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July 27, 2008 Dear Friend, Enclosed are a comparison of our two best of our seven favorite ideas, our weekly review of Spot Markets and an update on Alcoa. We focus on Rio Tinto and Teck Cominco because their diversity, unit growth and strong balance sheets provide a buffer against risks should the world economy and stock market suffer. Each has a robust foundation to grow, and our price targets of $630 for Rio Tinto and $75 for Teck Cominco provide upsides of about 60% and 90%, respectively. We visited six Rio Tinto sites in Australia in June and since April we visited Teck Cominco at Antamina in Peru, Quebrada Blanca and Andocollo copper mines in Chile, Elk Valley Coal in B.C. and the adjoining Shell oil sands open pit mine in the Athabaska Basin and we also visited partners Fording Coal and UTS Energy each twice. Further, we love several companies less well diversified or moderately exposed to particular startup or commodity risks. We estimate Mercator Minerals trades under three times estimated 2008 earnings. We estimate Duluth Metals trades near two times future 40,000 mtpd earnings from its 15..2 mm oz of au-pt-pd, 3.1 bil lbs ni and 10.2 bil lbs cu deposit. We estimate Allegheny Technologies trades near 8 times 2008/09 earnings. We estimate Thompson Creek Metals trades at 6.6 times current earnings though investors worry about new moly mines. We estimate Vale trades near 8 times 2009 with full iron ore price hikes, though acquisitions are a concern. We rate each of these and another dozen or so stocks each Overweight. There are many fine opportunities at recent sold off stock prices, and it is tough to narrow the opportunities down to several. Feel free to phone. Faithfully, John C. Tumazos |
Copyright © 2008 John Tumazos Very Independent Research,
LLC
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