My trading summary - Sept 2010

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I have been actively trading today whilst simultaneously writing a critique about religion. You'd think that under those circumstances I'd be losing money, but actually things are working out surprisingly well, despite the market weakness. Some of the stocks in play at the moment:

1. Union Resources (UCL.ASX): We first bought this stock about a month ago at 0.5c, sold between 1-1.2c, only to buy back at 0.8c. The simple moving average has just turned and technical support is returning at 0.8c today, with a 2mil unit buyer. I expect this stock to move up further. This company will ultimately be taken over by Minemakers I believe, and perhaps at the same time, or later, Minemakers (MAK.ASX) will be taken over itself by one of the larger industry players like BHP, if they decide to pursue Potash Corp. UCL & MAK have a JV to develop the Sandpiper(?) phosphate deposit in offshore Namibia. Its 1-2 billion tonne resource.

2. Vital Metals (VML.ASX) has recently made an announcement about its sampling program, which will end in Nov'2010. This ought to be a precursor to drilling, which will also test some geophysical targets. Obviously this offers the prospect of a huge discovery, however we will have to wait to see the size of the anomalies. The company might turn out a dud, or possess a company-making mine. This company is one of the cheapest entries into Africa at the moment, so we will retain our stake and buy more on weakness.

3. MIL Resources (MGK.ASX) is under selling pressure. We so no upside in this stock because of the lack of infrastructure in PNG. This might be resolved in 5-7 years time, as I see Origin is preparing a feasibility study for the development of a 1200MW power station. In the meantime they have some exciting gold projects, but they are not very advanced, and exploring in PNG is considerably more expensive, so we opted to pursue more immediate targets.

4. Azure Minerals (ASZ.ASX): I originally bought this stock at 4.4c, and I sold prematurely at 5.3c, as I was trying to trade, knowing they would go higher. They reached 6.5c, but I eventually got in again at 6.7c, and today sold at 7c, before buying back in again at 6.7c. Now 7c. Again, the moving average is crossing over, and I expect this stock to move higher. They are one of the highest grade copper stocks around, with this quarter expected to greatly expand their resource.

5. Marengo Mining (MGO.ASX): They are developing a very large copper-gold resource in PNG. Having just raised $Can20mil, the company is in the process of advancing its feasibility study. This stock has a lot of appeal for major fund managers, and the reason is, it will be targeted by a number of medium sized-large companies looking for a new target. Indophil Resources and Lihir Gold come to find, but maybe also Xstrata-size companies. I sold some stock this morning for 13.5c, and just bought back more at 12.5c this afternoon. Now 13c.

6. Gippsland Minerals (GIP.ASX): I have not traded this stock because of the low liquidity, its been very hard to get stock. Anyway, its hard to see their Egyptian project going ahead when there is no certainty of Rwandan-Congo tantalum-tin flooding the market. Anyway, there are better offerings. It does have gold-copper exposure, which needs a 2nd look by me.

7. There are some other base metal stocks around which I like, but with growing nventories for these metals, I will simply watch them.

8. For those of you with stakes in the stocks I recommended some time ago - like Perseus Mining (PRU.ASX) - recommended at 60c, now $3.01; Ampella Mining (AMX.ASX), then 60c, now $2.51; Gryphon Minerals (GRY.ASX) at 12c, now $1.30. Of course its not all good news. I stuffed up on AAM, though part of that was trying to trade my way out of quicksand. And of course I reversed out of MIL Resources (MGK.ASX) after spending 3 weeks researching the titanomagnetite market....and thought better of my early excitement.

If you go back far enough...you will find I stuffed up on AAM before, Gleneagle Gold and Matrix Metals. The problem with some of these companies is that they are too good to be true, which is why I end up buying them. I sadly have no industry contacts, so I get stung by these cheap stocks which people in the industry know about. Oh well. Despite ineffective regulation by ASIC, I can still make money. Their regulation of small stocks comprises asking CEOs why their stocks have increased 50% in the last 5 days and reporting their explanations. Pretty poor! Useless government. Yep, both factions of that government monopoly. don't kid yourself..there is no competition. Tyranny of democracy.

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Andrew Sheldon www.sheldonthinks.com