Micro-Cap Review Fall 2010 by Planet MicroCap Review Magazine

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Quarter 4 • 2010

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Resources Issue

Resources and Reserves: A Primer for the Lay Investor Mickey Fulp [6]

Future is Now for the Pink OTC Markets Sheldon “Shelly” Kraft [9]

Great Growth Opportunity: US Stock Exchange Listed Chinese Natural Resource Companies

Silver Rant

Robert Haag [25]

Gordon Chiu [42]

David Bond [34]

Secret World of Rare Earth Elements

Like It Or Not, Oil Sustains Us R. Gerald Bailey [48]

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E D I T O R I A L

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icro-cap companies in the natural resources and oil and gas industries and TSX junior mining often go unnoticed or are under-owned by U.S. investors. Why are U.S. investors missing one of the most value-laden opportunities currently available? Most U.S. investors have their own ideas and practices about investing, yet many bypass companies in this sector for the following reasons. • They do not know enough about the sector or have a low risk-tolerance for investing in companies in unfamiliar sectors, • They do not know how to buy companies listed on foreign exchanges, • They are scared by negative media propaganda, inauspicious reputations of past wildcatters, appearances of sketchy characters depicted in old stories and in the movies, and past frauds, including the Bre-X scandal. North America is rich in oil and gas reserves, minerals and other natural resources, but only our Canadian cousins appear to have been successful with their investments in oil & gas, junior platinum, gold, silver, copper, uranium, and rare earth metals companies. Many experts see that the underlying rise in commodity prices as an indication of prices going even higher. Of course,

Micro-cap Review P.O. Box 4216 Metuchen, NJ 08840-1848 T 646-837-0351 F 212-202-6020 PUBLISHER Sheldon Kraft skraft@snnwire.com Wesley Ramjeet wesley@microcapreview.com EDITOR Ronald Stone Ron@microcapreview.com WRITERS R. Gerald Bailey David Bond Gordon Chiu John Faessel Michael Fulp Robert Haag Chet Hebert Jordan Kimmel Sheldon Kraft Jack Leslie Ken Norensberg Stephen Robbins Marshall Sterman ACCOUNTING Jennifer Anglade Accounting@microcapreview.com ADVERTISING Sheldon Kraft skraft@snnwire.com 818-730-6000 BUSINESS DEVELOPMENT Ron Stone Ron@microcapreview.com CIRCULATION Ashkan Farida afarida@snnwire.com

there are interested U.S. investors, but the junior mining and micro-cap companies are just beginning to get the widespread attention that they deserve. There are more than 1,700 junior mining companies that explore, develop, or produce metals in Canada and the United States. The TSX and the TSX.V exchanges in Canada have hundreds of listed mining stocks and hundreds more of oil and gas companies of all sizes, which make up the majority of their listings. The U.S. market has a much smaller cadre of micro-cap companies, mostly listed on the OTCQX and OTCQB exchanges. One of Canada’s most overlooked exports is its geologists. It sounds funny but a Canadian geologist is usually found somewhere in the middle of a major discovery wherever it may happen in the world. Because of this, it is not a small coincidence that Canadian geologists are highly sought after in the natural resources market. In response to readership requests, we have made an effort to focus this issue on North American resource micro-cap companies. We hope that we have provided our readers with information and a sampling of micro-cap companies for review.

Sheldon “Shelly” Kraft

GRAPHIC PRODUCTION Tony Vibhakar Tony@microcapreview.com All Printing Services nadiaf@pacbell.net WEBMASTER Kelvin Chen Kelvin.chen@3amediaonline.com Micro-Cap Review Magazine is published Quarterly, Spring, Summer, Fall, Winter POSTMASTER send address Changes to MicroCap Review Corporate Offices. © Copyright 2009 by Micro-Cap Review Inc. All Rights Reserved. Reproduction without permission of the Publisher is prohibited. The publishers and editors are Not responsible for unsolicited materials. Every effort has been made to assure that all Information presented in this issue is accurate and neither Micro-Cap Review Magazine or any of its staff or authors is responsible for omissions or information that is inaccurate or misrepresented to the magazine.

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This Publication is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Micro-Cap Review Magazine and its employees are not, nor do they claim to be registered investment advisors or broker/dealers. This magazine contains forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 relating to companies’ future operating results that are subject to certain risks that could cause results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements. This publication undertakes no obligation to update these forward-looking statements. Micro-Cap Review Magazine, its owners, employees, their families and associates may have investments in companies featured within this publication and may elect to sell these investments or purchase additional investments in these companies at any time. However, the policy of our editorial staff is to avoid any pre-publication trading of featured stocks or sales until the release date of the magazine. In order to be in full compliance with the Securities Act of 1933, Section 17(b), where the publisher has received payment for advertisement/advertorial of a security, the amount and type of consideration will be fully disclosed. All information about the Company contained within an advertisement/advertorial has been furnished by the respective Company and the publisher has not made any independent verifications of such information and makes no implied or express warranties on the information provided. Readers should perform their own due diligence before investing in any securities mentioned. Investing in securities is speculative and carries a high degree of risk. All MicroCap Review Disclaimers apply http://www.microcapreview.com/disclaimer.php before investing view www.sec.gov/investors

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C O N T E N T S Q U A RT E R 4

2010

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Featured Articles

Profiled Companies

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Clifton Star Resources Lucas Energy RX Exploration Rye Patch Gold Hecla Mining Best Kept Secret on the Sell Side - Global Hunter Securities Rogers Oil & Gas

Viewpoints

Resources and Reserves: A Primer for the Lay Investor by Mickey Fulp The Future is Now for the Pink OTC Markets by Sheldon “Shelly” Kraft Great Growth Opportunity: US Stock Exchange Listed Chinese Natural Resource Companies by Robert Haag Silver Rant by David Bond The Secret World of Rare Earth Elements by Dr. Gordon Chiu Like It Or Not, Oil Sustains Us by R. Gerald Bailey

Capital Is Being Put in the Hands of the Wrong People, One Man’s Opinion by Marshall Sterman Rebuilding Respect by Stephen Robbins

Finance & Investments

Legal, Tax & Accounting

How to Prepare for a FINRA Audit by Ken Norensberg The Compliance Corner by Chet Hebert Ombudsman by Jack Leslie

Investing Success Comes Down to Research and Timing by Jordan Kimmel Ask Mr. Wallstreet: On the Road Again by Sheldon “Shelly” Kraft On the Market: A National Treasure and a World Need by Dr. John Faessel

Comics

Wall Street Chicken

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F E AT U R E D A R T I C L E

Resources and Reserves A Primer for the Lay Investor

hen publisher Shelly Kraft asked me to write in the resource issue of Micro-cap Review magazine, I immediately thought about educating readers about the significant difference between mineral resources and mineral reserves. Although this is a simple concept that is familiar to most (but not all) trained economic geologists or mining engineers, the majority of lay investors don’t understand the difference between the two categories and the ramification that it has for speculating in junior resource stocks. A “mineral reserve” is alternatively called an “ore reserve” or an “ore deposit” by geologists and engineers. The rocks and minerals composing it are called “ores.” “Ores are rocks and minerals that can be recovered at a profit.” (Park and MacDiramid, 1975) It’s as simple as that: at a profit.

By Mickey Fulp

Micro-Cap Review Magazine

There is a consistent, well-defined, and absolutely critical difference between mineral resources and mineral reserves as defined by various securities, regulatory, and taxation authorities in the English-speaking world. Since most junior resource speculators deal mainly in Toronto Venture and Toronto Stock Exchange companies, I will discuss the Canadian Institute of Mining, Metallurgy, and Petroleum (CIM) classification system under National Instrument (NI) 43-101 regulations. As you probably have already realized, the key difference between resources and reserves is summed up in three simple words: at a profit. From the CIM Standards on Mineral Resources and Reserves (2000): A mineral resource is a concentration or occurrence of natural, solid, inorganic, or fossilized organic material in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics, and continuity of a mineral resource are known, estimated, or interpreted from specific geological evidence and knowledge. Mineral resources are sub-divided in order of increasing geological confidence into inferred, indicated, and measured categories. Note that the confidence level in inferred mineral resources is insufficient to allow the application of technical and economic parameters or to enable an evaluation of economic viability worthy of public disclosure. A mineral reserve is the economically mineable part of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other rel-

evant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allowances for losses that may occur when the material is mined. Mineral reserves are sub-divided in order of increasing confidence into probable mineral reserves and proven mineral reserves. Mineral reserves are those parts of mineral resources which, after the application of all mining factors, are the basis of an economically viable project after taking account of all relevant processing, metallurgical, economic, marketing, legal, environment, socio-economic, and government factors. The relationship between mineral resources and mineral reserves is shown below: As shown in the chart, measured and indicated resources can become proven and probable reserves, and vice versa. Mining, metallurgy, processing, economic, marketing, legal, environment, socio-economic, and government factors change drastically over time. What was ore yesterday is not always ore today, and may or may not be ore tomorrow. The critical concept here goes straight to our definition of “ore.” A mineral reserve can alternatively be called an ore reserve and be defined as follows: a quantified mass of rock or mineral that can be developed, mined, processed, and delivered to the marketplace or technology at a profit. (The Geology of Ore Deposits: Park and Gilbert, 1986.) I repeat: at a profit. Unfortunately many TSX company officers and directors, promoters, investor relations personnel, writers, brokers, analysts, financiers, and, sadly even some “experts” do not understand the difference. These so-called experts include professional geolo-

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gists, professional engineers, certified professional geologists, or other titles that earn them qualified person status. Perhaps they simply do not care, are jaded by their own skin in the game, or are so dependent on the company, clients, or subscribers to put beans and rice on the table that their reasoning has become corrupted. I wonder if some professionals deliberately and dishonestly use these classifications as if they were interchangeable at trade shows, in interviews, public presentations, and discussions with potential investors or subscribers. As Mark Twain said over 140 years ago, “A mine is a hole in the ground with a liar standing beside it.” When evaluating a company for investment, the lay investor should understand and realize that a mineral resource is simply a mineralized mass of rock that has highly elevated content compared to background abundance in a particular mineral commodity. There is often little or no economic input into this classification. A NI 43-101 mineral resource that consists of all material or a large majority of material in the inferred resource category is particularly suspect to the informed investor. Mineralized rock in this category has a low confidence level and will require additional exploration and development work

to be upgraded to a measured and indicated resource and many more millions of investment dollars before it can possibly be classified as a mineral reserve. My experience is that many inferred resource project estimates in NI 43-101 technical reports have little chance of ever being upgraded to a measured and indicated resource, let alone an economically feasible proven and probable mineral reserve. Don’t forget that most junior resource companies are simply “mining the stock market.” Few have potentially viable resources let alone economic reserves. Most don’t want to be miners. Mining is a difficult business. Based upon past experience about four out of ten mines put into production will fail, four will trade dollars, and two will generate windfall profits. Of the 1,750 Venture and Toronto Exchange resource juniors, perhaps only 1 in 10 companies will ever develop a project with mineral reserves. Assuming my numbers are correct, about 175 exploration and mining juniors will define a reserve. About 35 of those will develop a profitable mine for their shareholders or reward them by selling to a bigger company that develops the said mine. Folks, that’s two percent of the listed companies. It takes dedicated research and due dili-

gence to pick the best of the best in the junior resource sector. Let the buyer beware. Remember the key element in the definition of “ore”: at a profit. Now let’s go and make some. The Mercenary Geologist Michael S. “Mickey” Fulp is a certified professional geologist with a B.Sc. degree in earth sciences with honors from the University of Tulsa, and a M.Sc. degree in geology from the University of New Mexico. Mickey has 30 years experience as an exploration geologist, searching for economic deposits of base and precious metals, industrial minerals, uranium, coal, oil and gas, and water in North and South America, Europe, and Asia. Mickey has worked for junior explorers, major mining companies, private companies, and investors as a consulting geologist or the past 22 years, specializing in geological mapping, property evaluation, and business development. In addition to Mickey’s professional credentials and experience, he is highaltitude proficient, and is bilingual in English and Spanish. From 2003 to 2006, he made four outcrop ore discoveries in Peru, Chile, British Columbia, and Nevada. Mickey is well-known throughout the mining and exploration community in his ongoing work as an analyst, writer, and speaker. Contact: Contact@MercenaryGeologist.com. n Disclaimer: I am not a certified financial analyst, broker, or professional qualified to offer investment advice. Nothing in a report, commentary, , interview, and other content constitutes or can be construed as investment advice or as an offer or solicitation to buy or sell stock. Information is obtained from research of public documents and content available on the company’s Web site, regulatory filings, various stock exchange Web sites, and stock information services, through discussions with company representatives, agents, other professionals and investors, and field visits. While the information is believed to be accurate and reliable, it is not guaranteed or implied to be so. The information may not be complete or correct; it is provided in good faith but without any legal responsibility or obligation to provide future updates. I accept no responsibility, or assume any liability, whatsoever, for any direct, indirect, or consequential loss arising from the use of the information. The information contained in a report, commentary, interview, and other content is subject to change without notice, may become outdated, and will not be updated. A report, commentary, interview, and other content reflect my personal opinions and views and nothing more. All contents of are subject to international copyright protection and no part or portion of report, commentary, interview, and other content may be altered, reproduced, copied, emailed, faxed, or distributed in any form without the express written consent of Michael S. (Mickey) Fulp, Mercenary Geologist.com LLC. Copyright © 2010 Mercenary Geologist.com LLC. All Rights Reserved.

Source: http://www.cim.org/committees/cimdefstds_dec11_05.pdf www.microcapreview.com

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F E AT U R E D A R T I C L E

The Future is Now for the Pink OTC Markets According to Pink OTC CEO Cromwell Coulson, “We wanted to change the meaning of OTC from slow and stale ‘over-thecounter’ to ‘Open, Transparent and Connected.’”

he OTC market, once where traditionally public companies too small to be listed on a stock exchange were traded, is now the third largest stock

market in the United States with over $10 trillion in aggregate market capitalization – over 100 times larger than the American Stock Exchange and about half the size of the New York Stock Exchange.

By Sheldon “Shelly” Kraft

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From its now seemingly ancient roots as the National Quotation Bureau (NQB) in 1913, which by the way was all that we stockbrokers had for stock quotes in the 1980s, the OTC market has now become the home to such household names as Nestle, Adidas, Nintendo, and Volkswagen. The NQB changed its name to Pink Sheets in the 1990s and then to Pink OTC Markets (Pink OTC), publicly trading on OTCQX as PINK, which operates the leading electronic quotation and trading system for OTC securities. And the company will be making another name change to OTC Markets Group Inc in January 2011 to better identify itself as the primary operator of the OTC marketplace. The secret to Pink OTC’s success is its vision to bring electronic trading to the OTC on an open platform so that broker-dealers

could easily execute trades of OTC securities for their customers. The largest market makers on NASDAQ are among the most active on the OTC, which include Knight, UBS, Citicorp, E*Trade, and even NYSE Arca Edge. According to Cromwell Coulson, Pink OTC’s chief executive officer, “We wanted to change the meaning of OTC from slow and stale ‘over-the-counter’ to ‘open, transparent and connected.’” Pink OTC is uniquely positioned in the marketplace. Investors today can trade most OTC securities electronically using their online brokers just as they do for NYSE and NASDAQlisted securities. While the U.S. exchanges have seen a contraction in trading over the past decade, trading in OTC securities has increased over 500 percent in the same time frame.

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Pink OTC operates a financial Web site for OTC investors, www.otcmarkets.com, which offers real-time stock quotes, news, and financial information for over 9,800 OTC-quoted securities. Otcmarkets.com offers unique trade and quote data for these thousands of OTC companies. Most importantly access to the site is free of charge to all OTC investors. In addition to their Web site, Pink OTC also resells its market data to over 40 market data redistributors so that other financial sites, such as Bloomberg, Scottrade, E*Trade, and Schwab, can display real-time OTC quotes to their customers as a source of additional revenues and a means to achieve brand building and co-marketing strategy. In 2007 Pink OTC created OTCQX to help reputable companies on the OTC by demonstrating they meet or exceed financial standards and are able to pass a qualitative review. That review includes management background checks to weed out any persons with questionable associations and requires a third-party sponsor, such as an attorney or investment bank, to vouch for the legitimacy of the company. Earlier this year, Pink OTC noticed that with fewer and fewer market makers choosing to quote SEC reporting companies on the OTC Bulletin Board, many SEC reporting companies were being designated as Pink Sheets. To fill this gap, Pink OTC created a mid-level market tier called OTCQB. It is similar in concept to the OTCBB where companies must be current in their SEC reporting, but OTCQB companies are not able to meet the more rigorous OTCQX standards. According to Pink OTC, only 20 percent of companies on the OTCQB or OTCBB can qualify to meet the OTCQX financial standards. Says Coulson, “OTCQX helps investors quickly identify the investment-worthy OTC securities from the more speculative stocks that also, by default, trade on the OTC. Those more speculative companies are now identified as Pink Sheets-companies that usually cannot provide timely disclosure, meet financial standards, or pass a quality

In 2007 Pink OTC created OTCQX to help reputable companies on the OTC by demonstrating they meet or exceed financial standards and are able to pass a qualitative review. That review includes management background checks to weed out any persons with questionable associations and requires a third-party sponsor, such as an attorney or investment bank, to vouch for the legitimacy of the company. check. Who would eat at a restaurant that has not passed the health board’s certification process? Similarly, why would you invest your savings in a company that has not voluntarily met a third-party quality review?” The companies traded below the OTCQX and the OTCQB have been categorized by the level of disclosure chosen by the issuer ranging from “current information” to “no information,” with the current information category being the highest tier of financial disclosure. Rankings of Pink OTC’s alternative reporting system are based on the level of disclosure and not on a designation of quality or investment risk. The Pink Sheets “limited information” tier is designed for companies that choose to provide a limited amount of financial information to investors. The financial information provided by limited information companies may include companies filing late SEC reports to those issuing a simple balance sheet and income statement. Most companies in the limited information category are usually in financial distress and therefore are unable to provide adequate current information. The Pink Sheets “no information” tier indicates companies that are not able or willing to provide disclosure to the public markets - either to a regulator, an exchange, or Pink OTC. In addition, companies that are of a public interest concern, as a result of promotional activities or SPAM campaigns, for example, are flagged as caveat emptor

(i.e., let the buyer beware) with a skull and crossbones icon on their www.otcmarkets. com page. Pink OTC’s mission is to promote market transparency, facilitate regulatory compliance, and increase the quality of issuer disclosure. The company is continuing to make innovations to improve the OTC market and make it a friendlier place for investors. To further this mission, Pink OTC is in the process of registering their interdealer quotation system with the SEC as an alternative trading system (ATS), which is expected to be completed by the end of this year. Pink OTC encourages professional investors to contact their market data provider and request Pink OTC’s data for their account. All investors should use www.otcmarkets.com for realtime quotes and trade data and to see full corporate profiles for all OTC stocks. Pink OTC is a prime example of how the markets have grown and have changed over the years. By writing this article I became an educated consumer and hopefully helped to raise the level of understanding within the markets for our readers. n

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PROFILED COMPANIES

Clifton Star Resources Inc. (TSX-V: CFO; Frankfurt: C3T)

lifton Star is a gold exploration and development company with a potential world-class project in southwestern Quebec established with joint venture partner Osisko Mining Corp. The mining concession, the Duparquet Gold Project along the historic Porcupine-Destor Fault, is composed of former producers, including the Beattie, Donchester, Central Duparquet, Dumico, and the Duquesne. Combined they produced over 1.2 million ounces of gold and a half million ounces of silver. The joint venture with Osisko, a $107 million deal, requires Osisko to spend $70 million over four years to earn a 50 percent interest in the project. In year one, 2010,

By Laura Stein

Osisko spent $15 million and drilled 123,000 meters. A budget for 2011 of $15.7 million was expected by the beginning of December 2010 with an updated NI-43-101 report to be issued in the first quarter of 2011. Prior to the agreement with Osisko, Clifton Star having drilled over 100,000 meters, viewed the project as an underground operation. With the success of their Malartic project, Osisko felt that the Duparquet Project would lend itself to a low-grade bulk tonnage deposit, as well as a future underground operation. And drilling to date appears to bear out that hypothesis. Clifton Star owns other assets, including the Hunter Mining group located north

of Duparquet. With Hunter Mining, the company plans to test for copper, zinc, gold, and silver, and approximately 200 ounces of recoverable gold in the form of tailings. With over $16 million in its coffers, the company is currently assessing the best method to recover the value of the tailings.

Contact: Harry Miller, President and CEO Direct Phone: (425) 453-0355 E-mail: hmiller@cliftonstarresources.com Web site: www.cliftonstarresources.com Please visit our booth # 2081 at the PDAC in Toronto on March 6-9, 2011. n Disclaimer: This corporate profile is based upon information provided by the issuer or company representative. The information is not intended to be, and shall not constitute, an offer to sell or solicitation of any offer to buy any securities. It is intended for information purposes only, and to increase awareness of the company profiled. Safe Harbor Statement: The statements in this advertorial or profile relating to future products, partnerships, technology, and positive direction are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some or all of the aspects anticipated by these forward looking statements may not, in fact, occur. Factors that could cause or contribute to such differences include but are not limited to contractual difficulties, demand for the Issuer’s common stock, and the company’s ability to obtain future financing. Microcap Review Magazine may have received payment to publish and print this advertorial or corporate profile. Micro-cap Review Magazine disclaimers apply and may be reviewed at www.microcapreview.com/disclaimer.php. Before investing in any security, you are strongly advised to review all public filings of the issuer of such security, which can be found at www.sec.gov, as well as warnings published by the SEC at www.sec.gov/investors and to consult with your professionals.

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PROFILED COMPANIES

Lucas Energy’s Rapid Growth Attracts JV Partners in Restarting Shut-in Texas Oil Wells Company solidifies position on Austin Chalk trend, looks for next big oil play By Michael Brette and Tammy Billington

ith control of 17,000 acres of oil and gas leases, 47 producing wells, and an average daily production of more than 300 barrels of oil in a part of Texas many thought was well past its production prime, Lucas Energy, Inc. (NYSEAmex: LEI) has both surprised and gained the attention of the energy industry. Now the company’s race to consolidate its position on the Austin Chalk trend is attracting joint venture partners, enabling the company to devote more of its resources to finding other undeveloped but proven areas that have strong underlying production potential. “Our business plan is very simple,” says Lucas Energy president and CEO Bill Sawyer. “We are not explorers or on the hunt for massive acquisitions. We just do what we do best – put oil wells back into production.” In 2004 Lucas Energy began identifying, evaluating, and acquiring leasehold property interests in the Austin Chalk formation along the mid-Texas Gulf Coast, an area of the United States that remains one of the world’s richest oil plays with an estimated six billion barrels of oil reserves. Lucas Energy focused on building its initial properties within Gonzales, Wilson, Atascosa, and Karnes Counties, Texas in the

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middle of the oil-rich Eagle Ford Shale and Buda formations. From the beginning, the company’s strategy called for avoiding the energy industry’s high exploration risks by acquiring properties in proven oil and gas areas where the company’s management team had prior experience, particularly those areas where management was confident it could extract significant amounts of oil and gas from refurbished wells that previously were under-performing, shutin or plugged, and abandoned due to low commodity prices in the early 1990s.

Joint Ventures Boost Lucas Energy’s Financial Strength, Flexibility In May 2010 Lucas Energy closed the first part of a joint venture on its Eagle Ford Shale properties with Hilcorp Energy I, LP, an affiliate of Hilcorp Energy Company, one of the largest privately-owned oil and gas companies in the United States. The move initially garnered Lucas $7.5 million, which enabled the company to pay off $2.2 million in outstanding loans. To date, Hilcorp has invested $10.2 million in Lucas Energy to acquire some 85 percent of

the company’s rights below the Austin Chalk trend. Lucas retains a 15 percent undivided working interest in the “deep rights” sold. Additional joint venture closings may take place in the future, according to Sawyer. Lucas has additional acreage in Gonzales County that is not yet a part of the Hilcorp joint venture, and Lucas Energy is continuing to acquire additional acreage in Gonzales County. “Lucas Energy has paid down its bank debt and is now on the way to developing its Eagle Ford assets. We now have more flexibility for future transactions such as joint ventures,” says Sawyer. For Lucas, securing leased properties through joint ventures makes a lot of financial sense. By taking on a deep-pocketed partner, the company can devote more of its capital to acquiring and quickly developing oil and gas leases, increasing cash flow without diluting shareholder value.

