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To: ms.smartest.person who wrote (2831)	10/7/2007 9:03:54 PM
From: ms.smartest.person	Read Replies (1) \| Respond to of 3198

&#8362 David Pescod's Late Edition October 2, 2007 NATURAL GAS $7.43 +0.38 TUSK ENERGY (T-TSK) $1.40 n/c DIAMOND TREE ENERGY (T-DT) $1.50 n/c DELPHI ENERGY (T-DEE) $1.83 +0.04 It doesn’t matter whether you’ve been into a big dull and boring, mainly natural gassy income trust or a lively junior, if you are in the natural gas sector you’ve been devastated. It’s been a combination of lower natural gas prices, high costs in Canada for everything from exploration to servicing and the biggest surprise has been the strong Canadian dollar. Suddenly a 20% surge in the Canadian dollar has meant much less revenue for Canadian producers who expect to sell to the premium press buyers in the United States. But what next? Bruce McDonald writing in Canaccord’s Energy Daily today suggests that there is speculation growing for a colder than normal winter which would cause natural gas demand to go higher. “Weather-watchers are looking for a La Nina weather patterns” he suggests, and they would be the first seen in seven years. “This weather phenomenon affects the jet stream and creates unusual weather patterns” he suggests. “The last La Nina hit the United States in November and December 2000 according to the National Oceanic and Atmospheric Climatic Data Centre, were the two coldest months recorded in the history for the United States.” The charts show you how badly beaten up many of the natural gas juniors have been, but as we said earlier, it’s the same thing for the dull/boring trusts and some of the big companies as well. Should suddenly there be increasing demand for natural gas and accompanying higher prices, then a lot of these stocks could do a lot of traveling ... quickly. But once again, the scary thing for this entire scenario is that you are betting on weather...which is not reassuring at all. IRON ORE BAFFINLAND IRON MINES (T-BIM) $4.07 +0.07 LABRADOR IRON ORE R.T. (T-LIF.UN) $40.53 +0.51 Iron ore prices are surprising a lot of people and suddenly there is lots of talk about big price increases. The cause? Well, once again it’s demand from China that just continues to go through the roof. Credit Suisse is now publishing potential scenarios of anywhere between 40% and 100% increases in prices. Price negotiations start after China’s national holiday on October 7th and the suggestion is by many sources that they should end by the end of October. What some find interesting is that Zhang Xiaogang, Chairman of the China Iron and Steel Association has warned BHP and Rio Tinto the two big Australian producers against abusing this position as major suppliers by demanding damaging price increases. Interesting comment, don’t you think? There are suggestions that BHP and Rio Tinto want 50% price increases that might just tick off the big Chinese buyers. Given the strength in the international iron ore markets, where should one be looking these days? One suggested way to play it is the Labrador Iron Ore Royalty Income Fund or for those looking for something riskier and longer-term, Baffinland Iron Ore—a project years from potential production, but also with some years of preliminary work behind it, being led by former mining analyst Gord McCreary who is also founder of successful Kinross. If you would like to receive the Late Edition, email Debbie at debbie_lewis@canaccord.com