The Extract Complex

Wednesday, Jun 24 2009 by

This thread relates to companies, news etc that surrounds ASX listed uranium explorer Extract Resources (ASX:EXT) - Extract's latest investor presentation can be found here: . The attractions of Extract are:

a) It has consistently underpromised and overdelivered

b) It has made one of the most significant uranium discoveries in decades, in politically stable & mining friendly Namibia. [It now has Namibian govt linked directors on its Board]. Once fully scoped its undeveloped resources are likely to be at least 550Mlb of U3O8, according to Kalahari's chairman. 292Mlb of JORC resources are currently declared, with exceptional grades for the ore type (439ppm average). An independent estimate, based on drilling results released up to 18Feb2010, suggests that a total of at least 434Mlb  should be identified in the next JORC estimate. Recent trade sales indicate a value of US$6/lb is conservative for undeveloped resources - suggesting US$3bn as a conservative valuation.

c) It has attracted the interest of Rio Tinto, who have substantial shareholdings in Extract and Kalahari. If you study the 2007 and 2008 "stakeholder reports" for Rössing Uranium, you will see that the existing Rössing mine is in need to new ore sources: and 

d) The initial scoping study for developing a mine has indicated a target production rate of ~15Mlb U3O8 pa. This rivals production from the world's largest current U mine at McArthur River, Canada (which has reserves of 333Mlb by comparison to Rossing South's resources). Indicative cost figures will also place Rossing South amongst the world's lowest cost producers.








NB: The vast majority of U3O8 is sold on long term contracts and the spot market is small & illiquid.


Long Term Contract U3O8 Price


Linked Companies

All the following companies have significant investments in Extract (either directly or via investments in Kalahari, which owns 40% of Extract), hence understanding Extract and goings on surrounding it is rather important, if you have a direct interest or an interest in any of these companies:

Kalahari Minerals (AIM:KAH)

Polo Resources Ltd (AIM:PRL)

Emerging Metals (AIM:EML)

Niger Uranium Ltd (AIM:URU)

NWT Uranium (TSX-V:NWT) (33.8% shareholder of Niger Uranium)

AfNat Resources (AIM:AFNR) (11.7% shareholder of Niger Uranium)

Regent Pacific (HK:0575)

Brazilian Gold Corporation (TSX-V:BGC)


All of these companies have connections with the directors of Uramin, which was sold to Areva for US$2.5bn in 2007. Of particular note is the heavy involvement of Stephen Dattels (see and James Mellon (see See this thread: to keep up-to-date on SD's activities (and for further background).

*Ambrian is confident that the resource will exceed 560Mlb. See$/News.aspx?id=119


Forthcoming Events

I am now expecting the following newsflow over the next few weeks and months:


Links & Further Reading

Paydirt article on Extract's recent history:

Useful Wikipedia articles (these are excellent IMO):

Uranium supply & demand thread:

Illustration of Rössing South resouce drilling and results:

A website that dynamically calculates the discounts of KAH, URU and EML to the value of their tangible assets:


Recent Presentations by Extract & Related Companies

February 2010 Mining Indaba:

March 2010 Paydirt Uranium conference, Adelaide:

Kalahari update, February 2010:

Audio Interview with Kalahari's Mark Hohnen:


DISCLOSURE: I have shareholdings in Extract, EML and Polo. Together (even after topslicing) these consititute a significant part of my overall portfolio.

Filed Under: Asx, Uranium,


The author may hold shares in this company, all opinions are his own and you should check any statements that appear factual and not rely on them before making an investment decision. The author is NOT a qualified analyst nor authorised to give investment advice. Whilst the author is a director of ShareSoc, all views expressed are entirely his own and not necessarily those of ShareSoc.