LUCAS ENERGY MANAGEMENT TEAM William A. Sawyer – President and CEO Mr. Sawyer is co-founder with 30+ years of experience in oil and gas operations. He

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T DISCOUNT BROKERAGE, AMERICAN CAPITAL PARTNERS, ANDREW GARRETT, ANDREWS SECURITIES, APS FINANCIAL 1STSECURITIES, DISCOUNT BROKERAGE, AMERICAN CAPITAL 1ST DISCOUNT PARTNERS, BROKERAGE, ANDREW GARRETT, AMERICAN ANDREWS CAPITAL SECURITIES, PARTNERS, APS ANDREW FINANCIAL GARRETT, ANDREWS SECURIT ORPORATION, ASG ATWOOD MARKS & CO. , AURORA CAPITAL, BEACON VENTURE CAPITAL, THE BENCHMARK CORPORATION, ASG SECURITIES, ATWOOD MARKS CORPORATION, & CO. , AURORA ASG SECURITIES, CAPITAL, BEACON ATWOOD VENTURE MARKS & CAPITAL, CO. , AURORA THE BENCHMARK CAPITAL, BEACON VENTURE CA OMPANY, BERTHEL FISHER & COMPANY, BLUE MOON FINANCIAL, BRILL SECURITIES, BROKER DEALER FINANCIAL SERVICES FISHER & COMPANY, BLUE COMPANY, MOON FINANCIAL, BERTHEL FISHER BRILL PARTNERS, & SECURITIES, COMPANY,LC, BROKER BLUE MOON DEALER FINANCIAL, FINANCIAL BRILL SERVICES SECURITIES, BROKER DEA ORP., BUCKMAN,COMPANY, BUCKMANBERTHEL & REID, INC., CAPITAL GROWTH RESOURCES, CAPSTONE THE CHAMPION GROUP, CORP., BUCKMAN, BUCKMAN & REID, INC., CAPITAL CORP., GROWTH BUCKMAN, RESOURCES, BUCKMAN & CAPSTONE REID, INC., PARTNERS, CAPITAL LC, GROWTH THE CHAMPION RESOURCES, GROUP, CAPSTONE PARTNERS, LC C., CHARLES MORGAN SECURITIES, CHICAGO INVESTMENT GROUP, LLC, CIM SECURITIES, C.K. 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CAPITAL SECURITIES, INC., DAN REDERICK SECURITIES, DIVINE CAPITAL MARKETS, LLC, DOUGHERTY & COMPANY, LLC, EMPIRE SECURITIES CORPORATION, FREDERICK SECURITIES, DIVINE CAPITAL MARKETS, FREDERICK LLC, SECURITIES, DOUGHERTYDIVINE & COMPANY, CAPITAL LLC, MARKETS, EMPIRE LLC, SECURITIES DOUGHERTY CORPORATION, & COMPANY, LLC, EMPIRE SEC BR CAPITAL MARKETS, FINANCIAL WEST GROUP, FIRST LONDON SECURITIES CORP., FIRST MIDWEST SECURITIES, INC., FIRST FBR CAPITAL MARKETS, FINANCIAL WEST GROUP, FBR CAPITAL FIRST LONDON MARKETS, SECURITIES FINANCIAL CORP., WEST FIRST GROUP, MIDWEST FIRSTSECURITIES, LONDON SECURITIES INC., FIRST CORP., FIRST MIDWES OUTHWEST COMPANY, FREDERICK & COMPANY, INC., GLOBALINK GRANDVIEW INC., CAPITAL, LLC, SOUTHWEST COMPANY, FREDERICK & COMPANY, SOUTHWEST INC.,SECURITIES, GLOBALINK COMPANY, SECURITIES, FREDERICKGRANDVIEW &CAPITAL, COMPANY, INC.,GVC GLOBALINK GRANDVIEW CAPIT CAPITAL, INC., GVCSECURITIES, CAPITAL, LLC, OULIHAN SMITH HOULIHAN & COMPANY, INC., HUNTER WISE LLC, I-BANKERS SECURITIES, INC., IMSWISE SECURITIES, INC., SMITH & COMPANY, INC.,SECURITIES, HUNTER SECURITIES, LLC, I-BANKERS SECURITIES, INC., IM SMITH & COMPANY, INC., SECURITIES, HUNTERHOULIHAN WISE SECURITIES, LLC, I-BANKERS INC., IMS SECURITIES, INC., STITUTIONAL CAPITAL MANAGEMENT, INTEGRATED TRADING ANDTRADING INVESTMENTS, INC., INVESTORS CAPITALTRADING CAPITAL MANAGEMENT, INC.,INC., INTEGRATED INSTITUTIONAL CAPITAL INC., MANAGEMENT, INC.,INSTITUTIONAL INTEGRATED AND INVESTMENTS, INVESTORS CAPITALAND INVESTMENTS, INC., INVE ORPORATION, JANNEY MONTGOMERY LLC, JOSEPH GUNNAR & CO., LLC, J.& P.CO., TURNER LLC, KCD CORPORATION, JANNEY MONTGOMERY SCOTT, LLC, JOSEPH GUNNAR & CO., LLC, J. P. TURNER & COM CORPORATION, JANNEYSCOTT, MONTGOMERY SCOTT, LLC, JOSEPH GUNNAR LLC, J.& P.COMPANY, TURNER & COMPANY, LLC, KCD NANCIAL, INC., LADENBURG THALMANN & CO. INC., LAMPOST FINANCIAL GROUP, LANE CAPITAL MARKETS, LLC, LASALLE ST. GROUP, FINANCIAL, INC., LADENBURG THALMANN & CO. INC., MARKETS, LAMPOST FINANCIAL FINANCIAL, INC., LADENBURG THALMANN & CO. INC., LAMPOST FINANCIAL GROUP, LANE CAPITAL LLC, LASALLE ST. LANE CAPITAL M SECURITIES, LLC., MARINO CAPITAL PARTNERS, MAXIM LLC, MCGINN, LLC., MARINO CAPITAL PARTNERS, MAXIM GROUP, LLC, MCGINN, SMITH &MDB CO., CAPITAL INC., MDBGROUP, CAPITAL GROUP, LLC,SMITH & CO., INC., MD ECURITIES, LLC., SECURITIES, MARINO CAPITAL PARTNERS, MAXIM GROUP, LLC, MCGINN, SMITH & CO., INC., GROUP, LLC, ADVISORS, LLC, MCM SECURITIES, LLC, MILLERINC., CAPITAL INC., MARKETS, LLC, NEIDIGER, TUC MILESTONE ADVISORS, LLC, MCM SECURITIES, LLC, MILLER CAPITAL MARKETS, LLC, TUCKER, NEIDIGER, TUCKER, BRUNER, ILESTONE ADVISORS, LLC, MCM SECURITIES, LLC, MILLERMILESTONE CAPITAL MARKETS, LLC, NEIDIGER, BRUNER, NETWORK 1 FINANCIAL SECURITIES, NEWBRIDGE CORPORATION, NEWPORT COAST SECU NETWORK 1 FINANCIAL SECURITIES, NEWBRIDGE SECURITIES CORPORATION, NEWPORT COASTSECURITIES SECURITIES, INC., NEXT ETWORK 1 FINANCIAL SECURITIES, NEWBRIDGE SECURITIES CORPORATION, NEWPORT COAST SECURITIES, INC., NEXT EQUITY RESEARCH, LLC,NORTHLAND NOBLE INTERNATIONAL IVESTMENTS, INC., GENERATION EQUITY LLC, NOBLEGENERATION INTERNATIONAL IVESTMENTS, INC., SECURITIES, INC., NYPPEX, LLC, NORTHLAND SEC ENERATION EQUITY RESEARCH, LLC, RESEARCH, NOBLE INTERNATIONAL IVESTMENTS, INC., NORTHLAND SECURITIES, INC., NYPPEX, LLC, PAULSON INVESTMENT COMPANY, INC., PINFINANCIAL FINANCIAL, LLC., PLUMTREE PAULSON INVESTMENT INC., PIN FINANCIAL, LLC.,CAPITAL, PLUMTREE CAPITAL, LLC, PROSPERA FINANCIAL SERVICES, INC., LLC, PROSPERA F AULSON INVESTMENT COMPANY, INC., COMPANY, PIN FINANCIAL, LLC., PLUMTREE LLC, PROSPERA SERVICES, INC., CAPITAL, PROVIDENT ASSET MANAGEMENT, LLC, R.F. LAFFERTY & INC., CO., RAYMOND PROVIDENT ASSET MANAGEMENT, LLC, R.F. LAFFERTY & CO., RAYMOND JAMES FINANCIAL SERVICES, RICHFIELDJAMES ORIONFINANCIAL SERVICE ROVIDENT ASSET MANAGEMENT, LLC, R.F. LAFFERTY & CO., RAYMOND JAMES FINANCIAL SERVICES, INC., RICHFIELD ORION INC., RIVERSTONE WEALTH LP, MANAGEMENT, ROAN-MEYERS ASSOCIATES, LP, SAND INTERNATIONAL, INC., RIVERSTONE WEALTH INTERNATIONAL, MANAGEMENT, ROAN-MEYERS ASSOCIATES, SANDGRAIN SECURITIES, INC., TERNATIONAL, INC., RIVERSTONE WEALTH MANAGEMENT, ROAN-MEYERS ASSOCIATES, SANDGRAIN SECURITIES, SECURITY ASSOCIATES, INC., SMITH, & COMPANY, SPENCERINC., CLARKE, LLC., SPENC SECURITY RESEARCH ASSOCIATES, INC., SMITH, MOORE RESEARCH & COMPANY, SPENCERLP, CLARKE, LLC.,MOORE SPENCER TRASKINC., SECURITIES, ECURITY RESEARCH ASSOCIATES, SMITH, MOORE & COMPANY, SPENCER CLARKE,STRUCTURED LLC., SWARTWOOD, SPENCER TRASK SECURITIES, INC., STANFORD GROUP COMPANY, CAPITAL RESOURCES CORPORATION, SWARTWOOD, HES STANFORD GROUP INC., COMPANY, STRUCTURED CAPITAL RESOURCES CORPORATION, HESSE INC., TERRA NOVA TANFORD GROUPFINANCIAL, COMPANY,LLC, STRUCTURED CAPITAL CORPORATION, SWARTWOOD, HESSE INC., TERRA NOVAVFINANCE FINANCIAL, LLC, TERRANOVA CAPITAL PARTNERS, INC., TRUSTFIRST, INC., VELOCITY CAPITAL ADVI TERRANOVA CAPITALRESOURCES PARTNERS, INC., TRUSTFIRST, INC., VELOCITY CAPITAL ADVISORS, INC., NANCIAL, LLC, TERRANOVA CAPITAL PARTNERS,SECURITIES, INC., TRUSTFIRST, INC.,INC., VELOCITY CAPITAL ADVISORS, INC., VFINANCE INVESTMENTS, VISIONQUEST SECURITIES, LLC, W. QUILLEN SECURITIES, WESTPARK CAPITAL, I INVESTMENTS, INC., VISIONQUEST LLC, W. QUILLEN SECURITIES, WESTPARK CAPITAL, INC., WESTPORT RESOURCES VESTMENTS, INC., VISIONQUEST SECURITIES, LLC, W. QUILLEN SECURITIES, WESTPARK CAPITAL, INC., WESTPORT RESOURCES INVESTMENT SERVICES, INC.,CAPITAL WESTROCK ADVISORS, INC., WINEBRENNER CAPITAL PARTNERS, WIN INVESTMENT , SERVICES, INC., WESTROCK ADVISORS, INC.,, WINEBRENNER PARTNERS, WINSLOW, EVANS & CROCKER, WORLD EQUITY GROUP, INC., WUNDERLICH SECURITIES, XNERGY FINANCIAL CORPORATION INC., WORLD GROUP, INC., WUNDERLICH SECURITIES, XNERGY FINANCIAL CORPORATION VESTMENT , SERVICES, INC., EQUITY WESTROCK ADVISORS, INC., INC., WINEBRENNER CAPITAL PARTNERS, WINSLOW, EVANS & CROCKER, C., WORLD EQUITY GROUP, INC., WUNDERLICH SECURITIES, XNERGY FINANCIAL CORPORATION NIBA ASSOCIATE MEMBERS

NIBA ASSOCIATE MEMBERS

IBA ASSOCIATE MEMBERS

MEMBERS, INC., FINANCIAL, INC., AGS SPECIALIST LLC, ALPHATRADE.COMBERENB ACREDITED MEMBERS, INC., AERO FINANCIAL,ACREDITED INC., AGS SPECIALIST LLC, AERO ALPHATRADE.COMBERENBAUM, WEINSHIENK & EASON, PC, CAPITAL FINANCE,GROWTH, CAPITAL LLP, SOURCE FINANCE, LLC, CARDINAL EASON, PC, CAPITAL SOURCE FINANCE, CAPITAL SOURCE FINANCE,SOURCE LLC, CARDINAL CASSON MEDIA GROUP, CCG GROWTH, LLP, C CREDITED MEMBERS, INC., AERO FINANCIAL, INC., AGS SPECIALIST LLC, ALPHATRADE.COMBERENBAUM, WEINSHIENK & INVESTOR RELATIONS, EXECUTECH FINANCIAL ADVISORS, LLC/, CHINA RISING NEWSLETTER INVESTOR RELATIONS, EXECUTECH FINANCIAL ADVISORS, LLC/, CHINA RISING NEWSLETTER ASON, PC, CAPITAL SOURCE FINANCE, CAPITAL SOURCE FINANCE, LLC, CARDINAL GROWTH, LLP, CASSON MEDIA GROUP, CCG COHEN SPECIALISTS, , ADVISORS, CONSULTING FOR STRATEGI COHEN SPECIALISTS, LLC, COMMONWEALTH CAPITAL , ADVISORS,LLC, LLC, COMMONWEALTH CONSULTING FOR CAPITAL STRATEGIC GROWTH, LLC, COVENANT VESTOR RELATIONS, EXECUTECH FINANCIAL ADVISORS, LLC/, CHINA RISING NEWSLETTER CAPITAL CORPORATION, DARTMOUTH CAPITAL, INC., DAS CONSULTING LLC, L. DYNASTY CAPITAL CO CAPITAL CORPORATION, DARTMOUTH CAPITAL, INC., DAS CONSULTING LLC, DYNASTY CAPITAL CORPORATION, EDWARD OHEN SPECIALISTS, LLC,& COMMONWEALTH CAPITAL , ADVISORS, CONSULTING FOR STRATEGIC GROWTH, COVENANT JAMES &LLC, ASSOCIATES, ELLENOFF GROSSMAN & SCHOLE, LLP, ENVISION JAMES ASSOCIATES, ELLENOFF GROSSMAN & SCHOLE, LLP, ENVISION CAPITAL, LLC, EPOCH FINANCIAL GROUP, INC.,CAPITAL, LLC, EPOCH FINAN APITAL CORPORATION, DARTMOUTH INC., DAS CONSULTING LLC, DYNASTY CAPITAL CORPORATION, EDWARD L. EVOLUTION INVESTOR RELATIONS, FARCAP GROUP, FUTUREVEST CORPORATION, EVOLUTION INVESTORCAPITAL, RELATIONS, FARCAP GROUP, FUTUREVEST CORPORATION, GLOBAL CAPITAL GROUP, LTD, GOOD SWARTZGLOBAL CAPITAL MES & ASSOCIATES, ELLENOFF & SCHOLE, LLP,BROWN ENVISION CAPITAL, LLC, EPOCH FINANCIAL GROUP, INC., & BERNS, LLP,LLC, GREENBERG TRAURIG, P.A., GUZOV OFSINK,CAPITAL LLC, HALTER FINANCIAL GROUP, BROWN & BERNS,GROSSMAN LLP, GREENBERG TRAURIG, P.A., GUZOV OFSINK, HALTER FINANCIAL GROUP, HANOVER VOLUTION INVESTOR RELATIONS, FARCAP GROUP, LLP, FUTUREVEST CORPORATION, GLOBAL GROUP, LTD,FUNDING GOOD SWARTZ CORPORATION, HEIN LLC, & ASSOCIATES, LLP,FIRM, HIGH CAPITAL LLC, IOPPOLO LAW FIRM, INFUSIO CORPORATION, HEIN & ASSOCIATES, HIGH CAPITAL FUNDING IOPPOLOCAPITAL LAW INFUSIONCAPITAL, LLC, INVESTOR AWARENESS, INC., INVESTREND COMMUNICATIONS, INC.,CAPITAL JOHN CAPITAL MANAGEMENT GR AWARENESS, INC., INVESTREND COMMUNICATIONS, INC., THOMAS CAPITAL MANAGEMENT GROUP, LLC,THOMAS KM FINANCIAL, ROWN & BERNS, LLP, GREENBERG TRAURIG, P.A., GUZOV OFSINK, LLC,JOHN HALTER FINANCIAL GROUP, HANOVER INC., L.LLC, G. ZANGANI, LLC, MADAMA GRIFFITTS O’HARA, LLP, ADVISORS, INC., MARKET DEV INC.,& L. G. ZANGANI, LLP, LLC, HIGH MADAMA GRIFFITTS O’HARA, LLP, MAGNA ADVISORS, INC., MARKET DEVELOPMENT CONSULTING ORPORATION, HEIN ASSOCIATES, CAPITAL FUNDING IOPPOLO LAW FIRM, INFUSIONCAPITAL, LLC, MAGNA INVESTOR GROUP, INC.,MIRCO-CAP MAS CAPITAL, INC.,MAGAZINE, MCC GROUP USA, INC., MIRCO-CAP REVIEW MAGAZINE, MOZAIC IN INC., MAS CAPITAL, INC., MCCINC., GROUP USA, INC., REVIEW MOZAIC INVESTOR RELATIONS, INC., WARENESS, INC., GROUP, INVESTREND COMMUNICATIONS, JOHN THOMAS CAPITAL MANAGEMENT GROUP, LLC, KM FINANCIAL, NATIONAL CORPORATE SERVICES, INC., DBA WALL-STREET.COM, THE NATIONAL DUE DILIGENCE AL NATIONAL CORPORATE SERVICES, INC., DBA WALL-STREET.COM, THE NATIONAL DUE DILIGENCE ALLIANCE, NEWPORT CAPITAL C., L. G. ZANGANI, LLC, MADAMA GRIFFITTS O’HARA, LLP, MAGNA ADVISORS, INC., MARKET DEVELOPMENT CONSULTING CONSULTANTS, NEWPORT EQUITY NYSE EURONEXT (NYX), OTC STOCK REVIEW EQUITY PARTNERS, LLC, NYSEINC., (NYX), OTCPARTNERS, STOCK REVIEW/ATLANTA CAPITAL ROUP, INC., MAS CONSULTANTS, CAPITAL, INC.,INC., MCCNEWPORT GROUP USA, INC., MIRCO-CAP REVIEWEURONEXT MAGAZINE, MOZAIC INVESTORLLC, RELATIONS, INC., PARTNERS, LLC,&PEACHTREE PARTNERS, PEARLMAN PEARLMAN OF COUNSEL TO QPBW, P PARTNERS, LLC, PEACHTREE EQUITY PARTNERS, PEARLMAN PEARLMAN EQUITY OF COUNSEL TO QPBW, PHILIPP & ADVISORS LLC, ATIONAL CORPORATE SERVICES, INC., DBA WALL-STREET.COM, THE NATIONAL DUE DILIGENCE ALLIANCE, NEWPORT CAPITAL PHILLIPS, LLP, PRIMA CONSULTING GROUP, INC, R. J. FALKNER & COMPANY, PHILLIPS, NIZER, LLP, PRIMA CONSULTING GROUP, INC, NIZER, R. J. FALKNER & COMPANY, RICHARDSON & PATEL, LLP, RODRIGUEZ & RICHARDSON & P ONSULTANTS, INC., NEWPORT EQUITY PARTNERS, LLC, NYSE EURONEXT (NYX), OTC STOCK REVIEW/ATLANTA CAPITAL ASSOCIATES, ROETZEL & ANDRESS LPA, RRADA, LLC, SEVENTH CIRCLE S DEVANNEY ASSOCIATES, ROETZEL & ANDRESS LPA, RRADA, LLC, SEVENTH CIRCLE CONSULTING, S DEVANNEY & COMPANY, LLC,CONSULTING, SC ARTNERS, LLC, PEACHTREE EQUITY LLC, PARTNERS, PEARLMAN && PEARLMAN OF COUNSEL TOROSS QPBW, PHILIPP ADVISORS LLC, CAPITAL PARTNERS, LLC, SCHWARTZ, LEVITSKY & FELDMAN LLP, SICHENZIA ROSS FRIEDMAN FEREN CAPITAL PARTNERS, SCHWARTZ, LEVITSKY FELDMAN LLP, SICHENZIA FRIEDMAN FERENCE, LLP, SINGER LEWAK HILLIPS, NIZER, LLP, PRIMA CONSULTING INC,INCORPORATED, R. J. FALKNER & COMPANY, RICHARDSON & LEIGH PATEL, LLP,STANDARD RODRIGUEZ & CAPITAL GREENBAUM & GOLDSTEIN, L.L.P,STENTON SNN INCORPORATED, & POOR’S, STENTON LEIGH GROU GREENBAUM & GOLDSTEIN,GROUP, L.L.P, SNN STANDARD & POOR’S, GROUP, INC., STERLING SSOCIATES, ROETZEL & ANDRESS LPA, RRADA, LLC,TRYANT, SEVENTH CIRCLE CONSULTING, SGROUP, DEVANNEY &DIVISION COMPANY, LLC,DILIGENCE SC ADVISORS, LLC, STRATEGICA TRYANT, LLC, V-ROOMS™ VIRTUAL ONLINE, DATA ROOMS, A DIVISION ADVISORS, LLC, STRATEGICA GROUP, LLC, V-ROOMS™ VIRTUAL DATA ROOMS, A OF DUE APITAL PARTNERS, LLC, SCHWARTZ, LEVITSKY & FELDMAN LLP,VIGILANT SICHENZIA ROSSWALL FRIEDMAN LLP,ADVISORS, SINGER LEWAK INVESTMENT ADVISORS, LLC, VISION INC., LLC, VIGILANT INVESTMENT ADVISORS, LLC, LLC, VISION ADVISORS, INC., STREETFERENCE, MANAGEMENT & CAPITAL, THEWALL WALLSTREET MANAGEMENT STREET ORGANIZATION, INC., WEINBERG & COMPANY, PA. STREET ORGANIZATION, INC., WEINBERGSTANDARD & COMPANY, REENBAUM & GOLDSTEIN, L.L.P, SNN INCORPORATED, &PA. POOR’S, STENTON LEIGH GROUP, INC., STERLING CAPITAL

DVISORS, LLC, STRATEGICA GROUP, TRYANT, LLC, V-ROOMS™ VIRTUAL DATA ROOMS, A DIVISION OF DUE DILIGENCE ONLINE, LC, VIGILANT INVESTMENT ADVISORS, LLC, VISION ADVISORS, INC., WALL STREET MANAGEMENT & CAPITAL, THE WALL TREET ORGANIZATION, INC., WEINBERG & COMPANY, PA.

The National Investment Banking Association The National (NIBA)Investment Banking Association (NIBA)

NIBA is the only not-for-profit association NIBA for is national, the only not-for-profit regional and independent association for broker national, dealers, regional and independent br The National Investment Banking Association (NIBA) investment banking firms, investment investment advisors, and banking relatedfirms, capital investment market service advisors, providers. and related capital market service pr

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NIBANET.ORG for upcoming Conference D logo firms, investment advisors, andlogo NIBANET.ORG for upcoming Conference Dates and Locations nvestment banking related capital market service providers.

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is a highly experienced field operator and petroleum engineer who has worked with Sources Since 1982. notable firms, including ARCO, Houston Oil & Minerals, and The Superior Oil Company.

