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200 and 300 million. That's the number of cars expected to be manufactured to meet demand over the next 10 years in India and China respectively.
Since last Fall we've done really well with some young resource companies. Imperial Resources (IPRC), Bering Exploration (BERX), Eagleford Energy (EFRDF), FieldPoint Petroleum (FPP)- all have been great trades for us at one time or another.
The formula was simple- I got you the idea early- before anyone was following it, and if you acted early and remembered to take your profit when the stock traded up, you made money. It's that simple. All you have to do is look at the charts to see they were all profitable ideas.
With oil prices still holding over $100 per barrel, oil and gas exploration companies have been popping up and investors have been piling in.
However, oil and gas is not the only commodity investors are looking at. Prices of other commodities have run up the charts, fueled by burgeoning demand from emerging markets.
200 and 300 million cars. The shear number of people in these economies is something the world has never seen. India is expected to consume 200 million cars in the next 10 years. China is supposed to consume 300 million.
I won't begin to guess how much steel will be required to deliver all those cars, but I know it's a whole bunch. To make steel, you need iron ore, and behemoths like Rio Tinto (NYSE: RIO), and BHP Billiton (NYSE: BHP) are both trading at near historical highs thanks to the gigantic demand for the minerals they mine including iron ore.
Just as new technologies are allowing the successful revival of oil and gas properties all over the United States, new technologies are also allowing expansion into properties for other commodities as well.
Enter Pittsburgh based Allied American Steel (OTC BB: AAST)- a clever management team has just acquired 47 years worth of iron ore mining property in Eastern Canada, and it's right in Rio Tinto's back yard.
Read on McDuff......
It's almost like an IPO. The stock traded Friday for the first time ever at $1.01, $1.05, and $1.10. Since there's only been one trading day, I won't show a chart- there's nothing to see.
However, I will show you a map of their property. AAST has 68 contiguous mining claims in Eastern Quebec adjancent to the St. Lawrence Seaway- the gateway from the Atlantic Ocean to the Great Lakes.
The 68 contiguous mining claims span 9447 acres, and are located a long stone's throw southwest of one of Rio Tinto's largest mines.
A Form 43-101F1 technical report (that's a special report prepared by geological standards) was compiled by an independent third party in May of 2010.
The report establishes two of the zones on the 9447 acres has an estimated 124 million tons of high grade iron ore and titanium.
According to AAST's web site, this resource, if mined to the shallow depth of 330 meters, would provide 45.9 years of mineable resource, and potential annual operating value of $1.1 billion net.
Here's a map of the actual property showing the four zones the geologists have identified to be extremely rich in resources. Zone A and B represent 124 million tons of 23.3% iron ore and 6.6% titanium just down to 160 meters of depth.
The company also recently completed a financing of $1 million with restricted shares priced at $.75. These funds are likely earmarked to complete further geological studies so the company can position and obtain the financing and permits to begin mining the most promising zones.
There's plenty of infrastructure in the area to support mining left by the logging industry. They've already built the appropriate roads and rails required to move vast amounts of resource.
I've read one report on the company suggesting BHP would be willing to buy this company for $50 per share. After all, the company recently earmarked $147 billion to buy out Rio Tinto, and the deal fell through as it was rejected by shareholders.
I'm not bold enough to suggest you should expect to pick up this stock at $1.10 to $1.25 and expect to sell it in short order at $50. Seems a little absurd to me to suggest those kinds of expectations. I wouldn't insult your intelligence.
In my view, the reported value of their resource claims far exceeds the market value of the company, so there's plenty of upside.
As importantly, you are reading the first published report on this company. Many other reports will follow to many investors, and if the stock trades well, you will have the coveted pole position.
Depending on how the market responds to this opportunity, I could easily see the stock trading to the $1.50 to $2 range over the next 2 to 4 weeks.
As usual, I advise caution right at the open if the stock gaps up. According to Friday's Level II quote, there are only 10,000 shares offered at $1.15. I would love to know one of you reading today's edition was nimble enough to grab those shares.
However, use a little caution if the stock gaps up on the open. Make sure it's worth your while to own it if your upside is $1.50 to $2 in the short term. From there- who knows? Maybe BHP will buy the company so they can move in next door to arch rival Rio Tinto.
One never knows........