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Bottom-Fish Action
 Tue Apr 13, 2010
Bottom-Fish Action Report for March 28, 2010 to April 10, 2010
    Publisher: Kaiser Research Online
    Author: Copyright 2010 John A Kaiser


Bottom-Fish Action Report for Week of March 28, 2010 to April 10, 2010

A Teeter Totter Market

Several weeks ago I threatened to remove the "bear" icon from my TSXV charts, and during the past two weeks the junior market certainly behaved in a bullish manner as gainers outnumbered losers, and the TSXV Index along with volume and value traded tracked upwards. This upwards inflection in market sentiment following the post-PDAC slump is also reflected in the indices for the Bottom-Fish 2009 and 2010 editions, with the 2009 edition testing the 300% high it achieved in early January and the 2010 edition inching to a new high. But I refrained from doing so because the macro signals remained too confused for my comfort. Judging by the distinctly negative tone of the last two days in the junior market, which seems to be linked mainly to gold and base metals stopping from going higher while the Dow Jones danced with 11,000, my caution appears to be justified. However, the early stages of a major bull market are always characterized by a nagging uncertainty that causes the market to assault the wall of worry with hesitant pulses rather than a sustained assault.

An alternative explanation is that the market weakness of the past couple days simple reflects the re-establishment of the PDAC Curse, more commonly known as "sell in May and go away", which is such a platitude that when this phenomenon is active, it happens in April instead of May. April, of course, is also when people have to file tax returns, April 15 for Americans and April 30 for Canadians. While few people think that 2009 was a wonderful year, if you consider the value of your risk portfolio at the end of 2008, which presumably consisted of juniors left after you dumped all the stocks you had let yourself be stampeded into buying by others while keeping those you bought for reasonably thought out reasons, and compare that to today's value, you just might have to accept that 2009 was your best year ever. And since you racked up hideous losses in 2008 getting rid of the junk, you probably did not have to make much in the form of estimated tax payments. If you used the proceeds from selling the junk to do some serious bottom-fishing, you probably sold at least some stock during the 2009 rebound, with the result that you may have just discovered that you have to write a fat check this month to the taxman. And so we can understand why you have suddenly lost interest in the junior market except perhaps to sell some stock to avoid raising the ire of a beast that has grown very hungry thanks to the recession. Of course it is silly of me to assume that the likely predicament of KBFO members maps to the rest of the market, which may simply be backing off in April to avoid the sell-off in May.

Nevertheless, when you examine my PDAC Curse chart above, it is clear that the market action of the past 12 months has no correlate during the past decade when every year we had a junior market runup during the first quarter followed by a market fizzle during the second quarter fading into summer doldrums. That pattern changed in 2008 when the commodity based juniors went exponential in Q2 only to get kayoed during the summer followed by the fall meltdown. During 2009 we had a modest uptrend during the first half that turned up during the summer and did not flatten until late January 2010 since when the market has been like a teeter totter wobbling on the fulcrum. This metaphor aptly reflects our current situation because we have conflicting signals on whether the global economy is on the mend, or on the verge of tipping into a double dip recession. On top of that there are all sorts of potential "shots from left field" in the wings that could tip the teeter totter down, as well as high level manipulative agenda to paint the tape higher. In this scenario it is prudent to stay selectively exposed to the market, by which I mean stick with juniors with self-sustaining narrative structures. In other words, stories that stand on their own. We are likely stuck with this uncertainty until September when we should have better clarity on the dominant macro-economic trends.

Above Bottom-Fish Range Within Bottom-Fish Range Below Bottom-Fish Range Recently Closed Out
Updated this Week New 2 Year High New 2 Year Low New Bottom-Fish High New Bottom-Fish Low

Bottom-Fish Recommendations made from March 28, 2010 to April 10, 2010
Company Date
Price Recommendation Action Net
Gain New Status
Lithic Resources Ltd 4/6/2010 $0.24 Confirm Good Relative Spec Value Buy
$0 4,167 0% Good Relative Spec Value Buy @ $0.24
Dome Ventures Corporation 4/7/2010 $1.25 New BF Spec Cycle Hold 100%
$0 5,263 558% BF Spec Cycle Hold 100%
First Point Minerals Corp 4/7/2010 $0.55 Good Relative Spec Value Buy Buy 1,818 @ $0.55 $0 1,818 0% Good Relative Spec Value Buy max $0.75
First Point Minerals Corp 4/7/2010 $0.55 New BF Spec Cycle Hold 100%
$0 5,263 189% BF Spec Cycle Hold 100%

New Comments
Volume High Low Close Chg Status
Africo Resources Ltd (ARL-T) 125,600 $1.010 $0.900 $0.960 $0.030 New BF MP Buy $0.76-$1.00
Antares Minerals Inc (ANM-V) 976,000 $3.070 $2.250 $3.000 $0.800 New BF Spec Cycle Hold 100%
Dome Ventures Corp (DV.U-V) 425,000 $1.250 $0.750 $1.250 $0.460 New BF Spec Cycle Hold 100%
First Point Minerals Corp (FPX-V)
2,197,500 $0.770 $0.460 $0.730 $0.240 Good Relative Spec Value Buy
Lithic Resources Ltd (LTH-V)
789,800 $0.290 $0.220 $0.290 $0.010 Good Relative Spec Value Buy
PC Gold Inc (PKL-T) 17,250,700 $1.900 $1.380 $1.800 $0.220 BF Spec Cycle Hold 100%