WS SECURITIES, APS FINANCIAL ENTURE CAPITAL, THE BENCHMARK ROKER DEALER FINANCIAL SERVICES John O’Keefe – Treasurer and CFO RTNERS, LC, THE CHAMPION GROUP, Mr. O’Keefe is currently a partner with ES, C.K. COOPER & COMPANY, S, INC., DANEVEST, LLC.,LLC D.H.in Houston, TX. Tatum EMPIRE SECURITIES CORPORATION, For theINC., past FIRST two years, John was president ST MIDWEST SECURITIES, VIEW CAPITAL, INC., and GVC CEOCAPITAL, of Blast LLC, Energy Services, a public TIES, INC., IMS SECURITIES, INC., company , INC., INVESTORS CAPITALin the specialty drilling and comRNER & COMPANY, LLC, KCD sector. For the prior three years, munications E CAPITAL MARKETS, LLC, LASALLE ST. John served asLLC, co-CEO and CFO of Blast O., INC., MDB CAPITAL GROUP, DIGER, TUCKER, BRUNER, where he INC., successfully raised $60 million in COAST SECURITIES, INC., NEXT newINC., funding and turned HLAND SECURITIES, NYPPEX, LLC, around the company. PROSPERA FINANCIAL INC.,John served as CFO of FromSERVICES, 2000 to 2003, AL SERVICES, INC., RICHFIELD ORION Energy,INC., a dual-listed public company S, LP, SANDGRAINIvanhoe SECURITIES, LLC., SPENCER TRASK SECURITIES, INC., where he raised $80 with projects worldwide WOOD, HESSE INC., TERRA NOVA million. Prior to 2000, he was vice-president PITAL ADVISORS, INC., VFINANCE CAPITAL, INC., WESTPORT of investor RESOURCES relations and corporate commuTNERS, WINSLOW, EVANS & CROCKER, nications with Santa Fe Snyder and Oryx ORATION

Energy Companies, both Texas-based NYSE companies. At Oryx, John participated in raismore than $3&billion in debt and $4 billion COMBERENBAUM,ing WEINSHIENK WTH, LLP, CASSON MEDIA GROUP, in equity. John had CCG a 22-year career with Sun TER Oil, which spun off Oryx Energy in 1988, and R STRATEGIC GROWTH, COVENANT APITAL CORPORATION, EDWARD L. for five years was CFO of Puerto Rico Sun Oil POCH FINANCIAL GROUP, INC., – aLTD, $1 billion per year refining and marketing AL CAPITAL GROUP, GOOD SWARTZ IAL GROUP, HANOVER CAPITAL company. In 1985, Sun Company sponsored M, INFUSIONCAPITAL, LLC, INVESTOR him to the Program for Management GEMENT GROUP, LLC, KMattend FINANCIAL, ARKET DEVELOPMENT CONSULTING Development (PMD) at Harvard Business MOZAIC INVESTOR RELATIONS, INC., School, an intensive executive education proIGENCE ALLIANCE, NEWPORT CAPITAL OCK REVIEW/ATLANTA CAPITAL gram for senior management. John began his O QPBW, PHILIPP ADVISORS LLC, British Petroleum. ARDSON & PATEL,career LLP, with RODRIGUEZ &

DEVANNEY & COMPANY, LLC, SC MAN FERENCE, LLP, SINGER LEWAK Investment Considerations EIGH GROUP, INC., STERLING CAPITAL A DIVISION OF DUE DILIGENCE ONLINE, NAGEMENT & CAPITAL, THE WALL

Lucas Energy’s annual production has grown exponentially since 2005, as the company continues to increase its reserves, producNIBA) tion, and cash flow. The company’s most recently announced endent broker quarterly dealers,financials show a 31 percent jump service providers. in net revenues over the same quarter for 2009-2010, as well as a 60 percent improvement in the adjusted EBITDA for the first ference Dates and Locations quarter of 2010-2011 over the last quarter of 2009-2010. Net revenues also increased 33 percent from May 2010 to June 2010, largely www.microcapreview.com

as a result of a 39 percent increase in net oil sales for the same period. Oil sales and revenue increased 30 percent in the first quarter of 2010-2011, as compared to the last quarter of 2009-2010. “Lucas has increased oil sales and production, as predicted, in the first quarter of this fiscal year,” says William A. Sawyer, Lucas Energy president and CEO. “We will continue to strive for an additional increase in our second quarter.” Lucas Energy Business Strategy: • Build a different kind of public oil and gas company. • Avoid typical exploration risk by acquiring properties in proven areas where management has prior experience. • Acquire prior producing wells which had been abandoned or shut in due to low commodity prices in the early 1990s and which were put back into production. • Seek producing property acquisitions that will significantly increase the size of the company by growing reserves, production, and cash flow accretive to shareholders. Lucas Energy Highlights: • Operates/owns 100 percent working interest in all but four wells. • Controls approximately 17,000 acres under lease, most of which is held by production from wells in the Austin Chalk Formation. • Has significant property holdings in the middle of the new Eagle Ford trend with undeveloped lateral potential from existing wells in both the Buda and Eagle Ford formations. • Has a strong joint venture partner in Hilcorp Energy I, L.P., an affiliate of Hilcorp Energy Company, which has invested more than $10 million on Lucas Energy projects on the Austin Chalk trend. • Is debt free, and recently reported a 31 percent jump in net revenues over the same period last year.

Lucas Energy, Inc. is an independent oil and gas company based in Houston, Texas. The company is building a diversified portfolio of oil and gas assets in the United States. The company is focused on identifying under performing and shut-in oil and gas assets in Gonzales County, Texas, primarily in the Austin Chalk formation, one of the world’s richest oil deposits with an estimated six billion barrels of oil reserves. Lucas Energy revitalizes these assets through a carefully designed process of evaluation, application of production enhancement technologies, and stringent management controls. This process allows Lucas Energy to increase its reserve base, production, and cash flow, while significantly reducing the risk of traditional exploration projects. Lucas Energy’s financial structure allows the company to minimize the high overhead costs of conventional exploration and production companies.

LUCAS ENERGY, INC. NYSEAmex: LEI Contact: William A. Sawyer, President and CEO 3555 Timmons Lane, Suite 1550, Houston, Texas 77027 Phone: (713) 528-1881, Fax: (713) 337-1510 E-Mail: info@lucasenergy.com Web Site: www.lucasenergy.com Shares Outstanding: 13.62 million 52 Week Trading Range: $0.44 to $3.39 n

Disclaimer: This corporate profile is based upon information provided by the issuer or company representative. The information is not intended to be, and shall not constitute, an offer to sell or solicitation of any offer to buy any securities. It is intended for information purposes only, and to increase awareness of the company profiled. Safe Harbor Statement: The statements in this advertorial or profile relating to future products, partnerships, technology, and positive direction are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some or all of the aspects anticipated by these forward looking statements may not, in fact, occur. Factors that could cause or contribute to such differences include but are not limited to contractual difficulties, demand for the Issuer’s common stock, and the company’s ability to obtain future financing. Microcap Review Magazine may have received payment to publish and print this advertorial or corporate profile. Micro-cap Review Magazine disclaimers apply and may be reviewed at www.microcapreview.com/disclaimer.php. Before investing in any security, you are strongly advised to review all public filings of the issuer of such security, which can be found at www.sec.gov, as well as warnings published by the SEC at www.sec.gov/investors and to consult with your professionals.

Micro-Cap Review Magazine

Surface Trace of Drumlummon Vein Systems Empire Vein

North Drumlummon

Frankie Vein

400 Level Adit

PROFILED COMPANIES Castletown Vein

North Star Vein

D Block

Charly Vein

The Drumlummon Gold-Silver Mine Xmas Vein

Drumlummon Vein St Louis Vein

9-hr Workings

500 metres

A Re-Discovered Treasure Chest

he high-grade Drumlummon gold and silver mine in Montana represents one of the largest historical gold mines in the western United States. The discovery was made in 1876 by Thomas Cruse, an Irish immigrant, who traced placer gold from creek beds to its source. The mine started operations in 1883 under the direction of the Montana Company (owned by Rothschilds). Gold and silver production from the underground mine generated $29 million of revenue until 1910. That year, the U.S. Supreme Court ruled against The Montana Company over a long standing legal dispute with the St. Louis Company. As a result, the mine was closed and allowed to flood to the 400 foot level. In 1911 the St. Louis Company took over ownership and leased the mine out periodically, but gold and silver was produced only above the 400 foot level. In 1946 the mine was de-watered and production recommenced under the ownership of the Montana Rainbow Company. Unfortunately a fire burned down the mill in 1950 and production again ceased. Due to these circumstances, the Drumlummon mine has never been fully exploited or explored, until now. In 2007 RX Exploration (TSX-V: RXE, OTCQX: RXEXF) consolidated all of the surrounding land claims and commenced work to re-open the mine. That goal is becoming tantalizingly close as RX Exploration is now in the test mining and milling phase of development. The company ultimately plans to produce up to 100,000 ounces of gold and silver per year at Drumlummon. The mine’s colorful history indicates that there is still extensive high-grade minerals that have yet to be mined. Nothing highlights this point more clearly than the discovery of a new high-grade gold and silver vein less than 300 feet east of the historic

Drumlummon workings. This vein, dubbed Charly, was discovered by RX Exploration geologists in 2008. Charly currently hosts a resource containing 70,703 ounces of gold and 1.9 million ounces of silver (NI 43-101 compliant inferred resource of 155,518 tons averaging 0.45 opt {15.6 g/t} gold and 12.3 opt {422 g/t} silver.) It remains open for expansion to depth as well as to the south. Underground development and test mining are currently underway, and gold and silver production to date covers the cost of mining and development, as well as milling and metallurgical test work. This means that little or no share dilution is expected to achieve full production. With a cash infusion of up to $20 million from the recent exercise of warrants, RX Exploration plans to aggressively upgrade its current resources to reserves and to significantly expand the mine’s resources. Based on the history of the Drumlummon mine, the job of expanding resources will be an exciting time for the company. As a result of the protracted claim dispute, numerous areas of the mine have never been touched. These claims have long since been consolidated and are now under RX Exploration’s control. Of particular interest is an area referred to as the “St. Louis Claims.” This area is situated about 500 feet south of the Charly vein. The original owner, the Montana Company, was not allowed to mine this area due to the claim dispute. They did however tunnel through the area to get access to ore on the other side of the St. Louis Claims. The Montana Company would not have fought for so long and so hard in court over ground that did not promise gold and silver mineralization. Another fact to keep in mind is that between 1876 and 1950 gold prices ranged between $19 to $36 per ounce and the minimum ore grade required to profitably

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mine was about half an ounce per ton. That implies that even the “mined-out” areas could still host mineralized material that grades up to a half an ounce gold. RX Exploration has identified such an area called “D-block.” This zone is located at the intersection of two past producing high-grade veins, the Drumlummon and the Castletown. The wall rock around the old mined-out stopes and the waste rock contained within the stopes is currently economic at today’s gold and silver prices. In recent months RX Exploration has been working to outline the extent of resources in the D-Block through an extensive underground drilling campaign. These are just a few of the promising areas of this treasure chest of gold and silver that have yet to be exploited. Company geologists are also excited about the potential of finding extensions to the main ore producing veins to the north in areas that have not been mined. As the company’s tagline suggests, the future really does look golden for this historic mine. n Disclaimer: This corporate profile is based upon information provided by the issuer or company representative. The information is not intended to be, and shall not constitute, an offer to sell or solicitation of any offer to buy any securities. It is intended for information purposes only, and to increase awareness of the company profiled. Safe Harbor Statement: The statements in this advertorial or profile relating to future products, partnerships, technology, and positive direction are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some or all of the aspects anticipated by these forward looking statements may not, in fact, occur. Factors that could cause or contribute to such differences include but are not limited to contractual difficulties, demand for the Issuer’s common stock, and the company’s ability to obtain future financing. Microcap Review Magazine may have received payment to publish and print this advertorial or corporate profile. Micro-cap Review Magazine disclaimers apply and may be reviewed at www.microcapreview.com/disclaimer.php. Before investing in any security, you are strongly advised to review all public filings of the issuer of such security, which can be found at www.sec.gov, as well as warnings published by the SEC at www.sec.gov/investors and to consult with your professionals.

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“Tell me and I’ll forget; show me and I may remember; involve me and I’ll understand.” — Confucius (Chinese philosopher, 551-478 B.C.)

Investing Success Comes Down to Research and Timing

espite experiencing the worst economic recession since the 1930s, there is still considerable opportunity to invest in a world with a rapidly growing population.

by Jordan Kimmel

Micro-Cap Review Magazine

This simple fact of increasing consumption has profound implications for investors both long and short term. Increasing demand on each continent has led to a bull market for most commodities, for example. Prices for basic materials, along with precious metals, are in long term bull markets. The problem, however, is that many investors have found these markets difficult to trade on shorter time-frames. I have been in the financial business for over 25 years, but now, through the use of new technology, I will finally be able to share the benefits of the Magnet Stock Selection Process® in a fully transparent way. I have, for several years, been investing around the theme of increased global demand and its implications. If you were to look back over the last few decades you would see a continual increase in demand for commodities of all kinds stemming from accelerating growth in the world population. The kicker is that in emerging markets, we are seeing greater industrialization, which has facilitated a higher quality of life for the average citizen. However, even with sound investment

ideas in place, you cannot make money in these ideas without proper timing. While the notion of commodity inflation is compelling, little good it would have done you as the price of a barrel of oil fell from $147/barrel to almost $35/barrel during the financial crisis of 2007-9! In the same vein, few possessed the moxie to stay invested in Gold over the last several years as it climbed to all-time highs. The markets change fast and it is often a challenge to write articles with timeless meaning. I look back at the many timely articles I have provided over the last several years and realize what has been missing. Investors and traders need to be able to combine long term themes with short term trading patterns. You must be able to isolate the companies or investments poised to benefit most directly at any given time, and have the tools to execute those decisions to give yourself the most favorable risk-reward scenario. The Magnet Stock Selection Process® is a quantitative system that blends value, growth, and momentum to do just that. Now I can couple the power of Magnet with continuing updates.

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“Through the website, followers will be able to see all of my current positions updated in real-time, and I will be able to post charts and analysis to help explain my actions.” The Magnet® Method of Investing (Wiley, August 2009) was written more than ten years after my first book, Magnet Investing®. My goal in writing both books was to demystify the markets so that all individuals could reap the benefits of the stock market. My idea has always been to teach investors “how to fish” so that they could feed themselves for life, rather than to “give them fish” so they can eat for a day. However, the reality is most readers also want examples of “actionable ideas”. Although I am not a stock analyst and my lists should never be construed as solicitations to buy or sell securities, I always share names of companies that rank highest on Magnet in order to demonstrate the technique. Interestingly enough, out of the “Top 20” stocks shared in my latest book, nine of them fell either in the Basic Materials or Energy sectors. The #1 stock was Randgold Resources, and it has a highly appropriate ticker: GOLD. Since the list was created on April 15, 2009, the Top 20 ranked Magnet stocks outperformed the S&P 500 with a weight-adjusted (based on Total Magnet Score) average return of more than 49%. Investors, and more importantly traders, need to know how to create a “watch list” of the best stocks available and, furthermore, how to use technical analysis to minimize risk and maximize potential returns. Technical analysis is not a be-all-end-all, but rather another weapon in your trading arsenal. You need to be able to build a strong, thematic fundamental watch list, understand technical analysis for timing, and employ disciplined portfolio management in order to reach your full profit potential, and that expertise comes only after years of experience. In the past, I have been hesitant to share my ideas with the media because what was often left out of their commentary was the reality that my

top ranked Magnet® stocks change over time. In the past, readers of my newsletters and articles did not know when I was selling, adding to a position, or just sitting tight. There is a new platform that has changed all of that. “Transparent trading” is a term to describe what I will be able to share going forward. I have recently joined the team at T3Live.com, a firm that combines trading, transparency, and technology to educate traders about opportunities in the markets. Through the website, followers will be able to see all of my current positions updated in real-time, and I will be able to post charts and analysis to help explain my actions. Subscribers will be able to see what I am currently long and short, but not see orders, size, and PnL. In addition, there are several other highly experienced traders at T3Live.com whom I hold in great esteem. These traders already provide their analysis and trade ideas on a daily basis to subscribers, and it is an outstanding service. Rather than just showing you an idea, I will be able to involve followers and teach them in a more interactive way. I hope that by demonstrating my techniques in a fully transparent forum, I will empower individuals to craft an investment strategy that suits their own risk/reward parameters. Even further, followers will be able to ask questions and have them answered directly by me, which will allow for another level of learning. It is a shame that many individual investors have retreated from the stock market at precisely the wrong time. The extreme volatility of the past few years, along with the breakdown in trust between Main Street and Wall Street, has disillusioned many investors and traders. Money continues to pour into the fixed income and money markets, despite the fact that those investments are generating historically low returns. At T3Live.com, I look forward to sharing my ideas even more transpar-

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ently than ever! Whether it will be benefiting from the Bull Market in precious metals, basic materials, or in any other sector, investors need to learn the techniques for identifying powerful opportunities and the tools to execute them on a timely basis. In the brave new world that is today’s stock market, investors need to get on board or risk getting left behind. n Disclaimer: T3 LIVE is NOT a Broker Dealer. T3 LIVE engages in trader education and training. T3 LIVE offers a number of products and services, both electronically (over the internet through T3LIVE.com) and in person. Through T3 TV, an online video network that is available through T3LIVE.com, T3 LIVE provides LIVE pre/ post market and stock analysis. Through T3LIVE.com, T3 LIVE offers the “Virtual Trading Floor”, a community through which independent traders (subscribers), as well as select T3 Capital Fund, LP Traders, observe a virtual trading floor environment (as described below) for educational purposes. T3 LIVE also offers web-based, interactive training courses on demand. Subscribers are able to see if traders are long or short and what symbols as part of best practices in regards to disclosure. Subscribers do not see trader’ screens, trades or size of positions. T3 requires traders to disclose whether they are long or short and which stocks they are trading to ensure that the community is fully informed and that traders substantiate their opinions. This approach is modeled after the analyst disclosures that accompany commentary on particular stocks on CNBC or other financial news media (as per FINRA Rules 2210 and 2711). The seminars given by T3 LIVE are for educational purposes only. This information neither is, nor should be construed, as an offer, or a solicitation of an offer, to buy or sell securities. You shall be fully responsible for any investment decisions you make, and such decisions will be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance, and liquidity needs. This material is being provided to you for educational purposes only. No information presented constitutes a recommendation by T3 LIVE or its affiliates to buy, sell or hold any security, financial product or instrument discussed therein or to engage in any specific investment strategy. The content neither is, nor should be construed as, an offer, or a solicitation of an offer, to buy, sell, or hold any securities. You are fully responsible for any investment decisions you make. Such decisions should be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance and liquidity needs. The seminars given by T3 LIVE are for informational purposes only. The investment ideas and expressions of opinion may contain forward looking statements and should not be viewed as recommendations, personal investment advice or considered an offer to buy or sell securities. T3 LIVE statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. T3 LIVE and T3 Capital Fund, LP are separate, but affiliated companies.

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PROFILED COMPANIES

Rye Patch Gold Corp A Major Player on Nevada’s Gold Trends By Terry Dove and Dove Communications

(TSX-V:RPM.V, OTC:RPMGF) is a tier one TSX Venture resource company exploring well-known mineral trends in Nevada - the world’s fourth-richest gold region. Starting with 150,000 ounces in mid-2006, this wellfunded company now has 1.2 million ounces of gold equivalent in the measured and indicated category, plus 2.7 million ounces of gold equivalent in the inferred category, and operates exclusively in Nevada. Incorporated in April 2006 by a senior-level management team, the company has set an ambitious target of accumulating a 10 millionounce gold inventory by the end of 2012. They are well on their way to achieving this goal. With a stated goal of 10 million ounces in gold inventory by the end of 2012, Rye Patch Gold has publicly set itself an extremely aggressive milestone and timeline. However, the company has the requisite tools, experience, and know-how to accomplish this feat. Rye Patch has already developed a measured and indicated gold resource of 986,000 ounces and a total inferred resource of 2.1 million ounces for a combined resource of over 3.9 million ounces of gold and gold equivalent. These totals include a measured and indicated silver resource of 9.8 million ounces and a total inferred silver resource of 30.5 million ounces. The numbers are impressive for a young junior mining company—even more so considering that the company started with only 150,000 ounces of gold when it was founded in 2006. The Rye Patch team is finding gold equivalent ounces at the astonishing low cost of $1.25 per ounce; this demonstrates the efficiency of the exploration team. A tier one company listed on the Canadian TSX Venture Exchange and the U.S. OTCBB, www.microcapreview.com

Rye Patch Gold’s stock currently trades in the $0.25 range with roughly 91 million shares outstanding. Based on the company’s current market capitalization of $23 million, Rye Patch holds an in-situ (in the ground) gold value of around $5.90 per ounce. Recently Canaccord Adams issued a mining report stating that in-situ gold is worth approximately $85.09 an ounce (Nov. 30, 2009). Based on this value, Rye Patch’s resource value is estimated at more than $332 million (3.9M oz x $85.09), or over $3.60 per share based only on the gold and gold equivalent reported to date. Recent analyst’s evaluations also show the company is undervalued with target prices ranging from $0.46 to $1.51 per share.

juniors to maintain their current gold output from operations, and Rye Patch is poised to become the resource supermarket to the majors operating in Nevada.”

One of Nevada’s Newest and Most Promising

The World’s FourthLargest Gold Region Rye Patch operates exclusively in Nevada, one of the world’s premier gold producing regions and an area very familiar to Rye Patch’s management. The company chose Nevada for three reasons. First, the state is the fourth largest gold producing region in the world, yielding nearly 80 percent of annual gold produced in the United States. Second, the state’s major gold producers are mining out their reserves and resources from their own operations. Third, despite the state’s long mining history there is still plenty of opportunities for enterprising explorers. According to Rye Patch president and CEO, Bill Howald, “Over the past 10 years, Nevada production has declined over 30 percent, and world gold production is off by over 15 percent according to some experts. Producers will soon need to acquire gold resource-based

Rye Patch is exploring four prime goldsilver projects along an emerging gold belt in Nevada known as the Oreana gold trend. As the dominant landholder, Rye Patch controls over 80 square kilometers along the Oreana trend. The company is in the midst of building a sizeable inventory of gold and silver resources while aggressively seeking to add additional large-scale mineral properties to its portfolio by the end of 2012.

Advancing a Major Target Being right under the nose of all of the major gold producers in Nevada has its advantages. Rye Patch’s low-cost resources are growing in

Micro-Cap Review Magazine

size and should inevitably continue to attract the interest of the regionâ&#x20AC;&#x2122;s major gold and silver producers who are quickly burning through their reserve ounces. Nevada gold production has steadily declined from the 1997 peak of nearly 9 million ounces to under 6 million ounces in 2008. Major gold producers are now extracting more gold than they are discovering. Acquiring junior companies with proven resources is a cost effective way for majors to ensure that no interruption occurs in their mill feed. Rye Patch is working aggressively to put itself into position to supply gold to those mills for years to come. Rye Patchâ&#x20AC;&#x2122;s Wilco, Lincoln Hill, Gold Ridge, and Jessup projects are in various stages of development. Collectively they represent an increasingly significant land position along the 30-kilometers-long Oreana trend. The richness of this region is characterized by blanket-like stockwork gold zones with impressive high-grade gold mineralization and significant silver potential.

potential to host over 20 million ounces of gold. To date, over five million ounces of gold and significant silver mineralization have been discovered. Rye Patch has designated significant funds and resources for its 2010 exploration programs now underway on its various advanced-stage projects.

Wilco - Two Key Zones The Wilco property has incredible infrastructure with access to interstate highway, power, water, and the community of Lovelock, Nevada, which is located ten kilometers away. The project covers roughly 3,300 hectares (14 square miles) and is situated on the western slopes of the West Humboldt Range. Most of the property is underlain by Triassic- and Jurassic-age sedimentary rocks of the Auld Lang Syne Group. The group is composed of generally north trending, west dipping shale, sandstone, quartzite, and limestone rocks.

pushed the total spent on exploration by Rye Patch above the mandated $3,000,000 necessary to earn a 100 percent interest in Wilco. The work was completed one year earlier than originally stipulated in the agreement with Newmont Mining Corporation. Work for 2010 includes $500,000 for a spring drilling program that was recently completed. It successfully found high-grade feeder zones in the North Basin target area. Rye Patch is moving the project toward a preliminary economic assessment.

