoms.  It is an area that presents great value, but you will need to be patient for the next 6 months.  The companies that I would selectively position into in the materials sectors are not the junior miners or explorers, but in the extremely cheap micro market ($5M to $20M market cap) that have good early stories with decent news that are well financed. The big high grade discoveries are few and far between these days and other than Tembo Gold TEM.TO or RoxGold ROG.V the pickings for a new big discovery just aren't there.  What the market needs is another ARU type story, and it just isn't happening.  Canaco was looking like it could be that story, but looks like they are going to come up well short on ounces if the price action is any indication.  

Correction: Tembo Gold Reports 16.10 g/t Au Over 3.00 Meters and 3.13 g/t Gold Over 25.89 Meters from Tembo Project, Tanzania

The best chance at value creation these days is the often overlooked low grade deposits that were not explored in the past because of the low grade nature, but represent 3M to 5M oz targets that could be bulk mineable.  These are the best value creation stories.  Like Gold Canyon was in the spring of 2010.  They released great news for 6 months before the market caught on to the story.  The SP languished around $0.25 from March 2010 (when I started following) to August 2010 when the share price really started to take off.  9 months later Gold Canyon was topping out at $4.20, a remarkable run for a company that was $0.20 to $0.25 cents 12 months prior.  I wouldn't buy Gold Canyon now... not because I don't like it...  but because it is a name that does not have the leverage even if they double the ounces over the next 2 years to 7M.  It is also moving up the evolutionary life cycle of a mining company (explorer/developer/miner) into a development project with a whole slew of risks taht are not attached to a typcial exploration early development project and currently that is something the market has no appetite for.  Development projects are much more dependent on mining type news including feasibility studies, environmental permits, strategic investors etc.   It has moved out of the sweet spot for where an investor has the chance to really make some de-risked highly leveraged dollars.  It is also still trying to bottom and find value as a development play. 

I can name producer after producer with 200k to 500k growth profiles selling for a fraction of what they should be entering into massive prodcution growth over the next 3 to 4 years.  The market doesn't want them. Gran Columbia GCM-TO and Petaquilla Minerals PTQ-TO being two highly prospective producers on my list.  One day this market will turn around.

 Other classic unloved stories having a tough time in this market are Canaco CAN-V and Trelawney TRR-V and are proof that the buy and hold strategy does not work in this market unless you are an early investor.  The sweet spot for these type of stories where most of the gains are made seem to happen all within 6 to 12 months.  Rule of thumb... there is a limit to the price anyone will pay for these low grade deposits so if the discovery pushes a company to a $500m to $1B market cap.  Take some profits, because the reality is... even if these discoveries make it to mine... it will be another 5 to 7 year process with little in the way of leverage unless the discovery gets bought out. Be rest assurerd though, timing is everything and if a company does not get bought out within a certain timeframe from discovery, a buyout usually won't happen until the mining project is in operation or close to being in operation.

The market sentiment is there for selective gold plays...  but it is clear the market wants fresh meat and a new discovery.

That is why over the last 2 months the interest in the gold stocks has been in the new stories that have good leads while many big discoveries from the past 2 to 3 years have lagged over the last year.  There have been some big volume days with crazy price action on several 'new' to the market low grade discoveries.  I won't mention them now as premium members are still doing their DD on these companies, but there is a group of companies that have flown to astronomical heights and more importantly created huge volume in the last 2 months on announcements of a gold discovery.  One name I will mention because I featured the company last year is Calibre Mining CXB-V.  The company has made a very interesting copper gold discovery on the B2 Gold jv making giving new life to these highly prospective properties in Nicaragua.  Calibre has traded almost the entire float of the company in the last 2 months.  

B2Gold Corp. and Calibre Mining Corp. Announce New Drill Results Discover Significant Porphyry Style Gold and Copper Mineralization at the Primavera Project in Nicaragua

Once the retail investing community has tired of a story... it is on to the next sparkly/shiny stock.  I am not saying its right... its just how it is these days with limited retail dollars chasing a ton of companies. With Chinese trade deficit as big as its been in a 20 some odd years...  investors are shying away from materials.  One thing in the recent numbers out of China that most aren't telling you is that the trade deficit is exasperated by the fact that China's internal economy is strong and Chinese Consumerism and a strong Yuan is enabling purchasing of a lot more stuff outside of China.  The European minor recession has also exasperated these numbers to an extreme, but with a continued rebound in the US economy, expect increased consumer confidence and US imports from China to increase, a Chinese rebound seems near.  US strength and the hope that the new China regime will stimulate should bring a decisive bottom in this sector sometime this year.   You can already see policy change in many developing countries including China, so there is hope that the emerging markets are bottoming this year.

That is the great Canadian hope anyway.  

When you have big guys with huge audiences telling people to stay away and there is a big crash coming in 2012... This has a lot of people scared stiff to do anything which is the worst decision of all.  Put your money to work!  What it does mean is there is a lot of cash on the sidelines and if the markets continue to go up... pyschology is going to drive this idle cash back into stocks.   Its tragic really, b/c the arguments being used by the old timers are baseless and ignore a wide range of fundamentals and are narrow minded.  Common sense says the market are going up.

You should be 100% invested in this market. If you want value... materials are great place to hide...  If you want momentum... O and G and Graphite are the best mometum sectors so far this year.