Bottom-Fish Action Report for March 28, 2010 to April 10, 2010
Antares Minerals Inc (ANM-V: $2.44)

Bottom-Fish Comment - March 30, 2010: Antares brings in $7.5 million through early warrant exercise

Antares Minerals Inc reported on March 29, 2010 that the International Finance Corporation (IFC), a member of the World Bank Group focused on developing countries, agreed to the early exercise of 3.75 million warrants at $2.00 for total subscription proceeds of $7.5-million. These warrants had an accelerated expiry truggered by a 30 day volume-weighted-average price of $2.75 that had not been triggered. IFC agreed to exercise the warrants early in exchange for an additional 1,875,000 new warrants exercisable at $3 until July 22, 2014, as well as a contractual right to participate in any future Antares financings to maintain its pro rata equity interest in the company. The warrant exercise now brings the IFC's stake above 10%, which can be expected to aid with social license efforts related to the Haquira project, which Antares now owns 100% after making its final payment of $5 million to Minera Phelps Dodge. All that remains is for Antares to pay $0.01 per lb of copper contained in the leachable oxide resource in excess of 2.2 billion lbs based on a 0.3% cutoff grade and 50% recovery upon completion of a feasibility study. The SX EW resource now stands at 2.85 million contained copper lbs, so unless there is a dramatic increase in the oxide resource, this extra payment is immaterial. Antares released a new resource estimate for its Haquira copper-gold-molybdenum project in Peru on February 26, 2010. which boosted the overal measured and indicated resource to 10.7 billion lbs of copper for both oxide and sulphide mineralization in the East and West zones which along with by-product credits have an in situ gross metal value of US $45 billion at current metal prices. Antares is now awaiting an updated preliminary economic analysis (PEA) during Q2 of 2010 and hoping for a goahead decision by Xstrata on the adjacent Las Bambas project ahead of Xstrata's October 2010 deadline. Xstrata is proposing a US $4.1 billion 140,000 tpd operation with a long mine life that would bring infrastructure into this remote region of Peru and decrease overall costs for other smaller mines such as Haquira. On February 24, 2010 we converted Antares to a Spec Cycle Hold 100% recommendation with a price target in the $3-$5 range later this year premised on a positive PEA, an Xstrata goahead for Las Bambas, and continuing strength in the copper market. The biggest market risk for Antares at the moment is a negative market reaction to the sudden unwinding of the US dollar carry trade that has fueled speculative stockpiling of copper. Although LME warehouse inventories have been inching lower since peaking in late February, and copper prices are at a post-crash high, the danger is that rising interest rates coinciding with a fresh downturn in western economies and trouble in China that undermines demand expectations could trigger dumping of speculative copper positions. Even though the medium term fundamental outlook would remain strong for Haquira, Antares' stock price would not be spared the consequence of a sharp drop in copper prices during the short term. For this reason we have not yet issued a Good Absolute Spec Value Buy for Antares, but we feel strongly that bottom-fishers who accumulated Antares at cheaper prices should hold out for higher prices and ignore any interim downtrend linked to fluctuations in the price of copper. Should Xstrata flash an official green light for Las Bambas, Antares would immediately become a Good Absolute Spec Value Buy below $2.50.

Africo Resources Ltd (ARL-T: $0.93)

Bottom-Fish Comment - April 5, 2010: Recommendation Strategy for Africo Resources Ltd