Lincoln Hill - High-Grade Gold

The Oreana trend was first defined at the Wilco Property and was further outlined by new high-grade gold and silver discoveries at Lincoln Hill and Gold Ridge. Similar discoveries were made by Midway Gold and Barrick Gold at the Spring Valley project to the northeast. Geologic models of the gold mineralization indicate the Oreana trend is a large-scale gold and silver system with

The projectâ&#x20AC;&#x2122;s rich history dates back more than 100 years and includes heap leach extraction by Western States Minerals in the early 1990s. Numerous significant gold discoveries have occurred since 1905. Drilling by major producers, such as Freeport Exploration, Santa Fe, and Newmont Mining, has defined a number of targets never fully tested. Since entering into an option agreement with Newmont Mining, Rye Patch has defined two key gold equivalent zones, Willard and Colado, with resources to date of 686,000 ounces measured and indicated and 1,660,000 ounces inferred. In 2009 Rye Patch completed more than 19,000 meters of reverse circulation drilling and 900 meters of core drilling. This program

The Lincoln Hill and adjacent Gold Ridge properties securely position Rye Patch along the Oreana gold trend and Rochester mining district of Western Nevada. These 100 percentowned properties are supported by a welldeveloped infrastructure that was established during past mining activities, and it includes numerous roads and a nearby power line. The Lincoln Hill area has supported historic mining activity for over 100 years. Underground mining in the early 1900s reportedly produced gold grades averaging 257 g/t Au (7.5 ounces of gold per ton). Most mining occurred along a 2,130-meter (7,000foot) strike length where mine tailings and numerous dumps are found today. A significant amount of visible gold is evident as well. Lincoln Hill is in the Rochester mining district and has some characteristics in common with the bulk-tonnage Coeur Rochester silver mine 3.2 km (2 miles) to the east and the recently expanded Spring Valley gold deposit 4.8 km (3 miles) to the northeast. The Coeur Rochester silver mine produced in excess of 110-million ounces of silver and 1-million ounces of gold since 1986 from an open pit operation. At Spring Valley, Barrick Gold is advancing the project to a pre-feasibility stage. Rye Patch drilled 2,550 meters in 18 RC holes on the Lincoln Hill target in 2008, cutting a multi-ounce gold and silver intersection in drillhole LR-013. The results included 7.6 meters grading 75.4 grams per ton start-

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ing at 27 meters down the hole. In addition, there were numerous other significant gold intervals encountered in the program.

In the fall of 2009, a follow-up drill program was undertaken to explore 14 highgrade gold targets. The 2009 campaign totaled 2,508 meters (8,225 feet) of reverse circulation drilling and 557 meters (1,826 feet) of core drilling in 29 drill holes. Core hole LRC-002 returned 21.19 g/t gold and over 7.0 meters starting at 25.3 meters, which continues to illustrate the high-grade nature of the Lincoln Hill area. In May 2010, the company announced results of the first ever NI 43-101 resource calculation on the Lincoln Hill project. The resource estimate was based on Rye Patch’s 2008 and 2009 drill campaigns and used a 0.343 g/t (0.01 opt) gold and gold equivalent cut-off grade, reporting an inferred gold resource of 380,000 ounces along with 9,488,000 ounces of silver. Using $900 per ounce for gold and $18 per ounce for silver, an inferred gold equivalent resource of 569,760 ounces with an average grade of 1.029 g/t Au-eq was estimated. A drill program to follow up on the resource as well as test additional targets on the property is planned for the fall of 2010.

thousand ounces of gold prior to 1940. Rye Patch acquired the Jessup property in 2007. Since the acquisition, resource totals have increased 150 percent to 300,000 ounces of gold (measured and indicated), with a 250 percent increase in the inferred resources to 77,000 ounces. Silver resources also increased significantly to 5.09 million ounces from 1.65 million ounces (measured and indicated). The inferred silver resource also increased from 286,000 ounces to 1.146 million ounces. Both gold and silver mineralization remains open both down dip and along strike. The Jessup property holds excellent potential for both bulk and underground mining.

Based on Rye Patch’s exploration work, a new geologic model for gold deposition has emerged. The company plans to test this new model and target high-grade gold and silver mineralization in the fall of 2010.

Working Aggressively and Meeting Their Goals

The 100 percent-owned Jessup project is located roughly 50 kilometers southwest of the Lincoln Hill, Gold Ridge, and Wilco projects. Exploration activity in the early 1900s focused on veins and breccias and may have resulted in production of about a

Most companies would be more than satisfied with four prime gold-silver projects on one of the newest gold trends in Nevada, but Rye Patch Gold is not one of them. The company is building a sizeable gold and silver resource inventory and is on an aggressive hunt to add additional large-scale mineral systems to its project portfolio by year-end. With 40 percent of its corporate ounce goal achieved, Rye Patch is still aggressively exploring the Oreana trend and having success finding new target areas to drill. The company has close relationships with such major players as Kinross Gold, Newmont Mining, and Barrick, which bode well for Rye Patch Gold’s continuing efforts to acquire

Jessup – More Gold And Silver

Micro-Cap Review Magazine

new and promising gold/silver projects that bring the company closer to meeting its goal of building a 10 million ounce gold equivalent resource by the end of 2012.

For additional information please contact: RYE PATCH GOLD CORP info@ryepatchgold.com Tel.: (604) 638-1588 Fax: (604) 638-1589 www.ryepatchgold.com n

Forward-looking statements are based on the expectations and opinions of the company’s management on the date the statements are made. The assumptions used in the preparation of such statements, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statement. This article contains forward-looking statements, which address future events and conditions, which are subject to various risks and uncertainties. The company’s actual results, programs, and financial position could differ materially from those anticipated in such forward-looking statements as a result of numerous factors, some of which may be beyond the company’s control. These factors include the availability of funds, the timing and content of work programs, results of exploration activities and development of mineral properties, the interpretation of drilling results and other geological data, the uncertainties of resource and reserve estimations, receipt and security of mineral property titles, project cost overruns or unanticipated costs and expenses, fluctuations in metal prices, currency fluctuations, and general market and industry conditions. Disclaimer: This corporate profile is based upon information provided by the issuer or company representative. The information is not intended to be, and shall not constitute, an offer to sell or solicitation of any offer to buy any securities. It is intended for information purposes only, and to increase awareness of the company profiled. Safe Harbor Statement: The statements in this advertorial or profile relating to future products, partnerships, technology, and positive direction are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some or all of the aspects anticipated by these forward looking statements may not, in fact, occur. Factors that could cause or contribute to such differences include but are not limited to contractual difficulties, demand for the issuer’s common stock, and the company’s ability to obtain future financing. Microcap Review Magazine may have received payment to publish and print this advertorial or corporate profile. Micro-cap Review Magazine disclaimers apply and may be reviewed at www.microcapreview.com/disclaimer.php. Before investing in any security, you are strongly advised to review all public filings of the issuer of such security, which can be found at www.sec.gov, as well as warnings published by the SEC at www.sec.gov/investors and to consult with your professionals.

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Great Growth Opportunity US Stock Exchange Listed Chinese Natural Resource Companies

hina is both a major producer and consumer of natural resources. As the world’s second largest energy consumer, China considers natural resources to be vital to both its economic growth and national security. And while the scale of new cleaner energy sources such as solar, wind, and hydropower are growing faster in China than anywhere else and hold enormous potential, conventional energy sources, such as coal, oil, and natural gas will still be primary sources of energy for the foreseeable future. While crude oil and natural gas remain two of China’s more abundant and profitable natural resources – oil production was estimated at 3.725 million barrels per day in 2008, which made China the fifth-largest oil producer in the world, and China’s reserves of natural gas were estimated at 2.265 trillion cubic meters in 2008. The country is also rich in a variety of other natural resources, including coal, iron ore, mercury, tin, tungsten, antimony, manganese, molybdenum, vanadium, magnetite, aluminum, lead, zinc, and uranium, as well as in mountain ranges with fast flowing rivers and tributaries that give China the greatest potential for hydropower in the world. On the consumption side, China is a major consumer of fossil fuels and is leading the pack among developing countries.

By Robert Haag

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Driven by strong GDP growth of 8.9 percent, oil consumption in China rose by 6.7 percent in 2009, according to the Institute for Energy Research (IER), compared to a drop in the oil consumption of the United States by 4.9 percent. The country also imports over half of the oil it consumes. China’s coal consumption in 2009 was 1,537 million tons oil equivalent, higher than its consumption level in 2008 by 9.6 percent. This level is three times the amount of coal consumed in the United States in 2009. U.S. coal consumption was 498 million tons oil equivalent in 2009, 11.5 percent lower than its consumption of coal in 2008. As a share of world consumption, China consumed 46.9 percent compared to 15.2 percent for the United States, according to the IER. Not surprisingly, to safeguard the fuel to drive economic growth and safeguard its national security, China has been aggressively buying access to natural resources all over the world. Given this enormous appetite for natural resources, much of its attention has been focused on South America, the Middle East, Russia, Africa, and Australia

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- just about anywhere their money is welcome. China has offered billions in loans, long-term purchase contracts, and other incentives to foreign oil companies in countries, such as Brazil, Venezuela, Iran, Iraq, and Russia, to secure future oil supplies, including a $10 billion loan the Chinese government extended to Rosneft, the leader in Russia’s petroleum industry, in exchange for a guaranteed portion of its production. A revived battle between China National Offshore Oil Corp Ltd. (CNOOC) and state-run China National Petroleum Corp (CNPC) is also taking place for approval to bid for the Argentine arm of Repsol YPF S.A. (NYSE: REP) that could be valued at $17 billion, though the deal is still in preliminary stages. Recently, China has been teaming up with major oil companies such as BP (NYSE: BP), Total SA (NYSE: TOT), BG Group plc (LSE: BG.L) and Petrobras (NYSE: PZE), among others, in addition to procuring oil patch assets. Because the Chinese are sitting on a large pile of cash they have increasingly been diversifying their massive dollar denominated assets by buying natural resources. Also, China is seeking to reduce its dependence on foreign oil purchased on international exchanges by going directly to the source. In 2008, China National Petroleum Corp. signed an oil deal with Iraq that is worth up to $3 billion. In Africa, CNOOC (NYSE: CEO) and refiner Sinopec (NYSE: SHI) are buying a $1.3 billion stake in offshore Angolan development rights from U.S. oil firm Marathon Oil (NYSE: MRO). The increasing size and frequency of deals such as these have expanded China’s oil reach globally as the country positions itself, as many believe, to one day match and compete with the oil majors in the West. In addition to these, there are a number of smaller players in the field, including China Natural Gas (NASDAQ: CHNG), an integrated gas operator in China primarily involved in the distribution of compressed natural gas, and CAMAC Energy Inc. (AMEX: CAK) a development stage and exploration company

whose operations consist of drilling of oil wells in Inner Mongolia. Due to the government’s desire to invest heavily in overseas natural resources, the majority of China’s overseas deals have been in the materials sector/energy sector, followed by financials and industrials. While China has been purchasing strategic resource assets around the globe, it has also been spending money on developing its own resource rich western regions and providing tax breaks for coal, oil, and natural gas in those regions. Many see the development of western China as a key to the country’s sustained economic prosperity, and an attempt to replicate and sustain the growth that has taken place in the country’s prosperous coastal regions. Whether looking abroad to China’s procurement of natural resources around the globe, or inward to the development of China’s resource rich western provinces, there are a number of ways for U.S. investors to play China’s frontier resources market. The largest U.S.-listed Chinese companies in the natural resources sector are primarily in the energy space and include exploration, production, and refining companies. The top three by market capitalization are PetroChina Company Ltd. (NYSE: PTR), which produces two thirds of China’s oil and gas and operates in four segments: exploration and production, refining and chemicals, marketing, and natural gas and pipeline; CNOOC Ltd. (NYSE: CEO), the dominant producer of crude oil and natural gas offshore China and one of the largest independent crude oil and gas exploration and production companies in the world; China Petroleum & Chemical Corp. (NYSE: SNP), one of the largest integrated oil and gas, and chemical company in China with upstream, midstream, and downstream operations; strong oil and petrochemical core businesses; and a complete marketing network; Yanzhou Coal Mining Co. (NYSE: YZC), engaged in the mining, preparation and sale of coal, as well as the railway transportation of coal; and Sinopec Shanghai

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Petrochemical Co. Ltd. (NYSE: SHI), a giant chemical company that produces refined oil products, intermediate petrochemicals, synthetic resins, and synthetic fibers, and other intermediate petrochemicals, such as benzene. While China’s major oil companies afford one way to invest in the resources sector as they grow by hunting for foreign energy reserves and potential takeover targets or partners, a scenario likely to continue for years to come, there are many other smaller U.S.-listed Chinese resource companies on the NASDAQ, AMEX, and OTCBB that can offer compelling investment opportunities. These include companies such as SinoCoking Coal and Coke Chemical Industries, Inc. (NASDAQ: SCOK), a coal and coke processor that uses coal from both its own mines and that of third-party mines to produce basic and value-added coal products for steel manufacturers, power generators, and various other industrial users; Gulf Resources, Inc. (NASDAQ: GFRE), which manufactures and trades bromine and crude salt and sells chemical products used in oil and gas field exploration, drilling, and wastewater processing; China Natural Resources Inc. (NASDAQ: CHNR), which acquires mining rights for exploration, mineral extraction, processing and the sale of iron, zinc, and other nonferrous metals at mines primarily located in Anhui Province; Puda Coal Inc. (AMEX: PUDA), a supplier of high-grade metallurgical coking coal to the industrial sector to make the coke required for steel manufacturing; Sino Gas International Holdings, Inc. (SGAS.OB), engaged in the development of natural gas distribution systems and the distribution of natural gas to residential and industrial customers in small- and medium-sized cities; and Uranium 308 Corp. (URCO.OB) an exploration-stage company focused on the exploration and development of uranium mineral properties in Mongolia and other regions of China. In addition to these, investors can uncover a number of different Chinese metals and

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mining/metals-related companies. These include Silvercorp Metals Inc. (NYSE: SVM), which is engaged in the acquisition, exploration, development, and mining of silver, gold, lead, and zinc-related mineral properties in China; China Shen Zhou Mining & Resources Inc. (NYSE: SHZ), engaged in the exploration, development, mining and processing of fluorite, zinc, lead, copper, and other nonferrous metals in China; China Armco Metals, Inc. (AMEX: CNAM), which imports, sells, and distributes a variety of metal ores to the metal refinery industry, including iron ore, chrome ore, nickel ore, copper ore, scrap metal, and manganese ore; and China Carbon Graphite (CHGI.OB), a manufacturer of graphite-based products either used in the manufacturing process for other products, particularly metals, or for incorporation in various types of products or processes. For investors looking for more information and resources, there are a number of specialized professional firms known for servicing U.S.-listed Chinese companies. Among legal firms, Sichenzia Ross Friedman Ference LLP, Anslow & Jaclin, LLP, The Crone Law Group, Lowenstein Sandler PC, and Loeb & Loeb LLC have in-depth experience working with publicly-traded Chinese firms. Independent auditing firms that have developed a strong reputation and expertise in servicing U.S.-listed Chinese companies include Bernstein & Pinchuk LLP, an independent member of the BDO Seidman Alliance, MaloneBailey, LLP, Fraser Frost LLP, and Rotenberg & Co. LLP Certified Public Accountants. Data vendors and conference organizers such as DealFlow Media, sponsor of the Shanghai International PIPES conference, Halter Financial Group, and Capital IQ, are also excellent resources, as well as investments banks that have considerable experience in China, including Rodman & Renshaw, Global Hunter Securities, LLC, Brean Murray, Carret & Co., LLC, Tripoint Global Equities, LLC, vFinance, Inc, Hudson Securities, Inc, Maxim Group, LLC, Hunter Wise Financial Group, LLC. While there are

a number of investor relations firms serving U.S.-listed Chinese companies, I personally favor Hampton Growth (HGR) and IRTH Communications. (The author is affiliated with both IRTH and HGR). Going forward, China will continue to secure valuable natural resources around the globe as consumer-oriented commodities, especially those such as oil and natural gas, will be needed when the country’s economy transitions from an export economy to one that relies on increasing domestic consumption. Investing in companies that produce natural resources can provide a hedge against inflation, and steady demand from consumption in China could keep prices for resources historically high. While stocks of natural resource companies in developing markets might only make up a small portion of an individual’s portfolio, there are ample opportunities for U.S. investors to participate in this dynamic sector. I have been travelling to China for business since 2003 and more recently have been based out of Asia for more than three years, with most of the last one and a half years in China. The scale of the social changes and multitude of business opportunities there are astounding and there is no way that this article or any media source can convey the true scale or intensity. However, as the reader can see from the sample list of U.S. stock exchange-listed Chinese resource companies that I have included with this article, there are ample opportunities for U.S. investors to participate in China’s growth by buying Chinese companies that are listed on U.S. stock exchanges. In fact, right now there are over 500 U.S.-listed Chinese companies with more lining up to list every week. If you would like to learn more, please feel to email me at robert@hamptongrowth.com.

Disclaimer : * Keyuan Petrochemicals (KYNP) is a client of Hampton Growth (HGR). HGR’s contract is for one year and specifies payment of 12,500 shares of restricted stock (unless a registration statement on these shares has been deemed effective by the SEC) per quarter (50,000 total). HGR was also given 7,500 shares of free trading stock from a third party. As of August 20, 2010, HGR has received 25,000 shares of restricted stock and 7,500 shares of free-trading stock. HGR and its principals may purchase additional shares of stock from the company or from the market and HGR may sell any or all of its shares in the market once unrestricted.

Robert Haag is the managing director of Asia for Hampton Growth (HGR). The company provides investor relations and consulting services to U.S. stock exchange-listed companies with a particular focus on the China market. Mr. Haag has been in the investment business for about 20 years, is a graduate of Hamilton College, and spends much of his time in China. HGR is based in Santa Monica, California and was founded by his brother Andrew Haag.

American Metal & Technology, Inc. (AMGY. PK) – American Metal & Technology, Inc., through its wholly-owned subsidiary American Metal Technology Group (AMTG) and through AMTG’s whollyowned subsidiaries, Beijing Tong Yuan

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Chinese Natural Resource Companies Aluminum Corp. of China Limited (ACH) – Aluminum Corporation of China Limited (Chalco) is an aluminum producer with operations in bauxite mining, alumina refining, primary aluminum smelting and aluminum fabrication. It also provides ancillary products and services derived from or related to its aluminum operations. In addition, it also produces and sells alumina chemical products (alumina hydrate and alumina-based industrial chemical products), carbon products (carbon anodes and cathodes), and gallium. The company’s three principal products include alumina, primary aluminum, and aluminum fabrication products. For the year ended December 31, 2009, alumina, primary aluminum, and aluminum fabrication segments accounted for approximately 15.9 percent, 66 percent and 12.8 percent, respectively, of its total revenue. The company’s immediate and ultimate holding company is Aluminum Corporation of China (Chinalco). On October 29, 2009, Chalco acquired three companies, including a limestone mining business, from two subsidiaries of Chinalco.

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Heng Feng Technology Co., Ltd. (BJTY) and American Metal Technology (Lang Fang) Co., Ltd., (AMLF), primarily specializes in precision casting, machining, mold design, and manufacturing in the People’s Republic of China. The company manufactures investment casting and machined products, including valves, pipe fittings, regulators, dispensers, machinery spare parts, marine hardware, water treatment parts, automotive and airplane accessories, electronic circuit boards for home appliances and motion controllers, and other equipment parts based upon blueprints supplied to the company by its customers. It uses a range of ferrous and non-ferrous materials, such as stainless steel, carbon steel, low alloy steel, and aluminum. American Wenshen Steel Group, Inc. (AWSH.OB) –American Wenshen Steel Group, Inc. through its operating subsidiary, Chaoyang Liaogang Special Steel Co., Ltd. (Chaoyang Liaogang), is engaged in the business of manufacturing tungsten carbide steel, stainless steel, and die steel. On March 31, 2009, the Company distributed all of the capital stock of HXT Holdings, Inc. to its shareholders and it has no remaining involvement in the software applications business. The company’s subsidiaries include American Wenshen Steel Group, Inc., (American Wenshen), Chaoyang Liaogang, and Chaoyang Liaogang Special Steel Co., Ltd. (Chaoyang Liaogang).

Province and produces ferrochromium alloy, the core furnace material in making stainless steel. FS is located in Fanshi County in the northern part of Shanxi Province and produces pelletized ore, a key component of iron manufacturing.

well as 116 concrete mixers and 17 pump trucks at other plants, though it does not own the land use rights or the factory buildings, which it leases from the owner, Beijing SanTaiSan Chemical Trading & Logistics Co.

CAMAC Energy Inc. (CAK) –CAMAC Energy Inc., formerly Pacific Asia Petroleum, Inc., is a development stage company formed to develop new energy ventures, directly and through joint ventures and other partnerships in which it may participate. Through Inner Mongolia Sunrise Petroleum Co. Ltd. (IMPCO Sunrise), it commenced operational activities in the People’s Republic of China. The company’s operations consist of drilling of oil wells in Inner Mongolia, China, and exploration and development operations. PAP’s wholly owned subsidiaries and joint ventures include Inner Mongolia Production Company (HK) Limited (IMPCO HK), IMPCO Sunrise, Pacific Asia Petroleum (HK) Limited (PAP HK), Pacific Asia Petroleum, Limited (PAPL), Beijing Dong Fang Ya Zhou Petroleum Technology Service Company Limited, and CAMAC Petroleum Limited. In April 2010, the company acquired all the interest held by CAMAC Energy Holdings Limited (CAMAC) in a production sharing contract for the Oyo Oilfield, an offshore oil asset in Nigeria.

China Armco Metals, Inc. (CNAM) – China Armco Metals, Inc. (China Armco), through its wholly-owned subsidiaries, imports, sells, and distributes a variety of metal ores to the metal refinery industry in China. The company’s products include a range of metal ores, such as iron ore, coal, chrome ore, nickel ore, copper ore, scrap metal, and manganese ore. The company obtains metal ores from worldwide suppliers in Brazil, India, South America, Oman, Turkey, Nigeria, Indonesia, and the Philippines. China Armco sells its metal ore products to end users, such as steel producing mills, steelmakers, foundries, and brokers, which aggregate materials for other users. In March 2010, the company began operating a scrap metal recycling facility in the Banqiao Industrial Zone of Lianyungang Economic Development Zone in the Jiangsu province of China.

Beicang Iron & Steel (BEIC.PK) – Beicang Iron & Steel Inc. (Beicang), formerly Alpha Spacecom, Inc., produces ferrochromium alloy and pelletized ores in the People’s Republic of China (PRC or China). The Company is engaged in refining ores, through Pinglu County Changhong Ferroalloy Co., Ltd. (PL) and Fanshi County Xinyu Iron Resources Co., Ltd. (FS), into ferrochromium alloy and pelletized ores for steel and iron manufacturing in China. PL is located in Pinglu County in the Southern part of Shanxi

China Advanced Construction Materials Group, Inc. (CADC) – China Advanced Construction Materials Group, Inc. produces ready-mix concrete materials in China. The Company provides materials and services through its network of seven ready-mixed concrete plants located throughout Beijing and nine portable concrete plants located in various provinces across China. It owns one plant, leases two plants, and operates the remaining four plantsunder technical services and preferred procurement agreements at unrelated third party facilities. It owns all of the production equipment in one of the fixed plants located in Beijing, as

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China Carbon Graphite (CHGI.OB) – China Carbon Graphite Group, Inc. is engaged in the manufacture of graphite-based products in China. The company’s products are either used in the manufacturing process for other products, particularly metals, or for incorporation in various types of products or processes. It manufactures and sells a range of graphite products, which includes graphite electrodes, fine grain graphite, and high-purity graphite. The company’s wholly-owned subsidiaries include Talent International Investment Limited (Talent), Xinghe Yongle Carbon Co., Ltd. (Yongle), and Xinghe Xingyong Carbon Co., Ltd. (Xingyong). In June 2009, the Company launched production of fine grain graphite rods with a length of 3.5 meters.

