A1 Minerals (ASX.AAM) - best entry for gold

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A1 Minerals (AAM.ASX) as previously indicated represents good buying. The current price action provides another timely entry at 24.5c. The reason being the imminent break out in gold prices. The stock is a new gold miner, it has been unhinged slightly by the Kevin Rudd tax proposal, so it should gain as Rudd removes his foot from his mouth, and replaces his red Marx Manifesto bed time reading with 'Atlas Shrugged', the best-selling novel of Ayn Rand. Hopefully Kevin has a revelation.

We can see from A1 price action that the 24c resistance now becomes support, and I am looking for a new high of around 35c, so this ought to be a good move. It is destined to come because of the rally in gold prices. The new high will attract investment funds, plus I think the AUD will be subdued since it strong gold will likely be associated with subdued economic news. The resistance for the AUD is 0.8674. The support level is around 0.8540. The back down by Rudd will however be the biggest issue. The other appeal of A1 is the prospect of some appealing gold grades. Their drilling highlighted a lot of high-grade near-surface gold. The prospect of higher than expected gold output should help the stock, as well as average down mining costs per ounce. Its a good story. There is not as much resource upside as other stocks, but with a substantial resource base, a rising gold price, the pit design will broaden, which means an expanding mineable resource. There is also the prospect of some expansion of gold resources, but not as much as the boys in Africa, which control a hundred-plus kilometres of favourable Archean geology. The A1 area though is distinctly high grade, and its already mining, so it is a good short-medium term story.

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Andrew Sheldon www.sheldonthinks.com

Resource rent tax back down will buoy mining stocks

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The SMH Online seems to be alluding to the prospects for a backdown by Kevin Rudd on the mining tax. It is safe to say that Rudd will be sparing the precious & base metals industry. I suspect that the govt will instead target the bulk materials industries like coal, iron ore, though its fair to say he will be given a token if they are to stay happy, because those industries are the ones with all the money. The smaller metals are the one's who would be severely impacted by the tax from an operational perspective. Any news ought to have a neutralising impact on the governments prior stupidity.

The implication is that it is a really good time to re-enter mining stocks, with the expectation that Rudd will be backing out of this tax proposal with his tail between his legs. A1 Minerals I think represents good buying on that basis, as it has the most to gain from this tax. I think it has curtailed plans for an expansion of gold production after the tax was announced. It is a high grade producer, and it has broken out, and fallen back to support, i.e. previous resistance, so we can expect a move by it when Rudd announces the backdown. A1 Minerals is WA based.

Other Australian miners and project developers will of course benefit. i.e. coal seam gas producers or developers in particular. Its possible iron ore miners will concede a minor tax increase. Anyway, I do not think this tax will be going ahead as the Liberals will reject it.

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Andrew Sheldon www.sheldonthinks.com

Opposition to Resource Rent Tax

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There are many issues on which I don't agree with the Liberal Party, and the same can be said for Michael Darby (Christian); however we are both opposed to bigger government, and most particularly stupid policy like this Resource Rent Tax. If you would like to register your opposition, you can do so on Facebook.

Want to know more about the issue - refer to my taxation blog. I am less interested in the details of the policy, and more interested in the more fundamental points of its moral legitimacy.

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Author

Andrew Sheldon

Resource Rent Tax Australia

Applied Critical Thinking | www.SheldonThinks.com

MIL Resources (MGK.ASX) - good buying

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Several months ago we signalled that this was a good stock to buy....in this time it has remained in a consolidation band between 2.8-4c. At these prices the stock is only trading at cash value - if you base its value upon $3.3mil in cash and $5mil nominal value for ASX listing. The company has signalled its future direction. It has:

1. Earning a 90% stake in the Amazon Bay iron sands deposit in PNG. This is a large resource on the doorstep to Asia, which will prove particularly attractive if the Rudd government is able to adopt its Resource Rent Tax. Regardless, we believe the Rudd govt has done irreparable damage to Australia's sovereign risk rating, so we expect Chinese, Korean, Indian firms are looking at this project.

2. A 50% stake in Titan Metals: The company has a stake in a number of promising gold projects in PNG through Titan Metals. These projects are at an early stage of testing, but PNG is a highly mineralised province, and we expect some exciting results. MGK is close to completing its farm-in provisions to earn 50%, so we can expect more spending to increase this stake. This is subject to a future agreement. In recent weeks the company has announced its acquisition of a number of attractive gold projects in the northern PNG islands (New Britain area).

