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To: ms.smartest.person who wrote (2429)	5/9/2007 9:40:53 PM
From: ms.smartest.person	Read Replies (1) \| Respond to of 3198

&#8362 David Pescod's Late Edition May 9, 2007 AN INTERVIEW WITH ALFRED STEWART (From May 2, 2007) We are here with Alfred Stewart, who is one of the dealfinders for one of the more impressive of the Funds that try and save people some of their hard earned tax dollars and that is the Cordilleran Resource Group. Al’s key job is to try and find the good deals in the mining sector that might make their portfolio look good down the road, and so far in the last few years, they have been simply spectacular. Dave: Alfred, it’s time to look at some of your favorite stories. Hard Creek Nickel is one of them and could you please give us your background on that story? Alfred: Hard Creek Nickel is a company that we’ve been following since it started drilling its property in Northern BC. We recognized the property as being great potential for nickel and there were two things about it. One, there was a potential for finding high grade sulphide nickel on the property. By looking at past drilling which was done by Falconbridge, they had also found low grade nickel in almost every hole. So we felt that if we financed this company and kept on drilling, that eventually we would develop the bulk tonnage nickel deposit. We started financing it in 2003 and as of last year, they have identified 420 million tons of measured and indicated ore and they found 700 million tons of inferred ore and that contains a significant dollar amount of nickel in the ground – something like $88 billion worth of nickel. Dave: Now how does this compare to say, a Voisey Bay? Alfred: Voisey Bay was 30 million tons of 3% nickel at the time of the discovery and that contained about 900,000 tons of pure nickel metal and Hard Creek’s nickel deposit contains about twice that much nickel, if you consider the nickel in those categories, measured, indicated and inferred. It contains about 2 million tons of pure nickel metal. That’s twice as much as Voisey Bay. Dave: Management with Hard Creek Nickel has definitely had a history. Mark Jarvis was part of the crew that discovered Ultra Petroleum. Is this getting lucky twice unbelievable? Alfred: Mark had learned through Ultra Petroleum that if you start with a very large resource, even if the resource had marginal economics, you could end up with something that’s worth many billions of dollars. Mark told me that when he was with Ultra Petroleum, he went to the oil and gas industry experts many, many times and was rejected. Everybody told him that there was gas in these formations down in Wyoming, but it was tight, the capital costs were too high and it would never work. And guess what? The price of natural gas went from $1.00 to now where it’s probably around $8.00 per 1000 cubic feet and Ultra Petroleum has gone from $1.00 per share to about $60.00 U.S. per share. Dave: Some of the other stories with Cordilleran last year have done quite well also. Alfred: There is another company called Selkirk Metals and we’ll get to this one later. Bard Ventures is another company that we invested in last year. We paid $0.07 per unit which gave you a flow through share and a full warrant for two years at $0.11 and that stock has traded up to $0.48 per share in the spring of 2007 and it’s been one of the volume and value leaders on the TSX Venture market. And this is all on the back of a molybdenum property outside of Houston, British Columbia called the Lone Pine. Dave: Your fund has done awfully well the last couple of years. For a person who is looking for a tax relief, it’s surprising that you can also make money in this game. Alfred: When you look at the mining industry generally, there are 1500 to 2000 junior mining companies with very low market capitalizations and the financings are generally difficult for smaller companies. What we do is we put together a portfolio that’s in one limited partnership of just small companies. We don’t have very much competition, so we can get very good deals which include flow through benefits and warrants. Dave: These are small funds with only a handful of stocks. This sounds risky. Alfred: It’s very risky, but when you diversify across several commodities that tends to lower your risk considerably. We’ve done five partnerships to date and our average performance has been 100% return on the portfolio plus a tax benefit. We have been in a strong mining market since we launched the fund. We launched it at as a contrarian Idea in 2002 and nobody wanted to talk to us about a mining fund, but now we are going full stride, we are in a good mining market, there’s lots of liquidity and our fund has a very short time frame to it. Dave: Looking forward to this year’s investment oportunities, you’re not afraid of going against the grain and you are definitely doing that with going into the diamond sector. Alfred: A bunch of my colleagues in Vancouver who are in the mining business and speculate on stocks all the time