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F I N A NC E

A S K M R . WA L L S T R E E T : O N T H E R O A D A G A I N

Joining the Micro-Cap Financial Conference Circuit

our board of directors has decided that you, the CEO, have been entrusted to go on the financial conference circuit to tell the company’s story. Of course, you and the board think that the micro-cap financial world beckons so that anyone who hears the company’s story will be compelled to run, not walk, to get their hands on your company’s stock. In addition, all indications of interest by investment bankers to finance the company will turn into term sheets. The street is competing to hand you money. Dream on. Although this may be possible on planet Avatar, the micro-cap market is not exactly waiting with baited breath for your appearance to hand you money or run out and chase after your stock. You are about to embark on the exposure and awareness campaign that might give your company traction. You are given an expense budget for each quarter, which covers conference fees, travel costs, expenses for your assistant, and costs of printed materials. You will no doubt go over your budget and will find later that you need more money to get through the fourth quarter, if not the third quarter. Although you may be bullish, excited, and ready for the challenge, do you really know what you are in for and what you can expect? How much preparation will be involved? Have you realized that you will be on the road endlessly? My advice is to load your iPod with music, charge your batteries, purchase an iPad, and join all the frequent flyer programs and car rental clubs ahead of time. Even if you have done this routine many

times before, you will find the night flights a pain in the neck. The people’s faces, firms, and venues appear somewhat different each time. Learn to grin and bear it. Obviously the company needs you out there or you would be doing something else. Presentations must be “PowerPointed,” short in length, audience engaging, thought-provoking, and simple enough to keep everyone off their handhelds. Charts, graphs, and tables must be colorful, up-to-date (i.e., current and not from 2007), and the font size large enough so that the guy in the back of the room, standing by the exit door, can read it. Be prepared for the projector to malfunction, so you may have to present extemporaneously. Remember this useful suggestion when that happens: go without it! Explain to your audience, “As a good CEO, I have to be prepared for the worst crisis situation–a malfunctioning projector, so I will step up in front and tell you about the company without my PowerPoint presentation.” Doesn’t that beat the silence of fixing the malfunctioning projector by who knows whom? You paid real money for 10, 20, or 30 minutes, so tell your story. By the way, how was this done before the computer and projector had been invented? Many conferences have break-out rooms for one-on-one meetings with investors or funders; others have cocktail parties and networking events to mingle with the folks wearing color-coded investor badges who have gathered for the conference. Please remember not to drink in excess, even though the booze is free, because all eyes will notice your behavior. Limit your posse to

a choice few individuals and make sure the hired help is just that and no more. All “leave behind materials” should include your PowerPoint presentation, current press releases, printed research and magazine articles that you can re-print. Make doubly sure your Web site is fully functional and that your contact information, including cell phone, Web site URL, e-mail address, and office contact information, are all tested and ready for the anticipated onslaught of interest, because you will be traveling away from your home office, remember? I will not recommend which conferences to attend, only that some are better than others, but as I say to every CEO, it only takes one funding source to get you started. Getting funded through financial conferences is like a politician attending a political convention–you kiss a lot of babies. Good luck and remember to brush your teeth. Do not be late, miss a scheduled meeting, or lose your cell phone, battery charger, or glasses. Get comfortable shoes and keep them shined, wear a tie everywhere (no loud ones either), and make sure your jackets fit. You all know what I mean. n

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Silver Rant Why I’m Bullish on Silver

uring the last week of October 2010, a watershed event for silver occurred when Commodity Futures Trading Commission member Bart Chilton called for his agency to bear down on short sellers who, he said, have made “repeated” and “fraudulent efforts to persuade and control” the silver markets, according to the Wall Street Journal. A day later, on Oct. 28, Forbes reported that two traders accused HSBC and JPMorgan Chase of manipulating the price of silver in a pair of separate lawsuits. Commissioner Chilton’s two-year probe into a short-side manipulation of silver prices seem to bear out claims by former trader Ted Butler and the Gold Anti-Trust Action Committee (GATA) that precious metals prices were manipulated to the downside by big banks, perhaps going back decades. It’s further conceivable that this concerted mass-shorting took place with the tacit or even active approval of the U.S. Federal

By David Bond Publisher, Silverminers.com

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Reserve to stave off a run on the U.S. dollar, which would be beggared by higher gold and silver prices. Manipulation or not, silver remains an attractive metal. Its two-fold role as historic money – the Chinese began using silver as currency in 475 B.C. – and as an industrial and medicinal commodity gives the metal a dual appeal. In hard times, investors turn to silver as a hedge against inflation or a weak dollar; in good times, industrial consumption of silver goes up. Unlike gold, very little of the silver used in industrial applications is recycled. Silver is ubiquitous: it’s in cell-phones, refrigerators, cars, HDTVs, batteries, bearings, and computers. It’s not economic to recover two cents’ worth of silver from a used phone. The one application of silver – silver-halide photo film – where silver was recovered from the developing process, has given way to digital photography. Despite digital’s faster-thanexpected replacement of silver-halides, with a decreased use of silver in imaging came a concomitant decrease in the amount of silver returning to the market. Silver’s uses in superconductivity, in medicine, water purification, and sanitation continue to expand. As to silver’s investment appeal, consider this fact: in the first eight months of 2010, the U.S. Mint sold 23.5 million Silver Eagle Coins, compared with 19.5 million Silver Eagles sold during all of 2008. Government silver stocks are at a decade low: the U.S. government, which had two billion ounces of silver in the strategic stockpile three decades ago, now must buy silver for its coin program. China, the world’s third-largest

silver producer, halted outside sales this year. World mine production lags world consumption by 180 million ounces per year. But will silver production increase in response to silver’s rise in price? The answer is counter-intuitive: it will not. Although mine production has increased slightly over the past decade, 75 percent of the silver mined worldwide is a by-product of base metal mining, such as lead, zinc, and copper. By-product silver comes to market irrespective of silver’s price. This wields a doubleedged sword: when the price is depressed, supply doesn’t shrink. However, in the current bull market, don’t expect to see a flood of newly-mined silver coming to market. Silver is real money; a tangible, fungible asset. One caution should be noted: silver’s volatility is not for the faint of heart. The price of silver opened in 2000 at $4.57 an ounce, and 10 years later commands $24 an ounce. In the 1980s it fell just as precipitously. However, factors that conspired to suppress silver price in the 1980s and 1990s, including huge government stockpiles and the spectre of digital imaging, are behind us now. The “poor man’s gold” has a glittering future. n

David Bond is an award-winning newspaper reporter, editor, and columnist now focused on precious metals equities. He is twice recipient of the Atlantic City Press Club’s prestigious National Headliner Award, and holds numerous first place awards from the Society of Professional Journalists, the Associated Press Managing Editors Association and the Idaho Press Club for investigative reporting and commentary. Currently, he publishes the Web site Silverminers.com and is a correspondent for Platts Metals Week, a McGraw-Hill publication. David is co-founder of the Silver Summit. He lives in northern Idaho’s Silver Valley. www.microcapreview.com

PROFILED COMPANIES

Hecla Mining Profile Shelly Kraft recently sat down with Phil Baker, president of Hecla Mining, to discuss with him about the silver mining industry and Hecla. Excerpts of the interview are provided below for readers of Micro-cap Review magazine.

Biography Phillips S. Baker, Jr., is Hecla Mining Company’s president and chief executive officer. Mr. Baker joined Hecla in May 2001 as chief financial officer, was appointed president and chief operating officer in November 2001 and CEO in May 2003. He has over two decades of experience in the mining industry with operating companies and has participated in a number of financings and mergers and acquisitions during his career.

Questions Posed for the Micro-Cap Review Magazine 1. What is it like being president of Hecla, the largest U.S. silver company? It’s an opportunity to create value for shareholders, employees, and their families, and making their lives better. In fact, it’s meeting the needs of people and their communities. Our key stakeholders get to take part in Hecla and its legacy. It’s a long term investment in our people, our shareholders, and our communities. We have sustainable and long-lived assets in the Greens Creek and Lucky Friday mines.

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2. What have the first ten years at Hecla been like for you? The most significant change during this time period has been the realization of the importance of silver in the world and its various uses, such as in electronics, solar panels, and circuits, just to name a few. Having the opportunity to influence the company to maintain exposure to silver despite lower metals prices 10 years ago and pressure to reduce exposure to the metal. The steady change and growth in demand for silver from photographic to industrial products have changed the landscape for the industry. We have seen an 18 percent increase in industrial demand growth since 2009.

Also looking at ways to grow the business and the assets has been very rewarding. Lucky Friday is a good example where we are now extending the mine life beyond 2030 with the development of the #4 Shaft, which will increase annual production by 60 percent from three million to five million ounces of silver by 2016. The key driver for this increase in silver production is increased ore grade per ton from 10.4 to approximately 14. Another milestone during this time period is the acquisition of Rio Tinto’s 70 percent interest in the Greens Creek mine in Alaska in 2008. This transaction effectively doubled our silver production and tripled our cash flow. It has also been great to have a strong team with people that are knowledgeable in their respective areas and understand what is needed to move the company forward. The legacy of the company would not exist without the various individuals who have been involved over its 120 year history. 3. If an investor was interested in owning silver, is it better to own silver through buying silver bullion or stock in a silver company? Investing in silver equities provides you with exposure to silver and an opportunity to participate in the upside of that company. The upside can include cash flow generation, growth in production, stable operations, and exploration success, just to name a few.

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4. Hecla is known for low cost extraction and large deposits, how does Hecla intend to sustain that distinction? We have high quality assets that are operated by very experienced and dedicated people. That is our advantage. These mines have high contained metal or grade and are located in regions where there is good access to the main highway in the case of Lucky Friday and port facilities for Greens Creek. In addition, at the Lucky Friday mine, with the development of the #4 shaft, the grades are increasing at depth by 40 percent and this will most likely contribute towards further reducing costs. 5. What country outside the United States do you think has good silver deposits? Peru and Mexico are well endowed with silver; however, I’ll also say that until recently, there was not a great deal of exploration focused on silver. This was because of low metal prices over a 25-year period. New discoveries are emerging, and Hecla has been very active in Mexico. 6. What do you look for in junior silver mining companies? Hecla will look for good quality assets in the Americas which can add reserve and production growth. When evaluating the properties or companies, Hecla will try and identify opportunities where they could bring expertise to the project to improve the overall operational performance and/or exploration success. Since Hecla has experience in open-pit and underground mining, the company can look at the asset in a different light. 7. What recommendations would you make to investors when investigating investment into a junior exploration company? Hecla is not in a position to provide investment recommendations. One comment that I can make is that when a company progresses through the different stages of exploration, the risks will reduce. In the

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We have high quality assets that are operated by very experienced and dedicated people. That is our advantage. These mines have high contained metal or grade and are located in regions where there is good access to the main highway in the case of Lucky Friday and port facilities for Greens Creek. mining industry, there will always be an element of risk involved and this will vary depending on the type of company (earlystage exploration, development, producer, and reclamation/closure), jurisdiction(s) where they operate, and management expertise, just to name a few. 8. Has Hecla invested in any promising exploration /junior mining companies? Hecla does not publicly disclose its investment policy. Over the past few years we have not been actively pursuing this type of strategy. That is not to say that we don’t consider opportunities through equity, but this is done on a case-by-case basis and driven by the asset and how it can add long-term value. 9. What are your plans for green mining in the future? “Social responsibility” or “environmental sustainability” has become an important topic in the mining industry over the last 10 years. Given Hecla’s long tenure in the U.S. market, numerous accomplishments and progress in health and safety, environmental stewardship, and community development, the company will be reporting on these activities and launching its first sustainability report in 2011. 10. Would you call Hecla the bellwether silver stock? Hecla is the “go to” stock in the silver space

for the following five reasons: 1. Rich History: Hecla has been in existence for over 120 years and is the mining stock which has been listed the longest on the NYSE. 2. U.S.-Based Properties: Hecla’s Greens Creek and Lucky Friday operations are located in low political risk jurisdictions near Juneau, Alaska and Wallace, Idaho respectively. These are excellent operations which have been in production for 21 years in the case of Greens Creek and 69 years for Lucky Friday. Both operations have a mine life greater than 15 years. 3. Low Cash Costs: Our operations are amongst the lowest cash cost in North America. In the third quarter our total cash costs per ounce of silver were negative $1.01, net of by-product revenue. With an average realized silver price of $21.45 during the third quarter, Hecla’s margin on silver was $22.46. With the silver price well above $28.00 an ounce, the company will continue to generate significant cash flow. 4. Strong Balance Sheet: Hecla has $217 million in cash as of the end of the third quarter 2010 and no debt. The company generated in excess of $115 million in cash flow for the nine month period ending September 30, 2010, which is equivalent to the full year in 2009. 5. Growth Opportunities: Hecla has doubled its silver production since 2007 (acquir-

Hecla has doubled its silver production since 2007 (acquiring Rio Tinto’s 70 percent interest in Greens Creek) and has more than tripled cash flow.

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The size of the silver market is approximately 900 million ounces. There has been an 18 percent increase in industrial demand and 10-15 percent increase in investment demand since 2009. Silver is both an investment vehicle and a lifestyle metal with broad uses, such in as electronics, circuits, and solar panels, just to name a few. Silver has superior conductivity properties. ing Rio Tinto’s 70 percent interest in Greens Creek) and has more than tripled cash flow. Additional growth opportunities include: the development of the #4 shaft project which will increase silver production by approximately 60 percent from three million to five million ounces and will increase the throughput at Greens Creek; $20 million exploration program focusing on Hecla’s four large land packages (Greens Creek, Lucky Friday & Silver Valley, San Juan, and San Sebastian); and evaluating acquisition opportunities in the Americas (North America for gold and Americas for Silver). 11. Other than commonly known uses of silver, are there new uses for silver in the future? The size of the silver market is approximately 900 million ounces. There has been an 18 percent increase in industrial demand and 10-15 percent increase in investment demand since 2009. Silver is both an investment vehicle and a lifestyle metal with broad uses, such in as electronics, circuits, and solar panels, just to name a few. Silver has superior conductivity properties. 12. Who are the largest buyers for silver and how does Hecla participate in the market? The largest buyers of silver 20 years ago were Kodak and Fuji, which represented approximately 40 percent of the demand. Today, with the increased diversity in uses for silver, there is not one specific large buyer. The industrial demand in 2010 repre-

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sents approximately 46 percent of the silver market. The investment demand represents approximately 13 percent and includes the global ETF market with 489 million ounces of silver. Hecla sells silver concentrates to smelters for both its operations and sells a small portion of doré from the Greens Creek mine. 13. Although Hecla is a well known 120year old silver producing company, what other metals does Hecla produce? And in what percentages? The by-products are gold, zinc, and lead which represent 16 percent, 26 percent, and 18 percent of the revenue respectively for the nine month period ending September 30, 2010.

district-sized land packages • Has very strong financial and operating results • Has attractive valuation and inexpensive price/cash flow metric • Has $217 million in cash and no debt • Is ideally positioned to grow through merger and acquisition n Disclaimer: This corporate profile is based upon information provided by the issuer or company representative. The information is not intended to be, and shall not constitute, an offer to sell or solicitation of any offer to buy any securities. It is intended for information purposes only, and to increase awareness of the company profiled. Safe Harbor Statement: The statements in this advertorial or profile relating to future products, partnerships, technology, and positive direction are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some or all of the aspects anticipated by these forward looking statements may not, in fact, occur. Factors that could cause or contribute to such differences include but are not limited to contractual difficulties, demand for the Issuer’s common stock, and the company’s ability to obtain future financing. Micro-cap Review Magazine may have received payment to publish and print this advertorial or corporate profile. Micro-cap Review Magazine disclaimers apply and may be reviewed at www.microcapreview.com/disclaimer.php. Before investing in any security, you are strongly advised to review all public filings of the issuer of such security, which can be found at www.sec.gov, as well as warnings published by the SEC at www.sec.gov/investors and to consult with your professionals.

14. Silver prices are rising steadily in the market, could this be the beginning of a bull market for silver? We are in a bull market for silver and have definitely seen an increase in volume as a result of new shareholders on both the institutional and retail side. There are more generalist funds investing in the precious metals space. We have also seen a number of brokerage firms updating their precious metals price assumptions and revising silver equity price target upwards. 15. What do you want investors to know about Hecla? • Hecla is the “go to” silver company • Has very liquid stock • Is the largest silver producer in the United States with long-life, low-cost mines, and

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1. How do you judge a micro-cap company ceo’s success? q By the stock price q From the market exposure q The liquidity in the stock q Daily volume of the stock q The company revenue growth

2. what is your average holding period in a micro-cap stock? q Less than a year q More than one year q More than two years q More than three years q More than four years

3. How do you buy and sell stocks? q Online q Over the phone q Go to a bank or storefront q Use a wealth manager q Give discretion to my financial advisor

4. Where do you go to find research on micro-cap stocks? q Seeking advice from a broker q Receiving and reading newsletters q Doing web searches q Asking friends and family q Watching television q Attending financial conferences q Reading Micro-Cap Review magazine

5. How should ceo’s reach their targeted audience? q Financial conferences q Video press releases or text q Radio show interviews q Email q Investor relations q Road shows

6. on which exchange do you primarily trade stocks? q US - OTCBB q Canada TSX and TSX.V q Frankfurt - XETRA q London - AIM q Hong Kong - HREX q US - OTCQB

q US - OTCQX 7. which strategy do you use when buying micro-cap stocks? q Buy when the stock price is moving higher q Buy when the stock price is moving lower q Buy when the company releases good news q Buy when the company releases bad news q Buy when someone tells you to

8. what percentage of your stock portfolio is in micro- cap stocks? q 1% to 20% q 20% to 40% q 40% to 60% q 60% to 80% q 80% to 100%

9. How best describes your level of experience in trading micro-cap stocks? q Beginner q Amateur q Experienced q Seasoned q Professional

10. would you consider yourself to be? q Bullish q Bearish q Skittish q On the sidelines q Other

11.what is your favorite stock price range to buy and sell in? q $0.01 to $0.10 q $0.10 to $1.00 q $1.00 to $5.00 q $5.00 to $10 q Over $10

12.on average, how many brokerage

13.How much money do you invest in Micro-cap Stocks? q $0 - $100,000 q $100,000 - $250,000 q $250,000 - $500,000 q $500,000 - $1,000,000 q over $1,000,000

14.which of the following is your investment preference? q IPO q Private placement q Convertible debt q Fixed income

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check off areas of interest. q Aerospace q Accounting q Alternative Energy q Auto q Banking q Basic Minerals q Beverages q Biotech q Bullion q Business Services q Chemicals q China q Clean Energy q Communication q Construction q Consulting q Consumer Products q Consumer Services q Defense q Diamond Mining q Digital News q Digital Platforms q Direct Marketing q Diversified Investments q Drilling q Education q Electronics q Energy q Energy Products q Entertainment q Finance q Financial Trade Shows q Food q Franchisor q Gaming q Gold q Gold Producer q Green Technology q Healthcare q Housing q Industrial Goods q Industrial Metals & Minerals q Information Technology q Insurance q Junior Gold Developer q Junior Gold Producer q Legal q Manufacturing q Marketing q Media q Medical Devices q Medical Diagnostics q Medical Fund q Medical Practice Factoring q Metal Exploration q Oil Drilling q Oil and Gas q Oil and Gas Fund q Online Social Network q Organic q Pharmaceuticals q Publishing q Rare Earth Elements q Real Estate q Resource Exploration q Retail q Security q Silver q Social Network q Transport q Travel q Uranium q Veterinary Products and Services q Web Software q Wellness q Wireless Communications All participants in surveys receive a Free lifetime subscription to Micro-cap review Magazine.

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The Secret World of Rare Earth Elements (REEs) … where the real secret is beyond the mining Introduction to REEs Let’s begin by understanding that rare earth elements (REEs) are not rare. While their abundance is similar to lead, their properties prevented them from appearing in high concentrations in ore deposits; thus, REEs were assigned the French terms “terre rare”, meaning earthen rarity. As defined by the International Union of Pure and Applied Chemistry (IUPAC), REEs are a collection of seventeen chemical elements in the periodic table. These are scandium (Sc, atomic number 21), yttrium (Y, atomic number 39), and the fifteen lanthanides ranging from atomic numbers 57 to 71. Scandium and Yttrium were grouped as REEs, because they had similar properties to the lanthanides and were often found within the same ore deposits.

Macroview: REEs revolution could be similar to the plastics industry Average investors initially did not recognize the market potential of plastics. Investors recognized their value only much later after mega-industries started to sprout following

the introduction of many products made with plastics. While rare earth elements seem to show similar promise, their potential will be limited by their exhaustible supplies. They are natural elements (versus man-made). Also, their full capabilities and properties have yet to be discovered. No other group of elements on the periodic table, however, contains such a fascinating story and gamechanging impact as REEs. Lanthanum, atomic number 57 (from Greek lanthanein, meaning to be hidden) Lanthanum-based materials have remarkable uses in lens technologies and medical industries. A very large application is in the hybrid car industry wherein lanthanum is used to produce nickel-metal hydride anodes. Currently each electric hybrid car, such as the Toyota Prius, requires about 22-33 pounds of this material for their batteries. Because of its superior properties, lanthanum could one day replace lithium and cadmium as the material used in batteries. And if consumers and governments should want even more fuel saving capacity, each electric hybrid car would need to have double or triple the amount of lanthanum!

Every day new applications are being discovered for REEs. At the University of Virginia, the rare earth element Yttrium was doped into a mixture of iron, chromium, manganese, molybdenum, carbon and boron, creating a novel

material named Darva Glass 101, better known as “amorphous steel.” Within the next five years, Darva Glass 101 could be used to manufacture such products as ship hulls, automobile surfaces, surgical instruments, golf clubs, and even tennis racquets. The team consisting of researchers Joseph Poon, Gary Shiflet, and Vijayabarathi Ponnambalam has received well over $75 million in government grants from top names like Defense Advanced Research Projects Agency (DARPA). The University of Virginia scientists have given an exclusive license for Darva-Glass 1 (the precursor to Darva Glass 101) to a team of scientists at California Institute of Technology and Liquidmetal Technologies Inc. (OTC BB: LQMT), a publicly traded company which further developed the applications and technologies. On August 9, 2010, Liquidmetal Technologies entered into an agreement with Apple (NASDAQ: AAPL) in which Liquidmetal would transfer almost all of its intellectual property assets to a newly created special-purpose, wholly-owned subsidiary. The agreement grants Apple a perpetual, worldwide, and exclusive license to commercialize Liquidmetal’s intellectual property for consumer electronic products in exchange for a license fee. Earlier in the year, the public stock price of Liquidmetal Technologies was less than $0.08/share with a market capitalization of less than $8 million. Upon completion of the Apple deal, the stock price was trading as high as $1.70/ share with a market capitalization of over $120 million, a significant increase. The stories on the applications of REEs are nearly indescribable, as scientists and engi-

Yttrium, atomic number 39 (named for the village of Ytterby, Sweden, the place of discovery)

by dr. Gordon Chiu

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REFERENCE ARTICLES: Bauerlein, P; Antonius, C; Loffler, J; Kumpers, J (2008). “Progress in high-power nickel–metal hydride batteries”. Journal of Power Sources 176: 547. “As hybrid cars gobble rare metals, shortage looms.” Reuters 2009-08-31. 31 August 2009. “Liquid metal behaves like plastic,” Manufacturing Engineering, Mar 2003.

About the Author

neers alike are left in awe. For the layperson, watching the blockbuster movie Iron Man 2 will provide an analogy into the power of just one of the rare earth elements. In the storyline, Tony Stark, also known as Iron Man played by actor Robert Downey Jr., is dying from poisoning from using palladium to power his “arc reactor.” He has appointed his assistant Pepper Potts, played by actress Gwyneth Paltrow, to be the CEO of Stark Industries while he searches for a solution or dies of poisoning. By delving into his childhood past and revisiting his father’s messages, Tony Stark discovers a new element for the “arc reactor” that replaces palladium power and lives. Scientists agree that REEs have phenomenal characteristics that are not available in other metals.

I personally witnessed game-changing applications when I had the opportunity to visit with Utah scientists at a limited liability company called PolySci LLC. They have been working with praseodymium (Pr, atomic number 59), a rare earth element that has exceptional nuclear magnetic spin properties and piezoelectric resonance. Using the natural, inherent nuclear spin motion and harmonic resonance properties of praseodymium and unique ceramic combinations, a new type of electric generator was cre-

ated. This allows the use of portable energy in mobile phones, digital writing tablets, and portable electronic devices. Further, the technology has the potential to enable every electronic chip to have its own independent power source. Such a praseodymium-based power source may last for well over 20 years with just a single charge. This could potentially disrupt the existing alkaline, lithium and cadmium battery markets. In many ways, this breakthrough makes the unique element powering the “arc reactor” in the movie Iron Man 2 a very real phenomenon. Historically, the real excitement and growth have always resulted from discoveries in the many fields of science and their subsequent future applications. Several decades ago, China recognized and predicted the importance of REEs. The country now supplies almost all of the rare earth materials in the world. In hindsight, other countries are racing to activate their REE mines. We are only at the tip of the iceberg. Individuals who are concerned about a lock on supplies should know that markets are created when new applications are discovered. Only by the discoveries of new applications can we realize whether current prices of the raw materials are properly valued. Right now, REEs are experiencing an upswing, but the true hidden gems may be the products and technologies that will be created. Then we’ll realize that while REEs shine like gold, silver, and copper, the value of their future applications dazzles significantly brighter than any of these metals. n

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Praseodymium, atomic number 59 (from Greek prasios, meaning leek green color, and didymos, meaning twin)

Dr. Gordon Chiu is an execution driven businessman with more than 15 years of combined domestic and international experience in the biomedical, chemical, cosmetic, medical, and technology industries. He has been invited to serve on the board of public and private companies and to provide vital advice to the board while increasing overall shareholder value. His solid background and broad experience has allowed him to accomplish and advise in areas of Alzheimer research, breast cancer research, dermatology, drug addictions research, green technology, and antimicrobial research. He started his career as a research scientist at Pfizer Inc. and Merck & Co., Inc. and has healthcare and marketing experience with strong links to Wall Street and Asia. His educational background includes a B.S. degree summa cum laude in chemistry from Rensselaer Polytechnic Institute. He graduated with an M.S. degree in chemistry from Seton Hall University with high honors. Additionally, Dr. Chiu was accepted as an MD/PhD candidate under the National Institutes of Health’s Medical Scientist Training Program for four years at the Mount Sinai School of Medicine where he also researched, developed, consulted, and advised the Department of Dermatology’s Dr. Huachen Wei in skin cancer research. Seeing the opportunity to impact foreign policies in healthcare, he transferred his credentials to the fully accredited University of Bridgeport School of Naturopathic Medicine to receive his doctorate in naturopathic medicine. With this unique background, he has investigated the validity of foreign treatments and their success level for public health. He has also been chosen to serve in an advisory role to identify low cost solutions (i.e. non-invasive diagnostic equipment) for emerging countries that cannot afford to maintain armies of physicians across numerous sub-specialties. His years of experience and continuous involvement have created deep relationships within the scientific, business, and medical communities. Dr. Chiu developed and owns methodologies called directed combinatorial algorithmic libraries (D.C.A.L.) that are used in various commercial applications, composition development, and research. Disclosure: Dr. Chiu does not hold a current investment position in Liquidmetal Technologies or PolySci LLC. He has been appointed as an independent adviser to SNN.

