www.babybulls.com

VANCOUVER, Canada — Vancouver’s two January resources get-ups, Cambridge House for investors and B.C. Round Up for geos & technicians, gave us flogging five-day rains, one superb NHL hockey match … and plenty of hard-asset bravado:

• “I don’t own stocks any more; I own colored diamonds,” diamond seller Colin Ferguson told me at a private party I hosted with Cambridge House‘s Joe Martin. (I invite the guests and Joe entertains ‘em.)  Mr. Ferguson, a 51-year-old Vancouver Island resident, says we’ll see reports of diamond warehousing by aggressive hedge funds. Worldwide demand for diamonds is on track to exceed supply by 7 million carats. The “coloreds,” champagnes (cognac hues), pinks, blues and greens, are beginning to flash in fashion-minded markets. Colin will be at Mr. Martin’s Palm Springs investment conference at Indian Wells, California, in two weeks. I want to see more of these stones. (See: www. cambridgehouse.com)
  

  Dr. Clarke At PMI Gold Booth

• “Poly-metallic mines and properties are always in demand,” Tom Macneill says. I came across Mr. Macneill, a lifelong  Saskatchewan resident and longtime chief of 49 North Resources (FNR in Canada), across the street from Waterfront at lunchtime. Tom, sitting at a lunch counter, is sitting on his merchant bank’s 10-percent-plus ownership of surging DNI Metals (DNI). DNI is a northern Canada smorgasbord of elements in an expansive property portfolio. I am fortunate to own FNR and DNI after a fishing trip a couple years back with Tom, Bob Bishop, Doug Casey and others, way up there in Saskatchewan. (By the way, Mr. Macneill is hot on uranium prospectors right now — especially one big one whose first letter is C and its last O.)
• I tested my latest think on the exhibit floor at the Joe show; copper-gold porphyrys will outpace market gains of all metals equities in coming weeks. “When Dr. Copper is in the house, it’s a very, very, very good house,” says Don Mosher. Don represents Riverstone Resources (RVS), a Burkina Faso prospector whose shares look ready to bust out after a largely ignored resource report. A geologist I rely on for analysis, Dr. Peter Megaw of Minaurum (Gold (MGG), Candente Gold and others, told me, “Copper is a big-company business. A billion tonnes of half-percent copper with the gold credit blended in, that takes care of a lot of the risk of taking on a development.”

More on this: Copper’s market price is rising steadily: this week alone it’s flirting with a four-month high. I chatted with Frank Holmes, the Texas asset manager, at Italian restaurant Cioppino in Vancouver’s Yaletown section. U.S. Global Investors’ Mr. Holmes says copper is the most fluent of industrial metals. It flows with currency and paper flows. “The price is correlating very closely with the rise in money supply since October,” he says.

Copper-gold porphyrys (or vice-versa) are among the metals market’s leading equity gainers in the past three months: Ross Beaty’s Lumina, Wayne Hewgill’s Regulus (REG) in Argentina and just this past week, Calibre Mining (CXB), have experienced higher stock prices, all triggered by indications of large-scale copper (and gold) deposits in the central and south Americas.  I’ve owned Calibre for more than two years, and all of a sudden I am in the copper by 400 percent in the space of two days. I’ll stick with the Nicaragua prospector and B2Gold partner for another long spell, I figure. Douglas Forster and his mini-merchant bank are barely promotional, but enough in my book to rise above the fray with this one.

Calibre’s Greg Smith was stoked when he saw five or six trench-sample results in November. “We weren’t sure how to interpret the copper, which was in the 1,000 parts-per-million range. But we knew it was distributed very widely in every sample, right on the surface,” says Greg, who grew up in Nova Scotia. The exploration chief and his team tell me if drill results like the ones from a week ago continue to show mid-grade copper across vast swaths of land at Primavera, Calibre’s partners will start calculating projected mine life by the decades instead of the years. We’ll see.

