With over $850 million in cash under the mattress right now, these could be the only three Aussie miners that thrive next year...
'Rainy Day' Resource Plays That
Could Give You 134%
Gains in 2009
"The world cannot do without mined minerals. There are going to be great opportunities out there for the strong and the brave..."
--
Mineweb.com, 16 October, 2008
Fellow Bargain-Hunting Resource Investor,
In hard times, it pays to have a little cash under the mattress. If you're a mining company – and you want to survive 2009 – you need a LOT.
When banks refuse to lend, commodity prices are falling and stock investors head for the hills, cash is king.
In the pages that follow, you'll hear about three of the most cashed-up junior miners on the Australian stock market. They have some of the most profitable assets in Australia; oil wells, coal mines, gold reserves and iron deposits.
More importantly, they're flushed with cash. They've hoarded over $850 million in 'rainy day' money. That's enough to cover drilling and exploration costs for years.
As you'll see, we expect each of these cashed-up companies to thrive in the months ahead... while their competitors go to the wall. Each stock is, at the time of writing, massively oversold. Each is trading below the price of its most liquid assets.
In one case you can buy a dollar of cash for just 70 cents... if you act fast.
That kind of thing doesn't happen very often. Perhaps one in every twenty years.
And each of these three stocks could make you a lot of cash. In fact the best of these stocks could potentially return 134% in twelve months, even if markets continue to fall.
If you're looking to make back some recent losses in your portfolio, this is your chance. But time is of the essence here. Read on for full details...
Why Only 'Rainy Day' Miners
May Make It to Easter
The Australian mining sector was keen to see the back of 2008.
Thanks to the credit crisis and plunging commodity prices, dozens of mid and lower-tier miners suffered redundancies, cutbacks or simply went out of business.
Will there be a wholesale recovery this year? I'll level with you: it's unlikely.
Even the most bullish analysts I know are ruling out rising base metal prices in the first half of 2009. Most say there will be little progress at all this year. There IS at least one major exception which has me very excited. I'll tell you about it shortly.
"You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets." - Legendary investor, Peter Lynch |
But let's not be under any illusions about what's ahead.
Many more resource companies will fall over in the coming months.
Dozens of outfits out there have less than $1.2 million cash - what stockbrokers consider the benchmark required to survive 18 months of financial paralysis.But even miners with that kind of cash are going to struggle.
That's because the world is now undoing all the leverage it created during the credit boom. A large part of that leverage was embedded in commodities.
This is affecting resource stocks in two ways.
Firstly, share prices are plunging as investors rush to safety of cash or bonds.
Secondly, at a business level, credit that was available to miners twelve months ago just isn't there anymore.
With the banks fearful of lending even to each other, what hope do junior miners have of getting a loan to help them through the recession?
The taps of finance have all but been shut off. This is why one type of resource company - we call them
"Rainy Day" stocks... another term is a "cash box" - is about to become a highly prized commodity.
"Cash boxes" are rare. If you can find the right ones, and buy into them at the right time, you make good money in a down market. That's why I'm writing to you today.
- There are now hundreds of companies who have been forced to dramatically slow down or even halt exploration and development efforts in order to stay afloat...
- Alcoa has suspended its multi-billion expansion of the Waterup refinery in Western Australia. Their managing director calls the current challenges facing the sector "unprecedented".
- One of the biggest engineering groups, WorleyParsons, was desperate to hire staff six months ago. Recently they admitted to taking 250 jobs off mining sites.
- Iron ore miner Mount Gibson Iron has not only shed 190 jobs but reportedly has agreed to deliver its last shipment to China at one-third of the prices being achieved this time last year.
- The crisis claimed its biggest scalp on November 25 last year, when BHP Billiton axed its 18-month long, $US66 billion takeover of rival Rio Tinto.
A figure being put about by serious market analysts is that as much as 50% of mining juniors and explorers
may not survive this year.
As Ord Minnett analyst Peter Arden said last month:
"I think at the really small end a lot of those are companies are going to just fall by the wayside because they just haven't got the critical mass."
But there's a tiny group of resource companies who have spent the last few years stowing away cash for just this eventuality.
As others are forced to limit or completely halt exploration activity, these companies will break out their 'rainy day' savings... and use them to leapfrog their competitors.
