BizAnalyst Network: Another Blockbuster Resource Stock from Mike Schaefer

Tuesday, October 18, 2005

Another Blockbuster Resource Stock from Mike Schaefer

* Update on Augusta Resources
* Don't miss Mike Schaefer's latest resource play... it's another
blockbuster
* Hurricane Evacuees put Booze on Taxpayers Tab

"Opportunity is missed by most people because it is dressed in overalls
and looks like work."

- Thomas A. Edison
_____

Dear Wealth Daily reader:

Today's Wealth Daily contains the long-awaited update of Augusta
Resources. Augusta Resources was originally recommended last December in
Michael Schaefer's Secret Stock Files newsletter at C$0.18 per share.

It was then, several months later recommended to Wealth Daily readers at
C$0.70 per share. Today Augusta is trading at C$1.93 per share and
Michael Schaefer believes its going north of $10.00 in the next 12
months.

Michael says he's got several more new stock picks like Augusta coming
up in the next couple of months.

If you're not yet a member of the extremely profitable Secret Stock
Files news letter, now is the time to jump on board. Mike always seems
to find 3 or 4 Augusta's a year.

Just in the past 6 months Mike's pick of Wealth Minerals has gone from
C$0.55 to a high of $C1.90 just a week ago. And he's got a new pick
coming up that will blow the doors off that one in no time.

When you think of commodities - specifically energy and the metals like
copper - there are only a couple of things you need to remember.

1. In the United States there are 2.5 cars per household. In China there
is 1 car for every 10,000 people.

2. China's Domestic consumption will grow at 15% to 20 % per year for
the next 50 years.

Please let these two factoids sink-in for a few minutes. I then ask the
question: where is all the copper going to come from for all those new
houses and cars and where is the energy going to come from to fuel the
houses and the cars?

The answer to that question is simple. There is not enough copper, there
is not enough energy available today to handle China's growth, let alone
India, the rest of southeast Asia, and growth in the rest of the world.

The simple answer to all of this pontification is that the bull market
in commodities has barely just begun.

More on that in a moment. But first...

- Brian Hicks

Augusta Resources - The Behemoth Is Ready To Rise
By Mike Schaefer

I want to focus on copper today because we've got a full update on
Augusta Resources ARS-TSX.V. And Augusta has the last known world-class
undeveloped copper porphyry left in the United States.

I define World-Class as being among the top 1/3 in size and the bottom
1/3 in cost of production. I firmly believe Augusta's Rosemont Ranch
copper deposit fits that definition.

Just today Augusta announced a drill intersection of 741 ft. of almost
1% copper and that is a world-class intersection.

What I'm leading up to is this - Would you buy a stock at $2.00 a share
and hold it if you knew that in 3 years it would be worth $15.00 or
$20.00 a share?

That is exactly what we have with Augusta Resources. Augusta is
developing a World-Class asset - 5 billion pounds of copper.

"It's Here!"

As reported in today's USA Today:

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will send prices of gasoline, heating oil and all petroleum-related
products soaring."

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_____

Augusta's Rosemont deposit will produce 200 million pounds of copper a
year for the next 20 to 25 years. When you buy Augusta shares you are
buying value. Based on my most conservative valuation comparisons of 4
cents per lb. of copper in the ground, Augusta should be trading at
C$7.00 per share right now.

If you're new to the high-risk high-return world of resource investing
then Augusta will give you a winner right out of the gate. If my
grandmother was still alive, bless her soul, I'd be comfortable telling
her to buy Augusta Resources at current prices.

Regardless, let's get into a bit more detail on Augusta.as I've been
promising for several weeks now.

I talked with Augusta CEO Gil Clausen this morning. Gil's a conservative
guy who takes a very calculated approach to business. He's been in the
mining business a long time, and he realizes he's got an incredible
asset in the company's Rosemont copper project.

At this point, Rosemont is for the most part unknown, as is Augusta. But
as the story gains wide attention, which is already starting, you'll see
a major increase in interest.

So far, Augusta is getting the results they'd expected all along from
Rosemont.

