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Tuesday, December 14, 2010

Eastern Platinum Ltd. -- go with a winner

My latest suggestion for a stock is based upon something quite different than my usual suggestions. I am investing in Eastern Platinum Ltd. (Symbol ELR:CA or ELR.TO) because of my faith in the mangement of that company. The CEO of Eastern Platinum is David Cohen. Over the last few years, I have invested with great success in two different companies headed by Cohen. These two are Northern Orion, a Canadian copper and gold company, and Gold Wheaton Corp, a Canadian gold royalty stream company. With Northern Orion, Cohen found a project in Argentina called Agua Rica that has enormous reserves of gold, copper and molybdenum, and he bought it at a time when prices for such properties were enormously depressed. After bringing the project to the point where it was ready to go ahead, Cohen sold Northern Orion to Yamana Gold on very favorable terms. He then went to Gold Wheaton and ran a start up gold royalty company. Last week, Gold wheaton entered into a deal to merge with Franco Nevada, again on very favorable terms.

Eastern Platinum -- of which cohen is CEO -- mines platinum from South African mines. Prices for platinum have done well and supply of the metal is dwindling. These market characteristics have led to a price rise for Eastern Platinum which has doubled the price of the stock over the last six months from 90 cents to 1.80 (canadian). Even with this rise, however, Eastern Platinum is still at less than half of the price it reached in early 2008. As M&A activity among the platinum producers rise, I expect potential purchasers to look closely at Eastern. Both a rising price for platinum and an uptick in mergers and buy outs can help this small company.

Caution: In a departure from my usual methods, I am purchasing this stock strictly based upon the past success of the CEO. Anyone interested in this company should do his or her own investigation until he or she is sufficiently satisfied with the investment. I consider this a highly speculative investment, but I think it is worthy of a small purchase.

Disclosure: I invested today in 4000 shares of Eastern Platinum at 1.79 (Can). I may buy more over time.

1 comment:

Anonymous said...

In Argentina there is a lot of gold, but I think they do not know how to use it in a good way.
I was in Buenos Aires apartments last month and had a great time!