TER: Are there any you can share with us?

JP: I'll mention two. Mega Uranium Ltd. (TSX:MGA) and UEX Corp. (TSX:UEX ). Cameco Corp. (TSX:CCO) owns 21% of the shares of UEX and UEX is partnered with AREVA (ARVCF:OTO), the French nuclear giant, which is the world's second largest uranium producer, on its Shea Creek uranium exploration property. Shea Creek has produced spectacular high grade intersections over startling widths. My view is that UEX will most likely be taken over either by Cameco or by another nuclear industry participant.

I think that Mega Uranium looks interesting right now. The company just did a financing, which has depressed the stock. Mega's strategic partnership with Japan Australia Uranium Resources Development Co. Ltd. and ITOCHU, the Japanese syndicate, is a very promising development for the company.

TGR: I know you recently returned from Mongolia. Can you give an update on what you found over in that section of Asia?

JP: Ivanhoe Mines Ltd. (NYSE:IVN, TSX:IVN) , the Canadian exploration company, finally executed an agreement with the Mongolian government with respect to the development of Oyu Tolgoi, the world's largest undeveloped copper mine. This is a massive mine that will generate $5 billion of revenue per year for over 50 years. While this a positive development of Ivanhoe, a stock that we've been trading from the long side all year, it will be much bigger story for the Mongolian stock market.

Mongolia GDP is only about $5 billion, so Oyu Tolgoi, or OT as the mine is called, will transform the prospects for employment and per capita GDP growth. A great wall of domestic liquidity will support the local stock market, creating a new bull market which will last for decades. The local stock market currently has depressed valuation and almost zero liquidity Mongolia has structural similarities to other emerging markets that started out with very low market capitalizations, such Vietnam or the smaller Gulf states. There's 24mineral projects that have been deemed strategic by the Mongolian government and that represent potential sources of commodity exports.. The Ivanhoe deal marks the beginning of the Mongolian mining boom and I think the most leveraged long-term way to play this mining boom is through the local stock market.

TGR: How does an individual investor play the boom through the Mongolian stock market?

JP: There are no restrictions on foreign ownership of stock and the currency is freely exchangeable. It's easy to open up a and fund brokerage account. The hard part is finding shares to buy because the market is very thinly traded. It's possible to get a small amount of stock from time to time, although the entire market capitalization is only $500 million and the free float is much smaller. I think that it's certainly worth taking time to do a little bit of research and look at some of the larger stocks that are listed on the Mongolian stock exchange.

TGR: You mentioned there are 24 mineral projects and the big one is Ivanhoe with copper. With the recession worldwide, would we expect to see any return from anything in Mongolia for the next five years?

JP: The copper prices had a massive recovery. OT would be profitable at current copper prices. And Mongolia has other commodities, including coal, uranium, and iron ore.

TGR: Thanks so much for your time today, James.

Courtesy: The Gold Report 

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