The current drill program, which is intended to verify the company's
geologic model for the deposit, which was largely based on existing data
from exploration work carried out by Asarco and the Anaconda Copper
Company.

They're hitting exactly what they expected in terms of grade, exactly
where they expected to encounter it. This is encouraging in that any
surprises we get are likely to increase the resource.

The company is in the middle of a 30,000 foot drill program which will
continue to verify their existing model and confirm what we already know
about the property.

The ore body outcrops on the west and dips under ground on the east.
Depending on how far under ground the deposit goes, all of the material
on top will have to be removed and discarded prior to mining. However,
the current drill program has served to confirm additional ore grade
material to the east vastly improving the stripping ratio and improving
the already robust economics of the project.

Augusta has run the economics on the property at $1 copper. (As of
today, copper is going for $1.76.) This means there was a lot of
material the company had to count as waste rock because it didn't meet
the cutoff. But from the geologic model they know there's even more ore
in the deposit that isn't currently included in the model.

This means the economics of Rosemont, when all said and done, are likely
to be even better than expected.

The farther east you go on the deposit, the further it gets buried under
the cap rock, so if you look at the resource, there's potential for
60,000 tons of ore processed per day, or 200 million pounds of recovered
copper per year, which would be produced over a mine life of 20 to 25
years.

Overall, we're looking at about 5 billion pounds of copper. The historic
reserve calculations done in the past give us a deposit of about 400
million tons.

This is designed and optimized, with all mining costs included to
determine what can be extracted at a profit, and all of this is all part
of the pre-feasibility study, which we'll see early next year.

The pre-feasibility study is a major milestone for Augusta. As you'll
see in a minute, this is a step where the project moves from the
conceptual stage to a tangible item investors and other mining companies
can wrap their heads around.

Once that happens, the market begins to put a future value on the
project, and the valuation moves forward in leaps and bounds.

You see, as I've said in the past, this deposit is truly world-class.
What I mean by that is that it fits squarely into the top 30% of all
copper ore bodies in the world. And in terms of cash costs, it fits
neatly within the bottom 30%.

Deposits of this size and grade just don't come around that often. And
definitely not here in North America. The consensus is that this is the
last big porphyry deposit in the North America that remains undeveloped.

A Mixed Bag

Although Rosemont is primarily a copper deposit, and that's what I'll
focus on, we can't ignore the fact that there's also a significant
amount of silver and molybdenum which will add to the economics of the
deposit.

Though the company is testing several different production scenarios,
including the economics of shipping ore concentrates, I expect we'll end
up with copper production either on-site or at one of the nearby
smelters.

Remember, Augusta's goal is to open up a world-class open pit deposit.

So now, over the next month, these guys will be hitting the road quite a
bit to tell the story. They wanted to make sure they had everything in
place in terms of people and economics before really going out with the
story.

Expertise

As you know, any business is only as good as the people running it. CEO
Gil Clausen is absolutely top-notch, and he expects nothing less from
those working for him. That's why he's assembled a team of the best in
the business to ensure this project goes into production as quickly and
efficiently as possible.

It's very tough to find good people and here we have what I consider to
be the best working on this project. These guys have built huge copper
projects around the world, so they know how it's done.

Bottom line is that these guys have done this before. They know how to
take a huge project from start to finish.

You'll recall that there were questions about the environmental aspect
of this project. There were some articles written in the local paper
claiming that the project would never get off the ground due to
environmental opposition.

The reality is that Rosemont sits squarely in the midst of scores of
other copper mines. This is mining country, and the people there have a
very favorable stance toward mining.it drives the economy to a large
degree.

Further, Augusta plans on doing everything, from public discourse and
information to permitting and mining practices, one hundred percent by
the book.

To that end, Augusta brought on James Sturgess as VP of Projects and
Environment. He has over 25 years of industry experience in the areas of
environmental management, regulatory compliance, pollution control and
project management.

His career has spanned from research field biologist to site
environmental manager for large mining operations, and included terms as
Vice President Environmental Affairs for Cyprus Climax Metals Company,
and President of EnviroNet, an environmental engineering and consulting
business.