In a second, I'm going to introduce you to three oversold, cash-rich resource stocks you need to add to your shopping list right now.
One is currently trading at better than a 2-1 discount... and could potentially return 134% in 2009.
Before we get to them though...
I'll Introduce Myself...
My name is Dan Denning.
I'm the Publisher of the resource stock newsletter, Diggers and Drillers.
I spend every hour of every working day looking for the best ways to play the ongoing Australian resources story.
The goal of Diggers and Drillers is simple: to give you the best available research into the world into smaller Aussie metals, mining, and energy shares. In 2009, commodity investments may be your single-best hedge and haven of safety in the coming inflationary melt up. That may be hard to believe at first.
To prove my point, I'd like to send you my four best picks for the year ahead, free of charge. One of these plays offers the chance to buy over $2 worth of assets for $1. It's an unbelievable opportunity... one, as you'll see in a moment, that could soar 134% in the next 12 months.
But if you already held positions in energy and commodities, chances are you've seen them slide. So, was it all an illusion? A speculator-driven boom, like the dotcom bubble? In a word: no.
The global credit crisis has hit virtually every sector hard. But we have to remember that it is derived from a bunch of intangible investments that, when it came down to it, no-one really understood.
The opposite is true of the resources sector... In fact, right now precious metals and energy stocks may be the single-best inflation hedge available to your portfolio. The credit crisis has turned into a full-blown worldwide financial crisis. It's caused governments everywhere to spend as much money as possible to avert economic collapse.
Will it work? I don't know.
But I do know that in the past, these huge government spending binges have led to an increase in the money supply, which itself has led to inflation. The best hedge against this? Traditionally, it's gold and oil.
But it would not surprise me if other key commodities became favoured again.
We're talking about tangible and useable metals and minerals that keep the world running. You can hold a lump of Australian coal in your hand. You know what it's for and what it's worth. You can't hold a mortgage-backed security.
Do you see the big difference? The financial crisis is ripping through banks and brokerages and insurers. The assets of those companies are all tied to debts or loans taken out by people who may never repay them.
It's certainly bad for resources too. Don't get me wrong. But the commodities cycle - even with its booms and busts - is fundamentally different from the credit boom or the dot-com boom. There was never a big market to justify earnings multiples for on-line grocery stores. There IS a real and global market for lead, steel, zinc, uranium and other commodities.
But you know what didn't happen with the commodities bubble?
You didn't see a huge increase in the productive capacity for minerals, oil, or energy.
The dot-com boom saw too many tech companies. In the credit boom there was an excess of easy money. The housing bubble produced too many houses.
But did you get billions of new barrels of oil on-stream or trillions of cubic feet of natural gas or more coal, uranium, or rare earths?
No.
So you've had a whole boom and bust in the commodities sector without a significant increase in the world's productive capacity for raw materials.
Some things may be in oversupply next year because the global economy is growing slower. But I don't think chronic resource oversupply is our biggest problem of the next twenty years.
I think the opposite, in fact.
The global economic crisis will lead to a huge shortage in key commodities and smaller producers go out of business and finance dries up. Supply will fall. Meanwhile, despite the economic crisis, demand for other commodities (specifically those that hedge against inflation) will rise dramatically.
2009 is a pause in a long-term, secular bull market in commodities... and that the recent crash in stock prices gives you the BUYING OPPORTUNITY OF A LIFETIME.
If you agree, read on and discover...
'Cash-Rich Survivors' That Will
Keep You Afloat in 2009
I can't stress this to you enough...
The decisions you make in the first 120 days of 2009 will have a HUGE impact on how wealthy you are in
five to ten years time.
Right now there's a boat-load of Australian resource stocks that can be bought for significantly less than their prices 12 months ago. Many great firms with good projects are trading at pre-boom prices.
But there's a catch...
As you've seen, not ALL companies will survive this credit crisis.
There's no use buying a stock for 75% cheaper than it was a year ago if the company won't exist this time next year.
What happened in 2008 was the blow up of a world-wide credit bubble. It caused huge collateral damage. The world has now changed.
The only way you can come out of this crisis better off than you are now is to put some serious thought into what companies are going to be important in this changed world.
