Independent Research and Analysis of
Emerging Small Cap “Champions”:
Speculative, Undervalued, “Home Run” Opportunities in Today’s Markets

Special Trading Alert Just Issued: BM (TSX-V)

Invest with the wisdom of Solomon, and supercharge your portfolio!

Welcome to our site, or at least a sneak preview of it! The final version will look much different than this, but in the meantime be sure to visit us often to check out our new “Simulated Portfolio”, research reports, market analysis and general updates. Our aim is to provide investors with insightful market commentary and to point out what we believe are possible individual stock opportunities - special situations that many investors may have overlooked. Please read our disclaimer below. We are not in the business of giving buy, sell or hold recommendations, nor are we in the business of “promoting” issues. We exist for informational purposes only and we encourage you to follow up on our reports with your own due diligence.

Our first highlighted stock has been a stellar performer. On May 31 we issued a report on Greencastle Resources (VGN, TSX-V) which was trading at 15 cents. Greencastle has performed extremely well over the past three months - it reached all-time high of 63 cents June 26 - and closed August 29 at 34.5 cents. We continue to be very excited by this profitable little company as you’ll read on this site.

Our second featured stock, BacTech Mining (BM, TSX-V), has the same potential as Greencastle in our view. BacTech has been under increasing accumulation since near the end of May. Yamana Gold (YRI, TSX) recently gave BacTech a strong vote of confidence by becoming its largest shareholder, taking a 20 per cent position through a transaction that also gave BacTech its first refractory gold project. We see great things ahead for BM over the next 12 months as it undertakes additional projects, accumulating an inventory of up to three million ounces, and continues to work with Yamana.

On Monday, September 1, we released our Simulated Portfolio consisting of 30 stocks and two ETF’s (read all the details below). We strongly believe our portfolio will significantly outperform the market. Keep visiting our web site often to track our portfolio’s progress and get updates on any “transactions” we have completed.

Disclaimer
SolomonSmallCaps is completely independent from any companies we cover. We accept no compensation of any kind from any groups, individuals or corporations mentioned on this site. Our stock coverage is for informational purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. No investment opinion or other advice is being rendered on any stock or company. We strongly recommend that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, and do your own due diligence and research before making any investment decisions. The stocks we cover, by definition, are highly speculative and potentially very volatile. Investors are cautioned that they may lose all or a portion of their investment if they make a purchase or short sale in these speculative stocks. We are not Registered Securities Advisors. Our opinions can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction. Editor of SolomonSmallCaps is Mr. Jonathan Patrick (British Columbia, Canada, an individual investor with over two decades’ experience in the junior resource market. He is an entrepreneur and former radio broadcaster and journalist). It should be assumed that the author and editor and their associates may hold or dispose of or trade in positions in any securities mentioned herein at any time.

UNBELIEVABLE

September 29, 2008

After witnessing today’s incredibly bizarre political developments, I’m sorry to say this, but the United States deserves a financial disaster. That’s not what I want to see, and I’m as pro-American as any Canadian or even most Americans for that matter, but Washington is broken and the American people just don’t seem to have any understanding of Economics 101 at the moment. The end result is one huge mess, and one that’s only going to get worse.

The U.S. House of Representatives today, of course, voted down the poorly-named “bailout plan” in a fairly close vote with most Republicans going against it. House Speaker and Majority Leader Nancy Pelosi proved beyond a shadow of a doubt today why she is the most dangerous person in America next to Barack Obama. Just moments before the critically important House vote, Pelosi - who is so far to the political left she makes Canada’s Jack Layton look like a pragmatic centrist - delivered a sharply partisan speech attacking the economic policies of the Bush Administration for the past eight years (she seems to have forgotten about the tech bubble and the collapsing markets and economy at the end of the Clinton administration, not to mention the fact the Democrats have been the majority party in Congress over the last two years). At the precise time when Congress needed leadership and bi-partisanship today, Pelosi went on the attack like a pit bull. Not exactly a smart way of setting the right tone for a hugely important vote. Then she closes with, “Wall Street, the party is over.” House Republicans, rightly or wrongly, took exception to her tone and voted her bill down.

Pelosi got her closing line half-right, anyway. What she should have said is, “America, the party is over.”

The Dow suffered its worst point-loss in history today, 778 points, while the TSX plunged 841 points. The Venture Exchange, which was just beginning to show some strength in recent days, unfortunately fell nearly 10% to 1,382. Gold, of course, went higher, while our most recent recommendation - BacTech Mining (BM, TSX-V) - was probably the best stock on the entire planet today, jumping 45% on just over a million shares. If you bought BM today, hold on to it. If you didn’t buy it today, look for an opportunity tomorrow. We are hugely bullish on this play and we do expect the Venture Exchange to straighten out and head north again as the reality of much higher gold prices starts to set in.

The United States is in an extremely serious financial situation with credit markets freezing up and more bank failures on the way. What should we anticipate now, especially with the politicians unable to get their act together? Expect the Federal Reserve to take out all the tools in its toolbox and do whatever it can to inject as much liquidity as possible into the system. This is going to send gold through the roof.

Even if the $700 billion dollar rescue plan is revisited and somehow gets passed in the coming days, it’s only a one-step measure to temporarily relieve the stresses in the system.

The United States is buckling under a massive weight of debt. Residential mortgages get the headlines, but private sector debt (auto loans, business loans, student loans, credit card debt) is the other, bigger side of the problem: $20 trillion. Add another $26 trillion for commercial mortgages.

In 2007, the U.S. federal government spent $430 billion in interest payments alone on its total debt. That’s $50 million per hour, just in interest payments.

Then, of course, there’s the $100 trillion or so in unfunded promises for medicare, social security and federal retirement programs that American taxpayers are on the hook for.

And it goes on and on and on…

Housing prices are continuing to decline, and the economy is on the fast-track to recession. It’s all a vicious circle, and many people are going to be badly hurt. The party is over in the United States, not just on Wall Street, but on Main Street.

Buy gold.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

SPECIAL ALERT:
PORTFOLIO ADDS 100,000 BACTECH SHARES
SPECIAL SITUATION OPPORTUNITY FOR MONDAY

September 27, 2008

We made a significant portfolio move yesterday, selling 500 shares of Detour Gold (DGC, TSX) for a profit of $805 and using all the proceeds to purchase an additional 100,000 shares of BacTech Mining (BM, TSX-V) at 6 cents. We now hold 187,500 shares of BacTech in our simulated portfolio, and you’ll understand why when you read the information below. Our total investment in BacTech is $12,000 and our average price is just under 6.5 cents per share.

We hope you took our advice and accumulated some BacTech Mining (BM, TSX-V) Friday. Nearly half a million shares traded, one of its highest volume days of the year, but this amount will surely look rather small come Monday. We have two major developments to report, and one is some “exclusive” news that we’ve uncovered strictly for SolomonSmallCaps readers.

For the past week or so we’ve been scratching our heads, wondering why offers have consistently been put up in the market on BacTech at 6 cents, particularly since the Venture started to rebound eight sessions ago with the sharp increase in gold. Who is the infamous “Anonymous” continually selling this stock at 6 cents when it should actually be firming up? It makes no sense. Yesterday, after days of painstaking research, we got our answer. And that answer can make you a lot of money in a real hurry.

A mutual fund that owned approximately three million shares of BacTech has been liquidating some of its holdings this month, including all of its BacTech shares. Why has this been happening? For quite a simple reason. This particular mutual fund (in order to give you this information we had to agree not to release its name) has just recently gone through a change of ownership, and the new group has little interest in the mining sector which made up a non-core portion of that fund. So a whack of BM shares have been dumped into the market recently for no fundamental reasons related to BacTech itself. What an opportunity! When you know why a seller is selling, and who that seller is, that’s a huge trading advantage in any market.

We also confirmed that the BM liquidation is nearly complete. The fund is left with only about 20% of its original holdings and we fully expect that its balance of BacTech shares will be put up for sale again Monday and will be eagerly gobbled up by the market, removing the supply pressure we’ve been so puzzled about. When that happens, look out. When pressure builds up, like in a volcano, and it’s very suddenly removed, what happens? You get an explosion, and that’s exactly what we’re about to see with BacTech. It’s a volcano waiting to explode. This is a classic and investment trading opportunity if we’ve ever seen one.

In another significant development, Pinnacle Digest has picked up on the BacTech story and will be aggressively putting it out to the investment community beginning immediately (as in this weekend) and through the coming days and weeks. This will bring a lot of new eyes to the great work that BacTech is doing and the investment opportunity it represents. In addition, rumor has it that BM CEO Ross Orr is headed back to Europe. Something is definitely in the works here, and the days of this stock trading at 6 cents will soon be long gone. You may also have noticed that BacTech has a brand new web site, and it’s pretty slick. My gut feeling is that these guys are getting ready for something very big. With a new bull run in gold underway, the potential for BacTech to make a huge move is very real.

Pinnacle has prepared an excellent report on BacTech, and you can link to it at the bottom of our article. We’ll be doing our own updated report on BacTech in a few days, but we want to share something with you right now that was not covered in the Pinnacle story and is very important.

BacTech, of course, formed a partnership with Yamana Gold (YRI, TSX) in June of this year, and Yamana is now a 20% shareholder in BM. We stated this before (but we now have some new information) - if you go back to BM’s news release June 18 which announced the “partnership” with Yamana, there was one hugely important 12-word sentence in the second paragraph that was overlooked by many investors: “BacTech will also provide bioleach consulting on one Yamana project going forward.”

Folks, that project is the massive Jeronimo Deposit in northern Chile that contains an indicated and inferred resource of 2.1 million ounces of gold (11.7 million tonnes grading 4.07 g/t). BacTech nearly acquired part of the Jeronimo Deposit a few years ago, but is now working with Yamana to solve some metallurgical issues with Jeronimo using BacTech’s proprietary bioleaching technology.

Yamana, which is focused on organic growth, is serious about bringing Jeronimo into production as soon as possible, especially with gold doing what it’s doing. A total of 68 combination reverse circulation/diamond drilling holes totaling 18,000 metres were completed at the upper Jeronimo Deposit in the first half of this year, and Yamana now confirms (on its web site) that “metallurgical testwork…including bioleaching…is currently underway to accommodate the unoxidized refractory nature of the Jeronimo mineralization.” BacTech has the solution to recover the Jeronimo mineralization in the most cost-effective manner, and Yamana knows it which is a big reason they partnered up with this company. The pay-off for BacTech, we suspect, would be some sort of a royalty on production that would generate significant and consistent cash flow for BacTech. This is where big money is made in the markets, folks, being a step ahead of others in spotting developments and trends.

There is much more to say about BacTech, but we’ll save it for our special report. Click on the link below to read the Pinnacle report on BacTech, and be quick on the draw Monday morning if you want to position yourself for a potential home run in this exciting play.

http://www.pinnacledigest.com/articles/vol.-87-bactech-mining-corp.-our-new-featured-company

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

MAJOR VENTURE RALLY UNDERWAY
PORTFOLIO UPDATE

September 25, 2008

We took advantage of a modest drop in the gold index today to purchase 1,300 HGU (TSX) units at $15.27 in “Category 3” which has been our top performing category since we launched our simulated portfolio at the end of August. Tomorrow, we’ll be updating the performance of our portfolio which has gained substantially in value recently. We’re on the right track and we believe October is going to be a very profitable month.

Despite the drop in gold, and the fact today was settlement day which can often be quite nasty with the Venture Exchange, the CDNX dropped just 10 points to 1,541 on decent volume. In all likelihood, the Venture’s 10-day moving average will reverse to the upside tomorrow and that suggests some fresh fuel is about to be added to the fire here.

Our immediate target for the Venture Exchange is the 20-day moving average at about 1,670 - that’s a level we could very well see next week, and the key will be whether or not the Index can push beyond its 20-day moving average which has been a strong area of resistance since the middle of June. In our favor now is a very bullish gold scenario, thanks to the inflationary implications of the massive bailouts happening in the United States. As explained in our September 21 article, the American debt crisis could very easily cause gold to run to 1,500 and beyond. We’ll be expanding even more on that thesis in another article tomorrow, but all investors should be holding some form of gold in their portfolios right now – strong gold shares and even physical gold.

BacTech Mining Update

With positive corporate developments and given the fact the Venture Exchange is now waking up, we see little chance that BacTech Mining (BM,TSX-V) is going to remain under 10 cents for much longer. It closed today at 5.5 cents and has been under heavy accumulation over the past couple of weeks. We’ve seen this action before in BacTech, and it has always preceded a major advance in the share price. Folks, if you’ve been following the BacTech story at all, you’ll know that this stock is an absolute “screaming buy” at these levels. Technically, it is hugely oversold and could easily run back up, in slingshot fashion, to its yearly high (.185 cents). We love the fact that BacTech not only has gold ounces in the ground (recoverable with its bioleaching technology) and is 20% owned by Yamana (YRI, TSX-V), but it’s also a “green” stock. Check out the last couple of BacTech news releases, including today’s. Their technology is delivering solutions to environmental problems. BacTech is in the right place at the right time with a one-two punch (gold and the environment) that could send this oversold stock into the stratosphere. As mentioned earlier, we’ll soon be releasing another major report on BacTech. We expect it’ll be one of our top performing stocks in the weeks ahead. Do yourself a favor and pick some up at these fire sale prices which likely won’t last much longer.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

PERILOUS TIMES AHEAD…
GOLD PREPARES FOR MOVE TO $1,500 AND BEYOND

September 21, 2008

It’s our view that gold’s sharp move to the upside last week was not an aberration or a temporary “event”. It was rooted in a growing uneasiness in the inability of the United States, at this juncture in history, to properly manage its financial affairs. The problem here is not capitalism and a lack of government regulation, as Barack Obama implies, but shortsighted politicians of all stripes, horrible regulation, over-regulation, ill-conceived interventionism in the markets, dangerous attempts to manipulate the markets, and an incompetent Federal Reserve. Throw in a whole lot of greed and millions of individuals who lack a basic understanding of how to handle money, and one has an awful mess. The United States, we’re afraid, is about to eat a dog’s breakfast or something even worse. In general, government is the problem, and unfortunately our neighbor and great but suffering friend has neither a Ronald Reagan, George Washington or Abraham Lincoln ready to step in who could rally the nation and steer it in the proper direction. Folks, we are headed for perilous and difficult times, particularly if Obama - the “community organizer” who believes government is a positive force and holds the answers to our problems - wins the White House for the wrong reasons and has Nancy Pelosi and other wing-nut Democrats encouraging him rather than Republicans restraining him. Heaven help us.

Let’s get right to the big picture, because with so much happening at the moment it can be difficult to see the forest for the trees:

So where does this leave investors? The end result could very well be Financial Armegeddon in the worse-case scenario, but if that happens it’s not likely to be for a while yet. Over the next couple of months the markets may indeed perform well on the false hope that all this “bold action” is going to set everything straight and life will return to “normal”. But reality will quickly set in come January, 2009, and the new President and Congress will do one of two things: Make a bigger mess of the current situation, or truly come to grips with it, demonstrate leadership and deliver the painful news that Americans are going to have to sacrifice in a different way for their country. In either case, you don’t want to be long the Dow Jones Industrial Average.

Gold has indeed broken out and it’s not hard now to see where it’s ultimately headed as confidence continues to erode in the U.S. financial system. Expect to see gold at $1,500 within six months, if not sooner, and $2,000 within a year or two. Oil, which enjoyed its biggest three-day rally in a decade last week, could easily rocket back up in an inflationary spiral.

Looking out over the next year or so, the safest and smartest single stock you could probably own right now is Goldcorp (G, TSX).

The Venture Exchange, which we expected to move sharply higher at the beginning of September, is now finally waking up and could rally very significantly in the coming weeks as gold advances and the inflation argument gains momentum.

Our favorite stock under 10 cents at the moment is BacTech Mining (BM, TSX-V), which is 20% owned by Yamana (YRI, TSX). BacTech closed Friday at 6.5 cents and we’re currently preparing another major report on this company. We expect some real fireworks out of BacTech in the fourth quarter this year, and we don’t believe it’ll remain under a dime for much longer. I never thought I would ever say this, but a penny mining stock like BacTech is likely a safer and better investment right now than U.S. treasuries.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

PORTFOLIO UPDATE

September 18, 2008

We locked in some profit on the HGU ETF today, selling 1500 units at $13.75 for a net profit of $4,080. However, we will not be moving back into HGD units at the moment. We now have over $20,000 cash in Category 3 - more than we started with - and it’s possible we may move back into the HGU shortly as we do anticipate higher gold prices.

We’re keeping our ears close to the ground, and we’re hearing rumors with regard to developments with BacTech Mining (BM, TSX-V) and Greencastle Resources (VGN, TSX-V). BacTech is under increasing accumulation and we are extremely bullish on this play for a number of reasons which we will spell out in detail in a special report over the weekend.

Some interesting trading took place in Greencastle late in the day today, and we expect this stock will be back in the 30 cent range next week with a strong finish to the month. We added 50,000 VGN shares to our simulated portfolio recently. The company is overdue for news. This is pure speculation on our part, but we’re expecting something significant from Greencastle before the end of the month.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

WASHINGTON IMPLODES, GOLD EXPLODES…
PORTFOLIO ADDS DETOUR GOLD,
ACCUMULATES MORE RUBICON AND BACTECH

September 17, 2008

Gold finally responded today to the growing U.S. debt and financial crisis, and - wow -did it ever speak! We will explore this whole issue in further detail in the coming days, but gold truly showed its precious side today with a history-making one-day move of over $80 per ounce. The $850 resistance area was blown away, and what was unthinkable just a week ago is now a distinct possibility: A parabolic move by gold that takes it to record highs in the very near future. A number of factors contributed to gold’s incredible rise today including SEC action against “naked” shorting.

The TSX Gold Index jumped 10% today, and the Venture Index even managed a positive day with a modest 10-point gain. But that was against the backdrop of huge losses in New York and on the TSX Composite. It’ll be very interesting to watch how the Venture Exchange performs in the coming days - a rising gold price always has a positive impact on this market, and the possibility exists that the Venture Exchange’s two-and-a-half month carnage could be over.

Today in our simulated portfolio we added 50,000 shares of BacTech Mining (BM, TSX-V) at 6 cents, and 2,500 shares of Rubicon Minerals (RMX, TSX) at $1.73. We also purchased, in Category 2, 500 shares of Detour Gold (DGC, TSX) at 10.44, a new stock in our portfolio. We’ll have more on Detour in the coming days, but with over 10 million ounces in measured and indicated reserves it’s a terrific buy at $10.44 in a rising gold market. Detour’s reserves are being valued at less than $50 an ounce.

On another note, Greencastle Resources (VGN, TSX) bounced off very strong support at 18 cents today which is where we believe it has bottomed out. Greencastle closed at 20 cents today, giving it a market cap of only $8.8 million. It’s worth pointing out that not only is Greencastle of course making money on its Primate Oil Field royalties, but it also has some outstanding Nevada gold properties that we believe could come back into focus in the coming weeks if gold continues to push hard.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

PORTFOLIO UPDATE

September 15, 2008

Gold has strengthened on the growing U.S. financial crisis, though we’re surprised it hasn’t moved even higher. Gold’s “safe haven” status is clearly going to be put to the test now.

With a flight to safety possible and gold showing renewed signs of strength, we closed out our HGD position today at $15.80 for a profit of $1,284 and purchased 1500 HGU units at $11.03. We made no other portfolio moves today and we prefer to hold off on any additional moves until there is additional clarity in the markets.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

PORTFOLIO UPDATE

September 12, 2008

The Venture Exchange rebounded nicely today, gaining 44 points to close at 1,608. This was fuelled in part by a 10% single day jump in the TSX Gold Index - it closed at 242 today for a gain of 22 points as gold itself enjoyed a $17 advance.

Monday may tell the tale if this was simply a dead cat bounce or the start of a major recovery. We’re of the opinion that today’s action was simply a correction to the upside, which is why we purchased 1,200 HGD units today for our simulated portfolio at $14.73. We made over a $2,000 profit on an HGD trade early in the week, and we re-entered this market Friday afternoon. We’ll see what next week brings, but the HGD is clearly in an overall bullish trend and a third major wave to the upside appears quite possible. All the Gold Index did today (albeit impressively) was move back to an area of previous strong support (240-243), which technically was to be expected. Our thinking is that this Index will break down again to just below the 200 level before this sell-off has concluded which means the HGD would run to at least the $20 mark. In any event, our position in the HGD is an excellent hedge in a volatile and somewhat uncertain market.

The first two weeks of September have been horrible for most investors. Our simulated portfolio has certainly taken a hit, but is holding up reasonably well. Overall so far, our portfolio has lost 9.6% of its value since it was launched at the end of August. We started with a $100,000 portfolio and it is now valued at $90,458.17.

The 9.6% drop in our portfolio in such a short period is unacceptable in our view, and we’ll be working hard in the coming days to ensure that the next two weeks are much more favorable. However, we have faired better than the TSX Venture Exchange which has dropped 19% so far this month. The TSX Composite is down 7.3%.

Currently, we’re sitting on $3,638 cash in Category 1 and $10,000 cash in Category 2. We sold one stock this past week - Columbia Yukon - and added to our positions in Greencastle Resources (VGN, TSX-V, 30,000 shares at 21 cents), Noront Resources (NOT, TSX-V) and MacDonald Mines (BMK, TSX-V). We had just over $18,000 in cash in Category 3 until Friday afternoon when we purchased 1,200 HGD units at $14.73 as a hedge against a drop in gold and the TSX Gold Index.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

PORTFOLIO ADDS 30,000 GREENCASTLE SHARES

September 11, 2008

Our simulated portfolio today added 30,000 shares of Greencastle Resources (VGN, TSX) at 21 cents per share, giving us a total of 38,571 VGN shares at an average price of 24 cents. The stock closed today at 21 cents, exactly at its 300-day moving average. The current major market sell-off has given us a terrific buying opportunity with Greencastle - the risk-reward ratio at current levels is extremely attractive, and we expect this stock to advance very strongly as soon as the overall market finds its footing which should happen over the next couple of weeks.