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URU Metals Limited is engaged in exploration and development of mineral properties in South Africa and Sweden. The Company's segments include Exploration and Corporate office. The Exploration segments include obtaining licenses and exploring these license areas. The Company's projects include Zebediela Nickel Project, The Narke Oil-Uranium Project and Nueltin Lake Gold-Uranium Project. The Zebediela Nickel Project is located in the Limpopo Province of South Africa close to the platinum mining town of Mokopane. The Narke Oil-Uranium Project is located approximately 150 kilometers west-south-west of Stockholm. The exploration licenses cover approximately 7,087 hectares of land overlying prospective Alum Shale outcrops. The Nueltin Lake Gold-Uranium Project is located in the Kivalliq Region of the Territory of Nunavut, Canada. The Nueltin Project consists of 34 mineral claims and a mineral lease covering a combined area of approximately 27,279 hectares. more »

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433 Posts on this Thread show/hide all

marben100 18th Feb '10 294 of 433

Oops, I missed another v important point in the Kalahari RNS (thanks to gero for spotting it!):

We expect that the pre-feasibility report, which is due in June 2010, will indicate production throughput levels higher than the 15Mtpa reported in the scoping study, further reiterating the enormous potential of this project to support one of the world's largest uranium mines."


[my bold]

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marben100 19th Feb '10 295 of 433

Some interesting comment from Ambrian posted on Kalahari's website:


...In our view, recent goings-on between Kalahari shareholder Niger and Niger shareholder NWT were a distraction, and nothing more now that Niger has sold around half of its Kalahari shares and proposed to distribute the remainder. Moreover, while we think it unlikely Niger will eventually call for Kalahari to distribute its Extract shares; should the request be made, it would certainly be voted down by Kalahari shareholders in our view.

Further restructuring is also probable: of Polo's 9.3% holding in Extract; and the potential for the Kalahari and Extract structure to be 'collapsed'. That would remove the Kalahari implied discount to Extract (currently at 8%), and deliver a much cleaner corporate structure.

Key share price drivers for Kalahari will be the release of a resource upgrade and following pre-feasibility data around mid-year. We expect the pre-feasibility will indicate production throughput higher than the 15Mtpa in the scoping study given the size of the resource, and note that even at a conservative US$50/lb, 6x EBITDA lifts from £2.69/KAH share at 15Mtpa to £3.58 at 20Mtpa. For energy bugs, 6x EBITDA at 25Mtpa and US$60/lb equates to £6.20/KAH share, although it is probably too early to be banking on reaching 25Mtpa!



Of course, we must expect some dilution along the way to fund CAPEX and the "T" in EBITDA is a particularly important factor (37.5% is the going rate in Namibia, currently), OTOH even $60/lb may prove conservative.



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marben100 19th Feb '10 296 of 433

...and EML comment:

The Directors of Emerging Metals commented:

"EML shareholders will be pleased to see the announcements made yesterday by
Extract and Kalahari. The recent drill results by Extract indicate the
extraordinary potential of Rossing South. There is potential for the deposit to
support a major project which will be strategically important to future
customers vying for the long term supply of U308 as the significant build out
of uranium reactors plays out over the next decade and beyond. Extract is now
deploying 15 drill rigs, and 5 additional rigs focused on exploration targets
outside of the two main zones. The main zones are being intensively drilled.
This may result in the upgrade of the resource to `Indicated' status for
inclusion in the feasibility study, as stated in Extract's release. Of
particular note is the number of higher grade intercepts which could enhance
the project's economics. In view of the very positive progress being made by
Extract and the importance of that company to EML through its strategic holding
in Kalahari, the Directors encourage EML shareholders to continue monitoring
information about Extract and Kalahari."


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Gero 21st Feb '10 297 of 433

Hi All

Very interesting interview with Jim Mellon.

I have attached a link below to the full interview.


"You are also investing in commodities through Regent, which is now a mining investment company listed in Hong Kong, with your partner Steve Dattels, former finance director of Barrick Gold. Your start-up UraMin was sold in 2005 to Areva for US$2.5 billion and now you are doing the same with Emerging Metals Ltd which has a stake (via Kalahari Minerals) in the Extract Resources uranium deposit at Rossing South, which looks as if it could be the largest deposit ever found.

