thinker703,463

THE STOCK ALL THE ANALYSTS MISSED!

I was early in latching on to the Rare Earths space buying Rare Element Resources RES in Mar/09 @ .55 and selling at doubles and triples to get my original investment off the table, finally selling my remaining shares when they peaked @ $14.55 towards the end of 2010. Along the way I purchased other prominent Rare Earth stocks such as Avalon, Commerce, Quest and others.

As is usual when a sector is HOT, you have the "me to, wannabe players" latching on to the name to promote their stock even if the chances are slim to none that they will ever develop an economically feasible resource and develop a mine. On the other side of the spectrum are those who for various reasons, (sometimes legitimate) claim that people should stay away from the sector because the market is to small, touted companies are many years away from profitability, the sector is in a bubble and likely to crash, most of the action is in China who effectively controls the sector and is too risky to invest in etc.

This dichotomy results in unsophisticated investors piling into any stock HYPED with the then current "magic name" as unscrupulous promoters hope, while others are scared away from the sector as being too risky or they are sceptical that a real market actually exists and is growing!

The truth as is usually the case, lies somewhere in the middle of the two extremes. By doing your homework and choosing carefully you can come up with some undiscovered gems, and due to my success in rare earth investing over the last 2 years, (lots of doubles and triples) I decided to check out the extreme claims on both sides to see whether there were viable investments in the field that were not purely speculative based on undeveloped resources.

• I reasoned that SOMEBODY had to be supplying the resources and making the components that were in such demand for the latest in electronic products, hybrid and electric cars, windmills and other sophisticated new technologies that demand lots of rare earths, that it could not all just be speculative based on future demand and development of as yet unproven resources.

The focus of course was on China as supposedly controlling 97% of the market, but they are not stupid, when they need western technology to develop their resources or industry they cut deals to get what they want, and this is what I found to be the case. One Canadian company that operates in China in the rare earth field is little known (as yet) Dachau Strategic Metals DAC which I bought in Sept/10 @ .40 and operating in Europe we have Tasman Metals TSM-V which I bought in Dec./10 @ $3.17 because the EU is also highly dependant on imports of high tech metals like cobalt, platinum, titanium, tantalum and rare earths, and this company holds virtually every REE project of merit in Sweden, (where they were first discovered) as well as Finland and Norway! Scandinavia is mining friendly with a long and active mining history and Tasman has the resources and finances to be a big winner. I like that 29% of the shares are owned by management and insiders aligning them with shareholders, and last I checked they had something like $5M in operating capital!

These while interesting, and I think good long term investments, are side issues to the main company I wanted to alert Pinnacle readers too. My #1 stock pick in the Rare Earths space was founded in Canada in 1993, now has 20 locations in 10 countries, has 350 employees a Mkt. Cap of $503M, based on 124M shares, (numbers may be slightly out of date) has $67M in CASH, Q1/10 revenue of $65.1M has a unique virtually integrated structure, is a market leader with a proven track record, and has developed close customer relationships with major companies like BASF, Canon, Epson, Hitachi and Samsung for 17% of revenue from Japan and 51% from China where between its founding in 1993 and 1997 they developed TWO joint ventures plus a powder Mfg. facility in Thailand.

Their products make possible smaller more efficient electric motors, lighter smaller, smarter electronic devices of all kinds, all using cleaner technology. They now have 8 production centre's in a field with high barriers to entry as they hold proprietary technology and many patents besides high capital investment requirements, yet they have no long term debt.

They have signed a letter of intent with Molycorp (the previous U.S. producer of rare earths) for co-operation in developing a "mine to magnets supply chain" for mutual benefit. Through organic growth and acquisitions this innovative company has developed into a market leader! They are a producer, processor and developer of neo dymium, -iron-boron- magnetic powders, rare earths and zirconium based engineered materials and applications essential in modern high tech products including missiles and other advanced military applications.

Managements latest astute strategic move was to acquire voting control with 50% ownership of the shares of a German firm "Buss & Buss" that specializes in recycling and recovery of rare metals. This is a Canadian based world class company and for all their HYPING of speculative rare earths companies and warnings about a BUBBLE I have not seen even ONE analyst even mention this obviously financially sound, innovative, established market, world girdling company, let alone issue a recommendation to buy the shares, which shortly after I bought in early Nov. @ $5.85 appeared on my CIBC Alerts Nov.11th/10 as a "highest volume increase" and has since risen close to $8.00

Here is the companies revenue and net profit history:

Q2/09 $41.8M / $4.8M, Q3/09, $54.1M / $9.3M, Q4/09, $62.8M, / $8.7M, Q1/10, $65.1M / $12.8M, and the pattern continues with Q2/10 coming in @ $79.2M sales compared to $41.8M Q2/09!

With all those clues any diligent investor could probably find the company on their own, but I will make it easy for you, it is; NEO MATERIAL TECHNOLOGIES NEM-V and if you need any more information you can check their website to see if i missed anything.