The best move you can make - perhaps the smartest money move you'll ever make - is to buy companies with 'survivor' written all over them... 'Rainy Day' resource plays with loads of cash to see them through the downturn.
Of course, identifying these stocks is easier said than done.
That's why you have to do your homework. You have to read financial statements, call the company directors, and understand the mining business from top to bottom.
Frankly, though, most investors don't have time for this. But I do. In fact, it's all I do.
And it gives my readers a huge advantage when it comes to turn crisis to opportunity in this extraordinary market...
Resoure Cycle Phase II:
What's Your Gameplan?
Listen, if you're dead against investing at the moment, I won't hold it against you.
These are rough times. Many consider cash to be the safest place at the moment. Safe, yes. Profitable... no way. If you act smart - and keep the big picture in mind - you really can make money from what's unfolding.
You must remember that commodity prices are governed by the iron law of supply and demand. Right now, demand is falling. Supply is adjusting, as big miners shut down projects and small miners disappear.
Here's a key point: this is EXACTLY HOW MARKETS ARE SUPPOSED TO WORK.
And what happens next will surprise people, perhaps as much as the fall in commodities surprised others.
Sometime in 2009, commodity stocks will hit rock bottom. Supply will be choked off as smaller miners and explorers die off. But the long-term demand for Australia's key resources is not retreating. It's reloading. That's why I suggest that you take leaf out of China's book...
The economic powerhouse is using the downturn to secure a permanent foothold in the Australian resource sector.
In the last three months...
- South Australia-based iron ore explorer Centrex Metals sold a 50% interest in two of its Southern and South Central magnetite deposits for $180 million to China's third-largest steelmaker, Wuhan Iron and Steel.
- Mount Gibson Iron brokered a rights issue and share placement to Chinese interests, with two major companies taking a stake of up to 40% in the miner.
- Gindalbie Metals was given a $162.1 million boost from AnSteel, China's second-largest steelmaker.
China's got the big picture in mind. It's on the prowl for Australian hard assets while they're cheap. You should be too. And it's these opportunities we cover here at Diggers and Drillers.
You won't hear about these plays in the mainstream financial press. They make money by peddling horror
stories. That's why we, at Diggers and Drillers, have a simple aim: to sift through the bias, babble and plain
bullcrap that spews out of the mainstream... to bring you uncommon ways to profit from what's unfolding.
I can't promise you we always get it right with our share tips and market calls.
But I can promise you this... you will not find a more thoroughly researched resource sharetipping
publication in Australia.
Our work is not compromised by any conflicts of interest or other agendas. We publish our best investment
ideas and we don't get paid a cent by any company to promote it. And there's never been a better time for
you to get hold of this kind of investment intelligence.
Why?
This financial crisis is a death sentence for a certain kind of capitalism. It will be very hard on banks and
financial firms to be profitable again for years to come. For investors, it will be years before you can trust that there are no hidden "landmines" and "time bombs" lurking on financial balance sheets.
This bear market in trust could last years. Decades even. And in the meantime, you have to choose what
stories and sectors to invest in. My forecast is that most investors will invest in the only long-term story on
the planet where there is real demand for tangible goods. This immensely favours Australian commodities.
Because this is a growth story whose long-term fundamentals are still very intact. The BRIC economies
[Brazil, Russia, India, and China] share of world growth is projected to double in less than 20 years, reaching over 40% by 2025. India alone will spend an estimated US$21 billion a year for the next 10 years on the construction of highways, dams, water treatment plants, and nuclear energy facilities. This will ramp up demand for resources.
We're sitting on the world's largest deposits of uranium, nickel, zinc, recoverable brown coal, lead, rutile,
zircon, and tantalum... and the world's second largest deposits of gold, silver, copper, bauxite and ilmenite...
This is a trend worth being on the right side of. Even more so now that, due to the credit crunch, genuine profit opportunities are so thin-on-the-ground elsewhere.
That's why I've dedicated myself to researching out the very best ways that Australian investors can pick
off resource stock bargains - as they appear - throughout 2009.
And I'd like to get you up-to-speed right away by sending you a just-published and FREE report called
'Three
Oversold, Cash-Greedy Resource Stocks to Add to
Your Shopping List Now'
The downturn hit the resources sector like an out-of-control freight train. Many companies sitting on high quality projects either do not have money to operate, or are struggling to ward off predators looking for a bargain.