At 21 cents Greencastle is trading at just five times a conservative after-tax 2008 estimated profit of four cents per share (after-tax earnings could be as high as six cents per share). VGN’s working capital as of June 30 was $5 million and should stand at approximately $5.5 million at the end of this month (Q-3).

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

1,500 VENTURE NEAR AT HAND?

September 9, 2008

The bloodbath accelerated today on both the TSX Composite and the Venture Exchange, with the Venture plummeting a whopping 8.5% to 1,621. That massive one-day decline leaves this market right in the zone of a support area from 2005 - if the Venture can’t hold the 1,600 level, it will surely test 1,500 and in a hurry. The 1,500 level is an area of major support and we don’t want to consider the possibilities if that should be breached. The Venture Exchange is now down over 1,000 points and nearly 40% in just over two months, making this a sell-off of historical proportions.

We made the right call on gold yesterday, and today we sold our 750 HGD units at $19.00 for a gain of $2,175 or 18%. That’s how profitable ETF’s can be in one day, if you’re on the right side of the market. We’re still down overall in Category “3” but today’s gain helped recover more than half of our earlier losses from the HGU and the HNU. Our portfolio is in a strong cash position.

Other moves we made with our portfolio today:

• We added to our position in Noront Resources (NOT, TSX-V), purchasing 1,000 shares at $2.04. We now hold 2,107 shares of NOT at an average price of $2.37.

• We added to our position in MacDonald Mines (BMK, TSX-V), purchasing 10,000 shares at .145. We now hold 25,789 shares of BMK at an average price of 0.17.

• Our current cash position in Category “1” is $9,939. Our Category “2” current cash position is $10,000, while our Category “3” current cash position is $18,174.40.

Our interpretation of market activity is that a severe recession will hit the United States in 2009 - hence, the sell-off we’re seeing in gold and commodities in general. We are in a very vicious bear market and one must be exceedingly careful in terms of protecting capital. Having said that, many trading opportunities become available in situations such as this and we will be looking to take advantage of those in the coming days and weeks. Today’s widespread, capitulation-style selling on heavy volume is an indication the market should be close to a short-term bottom.

Perhaps lost in today’s bloodbath was the trading halt in Fancamp Exploration (FNC, TSX-V). Has Fancamp pulled a spectacular drill hole out of McFauld’s to help revive this market, as Noront did in 2007? Perhaps that’s too much to ask right now, but we can at least dream about the possibility tonight.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

GOLD, VENTURE EXCHANGE HEADED LOWER

September 8, 2008

So much, as they say, for our bold call on a major upside move in the Venture Exchange.

Almost all technical indicators strongly suggested the Venture Exchange was likely headed higher in September. Today it closed at 1,772, down 212 points or 11% in just the first five trading sessions of this month. We got it wrong. So what happened?

The strength of the U.S. dollar has been mind-boggling, and this is no longer a trend to deny or fight. It’s going up for one reason for sure - right now, investors perceive the U.S. dollar as the best of a bad lot in terms of world currencies (and that’s pretty scary). Some are making the argument that interest rates in the United States are going to move up significantly - we’re not so sure about that one, but clearly a seismic shift is happening in the markets and investors need to brace themselves.

Gold’s most recent rallies, including today’s, are increasingly looking more feeble, and today the TSX Gold Index dropped below key support at 240. So we’re seeing new lows in gold shares without new lows - yet - in gold itself. Since the gold stocks tend to lead the market, the suggestion is that gold itself is ready for another plunge that ultimately could take it all the way down to about the $700 level.

Our speculation at the moment is that the United States is going to enter a very severe recession which will of course spill over into Canada (this, we’re sure, was part of the thinking of Stephen Harper in sending Canadians to the polls in October before the wheels begin to fall off the economic wagon. For the sake of the markets, we hope the Conservatives will win a majority and that the McCain-Palin ticket will turn back Barack Obama, America’s version of Pierre Trudeau).

So right now, we have the worst possible environment for the junior resource market:

• An economic slowdown;
• A “reverse wealth” effect with housing prices continuing to drop in the U.S., and now beginning to fall significantly in Canada (particularly in the west);
• Gold, and perhaps commodities in general, headed lower;
• A major liquidity crunch - companies are finding it harder to raise money, individuals are finding it harder to borrow, and bids have dried up for company shares.

So where is the Venture Exchange headed? The fact that it dropped below support at 1,880 last week was clearly a bearish sign. It looks certain at this point that the Venture Exchange is likely going to test at least the 1,500 level, which means another 15% move to the downside from here and probably in relatively short order. Ultimately, it’s not hard to imagine this Index testing the 1,000 mark. There will be buying opportunities along the way, but one will have to be extremely careful.

One of our favorite stocks, Greencastle Resources (VGN, TSX-V), is an excellent example of how bad this market is right now. This is a company making money with $5 million in the bank and a likely after-tax profit of at least four cents per share this year. Today, for the first time since the Venture Exchange broke down in early July, and for the first time since VGN’s move began at the beginning of June, Greencastle closed below its 100-day moving average which suggests even lower prices are imminent. Greencastle is likely to see 20 cents before it sees 30 cents again, and that’s how bad this market has become. VGN closed today at .265, and buyers for this stock were hard to find.

As far as our simulated portfolio is concerned, we have made the following moves:

HNU - sold our entire position today at $13.30 (994 shares) for gross proceeds of $12,502.

HGU - sold our entire position today at $12.06 (290 shares) for gross proceeds of $3,497.40.

HGD - anticipating a lower gold price in the days and possibly weeks ahead, we purchased 750 shares in the HGD at $16.10 for a total investment of $12,075.

As far as individual companies are concerned, we sold our entire position in Columbia Yukon Mining today at 40 cents to raise cash (we made a small profit of just over $400 on that transaction). We continue to have faith in CYU’s promising Storie Deposit. However, we wanted to raise cash in Category 1 and we also believe that overall market weakness is likely to take CYU lower in the near future so we closed out a profitable position.

Our best performing stocks at the moment are:

Selwyn Resources, up 22.7%
Clean Energy Fuels, up 12.2%
Junex, up 6%

We still believe we’re in a long-term commodities super-cycle, but for now at least the bull has retreated and investors need to be careful in protecting capital.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

SolomonSmallCaps vs. THE MARKET:

SolomonSmallCaps SIMULATED PORTFOLIO

September 1, 2008

Below are 30 stocks and two ETF’s that form our $100,000 “simulated” portfolio. We spent many hours researching countless opportunities in the resource sector, so deciding on these 30 situations was no easy task. We remain bullish on the commodity sector in general and we believe we have found the right “balance” with this portfolio which includes 22 TSX Venture Exchange companies, seven TSX listed companies, one NASDAQ company, and two TSX traded ETF’s including a big call on the Horizons NYMEX Natural Gas Bull (HNU) which we are investing 15% of our portfolio into right off the bat.

We will “sell” and “buy” individual securities as conditions warrant, and we will report each “transaction” here on the site. New stocks/ETF’s could be added and some could be deleted. This is a “simulated” portfolio that does not involve real money. We will track our performance against the overall market, and we are confident we will beat the market by a substantial margin.

“Category 1” features stocks that we believe will significantly outperform the market over the immediate to short term (one to three months); “Category 2” features stocks that we believe will significantly outperform the market over the intermediate to longer term; Category 3 consists of ETF’s. We have “double-weighted” Category 1 over Category 2 as we believe Category 1 stocks have the greatest immediate upside potential. Some brief comments on each stock and ETF will be found in this report.

Ten of the stocks in our model portfolio were released last Tuesday, August 26, following the market close that day, so the “purchase price” for these stocks is based on their respective closing prices August 26. The “purchase price” for all other securities is based on closing prices August 29, 2008.

The total portfolio is currently invested 80% and holds a total starting cash position of $20,000 ($10,000 in Category 1, $10,000 in Category 2, and $0 in Category 3).

Category 1 - $3,000 Initially Invested Into Each

“Category 1” Total Investment: $40,000.00
Total Current Value: $41,960.74
--------------------------------------------------------
Gain (Loss) $1,960.74 or + 4.9% vs. 2.1% market gain

Category 2 - $1,500 Initially Invested Into Each

------------------------------------------------------------------------------------------------------------
“Category 2” Total Investment: $40,000
Total Current Value: 40,000
----------------------------------------------------
Gain (Loss) 0.00

Category 3 - ETF’s

-----------------------------------------------------------------------------------------------------------
“Category 3” Total Investment: $20,000
Total Current Value: $20,000
----------------------------------------------------
Gain (Loss) $ 0.00

Category 1 Stocks

BacTech Mining (BM, TSX-V)

Little-known company trading under 10 cents with Yamana as its largest shareholder. BacTech owns commercially-proven, bacterial oxidation and bioleaching technology that liberates precious and base metals from difficult-to-treat sulphide ores and concentrates. This company has been around for a while but now is finally starting to make significant strides with its business plan. BacTech announced its first refractory gold project in June and we expect it will close at least two or three other situations before year-end. This is an interesting turnaround play with an intriguing environmental angle as well.

Columbia Yukon Explorations (CYU, TSX-V)

Columbia Yukon is developing a world class molybdenum deposit in northwestern British Columbia near Cassiar, and current drilling outside of the known resource (an updated 43-101 was released in August) is delivering very good results. The recent 43-101 (based on drilling through 2007) showed the Storie Deposit contains an indicated and inferred resource of 170 million pounds of Mo, which means the market is giving a valuation of only nine cents per pound of Mo at CYU’s current 39 cent share price. This stock is undervalued, plain and simple, and should strengthen nicely in a better overall market in September. Assays from approximately another 50 or 60 holes yet to come.

Eldorado Gold (ELD, TSX)

Low-cost producer with a solid growth profile and a history of strong Septembers. We were very impressed with management’s takeover of Frontier Pacific Mining, a steal for Eldorado shareholders. Eldorado should produce more than 300,000 ounces of gold this year. Technically, the stock held up well during the recent market sell-off and will accelerate nicely if the gold price strengthens further as we suspect it will.

Greencastle Resources (VGN, TSX-V)

One of our favorites which we first uncovered and recommended at 15 cents May 31. Sound management, very strong financials, and solid portfolio of diversified projects (oil and gas royalties from Primate oil field, coal, shale gas in Quebec, gold and uranium). More “high-impact” projects under review. Second quarter results just released, showing revenue at a record $1 million and six-month pre-tax profit of three cents per share. With just a $15 million market cap, this cash cow is a very attractive opportunity short and long term. Just 44 million outstanding shares and CEO says company “may never have to go back to the market for capital.”

Hathor Exploration (HAT, TSX-V)

Uranium, we believe, will be a big story in the year ahead, and Hathor has made a significant discovery at its Midwest NE Property in the Athabasca Basin. Plenty of blue-sky potential here.

Kodiak Exploration (KXL, TSX-V)

Kodiak was hit hard by the recent market sell-off but has bounced off strong support at $1.20. Kodiak’s Hercules Property in Ontario’s Beardmore-Geraldton area is going to be a huge winner, we believe, with multi-million ounce potential. This is one of those stocks you probably just want to tuck away for a year or two and not worry about. Over the past year it has been quite volatile, so it also does present trading opportunities for very experienced investors.

MacDonald Mines (BMK, TSX-V)

One cannot overlook the continuing excellent exploration potential of McFauld’s Lake and the James Bay Lowlands where BMK is a huge landholder. Everyone, though, has fallen out of love with BMK, which is why we believe it’s time to be a buyer. The stock has steadily drifted all the way down from a 52-week high of $1.32 to below 20 cents where it just has to be a screaming buy in our view. We strongly believe McFauld’s will become one of the great “area plays” in Canadian mining history, and BMK will be right in the middle of it. Lots of drilling news coming out of BMK and McFauld’s in general in the coming weeks and months.

Noront Resources (NOT, TSX-V)

Again, McFauld’s Lake has got to be in any resource investor’s portfolio and Noront is King of that area with the Eagle 1 Deposit, Eagle 2, and several other very interesting situations. Noront currently controls 100% of 120,000 acres at McFauld’s, and has joint ventures covering another 168,000 acres. Their Windfall Lake Project in Quebec is significant as well. We expect plenty of news out of Noront over the next few months, and of course this company is also a ripe takeover target.

Nortec Ventures (NVT, TSX-V)

The same group that ran Frontier Pacific Mining is in charge of Nortec which is getting very interesting results from its Kaukua platinum-palladium-gold-nickel-copper project in northeastern Finland. They also have high-quality nickel-copper-cobalt targets in Labrador, one of which is currently being drilled. The individuals behind Nortec are company builders and mine finders - they will make Nortec a success story.

Pinetree Capital (PNP, TSX)

We believe a very significant rally is now underway in the Venture Exchange, and in that situation Pinetree will do extremely well with a large portfolio of junior resource companies. The recent market sell-off brought the stock down to one-tenth of its value from early 2007.

Category 2 Stocks

Clean Energy Fuels (CLNE, NASDAQ)

Clean Energy is very much the right stock at the right time - the largest provider of natural gas for transportation in North America with a broad customer base in the refuse, transit, ports, shuttle, taxi, regional trucking, airport and municipal fleet markets. The company’s founder is legendary Texas oil and gas executive T. Boone Pickens (you’ve probably heard a lot recently about the Pickens Energy Plan), so we’re parking our money with a winner.

Crew Energy (CR, TSX)

A fast-growing oil and natural gas producer, Crew Energy recently completed a strategic takeover of Gentry Resources and over the past year has assembled a dominant land position in the heart of the important Montney resource play in northeast British Columbia. This is an aggressive company well-positioned to deliver long-term value to shareholders.

Eastmain Resources (ER, TSX)

After reaching nearly $2.00 in early July, Eastmain has pulled back substantially to a very attractive $1.25 (just above its rising 200-day moving average). Eastmain, which holds an attractive package of properties, is currently drilling its million-ounce Eau Claire Deposit in Quebec where surface rock has an impressive $600 value. Its Eleonore South joint venture with Goldcorp, however, is what could really send ER soaring.

Explor Resources (EXS, TSX-V)

Explor has pulled back to its 200-day moving average after quite a run in June on favorable and interesting results from its Eastford Lake gold project, 90 kilometres east of the Timmins-Porcupine camp. Explor is also currently drilling its highly prospective Kidd Township Property. Altogether, EXS has a land position of over 10,000 hectares in the Abitibi Greenstone Belt. Strong management. We like this stock a lot at its current price which puts a market cap on EXS of only $16 million.

Goldsource Mines (GXS, TSX-V)

Goldsource has once again settled back to its 200-day moving average where it has to be regarded as a strong buy. They have made a significant coal discovery in Saskatchewan, though the coal stock frenzy has certainly cooled off (at least for now). There is also now a pause in GXS drilling, so it’s possible this volatile stock could bottom out at a lower price but we would “average down” if that were to happen. Goldsource will bounce back strongly - it’s only a question of when.

GoldQuest Mining Corporation (GQC, TSX-V)

GoldQuest is entirely focused on the Dominican Republic and has a strategic alliance with Gold Fields covering a number of high quality targets. GQC is also developing its 100% owned Las Animas gold-copper-silver-zinc property which is showing good potential. This is one of those stocks you hold for a “major hit” - they’re exploring in a favorable area with an excellent geological team, so sooner or later they’re likely to deliver some rather stunning drill results and discover a decent deposit.

IMA Exploration (IMR, TSX-V)

IMA is an interesting situation. It’s actually trading at a 38% discount to its cash value. The company is currently sitting on $25 million in cash and in a month or so will begin drilling its Island Copper Project in the Port Hardy Mining Division of Vancouver Island. IMA does have a bit of a history, and at 30 cents the stock is at an all-time low. But we just can’t see it drifting much lower and in all probability it’s likely to stage a significant recovery, if for no other reason than the fact it’s at such a discount to its cash value. IMA’s Island Copper Project does has some merit, however. It hosts at least six copper-gold-molybdenum porphyry-related systems, and the most advanced of these systems has a 43-101 measured and indicated resource of 231 million tonnes grading 0.28% copper and 0.31 gram per tonne gold.

Junex Inc. (JNX, TSX-V)

We’re bullish on the shale gas play in Quebec, and Junex is certainly a major player there. They recently started their 2008-2009 exploration program that foresees the investment of about $10-million in the St. Lawrence Lowlands over the next 18 months. The stock is down considerably from its high of just over $8 per share in early June, and just recently bounced off its 200-day moving average. This will be a volatile stock in the months ahead but the current price represents an excellent entry point.

Legend Power Systems (LPS, TSX-V)

This intriguing company finally became public in early July after several frustrating years of trying to satisfy the TSX on a reverse take-over of Texas Oil & Gas. Legend Power is an electrical energy conservation company that uses a patented device to achieve significant energy conservation results through voltage optimization. This is not a theory - it’s a proven concept and one that we believe Legend Power could have great success with. They already have a significant client base that includes the likes of BC Hydro, Canada Post, Honda Canada, and IKEA. Installation results have yielded clearly measureable reductions in electric bills, maintenance costs and greenhouse gases. It’ll be very interesting to watch how this company develops in the months and years ahead.

Ontex Resources (ONT, TSX-V)

The strength of this stock during the recent market sell-off (it actually went up in value significantly) was impressive to say the least, which speaks volumes we believe about the encouraging development of its Brookbank Gold Deposit in the Beardmore-Geraldton area. The action we’re seeing in the stock suggests to us that ONT wants to take a run at the $1.00 level - time will tell, but we like the results that are coming out of Brookbank.

Pediment Exploration (PEZ, TSX-V)

The recent market sell-off took its toll on Pediment which has been beaten down to a market cap of only $55 million. Pediment recently filed a 43-101 report on its San Antonio Gold Project in northwestern Mexico with a preliminary resource estimate of 1.45 million ounces (inferred). We believe San Antonio holds excellent potential for two million or more ounces of proven reserves, and Pediment has numerous other 100% owned properties in Mexico including its other flagship, La Colorada. The company is well financed. The current stock price is a steal, plain and simple, and it’s interesting how it filled a “gap” recently around $1.20.

Probe Mines (PRB, TSX-V)

Probe disappointed investors with recent drill results from its McFauld’s West and Victory Projects. But we believe both properties (McFauld’s West in particular) still hold excellent potential, and Probe also has a good prospect in its Tamarack Property in addition to other landholdings it’s currently starting to explore in the James Bay Lowlands. At just 25 cents Probe is trading not far below its cash value, so now’s the time to be a strong buyer of this stock. PRB is not likely to get a whole lot cheaper, so the risk-reward ratio here is very attractive.

Rubicon Minerals Corporation (RMX, TSX)

We’ve been keeping an eye on Rubicon for a while now, and sure enough last week it reported bonanza grade gold (27 ounces per ton) over two metres at its flagship Phoenix Gold Project. Rubicon controls over 65,000 acres of prime exploration land in the prolific Red Lake camp. With strong management and a portfolio of excellent projects, Rubicon is well positioned to move very swiftly in a stronger market this fall. Technically, the stock has turned bullish with reversals in its 100 and 200-day moving averages. RSI shows a short-term overbought condition, but we believe this stock has much further to go through the balance of the year.

Selwyn Resources (SWN, TSX-V)

Selwyn is a “dog” right now, and an abandoned one it appears, so we’ve decided to adopt it. The Selwyn Project in the eastern Yukon is a huge zinc property (the largest of three giant undeveloped zinc deposits in the world) that this company has been aggressively exploring and developing over the past few years. The drop in zinc prices has taken its toll on the Selwyn share price which just recently bounced off a 52-week low of 9.5 cents (it was as high as nearly $2.00 in early 2006). When times look the bleakest, it’s time to buy. The stock closed Friday, August 31, at 11 cents. Zinc prices will recover, sooner or later, and so too will Selwyn.

Sherwood Copper (SWC, TSX-V)

Sherwood Copper is a producing company with excellent growth potential and superb management that consistently meets its goals and timelines. The stock has formed a nice base around $4.50 and appears ready for lift-off. Commercial traders have massively increased their long copper positions in recent weeks, suggesting copper could be ready for a break-out which would certainly benefit SWC.

Shore Gold (SGF, TSX-V)

We’ve watched with amazement at how Shore, with one of the world’s largest diamond deposits near Prince Albert, SK, has been absolutely hammered by the market after topping out at nearly $9 in early 2007. At just $1.49, Shore is just 19 cents off its multi-year low of $1.30 that it plummeted to last week. We’re putting Shore in our portfolio as this diamond play does have solid intrinsic value and the stock is currently heavily oversold and due for a near-term technical rebound if nothing else.

Solex Resources (SOX, TSX-V)

Solex is very active in Peru where its flagship project is the Macusani uranium play. Macusani “East” is a joint-venture now with Eldorado Gold, following its takeover of Frontier Pacific, while Solex is also advancing its three 100% owned Macusani projects. We’ve followed exploration very closely at Macusani over the last few years and we’re impressed by the potential there. The uranium is low grade but widespread and very near surface. Solex is also eyeing the possibility of re-acquiring 100% of Macusani East if Eldorado decides not to keep it. Solex is well off its all-time high of $1.60 and appears to have ended a brutal year-and-a-half decline that brought it all the way down to just 16.5 cents in early August. The company is well-funded and has a current market cap of a modest $15 million.

Uranium One (UUU, TSX)

Uranium stocks have been hit extremely hard since topping out in early 2007, but the uranium price is recovering and we believe the demand for uranium will be high in the years ahead. Uranium One is a growing producer whose stock price bottomed out at $3 earlier this year after reaching nearly $19 in 2007. As the uranium “story” picks up again, investors will be paying much more for Uranium One than they are now. The stock is starting to look much healthier, technically, and once it blasts through resistance and finds its way to about $6, the path is clear for significantly higher prices.

Vast Exploration (VST, TSX-V)

Iraq is a smart place to invest at the moment, believe it or not, and Vast recently completed a $35 million financing to participate with Niko Resources (operator) in the exploration, development and production of petroleum resources in the 846-square-kilometre Qara Dagh block in the Sulaymaniya governorate of the Federal Region of Kurdistan. The stock reached a high of $1.40 in June before pulling back to its rising 200-day moving average. It has since formed a nice base around the 60 cent area and appears ready for another leg up.