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On the Market Commentary and Insights A National Treasure, A World Necessity & A Supply Deficit The world’s largest still undeveloped open pit molybdenum deposit & “to be” the world’s low cost producer and possibly one of the world’s most profitable mines* China adds Molybdenum to its “Protected” status CONSIDERS STOCKPILING Per LONDON TIMES; Micro Cap’s “world’s largest untapped open pit molybdenum deposit” and as just highlighted in a NEW YORK TIMES feature story Plus; “continuing to negotiate with parties interested in partnering” ― Read China here! Mosquito Consolidated Gold Mines Limited (TSX-V: V.MSQ) - NASDAQ bulletin board: MQCMF 11-8-2010 – More important color: “China’s Sure Bet”, BARRON’S cover story (November 8th): “As the Dollar wobbles, China is pulling back from U.S. Treasury securities and buying up hard assets around the world.” Striking, is that China’s 3-year total of foreign hard asset deals is near $150 billion. And that Chinese companies have invested over $25 billion in acquiring stakes in 19 iron ore start-ups and producers over the past three years.

Dr. John Faessel

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11-3-2010 – China studies starting strategic reserves / stockpiling of molybdenum and 9 other metals. (Bloomberg news) 10-29-2010 - China’s Ministry of Land and Resources classifies molybdenum as a protected mining status and impose quotas on its production. 10-21-2010 - China curbs exports of rare-earth metals, a group of metallic elements used in petroleum refining, fiberoptic transmission, and military radar and missile-guidance systems. China produces about 95 percent of the world’s rare earth metals. Rare-earth prices jumped following the move. Now with a “protected status” and looming “stockpiling” by the major consumer China, molybdenum has to be elevated to the realm of strategic metals and thought of in an entirely elevated status. Rarely do the stars align in such a fashion for a micro-cap company with a minuscule market-cap of about $60 million. Possibilities abound! Read on: Below the hilly landscape of southern Idaho lies a yet untapped gargantuan deposit of molybdenum and other minerals said to be worth as much as $80 billion. In fact, its entire footprint is yet to be fully determined as it is only 25 percent explored.** (Recent core drillings suggest that the asset is well in excess of original estimates made by global engineering and project management leader Ausenco***; importantly the new cores suggest coarse grained molybdenum bearing veins much closer to the surface.) These

impact of the new cores may now be best characterized by saying; current drilling is designed to convert blocks that were calculated as waste in all economic calculations into ore which will have a dynamic impact as expense converts to revenue - a double whammy. As it is, and it’s said by the London Times to be the world’s largest still undeveloped open pit molybdenum deposit***, this treasure will bring untold billions of dollars to not only the United States and Canada, but certainly to the state of Idaho and its environs. Most notably, the massive infusion of money into that poor county in Idaho will occur long before Mosquito will see any output from the mine as these enormous projects take several years to begin production. The positive economic impact to the region will be immediate, profound, and lasting; indeed billions of dollars will be spent there. Talk about a stimulus plan―this is a REAL stimulus plan that will provide jobs for over 100 years. * Re: “the world’s low cost producer and one of the world’s most profitable mines” See: CORPORATE PRESENTATION (Power Point) page 35. Mine Profitability i.e. Total recovered value / ton divided by total cost per ton. See Mosquito’s CUMO vs. the world’s major mines. Key public disclosures relating to the mines size and concentrations of mineralization has already been completed–referred to as Ni 43-101, Canada’s necessary public disclosure. ***** In these days of deep uncertainty, economic stagnation and high unemployment, the development of this major resource will inject a continuum of huge funding to

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a mining-friendly region in Idaho where unemployment is high and the region’s largest mine, the Thompson Creek Mine ****** , is nearly played out after 30 years of production. From what I hear, miners from the region and its adjoining states are said to be making plans for a new “forever” job at the site. The importance of this mining project to not only Idaho, the United States, and Canada, but globally cannot be understated; it’s indeed an astonishing resource in a world where molybdenum use is growing by orders of magnitude. Think China, that is a major importer of molybdenum and all the country’s steel needs and all the new uses like those in desalination and nuclear facilities that are beginning to manifest in the metals use. And, by the way molybdenum is not recyclable. Key in the Mosquito story is that its veteran management is experienced, savvy, and has the skills to parlay this project to its next level of a major financing. Evidenced by the fact that China-based International Energy and Mineral Resources Investment Company Limited and Ivy Mining, another China-controlled company, have already acquired 21 percent ownership of (MSQ) in June 2009 lends credence to the proposition that management has the necessary acumen to achieve this kind of deal; and I believe that there is another whopper of a deal in the mix. A recent press release (August 17, 2010) confirms this, “Mosquito is also continuing to negotiate with parties interested in partnering

with Mosquito on funding the ongoing development of the CuMo project.” In addition: On September 17, 2010 in the New York Times Business Day section, reporter Phil Taylor from Greenwire and E and E Publishing penned an extensive (1,683 words) article entitled, “Molybdenum Exploration Sparks Debate Over Idaho Watershed.” It gives you a pretty good handle on the necessary permitting that needs to be received from the Boise National Forest Service agency. It’s definitely worth a read. http://www.nytimes.com/ gwire/2010/09/17/17greenwire-molybdenum-exploration-sparks-debate-overidah-23690.html?pagewanted=alll Molybdenum Demand Molybdenum demand is expected to increase between five and seven percent annually during the next decade with demand forecasted to outstrip supply for several years to come. Global demand calls for an additional 21 million pounds by 2011, rising to 85 million pounds by 2015. Also key is that global inventories of molybdenum are very near historic lows and there is a supply deficit. In January, JP Morgan analysts said that they saw a likely rise of 55 percent in molybdenum prices to a possible $24 per pound by Q4, 2011. Molybdenum Primer Molybdenum [Mo, atomic number 42] is a refractory metallic element used principally as an alloying agent in steel, cast

iron, and superalloys to enhance hardenability, strength, toughness, as well as wear and corrosion resistance. Ideal for tough environments where heat, pressure, and corrosion are factors, it makes steel stronger and lighter and makes stainless steel more resistant to corrosion. Due to its low-toxicity, it is used as a catalyst in energy production. Molybdenum currently trades on the London Metals Exchange. I strongly encourage you to spend some time on Mosquito’s Web site, which is extremely comprehensive. The corporate presentation, fact sheet, and the CUMO interactive models are particularly informative and engaging in viewing the scope and size of the project: http://www.mosquitogold.com/s/Home.asp. I have purchased shares in Mosquito Consolidated Gold Mines on the open market. For my list of Best Ideas for 2010, please send an e-mail request to Dr.Faessel@onthemar.com. n Dr. John Faessel is a seasoned Wall Street analyst who is widely recognized for his insights into public companies and financial markets. Dr. Faessel advises firms, brokers, and traders. His market evaluations cover global currencies, credit markets, sector strength analysis, technical analysis, sentiment overviews, and both long-side and short-side recommendations. For over 20 years, Dr. Faessel’s On the Market reports have been widely distributed throughout the world to an extensive list of financial institutions, investment banking firms, mutual funds, hedge funds, brokers, foundations, and high net worth investors.

** Recent 2010 core drillings have just been announced (August 17, 2010) and the southern boundary of the resource has been expanded by a third of a mile. This new exploratory hole confirms yet more coarse grained molybdenum bearing veins nearer the surface and adds a huge increase in scope to the yet-to-be defined perimeters of the resource. Obviously it multiplies by an enormous factor the value of the Mosquito’s CUMO asset. *** The Ausenco Group (ASX: AAX) [Market-cap AUD$300 million], headquartered in Brisbane, Australia, is a leading provider of engineering, project management, and operation solutions for the global resources and energy sectors and employs around 2,200 people in 13 countries around the world. **** Mosquito’s wholly owned, Idaho-based CUMO deposit is thought to be the world’s largest and still undeveloped open-pit molybdenum deposit (according to a London Times article reported by Dow Jones on January 19, 2010). ***** The Ni 43-101 disclosure states Mosquito holds confirmed resources of 4.13 billion pounds of molybdenum oxide, 5.43 billion pounds of copper, 234.6 million ounces of silver, and 282.4 million pounds of tungsten. The molybdenum and other mineralization are said to be worth perhaps as much as $80 billion. With a discounted present value of $16 billion (using a 40-year mine life at 150,000 tons per day), the CUMO mine appears to be able to produce for somewhat over 100 years. Also noteworthy is that the “limits” of the mine have yet to be totally delineated, as only about 25 percent of the property has been core-sampled and assayed. It’s an enormous resource. ****** The fourth-largest primary molybdenum mine in the world, the Thompson Creek Mine, which is 75 percent owned by Thompson Creek Metals Company Inc. (NYSE: TC), is the largest mine in Idaho and is located about 60 miles from Mosquito’s CUMO asset.

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Like It or Not, Oil Sustains Us A

case needs to be made for the development and protection of the world’s oil reserves. In so many quarters, oil gets a bad rap. Nevertheless, oil is perhaps our most valuable commodity. In a world with an insatiable appetite for energy, oil rises to the front to meet that need. Demand continues to increase and exceeds the world’s ability to supply. Oil, and let me include natural gas, fuels the world economy. Oil has met this challenge for 100 years and will do so for another 100 years. Everyone uses oil and everyone needs it. If you haven’t thought about it, remember oil is a hydrocarbon, a basic building block for an industrialized society. Oil goes beyond fuel. It is an important component in the production of petrochemicals, plastics, and a host of other things that we use every day. It is used to make

asphalt, tires, soccer balls, milk containers, computers, fertilizers, heart valves, and artificial limbs. Oil surrounds us. I am amazed when the anti-oil crowd takes issue with it, even while they wear tennis shoes, write on computers, and ride bicycles with rubber tires on asphalt streets. Oil is a necessity. When times are tough and money is scarce, we can reduce our demand in various ways, but we cannot do without oil completely. It is a necessity to maintain the standard of living that we all want. Oil exploration and production is a risky and difficult business. Not only does it takes large sums of money and requires high-

By R. Gerald Bailey

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Crude oil prices continue to rise because demand exceeds supply. Energy consumption is growing exponentially in China, India, and the Middle East. Imagine those millions of bicycles in China turning into automobiles. In addition, speculators add to the spikes in oil prices. Trading in oil futures has become more attractive than trading in stocks and has attracted enormous inflows of money. ly qualified engineers and technicians, it demands great patience and persistence. The media tends to focus on the large revenues and profits, but often fails to report how much money and effort were expended. The United States has seen taxes on windfall profits and a regular call for increased taxes on companies which produce oil. Wal-Mart makes a higher return on money invested, but I hear no call for higher taxes here. In reality, such punitive practices rarely work in a capitalist society, because the taxed party will find ways to pass those higher costs on to the consumer. Instead of more taxes, the government should enact incentives to encourage more development of oil resources. Crude oil prices continue to rise because demand exceeds supply. Energy consumption is growing exponentially in China, India, and the Middle East. Imagine those millions of bicycles in China turning into automobiles. In addition, speculators add to the spikes in oil prices. Trading in oil futures has become more attractive than trading in stocks and has attracted enormous inflows of money. No one would have forecasted the hijacking of oil tankers on the high seas. To help counteract this imbalance, people should think more about conserving energy. We often waste. Office buildings, for example, often run air conditioners without considering how temperatures affect people. Many offices are so cold that people often wear sweaters and secretaries use heaters. I cannot go into a place of business without a jacket to be comfortable. Â Remember when

we lowered the speed limit to 55 miles per hour? It worked then. Yet we have few examples being set by the government. The United States lacks an energy policy and strong leadership in the Department of Energy. Congress is a joke. The public might take notice when congressional members start driving less or in smaller cars, not limousines. It is easy for them to say what the rest of us should do. The government often forgets that the country has been suffering from a shortage of crude oil refining capacity for nearly three decades because of strict federal regulations. The United States has not built a refinery plant since the 1970s because it takes years to get a permit to build one. The refining profit margin is not attractive. A smart investor will not mess with it. This is another area that needs to change. More nuclear power plants would help. But again, costs and regulations are a nightmare. More funds into alternative energy sources will not solve the shortage problem either. Projections 50 years into the future all say that alternative energy sources will likely contribute no more than 10-15 percent of the total energy need. Ethanol, for example, uses more energy to produce than what it delivers, and now has been found to disrupt the food chain. Solar and wind power has important roles to play. However, oil will remain the most cost-effective alternative for many years to come. At our current rate of consumption, the United States will not only continue to import more oil, but might eventually be importing gaso-

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line due to a shortage in refining capacity. Other countries are expanding their drilling and production activities, while the United States falls behind in production because of restrictive governmental policies, even though the country is the leader in oil and gas technology. The United States needs to drill for more oil domestically. We need to drill in Alaska where the reserves are enormous. Drilling activity in Alaska is inhibited by the perception in the media that it might harm the Alaska National Wildlife Reserve, which is a relatively small area that can be avoided. Alaska has seen a steady decline in production that must be reversed. Offshore drilling can be done in California, Florida, and other states along the East Coast. Local entities cannot continue to be consumers without trying to be a part of the solution. States cannot expect to consume energy supplies without finding ways to replenish them. Most Americans are unaware that China, Spain, and Cuba have already made plans to build deep oil and gas wells in the Florida Straits while we sit idly by. The United States and the world must deal with the energy problem as a global community. Oil sustains us, and its efficient development and production will help supply our energy needs. We can ill afford another energy crisis like the one that was experienced in the 1970s. Let us not be lulled into thinking that oil will always be available in ready quantities without the required effort. A rise in energy cost for the populace is a crisis that we do not want to endure again. n Dr. R. Gerald Bailey is chairman of Bailey Petroleum, where he is involved in business development consulting and operations management of several oil and gas production ventures, both domestic and international. Dr. Bailey has over 45 years experience in the petroleum industry with extensive engineering, management, and executive assignments. He is a former Exxon executive, having been the president of the Arabian Gulf region. Dr. Bailey is a graduate chemical engineer from the University of Houston and serves on a number of industry boards, including Vanguard Energy, Ephraim Oil, and BCM Energy Partners. He is a member of the Middle East Policy Council, Society of Petroleum Engineers, and American Institute of Chemical Engineers. Dr. Bailey is a registered professional engineer in Texas.

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G E N E R A L

The Best Kept Secret on the Sell Side: Global Hunter Securities

wo years ago, if someone were to ask, “Who is Global Hunter Securities?” chances are that you would not have heard of the firm before or would have confused it with a mining company, an asset management firm, or maybe even a race horse! Actually Global Hunter Securities (GHS) is a boutique broker-dealer with an expertise in energy, natural resources, and the China market. Metaphorically speaking, you might think of the company as a racehorse. Sprinting from the starting gate, Global Hunter Securities is now pounding down the tracks to get to the front. The firm entered the metals and mining sector only a year ago; if the firm’s success in other sectors is a harbinger, GHS will soon be a force to be reckoned in metals and mining, as well. From the outset, GHS has taken a calculated risk approach. On the surface, there was nothing safe for anyone to leave wellestablished firms with a track record of growth and success to set out on a path of self-determination in a challenging environment. But, that’s exactly what Daniel O. Conwill IV and Ed Lainfiesta did in early 2007. Conwill, an extraordinarily success-

ful investment banker who completed $25 billion in transactions at Jefferies & Co., had been well established as a thought-leader in the field of energy finance. Lainfiesta had amassed a similarly spectacular record in sales and trading with a mid-size brokerdealer in Orange County, California that was increasing its focus on China. The two bankers saw a potential for synergy – and an opportunity. Starting with offices in Newport Beach, CA and New Orleans, LA, they established GHS with the idea to attract highly talented professionals with enormous experience who can bring that power to bear for clients in a highly focused manner. At first the firm specialized in the energy and China markets. Conwill and Lainfiesta funded the firm’s expansion in investment banking, sales and trading, and research, the three key components of a sell-side firm. They attracted recognized leaders in their respective fields who would complement their own resumes, and set out to give clients the highest quality of service in the industry. Justin Cable, partner and director of research at GHS, was hired immediately from B. Riley & Co., where he had been head of research. With five initial research analysts, the GHS research team officially started work in October 2007. Unlike many firms in the industry and despite being a start-up, GHS survived the harsh bear market of 2008. Conwill and Lainfiesta moved carefully, however, to

keep the firm’s core team of marquee leaders together. Doing this was important to ensure that the firm had the technological and operational infrastructure to scale up quickly when the market would rebound. The firm’s investment banking arm continued to close transactions predominantly in the energy and China areas. Meanwhile the sales and trading team was expanding and soon established a presence among funds in the Midwest, thanks to the effort of Tim Arthurs, a partner and institutional salesman at GHS. When the market finally rebounded, GHS took advantage and continued to beef up its team, more than doubling its size within a matter of months. Managing director and head of energy research Michael Bodino brought more than 20 years of oil and gas experience to GHS as an analyst. He has been consistently rated as one of the best analysts in the business, including being honored with the Wall Street Journal’s prestigious “Best on the Street” award. The energy team alone has three individuals who were former directors of research at other firms. Reflecting the founders’ experience, the energy research team has robust coverage in both exploration and production, and oilfield equipment and services. Phil McPherson, a partner and E&P analyst at GHS, is tthe former head of research at C. K. Cooper & Company. He appeared on Zack’s 5-Star Analyst list at least four times. Dan Morrison brought nearly a quarter-century of experience to

By Sheldon “Shelly” Kraft

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GHS, including time with Exxon and Merit Energy. Brian Uhlmer brought his CFA qualifications and a decade of experience with him from Pritchard Capital, where he had been head of research. The high yield research team of GHS is led by 20-year veteran Ravi Kamath, another Wall Street Journal All-Star. The GHS China team also brings a wealth of experience, headed up by Joe Giamichael who was director of research at Rodman & Renshaw, where he had covered a variety of international names. Ping Luo is one of the team’s senior analysts and a CFA. She was born, raised, and educated in China, graduating from the University of International Business and Economics in Beijing. Also on the China team is senior analyst Dmitriy Shapiro, who worked with Giamichael at Rodman & Renshaw. When GHS entered the metals and mining space in 2009, the firm took the same experience-oriented approach, providing both research and investment banking services. The investment banking team is led by managing director J. Barry. A former managing director at Olympus Securities, Mr. Barry managed or co-managed over 20 debt and equity transactions with resource issuers on various exchanges, including the TSX, NYSE, NASDAQ, OTCBB, ASX, and the Lima Exchange. He has had a role in more than 150 transactions, and previously worked for Iroquois Capital, one of the most active small-cap investors in the United States. That’s not bad for a guy who launched his career in finance a decade ago after a career in the television business at Paramount Pictures. Only weeks after Mr. Barry came to the firm, GHS debuted work in the metals and mining sector with a $115 million financial restructuring engagement for Blaze Metals, LLC. Less than two months later Global Hunter closed on a PIPE transaction worth nearly $14 million for Minco Silver Corporation. In October 2010 the GHS metals and mining team handled more than $63 million in transactions with Comstock Mining and Uranium Energy Corp. Since launching its metals and mining

investment banking practice, GHS has worked on transactions around the globe for clients, including Brazil’s Luna Gold Corp. ($33 million CDN private placement) , Canada’s Alexis Minerals ($12.5 million CDN common stock offering), Mexico’s Silvermex Resources Ltd ($6.3 million PIPE) and in the United States for Rare Element Resources ($8.8 million). Add that up: in the last eight months, GHS has handled $125 million in metals and mining transactions–not bad for the new kids on the metals and mining block. Mr. Barry is one of many heavy hitters on the GHS investment banking team. It’s no surprise that the team is heavy on the energy side, given Conwill’s industry background. Like Conwill, head of equity capital markets Tim Monfort came from Jefferies, as did Rich Goldenberg, GHS’ head of global debt capital markets. The China investment banking team is led by Barry Monte, who came from Rodman & Renshaw. The financial advisory services of GHS is led by Steve Sebastian, who holds both an MBA and JD degree from Northwestern University. William G. Shaw brought more than 30 years of experience in the financial services industries when he joined GHS to head the mergers and acquisition team. Perhaps the secret is already out, as we’ve noticed that GHS is garnering more attention from both the media and institutional investors. We often see the firm’s macro-strategist Richard Hastings in interviews on CNBC and other analysts in various print and online media. Additionally, the appeal of GHS among the investment community was seen first-hand at GHS’ first ever investor conference in San Francisco in July 2010. It was an impressive and tasteful affair. Nearly 100 China-based companies (almost all of them publicly-traded) presented their stories to some 300 investors over three days, starting with an opening night dinner hosted by Yang Lan. Dubbed “The Oprah of China,” Lan drew a rousing reception from attendees. In the “Year of the Tiger” GHS came out roaring and their first foray into a large public forum was a first class show and a first rate success.

Global Hunter is galloping toward a market-leading position. Earlier in the year, GHS closed on one of its largest transactions to date, a $300 million asset sale for an energy company. And just recently the company closed on a $150 million high yield debt issuance for a private energy exploration and production company, and another deal has quickly followed. Within three months through November 2010, GHS announced nearly a billion dollars in transactions spread across China, energy, and metals and mining. The research team has grown to over 100 companies under coverage and the sales team has grown proportionally with six offices in cities across the United States. The landscape of the brokerage industry is constantly changing, especially in the last five years. Global Hunter is now on most radar screens and is no longer a secret. Having attended several prestigious conferences hosted by GHS and having watched the firm in action, GHS reminds me ofers thoroughbred in full stride heading to a first place finwer.