Joe Martin Explains Why The Show Drew 600 Companies

In the world of tiny, there is Dr. John Clarke, a geologist I know from years ago during his days with Nevsun Resources in Eritrea. Dr. John was manning the PMI Gold (PMV) booth. He’s a director of the Ghana operator of Obotan, which I saw last summer and fell in love with. Dr. Clarke says he has an interest in a tiny Turkey copper & gold prospector, Mediterranean Resources (MNR). Turkey has only a handful of metals prospectors that trade publicly.

I am confident we’ll see a few more copper-goldies pop off the shelf in coming weeks. One of them is in our Torrey Hills Capital portfolio of clients, EurOmax Resources (EOX). Its Ilovitza copper-gold property is in Macedonia. On the poly-metallics, another Torrey Hills client, Revett Minerals (RVM), has several metals in production at its Troy Mine. I’ve owned Revett mostly as a silver-zinc-copper stock since visiting Troy a couple of years ago.

Not long ago, I saw Boxxer Gold‘s (BXX) Boss copper property near Las Vegas in Nevada. Elmer Stewart showed me around the skarn-hosted plains. I saw plenty of visible and oxidized copper, which is no “sure” indicator of economic value when drills start piercing the limestone and marble beneath the desert floor. I mention Boxxer here because it is probably the cheapest thing out there in my world of possible copper-gold poprhyrys. If coming assays prove to host  mediocre copper grades across lengthy meters, the 13-cent stock easily would quintuple in a short stretch of days. I don’t own it, but I might buy in.

My biggest personal bet on copper-gold is Bellhaven Copper & Gold (BHV). I own almost 2 million shares now, and the Colombia and Panama prospector is not a client of Torrey Hills. La Mina in Colombia has enormous copper-gold potential; the compliant resource is something like 1.6 million ounces gold equivalent. That part of Colombia is called the Middle Cauca Belt; in and around La Mina I have great respect for David Forest & Colin Andrews’ Sunward Resources (SWD), whose gold-copper project at Titiribi I have seen thrice now but do not own. Don’t know if you have seen the latest assays on Cerro Vetas. They appear to dispute the notion that Titiribi grades are just mediocre.

Dave Forest, the chief operating officer, shared a sparkling water with me at a Sunward cheese-and-wine party in the Pan Pacific. He’s just back from Myanmar. Mr. Forest, a geologist and a writer in his own right, calls the 3-plus gram-tonne gold across 38 meters “the most significant development with the project since we first started drilling. ” Lots of copper, too, as I recall from my visits. I think closely held SWD shares will boom well above the $2 level in very short order here.

As for silver, I am hopeful the run will continue. At Joe Martin’s show, I got a couple of questions about Revett Minerals as a levered silver equity, now that federal USA court appears to have cleared the way for its Rock Creek project in Montana. Revett is a client of ours, as is another metals company that has silver on its property, gold producer Scorpio Gold (SGN) in Nevada.

I saw Scorpio’s Peter Hawley at Metro, a cutesy hotel not far from the Convention Centre. This was minutes after seeing the Canucks edge the San Jose Sharks at the arena, tit for tat, goal for goal. Mr. Hawley thus far has accomplished most everything he said he would at Mineral Ridge near Silver Peak. The company is processing material from waste piles at the Drinkwater Pit and delivering gold. I’d have talked with Peter some more but in walked John-Mark Staude from Riverside Resources (RRI), and I had the GATA dinner to attend that evening, anyway. I had the risotto con funghi at Don Francesco’s place. (At Pino Posterari’s Cioppino I had one luscious veal chop; not my first choice as I try to go with macaroni and fish at great restaurants; but Pino and his head waiter convinced me.)

I know folks read the BabyBulls feed to catch up on their favorite Torrey Hill clients. At the two shows, I’d have to say the most investor interest that I was able to catalogue centered on Glenn Mullan and his team, who operate Golden Valley Mines (GZZ). Folks were buzzing the GZZ booth, now that they are starting to see Glenn’s Abitibi gold belt prospect generator as a cousin to giant Osisko Mining at Malartic. GZZ owns two-thirds of Abitibi Royalties (RZZ), which operates a 50-50 with OSK at Malartic, Canada’s largest gold mine. Glenn Mullan celebrated his birthday the other day, his 54th I seem to remember; he’s been collecting NSRs (net smelter royalties) since he was 18 years old.