Africo Resources Ltd was recommended a medium priority bottom-fish buy in the $0.76-$1.00 range on December 31, 2009 on the assumption that controlling shareholder Dan Gertler would use the company's $80 million in working capital, most of which he provided through a 2008 private placement at $2.50, for a project other than the 75% owned Kalukundi copper-cobalt deposit which Africo had planned to put into production as a 800,000 tpa open-pit mine before the 2008 Crash wiped out the ability to raise the estimated $200 million capital cost. Alternatively, a strengthening outlook for copper and evidence of stability in the DRC could lead to a decision to fast-track development of Kalukundi. Copper's recent strength despite an ongoing drumroll of pessimism, tentative signs that the global economy may not be heading for a double dip recessions, and stirrings of stability in the DRC suggest that perhaps development of its copper project will once again become Africo's top priority. The Kalukundi project has a dozen so-called "fragments" of which four have a combined M+I+I resource of 27,130,000 tonnes of 2.54% copper and 0.59% cobalt to a depth of 200 metres. At copper and cobalt prices prevailing in April 2010 the in situ value of this resource was $12 billion and the rock value averaged $442 per tonne. Kalukundi is located in southeast DRC within the Zambian-DRC copperbelt 60 km east of Kolwezi. The DRC state mining company Gecamines initiated work during the eighties, and handed off the project to a private group in 2001 which in 2004 formed an alliance with Rubicon's subsidiary Africo which funded a feasibility study that became the basis for a plan of arrangement in which Africo acquired the private company and was spun off from Rubicon with a TSX listing obtained on Dec 18, 2006. A $100 million financing was derailed in early 2007 when legal shenanigans resulted in a court awarding Africo's 75% stake in the license holding entity to a former employee as payment for a "secret" default judgement, who in turn flipped title to a private company called Akam Mining Sprl. Africo appeared to be on track to recovering title through the DRC courts when in early 2008 Dan Gertler materialized as the owner of Akam and negotiated a resolution which saw him receive 5.4 million shares, agree to undertake a private placement of 40 million units at $2.50, and have Africo acquire his 75% interest in the adjacent Mashitu project. Gertler is a youngish (born 1973) Israeli diamond mogul who specializes in sourcing diamonds from the DRC and has a close relationship with DRC president Joseph Kabila. He is also an associate of diamantaire Beny Steinmetz in a variety of DRC copper operations including at one time Anvil and George Forrest's Katanga, now controlled by Glencore. Africo appears to have been a sideshow to Gertler's other affairs and was further sidelined by the 2008 Crash. The uncertainty created by the "mining reviews" of existing Gecamines contracts initiated by the DRC in 2008 was resolved in Q1 of 2009 with new terms for Kalukundi which left the 75:25 ownership structure intact but requires Africo to make 4 annual "entry premium" payments of US $1.6 million, of which it has made $3.2 million as of January 2010, and sets the gross royalty at 4.5%. The Mashitu acquisition was cancelled in May 2009 after Gecamines denied consent for the transfer. Tony Harwood, the executive driving force behind Africo, left the company, forcing Chris Theodoropoulos to add interim CEO to his chairman role. A technical team with strong leadership is thus a missing piece for this cash and structure rich junior if the copper story is to become a priority once again. During 2009 Africo scaled back most of its development oriented activities apart from some hydrology related drilling, and instead conducted a 30 hole drill program of 3,971 m that focused mainly on the Kesho fragment, which is not included in the resource estimate. Infill drilling on 50 m spacing has been recommended for the Kesho fragment, plus further infill drilling on some of the fragments already in the resource estimate. Africo has not yet decided its work plans for 2010, and indicates in the MD&A of March 2010 that it is considering an acquisition strategy that represents a "good long term strategic fit". I am normally cautious about semi-private cash rich juniors as bottom-fish because too often such companies get "privatized" with little if any gain for minority shareholders. However, Haywood's John Tognetti, who appears to have not noticed that he is no longer technically an insider, has filed insider reports indicating ongoing accumulation of the stock during 2009, suggesting that he at least has confidence that Gertler will pursue a strategy that creates value for all shareholders. Africo was thus chosen as a bottom-fish viewed either as a cash rich shell which will acquire a story in a less geopolitically troubled region than the DRC, or as a copper sleeper asset that will get developed once confidence returns that a global economy recovery is underway, long term copper demand will be strong, and stability will reign in the DRC. The priority is "medium" because we have no special insight as to Dan Gertler's intentions with regard to Africo in which about $100 million of his money was parked.

Lithic Resources Ltd (LTH-V: $0.24)

Bottom-Fish Comment - April 6, 2010: Lithic awaiting Crypto preiliminary economic assessment

Lithic Resources Ltd announced on April 6, 2010 that it is in the midst of completing a preliminary economic assessment (PEA) for its Crypto zinc-indium-copper skarn project in Utah prior to deciding the next stage of work for the project. The PEA will define the cost structure for developing a combination open pit mine for the oxide resource and an underground mine for the sulphide resource. It will also identify work required prior to initiation of a prefeasibility study. At the start of the year Chris Staargaard contemplated a $6-$8 million program earmarked partly for additional infill drilling to upgrade to indicated the portion of the deposit where old holes are missing the indium grade, and to drill several stepout holes to test zone extension potential and test several conceptual targets whose success would require a rethinking of the proposed development scale of the project. This would be a prelude to a $20 million underground prefeasibility study which would establish the optimal mining plan. The momentum Lithic had going at the start of 2010 stalled in late January when the market became concerned about the potential for a double dip recession and China started to take steps to cool its economy. This affected the willingness of the market to ignore the zinc surplus expected to glut the market during 2010 and look forward to 2011 when the surplus is expected to go into deficit. We are seeing signs of zinc projects being nudged into position for major speculation cycles, but for market interest to get rekindled we need to see more evidence that the global economy will avoid a second crunch. It may well take until September before anybody is willing to trust a positive outlook, so the interim will be a positioning period for zinc plays. With regard to Lithic, bottom-fishers and spec value hunters will have to wait until the end of April when Lithic expects to have its PEA in hand, and then the uncertainty is whether or not Crypto is sufficiently robust to justify a major financing effort. I believe the PEA will signal a green light, but that green light will be meaningless unless the management team gets fleshed out with people that have skin in the game, and thus incentive to drive the Crypto story forward. Apart from Staargaard himself the board consists only of people with stock options. So the real green light will be news that Staargaard has brought on board people whose willingness to pull weight is driven by more than a salary and some cheap options. Meanwhile the stock is suffering liquidation by momentum traders caught offside earlier this year, which is an opportunity for Spec Value Hunters to accumulate a position below $0.30. The Spec Cycle Hold 100% recommendation related to the original extreme risk bottom-fish buy below $0.10 remains intact, and the Good Relative Spec Value Buy at $0.24 with a $0.30 limit made on January 11, 2010 remains valid.