Even many majors have empty wallets. Xstrata recently pulled its bid for Lonmin reportedly due to a lack of cash.
As Mineweb puts it:
"... it is very much the Darwinian theory of survival of the fittest which will prevail. The industry has seen crashes before which have also resulted in huge contractions in the numbers of junior miners. But it always recovers.
"The world cannot do without mined minerals. There are going to be great opportunities out there for the strong and the brave."
Thanks to the unprecedented mining boom of the last two years – some clever players with top resource assets are sitting on a mountain of cash. When the dust from this crash settles, it will be THESE companies that emerge ahead of the pack.
They could be your ticket to steady share gains – even during recession. And I've outlined the best three on the Australian market right now.
But they all have big cash accounts in common. Of the resource shares in the top 300 listed Australian companies, these companies have the most liquid backing.
As you'll see in a moment, I'd like to rush you your report detailing the Three Oversold, Cash-Greedy Resource Stocks to Add to Your Shopping List Now, FREE OF CHARGE.
Inside, you'll discover...
- How to buy $1.57 for $1.
This oil producer has been out-of-favour with investors for a year now. But this month it made a very important discovery – it's struck oil in Northern WA . This new find adds to current annual oil production of 1 million barrels.
It's not Australia's biggest producer. But, as of its latest quarterly report, it's backed by a cash balance of $307 million– that's enough money to cover its operating expenses for four years.
The company has just one debt – a long-term convertible note worth $83 million. Get this… even if it paid this debt back today, it would still have a cash-to-share ratio of 157%.
That means you can buy $1.57 for $1, debt-free. But only if you act while the stock is still depressed…
- A growing resource protected by a moat of cash.
This medium-sized miner has projects in Australia, but the jewel in its crown is 200,000 hectare coal tenement in Mozambique.
Last financial year it filled up its cash pool with a $235 million equity raising. Not only does this company now have a cool $345 million in cash reserves, it also generated $16.5 million in operating cash flow last year. Its mines are growing too – last quarter coal revenues increased 36%.
A growing, self-sufficient asset protected by a moat of cash – a great credit crunch buy.
Both of these companies own quality projects. Each has minimal short-term debt maturing in the next year.
That's just as crucial as the cash balance itself. These companies have liquid assets unsoiled by heavy borrowing.
They aren't leveraged to the credit crunch through debt exposure. They are leveraged to the resource market through asset exposure.
And... believe me... this is a boom worth getting into at a discount right now...
Despite the Turmoil, the Cash is Still
Flooding into Aussie Resources
Look, a long overdue deflation of the credit bubble is taking place.
But if anything, the correction in resource prices has set off a mad scramble to acquire the best assets and best projects at absurdly low prices.
Some of the biggest buyers are Chinese and other foreign companies who know the opportunity of a lifetime when they see it. The scarcity of resources is a powerful, long-term trend. As far as making money on the global markets goes for the next twelve months, this is the best show in town. And, as an Australian investor, YOU have front row seats!
Feast your eyes on the map below...
As you can see, the scale of what's happening is simply staggering...
According to official statistics, there are 97 projects underway right now. That's a lot of activity. Chances are, thanks to the credit crisis, not all these projects will reach completion.
But you can bet the 'Kings of Cash' I want to introduce you to in your free report will be able to finance their activities and turn a profit... even if market conditions worsen. And if you're going to back just one cash-hoarding resource stock right now, I'd make it this one...
Get a
2-to-1 Bargain with this
Banked-Up Mining Junior
Credit stretches and contracts like a length of elastic. That gives credit-based companies a wild ride up and a wild ride down. But cash doesn't stretch. It's solid. It sits there. It does nothing until you need it. That time has come.
The third recommendation in your free report – Three Oversold, Cash-Greedy Resource Stocks to Add to Your Shopping List Now – is the best-positioned stocks on the market.
It's a junior. But it's also a floating raft of dollar bills.
It has a cash balance of $230 million. It plans to spend just $5 million on exploration expenditure next quarter. And get this. The market is rating it at a market cap of $95 million.
That's almost a 2 -to-1 bargain.
Let me just restate that...