I could go on forever, but I’ll more or less end with Gold Standard Ventures (GV). Jonathan Adwe and Dave Mathewson run the Nevada gold and silver prospector. Yes, it’s a client of Torrey Hills, and yes, like several of the companies in this report, I have my money where my pen and sneakers are with share ownership. I happened across Carl Pescio, a longtime Nevada property owner and geologist who spawned Allied-Nevada and who owns a hunk of GV. Carl told me Gold Standard will surprise the market on the silver ingredient to its Railroad Project near Elko, where Mr. Pescio lives.

I’m always on the hunt for hidden silver. Maybe that’s why Gold Standard shares largely have held their value, and a bit more, in the ghastly 2011 metals market. If you’d like more on what I gleaned in Vancouver this time around, and don’t want to read another word, Mr. Martin had a full-fledged broadcast centre with professional broadcasters, just like my days at CBS MarketWatch. Here is my interview. In it, I also talk about my views on geopolitical risk … and the mistakes I have made in the past, including my big one: failing to disclose trades when I was writing a subscription newsletter 8 years ago.

Oh yes, Round-Up was outstanding. The new pavilion took me through 100 years of British Columbia metals exploration.  I always cherish the “Abstract Volume,” which is probably online by now. John Lee’s Prophecy Platinum (NKL) and Bill Sherriff’s Golden Predator (GPD) in Yukon, among others, get into the nitty grittyof their respective projects in the hinterlands.

See you at Indian Wells, California, in two weeks (Feb. 11-12): Cambridge House. Read my feed.

– Thom Calandra

– Thom Calandra is an author whose work has appeared in newspapers, newsletters, magazines and across the Web. He is a founder of CBS MarketWatch, now Dow Jones MarketWatch. He is a member of Torrey Hills Capital. Clients  provide stock options to Torrey Hills in return for investor outreach services. Thom is also an owner of HV, GV, GZZ, RZZ, RVM, CXB, PMV and SGN. All photos, even mediocre ones, by Thom Calandra. Your comments are welcome. See: babybulls.com

According to Quinton Hennigh, the Company’s Chief Geologist, “Our drilling has already demonstrated that Ilovitza is a large Cu-Au porphyry complex, and we also have good geologic and geophysical evidence which indicates that further drilling could significantly expand the known mineralization.” comments Quinton Hennigh, Chief Geologist for EurOmax. “In gaining 100% control over this project, we are now free to proceed with exploration in areas to the southeast and east where we have indications there is significant potential for growth of our resource. We are planning step-out drilling in these areas for 2012. In addition, an updated NI43-101 compliant resource estimate for Ilovitza is expected to be completed this quarter.”

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With the US Federal pledging to keep interest rates in check until late 2014 – gold soared to $1713, its highest since December 9th 2011, a rise of nearly $45 or 3% on the day. Last night’s move in gold was the largest in four months.

The decision by the Federal Reserve was resounding with a 9-1 vote in favour of capping medium term treasury rates. Gold investors however chose to ignore a further statement which advised the Fed would be targeting an inflation rate of just 2% –  the voting machine advised “we don’t believe you”.

Gold was lifted by heavy buying of gold futures on COMEX where it witnessed volumes twice the previous months average. Although there was heavy speculative buying, anxious investors joined the fray who are concerned by currency depreciation as global central banks use easy monetary policies to flood markets with cash.

For savers low rates are bad news. For the economy this is welcome relief. But for the gold market it ensures that the decade long bull run has at least three years but probably closer to 5 years to run. For us it confirms our view that gold is roughly two thirds the way into its rally in terms of years and roughly half way there in price terms – that is because of the compounding effect on prices which gain roughly 20% per annum on average.

Later today negotiations will continue in Athens with the Greeks hoping to prevent a disorderly rout by agreeing a debt swap with bondholders.