PC Gold Inc (PKL-T: $1.71)

Bottom-Fish Comment - April 7, 2010: PC Gold raises $9 million in flow-thru for Pickle Crow

PC Gold Inc announced on April 5, 2010 that Coremark and Canaccord were conducting a guaranteed agency financing of 5 million flow-through shares at $1.82 to raise $9.1 million. This is a major development for PC Gold because it is now financed for most of the rest of 2010 at modest dilution compared to its 2009 financings. Since announcing a third high grade intersection for the new No. 19 Vein in the porphyritic unit at its 100% owned Pickle Crow project in northern Ontario, PC Gold's market has charged to new highs with market action suggesting one or more big players are accumulating stock. At the new 62.1 million fully diluted and current $1.71 stock price the implied project value for Pickle Crow is still just $106 million, which leaves plenty of upside for a scenario where the No 19 Vein proves to host a major high grade and not so deep gold resource, or the original scenario where deep drilling demonstrates a substantial high grade downdip extension for the No 1 Vein which the latest mother hole should intersect some time during April. Another upcoming milestone will be a first time 43-101 resource for the Pickle Crow project which will cover mineralization in the Shaft 1 area and thus only represent a part of the 1.3 million ounce historical resource.Now that PC Gold is financed for the rest of the year and a new audience is taking the Pickle Crow play seriously, bottom-fishers should let their positions ride for at least a $2 target.

Dome Ventures Corporation (DV.U-V: $1.25)

Bottom-Fish Comment - April 7, 2010: Dome merger target Metalline delivers silver-zinc resource estimate

Dome Ventures Corp will hold a special meeting on April 14 to vote on a proposed merger with Metalline Mining Company, and Metalline will hold its special meeting the following day. There is no question that tightly held Dome will secure approval from its shareholders, but that cannot be assumed with the more widely held Metalline despite a large group of supportive shareholders. Apparently, if Metalline receives shareholder approval on April 15, the merger will take place the following day, with Dome shareholders receiving 0.96882 Metalline shares. When the merger proposal was announced on November 13, 2009 I was disappointed because it looked like a perfectly good shell which had been nursed along by its principals for nearly a decade was being blended into a messy, financially challenged AMEX listed resource junior which had chewed through more than $50 million over 10 years on a single project without delivering any ounces or pounds in the ground and whose AMEX listing was in jeopardy. As part of the proposal Dome conducted a special warrant private placement of 28,911,111 shares at US $0.45 to raise $13,010,000, which is being held in escrow until the merger is completed. Upon completion of the merger Metalline will have 103,058,990 shares issued and 133,577,883 fully diluted, about $18 million working capital, an intact AMEX listing, and an inter-listing on either the TSXV or the TSX. During the past couple weeks, however, both Dome and Metalline saw their stock price increase, with Metalline leading the way while the less liquid Dome tracked it at a discount to the proposed merger terms. The increase in market activity can be linked to the March 15 filing of a technical report on Sedar and the mailing of the information circular. After reviewing both, which included 43-101 compliant resource estimates for the North Silver and Red Zinc Manto zones on the Sierra Mojada project, I now understand why Dome management has pursued this merger and have high hopes that Dome bottom-fishers will be well rewarded for their patience. The original medium priority bottom-fish buy in the $0.10-$0.19 range made on December 24, 2008 is now converted to a Spec Cycle Hold 100% recommendation in anticipation of successful completion of the Metalline merger and a relaunch of the Sierra Mojada story as a major silver-zinc mine development play.

Metalline is run by a team of Coeur D'Alene residents who have been working on the Sierra Mojada project in Mexico's Coahuila state since 1997. The property is located within the 6 km by 1.5 km Sierra Morada district which has a long history of production from 1879 until 1985 during which about 10 million tons of high grade direct shipping lead, silver, copper and zinc ore was extracted from 45 mines. Past operators included Penoles, Asarco and Kennecott. After Metalline became involved in 1997 it first optioned Sierra Mojada to North Ltd which dropped out in 2001 after Rio Tinto acquired it, and then Penoles took a crack at the project until 2003. From 1999 onwards Metalline has been focused on the zinc oxide resource. In total the project has seen 553 drill holes representing 78,801 m. A 43-101 resource estimate was not completed until 2010 when Pincock Allen & Holt provided inferred resources for the Red Zinc Manto and North Silver Manto zones presented in the table below. The technical report describes this system as "unique", best described as "probably low temperature carbonate hosted deposits formed from basinal brines", which might partly explain the interest of Murray Hitzman who is coming on board Metalline via Dome. The east-west striking north dipping Sierra Mojada Fault cuts through the property and separates the resource estimate zones. The Red Zinc Manto zone has a strike of 2,400 m with thicknesses up to 100 m and is located on the south side. It is underlain by the higher grade White Zinc zone for which no resource has been estimated. The Red Zinc mineralization consists of a zinc silicate called hermimorphite and a zinc carbonate called smithsonite formed through weathering. Both are zinc oxides which posed metallurgical challenges until Renuion Ltd in 1999 demonstrated the economic feasibility of processing the zinc oxide Skorpion deposit in Namibia. The White Zinc zone has more smithsonite than the Red Zinc zone. The North Silver zone is located north of the fault, has a thickness from a couple metres to 50 metres, and very little hermimorphite or smithsonite with zinc occuring as the sulphide sphalerite. The mix between silver and zinc in the North Silver zone is about equal based on grades and current metal prices. Although considerable work has been done on these zones, Pincock limited its resource estimate to the inferred category because of "insufficient QA/QC proceudres used in the past during sample preparation and analysis". Some metallurgical work has been done on the Red Zinc Manto zone but none on the North Silver zone.