Steve and I started UraMin in September 2005 with US$100,000 split 50/50 over a drink at my pub the Commander in Notting Hill Gate. We sold it for US$2.5bn in September 2007 and shared US$130m. I took him out to celebrate at the Eiffel Tower restaurant. We are now doing similar with Emerging Metals Ltd (listed on London's AIM market) with a stake in the Rossing South uranium deposit in Namibia, which is even bigger.

You are backing solar power and have been quoted as saying, "Solar is genuinely clean, it ticks all sorts of zeitgeist boxes. Within five years, solar power will be as cheap as oil and gas without the subsidy … it will be bigger than the internet in five years." Emerging Metals Ltd was set up as a vehicle to invest in materials that are used in solar panels but its only major investment so far has been the (admittedly spectacularly successful) stake in the Rossing South uranium mine. Is this because you are losing faith in the solar future?

No, I am just as keen on solar power. The potential of the Rossing South mine is staggering and we seized the opportunity to invest in it. When Emerging Metals realises its stake one way or another we will refocus on solar investments."

Also found this Jim Mellon video interview with the Financial Time (27/03/09).



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marben100 21st Feb '10 298 of 433

Thanks Steve - just to correct the link that you've posted, it should read: 



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marben100 21st Feb '10 299 of 433

I have now finished processing the latest batch of drilling results. First of all, here is a picture showing the location of the new drilling (you may need to click on the link above to see the full picture):


Yellow cells represent new infill-drilling & green cells respresent drilling in previously undrilled 100m x 100m cells.


Why the focus on infill-drilling?

As you can see, most of the drilling is infill with only a few extensional holes. This explains the relatively slow rate of addition to resources, despite a large number of rigs being deployed (though the reported results refer to holes drilled some time ago, due to lab turn-around times for assaying). So, why is the company focussing so much on infill drilling when it might be able to book much larger resource increases by doing more extension/explo drilling?

I think this next image offers an explanation:


I have scaled this image (based on my spreadsheet) so that the 100m x 100m cells have a more accurate geometry (i.e. are square!). The picture is a "heat-map" of average U3O8 grades through a slice from 100m to 200m downhole, i.e. vertical depth 87m - 173m, taking account of the drilling dip angle. Green cells represent an average grade of 50-150ppm U3O8 across the whole slice, orange is 150-300ppm and red is more than 300ppm. All of these figures are good for mining, considering that they are averages and that in practice waste rock will be discarded from between the embedded higher grade layers of ore.

I have drawn some very rough possible pit outlines, at the stated depth, on the image. Ultimately, it is likely that these individual pits will be combined into one giant "superpit", to access high-grade resources at greater depth in the area between zones 1 and 2 that is barren at this relatively shallow depth. Now consider how large these initial pits are. They are all at least 500m x 500m. The zone 2 pit is more than 1km x 1km. Remember that to achieve that scale at this depth the sizes at the surface have to be rather larger, to accommodate the slope of the pit walls. I.E. each of these pits is a major engineering project.

ISTM that designing these pits correctly (taking into consideration their development over time) is a significant part of the feasibility study that is now underway. Clearly, the last thing we want to do is conduct these designs based on inadequate data, therefore infilling to a 50m hole spacing is likely to be on the project "critical path" to completing the definitive feasibility study (DFS) planned for mid-2010. ISTM that this explains the current focus on infill drilling. Once sufficient infill-drilling has been conducted that the pit designs can be undertaken to a good degree of confidence, the focus can switch back to explo drilling.

I have examined how much infill drilling we've done so far in zone 2 and conclude we're about half-way there. Around another 90 holes are likely to be needed, I estimate. Considering the lab turnaround, I would guess that infill drilling will be more or less complete by the end of March and we'll see the last results from it by May (when results are back from the lab).


Implications for Production

One key output of the DFS is the profile of expected production over time. That in turn has big implications for the NPV of our resource and hence the value of the company. Once again, this profile is heavily dependent on the pit designs - and how many pits we choose to work on at any given time. Digging them in parallel clearly leads to much higher production than digging sequentially - but also requires more resources of all kinds (equipment, power, water etc etc).