VMS Ventures (VMS, TSX-V)

VMS continues to get excellent results from its Reed Lake discovery in Manitoba where it holds one of the largest land positions in the developing Flin-Flon-Snow Lake VMS belt. The recent weakness in base metal prices and the overall sell-off in the general market has reversed the stock’s technical condition from overbought in late May/June to oversold, and it’s now sitting at very attractive levels just above strong long-term support at 45 cents. We’re optimistic Reed Lake will develop into a significant deposit.

Category 3 ETF’s

Horizons BetaPro S&P/TSX Global Gold Bull (HGU, TSX)

We’ve consistently made the case for gold here in recent weeks, and actually put out a “screaming buy” recommendation on the HGU at $15.00 on August 11. We’re investing $5,000 into the HGU based on its August 29 closing price of $17.24.

Horizons BetaPro NYMEX Natural Gas Bull (HNU, TSX)

This is our single-largest investment right now - a $15,000 position in the HNU at $15.09. The HNU has been savagely hammered over the past two months, dropping from a high of $48 in early July. Downside momentum appears to have run its course, however, and it’s important to note that the COT structure at the moment now looks very bullish - commercial traders have gone hugely long on natural gas, and they’re great at calling market turnarounds. We do like the fundamentals of natural gas as well.

OIL FLOW, CASH FLOW AND DEAL FLOW:

PRIMATE BECOMES COMPANY BUILDER FOR GREENCASTLE

August 31, 2008

Primate Oil Field - Increased Production On The Way

The Primate oil field, operated by Enterra Energy Trust (ENT-NYSE, ENT.UN-TSX), is far more significant to Greencastle Resources than many Greencastle shareholders even appreciate.

Enterra is very much focused on this oil field in west central Saskatchewan where Greencastle made the initial discovery five years ago and is now collecting monthly royalty checks of nearly $400,000. In April, 2007, Enterra acquired Trigger Resources Ltd. whose main producing fields were Primate and Liebenthal (southwestern Saskatchewan). Saskatchewan represents 18% of Enterra’s entire North American oil and gas production. Their other Canadian interests are in Alberta and British Columbia, but Primate certainly figures prominently in their overall Canadian production and future plans.

“The main producing asset in the Primate field is a large McLaren oil pool,” states Enterra on its web site. “While it produces heavy oil, solution gas drive allows higher than average production rates and lower initial operating. Lower than average sand and water cuts characterize production from this pool.”

Following its acquisition of Trigger Resources last year, Enterra stated it had “21 oil and gas drilling opportunities identified in the Viking, Colony, Sparky and McLaren zones in the Primate area and is presently planning a strategic farm-in of offsetting lands to add more opportunities to the area. Enterra plans to focus capital development in this area.”

Indeed, that’s exactly what’s happening. Enterra, which just recently brought another new well on stream at Primate (impacting Greencastle’s financials beginning in Q-3), has increased its Canadian capital expenditures by $8 million and will be conducting a “heavy program” over the next several months that is expected to result in the addition of eight to 10 new Canadian wells. What that means is more wells will be coming on stream at Primate in the near future, and increased production there means even larger royalty checks for Greencastle as long as heavy oil prices remain at current levels. “We’re building momentum here,” stated Jim Tyndall, Enterra’s Senior Vice-President and Chief Operating Officer in a second quarter conference call. Enterra drilled four new wells at Primate in 2007, following its acquisition of Trigger, and has added one new well so far this year. More, clearly, are on the way, as Enterra focuses on organic growth.
(Enterra Energy Trust units have enjoyed a terrific year on the TSX (up 215%). They closed August 29 at $3.62 after beginning 2008 at just $1.15).


Greencastle Reports Record Revenue/Earnings

Following the market close on Friday, August 29, Greencastle’s second quarter results were announced and they were stellar. For the first time in its history the company hit the $1 million mark in quarterly revenue and recorded a pre-tax profit of three cents per share for the first six months of 2008 (cautiously, the company took a $370,000 tax provision for the second quarter).

Our Q-2 estimates were very much in line with the actual numbers (in fact, we were a little on the conservative side). Our Q-3 revenue estimate for Greencastle is $1,100,000 and our pre-tax profit estimate is $850,000. That would give Greencastle a pre-tax profit of five cents per share for the first nine months of the year. Working capital should be approximately $6 million by the end of Q-3.

Greencastle’s pre-tax profit for the first six months of this year increased by a staggering 636 per cent over the same period last year.

Greencastle currently has 44,602,671 shares outstanding, giving it a market capitalization of only $15.4 million (for comparative purposes, Strategic Oil & Gas (SOG, TSX-V), for example, also reported its second quarter financials Friday. This company has a market cap of $19 million and recorded gross revenue of $2 million and net earnings of .01 per share for the first six months. SOG has a working capital deficit and will fund its capital expenditures through the remainder of 2008 “out of cash, operating cash flows, bank debt and additional equity financing as needed).”

Greencastle CEO Tony Roodenburg made a very important and revealing point in an interview made available on the company web site following Friday’s market close: “If we play our cards right, we may never have to go back to the market for capital…which sets us apart from hundreds of a thousand other junior resource companies.”

Roodenburg also confirmed the company is reviewing a lot of “deal flow” at the moment. As we explained in last Sunday’s report, given what we’ve seen so far this year out of Greencastle and the public statements Roodenburg has made, we wouldn’t be at all surprised if he pulls another “rabbit” out of the hat very soon and lands a deal that puts a big smile on the face of every Greencastle shareholder.

With a strong and diversified portfolio of projects (royalties from Primate, coal in Manitoba, shale gas in Quebec, gold in Nevada and Africa and uranium in Wyoming), there are many factors that could lead to an explosion in the Greencastle share price (including of course the announcement of another major deal). A strong foundation is firmly in place here upon which Greencastle can significantly build shareholder value.

Tomorrow (Monday, September 1) SolomonSmallCaps will be releasing its 30-stock model portfolio. Greencastle is in “Category 1” of that portfolio, along with nine other stocks, for companies that we believe will substantially outperform the market over the immediate to short term (one to three months). A major rally, in our view, is already underway with the Venture Exchange which could jump 10 to 20% over the next couple of months. In that kind of environment, some of the best stocks will double or triple in value (or better).

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

GREENCASTLE REPORTS RECORD REVENUE/EARNINGS

August 29, 2008

Greencastle Resources’ (VGN, TSX-V) Q-2 financials came out this afternoon and the numbers even slightly exceeded our estimates.

We’ll be posting a new report on Greencastle this Sunday evening, August 31, analyzing the numbers in more detail and looking ahead to what could be next for this company, but below are the quick financial highlights:

• Q-2 revenue - $1,000,000 (vs. our $900,000 estimate)
• Six-month profit - $1,111,000 (pre-tax, or 3 cents per share)

Greencastle’s pre-tax profit for the first six months of this year increased by 636 per cent over the same period last year. The company has taken a tax provision for the first six months of $370,000, leaving it with an after-tax profit of $741,000 or two cents per share.

Greencastle’s June 30 working capital was $5.3 million (vs. our estimate of $5 million).

An Agoracom interview with Greencastle CEO Tony Roodenburg was posted on the Greencastle web site this afternoon. Roodenburg stated that the company’s last monthly oil royalty check was for $370,000. He also said, “If we play our cards right, we may never have to go back to the market for capital…which sets us apart from hundreds or a thousand other junior resource companies.”

Roodenburg also confirmed the company is reviewing a lot of “deal flow” at the moment. More on Sunday evening when we’ll also be releasing our 30-stock “model” portfolio, and VGN will be in “Group A” of that portfolio for the highest probability of a significant share price advance over the immediate to short term.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

RALLY TIME:
VENTURE EXCHANGE SELL-OFF IS OVER

PLUS…GREENCASTLE NEWS IMMINENT

August 26, 2008

We have never felt more certain of a call than the one we are now making: The TSX Venture Exchange, which plummeted 29% from July 2 thru August 19 (34 trading sessions), is actually now in the very beginning stages of a significant rally that should intensify next week when volumes pick up following the Labour Day long weekend. We presented our case for this in our Sunday, August 25 article, and today we examine in further detail just how far this market could go.

The upcoming rally is likely to have a duration of six weeks (from August 19) to three months and should take the Index up anywhere between 10% and 20% from today’s close of 1,943. In this bullish environment, some of the best stocks could increase in value by 50% or even 100% or better. Given that this would be a “bull run” within the context of what is currently still an overall bear market, it will be a selective market. Investors and speculators, then, are encouraged to stick with quality in terms of company management, balance sheets, and exploration prospects. At the end of this article we lay out 10 situations that we view extremely favorably and all 10 of those stocks will be included in our 30-stock model portfolio that we will be releasing in full Sunday evening, August 31. We strongly suggest, as usual, that investors perform their own due diligence with each of the companies we highlight.

Last month, we warned of the possibility the Venture Exchange could fall to as low as 1,950 over the short term, an area of previous strong support. This market appeared to be in a free-fall when it plunged below 1,900 last Tuesday, August 19, but it quickly reversed course during the day. The 1,881 low reached that morning marked the bottom, we believe, of the massive sell-off that began July 2 and erased 769 points from the Index. This is not to say that we’ve necessarily seen the low for the year, although that is certainly possible. But what we are saying is that given all the technical and fundamental factors we have closely examined, this market is poised for a substantial short-term rally to at least help alleviate the current extreme historical oversold conditions. The sell-off in the Venture Exchange coincided with a general commodity sell-off that we believe has also run its course.

For some reason, the Venture Exchange seems to enjoy a near 30% hair cut every now and then. Let’s now take a look at what transpired following each of the three most recent “crashes” for some insight into what may develop now:

1. May-June, 2006

With a major drop in gold, the Venture Exchange plunged 29% over just 22 trading sessions. After the bottom was reached in mid-June, the Index climbed 14% in 14 trading days and exactly 20% over 57 sessions before reaching 2,800 in early September (another plunge followed that).

2. Late July-August, 2007

This 29% drop of course was fueled by the emergence of the “credit crisis” and also a sharp fall in gold. After bottoming out at 2,350 August 16, the market went on a tear and 56 sessions later reached a high of 3,200, an increase of 850 points or 36%.

3. October-January, 2008

After bottoming out in mid-January at 2,350, the Venture Exchange immediately took off and rose 19% to 2,800 over the next 27 trading sessions.

So, as you can see, we’ve had short-term rallies of 20% (57 sessions), 36% (56 sessions) and 19% (27 trading sessions) following the three most recent major sell-offs in the Venture Exchange (the average percentage increase being 25% over an average period of 47 trading sessions).

With the above in mind, it’s not hard to conclude that we could quite possibly see a rally that takes the Venture Exchange all the way back up to 2,350, a 25% move from 1,881, over the next couple of months. Resistance at 2,350 would certainly make sense as this was a strong support area for a considerable length of time.

We expect a deluge of exploration results in September and October, beginning next week. Keep a close eye on news - historically with the type of market situation we have now, major discoveries and “area plays” have a tendency to suddenly emerge.

We expect a reversal in the Venture Exchange’s 10-day moving average this week which means a strong close for the week to set the stage for the start of some fireworks right after Labour Day.

10 Stocks For Upcoming Market Rally:

1. Greencastle Resources (VGN, TSX-V)

One of our favorites which we first uncovered and recommended at 15 cents May 31. Sound management, very strong financials, and solid portfolio of diversified projects (oil and gas royalties from Primate Oil Field, coal, shale gas in Quebec, gold and uranium). More “high-impact” projects under review. Closed August 26 at 35 cents.

2. Eldorado Gold (ELD, TSX)

Low-cost producer with a history of strong Septembers. We were very impressed with management’s takeover of Frontier Pacific Mining, a steal for Eldorado shareholders. Closed August 26 at $8.26.

3. BacTech Mining (BM, TSX-V)

Little-known company trading at just eights cents with Yamana as its largest shareholder. BacTech owns commercially-proven, bacterial oxidation and bioleaching technology that liberates precious and base metals from difficult-to-treat sulphide ores and concentrates. This company has been around for a while but now is finally starting to make significant strides. We’re looking forward to big things out of BacTech in the weeks and months to come.

4. Sherwood Copper Corporation (SWC, TSX-V)

Producing company with excellent management that consistently meets its goals and timelines. Stock has formed a nice base around $4.50 and appears ready for lift-off. Closed August 26 at $4.66.

5. Columbia Yukon Explorations (CYU, TSX-V)

Columbia Yukon is developing a world class molybdenum deposit near Cassiar, BC, and current drilling outside of the known resource (an updated 43-101 was released earlier this month) is delivering high-grade visuals. The first drill results from this summer’s 30,000 metre program should be coming out beginning next week, we suspect, and at just 35 cents ($15 million market cap) this stock is quite simply very undervalued.

6. Hathor Exploration (HAT, TSX-V)

Uranium, we believe, will be a big story in the year ahead, and Hathor has made a significant discovery at its Midwest NE Property in the Athabasca Basin. Lots of blue-sky potential here. Closed August 26 at $3.58.

7. Kodiak Exploration (KXL)

Kodiak was hit hard by the recent market sell-off but has bounced off strong support at $1.20. Kodiak’s Hercules Property in Ontario’s Beardmore-Geraldton area is going to be a huge winner, we believe, and the current $1.55 share price will look very cheap six months from now.

8. MacDonald Mines (BMK, TSX-V)

One cannot overlook the continuing excellent exploration potential of the James Bay Lowlands where BMK is a huge landholder. Everyone, though, has fallen out of love with BMK, which is why we believe it’s time to be a buyer. The stock has steadily drifted all the way down from a 52-week high of $1.32 to below 20 cents where it just has to be a buy in our view. Closed August 26 at 19 cents.

9. Nortec Ventures (NVT, TSX-V)

The same group that ran Frontier Pacific Mining is in charge of Nortec which is getting very interesting results from its Kaukua platinum-palladium-gold-nickel-copper project in northeastern Finland. They also have high-quality nickel-copper-cobalt targets in Labrador, one of which is currently being drilled. The individuals behind Nortec are company builders and mine finders - they will make Nortec a success story. Closed August 26 at 28 cents.

10. Junex Inc. (JNX, TSX-V)

We’re very big on the shale gas play in Quebec, and Junex is very much at the centre of the action there. Closed August 26 at $2.47.

Special Note: We will be updating our site later this evening with new information regarding Greencastle Resources.
As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

GREENCASTLE FINANCIALS IMMINENT…NEWS NEXT?

August 26, 2008

Investors should expect the reporting of Greencastle’s Q-2 financials as soon as tomorrow (Wednesday), and we believe most definitely either Wednesday or Thursday. We say this because a small sister company to Greencastle reported its Q-2 financials Tuesday morning. Q-1 Sedar filings came out the same day for the two companies back in May (May 29).

Here’s an interesting scenario, however: While a news release accompanied Greencastle’s Q-1 financials May 29, we don’t expect a news release to immediately accompany these financials as we’re only a few days away from the Labour Day long weekend. What we’re speculating on is that Greencastle will kick-start the month of September, when all eyes are back on the market, by delivering news next week on the heels of its strong Q-2 financials that are expected to show record revenue and profit for the company as we outlined in our most recent major report. There was a two-day gap between Greencastle’s 2007 Q-2 financials and a news release, and a four-day gap between 2007 Q-3 financials and a news release.

CEO Tony Roodenburg gave the market plenty of clues back in June, through a series of news releases, that investors can expect Greencastle to get involved in more “high impact” situations after already stepping foot into the coal and shale and gas plays. So investors, we believe, have much to look forward to with VGN over the next few weeks and months.

"The Utica shale is an extremely compelling gas exploration story and the kind of high-impact play we have been looking for. We are also currently examining several other opportunities where Greencastle can leverage a strong balance sheet with over $4-million in cash and monthly cash flow of over $200,000 for the benefit of our shareholders,” stated Roodenburg (bold italics our emphasis).

Over two months have passed since the above comments in a June 12 news release, and now we anticipate the company’s cash position has grown to about $5 million and regular monthly cash flow has jumped by 50% and shows no signs of slowing down.

Greencastle is different than many other small exploration companies whose only means of survival is to get lucky on a drill hole and/or hype their stock to do a financing and suck investors into an over-priced private placement. No dilution is coming from Greencastle whose blessing and cash cow is the Primate Oil Field in west central Saskatchewan. Thousands of barrels of heavy oil (and gas) are being produced at Primate. A new well (the 14th) just recently came on stream with more likely on the way (Enterra is the operator - they’re getting very aggressive in their Canadian exploration with an eager eye on Primate).

We look forward to the release of Greencastle’s Q-2 financials and we’re confident they will fall in line with our forecast. The management discussion and analysis will be an interesting read as well. We expect Greencastle’s Q-3 financials to be even better than Q-2.

The bottom line, folks, is this: Primate is producing prime earnings and wealth for Greencastle and its shareholders. This is creating a very strong foundation for the company. Armed with a substantial bank balance and consistent and growing monthly cash flow, CEO Tony Roodenburg is in a great position to pull the trigger on another deal (or two) to, in his words, “maximize shareholder value.”

Technical Update

The VGN chart remains bullish. FACTS:

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

AUGUST 25 MARKET NOTES

August 25, 2008

Greencastle Resources (VGN, TSX-V) weakened after a strong start this morning, but closed down just one-and-a-half cents at 0.35 on strong volume of over 1.2 million shares. We took advantage of the pullback from a high today of .415 to add to our holdings in the mid-30’s. In this bullish new uptrend for Greencastle, any slight pullback or weakness is healthy from a technical view and must be viewed as an attractive buying opportunity. The resistance level of around 40 cents we identified in our report yesterday is one that we expect VGN to overcome in fierce fashion very soon. We’ll be updating the situation with Greencastle for our readers Tuesday evening with some important fresh information and analysis we’re currently working on.

We would also like to reiterate our very bullish stance at the moment with regard to the Venture Exchange as a whole. As we explained yesterday, the probability is very high that a significant rally is in the works here with this market - one that could drive the Index up 10 to 20%. The Venture Exchange closed down 12 points today at 1,940 on light volume. There could be some additional choppiness Tuesday which is month-end settlement day, but the arrows are clearly pointing north with this market which bottomed out, in our view, at 1,881 last Tuesday. The train will soon be leaving the station, as they say, and you certainly don’t want to be the last one to get on board.
Our 30-stock model portfolio will be posted Sunday, August 31.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

GREENCASTLE RESOURCES:
A ROCKET PREPARING FOR LIFT-OFF?

PLUS…VENTURE EXCHANGE RALLY IN THE WORKS

August 24, 2008

Something indeed appears to be up with Greencastle Resources (VGN, TSX-V), and we’re not referring to the Thursday-Friday share price increase.

Friday evening, August 22, Recognia Inc., which provides technical trading tools for E-Trade clients, issued a startling price target for Greencastle. My eyes nearly popped out of my head as I stared at their prediction on the screen - $1.50-1.70, a target based solely on chart analysis.

“Wow”, of course, was my first reaction. My next thoughts were, “Is this even possible right now, or in the near future? Are drillers about to discover the mother-of-all wells at the Primate oil field? Is Greencastle sitting on a huge coal seam in Manitoba? Is a major discovery about to be reported near or at their Nevada or South African gold properties? Will the shale gas play in Quebec deliver big-time? Is the company about to announce an attractive new project? Is Greencastle “telegraphing” a major upside move in the Venture Exchange? What on earth is going on here?” In this special report we’re going to explore the Greencastle story in considerable detail and try to make some sense out of what could be developing with this profitable little Venture Exchange company.

The way we analyze stocks at SolomonSmallCaps is through a combination of technical and fundamental analysis. We believe it’s foolish to use only one of those methods in determining whether or not to invest in a stock. At certain times, one may place more emphasis on one method than the other. But both have to be looked at closely. The “fundamentals” of Greencastle are exceptionally strong, and we’re going to examine those in greater detail in this report with second quarter financial results about to be released. Let’s first look at the “technical” side of the equation, though, which relates directly of course to where VGN’s share price could be headed.

The Technical Side

First off, we’re certainly not here to promote E-Trade or Recognia. As a matter of disclosure, I do have an E-Trade account and I also deal with another discount broker and a full-service broker. However, after doing more research on Recognia this weekend, I can tell you that I’m adding their tools to my toolbox. I probably should have done that earlier as last October Recognia made a great call on a huge move with MacDonald Mines (BMK, TSX-V) that I used as part of my analysis in a BMK stock purchase that made me a small fortune. That should have been a clue for me at the time to use Recognia more regularly (sometimes we can be stubborn when it comes to accepting new ways of looking at things, not just with the market but in all facets of life).

What is really impressive about Greencastle, technically, is that despite the market carnage that started July 2 and ended (we believe) August 19, a period that saw the Venture Exchange drop a whopping 29% over 34 trading sessions, not once did the stock close below its rising 100 and 200-day moving averages. On Monday, Tuesday and Wednesday last week, the stock did drop below its 100-day moving average on an intra-day basis but recovered each day to close at or above the 100-day (0.26). Tuesday the 19th was the turning point - VGN got knocked down to 22 cents, only a penny or so above its 200-day moving average, but quickly bounced back to close at 0.265. A definite “truism” in technical analysis is that one of the best times to buy a stock after a huge upside move is when it first touches, or nearly touches, its rising 200-day moving average. VGN did that last Tuesday and a day later, after reviewing other technical indicators, we correctly called a bottom in the stock and issued a buy alert.

Other technical tools we pay very close attention to are the Relative Strength Index (RSI) and the “Slow Stochastic Oscillator”, and both presently give us strong comfort that VGN has further to go on the upside. The RSI has moved up with VGN but remains in “neutral” territory, indicating the stock is not in an overbought situation, and the Stochastics give us a very bullish reading. In fact, they’re very close to the lowest readings we’ve seen all year with VGN, dropping substantially from overbought levels in June. This is very important.