Project Resource Estimate - Sierra Mojada - North Silver Manto
Jan 29, 2010NI 43-101Jeremy Clark, Ross Conner, Aaron McMahon - Pincock Allen & Holt, Denver, CoCutoff: 60 g/t Ag
Resource CategoryTonnageTotal
Rock Value
MetalGradeRecoveryContained Metal% of GMV
Inferred Mineral Resources28,422,000$148/tSilver149 g/t100.0%136,156,577 oz57%
Zinc2.670%100.0%1,672,988,095 lb43%
All Categories Spot28,422,000$148/tSilver149.00 g/t
136,156,577 oz57%
1,672,988,095 lb43%
Spot Gross Metal ValueMarket Cap as % of Net GMVSpot Prices Used
$4,198,707,1013.8%Silver $17.69/oz, Zinc $1.07/lb
Project Resource Estimate - Sierra Mojada - Red Zinc Manto
Jan 29, 2010NI 43-101Jeremy Clark, Ross Conner, Aaron McMahon - Pincock Allen & Holt, Denver, CoCutoff: 6% Zn
Resource CategoryTonnageTotal
Rock Value
MetalGradeRecoveryContained Metal% of GMV
Inferred Mineral Resources20,405,000$263/tZinc10.590%100.0%4,763,865,741 lb95%
Silver23 g/t100.0%15,089,059 oz5%
All Categories Spot20,405,000$263/tZinc10.590%
4,763,865,741 lb95%
Silver23.00 g/t
15,089,059 oz5%
Spot Gross Metal ValueMarket Cap as % of Net GMVSpot Prices Used
$5,364,261,7953.0%Zinc $1.07/lb, Silver $17.69/oz

The technical report recommends only a modest budget of $756,000 for the Sierra Mojada involving re-sampling, 4,200 m of drilling and a mapping program as part of an effort to better understand the deposit model and upgrade the resource to indicated. There is thus a disconnect between the recommended going forward plan at Metalline and the $13 million raised through Dome from investors who are clearly interested in acquiring a stake in Metalline and its Sierra Mojada project. It is interesting to note that Dome insiders took down most of a 6.5 million units Metalline private placement at $0.46 in December 2009. Stepping back one can see that the current Metalline management gave the company a major speculation cycle during the last decade but got blindsided by the 2008 Crash. Since taking on Sierra Mojada in 1997 the key people have also aged into their seventies, and while still significant stakeholders in Metalline, appear ready to hand the funding responsibility to a new group. In light of all the money Metalline spent on Sierra Mojada which seems to have generated a fair amount of unreliable data and failed to advance the project to a feasibility stage, the question current Metalline shareholders must be asking themselves is whether or not the arrival of Dome will bring a fresh exploration and development perspective to the Sierra Mojada perspective. Given that the two deposits have an in situ value of $9.5 billion represented in part by a 150 million ounce silver resource, and that the Dome principals have gone to considerable trouble to rescue Metalline from financial and listing oblivion, one suspects that there is a serious game plan afoot to turn Sierra Mojada into a major silver-zinc development story. We will, however, have to wait for the details until the merger is completed, and recommend bottom-fishers hold their Dome position 100%.

First Point Minerals Corp (FPX-V: $0.55)

Bottom-Fish Comment - April 7, 2010: First Point secures $7.5 million financing to fund nickel deposit acquisition spree

First Point Minerals Corp announced on March 29, 2010 that it was conducting a private placement of 10 million units at $0.50 to raise $5 million for its new nickel-iron alloy acquisition strategy. The financing was so over-subscribed that First Point boosted the financing to 15 million units on April 6 and cut back a fair number of orders. Each unit includes a half warrant exercisable at $0.65 in the first year and $0.80 in the second year. Should the stock trade for 20 consecuitive dats at $1.10 or higher starting 4 months after the close of the financing, the expiry date will be accelerated. Cliff Natural Resources Inc, which owns 15% of First Point, ontends to subscribe for 15% of the offering. Although this financing is dilutionary, boosting fully diluted to 98.4 million, the $7.5 million will go a long way with regard to First Point's business plan. The company's flagship project, Decar, has been optioned to Cliffs which can earn up to 70% by delivering a bankable feasibility study. First Point is currently operating the Decar exploration program on behalf of Cliffs and will be conducting airborne geophysical surveys in early April followed by ground IP surveys as a prelude to a resource delineation drill program this year. The main milestone awaited during the the next couple months is the outcome of a metallurgical study Cliffs has conducted on sample material from Decar. It is expected that the Decar "ore" will grade 0.2%-0.3% nickel, but the question Decar will answer is what percentage is recoverable using low cost gravity and magnetic separation methods. Cliffs will already have conducted mineralogical studies and will thus know what percentage of the grade is attributable to a nickel-iron alloy mineral called awaruite, rather than locked in with a silicate such as olivine, which will be the recoverable limit for the Decar ore.

