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Globetrotting Mickey Fulp Brings Back Exciting News

on 6/18/2011

There are plenty of arm-chair metals experts who make decisions based on information they dredge up from various sources. But the best experts put on their work boots and willingly get their hands dirty by visiting mines.

Mickey Fulp – the "Mercenary Geologist" – is exactly the kind of expert who earns our respect by visiting far-flung projects around the world and reporting back with the kind of insight that can only be gleaned from being on location.

At the recent Cambridge House Resource Investment Conference in Vancouver, we caught up with Mr. Fulp on day 30 of his 36 day/8 country tour. He was tired and jet lagged (especially because of a stint above the Arctic Circle 10 time zones away and where the sun currently doesn't set) but generously sat down with us to report on his tour.

The first leg of his tour took him to Eastern and Southwestern Europe: "After leaving the Hard Assets Conference (in New York), I went to Kosovo and Portugal to look at a company I cover called Avrupa Minerals Ltd (TSX-V: AVU)," Mr. Fulp said. Avrupa has interesting projects because of their locations – Kosovo and Portugal aren't often thought of as mineral-rich countries but readers will be surprised to learn why Mr. Fulp likes this company's locations: "They have lead-zinc-silver plays in Kosovo, and Kosovo is the largest historic producer of lead and zinc all of Europe. They also have two projects in Portugal which I visited. In northern Portugal, they have a tungsten-gold skarn project, and Avrupa recently joint-ventured that project to a new junior company that will IPO in the next few months. Then I went to southern Portugal to the Pyrite Belt. Not a lot of people know this but the Iberian Pyrite Belt is the largest accumulation of sulfide in the world. Mines have produced from Roman times up to the present. There's a big copper-zinc mine in the area – Neves-Corvo of Lundin Mining – and Avrupa has plays to the north of that large mine in an underexplored part of the belt. By the time this interview is published, they will have a joint venture announcement with a mid-tier mining company to explore those projects."

After investigating Avrupa, Mr. Fulp spoke at a boutique investment symposium in Geneva. "I spoke on how to evaluate rare earth companies for speculation. As you're well aware, there are over 200 public rare earth companies but only about ten of them that have a shot at operating a successful business model."

Next, Mr. Fulp travelled north to Sweden where Tasman Metals (TSM.V) operates. "I went to Tasman's Norra Karr project, a heavy rare earth project that is currently finishing a third round of drilling." This drilling will generate a new resource estimate, Mr. Fulp reported. "Everything looks very positive on that project. It's rich in heavy rare earths with the highest percentage of any significant deposit  and it's very well situated in Europe with excellent infrastructure: Tasman essentially has a monopoly on all the significant known rare earth element occurrences in the European Union."

After Sweden, Mr. Fulp went to Estonia (just across the Baltic Sea from Sweden). "I went to Silmet and saw the rare earth separation plant – one of three light rare earth separation plants operating outside of China." Mr. Fulp quickly reviewed these operations outside of China: "Molycorp (NYSE: MCP) produces about 3,000 tons of rare earth element oxides a year, Silmet produces about the same number, and there's a small plant in Kazakhstan that produces very minor amounts. That was very interesting and I've recently written about that experience. I learned a lot about the downstream processing and marketing of rare earth element compounds and metals."

Mr. Fulp continued, adding some insight about the rare earth sector as well as one of the key players in the sector: "Molycorp bought Silmet about two months ago for an all-stock deal valued at about $90 million at the time. Molycorp is putting together a complete mine-to-magnet organization. Silmet will be expanding its product line and its capabilities to generate more kinds of products. Right now they produce lanthanum, cerium, neodymium, and praseodymium, and I think you're going to see some other products come out of Silmet in the future."

Mr. Fulp then went north again, to northern Finland and the Arctic Circle to look at Mawson Resources’  (TSX: MAW) project, which we reported about last time we spoke to Mr. Fulp. "That's arguably the highest gold-uranium discovery ever made," Mr. Fulp said. "It has bonanza grades in both metals. There are surface exposures only at this time but numerous small occurrences within a big area."

Mr. Fulp explained Mawson's short-term plan: "It's still early stage. They are prospecting through the summer and they keep finding more occurrences. They don’t have permits yet so won't drill until next year. They have a crack geological team mapping at all scales and they really need that to determine the directions they will drill. It could be simply a curiosity of high grade material with no continuity; it could be a world-class gold-uranium discovery. At this point, we don't know but it's likely to be something in between those extremes."

After traveling around Europe, Mr. Fulp returned to North America and we met up with him in Vancouver at the Cambridge House Resource Investment Conference – the last leg of his tour before he returns home.

When we last spoke, he gave some compelling and contrarian thoughts about the market correction, and he believes that little has changed since we last spoke: "We're still in a disinterested market," he said. "Commodities took a correction but gold has come back. Silver is now trading in the upper $30's again. But the market is disinterested. We've got the summer doldrums coming up. It's going to be a choppy market likely until after Labor Day… but we should look at these markets as buying opportunities."

So what is Mr. Fulp looking for? "I'm looking for unloved and undervalued stocks. I'm on the sidelines right now and I want to see this scenario play out. I don't think we've seen the bottom of this market. I don't think we'll see the bottom until mid- to late- summer, so what's the hurry right now?"

Lastly, we asked him for his take on Germany's recent announcement about reducing their dependence on nuclear power. Mr. Fulp gave us his point of view: "It doesn't actually take much uranium demand off the market. If you add up the four Japanese reactors that will never produce again, plus Germany's seventeen reactors by 2022 [that they are taking offline], and do a supply-demand equation, it will only take about 5-10% off of current demand over the next 11 years. We still are in a 30% deficit of mine supply every year. Where's that uranium going to come from? The percentage is meaningless in terms of the supply-demand equation. There are 60 reactors in various stages of construction right now. Markets run irrationally and on emotion and don't often run on supply and demand fundamentals. Let’s operate within that context. We'll buy uranium stocks when they're downtrodden and sell them when they are in favor again."

Mr. Fulp spent 36 days on the road, much of that on the ground, visiting operating mines and exploration projects, and reporting back on what he found. That's the kind of expertise that smart investors listen to when they're researching the next addition to their investment portfolio.


I own Avrupa Minerals Ltd, Tasman Metals Ltd, and Mawson Resources Ltd, and they are sponsors of my website.


Mickey Fulp

Avrupa Minerals

Tasman Metals Limited

Mawson Resources Limited







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