Equity Strategy July 20, 2007:

The North American equity markets have been moving higher on more n=merger and takeover activity. The announcement that British mining giant Rio Tinto was interested in Alcan and willing to out bid rival Alcoa has changed the entire nature of this takeover battle. This is one of the problems that American companies are going to come up against going forward, the recent decline in the US dollar relative to most other major currencies puts them at a disadvantage when trying to buy companies in other countries. Rio Tinto is one of the largest mining companies in the world and Alcan fits nicely in to their global operations.

The Federal and Provincial governments should look closely at this deal due to the strategic position Alcan has regarding power generation. The Province of BC has given Alcan access to water to produce the cheap hydro electric power required to produce aluminum competitively. That electrical power capacity is becoming more valuable daily and the province should ensure that it has first access to that power going forward.

Potash Corporation has announced expansion plans for its operation in New Brunswick, the company will be increasing production to 2 million tonnes from the operation in a $1.6 billion investment expected to take four years to complete. The New Brunswick operation is strategically located for easy access to the important South American markets such as Brazil.

The demand for increased crop yields will be very beneficial for the fertilizer industry and Potash has embarked on a major initiative to capitalize on the increase demand for fertilizer.

A couple of negative surprises over the past couple of days Southwestern Resources (SWG-T)has announced that the drilling results from their Boka gold property in China can not be relied upon. This has caught investors by surprise and Brex is being mentioned along with Southwestern, not sure this is a Brex situation but you never know. This will put a chill on all exploration companies operating in China.

Cameco (CCO-T) came out with another surprise this week stating that they have found radioactive material in the ground at their Port Hope, Ontario uranium hexafluoride conversion plant. This will shut the plant down until more environmental tests can be completed. Cameco does not need another expensive delay to add to the problems at Cigar Lake. This could hold CCO back for a while regardless o the uranium market, if the stock sell off badly on this news if may be appropriate to add or initiate a position for long term investors.

In another surprise for investors Paramount Energy (PMT.UN-T) just cut the distribution on the units due to lower natural gas prices, the surprise is that this cam less than three weeks after Paramount completed a major issue of units to investors valued at $250 million. The distribution was cut from 14 cents per unit per month to 10 cents or 29%. Anyone that continues to hold this unit deserves all of the pain and frustration they will get. When management lies to you or tries to put one over on you the stage has been set for more abuse, sell, get out now before more bad things happen.