EAST ASIA MINERALS and BRETT RESOURCES

With so many thousands of gold exploration companies
out there and so many of them with way too many shares
outstanding, it’s hard to stand out in the sector. One key is
coverage by newsletter writers and more importantly, ana-
lysts.
East Asia Minerals for instance had been a big favourite of
the Coffin Brothers and to start with, their pick did quite well.
Lately however, it’s done next to sweet nothing. Despite the
fact they once again, announced more of the same—huge
widths of low grade gold on their Miwah project in Northern
Sumatra, Indonesia.
Now that is changing for East Asia Minerals as Wendell
Zerb of Canaccord starts publishing on the company and
writes, “Miwah represents a high-sulphidation epithermal
gold environment with characteristic vuggy silica alteration
that spans more than 1 km2.” Got that?
Zerb continues, “We believe the Miwah area represents a
large epithermal mineralized system that has potential to
host multi-million ounces of gold. The South Miwah and ad-
ditional feeder structures could expand the scope of miner-
alization to include a higher bonanza-grade compo-
nent.” (Zerb tells us a sweet spot would definitely help the
project economics).
Zerb continues, “The company has initiated a 45-hole
infill program at Miwah with the intention of outlining a NI 43-
101 mineral resource by mid-2010.” Zerb has a target of
$4.00.
Meanwhile, Zerb also initiates coverage on another story
that hasn’t received a lot of attention in the markets...until
lately. Brett Resources was one of the favorites of John Kaiser
and Kaiser, editor of the Kaiser Bottom Fishing Report which
is always interesting reading, had suggested Brett was one
of the stories that he thought down the road could see $5.00
to $10.00. Zerb has a more modest target of $3.25.
Zerb writes, “Brett’s Hammond Reef is being advanced as
a potential large, low-grade open pit gold operation.” (In
northwestern Ontario near Atikokan). “The company re-
cently released a Preliminary Economic Assessment (PEA)
relating to the Hammond Reef project that estimates an af-
ter-tax net present value (NPV) of US$413 million for the
project using a 5% discount rate at a base case of $825 gold
over a 14-year mine life.”
“They suggest in the first six years production averages a
big chunk of 460,000 ounces per year at total cash cost of
$360/ounce…”

STERLING RESOURCES
(V-SLG)
$1.71 +0.02
XCITE ENERGY
(V-XEL)
$1.73 +0.08
Now that oil seems to be in that $70 to $80 range,
one area of the world is probably going to start attract a
lot more attention...the North Sea. This is an area of the
world which involves pretty steep upfront costs for all
those expensive offshore platforms and for all those
expensive British tradesmen.
Once you’ve got production on stream, the British
government has some pretty tasty royalties that are
actually encouraging oil production...unlike Alberta,
where they seem to be encouraging oil and gas compa-
nies to move to BC or Saskatchewan.
Some analysts such as Warren Verbonac of Octagon
Capital suggest a basket of plays in the North Sea such
as Sterling Resources, Xcite Energy, Antrim Energy (AEN)
and Ithaca Energy (IAE), but not everyone has got all
that much money to have a piece of everyone and
heck—there are other areas of the world to explore.
Our preferred way is simply hoping Sterling (the top
pick of Kevin Shaw of Wellington West) and Xcite En-
ergy is the way to go. As we get closer to work actually
starting on the Xcite Energy play in the North Sea, we
expect more analysts to start publishing on it and more
people to discover the play.
On November 27th, Arbuthnot Securities out of Brit-
ain publishes a report on Xcite Energy and frankly folks,
Xcite will be one of the more exciting stories in the next
few months as we have written up that they’ve got an
awful lot of balls in the air as far as financings, when to
get started, joint ventures with service companies, you-
name-it. Management here might actually earn their pay
in a big way (and today, management makes us an even
bigger fan as they set options that are at current
prices...instead of what you usually see in the markets
with directors giving them scads of stock at huge dis-
counts and usually much more than they deserve).
The most intriguing thing about the Arbuthnot report
is they are suggesting this stock will be a three-bagger
if not better.
Analyst Dr. Dougie Youngson writes, “XEL is ex-
tremely undervalued. The company is currently valued
at c.$0.40/bbl, which in our view is derisory. Given the
current oil price of c$80/bbl and XEL’s asset base
status, we would expect the market to value the com-
pany today in the region of $2-3/bbl.”
Youngson continues, “Bentley is one of the largest
undeveloped oil fields in the UKCS. If it can success-
fully covert the resource base into reserves, XEL will
become the third largest (in terms of asset size) inde-
pendent oil company active in the UK North Sea.