What Cliffs wants to know is what percentage of that nickel-iron alloy percentage of the overall nickel grade is recoverable. Apparently Cliff's is looking for a recoverable grade of at least 0.1%, which has a rock value of $22 per tonne at $10/lb nickel and $11 per tonne at $5/lb nickel. That might look a little meagre, but when you consider that this is direct shipping nickel that does not need to be smelted as would be a nickel sulphide concentrate, or chemically processed as would be a nickel laterite ore, one can see how an iron ore and coking coal producer accustomed to handling low value material might be interested in this story, particularly if the destination market is North America where the mine is located. Also very important to the First Point story is that the target nickel deposits have minimal sulphide content, which tends to be the case with ophiolites that underwent serpentinization during obduction, because this avoids the cost of dealing with acid generating waste rock and tailings. The risk that Cliffs and First Point will deliver disappointing metallurgical news during the next couple months is low because Cliffs had already spent 6 months conducting due diligence on the Decar "ore" before optioning the project last November. Although the outcome of those studies is internal to Cliffs, one can assume that the decision to option Decar and insist on purchasing a minimum 15% equity stake in First Point had a rational basis. However, knowing how close the recoverable nickel is to the margin and seeing the associated recovery method documented in print will be a very important credibility milestone for First Point, one that may even shake the skepticism of nickel experts steeped in sulphide and laterite recovery economics. It may also put First Point on the radar of Chinese entities and prompt Cliffs to make a premature buyout offer.

This $7.5 million financing is an important milestone for First Point because it gives First Point the means to assemble a major portfolio of similar low grade nickel deposits over the next couple years. Cliffs insisted on the 15% equity stake because First Point retains control of proprietary information that could allow this obscure junior to tie up many more low grade mafic bodies around the world with a high nickel-iron alloy content similar to that of Decar. There are plenty of mafic bodies grading 0.2%-0.3% nickel in the world, just as there were lots of 0.3%-0.6% copper deposits in easy to mine locations more than fifty years ago before anybody thought of giant open pit copper mines. The hard part is figuring out which ones have recoverable nickel without spending a lot of time and money. First Point agents are on the ground investigating large ophiolites and collecting samples which will be fire assayed and tested for nickel iron alloy content using the proprietary method. If samples score well on overall nickel grade and nickel-iron alloy content, the samples will be subjected to confirmation testing using traditional thin section electron scan assisted speck counting methods. The result will be a new layer of information for the world map of large nickel bearing mafic bodies which only First Point will possess for a few years. Peter Bradshaw believes that as a result of this systematic process First Point will be in a position to make the first of many major acquisitions by the end of summer, major in the sense of large bodies, minor in terms of acquisition costs. As the first mover with this strategy First Point will be able to choose the best deposits in both physical and location terms, because these are mines that need to be made, and the most makable ones are those with the best location in permitting and infrastructure terms. It is this bluesky, revolutionizing potential of First Point that is stimulating market interest in First Point's story.

On the assumption that the Decar metallurgical studies please Cliffs, the next stage will be to drill off Decar for grade and collect samples for bench scale metallurgical studies of material representative of each resource block. This step is necessary because First Point's proprietary method for measuring nickel-iron alloy content is not certified for reporting purposes. Furthermore, this method does not distinguish between fine and coarse grained mineralization, which determines how much of the nickel-iron alloy grade is recoverable on reasonable cost terms. Meanwhile the junior will conduct basic mapping and prospecting work on other 100% owned prospects in British Columbia such as Klow which are similar to Decar and were acquired in 2009. These are the projects that First Point might be able to farm out to Asian entities during 2011. It will take about 6-12 months for First Point's story to wander up the credibility curve, but, if First Point during this period has assembled a portfolio of projects that match its story, its valuation will be ready to go exponential. Because First Point is a one of a kind story that could deliver a very high stock price, and because the $7.5 million financing provides the junior the means to execute its business plan while capping dilution risk, I am converting the open bottom-fish buy recommendation to a Spec Cycle Hold 100% recommendation, and issuing a new Good Relative Spec Value Buy recommendation at $0.55 with a short term buy limit of $0.75 and 12 month target of $2.

