Email of the day (3)
Comment of the Day

March 07 2011

Commentary by David Fuller

Email of the day (3)

On Commerce Resources Corp in Canada:
"I am interested in following the chart of Commerce Resources Corp in Canada (CCE on the TSX/VS. I am intending to buy on the next pull-back. It may be of interest to some subscribers to know that they have been exploring for Rare Earth Elements for some years - well ahead of the market and have 3 advanced exploration projects in Canada. One in B.C., heavy in Tantalum and Niobium, so much in demand. A second in Quebec just announced as being 117 million tons of ore containing 1.75% total rare earth oxides with a strong emphasis in the commercially desirable Light REOs.

David Fuller's view Thanks for this information on Commerce Resources, a share (weekly & daily) and sector that I agree is interesting. You obviously know a lot about it, and I note that you are interested in buying on the next pullback. What I would like to request, as a disclosure protocol for all subscribers, is that when mentioning any shares or funds that people declare whether they have an investment in these instruments, either directly or indirectly.

Technically, CCE appears to be in what may be a late stage of the first step above the base, as taught at The Chart Seminar. I am in a steep learning curve regarding rare earths metals but the heavy elements such as tantalum and niobium appear to be especially valuable and often scarce.

For instance, This article: Japanese, South Korean steelmakers to buy Brazil rare metal rights, mentions Companhia Brasileira de Metalurgia e Mineracao, an unlisted Brazilian miner which is apparently a major producer of niobium. Another niobium producer which has had a storming performance recently is the Australian company Alkane.

I regard all of these rare earths companies as highly speculative, especially as few of them are in production. However, there is no doubt that China's dramatic reduction in exports has transformed the outlook for rare earths miners, which are now regarded to be of strategic interest. The fundamental driver of demand is that they are essential for the functioning of most modern technology, from mobile phones to flat screen TVs, to windmills and guided missiles.

For those interested in the sector, I think we should try to buy on pullbacks to areas of potential support, or in ranges that resemble a build-up of support prior to another advance. In the current, choppy market environment, there should be plenty of pullbacks. I would not pay up for any of these shares.

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