Given that we appear on track for 400-500Mlb U3O8 resource from zones 1 and 2 (ignoring the southern extension for now), moving towards 20-25Mlb p.a. production, yielding a 20 year mine life, would seem like a reasonable target to aim for (and would give a big uplift to Extract's value). However, besides the technical issues, we'd want to be confident that we have customers for that much yellowcake.

That might give some insight into the "partnership proposals" that Extract has indicated it is expecting. Each of our potential customers/partners will have a pretty clear view of their own future requirements. These include:

  • Areva
  • Korea (Kepco etc)
  • Russia (ARMZ)
  • China
  • India

It would clearly be useful to get firm commitments to take a certain volume of annual production, if we can produce it. This could also clearly develop into a bidding process, if their combined requirements (additional to currently known sources) exceed our capacity, which I believe is likely.

Intersting & busy times ahead for Extract.



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lamanga2004 21st Feb '10 300 of 433

Great post Mark.

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tournesol 21st Feb '10 301 of 433

Awesome contribution Mark

Thank you so much

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wantedman 22nd Feb '10 302 of 433

Thanks Mark-as always great work you did there :-)

Here is RBC's latest take on EXT (thanks to ifew) -nothing really new,but always good to get our own views confirmed...


Source - RBC Equities Australia

February 18, 2010

Extract Resources Limited (ASX: EXT; 7.22; TSX: EXT)

More Positive Drilling Results from R?ssing South


Speculative Risk

First Impression
On February 18, 2010, Extract announced further drill results from its R?ssing South project in Namibia. In the press release, Extract released the results of 75 drill holes from Zone 1, Zone 2 and the Zone 2 Southern Extension.

Most of the holes appear to be from infill drilling which we expect will result in an improvement in the resource quality. Extract reports that the system remains both down dip and along strike. The company currently has 14 drill rigs on site (8 RC and 6 diamond core) with the goal of upgrading the resource to the indicated level for use in a Definitive Feasibility Study. One additional rig is carrying out sterilization drilling for the proposed mill and tailings facilities.

In the results released on the 18th, there were many high grade intercepts, including 24 higher than 1000 ppm U3O8 (these intercepts average 15 metres and 1614 ppm). Overall, we estimate the weighted average grade above the 100 ppm cut-off for the 75 drill holes is approximately 478 ppm with an average width of 19 metres. This compares favourably with the currently defined 43-101 compliant resource of 267 million pounds grading 488 ppm (at a 200 ppm cut-off, the weighted average grade of these results is approximately 540 ppm).

The company is also deploying additional rigs to test exploration targets outside of Zone 1 and Zone 2. We anticipate they will hire four to six rigs. Given recent results, we think there is a very high likelihood of positive results from this campaign.

We continue to believe that the Roessing South project is one of the best uranium exploration projects in the world and has already become a strategic asset to the future of the nuclear renaissance. We reiterate our Outperform, Speculative Risk rating.

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marben100 22nd Feb '10 303 of 433

Thx wantedman. There is an audio interview with Mark Hohnen from 27th Jan here:

I have included it and links to other recent presentations in the thread header.



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marben100 24th Feb '10 304 of 433


I'd like to draw readers' attention to a little side issue that is currently brewing...

This map (taken from ) shows Extract's licences:


EPL3138 is the main focus and contains the Rossing South & Ida Dome discoveries.

EPL3139, however, is also thought to be prospective for uranium. You will note that the explo rights for nuclear fuels within that EPL were under application but not granted. However, according to this document (page 6), unearthed by Fordtin on another site, these rights have now been granted.


Extract's rights to EPL3139 were obtained as part of the original agreement between Extract & Kalahari Minerals :

Kalahari Minerals Plc, the AIM listed mining exploration and evaluation group with a portfolio of copper and uranium prospects in Namibia, is pleased to announce that it has entered into Heads of Agreement ('HOA') with Extract Resources Ltd (ASX:EXT), a company incorporated in Australia, whereby the companies have conditionally agreed to consolidate their respective interests in their common uranium projects in Namibia.