New Bottom-Fish Highs
Volume High Low Close Chg Status
Dome Ventures Corp (DV.U-V) 425,000 $1.250 $0.750 $1.250 $0.460 New BF Spec Cycle Hold 100%
Esperanza Silver Corp (EPZ-V) 1,891,800 $1.700 $1.330 $1.600 $0.280 BF TP Buy $0.50-$0.75
James Bay Resources Ltd (JBR-V) 357,700 $0.750 $0.650 $0.670 ($0.050) BF LP Buy $0.10-$0.19
Marathon PGM Corp (MAR-T) 1,631,900 $1.710 $1.100 $1.540 $0.400 BF MP Buy $0.30-$0.49
Strategic Metals Ltd (SMD-V) 375,000 $0.590 $0.460 $0.560 $0.080 BF MP Buy $0.10-$0.19

Top 10 Bottom-Fish Volume Traders
Volume High Low Close Chg Status
PC Gold Inc (PKL-T) 17,250,700 $1.900 $1.380 $1.800 $0.220 BF Spec Cycle Hold 100%
B2Gold Corp (BTO-T) 16,183,500 $1.550 $1.230 $1.540 $0.240 BF TP Buy $0.30-$0.49
Gleichen Resources Ltd (GRL-T) 11,770,800 $1.180 $0.990 $1.160 $0.110 BF Spec Cycle Hold 100%
Volta Resources Inc (VTR-T) 7,896,100 $1.700 $1.240 $1.490 $0.220 BF MP Buy $0.10-$0.19
IBC Advanced Alloys Corp (IB-V) 6,436,400 $0.180 $0.145 $0.165 $0.010 New BF LP Buy $0.10-$0.19
Rye Patch Gold Corp (RPM-V) 6,246,000 $0.345 $0.225 $0.240 ($0.030) New BF LP Buy $0.30-$0.49
Brett Resources Inc (BBR-V)
5,136,500 $3.180 $2.900 $3.180 $0.250 Good Absolute Spec Value Buy
INV Metals Inc (INV-T) 4,950,500 $1.000 $0.700 $0.970 $0.220 BF MP Buy $0.10-$0.19
Underworld Resources Inc (UW-V)
4,087,500 $2.630 $2.410 $2.630 $0.210 BF Spec Cycle Sell 75% Hold 0%
Red Hill Energy Inc (RH-V) 3,929,000 $0.820 $0.730 $0.790 $0.020 New BF LP Buy $0.30-$0.49

Top 10 Bottom-Fish Value Traders
Value High Low Close Chg Status
PC Gold Inc (PKL-T) $28,902,161 $1.900 $1.380 $1.800 $0.220 BF Spec Cycle Hold 100%
B2Gold Corp (BTO-T) $22,559,375 $1.550 $1.230 $1.540 $0.240 BF TP Buy $0.30-$0.49
Brett Resources Inc (BBR-V)
$15,489,864 $3.180 $2.900 $3.180 $0.250 Good Absolute Spec Value Buy
Gleichen Resources Ltd (GRL-T) $12,920,287 $1.180 $0.990 $1.160 $0.110 BF Spec Cycle Hold 100%
Volta Resources Inc (VTR-T) $11,441,436 $1.700 $1.240 $1.490 $0.220 BF MP Buy $0.10-$0.19
Quest Uranium Corp (QUC-V)
$10,822,361 $4.260 $2.850 $3.970 $1.120 Good Relative Spec Value Buy
Underworld Resources Inc (UW-V)
$10,188,239 $2.630 $2.410 $2.630 $0.210 BF Spec Cycle Sell 75% Hold 0%
Nevsun Resources Ltd (NSU-T) $8,889,059 $3.360 $3.000 $3.180 $0.090 BF Spec Cycle Hold 100%
Rare Element Resources Ltd (RES-V) $6,079,677 $3.800 $3.360 $3.490 ($0.010) BF Spec Cycle Hold 100%
Avalon Rare Metals Inc (AVL-T)
$5,428,969 $2.950 $2.440 $2.710 $0.230 Good Absolute Spec Value Buy

Top 10 Bottom-Fish Price Gainers
Volume High Low Close Chg Status
Quest Uranium Corp (QUC-V)
2,963,100 $4.260 $2.850 $3.970 $1.120 Good Relative Spec Value Buy
Antares Minerals Inc (ANM-V) 976,000 $3.070 $2.250 $3.000 $0.800 New BF Spec Cycle Hold 100%
Dome Ventures Corp (DV.U-V) 425,000 $1.250 $0.750 $1.250 $0.460 New BF Spec Cycle Hold 100%
Marathon PGM Corp (MAR-T) 1,631,900 $1.710 $1.100 $1.540 $0.400 BF MP Buy $0.30-$0.49
Anfield Nickel Corp (ANF-V) 215,700 $3.250 $2.600 $3.000 $0.300 BF Spec Cycle Hold 100%
Esperanza Silver Corp (EPZ-V) 1,891,800 $1.700 $1.330 $1.600 $0.280 BF TP Buy $0.50-$0.75
Almaden Minerals Ltd (AMM-T) 792,100 $1.200 $0.900 $1.200 $0.270 BF MP Buy $0.50-$0.75
Golden Queen Mining Co Ltd (GQM-T) 788,900 $1.350 $0.890 $1.200 $0.270 BF MP Buy $0.30-$0.49
Peregrine Diamonds Ltd (PGD-T)
2,336,600 $2.190 $1.850 $2.140 $0.250 Good Absolute Spec Value Buy
Brett Resources Inc (BBR-V)
5,136,500 $3.180 $2.900 $3.180 $0.250 Good Absolute Spec Value Buy

