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August 2, 2010 Dear Friend,
We will begin our August 12th visit to
Plum Creek at 3 pm in their Seattle offices through dinner. We will visit
Weyerhaeuser from 9 am to 12 noon. Weyerhaeuser is rolling out their major
"brass," including 9:00a – 10:00 Dan Fulton (President & CEO) / Patty
Bedient (Exec VP & CFO), 10:00 – 10:30 Shaker Chandrasekaran (Sr VP
Cellulose Fibers), 10:30 – 11:00 Larry Burrows (President, WRECO
homebuilder) and 11:00 – 11:30 Miles Drake (Sr VP, Research &
Development). We will depart on a 3:05 pm Pacific time flight to Newark.
On August 5-6 we will visit Vale in
Brazil at the Carajas iron ore deposit and their existing potash mine. On
August 16-20 we will visit Newmont Mining, Victoria Gold, Midway Gold,
Yukon-Nevada Gold and several other companies in the Elko, NV vicinity to
the northeast. On Sept 13-15 we will visit Goldcorp at the Red Lake,
Musselwhite and Porcupine gold mines in Ontario. On Sept. 20-22 we will
attend the Denver Gold Show. We do NOT expect to attend the Great Basin
Gold visit in Nevada on Sept. 16, the Coeur d'Alene Mines Kensington, Alaska
tour Sept 8-10 and we are not sure about the September 25-30 tourin
Congo/Zambia to visit Anvil Mining, Lundin Mining at FCX's Tenke mine, Hanna
Mining, First Quantum and Equinox Mining.
We are impressed at Neutral-rated Barrick
Gold's over $300 mm monthly operating cash flows and cost performance near
peers though slight valuation discounts.
We are disappointed that Overweight-rated
Domtar bought just 340,000 shares back in the second-quarter as its stock
price retreated about 35% from its $78 peak, and the company mentioned
possible acquisitions as an explanation during its July 30th conference
call.
We cut our earnings estimate for
Overweight-rated Allegheny Technologies to $1.12 from $1.65 for 2010 due to
lower stainless volumes and prices and for 2011 to $2.98 from $4.72 due to
lower titanium volumes and prices and lower high nickel alloy volumes as we
anticipate slower Boeing 787 and 747-8 rampups.
Incidentally, Gavin Thomas, a
founder of Niugini Mining (forerunner of Lihir Gold) and non-executive
chairman of Mercator Minerals, has drawn accolades for his management of
Kingsgate Consolidated. This is ironic in the context of Mercator Minerals'
less than design mill throughput, copper recovery and moly recoveries in its
first 18 months of operations. See
http://www.mineweb.com/mineweb/view/mineweb/en/page31?oid=109036&sn=Detail&pid=31 .
Faithfully,
John C. Tumazos, CFA
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Copyright © 2008 John Tumazos Very Independent Research,
LLC
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