Physical demand for gold in Europe outside of Germany has been patchy of late. German and Swiss investors have been in this bull run from the outset and understand the important role that gold plays. They have been well rewarded for this prescience. UK investors on the other hand have joined the party late and generally show less commitment and enthusiasm for gold… demonstrating fully their natural skepticism. Hi ho.

Ross Norman is the CEO at Sharps Pixley

The Gold Report: Fayyaz, in June 2008, using readily available economic data, you wrote that the global economy was on the verge of financial collapse. What do those sources tell you about where the global economy is headed today?

Fayyaz Alimohamed: In November 2006, I predicted that the U.S. was headed into a recession. Seven months later, the Bear Stearns funds cracked, beginning the crisis. By June 2008 it was obvious to me that the crisis would escalate into a crash.

Today, the U.S. cannot meet its gargantuan future unfunded liabilities. Europe and Japan face debt levels that ensure eventual sovereign debt defaults and declining standards of living. There is potential for all of this unwinding to seriously affect an entire generation.

These economies cannot grow their way out of their problems and the cuts needed to balance budgets would create massive social turmoil because the cuts themselves would lead to sharp drops in gross domestic product, creating vicious negative spirals. The current solution being utilized is more debt and quantitative easing. That can only keep things afloat until it can’t anymore. I would say that we will have the next major crisis within the next two years.

TGR: I would like to flesh that out a bit. What do you believe will trigger the next crisis?

FA: Genuine reform has not been implemented. This crisis was caused by unprecedented levels of consumer and corporate debt and Wall Street greed. When the crisis happened, government rescued distressed debt by massively increasing its own debt. For example, the Federal Reserve and the European Central Bank are using their balance sheets at about a 30:1 leverage. This is the same sort of leverage that Wall Street banks had recklessly indulged in. When government debt was substituted for corporate and consumer debt, the whole system rolled over into a much more dangerous phase.

TGR: Do you think the European debt crisis will remain the dominant theme in 2012 or will other themes take center stage?

FA: The European crisis is simply a proxy for a global debt crisis. It happens to be focused on Europe because Germany has not been as eager as the Federal Reserve to print money. Germany remembers the hyperinflation of 1924, when unbridled money creation led to prices doubling every two days.

Today, governments have a preponderant influence on the economy, while large corporations, through lobbying, have inordinate influence over the government, to the detriment of other stakeholders. As the danger of a deflationary depression increases, governments are attempting to reinflate the economy; they may well overreach and create hyperinflation.

Thus, the broadest theme by far is debt and the reaction to debt. We just saw France’s debt downgraded and a negative watch put on the European Financial Stability Facility. This negative spiral will continue. Even though the U.S. has tepid signs of economic growth, it is at the cost of enormous amounts of stimulus being put into the economy.

Given that the U.S. and Europe are its two largest export markets, China also is headed for a hard landing unless it can increase internal consumption substantially.

TGR: Much of the discussion of the European crisis has centered on Greece. But a recent auction of six-month Italian bonds was priced at an interest rate of 6.5%-the highest rate of a bond auction since Italy joined the Eurozone 13 years ago. What do you make of that?

FA: In literature, readers are invited to enter into a “suspension of disbelief” to go along with the story, even if implausible. Before the 2008 crisis, that was the mindset of investors. Now they want to believe that governments can solve these problems.

Greece was not the primary cause of the European crisis. It was caused by German, French and U.S. banks. These banks are all insolvent if they were to mark their assets to market and not to theoretical models. But, we are suspending disbelief because we all have skin in the game and need things to work out.

The drive for austerity ensures that Portugal, Ireland, Italy, Greece and Spain (PIIGS) will continue to see their economies shrink, leading to lower tax revenues and the continued inability to meet budget targets, which will require larger debt relief. It is a vicious downward spiral that will lead to declining standards of living.

Greece, Portugal and Ireland would be much better off leaving the EU, defaulting on their debts and devaluing their currencies. That is a time-honored tradition. After some pain things will work out, as they did in Argentina and Russia in the 1990s.

Investors want to believe that heavily indebted countries can solve the problems of other heavily indebted countries; that an insolvent banking system can be rescued by governments through more debt issuance and debt monetization.