Technically, the next challenge for Greencastle is to plow thru its rising 50-day moving average which we now believe it will do next week, quite possibly on Monday given Friday’s clear breakout. VGN encountered resistance Friday at .375, exactly at its rising 50-day moving average. But one of my theories is, if this stock had enough underlying strength to remain at or above its 100 and 200-day moving averages through seven weeks of market mayhem, it certainly should have the power to bust through some minor resistance at its 50-day moving average and, generally, around the 40 cent area.

VGN stock is rather tightly held. Only about 40 million shares are outstanding, and much of that is in very solid hands. It would not take much for this stock to blast off.

So what does Recognia see in VGN, technically, that has prompted it to issue a $1.50-1.75 price target? In layman’s terms, they see the quick, sharp move in June, which came with record volume for VGN, as the beginning - not the end - of a new phase in the history of this stock. After a bullish “continuation wedge” was identified on Thursday, a bullish “flag” formation occurred Friday, according to Recognia. “After a steep rise in price, the pennant reflects a temporary pause in the uptrend, consisting of two parallel trendlines that form a rectangular flag shape,” as explained in Friday’s price target call. I double-checked Recognia’s technical interpretation with a well-known technical analyst who does this stuff for a living (I have great respect for his work). He says what in fact has happened is that VGN has formed a “bullish falling wedge”, not a “flag”. Nonetheless, his view is that VGN has indeed “broken out” and is a “buy”. No price target from him, at least not yet, but I sensed he’s of the opinion VGN could make a move close to its June high where of course it will encounter very significant resistance (if it were to bust through that high, then of course the stock could really go crazy).

Recognia’s price targets sometimes prove incorrect just like anyone else’s, naturally, and it would be a mistake to accept their current $1.50-1.70 prediction for VGN as gospel. But neither should we take this bold call lightly or dismiss it. On July 11, when Greencastle closed at 44 cents, Recognia turned short-term bearish on the stock and issued a price target of 16 to 22 cents - an exceptional call to say the least and one that many people may have shrugged off at the time. On August 8, following a 31 cent VGN close, Recognia again warned of trouble ahead with a new price target of .14-.18. That target proved slightly overly bearish but didn’t miss the mark by much. Everything changed last Thursday, August 21, when Recognia identified the start of a new Greencastle uptrend (a day later than we did) and issued a price target of 61 to 67 cents. That target was then raised substantially on Friday. The only price targets Recognia has issued this year on VGN are the ones described above, and so far they are essentially 2-for-2 with a bang-on call last Tuesday when VGN touched 22 cents.

There are many examples of how effective Recognia’s technical analysis can be. Hathor Exploration (HAT, TSX-V) is a stock we like a lot at the moment, and on April 7, after HAT closed at $2.22, Recognia issued a price target of $3.30-$3.50. Bang-on with that one, too. On July 15 Recognia warned of a “downside breakout” in the CDNX and we all know how prophetic that turned out to be (by the way, Recognia is now giving bullish readings on the Venture Exchange). When combined with other technical tools and of course fundamental analysis, we believe Recognia’s system offers value to investors.

Technical analysis is so fascinating and effective because it reveals so much to the astute investor as to what the market is “saying”. Yes, the market “speaks” in its various movements, and those who are listening closely and have discernment through technical analysis can have a huge advantage over other investors.

So what can we discern from “listening to the market” and “reading the tape” in the case of Greencastle? Here’s where we now shift to fundamental analysis because relying on technical analysis alone is insufficient in our view.

The Fundamental Side

Greencastle is a true “gem” in a market that is now placing far greater importance on a company’s financial strength and management quality. Does VGN have the ability to grow well beyond where it is today and become that dollar-plus stock? Absolutely it does, and the reasons why are sound management and a terrific balance sheet. The building blocks are firmly in place here, folks. CEO Tony Roodenburg has been a wise steward of Greencastle’s resources - and we’re sure he’ll continue to be - and he has a clear vision for where he wants to take this company to maximize shareholder value. We would like to see Greencastle communicate more effectively with its shareholders, but that is also a process that develops as a company like Greencastle matures and grows.

We’ve said this before and we’ll say it again, though we stress that this is just pure speculation on our part and it’s based solely on the fact that some “rabbits” have already been pulled out of the hat with Greencastle this year: Roodenburg has an “ace up his sleeve,” we believe, and perhaps that ace is what’s going to help produce the “Rocognia VGN Rocket Launch” (please forgive the flamboyance of that language, we’re not trying to be cheerleaders!). Just two months ago, Roodenburg stated the following in a news release: “We are also currently examining several other opportunities (our emphasis) where Greencastle can leverage a strong balance sheet with over $4-million in cash and monthly cash flow of over $200,000 for the benefit of our shareholders.” The opportunities Roodenburg is searching for are “high-impact” opportunities (his words). We don’t believe he’ll disappoint.

Greencastle’s Q2 financials are coming out shortly and we suspect the highlights could be provided in a news release that also includes an update on current projects.

Our estimate with regard to Q2 financials is that they will show VGN with over $5 million in cash at the end of June and net earnings for the first six months of two-and-a-half cents per share. Given the trends that we see in the company’s financials, the generally positive pricing outlook for heavy oil (assuming $80 per barrel), and increased production levels through the balance of the year at Primate, Greencastle’s monthly cash flow should exceed $300,000 through the balance of the year. Our projection is that the company could earn approximately six cents per share for the year which means the stock is currently trading at only six times its estimated 2008 earnings. We have not taken into account possible gains on any sales of marketable securities, and we’ll be looking closely at the upcoming financials to get clarification on what holdings Greencastle actually has.

Greencastle of course earns its revenue thru a royalty on the Primate oil field in Saskatchewan where it made a discovery in 2003. A total of 13 wells (11 oil and two gas) are currently in full production at Primate and prospects are good for more discoveries (we will explore this very interesting “Primate” in further detail in another upcoming report). The 11th oil well came on stream at Primate late in Q2 and Greencastle should have started receiving income from that this month.

A company in such solid financial shape as Greencastle - regular monthly income and millions in the bank - is in an excellent and enviable position to leverage that strength to maximize shareholder value. Greencastle also already has a very impressive portfolio of exploration projects (coal in Manitoba, shale gas in Quebec, gold in Nevada and South Africa, and uranium in Africa and Wyoming to go along with the revenue-producing Primate oil field). Which is why we believe so strongly that VGN’s current market capitalization of only $15 million substantially undervalues its assets and growth potential. We do believe that’s about to change, however, as the company continues to progress and more investors become aware of this exceptional value play. There are many other companies on the TSX Venture Exchange with higher market caps and much less going for them than Greencastle - no cash flow, more shares outstanding, consistent share dilution, average or even lousy management, and inferior exploration projects. Not only are we excited about Greencastle’s short-term prospects, but one has to love the long-term value that’s very apparent here which is why I have no hesitation acquiring VGN for my RRSP (some “professional” money managers would gasp at that, putting a “penny” stock in your RRSP, but those were the same managers pushing those “safe” banks in recent years).

Investors’ appetites for anything to do with coal or shale gas in Quebec were certainly key factors in driving the VGN share price to a record high of 63 cents in the month of June. What possible “triggers” (or combination of triggers) could make the latest Recognia price target ($1.50 to $1.70) become a reality? There are a number of possibilities:

• VGN announces a “barnburner” new project (we know they’re aggressively pursuing new opportunities);
• A major Venture Exchange rally ensues (which now appears quite possible);
• The coal play and/or the shale gas play heat up again, and Greencastle becomes even more involved;
• Greencastle’s promising Nevada/South African gold properties stir up excitement (Nevada is what we’re most interested in);
• A major discovery occurs at Primate or Greencastle’s Manitou Oil Project, also in Saskatchewan, and/or the price of oil moves significantly higher than forecast;
• A Greencastle investment skyrockets.

All things are possible. 2008 has already been a very good year for Greencastle, and it could get much better still. We should not underestimate the potential of this profitable little company to develop into something much more substantial. It has every opportunity to do so.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

VENTURE EXCHANGE RALLY IN THE WORKS

August 24, 2008

Evidence is mounting that a significant rally may now be underway with the Venture Exchange that could result in a 10% move or better in the month of September. In that kind of environment, some stocks will enjoy very substantial gains. Greencastle, as we described above, would certainly be a major beneficiary of a significant rally. Focus on stocks with strong management, strong financials and strong exploration stories because those are the ones that will move. Stay away from junk.

First off, one has to recognize that the Venture Exchange is currently in a bear market which started in earnest last November when the Index dropped below a long-term trendline and the 200-day moving average began to decline in tandem with the 100-day moving average. Since the highs of last October, the Venture Exchange has now fallen approximately 40%. More than half of that drop occurred in just 34 trading sessions (July 2-August 19) when the Index shed 769 points or a whopping 29%. Examine the comparisons with previous declines below and you’ll see why we have good reason to believe that the most recent sell-off has indeed run its course:

Amazingly, the severe drop from July 2 to August 19 - 769 points - was the exact same percentage point loss the Venture Exchange experienced last summer and also in the May-June period of 2006. The average length of each drop - 33 trading sessions. Wow!

Following the above declines in 2006, 2007 and 2008, the Venture Exchange quickly reversed course and went on to post HUGE gains. A lot of money was made in those “turnaround” situations and that’s the environment we suspect we’re entering now (in this instance, it could be just a “bear” market rally but a bull run within a bear market presents many profitable opportunities). Investors tend to have a “herd” mentality, so if this train starts leaving the station…many are going to be jumping aboard with cash in hand. From a technical perspective, a rally that carries the Venture Exchange back up to about 2,350 is entirely possible. From current levels that’s a 20% move, and selected stocks will greatly outperform.

Other reasons we have now turned short-term bullish on the Venture Exchange:

With regard to commodities, gold certainly has some work to do to regain technical strength after its rather massive drop. We’re confident, though, that physical demand from overseas will provide a strong underpinning for gold moving forward. Throughout the duration of gold’s bull market that began in 2001, the month of August has consistently proven to be one of the best times of the year to be a buyer. We believe the same will hold true for 2008. We don’t believe for a minute that the commodity “super-cycle” has drawn to a close.

Frank Holmes, who’s the CEO and Chief Investment Officer for U.S. Global Investors, a Texas-based investment adviser that specializes in natural resources, wrote an exceptional article on the commodities market the other day, and you’ll find a link to that article below from Kitco. We saw a couple of Frank’s presentations at the recent World Resource Investment Conference in Vancouver, and there’s no question he knows his stuff (he lays out his case for commodities far, far better than we ever could). You’ll find his article very informative and helpful, just as we did:

http://www.kitco.com/ind/Holmes/holmes_aug212008.html

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

1881 - VENTURE EXCHANGE BOTTOM?

August 22, 2008, PM Update

It has been an eventful week in the markets, and a confusing one as well for a lot of investors with many cross-currents and differing opinions on where commodities are headed. We’re on the bullish side of the fence for the month of September at least as we see a growing likelihood of a significant commodities rally and a substantial upward move in the Venture Exchange. We will review the markets and present our case in a major article that will be posted right here over the weekend (by 4:00 pm Pacific time Sunday). The 1,881 we saw on the Venture Exchange Tuesday was an important bottom, we believe, and confirmation that this market is truly in rally mode should come by the end of next week.

We’ve been very busy the last couple of days monitoring the action in Greencastle Resources (VGN, TSX-V) which moved higher again today to close at 0.365 on over 700,000 shares. A lot is happening with Greencastle, fundamentally with the company and technically with the stock, and we are working on a major VGN piece that will be posted here on Sunday. We had intended to put together something for this evening but there’s so much that we’re examining and working on with VGN at the moment that we just require some additional time. We are as bullish as ever on this stock and next week is going to be an interesting one indeed for Greencastle.

We are also continuing to work on our “model” 30-stock portfolio which we will be releasing next week, guaranteed.

Next Scheduled Major Update: Sunday, August 24, 4:00 pm Pacific Time

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

GREENCASTLE RESOURCES UPDATE

11 am August 22, 2008

Greencastle continues to show strength this morning, and we’ll be providing another in-depth report this evening. We know that the release of VGN’s Q2 financials is imminent, and they are going to be outstanding, but the chart pattern with the stock suggests that something much bigger could be coming down the pipe here. We will expand on that this evening, but what we’re seeing is what other technical analysts are now seeing as well - an extremely bullish chart formation, suggesting a powerful new up-leg that could take VGN beyond its June high (or at least to a test of that 60 cent area). This has clearly caught our attention and we were buyers in the market this morning at 35 cents.

The fundamentals of Greencastle are exceptionally strong. The company is on record as stating it is continuing to search for new opportunities. Something big is brewing, we suspect, and we may get more than just the financials next week.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

MARKET TURNAROUND?
PLUS…“READING THE TAPE” WITH GREENCASTLE:
POWERFUL MOVE UNDERWAY

11 pm August 21, 2008

“READING THE TAPE” WITH GREENCASTLE:
POWERFUL MOVE UNDERWAY

RECOVERY SETS IN
PLUS…COLUMBIA YUKON BUY ALERT

August 13, 2008

Gold Update

On Monday evening, August 11, we wrote about an “incredible buying opportunity” in gold as it plunged to nearly $800 an ounce in the Asian markets. Our three recommendations were the HGU (TSX) as well as call options in Goldcorp (G, TSX) and Agnico-Eagle (AEM, TSX) for October and November, respectively. The gold market is alive and well and all three of those trades should be very profitable. Generally speaking, we see gold moving a little higher in the short term as it continues to correct hugely oversold conditions. An eventual re-test of the Monday/Tuesday lows is certainly possible, however (technically, this should be expected), before gold heads significantly higher in the fall.

Recent “expert” comments about the “end of the commodity boom” are hogwash, as we see it, and those who are perpetuating that view are simply on the wrong side of history. Period. $100+ oil is here to stay, and $800 gold is going to look dirt-cheap a year or two from now. We’ll expand on those comments in the near future.

Venture Exchange

The Venture Exchange may have hit an important bottom this morning at 1,966, just 16 points above the 1,950 support level we identified. It bounced off that low and finished the day up 20 points at 1,997. In just 30 trading sessions, then, the Venture Exchange plunged a total of 670 points - 2,636 to 1,966 - or 25%. That kind of a drop is certainly in line with other short-term plunges we have seen over the years with the Venture Exchange and the old VSE. This market is extremely oversold, and today’s action was very encouraging, but whether a substantial rally is now underway remains to be seen. We’d like to see a convincing move over 2,000 tomorrow, a weekly close above 2,000, and then some follow-through next week for confirmation. Also important to watch out for with the Venture Exchange right now and in the coming days and weeks is news of a major discovery - historically, this often has occurred at or near a market bottom (last August was a great example with Noront) and fuels the market for a very sudden and sharp move to the upside.

30-STOCK MODEL PORTFOLIO COMING VERY SOON!

Columbia Yukon Explorations (CYU, TSX-V)
August 13 Close: 0.43

It’s very tempting to start shouting from the roof-top that Columbia Yukon is a “screaming buy” right now! This is our #1 pick, and we see the potential of a huge gain (greater than 100%) in this molybdenum stock before the end of September.

The panic sell-off in the resource markets Monday and Tuesday spilled over into CYU which fell as low as 40 cents yesterday (Tuesday) before rebounding. It’s worth noting that of the 770,000 CYU shares that traded yesterday, insiders and close associates were on the buy side, I’m told, of 600,000 of those shares. That says a lot for the confidence people “in the know” have about Columbia Yukon.

Why are we so bullish on this stock? Below are just some of the reasons:

As the recent Objective Capital report outlined, Columbia Yukon is grossly undervalued in terms of the current value of its main asset, the Storie Deposit. Objective Capital, a respected London research firm, puts a fair current valuation on CYU of 92 cents per share, or about $40 million.

Columbia Yukon, however, is undervalued also in comparison to its peers and how they are currently trading. Let’s look at just three examples we have selected:

*Value per pound of Mo is based on 43-101 measured/indicated/inferred resource estimates for company molybdenum properties

As you can see above, CYU’s market capitalization is well below that of both Creston Moly and Adanac Moly. CYU’s value-per-pound is also significantly lower, for no reason whatsoever. We would argue CYU actually has the best property of the bunch - the Storie Deposit has a lot of blue sky potential in addition to the already indicated and inferred resource of 110 million tonnes - and there’s no question CYU has a far better share structure than both Adanac and Creston. Those two have 115 and 121 million shares outstanding, respectively, vs. just 40.5 million for CYU.

The fact that CYU has a market cap of just $1 million more than Velocity is just plain ridiculous. We picked Velocity because it has two moly properties very close to Columbia Yukon - Mt. Haskin, about 15 miles to the north, and Cassiar Moly, immediately adjacent to the Storie Deposit. Velocity is currently drilling Mt. Haskin which has a non-compliant historical resource of 13.5 million tones grading 0.157 MoS2, while Cassiar Moly is a very early stage exploration project which has never been drilled.
Again, Velocity currently has a $16 million market cap vs. just $17 million for Columbia Yukon. Is CYU a bargain or not?

In a market rebound, which we now believe could be underway, Columbia Yukon will strongly out-perform and move substantially higher. The possibility of a double on this stock from current levels in the short term (over the next six weeks) is a real possibility.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

CAPITULATION STAGE:
PANIC SELL-OFF IN GOLD

August 11, 2008
8:00 pm (Pacific Time)

Gold breached support at $850 an ounce today and has plunged again this evening in the Asian markets, now trading at $806 an ounce. This panic sell-off was something we warned about Sunday evening, and could extend into trading Tuesday morning. Such hugely oversold conditions have rarely been seen in the gold market - in gold itself and in gold shares - and in our view this presents an incredible buying opportunity. What should investors do?

1. First, do not panic. This must be viewed as an opportunity, if you have available cash, so do not let the emotion of “fear” force you to do something stupid such as selling your favorite, high-quality gold stock at a rock-bottom price. The fundamentals for gold remain strong, and does it make sense that gold could move below the cost of production which for many companies is now at or above $700 an ounce? We expect very strong physical demand from Asia and elsewhere overseas to kick in with gold at current levels and on any drop below $800;

2. If you do have available cash, we suggest you invest it where you will find the greatest leverage in a rebound which we believe is now imminent. There are many different possibilities, but here are three that we suggest:

a) HGU ETF (TSX). Closed Monday at $15.00, down 53% since its $31.75 high July 15;

b) Goldcorp October call options;

c) Agnico-Eagle November call options.

If you do not have experience with options and futures, and you’re not comfortable with those types of investment strategies, then simply purchasing an ETF such as the HGU (which trades just like a stock, symbol HGU-TSX) would be the route to take. This gives you approximately 2:1 leverage on any move up in the TSX Gold Index.

Venture Index

With today’s large drop in precious metals, the Venture Exchange fell a whopping 76 points and plunged to a new 52-week low of 2,015, just 65 points off an important support area (1,950) from 2005. History has shown that whenever the Venture Exchange hits an important “bottom”, it does so with a severe last-gasp “plunge” on significant volume. That’s what we want to look for as a signal that this market is ready to turn. An intra-day drop of 100 points Tuesday, for example, followed by a recovery back over 1,950 by the end of the day is the type of action that we would like to see as a strong signal that this market has, for now at least, bottomed out.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

MAJOR RALLY IMMINENT

August 8, 2008

At the risk of sounding like a broken record, we want to reiterate our bullish view on the state of the current gold and resource markets. We will either be proven right or wrong, but the future is not for the timid and we don’t exist to “straddle the fence” and take positions that are fuzzy or open to interpretation. What we’re going to say here is very simple: Major profits are coming for those who are bold enough right now to be buyers of gold-related ETF’s and high quality resource stocks, some of which we have already highlighted here at SolomonSmallCaps.com. First, we’ll take a look at what is happening in both gold and the U.S. dollar.

Unfortunately we don’t have charts to display at this point with our site, but one of the driving forces behind gold’s current weakness (it closed down $16.80 today to $855.50) has been a strong rally in the American dollar. The U.S. Dollar Index was up sharply today to 75.87 (up 1.27 points) and has “broken out” above its 200-day moving average. We consider this to be a “false” breakout by the dollar, however, which is still in an area of major resistance and also still fighting a severe headwind with a declining 200-day moving average. In addition, the dollar is also technically overbought, so we see a high probability of a “dead cat bounce” here with the U.S. dollar and limited upside potential from current levels. Fundamentally, the U.S. remains in a financial mess on a number of fronts and there’s every reason to believe the situation there could actually worsen in the year ahead, particularly under a Barack Obama administration with a Democratic controlled Senate and House of Representatives (Canadians and Americans ought to be careful what they wish for, “Obamanomics” could wreak havoc on the North American economies and we’ll go into detail on that in the near future here at www.solomonsmallcaps.com).

The TSX Gold Index is down a whopping 27% over the last 18 trading sessions since July 15 when it was as high as 376 (today it closed at 275). Relative to gold, and by all other measures, the TSX Gold Index is extremely oversold, and we are now blessed with an exceptional bargain. It’s also interesting to point out that the RSI (Relative Strength Index) for the TSX Gold Index is at its lowest point since mid-August, 2007, just prior to a very powerful new sector up-leg. History, it appears, may be about to repeat itself.

Earlier this week we stated the following. “With these heavily oversold conditions in gold, we suggest taking a serious look at the Horizons S&P/TSX Gold Bull ETF (HGU, TSX) which has lost about half its value since the middle of July. The HGU closed today at $17.68. Now is an excellent entry point in our view and we suggest additional accumulation on any further immediate weakness.”

Today, the HGU closed at $16.88 and we will emphatically state that investors should back up the truck and load up on this ETF…and continue to keep loading on any further weakness, though we do believe the potential downside is very limited from here.

Gold has very strong technical support at the $850 level, which it touched today, and that’s only about $25 above its 300-day moving average which has been gold’s anchor since the onset of this bull market seven years ago. If gold unexpectedly falls thru support at $850, it will be saved by its rising 300-day moving average and that kind of event (a plunge that could take gold briefly to $800) would indeed represent an incredible buying opportunity in both gold and gold shares.