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Global Hunter Securities Offices Dallas 777 Main Street, Suite C80 Fort Worth, TX 76102 (817) 840-2920 Newport Beach 660 Newport Center Dr, Ste 950 Newport Beach, California 92660 (949) 274-8050 Houston 909 Fannin Street, Suite 3850 Houston, Texas 77010 (713) 658-6300 New Orleans 400 Poydras Street, Suite 3100 New Orleans, Louisiana 70130 (504) 410-8010 New York 777 3rd Ave, 36th Floor New York, New York 10017 (646) 264-5600 San Francisco 333 Bush St, Suite 1450 San Francisco, California 94104 (415) 276-8700 n www.microcapreview.com

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and heavy oil in 14 provinces and municipalities through seven sales offices located in various regions of China. In 2009 the company distributed 279,000 tons of finished oil and heavy oil products. The company operates a 100,000-ton biodiesel production plant in Tongchuan City, Shaanxi Province. Its biodiesel feedstock includes non-edible seed oil, waste cooking oil, and vegetable oil residue, most of which have limited alternative uses.

continued from pg 30 China Energy Corp. (CHGY.OB) – China Energy Corporation (CEC) is a producer of coal through its operating company located in China, Inner Mongolia Tehong Coal Group Co, Ltd. (Coal Group) and a supplier of heating and electricity requirements throughout the XueJiaWan district through its other operating company located in China, Inner Mongolia Zhunger Heat Power Co., Ltd. (Heat Power). Coal Group produces coal from the LaiYeGou coal mine located in Erdos City, Inner Mongolia, People’s Republic of China. Heat Power supplies steam heating and electricity to end users. Heat Power also owns and operates 21 heat transfer stations. China GengSheng Minerals (CHGS) – China GengSheng Minerals, Inc. is a holding company operating in the materials technology industry through its direct and indirect subsidiaries in China. The company develops, manufactures, and sells a range of minerals-based, heat-resistant products capable of withstanding high temperature, saving energy and boosting productivity in industries, such as steel and oil. Its products include refractory products, industrial ceramics, fracture proppants, and fine precision abrasives. The company sells its products to over 200 customers in the iron, steel, oil, glass, cement, aluminum, and chemical businesses located in China and other countries in Asia, Europe, and North America. China Integrated Energy Inc. (CBEH) – China Integrated Energy, Inc., formerly China Bio Energy Holding Group Co., Ltd., is an integrated energy company in China engaged in three business segments: the wholesale distribution of finished oil and heavy oil products, the production and sale of biodiesel, and the operation of retail gas stations. The Company’s primary business segment is the wholesale distribution of finished oil and heavy oil products. It sells primarily gasoline, diesel,

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China Natural Gas Inc. (CHNG) – China Natural Gas, Inc. (CHNG) is an integrated natural gas operator in China, primarily involved in the distribution of compressed natural gas (CNG) through its variable interest entity (VIE)-owned CNG fueling stations. As of December 31, 2009, the Company operated 24 CNG fueling stations in Shaanxi province and 12 CNG fueling stations in Henan province. The company’s VIE own its CNG fueling stations while it leases the land, upon which its VIE-owned CNG fueling stations operate. In 2009 the Company sold CNG 164,343,895 cubic meters of natural gas through its VIE-owned fueling stations. It also transports, distributes and sells piped natural gas to residential and commercial customers in the Xi’an area, including Lantian County, and the districts of Lintong and Baqiao, in Shaanxi province through a pipeline network of approximately 120 kilometers.

Co. Limited (Wuhu Feishang) and Yangpu Lianzhong Mining Co. Limited (Yangpu Lianzhong).The subsidiaries of the company include FMH Corporate Services, Inc. (FMH Services) and Sunwide Capital Limited (Sunwide). On July 10, 2009, the company completed the acquisition of Pineboom Investments Limited (Pineboom). China New Energy Group Company (CNER.OB) – China New Energy Group Company (China New Energy) is a vertically integrated natural gas company engaged in the development of natural gas distribution networks, and the distribution of natural gas to residential, and industrial and commercial customers in small and medium-sized cities in China. Its major business activities include development and construction of local gas distribution networks, transportation of natural gas from suppliers to its storage facilities in a given operational location, and operating and maintaining the gas distribution networks. The company owns the exclusive rights to develop distribution networks to provide natural gas to industrial, commercial, and domestic consumers in the cities of Dashiqiao, Nandaihe, Zhanhua, and Wuyuan. As of December 31, 2009, these distribution networks provided natural gas to approximately 64,000 consumers in these cities.

China Natural Resources Inc. (CHNR) – China Natural Resources Inc. (CHNR), through its operating subsidiaries are engaged in the acquisition and exploitation of mining rights, including the exploration, mineral extraction, processing, and sale of iron, zinc, and other nonferrous metals extracted or produced at mines primarily located in Anhui Province in China. It is also engaged in the acquisition, exploration, construction, development, and operation of coal mines located in Guizhou Province, China. The mining operations of the company are conducted by Wuhu Feishang Mining Development

China North East Petroleum Holdings Ltd. (NEP) – China North East Petroleum Holdings Limited, incorporated in 1999, is engaged in the exploration and production of crude oil in northern China. As of December 31, 2008, the company operated 247 producing wells in four oilfields in northern China. The company has an arrangement with the Jilin Refinery of PetroChina Group to sell the crude oil production for use in the China marketplace. The company, through two of its subsidiaries, Song Yuan City Yu Qiao Oil and Gas Development Ltd. Corp. (Yu Qiao) and Longde Oil and Gas Development Co. Limited (LongDe),

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has entered into binding sales agreements with the PetroChina Group, whereby it sells the crude oil production for use in the China marketplace. In October 2009, the company acquired Song Yuan Tiancheng Drilling Engineering Co. Ltd. China Petroleum & Chemical Corp. (SNP) – ADS China Petroleum & Chemical Corporation (Sinopec Corp) is a Chinabased energy and chemical company. The company through its subsidiaries engages in oil and gas and chemical operations in China. Oil and gas operations consist of exploring for, developing, and producing crude oil and natural gas; transporting crude oil and natural gas by pipelines; refining crude oil into finished petroleum products; and marketing crude oil, natural gas, and refined petroleum products. Chemical operations include the manufacture and marketing of a range of chemicals for industrial uses. The company operates in four business segments: exploration and production, refining, marketing and distribution, and chemicals. China Precision Steel, Inc. (CPSL) – China Precision Steel, Inc. is a steel processing company principally engaged in the manufacture and sale of high precision cold-rolled steel products and in the provision of heat treatment and cutting of medium and high carbon hot-rolled steel strips. The company conducts its operations principally in China through its wholly-owned operating subsidiaries, Shanghai Chengtong Precision Strip Company Limited (Chengtong) and Shanghai Blessford Alloy Company Limited (Shanghai Blessford). The company produces and sells precision ultrathin and high strength, cold-rolled steel products with thicknesses ranging from 7.5 millimeters to 0.03 millimeters. It also provides heat treatment and cutting and slitting of cold-rolled steel strips not exceeding 7.5 millimeters thickness. Its specialty precision products are mainly used in the manufacture of automobile parts and components, steel roofing, plane www.microcapreview.com

friction discs, appliances, food packaging materials, and saw blades. China Shen Zhou Mining & Resources, Inc. (SHZ) – China Shen Zhou Mining & Resources, Inc. (CSZM) is engaged in the exploration, development, mining, and processing of fluorite, zinc, lead, copper, and other nonferrous metals in China. The company’s business is conducted through its China-based subsidiaries. It operates mines in the Inner Mongolia and Xinjiang. The company’s whollyowned subsidiaries include American Federal Mining Group, Inc. (AFMG), Inner Mongolia Xiangzhen Mining Group Co., Ltd. (Xiangzhen Mining), and Inner Mongolia Wulatehouqi Qianzhen Ore Processing Co., Ltd. (Qianzhen Mining). On November 20, 2009, the company sold its interest in Tun-Lin Limited Liability Company. China Yili Petroleum Company (CYIP. OB) – China Yili Petroleum Company is engaged in the refinery business. The company’s subsidiary, Tongliao Yili Asphalt Co., is engaged in developing a facility for refining petroleum to produce three categories of end products: asphalt, diesel fuel, and lubricants. The facility has the capacity to produce each day 1,300 tons of diesel fuel, 780 tons of asphalt, and 520 tons of lubricants. China Yili Petroleum Company’s offices and refinery are located on a parcel of industrial land measuring 126,540 square meters. The company’s storage facilities consist of six tanks for storage of raw petroleum with a capacity of 30,000 cubic meters, six asphalt storage tanks with a capacity of 12,000 cubic meters, and 10 tanks for storage of petroleum distillate with a capacity of 14,000 cubic meters. CNOOC Ltd. (CEO) – CNOOC Limited is an investment holding company. The company, through its subsidiaries, is engaged in the exploration, development, production, and sale of crude oil and natural gas and other petroleum products. It is a

producer of offshore crude oil and natural gas. The company has four offshore production areas: Bohai Bay, Western South China Sea, Eastern South China Sea, and East China Sea. In addition, the company is also an offshore crude oil producer in Indonesia. The company also has upstream assets in Nigeria, Australia, and other countries. As of December 31, 2009, the company owned net proved reserves of approximately 2.7 billion barrels of oil equivalent (BOE), and its average daily net production was 623,896 BOE. Its subsidiaries include CNOOC China Limited, CNOOC International Limited, China Offshore Oil (Singapore) International Pte Ltd, CNOOC Finance (2002) Limited, and CNOOC Finance (2003) Limited. Element92 Resources Corp. (ELRE.OB) – Element92 Resources, Corp. (E92R) is an exploration-stage company. The company is engaged in the search for minerals. The company is engaged in the acquisition and exploration of additional mineral properties to exploit any mineral deposits. The company owns 14 uranium mineral claims located in Huddersfield Township and Clapham Township in the province of Quebec, Canada. These claims are located approximately 60 miles northwest of Ottawa, Ontario, Canada. On June 15, 2010, the company acquired the Penglai (Huwei) producing gold mine, and the Roncheng gold deposit in Shandong Province of China. In June 2010, the company acquired an additional 23 percent interest in Legarleon Precious Metals, Ltd., bringing its total interest in LPM to 51 percent majority ownership. Fushi Copperweld Inc. (FSIN) – Fushi Copperweld, Inc. (Fushi) is a producer of bimetallic wire products, principally copper-clad aluminum (CCA) and copperclad steel (CCS) products. The company sells bimetallic wire products to customers worldwide that operate primarily in the telecommunications, electrical utility,

continued on pg 60

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PROFILED COMPANIES

The Dawn of the New Oil Boom! Will You Take Advantage of It?

n 1951, oil deposits were discovered in a region known as the Williston Basin in North America. Spanning parts of Saskatchewan, North Dakota, and Montana, this was the first major discovery since World War II of a new geological basin. The hopes for a new oil boom were great in an area that had not seen much economic growth to date. As oil companies moved in and began drilling for the “black gold,” problems arose. Traditional wells of the 1950s were drilling vertically into the ground to retrieve the deeply buried oil. Unfortunately, this technique was not conducive to the geological makeup of the earth. The Williston Basin consisted of two layers of shale with naturally occurring vertical fractures. When the original drills were run vertically into the ground and subsequent drilling fluids were pumped in, the shale swelled and closed off the natural fractures. Retrieval of the oil was therefore not economically possible. As a result, these oil deposits have lain dormant for years. Until today… With new technology borrowed from natural gas wells, the ability to tap into these deposits has now become possible. Utilizing a technique called “horizontal” drilling, companies are able to retrieve these once unattainable oil deposits. Unlike a conventional vertical well that is drilled to a specific position within a reservoir, a horizontal well parallels the oil zone. Two important advantages to this new technique are; the well has greater contact with the productive layer (which is known as the “pay zone”) and the

well has the ability to reach into oil deposits that were once unrecoverable. We are witnessing the beginning of “a good old-fashioned oil boom,” Dr. Paul Pelzin (University of Montana). In 2008, the US Geological Survey released a report, estimating reserves in the area upwards toward 4.3 billion barrels of oil. Many researchers have even estimated that there are more oil reserves in the area than in Saudi Arabia. The New York Times has characterized the find as the largest in US history. The oil itself is of the finest quality, up to 41 degrees light crude oil, creating conservative estimates of the reserve to be worth $1 trillion! With all the new data available, financial advisors are recommending that this is the time for investors to get involved. The advice is to seek out pure-play oil exploration and production companies positioned in the Williston Basin. However, investing in a commodity such as oil is not without its risk. But with its risk, comes a greater reward. Therefore, financial experts have

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advised when seeking out these companies, look to those with certain criteria set in place. First, the company should have a risk management program established that has a balanced portfolio to generate a positive cash flow. Second, the company should possess a solid balance sheet and a financial leverage capacity. Lastly, the company should have and continue to pursue corporate growth and innovative partnerships. One company that has met these needs and has positioned itself as a player in the Williston Basin is Rogers Oil & Gas (gorogers.com). The leadership team, with over 100 years of combined experience in the energy sector, geology fields, and finan-

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cial services, has utilized a classic formula to manage risk and increase profits for its investors. By generally investing in 15-50% of any one well, they are able to limit exposure to any one project. In addition, by utilizing royalty incentives offered by the Saskatchewan government and the company’s low cost ability to establish a fully equipped well, they are able to quickly return earnings to investors. The Saskatchewan government offers royalty incentives to companies, like Rogers Oil & Gas, by reducing the royalty rate from 20% to 2% for the first 38,000 barrels of oil produced. This creates a rebate of roughly $500,000 when the oil is sold at $75/barrel. This royalty incentive, coupled with the low cost of $1.1 million to establish the fully equipped well, has allowed the company to attain a profit in a shorter amount of time. Rogers Oil & Gas is currently involved in several plays in the Williston Basin, 30 miles north of the North Dakota border in Saskatchewan, Canada. Drilling has been focused in three projects of the Mississippian Alida zone located in Wordsworth, West Wildwood, and West Queensdale. The zone itself has a higher porosity and permeability when compared to other zones of the Williston Basin. Therefore, Rogers Oil & Gas does not need to implement unconventional drilling techniques that utilize fracturing.

This results in the company’s ability to establish a fully equipped well at approximately 1/3 of the cost. In keeping with their risk management strategy, the company currently owns interest in 19 producing wells, with another 20 new development wells and 4 exploratory wells planned in the next 18-36 months. The new horizontal development wells are proposed in areas with existing pools to maximize the return from these reservoirs and to determine the size of their pools. Sites for 3-D select vertical wells have also been selected to explore new drilling locations identified from extensive seismic data analysis. This is an exciting time for Rogers Oil & Gas. The United States currently imports

more oil from Canada than any other country. International energy demands are rising and the market value of oil is projected to increase as well. Rogers Oil & Gas has positioned itself in the Williston Basin as a key player to meet the needs of an increasing global demand in oil. The company has created an opportunity for investors to benefit from the new oil boom.Through its classic approach to drilling and risk management, pursuit of new and innovative partnerships, and planned projects, the future of Rogers Oil & Gas is bright. The company is expecting substantial growth in the near future. n Disclaimer: This corporate profile is based upon information provided by the issuer or company representative. The information is not intended to be, and shall not constitute, an offer to sell or solicitation of any offer to buy any securities. It is intended for information purposes only, and to increase awareness of the company profiled. Safe Harbor Statement: The statements in this advertorial or profile relating to future products, partnerships, technology, and positive direction are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some or all of the aspects anticipated by these forward looking statements may not, in fact, occur. Factors that could cause or contribute to such differences include but are not limited to contractual difficulties, demand for the Issuer’s common stock, and the company’s ability to obtain future financing. Micro-cap Review Magazine may have received payment to publish and print this advertorial or corporate profile. Micro-cap Review Magazine disclaimers apply and may be reviewed at www.microcappreview. com/disclaimer.php. Before investing in any security, you are strongly advised to review all public filings of the issuer of such security, which can be found at www.sec. gov, as well as warnings published by the SEC at www. sec.gov/investors and to consult with your professionals.

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and transportation industries. Its products are sold to 536 customers in 37 countries and are marketed under the established Copperweld and Fushi brand names. It operates its business principally through two wholly-owned subsidiaries: Fushi International (Dalian) Bimetallic Cable Co. Ltd. and Copperweld Bimetallics, LLC. Fushi International (Dalian) is a subsidiary of Fushi Holdings, which is wholly-owned by Fushi Copperweld, Inc. On February 5, 2010, Fushi Copperweld acquired Dalian Jinchuan Power Cable Co. (Jinchuan), a low and medium-voltage power cable manufacturer in northeastern China. General Steel Holdings Inc. (GSI) – General Steel Holdings, Inc. (General Steel) operates a portfolio of Chinese steel companies. Its companies serve various industries and produce a variety of steel products, including reinforced bars (rebar), hot-rolled carbon and silicon sheets, spiral-weld pipes, and high-speed wire. In 2009 the company’s production capacity of steel products was 6.3 million metric tons, of which the majority is rebar. The company has interests in four steel-related subsidiaries: General Steel (China) Co., Ltd., Baotou Steel - General Steel Special Steel Pipe Joint Venture Company Limited (Baotou Steel), Shaanxi Longmen Iron, and Steel Co., Ltd. (Long Steel Group), and Maoming Hengda Steel Group, Ltd (Maoming). Gulf Resources, Inc. (GFRE) – Gulf Resources, Inc. (Gulf Resources) manufactures and trades bromine and crude salt, and manufactures and sells chemical products used in oil and gas field exploration, oil and gas distribution, oil field drilling, wastewater processing, papermaking chemical agents, and inorganic chemicals. As of December 31, 2009, its products have been sold only within China. Gulf Resources business operations are conducted in two segments: bromine and crude salt, and chemical products. The company manufactures and distrib-

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ness of coal mining, coal consolidation, and wholesaling in China. The company’s operations are conducted in the Yunnan Province in southwest China. Coal sales, both from coal production and coal wholesales, represented the majority of L & L’s consolidated sales during the fiscal 2009. The company conducts business operations in China through its Chinese subsidiaries, Kunming Biaoyu Industrial Boiler Co., Ltd. (KMC), a coal consolidating and wholesale business, and L & L Coal Partners, which has a 60 percent equity interest in two operating coal mines, the DaPuAn Mine and the SuTsong Mine (2 Mines), which are both located in the Yunnan Province. L & L owns 100 percent interest in KMC. In January 2009, the company disposed of its majority interest in Lieurkong Machinery Co., Ltd. (LEK), an air-compressor company.

utes bromine through its wholly-owned subsidiary, Shouguang City Haoyuan Chemical Company Limited (SCHC). Gulf Resources produce chemical products through its wholly-owned subsidiary Shouguang Yuxin Chemical Industry Company Limited (SYCI).

continued from pg 55

Ivanhoe Energy Inc. (IVAN) – Ivanhoe Energy Inc. (Ivanhoe) is an independent heavy oil development and production company. The company operates in four segments: oil and gas-integrated, oil and gas-conventional, business and technology development, and corporate. The company’s operations are carried out in Canada, China, Mongolia, and Ecuador. On July 17, 2009, the company completed the sale of its wholly-owned subsidiary Ivanhoe Energy (USA) Inc. In July 2009, the company sold its United States oil and gas operations to Seneca South Midway LLC, a subsidiary of Seneca Resources Corporation. In November 2009, the company completed the acquisition of PanAsian Petroleum Inc. (PPI), which provides Ivanhoe with the right to explore, develop, and produce oil or gas within Block XVI in Mongolia’s Nyalga Basin. * Keyuan Petrochemicals, Inc. (KYNP.OB) – Keyuan Petrochemicals, Inc. (Keyuan), formerly Silver Pearl Enterprises, Inc., through its wholly-owned subsidiary, Keyuan Plastics, Co. Ltd. (Keyuan Plastics), is engaged in the manufacture and supply of a range of petrochemical products in China. The company manufactures and supplies a variety of petrochemical products, including BTX aromatics, propylene, styrene, liquid propane gas (LPG), methyl tertiary butyl ether (MTBE), and other petrochemicals. On May 12, 2010, the company acquired 95 percent interest in Keyuan Petrochemicals, Inc. Effective May 17, 2010, it merged with Keyuan Petrochemicals, Inc.

Lihua International, Inc. (LIWA) – Lihua International, Inc., through its subsidiaries, manufactures and sells bimetallic composite conductor cable and wire products, and refined copper products in China. The company develops, designs, manufactures, markets, and distributes alternatives to pure copper wire, which include copper-clad aluminum wire and recycled scrap copper wire, and offers its products in various diameters ranging from 0.03 mm to 0.18 mm. The company’s copper rod-based wire products include cable products used for telephone drop wire and conductors; electric utilities; transmission lines, grid wire, fence, and structured grounds; industrial drop wire, magnet wire, battery cables, and automotive wiring harnesses, as well as magnet wire products used in electronic motors, transformers, water pumps, automobile meters, energy, industrial, commercial, and residential industries.

L&L Energy, Inc. (LLEN) – L&L Energy, Inc. (L&L), formerly L & L International Holdings, Inc., is engaged in the busi-

Longwei Petroleum Investment Hold Ltd. (LPH) – Longwei Petroleum Investment Holding Limited is an energy company that, through its subsidiaries, engages in oil and gas operations in China. Oil and

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gas operations consist of transporting, marketing, and selling finished petroleum products. The company’s primary facilities are located in Taiyuan, Shanxi Province (Shanxi). The company purchases diesel, gasoline, fuel oil, and kerosene from various petroleum refineries in China. The company sells its products to gas stations, coal plants, and other power supply customers and small, independent gas stations. The company operates in two segments: product sales, which is engaged in purchasing and selling diesel, gasoline, fuel oil and kerosene in China; and agency sales, which acts as an agent in the purchase and sale of products by other gas and oil distributors in China. New Oriental Energy & Chemical Corp. (NOEC) – New Oriental Energy & Chemical Corp. manufactures and distributes fertilizer and chemical products in China. The company offers urea and coal-based chemicals, including ammonium bicarbonate and liquid ammonia used for nitrogenous fertilizers, and as a raw material for chemical products. It also provides methanol used in the production of medicines, pesticides, dyes, plastics, synthetic proteins, fibers, formaldehydes, and methyl ether; and dimethyl ether used as an additive for liquefied petroleum gas (LPG) and non-industrial fuel substitute to LPG; as a refrigerant for refrigerators and air conditioners; as a chemical feedstock for production of acetic acid, acetate, and hydrocyanic acid; and in the production of pesticides and cosmetics, as well as everyday chemical products, such as detergent and hair gel. PetroChina Co. Ltd. (PTR) – PetroChina Company Limited is an oil and gas producer and seller in China. The company is engaged in a range of petroleum related products, services and activities. The company’s segments include exploration and production, refining and chemicals, marketing, and natural gas and pipeline. The exploration and production segment is engaged in the exploration, developwww.microcapreview.com

ment, production, and marketing of crude oil and natural gas. The refining and chemicals segment is engaged in the refining of crude oil and petroleum products, production and marketing of primary petrochemical products, and derivative petrochemical products, and other chemical products. The marketing segment is engaged in the marketing of refined products and trading business. The natural gas and pipeline segment is engaged in the transmission of natural gas, crude oil and refined products, and the sale of natural gas. Puda Coal Inc. (PUDA) – Puda Coal, Inc. (Puda) is a supplier of high-grade metallurgical coking coal to the industrial sector in China. Its processed coking coal is primarily purchased by coke and steel producers in the steel manufacturing process. Puda’s operations are conducted by Shanxi Puda Coal Group Co., Ltd (Shanxi Coal), which it controls through a 90 percent indirect equity ownership. Puda cleans raw coking coal sourced from third-party coal mines primarily located in Liulin County, Shanxi Province, and markets the cleaned, coking coal to coke and steel makers. Its primary geographic markets include Shanxi Province, Inner Mongolia Autonomous Region, Hebei Province, Beijing and Tianjin, China. It purchases raw coal from a diversified pool of local coal mines in Shanxi Province. Shengrui Resources Co. Ltd. (SRUI.OB) – Shengrui Resources Co. Ltd (Shengrui) is an exploration-stage company. The company is engaged in the development of business interests in China with the focus on completing the acquisition of one or more operating companies in the mineral resource industry. On April 16, 2009, the company transferred 100 percent of the shares of its wholly-owned subsidiary, Patch Oilsands Ltd., to Pacific Bridge Capital Ltd. As of October 31, 2009, the company had not generated any revenues.

Silvercorp Metals Inc. (SVM) – Silvercorp Metals Inc. (Silvercorp) is a silver producing company. During the fiscal year ended March 31, 2010 (fiscal 2010), Silvercorp mined 406,754 tons of ore. In fiscal 2010, the company produced and sold 4.6 million ounces of silver, 62.4 million pounds of lead and 14.7 million pounds of zinc. The company’s properties include Ying Mine (77.5 percent), HPG Property (80 percent), TLP Mine (77.5 percent), LM Mine (80 percent), Nabao Project (82 percent), GC Project (95 percent) and Silvertip Project (100 percent). In May 2009, the TLP mine operation and the LM Mine operation were partially resumed. The GC Project is a pre-development stage silver-lead-zinc project in Guangdong Province. In February 2010, the company completed the acquisition of a 100 percent interest in the Silvertip silver-lead-zinc project covering 216 square kilometers in northern British Columbia, Canada. Sino Clean Energy Inc. (SCEI) – Sino Clean Energy Inc. is a holding company, which through its subsidiaries, is a third-party commercial producer and distributor of coal-water slurry fuel (CWSF) in China. CWSF is a clean fuel, which consists of fine coal particles suspended in water. The CWSF products are used to fuel boilers and furnaces to generate steam and heat for residential and industrial applications. The company sells the products in China. The customers include industrial, commercial, residential, and government organizations. Until November 12, 2009, the company’s business operations were conducted through Shaanxi Suo’ang Biological Science & Technology Co., Ltd. Sino Gas International Holdings (SGAS. OB) – Sino Gas International Holdings, Inc. is engaged in the development of natural gas distribution systems and the distribution of natural gas to residential and industrial customers in small- and medium-sized cities in China, through indirectly owned subsidiaries in the PRC, Beijing Zhong Ran Wei Ye Gas Co., Ltd.