TGR: The European Central Bank has floated the idea of euro bonds, backed by all 17 members of the Eurozone, as a solution to this problem. But Germany does not want to go down that path unless the indebted countries adopt more severe austerity measures. Do you think we’ll ever see euro bonds?

FA: We are really into the realm of absurdity. For example, the European Financial Stability Facility is a private company authorized to borrow €450 billion (B) from the private sector backed by a guarantee from all the EU members who are already heavily in debt and being downgraded periodically. One proposal I saw was that it would use the €440B of debt as collateral to borrow another €1-2 trillion of debt to lend to the PIIGS!

Can this type of thinking ever end well?

As Europe enters a recession, the problems will only get worse. Euro bonds issued by indebted countries just mean France and Germany are putting their own balance sheets at risk. It may provide time, but it does not solve the problem. The question is, should they bailout the PIIGS or take the same money and bailout their own banks? There are no good solutions.

A final thought on yields: when I studied economics we were taught that U.S. Treasuries were the risk-free asset to be used as an absolute benchmark. Given the recent downgrade and outlook, perhaps the economics profession should start looking for another risk-free benchmark, just as the U.S. dollar replaced the pound sterling.

TGR: Given all of this, how are you protecting yourself?

FA: One of the primary measures of protection is a healthy cash balance. You have to be in a position where you are able to ride out any crisis and also to take advantage of valuations in case of a crisis. If the crisis is as bad as I think it will be, you will be able to find and acquire assets at generationally low prices.

The other way to protect yourself is to invest in precious metals. I believe precious metals will do well whether we continue to stagnate or actually see another crisis. I think silver and gold equities will do very well in the long run.

TGR: Investors have been seeking greater security for at least seven months. How long do you think that risk-off sentiment will last?

FA: Brian, U.S. domestic stock funds have seen net redemptions for five straight years. Due to negative real interest rates, equities are undervalued in historical terms. This is tempered by the dangerous, rising systematic risk. Fund managers are paid to perform or else they face redemptions. So, the bias is for stocks to rally as we are seeing now, unless the second phase of the crisis clearly emerges, which in my opinion is inevitable.

Ironically, in another crisis, governments will likely turn to quantitative easing with a vengeance, which means that, despite a crisis in sovereign debt, we will see a substantial rally in commodities, particularly gold and equities, as substantial sums of newly created money finds its way into the system and money leaves the bond markets. You may find prices rising while the economy is being undermined.

TGR: Fayyaz, your background is in insurance and finance, how did you find your way into the gold and silver space?

FA: From 2001 onward, I realized that the U.S. seemed to lack the political will to deal with its increasing levels of budget and trade deficits. In fact, the Fed was creating asset bubbles that were bound to end badly. At the same time, I knew from history that fiat money generally ends badly, starting with Kublai Khan. I came to anticipate the decline of the U.S. dollar and the rise of gold. I believe that the price of gold will be much higher in the coming years and that gold will become part of the monetary system in some capacity.

Gold is interesting in another way. Throughout history booms have been localized geographically. As an example, the average Canadian investor is unlikely to invest in, say, Argentinian real estate or in its stock market even if they are booming. The Internet bubble was the first time that a global audience became aware of an asset category that was rising dramatically, ironically thanks to the Internet itself. But you could not participate unless you had a U.S. brokerage account. Gold is the first truly global asset boom that investors at all levels can participate in. Today investors are more savvy and more heavily invested across markets and categories but gold is fundamentally money and all investors and savers can buy it. Local yet global.

TGR: Investors also have different tools.

FA: That’s right. They can do a lot of research. They have a lot more liquidity. The potential impact on the market for gold as an asset class is phenomenal. It appeals to all levels of investors. Someone buying a few grams of gold in China creates demand that directly helps the value of your gold holdings. I mean, how many people sleep with a barrel of oil tucked under their mattress?

TGR: Not if you could help it.