Mr. Sturgess was formerly a Senior Associate with Stantec Consulting in
the Environmental Management group, and did major permitting work in
Arizona for the last 15 years. He has earned both his MS in Resource
Management Ecology and his BS in Renewable Natural Resource Management
from the University of California at Davis.

The company expects very little opposition from the environmental side,
because there are no issues, from an environmental standpoint, that
should affect the project.

Regardless, the company plans to be totally transparent, meaning they
won't try to sneak anything past the public. There's a process you go
through and if you do things correctly, you get a permit.

Plus, with the intensity of demand, you'll see projects like these
become easier to permit.

Augusta plans on being progressive in terms of environment, and takes
stewardship and neighbors very seriously. They're going to produce a
plan that'll be in the best interest of the local community, the state,
and the shareholders.

Bottom line is, environmentally speaking, there's nothing that'll hold
this project up.

Supreme Value

Now, I've said for months that Augusta should be trading at least for $5
right now.

Here's what I mean.

If you look at some of the projects overseas that are smaller and lower
grade, all of these companies are trading way higher than Augusta.

Other projects out there on a comparable basis, typically range from 5
to 12 cents per pound of copper in the ground, depending on how
developed they are.

So what kind of comparisons can we draw from companies already in the
market?

Most decent projects trade from 2 to 3 cents per pound in the ground. As
they move through feasibility they're upwards of 10 cents. Then, once in
production they go higher.

A few examples:

Frontera Copper is just now building a mine. They have 750 million
pounds in Mexico, which is about 1/6 the size of Augusta, and they're
trading at 13 cents per pound.

Imperial metals is in production in (750 million pounds) British
Columbia with a small resource, which is very high cost. They trade for
18 cents per pound of copper.

Peru Copper has a big deposit, about 8 billion pounds, lower grade, and
is trading at about 4.5 cents per pound. Now get this.they're in Peru
and they've got metallurgical problems.

Reports are that the company cannot at this time produce copper
profitably. They're hoping for some magic bullet in the form of new
technology to come along and make this dead horse walk again.

At 4 cents per pound in the ground Augusta should be trading at $7.00
per share. It's where we should be now.

Augusta is trading for about 1.5 cents per pound of copper. Once the
pre-feasibility study is done, we should see about 7 cents, which is
equal to a share price of $10.50, or 425% above its current level.

And remember, that pre-feasibility study will come out in the first
quarter of 2006, less than six months from today.

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What's Next?

Rosemont is truly world class. And it's not going to go unnoticed by the
larger companies for long.

Plain and simple, we have a resource base at Rosemont that the bigger
companies will want. It's huge, with a 20 to 25 year mine life.

At this point, the company doesn't have any institutional following. I
think over the next few weeks we'll see people start to put these
numbers together and figure out what's going on here.

And remember, these valuations don't even include the company's other
properties, which should be worth another buck per share easily. Just
the molybdenum at the Shell property has an in situ gross metal value of
a billion dollars.

There's no question that, once this story gets out to a wider audience,
you'll see a large amount of interest from the major mining companies.
Phelps Dodge is already operating in the area, as are several other
large companies.

Anything is possible at this point. What's sure is we're going to see
Augusta revalued in a big way. I've been saying this all along.

Basically, however, right now is our last chance to get in early enough
for a major home run.

A Replay of the Natural Resource Bull of 2004... Get Ready

As you know, we ended last year with some skyrocketing gains.

I'm talking of course about Storm Cat Energy and Augusta Resources.

Both of those stocks were recommended originally in my resource letter,
Secret Stock Files.

And as I've told you many times before, readers who purchased these
stocks when I originally recommended them, are sitting on some hefty
gains.

Storm Cat Energy, for instance, was recommended in September 2003 for
$0.20 (post-split). But November of last year, Storm Cat was sitting
around a buck. a gain of 400% in little over a year.

And of course, you know what has happened since. Storm Cat made the jump
to the American Stock Exchange. and is sitting at around $3.50 a share.
That's a gain of 1,650% from my original recommendation 2 years ago.