and I asked them about diamond stocks and I had a range of responses from frustration at one end to hostility at the other. What I found is that basically no one likes diamonds; everyone is frustrated with the lack of success from the diamond industry which a few years ago had huge hopes. It isn’t that the industry has disappointed, it’s just that it takes a long time. So we are looking at the diamond field now, looking at stocks that are extremely inexpensive and the upside – well, a major diamond discovery in Canada is a multi-billion dollar prize. And you can get an exploration company for a market cap of $10 million. Dave: Is there one stock in particular you are looking at? Alfred: We really like Tres Or Resources because of the location of their deposit. They are located just off the highway outside of Timmins, Ontario which is mining central. They have the largest kimberlite pipe in Ontario and the pipe is proven to be diamondiferous and they’ve already recovered a macro-diamond. So, what’s wrong with this stock? Why doesn’t the market fall in love with this stock? Why does this have a market cap of $10 million? Dave: Something people are going to want to hear is some outrageous statement about some commodities. Do you have some favorite commodities? You were saying some very interesting comments about molybdenum. The market is grabbed with “moly-madness” at the moment. What are your thoughts on this? Alfred: My thoughts are that we should be very cautious investing in pure moly plays because moly is a biproduct. It generally comes from copper mining in the world and is produced as a bi-product. There are very few pure moly producers and right now the market is in deficit so the price of moly has soared. But if the market were to go into surplus, the producers would not curtail their production. The price can drop to just a few dollars a pound. Dave: And that wouldn’t surprise you? It’s done that in the past. Alfred: I worked for a major mining company (Esso Minerals) and they found one of the richest moly deposits in British Columbia. At one point, it was calculated at being worth over $1 billion in 1981. In 1983 it was zero because the price of moly dropped from $20 per pound to $2 per pound. Dave: Now there is another commodity that you are outrageously bullish on and that’s nickel. Alfred: Nickel is a different story. What’s happening in the nickel industry is very, very interesting for investors because the industry is shifting production from hard rock nickel deposits to soft rock laterite deposits. A laterite deposit has huge capital costs, typically between $2 billion to $3 billion and an example would be the Goro project that Inco was developing in New Caledonia. They are metallurgical nightmares. The history of laterite production is that they don’t work, at least right away. It could take several years. So the mining industry is looking forward and saying well, once Goro and Ravensthorpe come on, the nickel industry will be well supplied and the price will drop back down to $5.00 a pound. I think it’s much more likely that nickel prices will double from here to $50 a pound because laterites don’t work. Dave: Now you gave us your list of three favorite mining stocks right now and we are definitely intrigued by your rather bullish take on Selkirk Metals, Diamonds North and Vannessa Ventures. Alfred: Selkirk has the Ruddock Creek lead-zinc deposit with a 70% interest and they are merging with Doublestar Resources. If that merger goes through, they will have a 100% interest in the lead-zinc property. It’s a property that Cominco explored in the 1980’s and they dropped it in 1996 when the NDP were elected for the second time. Cominco had drilled mostly on one side of the mountain and they found a lead-zinc deposit that plunged into the mountain and it got rather deep and expensive to drill. They never went around to the far side of the mountain to see if it came out the other side. Selkirk has done that and they found the deposit came out the other side of the mountain five kilometers away. They found 20% leadzinc there. So in 2006, Selkirk raised $15 million and they are going to go underground and they are going to follow the strike length of this deposit. It has world-class potential. Dave: You are suggesting you’ve got quite a target on this play. Alfred: Yes. I think Selkirk is currently trading at $0.90 and it could be multi-dollars once they’ve completed this underground exploration. Dave: What about the two other stories you like? Alfred: The other two stories were Vannessa Ventures – Steven Dean being the former President of Teck Corporation has just announced that he’s invested $5 million in this junior gold company and they have a gold deposit in Costa Rica which they are putting into production and could produce 85,000 ounces of gold a year. The second company I was interested in is Diamonds North. It’s a major diamond explorer in the Northwest Territories. They have been having good results on their kimberlite pipes from their Amaruk project. Thank you Alfred for your time!