FA: Historically, gold and silver equities leveraged the returns on gold. In 2011, mining companies were producing gold at an average cash cost just under $600/ounce (oz) and were getting about $1,600/oz in revenue. Cash flows are very impressive and price earnings are healthy. Mining companies continue to buy juniors with good assets, especially at these low share-price values. I moved into the sector to take advantage of this bull market in gold. And, I believe we will see a mania in junior mining stocks before this is over.

TGR: And, when will that be?

FA: I think we will see this happen within the next two years as people begin to realize that solutions to the global economic situation are not forthcoming. There will be more and more nervousness and gold will find a larger and larger audience.

We now have a situation where central banks, which were net sellers of gold for 20 years, became net buyers in 2009 and are accelerating their buying programs. We are seeing tremendous support for gold from central banks, institutional and retail investors across the world.

TGR: In your time in this space, what have you learned that the average retail investor ought to know?

FA: This is a very volatile sector, subject to investors jumping in when there is a bullish trend and a lot of enthusiasm, and those same investors not wanting any part of equities when there’s a pullback in prices.

Given the overall increase in volatility in the markets, investors really should take a look at gold and silver. If they are bullish, any pullbacks in the commodity prices or in the associated equities should be seen as buying opportunities. When there is a lot of enthusiasm, it should be seen as creating selling opportunities.

You also have to have physical gold and silver in your possession. We learned a lesson with MF Global. We saw $1B of segregated funds in clients’ accounts vanish. My understanding is that some of those funds were comingled and used to settle MF Global’s liabilities to other financial institutions. There is this whole issue of counter-party risk, which gold does not have. That should be a cautionary reminder to people. You need to have physical cash balances. You need to have physical gold and silver outside of the banking system as a safety net because, as Warren Buffet said, we are in uncharted waters now.

TGR: You grew up in Pakistan, where gold is part of the culture, given as gifts at weddings and such. Do you think you would have that same opinion about physical gold as a personal asset if you had grown up somewhere else?

FA: Not in my case. I had no involvement or affinity with gold. I was a finance professional. My involvement with the gold sector is purely intellectually driven, from looking at trends within the macro economy and realizing that gold and silver really are hedges against turmoil and currency debasement.

But that is a very good question and it points up the importance of watching out for biases in the commentaries that you read. People have vested interests and they do tend to have agendas, both in the mainstream media and elsewhere. For your own protection, you need to be sensitive to those influences and to study track records at key inflection points before relying on other people’s judgment.

TGR: Fayyaz, thank you for your time and your insights.

Fayyaz Alimohamed is president, CEO and director of Altair Ventures Inc. and publisher of the Acamar Journal. He has over 20 years of experience in investment management, finance and consultancy. He previously worked at the Aga Khan University Hospital, Financial and Management Services Ltd. (a management consultancy set up by Morgan Grenfell & Co. Ltd. and Booz Allen Hamilton Inc.) and as the chief financial officer of the Key Capital Group before becoming director of investments for the Cupola Group, a large operating and investment conglomerate based in Dubai. He holds a Bachelor of Science (Honors) degree in economics from the London School of Economics, University of London, and is a Certified General Accountant (CGA).

Article published courtesy of The Gold Report – www.theaureport.com

The Critical Metals Report: Ryan, as someone who knows the graphite business, what would you recommend to investors?

Ryan Fletcher: The space should be on investors’ radars. Demand for graphite is increasing quite rapidly. Not only are historic uses growing, but new applications are adding demand. A number of professional investors, analysts and researchers have studied the fundamentals, and they see the potential. But it’s not yet front and center on the investment community’s radar. It should be.

TCMR: In terms of graphite’s historic uses, it’s used in tennis rackets, golf clubs and is important to the steel industry. What are some of graphite’s properties and historic applications?

RF: Graphite is an excellent conductor of heat and electricity and is corrosion and heat resistant. It’s a strong substance. It’s light. All of those qualities make it valuable. It’s used in the steel industry. The automotive industry is also a major consumer. Because of its heat resistance, it’s also used in crucible liners and so forth. Those are big applications.

TCMR: Would you say that demand in these historic markets is increasing?