Furthermore, on a seasonal basis, we are about to enter the best time of the year for the precious metals sector.

With regard to the Venture Exchange, it fell heavily again today to 2,091.47, down 39 points. Earlier we identified a possible bottom on the Venture of 1,950, a previous area of strong support. We’re now just 140 points from that level. While it’s possible the Venture Exchange could decline to that level in the days ahead, we believe it’s prudent to be accumulating high-quality issues now given the already extremely oversold conditions of this market.

30-Stock Model Portfolio Coming Next Week!

August 8 Columbia Yukon Explorations Alert
Current Price: 0.455

Much has transpired this week with regard to Columbia Yukon Explorations (CYU, TSX-V), and our bullish outlook on this stock remains firmly intact. We expect CYU to begin a very substantial move based on several factors including an overall market rebound, upcoming assay results from a growing resource at the Storie Molybdenum Property near Cassiar, BC, and greater investor awareness of the magnitude of the asset this company is sitting on and building. Two major developments occurred this week - an upgrading of the Storie resource with a new 43-101, and a report by Objective Capital out of London, England, which puts a current fair valuation on CYU of nearly $40 million or 92 cents per share. The spark, however, that we expect to ignite the fire with this stock will come with the release (quite possibly next week) of the first batch of assays from this summer’s 30,000 metre drill program.

Updated 43-101

On Tuesday, August 5, CYU released an updated 43-101 compliant resource for its Storie Deposit prepared by Watts, Griffis and McOuat Ltd., consulting geologists and engineers from Toronto, and Mintec Inc. of Tuscon. As expected, the new 43-101 represents another major step for CYU in the development of this large tonnage, lower grade deposit which remains open along strike and at depth. The new report, which took into account last year’s drill program along with CYU’s 2006 drilling in addition to historical drill data, has reclassified the mineral resource from an inferred category to indicated and inferred categories. The 2006 43-101 outlined an inferred resource of 101.6 million tonnes grading 0.067% Mo (using a 0.035% cut-off). The new report states an indicated resource of 85 million tonnes grading 0.069% Mo and an inferred resource of 25.6 million tones grading 0.064% Mo (also using a 0.035% cut-off).

A bulk of the deposit moving from inferred to indicated is important, and total estimated contained molybdenum at Storie now stands at approximately 170 million pounds (using the 0.035% cut-off), an increase of about 12% over the 2006 report. Keep in mind that most of the drilling CYU did last year (76 holes in total) was infill drilling (54 holes) designed not to actually expand the resource but merely to move as much of it as possible from inferred to indicated. This year’s program, however, is clearly aimed at producing a very substantial increase in the size of the Storie Deposit as you’ll read further below.

With an indicated and inferred resource of 110 million tonnes grading mostly 0.069% Mo, Columbia Yukon is sitting on a world class molybdenum deposit by any standard. The delineation of this deposit is still in the middle stages and its limits remain unresolved. Through extensive drilling outside of the known resource area this summer and through next year, we believe CYU has an excellent chance to dramatically increase the size of this deposit.

Objective Capital Report

The respected London-based research firm Objective Capital has just initiated coverage on Columbia Yukon, releasing a 36-page report on CYU Wednesday, August 6. The report can be found on Columbia Yukon’s web site (www.columbiayukon.com) or by going to: http://www.objectivecapital.co.uk/columbiayukon.pdf

Some of the highlights of Objective Capital’s report, in our view, are as follows:

There is a tremendous amount of information in the Objective Capital report, and we encourage you to read it in its entirety to get an excellent grasp of where Columbia Yukon is at with this project. We believe - and perhaps this is a good thing - that they were actually quite conservative in their estimation of the potential size and grade of this deposit.

Current Drilling Holds The Key

What the Objective Capital report did not specifically address is the apparent significant success of Columbia Yukon’s current 30,000 metre drill program at Storie. We expect the first batch of assays to be reported almost any day now, and one only needs to review a few CYU news releases from June and July to get a good feel for how stellar these results could actually be.

Currently, four rigs are drilling Storie around-the-clock. We estimate that over 10,000 metres has now been completed. Very interesting information on the first four holes was provided by CYU in a news release June 25 (bolded and underlined type - our emphasis):

“Thus far in 2008, Columbia Yukon has completed four core drill holes totaling 1,888 metres. Drill holes ST08-97 and ST08-98 are located 50 metres south of the resource area. In this area, the newly excavated drill pads exposed an outcrop of extensive molybdenite mineralization. ST08-97 showed molybdenite mineralization from surface to 375 metres. Drill hole ST08-98 showed good mineralization from surface to 337 metres. Drill holes ST08-99 and ST08-100 are located 50 metres north and west of the known resource area. Drill hole ST08-99 intersected molybdenite mineralization from 70 to 565 metres with very intense mineralization from 120 to 526 metres. Drill hole ST08-100 intersected molybdenite mineralization from 160 to 551 metres with intense mineralization from 200 to 500 metres. Assays are pending.”

In reviewing all of Columbia Yukon’s news releases on the Storie property, never have we seen them state they have encountered a hole with “very intense” or even “intense” mineralization. Our assessment is that hole ST08-99 is a stellar one indeed and could be the best yet at Storie, or at least one of the best.

All four of the holes mentioned above, ST08-97 thru ST-08-100, were drilled outside of the resource area, and it’s also worth noting that hole ST08-97 showed “good” mineralization from surface to 375 metres, 50 metres south of the resource area where mineralization tends to be thinner. This summer’s exploration program (approximately 100 holes) will no doubt significantly expand on the 110 million tonne indicated and inferred resource outlined in the new 43-101 (“intense” mineralization at depths below 325 metres is also interesting).

Columbia Yukon discovered a higher grade zone at Storie last year, which appears to be open in all directions, and it also seems to be continuous through the centre of the deposit. In the new 43-101, Mintec specificially noted that if this zone can be better defined geologically or structurally with further drilling, the block grade smoothing than occus from the interplation can be minimized and the grade and confidence of the mineral resource estimates can be improved. CYU’s August 5 news release stated that they are currently drilling several infill holes at 25-metre spacing in an effort to better define the high grade zone.

Some of CYU’s best high grade intersections from last year are as follows:

If the first results from this summer’s drill program exceed any of the above from 2007, then clearly the CYU share price is going to move forward very positively. Visual observations can be tricky, but we don’t believe CYU would have released visuals on holes ST08-97 thru 100 unless they had extremely high confidence that these are indeed impressive “hits”.

With four drill rigs and an independent on-site assay preparation lab (significantly reducing laboratory turnaround times), we should be receiving a steady flow of exploration news and assay results from Storie over the next few months beginning here in August. Columbia Yukon has an undervalued and very substantial asset on its hands, not to mention a strong treasury and sound management. It also has a solid investor relations program and we’re confident the company will be very effective at delivering its message and telling its “Storie” in the days and weeks ahead.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

A BUYER’S MARKET

August 5, 2008

The resource market got hammered hard today as gold and other commodities sold off sharply. Over the past 15 trading sessions the TSX Gold Index has now dropped a whopping 25%, though the bull market in gold itself remains firmly intact. One of gold’s most reliable technical indicators throughout this cycle has been its 300-day moving average, currently at about $820. The 300-day moving average has been rising continuously and the price of gold has remained at or above it throughout this bull market, and we see no reason to believe this is going to change anytime soon. We’ll have more on gold and commodities in general in the coming days.

With these heavily oversold conditions in gold, we suggest taking a serious look at the Horizons S&P/TSX Gold Bull ETF (HGU, TSX) which has lost about half its value since the middle of July. The HGU closed today at $17.68. Now is an excellent entry point in our view and we suggest additional accumulation on any further immediate weakness.

The Venture Exchange lost 95 points today to close at a new 52-week low of 2,142. Seeing that kind of action today - indiscriminate selling across the board - only strengthens our view that now is the time to be aggressively accumulating high-quality issues. We have reduced our cash position and we will continue to buy into any weakness we see in anticipation of a substantial rally in the days or weeks ahead. So we actually viewed today’s action as bullish, not bearish.

Kodiak Exploration (KXL, TSX-V)
August 5 Closing Price: $2.09

Kodiak Exploration (KXL, TSX-V) behaved pretty much according to the script we presented last night, selling off sharply early in the day and then recovering. Excellent buying support came in between $1.90 and $2.00, and given Friday’s positive news we expect Kodiak to have a good week and strengthen in the days ahead.

Columbia Yukon Explorations (CYU, TSX-V)
August 5 Closing Price: 0.54

Columbia Yukon (CYU, TSX-V) was one of the few resource stocks to actually finish in the green today as it moved up a penny to 54 cents. As we expected, the company today released a very encouraging updated 43-101 on its Storie Molybdenum Property near Cassiar, BC. There has been a significant increase in the size of this growing resource, and we will be going into more detail on this tomorrow. Within the next week or so we expect the first batch of assays to be announced from this summer’s 100-hole drill program. We’re extremely bullish on CYU, and the fact it was up today in a down market is another indication this stock is going to strongly outperform the market over the short term at least.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

KODIAK EXPLORATION UPDATE

BETTER DAYS AHEAD

July 31, 2008

Venture Exchange Down 15.6% In July

Investors in the junior resource market are probably quite happy to see July come to a close. Perhaps that helps explain the combined 56 point gain we got yesterday and today in the Venture Exchange which officially closed the month down nearly 16%. All kidding aside, we do see better days ahead in August and hopefully this market can gain some traction next week. A lot of exploration activity is underway in many different areas, and all this market needs for a huge lift is a nice little (well, maybe not so little) discovery.

Was July our August of 2007? Let’s hope so. Last August, of course, all the markets suffered a severe meltdown. The Venture Exchange was at 3,150 July 31, 2007. Just 11 trading sessions later, it was sitting at a low of 2,350 (a drop of 25%) and many investors were in a state of panic. Mid-August last year represented an incredible buying opportunity. Within six weeks the Index was back at nearly 3,000 and moved higher from there.

Hopefully, history will repeat itself as it so often does. These swift and savage declines with the Venture Exchange are scary for some investors but very welcome events for others, especially experienced traders who know the importance of buying into these plunges. We’ve stated repeatedly recently, the Venture Exchange is clearly in technically oversold conditions and due for a rally. That’s not to suggest a new bull market is upon us. But a very profitable trading rally, at the very least, is quite possibly now underway. Confirmation of that could come next week if we see some follow-through from the last two days. The first thing we would look for is a reversal in the 10-day moving average which hasn’t happened yet. Generally speaking, however, we’d be shocked if August is not a whole lot better than July.

Our #1 Short-Term Pick

Columbia Yukon Explorations (CYU, TSX-V)
July 31 Closing Price: 0.50

Our favorite pick at the moment, for a substantial move in the month of August, is Columbia Yukon Explorations (CYU, TSX-V). When we find a stock we really, really like…we focus in on it like a laser beam. This is a company with a terrific asset (the Storie Molybdenum Deposit) in northwestern British Columbia and strong management. We expect a lot of news out of CYU next month beginning next week. This is a very exciting situation and we believe CYU will strongly outperform the market in the days and weeks ahead.

Other Situations to Watch

McFauld’s Lake

We suggest keeping a very close eye on what’s happening at McFauld’s Lake. A number of companies are well into drill programs right now and recent market weakness has brought share prices down to very attractive levels. We mentioned recently that Noront (NOT, TSX-V) was pretty much a screaming buy when it dipped below $2.50. It closed today at $3.30.

Other companies we like are WSR Gold (WSR, TSX-V), which made a really nice move today to 75 cents (perhaps in anticipation of assays); Probe Mining (PRB, TSX-V), one of my personal favorites; Fancamp Exploration (FNC, TSX-V), and McDonald Mines (BMK, TSX-V). Our theory regarding the James Bay Lowlands is very simple: Eagle One has many “brothers” and “sisters” - thru persistence they will be located. A lot more money is going to be made with these plays. Keep a close eye on them.

BacTech Mining Corporation (BM, TSX-V)
July 31 Closing Price: 0.09

We are very bullish on BacTech Mining (BM, TSX-V) which is making really significant progress in developing its proprietary bioleaching business. You’ll see a report on BacTech here at www.solomonsmallcaps.com (June 25). July’s awful market brought BM down to levels that are downright silly in our opinion. With improving markets, and more positive news on the way, we believe BacTech has bottomed out and is ready to move back up again. Yamana Gold is now BM’s largest shareholder, and that’s pretty good company to have. BacTech is going to be one of the stocks in our “Group A” category for best short-term prospects when our 30-stock model portfolio is posted in the next week or two.

Greencastle Resources (VGN, TSX-V)
July 31 Closing Price: 0.34

It’s been a little while since we’ve provided an update on Greencastle Resources (VGN, TSX-V), which we first highlighted at the end of May when it was sitting at just 15 cents. What’s happening with Greencastle right now is very simple: consolidation. We really like the action in the stock right now as it forms a nice base around the 30 cent level. From a technical standpoint, this is very healthy and good to see. The company is awash in cash and we expect we’ll hear quite a bit more from Greencastle next month regarding its coal and shale initiatives. So look for this stock to heat up again in the near future. From a trading standpoint, we’re waiting for a reversal in the 20-day moving average which we expect will happen by the middle of August at the latest.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

Special Note: Our next scheduled update is Monday evening, August 4.

TIME TO JUMP…IN!

July 30, 2008

Intra-Day Reversal A Positive Sign

One day does not a market make, but we were certainly encouraged by today’s reversal in the TSX Gold Index which plunged this morning as low as 301.46 and closed near the high of the day at 314.81. That kind of action is usually indicative of a market turn, and even if gold itself drops a little more - which we suspect it will, perhaps 5% from current levels - gold shares may have pretty much bottomed out and could now be foreshadowing another significant upside move by gold itself in the near future. Gold could temporarily dip below its 200-day moving average (currently at $885.46) but its continually rising 300-day moving average ($818.52) will keep this bull market firmly intact. We expect gold to finally break through $1,000 this fall.

The Venture Exchange also enjoyed an intra-day reversal. The Index sold off another 19 points before some buying kicked in that drove it to 2,184, a 16-point advance (its best one-day performance since June 30 which of course was followed by a sustained heavy sell-off).

What’s different now, in contrast to a month ago, is that the Venture Exchange is in a deeply oversold state. Just check out the RSI and Stochastic technical indicators. Rarely have we seen these kind of oversold conditions on the Venture Exchange over the last five years, and when we have the market has rebounded sharply. Expecting this market to drop much further is probably wishful thinking at best. Today’s low of 2,149 represented an 18.5% drop for the month of July. The balance of probabilities suggests the month of August is going to be much better for the Venture Exchange, so now is a great time, we believe, to do some serious bottom fishing. We have lowered our cash position to take advantage of certain situations that are just too good to pass up in our view. The need, however, to be selective continues to be very important. You want to focus on companies with strong balance sheets, high quality projects, and sound management. This is not the kind of market in which a company with some cow pasture and a good promoter is going to succeed.

Our #1 Favorite Short-Term Pick

The future is not for the timid, so here we go: We have covered many excellent companies here at SolomonSmallCaps, but if we had to select just one of those right now as the stock with the best potential over the next two to four weeks…it is Columbia Yukon Explorations (CYU, TSX-V), and let me explain why.

Columbia Yukon is rapidly developing the Storie molybdenum deposit in northwestern British Columbia near Cassiar. The stock closed today at 48 cents (up a nickel on light volume) for a market capitalization of only $19 million. We say only $19 million because we believe this is a significantly undervalued situation, as we’ve been outlining here for a couple of weeks.

Very shortly (it could come almost any day now), Columbia Yukon will be releasing an updated 43-101 resource estimate on the Storie Deposit. The current 43-101, which outlines an inferred resource of 101 million tons grading .067 molybdenum (150 million pounds of Mo which is currently trading at about $33 a pound) was based on CYU’s 20-hole drill program in 2006 along with historical drilling data from the likes of Shell Resources in the 1980’s. The new 43-101 will take this deposit to an indicated resource and include last year’s successful 76 hole drill program which also encountered a new high grade zone at Storie. Based on the results of those 76 holes, which we have reviewed carefully, we anticipate the new 43-101 is also going to state a significant increase in both tonnage and grade at Storie. In short, it is our opinion that Columbia Yukon is sitting on a world class molybdenum deposit with the potential to eventually, we believe, at least double in size from what is outlined in the current 43-101.

For comparison purposes, Adanac Molybdenum Corporation (AUA, TSX), which is hoping to put the Ruby Creek Deposit near Atlin, BC, into production by 2010, has a current market capitalization of $47 million, 2.5 times that of Columbia Yukon. Ruby Creek contains a 43-101 measured resource of 49 million tons grading .073 MO, and an indicated resource of 164 million tons grading .060. It’s our opinion that CYU has many advantages over Adanac including a higher grade deposit (and potentially more molybdenum), less infrastructure challenges, superior management, and a far better share structure (41 million outstanding shares vs. 115 million). At this point CYU even has more money in the bank.

What also really intrigues us about Columbia Yukon are the results it appears to be getting so far in its 30,000 metre 2008 summer drilling program which started a couple of months ago (about 25% complete so far). The company has four drill rigs currently on the property in addition to an on-site independent assay preparation lab which will assist immensely in assay turnaround time. In fact, we believe the first batch of assays should be coming out very soon and they could be quite impressive.

On June 25, Columbia Yukon reported the following (emphasis is ours):

“Thus far in 2008, Columbia Yukon has completed four core drill holes totaling 1,888 metres. Drill holes ST08-97 and ST08-98 are located 50 metres south of the resource area. In this area, the newly excavated drill pads exposed an outcrop of extensive molybdenite mineralization. ST08-97 showed molybdenite mineralization from surface to 375 metres. Drill hole ST08-98 showed good mineralization from surface to 337 metres. Drill holes ST08-99 and ST08-100 are located 50 metres north and west of the known resource area. Drill hole ST08-99 intersected molybdenite mineralization from 70 to 565 metres with very intense mineralization from 120 to 526 metres. Drill hole ST08-100 intersected molybdenite mineralization from 160 to 551 metres with intense mineralization from 200 to 500 metres. Assays are pending.”

In reviewing all of Columbia Yukon’s news releases on the Storie property, never have we seen them state they have encountered a hole with “very intense” or even “intense” mineralization. Our assessment is that hole ST08-99 is a stellar one indeed and could be the best yet at Storie, or at least one of the best. Notice as well that the four holes mentioned above, 97 thru 100, were drilled outside of the resource area. This summer’s exploration program (another 100 holes) will no doubt significantly expand on the increased resource we expect to be outlined in the upcoming new 43-101.

In an interview with Al Korelin (co-host of the Korelin Economics Report) which now appears on the Columbia Yukon web site, CYU President Ron Coombes sums up our thoughts on this company with the following statement:

“We have the money, an asset in the ground, and a management team that knows how to deliver a product at the end of the day.”

We believe Columbia Yukon is going to have a great “Storie” to tell in the days and weeks ahead. Stay tuned for updates from SolomonSmallCaps as news is released from CYU!

30 Stock Model Portfolio Coming Soon

We’re looking forward to this because it’s going to be a lot of fun. During the first half of August we’ll be releasing our 30 best picks - 15 stocks we believe will substantially outperform the market in the very near term, and 15 more stocks we believe will substantially outperform the market over the next six to 12 months. We will track our performance vs. the overall market’s performance. Some of those stocks in our Model Portfolio have already been mentioned here and include Greencastle Resources (VGN, TSX-V), BacTech Mining (BM, TSX-V), Kodiak Exploration (KXL, TSX-V), Pediment Exploration (PEZ, TSX-V), Nortec Ventures (NVT, TSX-V), and of course Columbia Yukon (CYU, TSX-V). We have some surprising picks and some names you have probably never heard of before.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

TIME FOR BOTTOM FISHING BUT BE SELECTIVE

July 27, 2008

The Venture exchange has dropped another 35 points to 2,188 since our Wednesday, July 23, report when we warned about a selling “climax” that could drive the Index down to the 1,950 level, a major support area from 2005. As we indicated last Wednesday, the Venture Exchange is clearly oversold - every technical indicator suggests this - but that doesn’t mean of course that it can’t become even more oversold. Regardless, we believe now is a prudent time to accumulate high quality issues whose share prices have been beaten down badly in this sell-off that has seen the Venture Exchange plunge 17% this month alone. When a market is overbought and in the process of “topping out”, it’s wise to be a seller even though one can never precisely pick the exact high. The same applies in the opposite scenario: We believe the Venture Exchange is in the process of “bottoming out” - worst-case scenario is probably 10% to the downside from here - so it makes sense now to be picking away at certain stocks while still keeping some cash on the sidelines.

It’s useful to point out that a fairly wide gap has opened up between the current 2,188 mark on the Venture Exchange and its 200-day moving average (2,650). That gap is 17%. We saw a 22% gap at last January’s lows and a 24% gap at last August’s lows. The Venture Exchange’s RSI (Relative Strength Index) is at the lowest level we’ve seen in the last five years (a bullish indicator) with the exception of last August. And the Stochastic Oscillator is at a more than four-year low. So, clearly, it makes sense that this market is due for a substantial rally if nothing else.

In the near future we will be releasing our “Top 30” picks - stocks we believe will be star performers over the short term and the longer term. Tonight we’re briefly reviewing three of those stocks on that list and in that portfolio: Nortec Ventures (NVT, TSX-V); Pediment Exploration (PEZ, TSX-V), and Columbia Yukon Explorations (CYU, TSX-V). More details on these opportunities will be posted on this site in the coming days.

Nortec Ventures (NVT, TSX-V)
July 25 Closing Price: 0.30

The market has been in a free-fall, but Nortec keeps heading in the opposite direction. And the reason why is the results they’re getting from the Kaukua Project in northeastern Finland. Phase 3 diamond drilling is now underway on this PGE prospect which also contains copper and nickel values. A total of 14 holes were drilled in Phases 1 and 2 over the last year, and the average thickness of mineralization intersected was 30 metres. This appears to be a low grade, high tonnage, open pit situation. Nortec’s current market cap is only about $20 million and the company is currently completing a financing at 27 cents. The president and CEO is Mohan Vulimiri who enjoyed tremendous success helping rebuild Frontier Pacific Mining (Frontier was recently taken over by Eldorado in a transaction valued at over $150 million). Nortec also has interests in Labrador, and we are very intrigued by their TL Property (nickel-copper-cobalt) where drilling commences shortly.

