Aggressive Portfolio April 15, 2008:

The commodity markets continue to be very volatile and unpredictable on a short term basis. The uncertainty created by the current credit crisis is having an impact on the potential for continued strong global growth. The focus recently has moved to the agricultural sector as food inflation becomes a growing problem. The change of focus from industrial commodities to agricultural commodities has put considerable downward pressure on the base metals recently. This may be an excellent time to look at the base metals again.

Molybdenum is one metal that has very strong supply and demand fundamentals which appear to have the potential to remain in place for an extended period of time. Molybdenum is used in a variety of processes due to its hardening and corrosive resistant properties. Molybdenum is used extensively in the production of stainless steel and demand for stainless steel has been growing as both China and India industrialize. Molybdenum demand from the oil & gas sector is expected to increase as more pipelines are built globally. The main reason for the increased use of molybdenum is the increase in the amount of heavy crude oil being produced. The sulfur content in heavy crude is generally significantly higher than in light crude making heavy crude considerably more corrosive and damaging to the pipeline system. Another advantage of higher content molybdenum pipe is the ability to use smaller diameter with less wall thickness to carry the same volume and the ability to operate at higher pressures that conventional pipe lowering the cost of operation. The nuclear power industry also requires high molybdenum content in their steel due to the highly corrosive nature of the cooling system. The number of nuclear power facilities is expected to increase substantially over the next few years as more countries opt for nuclear in order to meet their Kyoto targets regarding the reduction of greenhouse gases.

Exploration for molybdenum and most other base metals was under funded for more than a decade due to the historically low prices from the early 1990’s through to the early 2000’s. This lack of exploration effort has created a situation where the additional new supply will be brought on line well behind the increase in new demand.

The development of new supply has been slow due to the long and detailed permitting phase that most countries require of mining companies along with the high cost of exploration and development. The capital required to bring a mine in to production is in the billions of dollars and the time frame tends to be about a decade. The reality is that even companies that were first out of the gate when commodity prices started to rise are not expected to be in full production until 2010, if all of the development is on schedule. The potential for delays are many and usually come as a surprise so they can not be easily anticipated by the market.

Companies that are currently producing molybdenum are in an excellent position to capitalize on the potential upside in the commodity price over the longer term. The next three to four years will likely see the imbalance between supply and demand move to levels previously unheard of creating substantial upside pressure on the price of molybdenum.

Molybdenum is commonly produced as a byproduct when mining copper; that is the reason there are relatively few pure molybdenum producers. It has only been over the past few years as prices have moved up to historically high levels that molybdenum has been actively targeted as the focus of exploration efforts.

Roca Mines Inc. (ROK-V) is a new molybdenum producer which recently achieved commercial production at the flagship MAX Molybdenum Mine located 65 miles southeast of Revelstoke, BC. The company is expecting phase 1 production of 300,000 pounds of molybdenum concentrate monthly. The company plans to complete phase 2 by the fall of 2008 increasing production from 500 tons of ore per day to 1000 tons per day and expects to produce 600,000 pounds of molybdenum concentrate monthly.

Roca Mines is very well positioned to benefit from the strong global demand for molybdenum. I am adding 200 shares to the Aggressive portfolio in the belief that Molybdenum will outperform over the next 12- 18 months.

Aggressive Portfolio April 15, 2008:                

Original investment January 15, 2007: $100,000