RF: Absolutely. The historic markets are still growing and you can’t forget about them. The demand from these markets is increasing, say, at a rate of 3-5% per year, based largely on global economic growth fueled by Asia, India, Russia and Brazil. But now we are seeing graphite’s application in lithium-ion batteries, fuel cells and nuclear technology, and in plastics and composite frames that find their way into products such as Boeing Co.’s (NYSE:BA) new Dreamliner as well as wind mills. These applications will add a big, incremental demand push to the market. This is all new demand.

TCMR: How does graphite figure into energy storage applications?

RF: The most important applications in energy storage are lithium-ion batteries and fuel cells. A lithium-ion battery needs 20 to 30 times more graphite by weight than lithium. Based on that, the number of end user transactions, the amount of capital and the level of interest in the graphite space should be about 20 to 30 times more than in the lithium space, but graphite has been flying under the radar.

TCMR: Maybe that’s partly because the lithium-ion battery isn’t called the graphite-lithium-ion battery.

RF: True. These batteries have two parts-the cathode and the anode. Lithium is the cathode. The anode is graphite. It’s become clear that these batteries will power not only electric vehicles but also our tools, our phones, our laptops, our electronics, our toys. They all use these batteries, and that’s going to be a big demand driver.

TCMR: How about in fuel cells?

RF: In the same way, graphite is used in plating and is an important component of a fuel cell. A lot of the same things I said about lithium-ion batteries also apply to vanadium redox batteries. Vanadium’s been getting a lot of attention. It takes a lot of graphite to produce these batteries as well.

TCMR: Are the batteries used in vehicles such as the Chevy Volt, Nissan Leaf and Tesla Roadster lithium-ion-graphite batteries?

RF: Yes. There was some debate whether a nickel-metal hydride battery would be the key driver for electric vehicles, and the original Volt was based on that technology. But the Leaf, the new hatchback version of the Volt, and the Tesla are now all based on the lithium-ion-graphite battery.

I’ve been speaking with a lot of the bright and experienced people who closely follow battery technology, such as the crew at Byron Capital, which has done a lot of good work in this space. Battery technology goes through phases and a certain technology typically can reign for some 10-20 years. It appears that the mass adoption of lithium-ion batteries has just started to take shape and will dominate for a long time. Graphite is so critical for that.

TCMR: Those changes in automotive technologies seem to moving faster than ever before. Consumers want the most current technology, whether it’s a cell phone, a laptop or a vehicle, and it’s exciting to watch demand pushing these new technologies into manufacturing.

RF: Yes. The natural graphite market is about 1.2 million tons per year (Mtpa) right now. Broadly speaking, that market consists of two different forms of graphite. The historic applications primarily use the amorphous graphite, whereas some of these emerging technologies and applications use flake graphite. About 40% of that 1.2-Mt market is flake and 60% amorphous, so the flake graphite market is just over 400,000 tons per year. Some of the players in the industry anticipate that just one application alone, the lithium-ion battery, could use well over 1.6 Mt of flake graphite per year by 2020, which is more than threefold the entire current market. Even if the market doubles, that’s 800,000 tons of graphite per year by 2020. A large-scale producer puts out only about 20,000 to 40,000 tons per year, which means a lot of new mines and a lot of opportunity.

TCMR: And is it China that dominates this market?

RF: Yes. China controls 70% of the current graphite supply. Over the last 10 years, China has become dominant in a number of commodities, based on blessings of geology and other circumstances. Behind China on the supply side is India, Canada and Brazil. Over the last couple of years, China has imposed value-added taxes, export taxes and licenses.

North America has been aggressively seeking solutions to weaning itself off oil production and reducing consumption of fossil fuels. China is trying to do the same and will conserve the resources it will require for this to build its own internal industries, its own green growth and its own economy.

TCMR: Where can we expect to find new sources of graphite? Where is it most abundant, and in what types of geology?

RF: You have to look to geological terrains with metamorphic activity. Canada, particularly Ontario and Québec, has some great terrain, as do Brazil and India. Because graphite prices have been kept low over the past decade or so, there had been almost zero incentive to explore for, fund or develop new graphite projects. That’s all changing right now, prices have increased threefold in the last few years. I think the best graphite deposits have yet to be found. There’s potential for new discoveries in many jurisdictions.