But the biggest play I've recommended in the past 2 years might be
Augusta Resources. I first alerted Secret Stock Files members to it in
early December. It was trading for just $0.18 a share. When the resource
market took off in late 2004/early 2005 (see chart of the Toronto
Venture Exchange), Augusta's stock rallied too. and reached a high of $3
four months later.

My Augusta thesis was simple: Demand for molybdenum was soaring. and
Augusta was sitting on a mountain of it. Literally.

Today, I have a similar situation. And like Augusta, I'll be
recommending this stock before the end of the year.

As you know, next to America, China is the second-largest consumer of
energy resources. and is now the #1 consumer of natural resources.

One of the staples of the Chinese resource market is... and will
continue to be... coal.

In fact, China still depends on coal to meet nearly 65% of its energy
consumption per year. That's massive.

The stock I'll be recommending soon in Secret Stock Files is a Chinese
coal company that's sitting on $12 billion worth of coal.

The short story is that this company is sitting on 400 million tons of
coal in China. and it's ready to be extracted and shipped. All of the
ingredients are there for a 10 to 1 return on this baby.

You see, a ton of coal in China sells for about $30.00. So we're talking
about a mountain of it.

I'll have a full write-up in the coming weeks. But make sure you're a
member to my resource letter Secret Stock Files so that you're
guaranteed to get the recommendation as soon as I put it out.

The stock trades for $1 a share. I'm looking for a potential move to $20
within the next 3 years.

But remember, like most of my stocks, I take advantage of leverage by
buying early stage companies while they're still dirt cheap. This is one
of them... so you want to buy early.

To make sure you get this China coal behemoth recommendation, become a
member to my Secret Stock Files. To secure your membership, visit: [
Secret Stock Files
<https://server.publishers-mgmt.com/ssf2/subscribe.php> ]

Sincerely,

Michael Schaefer

Hurricane Evacuees put Booze on Taxpayers Tab

Six weeks ago my blood began to boil when I heard that the federal
government issued debit cards worth $2,000 to each adult victim of
Hurricane Katrina.

Since that time I've had a chance to calm down. But once again the
issue has crept its way back into my forebrain.

In the September 9 issue of Wealth Daily I asked what was stopping these
people from spending the taxpayer money irresponsibly. It turns out ...
nothing at all. In fact FEMA officials have blatantly said there were no
restrictions on how the money could have been spent. Maybe they should
have thought this thing through first.

According to an investigation, conducted by the Boston Herald, victims
have been living it up in Cape Cod, blowing cash on ... of all things
?... booze and strippers.

And I have to say I'm really not that surprised.

Herald reporters observed Katrina victims blatantly drinking in public
at a strip mall near Camp Edwards on Otis Air Force Base.

And apparently they didn't have a good enough time just boozing it up.

Dancers at a local strip bar in Mashpee, MA, a few miles from Bourne
Coast Guard base, reported giving lap dances to several evacuees. I sure
hope they had a good 'ole time at our expense.

One stripper named Angel (gee a stripper named Angel ... that's
original) said, "They were tipping me $5 a pop. I told them I felt bad
taking their money. But I still took it." Sure why not?!?

The assistant manager of the club acknowledged that the strip joint is
quite popular with people from Camp Edwards saying that he'd let anyone
in as long as they had proper ID.

Herald investigators also witnessed several evacuees openly hitting the
bottle from brown-bagged containers, while others poured booze into jugs
or plastic cups and casually sipped drinks at the local Wal-Mart bus
stop.

One elderly man was seen pouring a bottle of vodka into a water bottle
and spent the afternoon sipping the liquor outside the Wal-Mart.

One Camp Edward's source said evacuees grabbed liquor off shelves at the
U.S. Coast Guard store on the base and drank it in the aisles. They
couldn't even wait to get outside. What a joke!

FEMA has issued more than $1.5 billion to 607,000 Katrina victims.

In addition to the $2K of free money, the Camp Edwards residents have
been treated to Red Sox and New Orleans Saints games, Boston Duck Tours,
a chowder fest, concerts, and free cell phone and Internet service, as
well as cookouts.

Yea I know... I'm a heartless guy.

Whatever.

Only in America,

- Luke Burgess