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Thursday, October 19, 2006

Latest Update

Primer on my investment outlook

Well. I've pretty much got the same constituents from a few months ago, and am waiting for an opportunity to exit most of my positions. The US housing market seems to be collapsing, and I think it will set off a chain reaction. US consumers will retrench causing a reduction in demand. Chinese factories satiating US demand will do bankrupt and the bull market in commodities will, at least temporarily collapse.
SHN (Sherlock Bay Nickel) changed its name to ARH (Australasian Resources). A year ago, this company was flirting with banruptcy. Here is an excerpt from a recent article..


PERTH-based Australasian Resources has received the preliminary backing of China Metallurgical Construction Corp (MCC) to develop its Balmoral South iron ore project in the Pilbara region of Western Australia.

Australasian Resources managing director Darren Hedley and MCC president Shen Heting signing the MOU in Beijing this week

Managing director Darren Hedley inked the deal in Beijing earlier this week where he was joined by Mineralogy chairman Professor Clive Palmer, whose company has signed a deal with Chinese group CITIC Pacific for the sale of up to 6 billion tonnes of magnetite ore adjacent to the Balmoral South deposit.

Under the terms of the non-binding memorandum of understanding, which is subject to board approval within 30 days, MCC will play a pivotal role in financing and offtake agreements for the project.

MCC, China's leading state-owned construction company with assets of $US4.35 billion ($A5.79 billion), will provide a commercial proposal for the construction of the project where Promet Engineers have previously completed an engineering study. The study indicated a cost of $2.1 billion for a 12 million tonne per annum magnetite concentrator, a 7Mtpa pellet plant and 1.45Mtpa Mindrex hot briquetted iron/direct reduced iron (HBI/DRI) plant.

MCC has also agreed to take an equity investment in Australasian, with the financial details yet to be agreed.