Pediment Exploration (PEZ, TSX-V)
July 25 Closing Price: $1.29

Pediment has been beaten down to a ridiculous market capitalization of only $53 million. It recently filed a 43-101 report on its San Antonio Gold Project in northwestern Mexico with a preliminary resource estimate of 1.45 million ounces (inferred). We believe San Antonio holds excellent potential for two million or more ounces of proven reserves, and Pediment has numerous other 100% owned properties in Mexico including its other flagship, La Colorada. The company is well financed. The current stock price is a steal, plain and simple.

Columbia Yukon Explorations (CYU, TSX-V)
July 25 Closing Price: 0.44

Columbia Yukon is rapidly developing a truly world class molybdenum deposit, the Storie Property in northwestern BC near Cassiar. At 44 cents, its market cap is only $18 million - again, another steal. An updated 43-101 (based on last year’s drilling) will be released soon - probably within a week or so - and we expect it will show a substantial increase in both tonnage and grade at Storie. A 40,000 metre drill program is currently underway on the property which involves four drill rigs and an independent assay preparation lab (for quicker results). CYU has completed about 25% of its 2008 drill program and the first batch of assays are expected soon from a high grade zone discovered last year. The company is well financed with current cash in the bank of approximately $10 million. They’re even buying back some of their own shares (up to 5% of 41 million) as a normal course issuer bid was announced June 12. This is an aggressive company that has put the Storie deposit on the exploration and development fast track. We will be covering CYU in much greater detail over the next two weeks.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our site.

BRACE YOURSELF:
VENTURE EXCHANGE SELLING CLIMAX AHEAD

July 23, 2008

Back on July 9, we warned about the possibility of a Venture Exchange “crash” and the need to avoid margin and hold at least 50% cash in your portfolio for such an event. At SolomonSmallCaps, we have come to the conclusion that indeed we are likely to witness further bloodletting in this market which has already plunged 15.6% this month (thru July 23). There is no question the Venture Exchange is already “oversold” - useful technical tools such as the RSI (Relative Strength Index) and the Stochastic Oscillator both clearly indicate a heavily oversold situation, but that doesn’t mean this market can’t become even more oversold.

With a close Wednesday of 2,223, this market has taken out important support just above and below 2,300, and now appears poised for an accelerated sell-off to the next major support area - 1,950, the lows of late 2005. This would mean the shedding of another 12% or 275 points in this market which is going to create some incredible buying opportunities in certain stocks. A number of factors are contributing to the continuing slide: The disappointing Goldsource (GXS, TSX-V) drilling news a few days ago which wreaked havoc not only on GXS but on an entire area play (for the time being at least); the drop in both gold and oil; and the usual “summer doldrums” as many investors are just sitting on the sidelines (check out the relatively low volume levels). Month-end selling is likely to cause this market to slide significantly over the next few trading sessions before a recovery possibly gains traction during the month of August.

You don’t have to look too far into the past to see examples of some pretty brutal declines in the Venture Exchange:

1. May-June, 2006 - 29% drop in 22 trading sessions (3,300 to 2,350)

2. Late July-August, 2007 - 29% drop in 17 trading sessions (3,300 to 2,350)

3. Late October, 2007-January, 2008 - 26% drop in 58 trading sessions (3,160 to 2,350)

4. July 2 - ??????

- A 20% drop from our July 2 high of 2,635 would take us down to 2,109
- A 25% drop from our July 2 high of 2,635 would take us down to 1,950, an area of strong support

The current slide could also be viewed as a continuation of the one that began in late October of last year, which means a drop to 1,950 would represent a 38% plunge in less than a year (when gold and oil have actually advanced!).

The good news is, the first three declines cited above were each followed by major rallies, and we believe we’ll come out of this current meltdown with a powerful move to the upside. What exactly will ignite that move we’re not entirely sure, but historically it’s typically the announcement of a major discovery. That’s exactly what this market is in need of right now.

The time for “bottom fishing” has certainly arrived but keep in mind we’re quite possibly going to see a further 10% drop in the Index which means many high-quality stocks will be beaten down even more in the days ahead.

This is certainly not a market for the timid. With any purchases, we highly recommend you select stocks with very strong balance sheets, high quality projects, sound management, market liquidity, and - if possible - an advancing 200-day moving average. We will be reporting on several stocks with these characteristics Sunday evening, July 27.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our site.

VOLATILITY BRINGS OPPORTUNITY

July 21, 2008

Coal Play Cools Off

It was not a good day if you were long on a bunch of Venture Exchange coal stocks.

Goldsource (GXS, TSX-V) came out with some disappointing news on its first two follow-up drill holes in a new round of drilling at its coal discovery near Hudson Bay, Saskatchewan. As usual, investors over-reacted and drove the share price down dramatically. Monday’s close of $6.00 (giving GXS a market cap of approximately $120 million) shaved more than half the value off Goldsource which closed last Friday at $12.75. Just a week ago, Goldsource was trading at just over $16.00.

The two holes reported today were 1,300 and 2,500 metres south, respectively, of the initial discovery holes. What the company is doing now is drilling a total of seven new holes on a pattern that tests a 7 x 19 kilometre area. There can be no doubt that Goldsource has indeed made an important coal discovery in Saskatchewan. This morning’s news changes nothing in that respect - only time will tell just how big that discovery actually is - but serves to remind investors that we can’t expect all news to be spectacular as the drills go to work to try to determine a resource size. There will always be a few bumps in the road, and today Goldsource ran into one. As bad as that bump was, though, the wheels didn’t fall off the wagon.

We warned investors a couple of weeks ago that Goldsource was weakening technically, though we must admit we didn’t expect the kind of dramatic drop we witnessed today. Nonetheless, the big sale sign and the fear that permeated the market this morning encouraged us to pick up some Goldsource today at $6.00. An $18 million financing was done on this thing less than a month ago for $11.75, so $6.00 sure looked attractive just for that reason alone this morning. We expect Goldsource will continue to be volatile in the days and weeks ahead. We plan to just sit on our GXS holdings for at least a month or so and see how things play out. We do not believe the “coal play” is dead but the heavy losses today in this group - approximately 30 companies are involved - will certainly knock some investors to the sidelines and cool the speculative fervor in these stocks for a little while at least. For now we’re of the opinion that today’s action was merely a severe correction. We weren’t stung, fortunately, but many were, and you never like to see that.

Where’s The Bottom?

Given the crash in the coal play today, it was surprising the Venture Exchange didn’t fare worse than it did. The Venture Index closed down just 11 points to 2,288. Strength in gold and oil helped, and the Quebec gas play heated up today with Junex (JNX), Gastem (GMR) and others up significantly. While it broke support last week at 2,350 (August, 2007, low and January, 2008, low) the Venture Index is still hovering around longer-term support. In early October, 2006, the Index slid to 2,290 after dropping as low as 2,350 several months earlier. A great buying opportunity has presented itself each time over the last two years when the Venture Index has dropped essentially to where it is now. Will history repeat itself again? We’re not exactly certain given the fact we’re in a much different investment and economic climate at the moment. However, the commodity super-cycle continues, and that gives us some encouragement. What this market really needs right now is a major discovery (preferably in Canada) to propel it forward, and that is likely the only thing that will kill the bear and put an end to the current malaise. Noront pulled the market out of its doldrums last summer. Who can do it this time? We’ll examine that question in the days ahead.

Making Money In This Kind Of Market

How does one make money in a market such as this? There are two options. The first is a long-term approach: Select high quality situations (strong balance sheet, sound management, excellent projects), accumulate stock on weakness, and prepare to hang on until the market turns (that could be a few weeks or a couple of years). The second approach is very short-term focused but recommended only for experienced investors and traders: Again, select high quality situations, accumulate in technically oversold conditions and sell into strength on rallies. We will provide some specific examples of both approaches in the days ahead. Learning how to tell when a stock is technically oversold and ready for a rebound is key. Having patience is also critical. There is plenty of volatility in the markets right now. No matter if the markets are going up or down, volatility creates opportunity. Learn how to make volatility work for you and profit from it.

Greencastle Resources Update

Greencastle Resources (VGN, TSX-V) has been one of our favorite stocks, and continues to be, but it remains vulnerable from a technical standpoint at the moment. We recently warned about Greencastle falling below its 20-day moving average, which it finally did late last week. Today, VGN got hit hard, closing at .325, down 8 cents from Friday’s close. The stock got pushed down today, perhaps unfairly, by the Goldsource and coal play crash (interestingly, VGN seemed to pretty much ignore the bullishness in the Quebec gas play today). Greencastle has positive cash flow, solid net earnings, and a market cap now of only $14 million. But it also has a negative short-term chart with its 20-day moving average now in decline. VGN closed today just above its 50-day moving average, but we’re not sure that support area will hold. We will expand on this later in the week, but the oil market is now looking technically weak and we wouldn’t be surprised if the price of crude dropped by as much as 20% in the coming weeks to around $100 per barrel. That would also take down the price of heavy crude which is what Greencastle relies on for its royalty income. Any further weakness in Greencastle in the days ahead, however, should be viewed, we believe, as an attractive buying opportunity. Our worst-case scenario for Greencastle (or best-case scenario depending on your point of view) is that it drops into strong support in the mid-20’s before rebounding.

Kodiak Exploration Update

We highlighted Kodiak as one of our favorite gold stocks July 9 when it was trading at $2.38. Today it closed at $2.03, and was as low as $1.72 in last week’s sell-off. We view Kodiak as one of the very best opportunities in the entire junior resource market with the potential to increase 10-fold from here. Kodiak has tremendous technical support between $1.75 (its 500-day moving average) and $2.00. Way back in the early 1990’s, KXL jumped to $2.00 per share. It didn’t return to that level until just a couple of years ago. Throughout the last 10 months, $2.00 has provided rock-solid support for KXL and we see no reason why that should not continue. This is a terrific stock to accumulate right now and keep in your portfolio for at least the next two years or so. Some may wish to have a core position and a trading position - that’s our approach, as KXL can be a great stock to trade. It has liquidity and volatility.

Kodiak management issued an “exploration update” on the company web site last Friday, and we’ll get to that in a moment. First, here’s what we stated July 9:

“We first caught on to Kodiak last fall in the very early stages of its move to $5.00. We were lucky and took profits near the high, but we are aggressively back on the buy side now. Kodiak’s Hercules Property in northern Ontario is absolutely massive, and we believe they could be sitting on one of the biggest gold discoveries in Canada in many years (10 million ounces or more is a distinct possibility and no exaggeration, though much more will need to be done to prove that up). They are now nearing the half-way mark of their 2008 60,000 metre drill program, and sometime this month we expect an exploration update. Kodiak has not issued a news release on Hercules since the end of February, and some investors have mistakenly assumed that this is because there is no “good” news to report. Nothing could be further from the truth, in our view, and we confirmed this at the World Resource Investment Conference in Vancouver in mid-June when Brian Maher gave a terrific presentation and update on Kodiak. The fact of the matter is, given the unfolding incredible magnitude and potential of this project (some 20 senior geologists are now involved and five or six drill rigs are going non-stop), and the recent state of the markets, frequent news releases with information on various holes no longer makes sense.

Trust us on this one: Kodiak, we believe, will hit the market soon with a “blockbuster” release on Hercules that will provide not only some great drill results, but a “big picture” assessment of where things are at - and the market will love it. That’s a bold prediction but we’re very confident in making it. Smart money is accumulating KXL for an anticipated huge run-up in the coming months. If you’re a buyer, never get into the game of trying to chase this stock as it has a tendency to run very quickly before pulling back. Always buy into weakness.”

Management issued the following “exploration update” on the Kodiak web site last Friday, July 18 (highlighted area is our emphasis):

“Kodiak is currently drilling multiple targets in several different areas at Hercules, including Golden Mile, Lucky Strike, Seven of Nine, Derek Lee and Yellow Brick Road veins. As of July 18, we have five drills working, and we have plans to increase to as many as eight drills in the immediate future. We understand shareholders are anxiously awaiting news, but we are still waiting on final assay results for many samples. In addition, our regional exploration program is proceeding robustly, with initial stripping having been started on over six stand-alone gold targets. Recently, five other new gold targets have been generated that require follow up exploration; research and development remains ongoing. Following a program of sampling and mapping, these targets are planned to be drilled for their economic potential.

As we drill new and deeper portions of the Golden Mile, it is crucial that we have all data in hand to model the geological interpretation, vein correlation, and other crucial information. For our new targets like the Lucky Strike vein structure, which is located parallel to the Golden Mile, this new data is providing our first indication of vein orientation and dip. With new information being developed daily in multiple areas simultaneously, it is crucial that we have as much information in hand as possible to confirm our interpretation and verify our models prior to releasing data. We plan to release news soon and look forward to the remainder of the Hercules program and the district exploration campaign with great enthusiasm. Thank you for your patience and continued support of Kodiak Exploration Limited.”

At SolomonSmallCaps we don’t believe there’s any doubt Kodiak is developing a multi-million ounce gold resource at Hercules. Historically, the Beardmore-Geraldton Gold Belt has produced several million ounces of gold. Armed with over $40 million cash in the bank, Kodiak is extremely well positioned to continue to fund a very aggressive exploration program and define a resource that could give the company a market capitalization well beyond its current $180 million.

Junex Trading Opportunity

The Quebec gas play heated up today, and we believe there are some attractive opportunities there especially considering that these stocks have all been beaten down pretty good recently. Junex (JNX) jumped 60 cents today and technically appears poised to start another up-leg. Its 10-day moving average reversed today, and its 20-day moving average is close to reversing. Junex closed today at 3.95. It is now just starting to emerge from oversold conditions and we view it as a solid buy at the moment. We’ll have more on Junex and the Quebec gas play in the near future.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our site.

GREENCASTLE RESOURCES UPDATE

July 13, 2008

It has been brought to our attention that Greencastle Resources (VGN, TSX-V) got a mention from the Coffin Brothers in their latest report. With tongue-in-cheek, we say we’re pleased to hear that VGN is now on their “radar screen” - remember, though, who first reported on Greencastle when it was a lonely little “dog” nobody wanted for more than 15 cents at the end of May! By the way, we think very highly of the Coffin Brothers and we certainly recommend their services. All your Greencastle coverage, though, is free of charge here at www.SolomonSmallCaps.com!

All humor aside, Greencastle closed Friday, July 11, at 44 cents (right at its 20-day moving average, interestingly enough - more on that below). This is truly a unique, special situation stock that we continue to be extremely excited about. Let’s quickly review some important facts regarding VGN and the “big picture” that’s unfolding here:

1. VGN announced last Thursday that it has filed an additional application with the government of Manitoba for a 3,200 hectare coal exploration permit on the Manitoba/Saskatchewan border. This triples the area covered by Greencastle’s permit applications to 4,800 hectares, adjoining the eastern boundary of the Goldsource (GXS, TSX-V) permit area;

2. Now that Greencastle has announced an expansion of its coal exploration plans in Manitoba, we believe it’s now a certainty - we’ve been speculating on this for a few weeks now - that it won’t be long before they announce they’ve expanded their stake in the Quebec shale play. Greencastle announced June 12 they had applied for an oil and gas exploration permit covering 6,000 hectares in the St. Lawrence Lowlands. We’re convinced that CEO Anthony Roodenburg is up to something more substantial there. That’s just speculation on our part but we’re quite certain, especially considering the reports we hear about “ties” between Roodenburg and Altai Resources (ATI, TSX-V);

3. In these times, you want to invest in companies that have very strong balance sheets. Greencastle has plenty of cash on hand (we estimate about $5 million as of the end of June) with monthly oil and gas royalty income now of several hundred thousand dollars:

Q-1 revenue………..$ 582,457 (actual and reported)
Q-2 revenue………..$ 900,000 (our projection)
Q-3 revenue………..$1,200,000 (our projection)

Q-1 net earnings…...$ 434,539 or .01 per share (actual and reported)
Q-2 net earnings…...$ 600,000 or .015 per share (our projection)
Q-3 net earnings…...$ 800,000 or .02 per share (our projection)

Heavy oil prices are now approximately $110 per barrel, more than double last year’s average price of $45 per barrel. Production has also increased substantially at the Primate section in Saskatchewan, so we project that Greencastle’s average quarterly royalty income last year of approximately $400,000 will become its average monthly income beginning here in July. Oil prices won’t stay at current levels forever, but for the time being Greencastle has a real cash cow on its hands. At 44 cents, the stock is trading at just 10 times our projected net earnings for the first nine months of 2008. Market capitalization is only $18.5 million, and we believe that is low considering Greencastle’s financial strength and diversification. How many other Venture Exchange resource companies have:

Technically Speaking

As we mentioned, Greencastle closed Friday exactly at its rising 20-day moving average (44 cents). Since its move began May 30, a period covering 30 trading days, Greencastle has closed at or above its 20-day moving average each of those days. A close below the 20-day moving average would cause some technical damage and would suggest some immediate weakness in the share price, but we believe this would be short-lived given the very strong underlying fundamentals here. Current resistance on the upside is in the low ‘50’s while there is exceptionally strong support in the upper ‘30’s (0.38 is the 30-day moving average). In our humble view, Greencastle’s best days are still ahead.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our web site.

MANAGING CASH AND RISK IN TURBULENT MARKETS

July 9, 2008 (Evening)

A wise friend once told me, “Manage your portfolio - don’t let your portfolio manage you.”

In this morning’s report we speculated that the TSX Venture Exchange, which has fallen 9% already this month, was at or near an important bottom. That argument is a persuasive one given two important facts: 1) The commodity bull market continues, and (2) the 2,350 level on the Venture Index has been a massive wall of support over the last year, much like 3,400 has been a huge wall of resistance on the upside.

However, what if our assumptions are incorrect? What if these already oversold markets (the Dow, TSX, and Venture Exchange) take us by surprise and crash to the downside?

We’re not trying to scare anyone but rather underscore the crucial point that when investing, one must always be prepared for all possible scenerios and have an action plan ready to go for any situation. That’s hard to do, of course, if you’re 100% invested with no cash - no ammunition in storage - to pull the trigger when perfect opportunities present themselves.

Too many investors often get caught with their pants down in times of market chaos because they simply don’t have the ability to buy when bargain basement prices suddenly appear all over the place. Worse yet, some even get scared and sell (at precisely the wrong time) while others are forced to sell due to margin calls. Just a few months ago, a broker friend of mine nearly went bankrupt when he lost over $150,000 on Aurelian Resources. He got a margin call and was forced to sell in a plummeting market. Avoid margin calls like the plague, especially in these times.

Looking at the markets right now, it almost seems as if they’re trying to talk themselves into a crash. We’re expecting the 2,350 area to hold with the Venture Exchange. But if it doesn’t, we have plenty of ammunition stored up to buy selected stocks at fire sale prices.

As we warned this morning, if the Venture Exchange falls through critical support, it’s possible this market could quickly plummet another 200 or 300 points to near 2,000. That would be close to a 25% drop within a month which certainly would not be unprecedented in the history of the Venture Exchange or its predecessor, the VSE. Should this happen, investors would very likely be presented with a fabulous buying opportunity, perhaps one of the best of the decade. Invest when there’s blood in the streets - that’s a Warren Buffet guiding principle, and a SolomonSmallCaps one, too.

We recommend a cash position right now of at least 50%. We believe that makes sense, and effectively hedges against a rapid downward spiral. If you’re not at 50% cash we suggest you take some profits off the table if you have any. Eliminate any margin debt.

What issues could you look at buying in a market meltdown? We highly recommend companies with very strong balance sheets (lots of cash, no debt), sound management, high quality projects and market liquidity. At least three issues we highlighted this morning would fall into that category: Kodiak Exploration ($50 million in cash and great properties), Greencastle Resources (profitable and $5 million in cash with a diversified property portfolio), and Columbia Yukon Gold (strong cash position and terrific property). All three are already undervalued, in our view, and would survive the worst of market and financial times and roar back quickly in a market rebound. All three are the type of stocks you would want to purchase as a speculative investor in a sharp market sell-off.

Above all, remember: Never let your portfolio manage you. When you allow that to happen, you become a slave to money. Make money your slave but treat it with respect. Invest wisely, and watch your money multiply.

As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our site.

SEARCHING FOR A BOTTOM - HAVE WE FOUND IT?

PLUS: A SIX-PACK OF STOCKS FOR THE SUMMER

July 9, 2008

Have we hit bottom yet? On a very short-term basis, at least, we probably have. The Venture Exchange dropped another 79 points yesterday (Tuesday) to close at 2,400. Over the last five sessions, since the first trading day of the month, the Venture Exchange has plunged 236 points or 9%. Historically, on the TSX-V, that kind of violent action typically signals a selling climax, and in this case that argument is strengthened by the fact that the Index is near extremely strong support at 2,350. This level was the August, 2007, low, and the January, 2008, low on the Venture Exchange. So for the second time in seven months, we are testing that crucial support. Of course the market rebounded very strongly last August and again after the January low, so we’ll see if that holds true again this time. Chances are it will, in our opinion, and a powerful move in gold could be the possible catalyst on this occasion. Should the Venture Exchange break decisively below 2,350, then get ready for a wave of potential panic selling that could drive the Index down rather quickly to the 2,000 level. We consider that unlikely, however, given an important underlying fact: We continue to be in the midst of a (long-term) commodities “super-cycle”, and a total breakdown and wipeout in the resource-heavy Venture Exchange seems highly improbable as long as that trend holds. So we’re putting our money where our mouth is and buying some selected issues that have been beaten down significantly in recent days and weeks. As we commented Tuesday, the Toronto and New York markets are clearly in oversold territory and indeed the recovery appeared to begin intra-day Tuesday.