The transaction will be effected by Extract issuing 667 million (pre-consolidation) new fully paid ordinary shares (on a pre-reconstruction basis, or 66.7million new fully paid ordinary shares on a post-reconstruction basis as referred to below) in Extract to Kalahari in consideration for the acquisition of Kalahari's 49% interest in the Husab Joint Venture, and its nuclear fuel rights (under application) in respect of EPL  3139 (Ubib) (the 'Sale Assets').

This transaction was confirmed here :

...All conditions have now been met including the issue to Kalahari's subsidiary,
Kalahari Uranium Limited ('Kalahari Uranium'), of 66.7 million new ordinary
shares in Extract and the completion by Extract of an A$15 million capital
raising.  Following the issue of these shares and the capital raising, Kalahari
Uranium holds a 36.4% interest in Extract on an undiluted basis and 34.3% on a
fully diluted basis...

...Kalahari Chairman Mark Hohnen said, 'The completion of this transaction will
enable us to focus on our copper and new base metal assets, whilst at the same
time, through our major holding in Extract, ensure our continued exposure to the
potential upside of these uranium prospects...

Whilst the nuclear fuel rights had not been granted, EPL3139 continued to be owned by Kalahari subsidiary West
Africa Exploration (Namibia) (Pty) Limited ('WAGE'), in respect of rights to other metals.


Hope you're following this so far because... things get a little messy when late last year Kalhari sold WAGE to North River Resources Plc . North River's homepage includes a map showing EPL3139. North River announced an update to its progress yesterday:


At Ubib, the Company is actively negotiating farm access contracts, following which it is intended to commence extensive field surveys aimed at delineating drilling targets.  Early surveying and historical data has indicated the licence is prospective primarily for copper, gold and uranium.  Indeed, the tenement extends to within 30km of Rossing and Rossing South uranium assets.  An application for an amendment to the existing licence to include nuclear fuels (uranium) has been submitted.

(Ubib = EPL3139)

Fortin's discovery (which I have also have some independent corroboration of) indicates that the nuclear fuel rights under EPL3139 have now been granted.


Extract has been asked by certain investors to clarify the situation regarding this licence.



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WigAndGown 26th Feb '10 305 of 433

According to the Chamber of Mines of Namibia website (feb '10 epl list) the licence, which includes nuclear fuels minerals, was granted last april and remains in the hands of WAGE. Since the grades get higher the further south and west the results go it'll be interesting to see how keen ext are to reclaim epl 3139 given it's location is north-east of rossing and rs.

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extrader 26th Feb '10 306 of 433

Hi all,

I wonder whether there's a risk developing of " Penny Black syndrome" ?

This is the tale of the amateur collector who phones up his philatelist advisor full of excitement, to say that he's discovered a bathroom papered in Penny Blacks in a house he's refurbishing......what should he do ?

"Destroy them smartish is the reply" - to maintain the value.

It seems to me that - with its hands pretty full already ;> - EXT may want to reclaim 3139 simply to keep it 'on ice' for as long as possible....

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marben100 1st Mar '10 307 of 433

Appointment of new CEO for Extract announced:

(sorry can't copy text from the announcement). It is Jonathan Leslie, who seems rather well qualified for the role:


Jonathan Leslie spent 26 years with Rio Tinto until 2003 and was appointed director of Rio Tinto plc in 1994. He had wide experience of Rio Tinto’s interests in Africa, Australia, Latin America and the United States, including as Managing Director of Rössing Uranium in Namibia. Mr Leslie was Chief Executive of Rio Tinto’s Copper Group from 1997 to 1999 and Chief Executive of Rio Tinto’s Diamonds and Gold Group from 1999 until 2003. In 2003 he joined Sappi Limited where he was Chief Executive Officer until 2006. Mr Leslie was educated at Trinity College, Oxford, receiving a Master of Arts degree in Jurisprudence. He was called to the Bar in 1974.

