Opti surges in heavy volume, stumping analysts

Opti surges in heavy volume, stumping analysts

Thomson Reuters


* Analysts puzzled by gain of 33 percent

* Nearly 9 times typical volume

* PetroChina bid fuels talks of next oil sands target

CALGARY, Alberta, Sept 16 (Reuters) - Shares in Opti Canada
Inc , known for its minority stake in Nexen Inc's
Long Lake oil sands project, surged by a third on
Wednesday, puzzling analysts, who said they knew of no reason
for the big gain.

Opti jumped 57 Canadian cents to C$2.25, its highest level
in almost three months, on more than 21 million shares, nearly
nine times its average volume in the last three months.

There was no clear reason for the move and a company
official was not immediately available.

Opti has been mentioned as a potential takeover target
since late August when PetroChina said it would pay
C$1.9 billion ($1.8 billion) to buy a 60 percent stake in two
planned oil sands projects from privately held Athabasca Oil
Sands Corp.

Some analysts have said that deal could be just the start
of a new wave of interest in Canada's vast oil sands resources
among Chinese companies that are scouring the globe for new oil
supplies.

"The Chinese have made a move; it's not unreasonable to
think they would make another move. But is Opti the choice? Who
knows?" Genuity Capital Market analyst Philip Skolnick said.

Opti has a 35 percent stake in the C$6.1 billion Long Lake,
Alberta, project, which is in startup mode. Nexen has said it
could be another year before all the bugs are ironed out and
the 70,000 barrel a day project is reliably operating at
capacity.

Last month, Opti negotiated eased restrictions on a key
C$350 million credit facility. Its shares had lost most of
their value in the past year as investors worried it would run
out of cash, while the startup of Long Lake, which employs new
upgrading technology, moved slowly.

At its Wednesday closing price, Opti's market value was
C$635 million.

($1=$1.07 Canadian)
(Reporting by Jeffrey Jones; editing by Rob Wilson)

Pescod writes...WHAT TO DO, WHAT TO DO, WHAT TO DO…

WHAT TO DO, WHAT TO DO, WHAT TO DO…

We are here in Alaska with a group of brokers, analysts,

newsletter writers and investors, so it is not long before we

get to the popular subject of...stocks.

Brian Butterworth, geologist and former analyst is now

in investment banking with Research Capital and he tells us

that one of his favorite stories is Underworld Resources (V-

UW) and as you’ve noted, that stock has come up as a fa-

vorite pick of several folks over the last while.

Many people are aware of the usual resource market

cycles—particularly lately for gold of “buy in September/

October and sell in April/May (then go away). But there is

also another cycle that those with gray hairs can remem-

ber.

That cycle goes back a couple of decades when about

the only exploration being done anywhere in the world was

in the Canadian North and Alaska and it was considered the

Northern Canadian Cycle in plays that had big hopes that

would start in the spring, work would get going in the late

spring and summer, create some interest and have some

stocks pop. But in the fall, when things would shut down

and go quiet, you knew that interest in those stocks would

wane as their exploration programs wound down.

Underworld is a decidedly Northern story and the heart

of the Klondike (maybe the source of some of the gold for

that rush?) and does that mean when work stops shortly,

interest will wane?

Sure more drilling results will be out for the next two

months or so and a resource base is expected by Christ-

mas, but then it will be decidedly quiet. How to keep up

interest?

Well, Michael Williams, chairman of the company is a

well-respected mining guy, but will the northern cycle per-

sist, or more drilling just echo what we have seen in the

last while...ever more excellent drilling results. What to do,

what to do?

No such problems with another Butterworth pick of

Keegan Resources (T-KGN) which happens to be one of our

favorites. Ghana is thousands of miles south from the

nearest snow, so there is no Northern Canadian cycle there

at all.

Mind you, Keegan also suffers from seasonal prob-

lems...the rainy season in Ghana can shut down things eas-

ily for two to three months when mining equipment simply

can’t operate in the muck.

UCORE URANIUM

(V-UCU)

$0.80 -0.04

We are in Ketchikan, Alaska—one of the prettiest little

towns you will ever see—so no wonder there are so

many tourists that take the Alaska cruises.

The economy

here has seen the logging industry totally devastated and

now even the cruise business is down because of the

economy. Still, one looks at the harbour and you see

how important tourism is. On this day, four cruise ships

are in port with 8200 tourists aboard that all hit a town of

a mere 7700 people.

There are duck boat tours, charter

flights to see the ocean, fiords and rivers, charter fishing

for the day and a walk-up fresh fish creek to see the in-

credible salmon run and a shoppers delight built up for

the tourists along this creek. There are also “Married

Man’s Walk” but we won’t get into that at this time.

Alaska does have quite the mining history, built on the

Gold Rush days to the Yukon and mining is still impor-

tant in the State and mining-friendly.

Several analysts, brokers, newsletter writers and your

humble servant are up here to see Ucore Uranium’s (soon

to be called Rare Earth One) Bokan Mountain. A former

uranium producer of a few decades ago with lots of rare

earths beside the uranium. The rare earths were known

about for some time—but those rare earths were then of

little value. Now rare earths are one of the stories of the

day and the question is, just how much Ucore has be-

cause there have been previous estimates made of as

much as 350 pounds of material. But based on very pre-

liminary work and the resource could be a lot smaller...or

larger. Also work needs to be done to see just how eco-

nomical the ore is.

John Kaiser is here—the editor of the Bottom Fishing

Report and is one of the few geologists anywhere who

knows something about rare earths. With names like

lanthanum, which is used in batteries. Neodymium, used

in super-magnets; europium, used in monitors and pan-

els and dysprosium, an extra ingredient being used in

super-magnets to help control temperatures. There is a

whole long list on names in the rare earths, but how

about this one...ytterbium...as some of these names

could surely be used in a “Scrabble” game sometime!

We hope to publish an interview with Kaiser this Fri-

day or Monday that was taped up in Ketchikan as Kaiser

believes we’ve gone into a six-month period of “rare

earth mania.” Now that we know that the Chinese are

cutting back sales and the Chinese supply 93% - 97% of

all rare earths around the world, there could be a short-

age developing down the road.