An interesting thing about the market right now is not only that only a handful of players are exploring and developing projects but that they view each other more as “co-petition” rather than competition because demand necessitates many new mines, even if current development projects all move to production. There’s also a premium for deposits outside of China, which will be more valuable to end users from Japan, Korea, Europe and the U.S.-all major consumers.

TCMR: It looks as if the graphite space is developing some traction, especially with all of the new applications you’ve talked about. It’s been called one of the “quintessential wonder materials.”

RF: I agree. It’s very early, but with all the factors we discussed at play, I see a lot of opportunity for the investment community.

TCMR: Thank you so much, Ryan.

Ryan Fletcher is a director of Zimtu Capital Corporation, a Vancouver-headquartered public investment company that creates, invests in and grows resource companies. Fletcher has been responsible for identifying and sourcing projects, structuring companies and investments, marketing group companies and business development. He is a graduate of the University of British Columbia Okanagan with a Bachelor of Arts in economics. Before joining Zimtu in 2009, Fletcher worked as a consultant for publicly listed mineral exploration and development companies and a boutique private investment firm focused on the mineral exploration sector.

Article published courtesy of The Critical Metals Report – a subsection of The Gold Report – www.theaureport.com

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In the release Mark Gustafson, President & CEO of EurOmax stated; “Our move to the OTCQX is designed to further enhance our presence and visibility in the United States. The OTCQX platform bridges the gap between our growing U.S. investor base and access to information about our company.”

Also, EurOmax information is now available via S&P Capital IQ Corporation Records Listing Program. As part of the program, a full description of EurOmax has been published in the Daily News Section of S&P Capital IQ Corporation Records, a recognized securities manual for secondary trading in up to 38 States under the Blue Sky Laws. S&P Capital IQ Corporation Records is available in print, CD-ROM, and via the web at www.netadvantage.standardandpoors.com as well as through numerous electronic vendors.

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The recently completed drill program focused on defining and expanding recent discoveries made by Revolution at Champion Hills. The Company intends to begin an initial NI 43-101 compliant resource estimate in Q3, 2012.  Numerous significant shallow intersections confirm a significant near-surface gold system at Champion Hills (the majority of intercepts occur less than 100 meters below surface).  Both Loflin and Jones-Keystone remain open to expansion at depth and along strike.  Revolution is in the final stages of completing the Company’s 2012 exploration program and will provide updated guidance in the coming weeks.

Highlights from the recent drilling include:

• LF11-030: 32.0 meters averaging 1.34 g/t Au
• LF11-031: 29.0 meters averaging 1.12 g/t Au
• JK11-036: 15.0 meters averaging 1.36 g/t Au
• JK11-048: 34.5 meters averaging 1.11 g/t Au

In the release, Aaron Keay, President and CEO of Revolution stated: “Given our close proximity to infrastructure and continued success intercepting mineralization close to surface at both Loflin and Jones-Keystone, we feel that it is important to begin looking at economic factors that will determine the viability of Champion Hills. In addition to the NI 43-101 report, we intend to begin base line economic studies at Loflin and Jones-Keystone.”

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In the release, Mr. John Shanahan, President and CEO, stated “2011 was a wonderful operating year based on all measurements. Although just fractionally short of our guidance, 2011 was a record year of production and cash flow which saw significant increases in silver and copper output. These achievements and our focus on safety is a credit to our employees.”

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According to Dr. Steininger, NuLegacy’s COO, “The new IP/R survey indicates that the structures and hydrothermal alteration related to the high-grade gold mineralization intersected in the historical drill hole BRH-13 (24.4 meters of 4.9 g/t Au, including 13.7 meters of 8.1 g/t Au) in the Central Pediment anomaly are much larger and thicker than indicated by the our previous IP/R survey.  This expansion is another important and valuable step toward our goal of discovering significant Carlin-type gold deposits at the Red Hill Project.”

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