You can buy $230 million for $95 million. One share, worth 29.5 cents, is backed by almost 70 cents in cash.
How did this freak opportunity happen? This company was smart enough to sell its major iron asset to a Chinese giant for $400 million. It has received $320 million of that already. Another $80 million is still coming.
Put simply, this mining junior has done what US value investing guru Warren Buffett does during every market crisis. It has moved entirely into cash just before all the assets become cheap. Here's how the company framed its situation in the report:
"The current turmoil being experienced in financial markets has resulted in a number of opportunities being presented to the company."
This company is backed by more cash per share than any other mining stock on the market right now. This is something you only see in a once-in-a-lifetime bear market.
If the market only recognises the full cash value of this stock in 2009, it could soar as high as 134% from it's current price .
And you can find out all about this – and two other 'Recession Kitty' stocks – by sending for your report Three Oversold, Cash-Greedy Resource Stocks to Add to Your Shopping List Now.
With your permission, I'd like to send you this FOR FREE.
There is no charge. All I ask in return is that you take out a trial subscription of my newsletter, Diggers and Drillers.
Invest in REAL ASSETS as Paper
Ones Go Up in Smoke
It's a bloodbath on Wall Street. Things aren't great here either.
The ASX was trading over 6,800 last November.
At the time of writing it sits just above 3,700.
Chances are your retirement savings have taken a hit. The Australian stock market has lost billions since last year's highs. Superannuation funds shed over 15% since the subprime crisis hit. That's their worst return since Super became compulsory in 1992.
If you'd like 'outside-the-box' analysis of what's really going on... as well as some clever ideas on how to make back losses and even make healthy profits... NOW is the time to make your move.
You can start by reading Three Oversold, Cash-Greedy Resource Stocks to Add to Your Shopping List Now.
Accept this limited invitation today and I'll also rush you the following:
- 12 monthly issues of the Diggers and Drillers newsletter: Packed with fresh, thoroughly-researched opportunities, market analysis and in-depth forecasting. You won't find a better resource stock advisory in Australia... or anywhere for that matter.
The great thing about the resource shares is that the good ones have intrinsic value... unlike financial operations, as you've seen recently. The global credit squeeze isn't going to melt away. Diggers and Drillers is one of the best tools to help you play it for profits.
- Profiting from Pebble Stocks. Discover how 'Pebble Stock' gains like 63% in one week, 118% in 3 days and 29% in 24 hours could be pouring into your portfolio... even while many investors flee to cash!
- Energy and Uranium Shares. What is the forecast for oil and which
Aussie companies are worth owning in 2009? Find out here. You'll read
about five of Australia's top energy shares, from oil and gas, to
uranium, electricity, and oil services.
- Peak Soil: The 2 Aussie Stocks Racking Up Millions from an Agricultural Shortage: Our strategy for the Aussie agriculture sector is simple. It's very long-term, and perfect for an investor's timeframe. But really, it has less to do with Australia's agricultural industry than it does with China's and India's.
- Why Australia's Junior Iron Plays are Exploding for Massive Gains. Trends in the iron market are pointing towards the Pilbara and Midwest in WA as the hotspot for Chinese acquisitions. Small companies are grazing the many deposits in these regions. There's valuable iron for the taking.
- How to Buy and Sell Shares For Profit. This concise guide answers the most common questions beginner investors have about buying and selling shares. You'll learn how to place orders with your broker... which type of brokerage is right for you... the importance of using limit orders... how much to invest... three ways to reduce tax on your profits, and much more. Even experienced traders will find something of interest in this valuable resource.
You don't pay for any of these six FREE reports. They are yours, on-the house. And there's more...
Every week, I'd also like to send you a FREE commodities investment update, straight to your e-mail account. This will bring you hot-off-the-press news... as well as developments relating to your current holdings. Plus other hot opportunities I have percolating on the stove.
Why just give all this away?
Well, as I said, there's something I want you to do for me in return...
Test-Run My Very Best Stock
Picks FREE for 3 Months
This is for investors who understand the scope of the opportunity to invest in tangible assets when global markets are unsettled.
You have this letter before you because I believe you are like me. I believe you know, as I do, that while many stocks and funds aren't worth much more than kindling these days...
Raw real resources like copper... platinum... silver... natural gas... steel... oil... coal... and especially gold... hold real and tangible value for civilisation.