We don’t spend a lot of time viewing the bullboards, but it was interesting taking a peak at the Noront Resources (NOT, TSX-V) Stockhouse board Tuesday and viewing some of the comments there. Many of the postings were very negative, both about Noront and the market in general (“No support left,” “When the markets are destroyed,” etc.). This kind of excessive bearishness - when so many retail investors in particular are throwing their stocks overboard and predicting the sky is about to fall - is a great contrarian indicator, so this makes us even more bullish about the market’s current state. In fact, it was very tempting to buy some Noront Tuesday, and we would have if it weren’t for so many other good opportunities we were evaluating and, in some instances, acting upon.

Below are six situations we find extremely attractive. We suggest you do your due diligence on each:

BacTech Mining (BM, TSV-V)
July 8 Closing Price: .13

We featured BacTech (BM, TSX-V) in a special research report June 25. Since then, the stock has backed off a few pennies and closed Tuesday at 13 cents. Quite honestly, given the recent news, we don’t know why anyone would be selling at these levels, but that’s sometimes what happens in markets. Yamana Gold (YRI, TSX) recently became BacTech’s largest shareholder, and we see a good possibility for higher prices in BM in the weeks ahead as it continues to develop its bioleaching business which, after many years of effort, is now really starting to take off (the market just hasn’t taken full notice yet). Conservatively speaking, BacTech is on track to build an inventory of at least one million ounces of refractory gold projects. That will happen this year, and likely sooner rather than later. As we detailed in our research report, BacTech could very easily command a market capitalization of at least $50 million within a few months. A very determined group is building this company into a winner, and we are most ecstatic to be able to acquire this little gem at the moment for just $10 per ounce of gold in the ground. Astute investors are snapping up shares. No need to chase, however.

We expect more news from BacTech in the coming weeks (just check out the corporate presentation on their web site). We are currently working on Part 2 of our BacTech Research Report. Previously we indicated we would be posting that report around July 7, but some unexpected travel commitments have caused some timing delays with regard to that piece. That second BacTech report should be posted later this month.

Greencastle Resources (VGN, TSX-V)
July 8 Closing Price: .465

The action in Greencastle (VGN, TSX-V) Tuesday was very interesting. The stock sold off in the morning to 41 cents (its 20-day moving average) but rebounded strongly at the end of the day to close up 2.5 cents at .465. The buying was stubborn and persistent, especially considering the 79 point drop on the Venture Exchange. As we have stated repeatedly, we believe we have yet to see the highs on this stock. We continue to suggest, therefore, that investors accumulate Greencastle on any weakness especially. VGN has very strong support right now at its 20-day moving average (41 cents). It’s possible it may hover a little above or around that level before moving much higher, or of course it could break below that support and search for new support in the ‘30’s. Either way, this stock is not going to collapse given its very strong fundamentals. Greencastle is one of the few Venture Exchange companies actually making money, and it’s also involved in the two hottest exploration plays in Canada at the moment (coal in Saskatchewan/Manitoba, and shale in Quebec). We first highlighted Greencastle when it was sitting at just 15 cents May 31. Obviously it has been a stellar performer, and the VGN market is very liquid. If you own VGN at the moment, we believe the wisest strategy is to hold and accumulate more on any significant weakness.

Kodiak Exploration (KXL, TSX-V)
July 8 Closing Price: $2.38

Kodiak (KXL, TSX-V) is one of our favorite gold stocks and we will be featuring KXL quite a bit in the coming weeks and months. We first caught on to Kodiak last fall in the very early stages of its move to $5.00. We were lucky and took profits near the high, but we are aggressively back on the buy side now. Kodiak’s Hercules Property in northern Ontario is absolutely massive, and we believe they could be sitting on one of the biggest gold discoveries in Canada in many years (10 million ounces or more is a distinct possibility and no exaggeration, though much more will need to be done to prove that up). They are now nearing the half-way mark of their 2008 60,000 metre drill program, and sometime this month we expect an exploration update. Kodiak has not issued a news release on Hercules since the end of February, and some investors have mistakenly assumed that this is because there is no “good” news to report. Nothing could be further from the truth, in our view, and we confirmed this at the World Resource Investment Conference in Vancouver in mid-June when Brian Maher gave a terrific presentation and update on Kodiak. The fact of the matter is, given the unfolding incredible magnitude and potential of this project (some 20 senior geologists are now involved and five or six drill rigs are going non-stop), and the recent state of the markets, frequent news releases with information on various holes no longer makes sense. Trust us on this one: Kodiak, we believe, will hit the market soon with a “blockbuster” release on Hercules that will provide not only some great drill results, but a “big picture” assessment of where things are at - and the market will love it. That’s a bold prediction but we’re very confident in making it. Smart money is accumulating KXL for an anticipated huge run-up in the coming months. If you’re a buyer, never get into the game of trying to chase this stock as it has a tendency to run very quickly before pulling back. Always buy into weakness.

GoldQuest Mining (GQC, TSX-V)
July 8 Closing Price: .345

GoldQuest (GQC, TSX-V) got sold off to 30 cents Monday, and we were there grabbing some. Investors were paying as much as $1.80 just over a year ago for GQC, and the story really hasn’t changed. GoldQuest has terrific properties in the Dominican Republic including 100% owned Las Animas. They also have a great little joint venture (not so little, actually) with Gold Fields (GFI, NYSE) on several other properties in this highly prospective area which is also a safe mining jurisdiction. We expect an exploration update in the near future, and investors will be paying close attention to: Results of deep drilling since January at Las Animas; new areas of mineralization at Las Animas; and recent work carried out by Gold Fields. The GQC share price appears to have bottomed out and could come roaring back in a big way in the coming weeks and months.

Pinetree Capital (PNP, TSX)
July 8 Closing Price: $2.05

Pinetree (PNP, TSX) holds equity positions in hundreds of resource companies on the Venture Exchange and the TSX, and the recent slide in the junior resource market has brought Pinetree down to a low not seen since early 2006 before its rise to $16.00. The market considers Pinetree a “dog” right now (it could even now be trading below its book value) which is one reason we love it so much at the moment. If you’re bullish on commodities long-term as we are, then Pinetree is a wise investment at these levels right now with the junior resource market expected to recover and (eventually) possibly soar. For short-term traders, we see an opportunity for a 20% move here in the near future up to resistance at $2.50.

Columbia Yukon Gold (CYU, TSX-V)
July 8 Closing Price: .53

Columbia Yukon (CYU, TSX-V) is developing the Storie molybdenum deposit located near the historic mining camp of Cassiar, BC. A major drill program is underway at Storie, and as many as four rigs will drill approximately 100 holes this summer to expand the known resource. The Storie deposit has an NI 43-101 compliant inferred mineral resource (soon to be updated) of 101.6 M/tonnes grading 0.067% Mo or 0.112% MoS2. This company is well financed and led by former Clearly Canadian Beverage President and CEO Doug Mason. At just 53 cents, CYU’s market cap is only $21 million, so we see significant upside potential this summer as the drill program continues. Columbia Yukon recently announced a proposed share buyback - an unusual step for a Venture Exchange company - which tells us that it, too, believes its shares are undervalued. We’ll have more to say on Columbia Yukon in the weeks ahead

MARKET COMMENTARY

July 8, 2008

Toronto and New York are both firmly in oversold territory after yesterday’s continued weakness, and the Venture Exchange is inching closer to a critical support level - 2,350, the low from last August and again this past January. Despite the prevailing bearishness at the moment in all three of these markets, we believe it’s an attractive time to be buying good quality issues in anticipation, at the very least, of a strong rebound in the near future. Since we remain in an overall commodities bull market (and the case for that is very strong), we see no reason why the Venture Exchange should drop below 2,350. It closed yesterday at 2,478, down a whopping 85 points. We were in fact buying yesterday, picking up some cheap 30 cent stock in a company called GoldQuest Mining (GQC, TSX-V). You would take advantage of a 20% off sale at your favorite store, wouldn’t you? It’s funny how people’s minds can work when it comes to the markets - our natural instincts are such that we are prone to allowing fear, excitement and greed rule our investment decisions. Use common sense, seek value, buy on weakness and sell into strength. Easier said than done, though, right?

Us gold bulls may have to wait until next month or September before we see the gold equities really start to take off, but that’s fine. In the meantime, pick away at the best opportunities and buy only on weakness.

Volatility also creates opportunities. A classic example was yesterday in a stock we brought to your attention - Noble Metal Group (NMG, TSX-V). It opened yesterday at .65, fell back to .61, then surged as high as .83 before falling back as low as .44. This continues to be an interesting situation to watch. For aggressive and experienced traders who have a tolerance for risk, we suggest accumulating between 30 and 40 cents as this is the range we see this stock falling into before rebounding. Not a great deal is known about Noble - they are currently working on a web site - but they disclosed some interesting information last Thursday regarding a substantial package of oil shale permits in Saskatchewan. Some of their holdings are near the Goldsource discovery.

Speaking of Goldsource, its 10-day moving average is now declining, and in the most pronounced way since this stock began its huge rise in late April. Other coal stocks are now suffering technical weakness as well. We believe this is a sign of lower prices over the next couple of weeks, and likely some attractive buying opportunities. It’s too early to buy now, however, in our opinion, and we suggest patience will be a virtue here. We believe one of our favorite stocks, Greencastle Resources (VGN, TSX-V) with some coal exposure, will fall in sympathy with these coal stocks which will only serve to create another great buying opportunity with Greencastle. Its 10-day moving average is also now in decline, and what we have to look for now is whether it can hold above its 20-day moving average, on a closing basis, which is .41. We believe now it may test support in the .30-.34 range, which is what we warned about late last week.

NOBLE METALS GROUP ALERT

July 7, 2008

Noble Metals Group (NMG, TSX-V)
Shares Outstanding: 66,837,631
July 4 Closing Price: 0.53

Experienced investors, with a tolerance for risk, are urged to take a serious look this morning at Noble Metals (NMG, TSX-V) which issued very interesting news late last week regarding its shale permits in Saskatchewan. The stock is up strongly this morning, but has pulled back slightly, and we will be updating our site with more information on NMG by tomorrow morning.

GREENCASTLE RESOURCES ALERT:
MAJOR REVENUE ADJUSTMENTS, SHALE PLAY

July 5, 2008

Exploding Revenues

Greencastle Resources (VGN, TSX-V) is turning into more of a “cash cow” than we even first predicted. Investors need to clearly understand the impact that higher heavy oil prices and production levels are having, and will have, on this company’s bottom line.

Heavy oil prices are now at a record $108 a barrel, a 74% increase since January. That fact, combined with increased production at the Primate section in Saskatchewan, has forced us to make significant revisions to our previous second quarter revenue forecast for Greencastle. And our new Q-3 revenue projection is exciting news for VGN shareholders.

In our June 22 report, we estimated Greencastle’s Q-2 total oil and gas revenue to come in between $650,000 and $700,000. We are now revising that estimate to $900,000. Greencastle’s recently reported $270,000 April royalty check (a 58% increase over January’s income) was derived, we estimate, from an average heavy oil price of approximately $70 per barrel, given the lag from production to collection and sale. Significantly higher heavy oil prices through the spring should easily push Greencastle’s May and June revenues over the $300,000 mark per month, hence our revised estimate of $900,000 for the quarter. Net income for the first six months should be very close to $1,000,000 or two-and-a-half cents per share.

And it gets even better. What’s unfolding here, in fact, is quite dramatic. Greencastle’s average 2007 quarterly royalty income was $405,060. Heavy oil prices averaged about $45 per barrel last year. As we begin the third quarter of 2008, it is safe in our view to assume that Greencastle’s 2007 quarterly royalty income will now become its average monthly income, and that is also probably a conservative forecast given substantially increased production levels at Primate in 2008 (the number of producing wells has doubled since last year, and of course the heavy oil price has now more than doubled). The Primate section currently has 11 producing oil wells and two gas wells. Greencastle’s bank account is exploding, and that gives the company tremendous leverage to maximize shareholder value. We are now projecting Greencastle’s third quarter royalty income to come in at approximately $1.2 million. The third quarter is going to be a blockbuster quarter for Greencastle, and the fourth quarter could be even better. We admit these are “rough” estimates as we do not have all the information we would like at hand, especially in terms of precise production levels and details on the royalty equation, but we believe strongly that our numbers are very much “in the ball park”.

Greencastle - A “Value Play”

It was interesting to see Greencastle weaken last week in tandem with other stocks in the Saskatchewan/Manitoba coal play. Interesting, we say, because while there has been considerable interest in Greencastle’s pursuit of a position in the coal play (which it officially announced June 19), some investors may have forgotten just how diversified this company really is. Greencastle is not a “coal play”. It is a “value play”, based on very strong financials, growing oil and gas royalty income, positive cash flow and actual net earnings, involvement in the two hottest exploration plays in the country, and exposure to both gold and uranium through property holdings in Nevada, Africa and Wyoming. It is worth repeating this important statement we highlighted regarding Greencastle in our June 22 report:

“A fundamental shift has taken place in the direction and fortunes of Greencastle (historical in the context of this company) as it now leverages its strong balance sheet, buoyed by lucrative and growing oil and gas royalty revenue, to maximize shareholder value through an aggressive pursuit of new opportunities.”

Greencastle’s market capitalization has dropped back down to just under $18 million. Given this company’s impressive balance sheet, its aggressiveness in pursuing new opportunities, its already broad range of current assets, and its sound management, we continue to be of the view that VGN is undervalued and has very significant upside potential from these levels.

Coming Up

We believe the next thing to watch out for with Greencastle is an increased presence and stake in the Quebec shale play in the St. Lawrence Lowlands. Rumors persist regarding “ties” between Greencastle (CEO Anthony Roodenburg) and Altai Resources (ATI), a huge landholder in the area. Greencastle has already announced a permit application covering 6,000 hectares, and we expect more news is on the way. We’re very bullish on the shale play in general. While Altai, Junex (JNX), Gastem (GMR) and others are down quite a bit from their highs (just a “corrective” pullback), we believe things are going to heat up again quickly in that region. And Mr. Roodenburg will ensure that Greencastle is right in the middle of it.

Insider Trading – Don’t Be Fooled

Fear has a tendency to overtake some retail investors, usually the more inexperienced, when they see company insiders selling stock. And this can result in silly and very costly investment decisions. We bring this up because the latest insider trading reports show that Roodenburg and others were selling some significant amounts of Greencastle stock into market strength the week of June 23. Options of course were exercised in conjunction with all of that, adding more cash into the Greencastle treasury, but certainly some insiders decided to take advantage of a sudden and big move in the share price. While the optics admittedly aren’t great, we definitely see no reason to criticize the CEO for selling a portion of his holdings and locking in profits. In part, that’s his reward for moving the company along in a very positive and profitable manner. He doesn’t draw a huge salary. And as far as we’re concerned, the stronger Roodenburg is financially, as an individual, the better off Greencastle is as a company. We also wouldn’t be at all surprised if he used some of his recent profits to buy more Greencastle stock on the open market in the very near future, if indeed he didn’t already start doing so late last week. It’s always dangerous, as an investor, to base buy and sell decisions on what insiders are doing (buying or selling). Just one great case in point (among many) is Cline Mining (CMK, TSX). Cline rocketed to nearly $1.70 in early May. Insiders sold into the move which scared the retail market which dumped stock and brought Cline down to 90 cents. Just as quickly, though, the stock reversed course and tripled to a new high of $2.73. Hmmm. Interesting comparison. Last Thursday, Greencastle dropped all the way down to 36 cents from a high of 63, a 43% plunge - similar to Cline’s drop. A triple from 36 cents would mean $1.08 on Greencastle! Stay focused on why Greencastle is such a sound investment and ignore the unimportant noise and the little bit of negative chatter that always accompanies a stock that has made such a significant move.

In our humble view, Greencastle’s best days are ahead. Quite simply, VGN is a tremendous “value play”.

VMS, GREENCASTLE, AND BACTECH

July 4, 2008

With the U.S. holiday today, trading volumes are going to be light in Toronto, so we’re likely looking at a fairly boring day. However, there are certainly some situations worth looking at.

VMS Ventures (VMS, TSX-V) reported solid results yesterday from its Reed Lake Discovery near Snow Lake, Manitoba, including 33.46 metres (109.78 feet) of 10.36% copper (gold and silver values have yet to be reported, and true thickness not yet known). At a depth of 350 metres, this was also their deepest intersection of mineralization to date at Reed Lake. It’s quite possible this stock has further to go in the days ahead, although it declined significantly from its high of 85 cents yesterday to close just above the day’s low at 71 cents. It takes a lot to impress the market these days, and total volume for VMS yesterday was a strong but not crazy 4.5 million shares. It’s interesting to note, from a technical perspective, that VMS climbed precisely to its 200 day moving average (85 cents) yesterday before being knocked back down, close to its 100-day moving average of 68 cents. VMS is off sharply from its 52-week high, and at current levels we believe the risk-reward ratio is quite attractive. Any weakness Friday (i.e., a drop into the ‘60’s) would present a reasonable entry point in our view for short-term traders, and certainly for those with a longer term perspective. The market may pick up more on the significance of yesterday’s results next week when many participants return from holidays on both sides of the border. We have not done a full report on VMS, nor do we plan to at the moment, but it is an interesting situation to watch and there seem to be some opportunities here.

Greencastle Resources (VGN, TSX-V) was dragged down with the rest of the coal stocks yesterday and closed at 41 cents, down a nickel. This is an interesting situation for traders. Greencastle has had four straight losing sessions after reaching an all-time high of 63 cents Thusday, June 26. It fell through support at 46 cents yesterday and plunged as low as 36 cents before staging a recovery, so in four trading sessions we’ve seen a 43 per cent swing in this stock to the downside. It’s certainly due for a bounce back up, and we suspect Greencastle is about to do that. The questions are, what’s ahead for this stock and has its “bull run” come to an end?

The answer to the latter question is a simple “no”. We remain extremely bullish on Greencastle. The fundamentals with this stock remain very strong: The company is awash in cash (likely around $5 million in the bank at the moment), its oil and gas royalty revenues are at record highs, six-month earnings to June 30 will fall somewhere between two and two-and-a-half cents per share, and it has a well diversified portfolio of projects with more developments unfolding. However, we see a couple of different possible paths to new highs for this stock. In the first scenario, Greencastle snaps back with a vengeance and starts a fresh advance and a new up-leg next week. Despite yesterday’s decline, Greencastle’s up-trend channel remains intact. It found support in the upper ‘30’s (an area of previous strong resistance), just like it did Monday morning, June 23, before running to 60 cents. Yesterday’s sell-off had a feel of capitulation to it, and the stock closed above its 20-day moving average which it has successfully done over the past month since its rise began. Greencastle had reported news on three consecutive Thursdays until yesterday when that cycle was broken, but of course this is not a good week to report news with holidays on both sides of the border. We believe it’s very likely Greencastle will hit the market with some more significant news next week, perhaps as early as Monday. So that’s the case for an immediate move back up in this stock.

Our alternative scenario suggests Greencastle will weaken next week and consolidate before a powerful new move to the upside that will take out the previous highs. The theory behind this is that Greencastle’s short-term momentum could be slowing. One of the best indicators of that is a declining 10-day moving average, and that is clearly a possibility with Greencastle beginning early next week. The best pullbacks to buy into are the ones in which the 10-day moving average continues to rise (supported by other advancing moving averages) and is not in serious or imminent jeopardy of reversing. This particular pullback in Greencastle appears ready to reverse the 10-day moving average, suggesting further price weakness and consolidation. Once the 10-day reverses, you would look at the stock’s support levels which would include, but not be restricted to, the 20-day and 50-day moving averages. Greencastle would have very strong support at .34 while its ultimate support level would be in the mid-to-upper 20’s. It’s interesting to note that some other “coal” stocks are showing weakness at the moment: Goldsource (GXS), the leader of the pack, retreated to its 20-day moving average yesterday and has a 10-day moving average in danger of declining; the situation is the same with Wescan Goldfields (WGF), while both Saturn Minerals (SMI) and Bitterroot (BTT) have seen their 10-day moving averages “roll over” and begin to decline. Each of those stocks is at a short-term “cross-roads”, though it’s hard to imagine BTT falling a lot further as it has declined for seven straight sessions. Greencastle’s advantage, of course, is that it is a very diversified stock and coal is just one aspect of its appeal. Nonetheless, any additional weakness in Goldsource and all the “area” plays would likely have a negative impact on Greencastle as well, though this would have the effect of setting up an incredible buying opportunity with VGN.

BacTech Mining (BM, TSX-V) continues to show tremendous support around 15 cents. There are many positive developments with BacTech at the moment, and we continue to view this stock very favorably. We’ll be featuring Part 2 of our research report on this little gem next week.

MARKET ALERT - GOLD ON THE MOVE, STOCKS TO WATCH

PLUS…YAMANA, BACTECH AND THE JERONIMO GOLD DEPOSIT

July 1, 2008

Gold, which climbed to its highest level today in two-and-a-half months ($948.50 on the August contract) has now clearly broken out technically and appears poised to challenge its record high set back in March of just over $1,000 per ounce. We’re not sure if it will blast through to new highs on this particular move, but we believe it’s only a matter of time - perhaps six to 10 weeks - before gold makes a dramatic move to $1,200 and beyond. In fact, we’re already on record here stating that gold will hit $1,500 by year-end. The reasons are obvious: Continued U.S. dollar weakness, rising crude oil prices, inflation and geopolitical concerns, and overseas demand.

The TSX Venture Exchange has risen sharply the last three trading sessions - 101 points or 4%. It’s possible this could be the genesis of a major new Venture Exchange bull market, so we need to watch this Index closely in the coming days and weeks for additional clues and confirmation. We will expand on this subject in the near future, but a critical resistance level on the Venture Exchange is 2,700 which represents the 200-day moving average. A clear move through 2,700, on impressive volume, will likely mean that a bull run has been born and the “disconnect” that we’ve seen between the gold price and the junior gold stocks for many months is drawing to a close.