(he subsequently became chairman of Sappi).




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Gero 2nd Mar '10 308 of 433

Hi All

Polo has notified Berkeley Resources today that it has ceased being a substantial shareholder as it has sold 14,100,000 share for a total of A$17,625,000.

Any ideas what Mr D might use the funds for?



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marben100 3rd Mar '10 309 of 433

Might Polo really be selling its stake? I wonder...

SYDNEY (Dow Jones)--Polo Resources Inc. (PRL.LN) has received strong interest from mining companies and offtakers in its stake in Australia's Extract Resources Ltd. (EXT.AU), which owns one of the world's largest undeveloped uranium deposits in Namibia, Polo's managing director said Wednesday.

London-listed Polo, which has appointed BMO Capital Markets to advise on its strategic options, will likely decide whether to sell its 9.29% stake in A$1.8 billion-valued Extract within the next two months, managing director Neil Herbert said.

"From our side we'd like to put more investment in coal over the coming year and that's part of our rationale for coming out of uranium," Herbert told Dow Jones Newswires.

"We are looking at a number of additional projects" in the coal sector, he added.

Herbert didn't disclose the identities of any of the possible bidders for the company's stake in Extract, which is based in Western Australia state.

Shares in Extract jumped to A$7.20 at end of trading Tuesday from A$4.49 on March 31 last year, when Polo first said it had invested in the company.

The share price rise reflects promising drilling results at its Rossing South mine in Namibia, as well as rising interest in uranium as Asian and other countries prepare to install vast amounts of new nuclear power capacity in coming decades.

Polo's strategic review is taking place as Extract prepares to weigh up bids from companies interested in developing the Rossing South mine, which is located to the south of Rio Tinto Ltd.'s (RTP) producing Rossing mine.

Extract says Rossing South has the potential to produce 15 million pounds of uranium oxide a year...





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marben100 3rd Mar '10 311 of 433

Our chairman speaks...

LONDON (Dow Jones)--Demand for uranium will continue to grow "for many years to come" the head of Extract Resources Ltd. (EXT.AU) told Dow Jones Newswires Wednesday.

"There is pressure on the uranium price but we think the fundamentals are going to drive a very solid demand dynamic," Steve Galloway, chairman of the Australian-based uranium exploration and development company, said.

Uranium is a "solid long term investment", Galloway said, despite spot prices currently being around $40 a pound after rising to over $100/lb in 2007.

"The contract prices are fine and we're not worried about spot prices. We would absolutely negotiate most of our production into long term price contracts," Galloway commented, speaking from the BMO Capital Markets Global Metals & Mining Conference.

Most uranium is supplied under long term contracts and the prices in new contracts often reflects a premium above the spot market.

Extract Resources is focused on Namibia where it owns the Husab Uranium Project, which contains the Rossing South and Ida Dome uranium deposits.

The major shareholder is Kalahari Uranium Ltd. (KAH.LN), while Rio Tinto Ltd. (RTP) owns 15.2% and has been touted as a potential acquirer of the group, or as a joint-venture partner at Rossing South.

(as you can see from the chart in the header, long term contract prices are currently being agreed at around US$60/lb)



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moniclub 3rd Mar '10 312 of 433

"The contract prices are fine and we're not worried about spot prices. We would absolutely negotiate most of our production into long term price contracts"

FWIW, backing up this element of the comment:

Steve Kidd, director of strategy at the World Nuclear Association, told the Mining Journals' Uranium Day in late January that only 10% of uranium trading takes place at the spot price  

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ohisay 3rd Mar '10 313 of 433

In your face but seemingly well written article on Emerging Metals .
Confess I hadn't appreciated there was an issue around the Tsumeb stock piles project come July -though the potential dilution is hardly earth shaking .
I think he's missing a trick because he's giving the a cash issue/cash burn too much prominence in his thinking.

Not a bad site otherwise with some good write ups on other companies in his "stocks to watch"


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