More importantly though...
A whole new cycle of global growth and foreign investment demand is about to catapult some Aussie resources shares much, much higher... and YOU'VE got the chance to get a ground-floor piece of the action!
There are going to be some extraordinary possibilities for making money over the next 24 months. And I'd like to make sure you don't miss a single one of them.
So here's the deal...
Take out a three-month trial subscription of Diggers and Drillers right now. You'll receive our next issues, plus a complete archive of all back-issues. You'll also get every investment report - and the profitable stocks they examine - mentioned in this letter, FREE OF CHARGE.
Track my tips. If you don't like what you see... for any reason... contact me for a full, unconditional refund. And you can keep all the reports I send you with my compliments.
That's a pretty fair deal, right?
With that in mind, what will you pay if you decide to stick around?
What is this One-of-a-Kind Investment Intelligence Worth to You?
I can tell you now there are few high-profile analysts in Melbourne and Sydney covering these stocks... let alone guys on Wall Street.
I certainly don't know many investment newsletters or tipsters - here or abroad - who've devoted the last two years entirely to the Australian resources story.
"I will have paid for my D&D subscription for another 75+ years!" -- Kieran |
Believe me, I've looked around... and
I'm confident in saying that you simply cannot buy what I'm offering you today anywhere else.
If you could get this calibre of
research from other publishers (and I don't believe you can) it would cost you anywhere from $700 to $1,500 dollars. But why pay that? But you'll be pleased to hear an annual subscription to Diggers and Drillers will put you back just $134 for the first year.
Listen, I can say with complete confidence you won't get this level of investment intelligence for anywhere near this price anywhere else in Australia.
As reader Don L emailed to us recently:
"The services you provide - Daily Reckoning (plus Money Morning) together with Diggers & Drillers and Small Caps - provide by far the best means for keeping up with things that I know... I will be continuing my subscription on an annual basis."
Frankly, if $134 seems like a hefty sum, these investment opportunities probably aren't your cup of tea.
If you want in, then you need to move fast...
This Market Crisis Will Pass. But the Australian Resources Boom
is Here to Stay...
The world's third great industrialisation will outlast this financial crisis.
And right now there are safe, undervalued assets screaming out for buyers.
The very best profits will go to investors who use their heads... will others are LOSING theirs.
Click on the link below. I'll send you all the investment intelligence outlined in this report.
Read it. Paper trade if you're cautious. Then wait.
As you've seen, HUNDREDS of new resources projects already underway from coast to coast.
All you need to decide now is whether or not YOU want to profit from it.
If you ultimately decide I've missed the mark, you lose nothing and get your money back. While keeping every last bonus or issue we've already sent.
I hope that sounds fair to you.
More importantly, I hope it sounds like something you'll feel ready to act on right away.
The best bargains are to be had NOW. And I'm not so sure I can promise you that in 12 or even six months time.
Here's all you need to do...
Click here and fill your details in on the No-Risk Secure Online Application.
I hope to hear from you soon...
Sincerely,
Dan Denning
Diggers & Drillers
PS: With its massive natural resource endowments and a distinct geographical advantage over its South American competitors, the Australian resource sector is set to boom as long as China does. Savvy investors will be looking for ways to profit from this.
No newsletter on the planet is best positioned to help you do this. Remember, it’s yours to keep and profit from whether you stay as a subscriber or not.
Calculating Your Future Returns: It's important to remember that investing in shares can lose you some or all of your money. The potential gains in this letter do not include taxes, brokerage commissions, or associated fees. Please seek independent financial advice regarding your particular situation. Also, while useful for detecting patterns, the past is not a guide to future performance. The value of any investment, and the income derived from it, can go down as well as up. Smaller companies can carry more risk. For any investment, never invest more than you can afford to lose, and keep in mind the ultimate risk is that you can lose whatever you've invested. If in doubt of the suitability of an investment please seek independent financial advice.
Diggers and Drillers is published by Port Phillip Publishing Pty Ltd.
Registered Office: The Old Hat Factory 21/83-89 Brighton Road, Elwood, Melbourne, VIC 3184
Port Phillip Publishing Pty Ltd (ACN: 117 765 009) (Australian Financial Services License: 323 988).