Top 10 Bottom-Fish Price Percentage Gainers
Volume High Low Close Chg Status
Dome Ventures Corp (DV.U-V) 425,000 $1.250 $0.750 $1.250 58% New BF Spec Cycle Hold 100%
Hard Creek Nickel Corp (HNC-T) 1,953,000 $0.650 $0.340 $0.560 58% New BF LP Buy $0.20-$0.29
First Point Minerals Corp (FPX-V)
2,197,500 $0.770 $0.460 $0.730 49% Good Relative Spec Value Buy
Quest Uranium Corp (QUC-V)
2,963,100 $4.260 $2.850 $3.970 39% Good Relative Spec Value Buy
Avnel Gold Mining Ltd (AVK-T) 1,347,200 $0.260 $0.185 $0.260 37% New BF LP Buy $0.10-$0.19
Antares Minerals Inc (ANM-V) 976,000 $3.070 $2.250 $3.000 36% New BF Spec Cycle Hold 100%
Marathon PGM Corp (MAR-T) 1,631,900 $1.710 $1.100 $1.540 35% BF MP Buy $0.30-$0.49
Northern Shield Resources Inc (NRN-V) 1,936,400 $0.230 $0.130 $0.190 31% New BF LP Buy $0.10-$0.19
Panorama Resources Ltd (PRA-V) 12,500 $0.175 $0.130 $0.175 30% New BF MP Buy $0.10-$0.19
INV Metals Inc (INV-T) 4,950,500 $1.000 $0.700 $0.970 29% BF MP Buy $0.10-$0.19

Top 10 Bottom-Fish Price Losers
Volume High Low Close Chg Status
Eastmain Resources Inc (ER-T) 742,000 $1.480 $1.370 $1.390 ($0.110) BF TP Buy $0.30-$0.49
Salazar Resources Ltd (SRL-V) 67,600 $1.180 $1.020 $1.020 ($0.090) BF MP Buy $0.10-$0.19
Ethos Capital Corp (ECC-V) 236,500 $0.520 $0.440 $0.450 ($0.090) New BF MP Buy $0.30-$0.49
Kootenay Gold Inc (KTN-V) 226,900 $0.750 $0.670 $0.680 ($0.080) BF MP Buy $0.30-$0.49
Western Lithium Canada Corp (WLC-V) 3,139,700 $1.440 $1.080 $1.310 ($0.070) New BF Spec Cycle Hold 100%
Rugby Mining Ltd (RUG-V) 41,000 $0.550 $0.530 $0.540 ($0.060) New BF MP Buy $0.30-$0.49
Helio Resource Corp (HRC-V) 429,900 $0.485 $0.420 $0.420 ($0.055) BF MP Buy $0.20-$0.29
Atna Resources Ltd (ATN-T)
669,200 $0.610 $0.560 $0.570 ($0.050) Good Relative Spec Value Buy
ReMac Zinc Corp (RMZ-V) 2,000 $0.200 $0.200 $0.200 ($0.050) New BF LP Buy $0.10-$0.19
Troon Ventures Ltd (TVN-V) 278,200 $0.730 $0.650 $0.650 ($0.050) Spec Cycle Hold 100%

Top 10 Bottom-Fish Price Percentage Losers
Volume High Low Close Chg Status
ReMac Zinc Corp (RMZ-V) 2,000 $0.200 $0.200 $0.200 -20% New BF LP Buy $0.10-$0.19
Ethos Capital Corp (ECC-V) 236,500 $0.520 $0.440 $0.450 -17% New BF MP Buy $0.30-$0.49
Xtierra Inc (XAG-V) 338,000 $0.180 $0.130 $0.140 -13% New BF MP Buy $0.10-$0.19
Helio Resource Corp (HRC-V) 429,900 $0.485 $0.420 $0.420 -12% BF MP Buy $0.20-$0.29
Rye Patch Gold Corp (RPM-V) 6,246,000 $0.345 $0.225 $0.240 -11% New BF LP Buy $0.30-$0.49
Tawsho Mining Inc (TAW-V) 709,500 $0.160 $0.130 $0.160 -11% New BF LP Buy $0.10-$0.19
Olivut Resources Ltd (OLV-V) 281,500 $0.370 $0.300 $0.320 -11% BF MP Buy $0.10-$0.19
Kootenay Gold Inc (KTN-V) 226,900 $0.750 $0.670 $0.680 -11% BF MP Buy $0.30-$0.49
Rare Earth Metals Inc (RA-V) 1,082,000 $0.395 $0.320 $0.350 -10% New BF MP Buy $0.30-$0.49
Rugby Mining Ltd (RUG-V) 41,000 $0.550 $0.530 $0.540 -10% New BF MP Buy $0.30-$0.49

New Bottom-Fish Lows
Volume High Low Close Chg Status
Inlet Resources Ltd (INL-V) 11,000 $0.280 $0.270 $0.270 ($0.010) New BF LP Buy $0.20-$0.29


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