We see a lot of upside for investors - conservatively 300%, though as much as 1000%. Hard to say at this point....there is still no drill holes into the first gold project. The company has however extended the strike potential of its most advanced gold project from 3km to 11km.

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Andrew Sheldon www.sheldonthinks.com

Gold stocks set to rally

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We believe gold is poised to break out very soon for new highs. We are currently seeing some consolidation. We can already see this today as people are buying up the gold stocks. I see IGR, AAM and ADU are up today. The best performers are going to be the African stocks, though they have already made significant gains, so the Australian laggards like AAM and IGR can be expected to do as well. There are a number of good gold stocks, e.g. CRE. Another nice one is RED 5 Ltd (RED.ASX).

We will of course be doing everything in our power to stop the Rudd government from taxing miners. This is pure fascism. We have witnessed the collapse of the US, and now the European economies, and now we are going to observe their efforts to tax any profits you make from investing in the only form of wealth left with any tangible value. By the way - don't think that you will be gaining. You will gain in nominal terms against a debased USD or EURO, but don't delude yourself to think that gold is any more useful today than it was a decade ago, its just that all other asset classes will be undermined by financial debasement. i.e. Demand based investments like copper, broad equities and relative investments like currencies. The solution of course is to buy gold stocks in those countries where governments are not taxing profits. The message is thus to buy stocks offshore.

The emerging financial peril might actually give Rudd the support he needs to implement this 'fascist' tax. To all those unthinking housewives, salary men and businessmen who thought the previous asset inflation was real, here is your financial reckoning.

Whilst gold stocks with Australian based projects are going to suffer from the Resource Rent Tax debacle, at least in the short term, other Australian gold stocks which have projects abroad will do well. Africa and the outer areas of China (Mongolia) and Central Asia will be hot spots, as well as PNG, so watch for announcements from these areas. i.e. Wide drilling intersections of over 2g/t. Anything over 40m is impressive, over 20m is good. The more holes the better, the more prospects/targets the better, the shallower the better. See our Mining Fundamentals eBook- I did not write it because I was bored :) If you read enough reports you get a sense of what is good..but it does take years....hence the report.

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Andrew Sheldon www.sheldonthinks.com

Gold stocks set to rally

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We believe gold is poised to break out very soon for new highs. We are currently seeing some consolidation. We can already see this today as people are buying up the gold stocks. I see IGR, AAM and ADU are up today. The best performers are going to be the African stocks, though they have already made significant gains, so the Australian laggards like AAM and IGR can be expected to do as well. There are a number of good gold stocks, e.g. CRE. Another nice one is RED 5 Ltd (RED.ASX).

We will of course be doing everything in our power to stop the Rudd government from taxing miners. This is pure fascism. We have witnessed the collapse of the US, and now the European economies, and now we are going to observe their efforts to tax any profits you make from investing in the only form of wealth left with any tangible value. By the way - don't think that you will be gaining. You will gain in nominal terms against a debased USD or EURO, but don't delude yourself to think that gold is any more useful today than it was a decade ago, its just that all other asset classes will be undermined by financial debasement. i.e. Demand based investments like copper, broad equities and relative investments like currencies. The solution of course is to buy gold stocks in those countries where governments are not taxing profits. The message is thus to buy stocks offshore.

The emerging financial peril might actually give Rudd the support he needs to implement this 'fascist' tax. To all those unthinking housewives, salary men and businessmen who thought the previous asset inflation was real, here is your financial reckoning.

Whilst gold stocks with Australian based projects are going to suffer from the Resource Rent Tax debacle, at least in the short term, other Australian gold stocks which have projects abroad will do well. Africa and the outer areas of China (Mongolia) and Central Asia will be hot spots, as well as PNG, so watch for announcements from these areas. i.e. Wide drilling intersections of over 2g/t. Anything over 40m is impressive, over 20m is good. The more holes the better, the more prospects/targets the better, the shallower the better. See our Mining Fundamentals eBook- I did not write it because I was bored :) If you read enough reports you get a sense of what is good..but it does take years....hence the report.

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Andrew Sheldon www.sheldonthinks.com