Some of our favorite gold stocks at the moment are as follows (and some of these we will be featuring in greater detail in the weeks ahead): Yamana Gold (YRI), Eldorado Gold (ELD), Kodiak Exploration (KXL), Pediment Exploration (PEZ), Canplats Resources (CPQ), Capital Gold (CGC), Rainy River Resources (RR), Lake Shore Gold (LSG), Goldquest Mining (GQC), Coral Gold (CLH), Explor Resources (EXS), Sage Gold (SGX), and last but certainly not least, our 15 cent special with huge upside potential - BacTech Mining (BM). We suggest you do your own diligence and watch these stocks carefully in the days and weeks ahead.

We are extremely bullish on silver as well, and commodity prices in general. We will be providing our thoughts and recommendations in those areas in the near future as well.

YAMANA, BACTECH AND THE JERONIMO GOLD DEPOSIT

July 1, 2008

An overlooked but extremely important piece of information in the June 18 Yamana/BacTech joint news release was contained in just one sentence of 12 words:

“BacTech will also provide bioleach consulting on one Yamana project going forward.”

It’s not hard to “connect the dots” with this, although many investors have yet to figure it out. That one project, undoubtedly, is the rather massive Jeronimo Gold Deposit located in the Potrerillos porphyry copper district of northern Chile, approximately 50 kilometres southeast of El Salvador. Jeronimo, a Carlin-style deposit, contains an inferred resource of 2.8 million ounces of gold, confirmed most recently by Meridian which completed an extensive drill program in 2007 prior to its takeover by Yamana. Jeronimo is part of a package of properties covering 240 square kilometers in an area well recognized for prospectivity and gold mining. These properties are owned 56.7% by Yamana, with the remaining interest held by state-controlled Codelco (Corporacion Nacional del Cobre de Chile).

So how does BacTech, a company with a market cap of only $11 million compared to Yamana’s $11 billion, fit into the equation here? BacTech, with its proprietary bacterial oxidation technology, believes it holds the answers to helping bring Jeronimo into production at the lowest possible capital and operating costs. And, apparently, Yamana believes the same as well, recently becoming BacTech’s largest shareholder in a transaction announced June 18.

BacTech has had its eyes on Jeronimo for several years now. In 2006, BacTech teamed up with Intrepid Mines as the two companies offered to jointly acquire GoldCorp’s 56.7% interest in Agua de le Falda S.A. (ADLF) which owns the Jeronimo deposit. At the 11th hour, Codelco exercised its right of first refusal and acquired 100% of ADLF before turning around and selling a majority interest to Meridian for $20 million. Meridian, of course, was taken over by Yamana last year.

Yamana, which is focused on organic growth, would love nothing more than to bring Jeronimo into production at the earliest possible opportunity and at the lowest possible cost. As it states on its web site, “The (Jeronimo) ore deposit is largely unoxidized and will require further metallurgical testing to determine the proper processing techniques to liberate the gold in a production environment. There is an existing scoping study on the property and as part of the agreement (with Codelco), Yamana is required to prepare the feasibility study of the Jeronimo Deposit.”

It’s helpful to go back to a June, 2006, news release issued by BacTech on Jeronimo:

“Following completion of the transaction, Bactech and Intrepid will immediately begin laboratory and pilot test work on concentrate and drill core in Perth, Australia, under the guidance of Dr. Paul Miller, BacTech’s Vice-President of Engineering. Although information on metallurgical testing indicates that the ore may be amenable to pressure oxidation and roasting technologies, the Jeronimo mineralization is contained within a complex sulphide ore that is expected to be liberated using BacTech’s more cost effective, patented “BACOX” (Bacterial Oxidation) process. The test work is expected to be completed in six to eight months.

“This is a project that BacTech has been pursuing for 3 years,” stated Ross Orr, BacTech’s President and CEO. “We believe we have put together an exceptional team that is capable of delivering a viable processing solution and, more importantly, the capability to develop a gold mine.”

Successfully assisting Yamana with Jeronimo will be a massive breakthrough for BacTech, not to mention a boost for Yamana shareholders with significantly more ounces added to their company’s growing production. At SolomonSmallCaps, we are extremely confident that BacTech will deliver for Yamana - another reason we are so bullish on the stock. At just 15 cents, and with gold expected to surge to new highs in the second half of this year, BacTech offers tremendous upside potential for speculative investors in both the short and medium term.

Along with the continued bioleaching consulting for Yamana, Bactech now has its first refractory gold project (also announced June 18, with an estimated 350,000 net ounces to BacTech) and more project announcements are expected in the very near future.

Technically Speaking

Since our recommendation June 25, BacTech has traded in a range of 15 to 18 cents. Volume has increased significantly over the past month, showing heavy accumulation, and last week the stock traded two million shares. Historically with BacTech, reversals in its 50 and 100 day moving averages have always been followed by powerful moves to the upside. Both the 50 and 100 day moving averages are now advancing strongly, and the stock has closed above its 20-day moving average since this new uptrend began in early to mid May. There is now very strong support for BacTech at .145, an area that was major resistance for a few weeks until the breakout we saw last week. While up substantially over its lows earlier in the year, we believe BacTech has only begun to make its move.

GREENCASTLE RESOURCES AND BACTECH MINING UPDATES

June 26, 2008

Greencastle Resources (VGN, TSX-V) roared to a new all-time highs on Monday and Tuesday, as predicted, before being driven back modestly by profit taking and a nearly 3% drop in the overall market (fuelled, in part, by month-end and technical selling as well as a drop in commodity prices). Gold is up sharply this morning and oil is recovering as well.

Greencastle closed Wednesday at 49 cents. It’s up significantly this morning and challenging its Monday and Tuesday highs. Support on this stock should hold around the previous all-time high of 46 cents, though a breach of that support is possible if there is any further significant overall market weakness. Greencastle reported record April oil and gas royalty income this morning of $270,000, so it’s quite possible the company could receive nearly a million dollars in second quarter royalty income which would even exceed our bullish forecast. What a financially solid company, and well diversified, too.

We remain very bullish on Greencastle and we stand by our previous report that we expect Greencastle to enhance its presence in both the Quebec shale play and the Saskatchewan/Manitoba coal play. Also, keep an eye on any dill results out of Coral Gold (CLH, TSX-V) as it is drilling immediately adjacent to Greencastle’s Indian Creek Property in Nevada. Everyone seems to have forgotten about Greencastle’s Nevada gold holdings in all the excitement over everything else.

BacTech Mining (BM, TSX-V) broke through important resistance at 15 cents Tuesday, and volume this week so far has been 1.5 million shares. Smart money has been accumulating BacTech recently, and we believe this stock has the same or even greater potential for gains than Greencastle did when we first highlighted VGN at 15 cents. Yamana Gold (YRI, TSX) has taken a 20% interest in BacTech which is making great strides in its bioleaching business. We expect an announcement soon from BacTech on acquisition of an interest in a 1.4 million ounce gold project in Peru. For speculative investors, BacTech is an extremely attractive opportunity, and if gold begins a fresh up-leg now…watch out.

BACTECH MINING:
BUSINESS BREAKTHROUGH IN BIOLEACHING, PART 1

BacTech Mining (BM-TSX-V)

GREENCASTLE RESOURCES UPDATE

June 22, 2008
Greencastle Resources (VGN, TSX-V)
Shares Outstanding: 42,267,005
June 20 Closing Price: 0.405
First Featured At: 0.15

When investing, it’s always important to stay focused on the “big picture”. Those who took advantage of our Greencastle report May 31, and have held on to this gem by staying focused on the “big picture”, have seen their investment increase substantially - congratulations! So where are things headed from here, particularly after Friday’s explosion with Greencastle jumping to a new yearly closing high on a whopping 6.8 million shares? We believe this move has much further to go. For both fundamental and technical reasons, our outlook on Greencastle has turned even more bullish. Nearly 11 million Greencastle shares traded last week. This stock is under heavy accumulation with new participants and record volumes. We believe it will break-out to new all-time highs this coming week - probably Monday.

So what exactly is happening with Greencastle, and why are we - and a growing number of other investors - so excited by it? The answer to both questions can be summarized as follows: A fundamental shift has taken place in the direction and fortunes of Greencastle (historical in the context of this company) as it now leverages its strong balance sheet, buoyed by lucrative and growing oil and gas royalty revenue, to maximize shareholder value through an aggressive pursuit of new opportunities. Greencastle, led by CEO Anthony Roodenburg, is more confident, more determined and more capable than ever to build shareholder value through strategic property acquisitions and investments. To truly understand Greencastle right now and where it’s headed, you have to understand Roodenburg. He’s a smart businessman and a company builder with a surprising number of important financial and resource connections. Greencastle shareholders can take comfort in the fact that he is a wise steward who will not squander the company’s treasury with ill-considered ventures. He will, however, embrace risk when he sees the right opportunity at the right time.

Key Moves – More To Come

Since our last Greencastle update June 10, the company has issued two news releases, confirming our speculation that it would join the Utica shale gas play in Quebec (June 20) and the Great Canadian Coal Rush (June 12). Greencastle has applied for exploration permits covering 6,000 hectares in the St. Lawrence Lowlands and 1600 hectares along the Manitoba-Saskatchewan border to the east of Goldsource.

Given Roodenburg’s public statements, an expanding pile of money in the Greencastle treasury, and the fact he’s a schrewd operator who won’t always show all of his cards, we’re speculating - and we’ve been right before - that he has quite a bit more in store for his shareholders with regard to Saskatchewan/Manitoba coal and the Quebec gas play, not to mention other possibilities. We keep our ears close to the ground, and rumors are that there are some “ties” between Roodenburg and Altai Resources which now holds a 100% owned land position of 114,000 hectares in the St. Lawrence Lowlands. Bottom line: We believe there’s an excellent chance Roodenburg will grab a bigger slice of the pie for Greencastle in Quebec.

Roodenburg’s news release statement June 12 is worth repeating: “The Utica shale is an extremely compelling gas exploration story and the kind of high impact (our emphasis) play we have been looking for. We are also currently examining several other opportunities (our emphasis) where Greencastle can leverage a strong balance sheet…for the benefit of our shareholders.” Translation: more developments to come.

Greencastle’s Manitoba coal permit application is highly significant, we believe, and deserves much more detailed discussion which we will get into very soon in an upcoming report. The Saskatchewan coal play is evolving into a cross-boundary play, and we heard John Kaiser make a compelling case for this with one of his recommendations at the recent World Resource Conference in Vancouver. We strongly urge you carefully re-read Friday’s Greencastle news release.

The Money Keeps Flowing In

With high heavy oil prices and increased production at the Primate Properties in Saskatchewan, as confirmed by Greencastle, we expect the company’s second quarter oil and gas royalty revenue to reach a new all-time high between $650,000 and $700,000. Net earnings for the first six months, based on trends we see in the financials, should be approximately $800,000 or two cents per share (how many Venture Exchange companies actually have positive cash flow and are making money?). Greencastle working capital as of June 30 should be approximately $5 million. An additional $3.5 million will likely be added to the company treasury before year-end thru continued royalties and the exercise of stock options and warrants. Shareholders need not worry about dilution. Greencastle is in a very enviable position - it does not have to worry about raising cash, and if it were to do a private placement for strategic business purposes, it could do so on its own terms (at significantly higher prices).

Valuation

Greencastle’s current market cap is only $17 million. We say only because given this company’s very strong financials, its growing oil and gas royalties from Saskatchewan, its aggressiveness in pursuing new opportunities, its broad range of assets, and its very sound management, it simply deserves a significantly higher valuation (Bitterroot Resources (BTT, TSX-V), referred to in Greencastle’s release on Friday, currently commands a $50 million market cap. We like Bitterroot’s potential as well, but in comparing both companies, we strongly believe Greencastle deserves to be much closer to Bitterroot’s current market cap).

Not only of course is Greencastle now involved in the two hottest exploration plays in the country, but it also holds an impressive portfolio of early stage gold and uranium properties in North America and Africa. Its 100% owned Indian Creek property, located in the heart of the highly active and productive Cortez area approximately five miles north of the Pipeline open-pit gold mine in Nevada, has attracted interest from several parties. In addition, Greencastle has three other 100% owned properties on the Battle Mountain Trend. At SolomonSmallCaps, we believe a combination of fundamental and technical factors will push gold well beyond $1,000 by year-end and ultimately to over $2,000 per ounce. We are now bullish on uranium as well. Greencastle’s exposure to both gold and uranium, in addition to everything else it is involved in, can only serve to further enhance share value. This is a very diversified company.

Technical Analysis

Friday’s action in Greencastle was particularly interesting from a technical standpoint and a classic example of textbook trading. Following release of news on the coal permit application, Greencastle gapped up to an opening price of 38 cents. It edged slightly higher, then pulled back to strong support at .34. It then staged a powerful rally on massive volume (with new participants) that took it convincingly through resistance at .385 to a high of .445, before closing at .405 which was, importantly, above the day’s open for a strong eight cent gain. This kind of activity is particularly bullish and suggests the stock will likely make an immediate assault on its all-time highs near 50 cents. Clearly, there will be considerable resistance in the .45-50 range, as one can observe on the long-term chart, but that resistance, we anticipate, should be digested without a great deal of difficulty by the market’s current appetite for this stock. Once Greencastle plows thru .50, there is no overhead resistance which clears the path for a powerful fresh advance. This stock will experience continued volatility, and traders will have to be careful. All of VGN’s moving averages are of course in bullish alignment and an “overbought” situation does not yet exist.

Conclusion

We like this company a lot, plain and simple. Anthony Roodenburg is hungry to build shareholder value and we trust he will succeed perhaps even beyond our expectations. Despite a very significant jump in VGN’s share price over the past three weeks, we still view the risk-reward ratio at current levels as extremely favorable. We expect an exciting summer for Greencastle Resources.

Remember, as with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your "eggs" in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a "double". Please also read our disclaimer at the top of our web site.

GREENCASTLE RESOURCES UPDATE

June 10, 2008
Greencastle Resources (VGN, TSX-V)
Shares Outstanding: 42,267,005
June 10 Closing Price: 0.325

On a market day like today, it's comforting to own a stock like Greencastle Resources (VGN, TSX-V). The "green" in Greencastle is symbolic of the fact this little company is actually profitable and making money every single day, as its wells in Saskatchewan continue to produce at a fervent rate. This is a real company making real money, but there's more to the story here - much more - as investors are now just starting to appreciate. After a strong move followed by a minor pullback last week, Greencastle resumed its advance today and appears to have started a new "up-leg". Clearly, it is no longer a question of "if" but "when" this stock, with very strong underpinnings, reaches new all-time highs.
This update focuses on what we believe will be record second quarter earnings for Greencastle, and speculation that it is about to get involved in the Quebec gas play. Please re-read our previous report for additional information on Greencastle.

Record Earnings Ahead

On May 29, Greencastle reported a net first quarter profit of $434,539, a whopping 51% increase over the first quarter of 2007. The company retains a sliding scale royalty on all oil production and a 15% royalty on all gas production from the Primate and North Primate properties in west central Saskatchewan. Higher heavy oil prices and increased production contributed to total royalty revenue of $582,457 in the first quarter of this year, an increase of 24% over the fourth quarter of 2007. Starting to get the picture here? The second quarter has been exceptionally strong for heavy oil prices, and new wells continue to come on stream at the Primate properties (as Greencastle itself indicated in its May 29 release). Bottom line: The second quarter of '08 is shaping up to be the best ever for Greencastle, and our prediction is for royalty revenue to slightly exceed the previous record of $636,418 (Q3, 2006).

Investors always enjoy earnings surprises, and Greencastle in our opinion is about to deliver one. We're also excited about the potential earnings impact from its marketable securities which we should learn more about in company’s next financial statement.
Greencastle is awash in cash and its working capital, which was over $4 million as of March 31st, should increase to approximately $5 million as of June 30th. With plenty of cash in the bank, Greencastle is aggressively pursuing new opportunities as it recently indicated.

Coal and Quebec Shale and Gas Play

In our May 31 report, we told you that Greencastle had applied for coal exploration permits in Saskatchewan. The company is eagerly awaiting confirmation of those permits from the Saskatchewan Ministry of Energy and Resources.
What we don't know for sure, but what we are now speculating on (for good reason) is that Greencastle is also about to get involved in the Quebec gas play in the St. Lawrence lowlands. Rumors are now circulating with regard to this, which perhaps explains today's renewed burst of activity in the stock. Greencastle CEO Tony Roodenburg seems less interested in gold these days and much more interested in coal and oil and gas. His connections with Altai Resources, and the tone of his May 29 news release, leads us to believe he will follow Altai and others into the exciting Quebec gas play.

GREENCASTLE RESOURCES - AN UNDERVALUED GEM

May 31, 2008
Greencastle Resources (VGN, TSX-V)
Shares Outstanding: 42,267,005
May 30 Closing Price: 0.15

Overview

One of the secrets to scoring huge profits as a junior resource investor is finding a stock that the “crowd” hasn’t quite discovered yet, a company with superior management, strong fundamentals, and a great story just waiting to be told. Greencastle Resources (VGN, TSX-V) fits that description perfectly, and that’s why this is the first stock we’re featuring on our site. Greencastle closed Friday, May 30, at just 15 cents. We strongly believe VGN is in the beginning stage of a major upside move that could see it hit all-time highs this summer. The purpose of this report is to provide a quick overview of the investment opportunity with an update and further analysis to follow in the coming days.

Up until now, Greencastle’s focus has been oil and gas and gold exploration. The company holds interests in three oil and gas properties in west central Saskatchewan (a strong revenue generating asset), four gold properties in Nevada, and one joint-venture gold property in Niger, West Africa. Last year, Greencastle stepped into the uranium exploration business by entering into a joint venture with Energy Metals Corporation (now Uranium One) on a property in Wyoming. Greencastle is currently awash in cash and aggressively pursuing new opportunities, including coal in Saskatchewan.

A 15 Cent Stock With Nearly 10 Cents in Cash!

How often do you find a junior resource stock trading barely above its cash value with monthly revenue around $200,000? You would call that a little “gem”, wouldn’t you? Well, that company is indeed Greencastle, which just reported a first quarter net income (Jan. thru March) of $434,539 or .01 per share. Total working capital as of March 30, 2008, was $4,239,436, or 10 cents a share (8 cents in cash and cash equivalents). The company’s oil and gas royalty revenue for the first three months this year was $582,457, its second-best quarter in two years. With strong heavy oil prices, and investments in public exploration companies (oil and gas) that are also doing extremely well, Greencastle and its shareholders are in an enviable position as management has no need to dilute the stock through a financing. The company has a significant and growing pile of cash to more than meet all of its needs and maximize shareholder value in the process.
Fully diluted, VGN would have only 50,708,005 shares outstanding, and another $2 million added to the treasury from the exercise of options (6,191,000 at an average price of 18 cents) and warrants (2,250,000 at 40 cents). Oil and gas royalties could add very close to another $2 million to the treasury by year-end, so there is no disputing the fact that this is a company on a very solid foundation which makes the investment risk-reward ratio extremely attractive.

Management

In CEO Anthony Roodenburg, Greencastle has a leader with a proven track record of entrepreneurship and stewardship. Roodenburg started this company with little money several years ago. While he is certainly not risk adverse when sensible opportunities arise, he is also both cautious and conservative - traits shareholders can take comfort in as their CEO is not one who will foolishly squander Greencastle’s resources. He’s not a geologist - he’s a businessman, through and through. He understands how a company should operate and while he’s far from being a “promoter”, he does appreciate the importance of share value. Roodenburg heads up a strong management team that also includes Dr. James Pirie (Director and President), a successful and respected exploration geologist for over three decades. Roodenburg has steered a smart and steady course for Greencastle, as evidenced by the company’s asset value of $7 million or nearly 17 cents a share as of March 31, 2008.

New Opportunites

A key statement many investors may have overlooked in the company’s latest news release (March 29, 2008) was contained in the second-to-last paragraph of that release: “The company continues to evaluate exploration and investment opportunities.” As we stated above, Roodenburg is cautious but he will pounce on opportunities when they arise which is why he applied for coal exploration permits in Saskatchewan shortly after Goldsource announced its discovery in April. The “cautious” side of Roodenburg is evidenced by the fact he has not shouted and screamed this fact from his office rooftop like other participants in this exciting coal play. He’s patiently awaiting confirmation of Greencastle’s permits from the Saskatchewan Ministry of Energy and Resources before proceeding with the next step.

We believe Greencastle will add other projects to its portfolio in the coming months, outside of precious metals and uranium, and will also likely increase its investment holdings in other junior

Gold Exposure

Greencastle has four early stage gold projects (100% interest in each) on the Battle Mountain Trend in Nevada. Its Indian Creek property, located in the heart of the highly productive Cortez area approximately five miles north of the Pipeline open-pit gold mine, is attracting interest from several parties. We expect an Indian Creek joint-venture agreement will be announced soon between Greencastle and another junior.
Exploration is continuing on Greencastle’s Koyria permit in southwestern Niger, West Africa, where Orezone Resources is the operator.

Bullish Technicals

If you examine Greencastle’s five-year chart, you will notice strong spikes in 2003, and again in 2006 and 2007. Historically, there is extremely strong support at 0.10, and this year’s low was 0.11. A low pan base has been forming in Greencastle since last September, and it now appears certain that a new uptrend has started which we believe will result in new all-time highs given the strong fundamentals here.
Volume indicators have been very bullish with VGN in recent days, weeks and months, and on Friday, May 30, VGN broke through its 200-day moving average with a close at 0.15. The stock’s 100-day moving average has also turned positive, a very bullish sign, and the 10, 20 and 50-day moving averages are also heading north. All of this points toward significantly higher prices in the weeks ahead.

Conclusion

Quite simply, at current levels and even into the 20’s, Greencastle is an extremely attractive investment as a revenue generating, cash-strong exploration company involved in oil and gas, precious metals, coal, and uranium. The stock will face long-term resistance in the mid-30’s to mid-40’s, but if there was ever a year VGN could blast to all-time highs, this would be it.
As with all investments, we recommend you do your own due diligence, invest only with money you can afford to lose, and never put all your “eggs” in one basket. Invest wisely, and we suggest taking at least half your profits off the table on a “double”. Also, please read our disclaimer near the top of our site.