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(Beijing Gas) and its subsidiaries. The company owns and operates 39 natural gas distribution systems, serving approximately 145,000 residential and seven industrial customers. The company’s facilities include approximately 1,040 kilometers of pipeline and delivery networks with a daily distribution of approximately 110,000 cubic meters of natural gas. SinoCoking Coal and Coke Chemical Industries, Inc. (SCOK) – SinoCoking Coal and Coke Chemical Industries, Inc. (Sinocoking), formerly Ableauctions.com, Inc., sells coal, and produces and sells coke, a by-product of coal. The company is a coal and coke processor that uses coal from both its own mines and that of thirdparty mines to produce basic and valueadded coal products for steel manufacturers, power generators, and various industrial users. SinoCoking has mining rights to extract 300,000 tons of coal per year from mines located in the Henan Province in central China. Effective October 16, 2009, five of the company’s subsidiaries (AAC Holdings Ltd., Jarvis Industries Ltd., Gruv Development Corporation, 1963 Lougheed Holdings Ltd., and 0716590 B.C. Ltd.) were amalgamated, retaining the name of AAC Holdings Ltd. On February 5, 2010, the company acquired Top Favour Limited (Top Favour).

Machinery Limited Corporation, Qingdao Sinogas Yuhan, Pingdingshan Sinoenergy Gas Company Limited, and Hubei Gather Energy Company Limited. Sinopec Shanghai Petrochemical Co. Ltd. (SHI) – Sinopec Shanghai Petrochemical Company Limited is a China-based petrochemicals company. The company’s integrated petrochemical complex processes crude oil into a range of products, including synthetic fibers, resins and plastics, intermediate petrochemicals, and petroleum products. It principally operates in four operating segments: synthetic fibers, resins and plastics, intermediate petrochemicals, and petroleum products. The synthetic fibers segment produces primarily polyester and acrylic fibers mainly used in the textile and apparel industries. The resins and plastics segment produces primarily polyester chips, low-density polyethylene resins and films, polypropylene resins, and polyvinyl acetate (PVA) granules. The intermediate petrochemicals segment primarily produces ethylene and benzene. The petroleum products segment has crude oil distillation facilities used to produce vacuum and atmospheric gas oils used as feedstocks of the company’s downstream processing facilities.

Sinoenergy Corp. (SNEN) – Sinoenergy Corporation (Sinoenergy) is engaged in four operating segments: manufacture of customized pressure containers and compressed natural gas (CNG) facilities and equipment; manufacture of CNG storage and transportation products and the construction of CNG stations for third parties; operation of CNG filling stations, which involves the design, construction and operation of CNG stations, and vehicle fuel conversion equipment, which involves the manufacture of kits, which are used to enable a gasoline-powered vehicle to operate using CNG. Its subsidiaries include Sinoenergy Holding Limited, Qingdao Sinogas General,

Synthesis Energy Systems, Inc. (SYMX) – Synthesis Energy Systems, Inc. builds, owns and operates coal gasification plants that use its U-GAS fluidized bed gasification technology to convert low rank coal and coal wastes into higher value energy products, such as syngas, transportation fuels, and ammonia. The company’s principal business activities are in China. The company has additional projects in various stages of development in Henan Province and Inner Mongolia. Gasification plants can produce synthesis gas, or syngas, a mixture of hydrogen, carbon monoxide, and other products. Depending on local market need and fuel sources, syngas can be used to produce many products, including methanol, dimethyl ether (DME), glycol, synthetic

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natural gas (SNG), ammonia, synthetic gasoline, steam power, and other byproducts (sulphur, carbon dioxide, or ash). Uranium 308 Corp. (URCO.OB) – Uranium 308 Corp. (Uranium 308) is an exploration-stage company. The company is focused on the exploration and development of the uranium mineral properties in Mongolia and other regions. The company’s subsidiaries include Mongolia Energy Limited, Tooroibandi Limited, Success Start Energy Investment Co., Mongolia Metals Limited, and Hong Kong Mongolia Metals Limited. As of December 31, 2009, the company had not realized revenues from operations. On January 15, 2008, Uranium 308 entered into an asset purchase agreement with Success Start Energy Investment Co. (Success Start) and the company’s subsidiary, Tooroibandi Limited (the Subsidiary), whereby Uranium 308 has agreed to provide the consideration on behalf of the subsidiary for the acquisition of two uranium exploration licenses from Success Start. Yanzhou Coal Mining Co. (YZC) –Yanzhou Coal Mining Company Limited (Yanzhou Coal) is engaged in the mining, preparation, and sale of coal, as well as the railway transportation of coal. As of December 31, 2009, the company owned and operated six coal mines: Nantun, Xinglongzhuang, Baodian, Dongtan, Jining I and Jining II (collectively the Six Coal Mines). The company has interests in a number of coal mines in China and Australia. The company’s products include thermal coal, and semi-soft coking coal and semi-hard coking coal, which are suitable for power generation and metallurgical production. n

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Capital Is Being Put in the Hands of the Wrong People One Man’s Opinion

e desperately need financial leaders and regulators who understand and appreciate the importance of a userfriendly environment for early stage investments.

These companies have always been responsible for creating new jobs and sustaining and adding to our economic world leadership. What has to be acknowledged is that non-investment grade companies should be considered at the forefront of any stimulus package or legislative and regulatory help instead of their too-big-to-fail brothers who use overseas workers whenever possible, park their excess capital outside the United States, and use shareholder money to pay for their personal malpractice and misdeeds. For indiscretions of much smaller magnitude, the officers of early stage companies are flogged, fined, and sent to perdition. What has me foaming at the mouth is an article in Bloomberg Businessweek (Nov 8-14, 2010), “Asia Trounces the World in IPOs.” For 2010 the United States accounted for 11

by Marshall Sterman

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percent of capital raised via IPOs, compared with 66 percent for Asia, up from 12 percent ten years ago. If this isn’t enough to raise a few questions and the need to reassess the situation, then we might as well stock up on franks and beans and move in with the kids. Believe me, this dearth has little to do with the market itself. Historically the “window” shuts from time to time, but there’s no need for what is taking place today. Surely you’ll see this change, particularly as stocks, commodities, and assets of every description continue to be bid up; but the process needs to be reexamined and major changes made that hark back to an earlier period when there was a more competitive, two-tier investment banking marketplace, and the SEC and industry regulators and representatives were facilitators rather than obstructionists. Certainly, they needed to protect the buying public; and they did it remarkably well, when considering the size of the market and the diversity of players. During that period, however, they were not the enemy. It was not an “us versus them” mentality. Just ask any attorney who practices in this arena, especially those who learned their trade at the agencies they now try to work with. The prevailing attitude is that, while the preponderance of regulators are not investors

themselves, they know what is best for the investing public. This of course translates into an adversarial position for the smaller, early stage companies that are starving for capital. They have been funded by friends, family, angel investors, and venture capitalists, and need access to the public markets for a host of obvious reasons. What in most cases should be offering documents that are user-ready are still being sent back and forth to the regulators, while time and expense (and missing markets) claim their victims. What has also taken place is that the smaller firms that once offered alternatives to the Goldman’s of the world have been forced out of the underwriting business. Commissions on IPOs and the fees necessary to pay for smaller offerings have been cut over the years by industry leaders who have catered to the larger firms, thus eliminating what little competition existed in this area. Now throw in Sarbanes-Oxley. As much as everyone recognizes what this has done to the smaller, early stage companies plying or thinking about this space, nothing has really been done about it. Sarbanes has been a boon to accounting and legal firms, as well as a host of consultants and the additional hires at the SEC, among others. What it hasn’t done is protect the public. n

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LEGAL • TAX • ACCOUNTING

How to Prepare for a FINRA Audit R

ecently I received a message from someone at a broker dealer firm: “Dear Ken, I just received a notice from FINRA that my broker dealer is going to be audited, HELP!” First and foremost, remain calm! You’re not the first broker dealer to be audited. As a matter of fact, last year FINRA performed over 2,000 audits. There are several types of audits. The most common is a cycle audit. As the name suggests, these audits are performed regularly, anywhere between once a year to once every five years, depending on the type of business, number of representatives, type of activities, and customer complaints, among others.

Ken’s 10 Rules When You Get Audited 1) Be polite. 2) Be sure to get the examiner’s business card and his/her supervisor’s information. 3) Explain to the examiner your business model. 4) Be fully transparent. Let the examiner know of any issues that you might have. 5) Make available resources that the examiner might need, such as access to the Internet, a clean office, phone, etc. 6) Be prepared. 7) Don’t be concerned about how long the exam will last. (When the examiners are finished, they will leave...lol). 8) Answer all requests in writing and as detailed as possible; if you need clarification about a question, ask the examiner. 9) If you need more time to answer a document request, simply ask for more time; the examiner will almost always accommodate such a request. 10) Go about your business as usual; if the examiner needs something, he/she will ask. While being audited sounds scary, it’s really not if you are prepared. Using a checklist, such as the one that I have created, will help: www.microcapreview.com

Folders 1) Personnel - a folder for each associated person with the following documents: signed U-4, a copy of fingerprint card, employment agreement, outside business activity, signed AML attestation, signed WSP attestation, and any other pertinent items that the firm requires. 2) Customer complaints – stocks, options, bonds, etc. 3) Incoming faxes/outgoing faxes 4) Incoming correspondence/outgoing correspondence 5) Master client list 6) Checks received blotter 7) Securities received blotter 8) Restricted accounts 9) Extensions 10) Margin calls 11) MSRB 12) Personnel 13) Advertising 14) Speaking engagements 15) Daily trade blotters 16) Private placements 17) Syndicate 18) FINRA 19) SEC 20) All states that the firm is licensed in separate folder for each 21) Branch offices 22) Fincen 23) OATS 24) Trace 25) Arbitration, litigation, and legal files, including any settlements In addition to the folders, you should have available the following items: 1) Signed copy of the firm’s Anti-Money Laundering procedures (AML) 2) AML – independent review 3) AML – continuing education 4) Signed copy of the firm’s business conti

nuity plan (BCP) 5) BCP disclosure statement provided to customers 6) Copy of the firm’s written supervisory procedures 7) CEO annual certification (Rule 3130) 8) Home office and branch office audit reports 9) List of employee accounts (both with and outside the firm) 10) Annual compliance meeting agenda and attendee list with sign-in sheet 11) Financials and copy of the firm’s annual audit 12) Copy of Fidelity bond 13) Paid bills file 14) Bank statements 15) Clearing agreement 16) Organizational chart 17) Supervisory chart 18) Continuing education needs assessment plan 19) Continuing education program 20) List of employees with outside business activities All of this may seem daunting at first; however; keep in mind that you only need to set it up right the first time, then simply update as needed. For your convenience, I have prepared a checklist that firms can use yearly to help them become organized. You can access the checklist online at www.microcapreview.com n Ken Norensberg is the managing director of Luxor Financial Group, Inc., a compliance and business development company based in New York and a newly elected member of the FINRA Board of Governors. Ken has been in the securities business for nearly 15 years and has helped build numerous broker dealer firms. Additionally, Ken is an expert in compliance, rules and regulations, investment banking, and virtually all aspects of owning and operating a broker dealer. For more information, please go to www.luxorbd.com or Ken’s blog at www.luxorbd.com/blog . Ken Norensberg, is the Managing Director of Luxor Financial Group Inc and a Member of the FINRA Board of Governors. All the views expressed are that of Mr. Norensberg’s and not the Board of Governors. Before acting on any advice in this column, readers should contact their local district office, attorney, accountant, etc.

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V I E W P O I N T S

Rebuilding Respect L

ike most Americans, I’m a novice when it comes to finance. I own a home, manage my own business, have a retirement fund, and live the so-called middle class life.

By Stephen Robbins

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I’m part of the Baby Boomer generation and so rely on my life’s savings and property to support me when I get old. Since my wife and I are not experts in our own financial well-being, we look to professionals in the financial world for all the same kind of advice, guidance, and support that all of you are asked to give. So I write this column from that point of view. I don’t pretend to know or understand the intricacies of the financial world. While there are members of my family who do and are quite successful at it, they themselves are dependent upon the information and advice provided by financial and investment advisors. The same is true for almost all of the people whom I have known over the last 50 years of working, serving others, and building a family which now includes grandchil-

dren. I look at the lives of my children and the struggles that they have had to endure to maintain their jobs, their homes, and their financial security. I have a similar concern for my children and grandchildren. Whom will they rely on to guide them through their most productive years? I look at my grandson, still blissfully ignorant of all of the currents that surround him, and I wonder what it is that his parents and I can do to help him gain the knowledge and the skills that he will need to grow up successfully in this contemporary world. Oh, and I forgot about my parents—my 90-plusyear-old mother and her husband who both lived through the Depression years (that is, the Depression of the 1930s). They were part of the great expansion of the American economy in the post-World War II era when America started to climb to the pinnacle of the world financial markets. I asked them the other day how they viewed the “Great Recession” from which we are trying to recover. They both chuckled and said, “Steve, you’re the one with the history degree, and you know that personal, national, and international fortunes ebb and flow with time and that nothing is ever certain.” This reminds me of something that I always teach, whether in my role as rabbi, therapist, coach, or consultant. There are two illusions to which humans cling: one is control, and the other is safety. Worry drives us to soothe the anxiety by trying to prepare

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for and outguess the inevitable surprise of something happening that we don’t expect, even when we know that it could happen at any moment. The other illusion is safety. We want to believe that at any time or place we are safe because of our planning and preparation, because of our skill and dexterity, and because of our strength of will. As we’ve learned, even in terms of our economics, there is no control and there is no safety. So what is the answer, I’m asked? My response is that one must learn to be in balance and in harmony with oneself to withstand the changing realities of life, especially in this contemporary world where things change from morning to afternoon, rather than overnight. Worry and the anxiety that drives us to try and maintain the illusion of safety through the illusion of control keeps us from being truly present in the moment. We become so preoccupied with the past and the future that we don’t see what is really happening around us. When we are thrown out of balance as a result of change or disaster, we are not prepared to deal with it. So it is not only the event that becomes

the disaster, but so do we. The financial collapse of 2008 was foreshadowed with so much knowledge and information, and yet we all ignored it or played into it, thinking that we would be the ones to escape from its effects. The truth is that, when a disaster happens, everybody pays one way or the other. What is most important for us now is to find out how we can rebuild our lives, our fortunes, and most of all our internal sense of well-being. How can we live a more harmonious and balanced life than we did before? Many of my friends who work in business and finance find themselves beset by a cloud of public distrust directed at them and their work. They feel that many people now approach them with an air of doubt; it’s not like it used to be, when they began their relationship and are continuing to work with someone in an atmosphere of trust, respect, and confidence. The truth is that the majority of you who work in business finance and investment are honorable people because of the trust and respect that you have built throughout the years. Some financial advi-

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Collateral Management—Transfac has the personnel to properly manage collateral such as accounts receivable Workouts, turndowns, non-renewals Manage, Participate, or Fund at lender’s discretion To find out more about Transfac’s products and services Call toll-free: 888-575-6501 Email: sales@transfaccapital.com Or visit our website: www.transfac.com

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sors, however, have not done so. It is sad that those who caused the pain of loss on such a huge personal and national level have left their reputations smeared across yours. My family and I are blessed with the friendship and counsel of financial advisors who have all the superlative qualities that one could say. Like many of you, they helped us through this crisis, saving as much as possible and even more than we could have expected. To them, we owe a great deal of thanks. I know that they extended themselves far beyond reasonable expectations to safeguard our well-being. In short, they felt responsible for our money even more than they felt responsible for their own. In this, I learned an important lesson to share with you from my tradition, and that is to treat another’s possessions as more precious than your own… as if it belonged to God. As my friends and contacts in the finance world once asked me, “How do I re-instill a sense of confidence, respect, and integrity in my industry?” I have thought much about my experiences in caring for others, whether it involved business, psychological, or spiritual concerns. Having worked in businesses and corporations as a coach and consultant, I’ve come to learn that the single most important issue is integrity—integrity in the individual, integrity in the corporation, and integrity in the transaction. It is a fascinating word. It comes from the verb “to integrate,” which means to make something whole by bringing all the parts together, making it sound and stable, making sure all the pieces fit. Integrity is the state of being integrated. A person with integrity has one set of values and behaviors for all people, not one set for business and one set for other aspects of his life. We know that people with integrity place a higher value on honor, respect, and reputation than their own possessions or positions. It is too frequently the case that many people in finance and investment have done exactly the opposite—they have one set of values for themselves, and a different set for their clients. The measure of integrity begins with

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No Boring Lawyers

OSWALD & YAP Award Winning Business Lawyers

Specializing in Micro-Cap Companies for Over 25 Years Contact Lynne Bolduc 16148 Sand Canyon Avenue Irvine, CA 92618 Telephone: (949) 788-8900 Fax: (949) 788-8980 E-mail: LPB@Oswald-Yap.com www.Oswald-Yap.com

the way in which one approaches a transaction. Who and what is the focus of your concern, and what is your intention? The principle of intention here is so important. Many things can go wrong inadvertently as a matter of accident. But if they are the result of either inattention or the wrong intention, it means that one begins without integrity in performing the task, even in establishing the relationship. Each of us must ask ourselves, “Why am I in the business of finance and investment?” One broker whom I know well began his career with the intention of making money, and somewhere along the way, that became the most primary of his values and it drove all of his transactions. Eventually, he was found to have violated the law. He did so inadvertently, but by ignoring his intentions, others took over and he lost control of the very thing he was trying to accomplish. Since then, he has changed his focus of intention to that of helping others do well and making sure that good businesses get a good start. In this, his focus has changed so that his integrity is truly about making sure that others do well. And his intention propels every transaction toward a good end. There is a saying that I believe to be true: the end is engraved in the beginning. The way in which you start something foretells how it will finish. So if we focus on the way something begins rather than in the way in which we want it to end, we remain in the moment and concentrate on what is happening now, so that we can assess the values and the purposes that are operating in any given transaction—and not get lost. People of integrity express humility. By seeing themselves as responsible for the lives of others, for being entrusted with the concerns of others, they receive the honor which has been bestowed upon them and that is to be a caretaker for the well-being of the client. Therefore, that person is serving both others and themselves. The person who is humble in business praises those who have made the deal go well, instead of praising himself for making the deal. If what you do is compe-

tent and the transaction is well-constructed and profitable, you will receive all due praise. A person of integrity operates with transparency. There is nothing about a transaction that is withheld; no piece of information is considered unimportant enough not to communicate. This kind of honesty refers not only to the information that you possess, but it is about the diligent presentation of information possessed by others. Transparency requires vigilance in examining and re-examining all the elements of a transaction so that all of its elements are clear, all of the persons involved in it are identified, and that there are no hidden agendas or back deals. People of integrity understand that their success is never accomplished alone. Rather, it results from the efforts of many people, both in their personal and professional lives, as well as in the making of the transaction. That sense of the interconnectedness between people that drives success engenders a deep feeling of gratitude for the gifts received from so many people. A person who lives in gratitude for the gifts of others does not participate in the corporate culture of competition. There are those who feel their success and accomplishments are arrived at in spite of others rather than because of others, and who live with a sense of separation and even isolation from others; co-workers are not seen as colleagues but co-competitors who become the targets of gossip and manipulation, and there is nothing more threatening to the health of a transaction, an office staff, or a corporation than gossip and manipulation. It is said that the gossiper inflicts murder on three people—the one he gossips about, the one he gossips to, and himself— by destroying the divine image in each. I will say more for this in a later column. Suffice to say that a person with moral integrity withholds himself from such behavior and even decries it when it is encountered. Any company which tolerates gossip as part of the price of doing business takes integrity out of the company and its employees. No

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one can be sure what is true or false in that kind of climate. Mutual respect for the humanity and the well-being of others must be the hallmark of any financial institution. The old image of the heartless banker and the grasping tycoon and the deviant Wall Street broker has all been resurrected in the American psyche. All of us regret that such images hold a certain amount of truth and are applicable to the 2008 financial collapse. They are, however, not applicable for the bulk of those who work in this industry and who need to distance themselves and their institutions from such colleagues to rebuild the reputation and confidence of Wall Street, the banking world, and investors on Main Street. In sum, to bring a company and individuals back into integrity means to re-humanize them by re-sensitizing them to the precious qualities of human life—more precious than the financial gain. Every business setting is like an extended family. I’ve had the experience of doing both family and business counseling. What I mean by that is when I’ve been asked to enter into consultation with a company, I find that the family-style ties that bind the company together frequently define the nature of the integrity of the company’s work and the quality of its transactions. The way a company maintains its integrity is by acknowledging the quality of the business family it has created, and by working to maintain its health and stability through good support and guidance. In doing so, the company provides a climate in which every person who works there can strive to have the greatest integrity for himself and for his work. Stephen Robbins is both psychologist and rabbi. He is currently in private practice in Los Angeles where he specializes in working with individuals and families and frequently consults with businesses on improving communication and decision-making. He also teaches students, leads seminars, and coaches individuals and business groups on effective leadership. He can be reached at (323) 528-1694 or stephenmrobbins@ gmail.com.

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TSX-V:SGM

...advan cin g to produ ction THE LINCOLN GOLD PROJECT, CALIFORNIA Lincoln Project

Santa Teresa

Sutter has obtained all ďŹ ve major operating permits for the Lincoln Project, located 45 miles southeast of Sacramento in Amador County, California. The Company controls a 3.6-mile segment within the most productive 10 miles of the historic Mother Lode Gold Belt, including eight historic mines. Collectively, these mines produced over 3.5 million ounces of gold, representing 27% of the historic production from the 120-mile long Mother Lode Gold Belt. Many of these historic mines had documented un-mined resources in-place at the time of their closure. The 2008 indicated and inferred resource contains approximately 700,000 ounces. Potential exists toÂ add to the resource at depth on the known mineralized zones within the Sutter properties. The Lincoln project has excellent infrastructure with power, communication, and transportation established. Sutter Gold is rapidly achieving benchmarks in the permitting and mine approvals process and hopes to make a production decision based on results of the ongoing pre-feasibility work. Sutter expects the completion of the Preliminary Economic Assessment in Q4 2010, and is one of few US junior companies capable of being in production by the end of 2011.

CONTACT INFORMATION Bob Hutmacher Tel: 303-238-1438 Email: bhutmacher@suttergoldmining.com

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w w w . s u t t e r g o l d m i n i n g . c o m

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SGS-COC-004752

LEGAL • TAX • ACCOUNTING

The Compliance Corner As 2010 comes to a close, we can look back on a year of tumultuous markets, far-reaching legislation, and a real desire to return to the “good old days”. But, returning is not an option. Sticking our collective heads in the sand is not either. Thus we must forge on! We shall forge on! And we shall all have a much better 2011! Many new rules have been enacted or will be implemented in the near future. Each of these items can be found in detail on the FINRA Web site, http://www.finra.org/ Industry/Regulation/Notices/2010/index.htm. We highlight a couple of the more than 70 notices published in 2010. Regulatory Notice 10-60 SEC Approves New FINRA Rule to Address Abuses in the Allocation and Distribution of New Issues Effective Date: May 27, 2011 New FINRA Rule 5131 (New Issue Allocations and Distributions), which further and more specifically prohibits certain abuses in the allocation and distribution of new issues1 goes into effect on May 27, 2011. Among other things, the rule prohibits

quid pro quo allocations and “spinning,” and addresses the conduct of member firms and associated persons in the areas of bookbuilding, new issue pricing, penalty bids, trading and waivers of lock-up agreements. The text of the amendments can be found in the online FINRA Manual at www.finra. org/finramanual. Regulatory Notice 10-57 Funding and Liquidity Risk Management Practices Executive Summary In adverse circumstances, whether the result of firm-specific events or systemic credit events, the cost of funding a brokerdealer’s operations could become prohibitively expensive; in extreme cases funding could become unavailable. FINRA expects broker-dealers to develop and maintain robust funding and liquidity risk management practices to prepare for adverse circumstances. Further, FINRA expects brokerdealers affiliated with holding companies to undertake these efforts at the broker-dealer level, in addition to their planning at the holding-company level. We are publishing

by Chet Hebert

this Notice to provide guidance in this effort. Regulatory Notice 10-54 FINRA Requests Comment on Concept Proposal to Require a Disclosure Statement for Retail Investors at or Before Commencing a Business Relationship Comment Period Expires: December 27, 2010 Executive Summary FINRA requests comment on a concept proposal to require member firms, at or prior to commencing a business relationship with a retail customer, to provide a written statement to the customer describing the types of accounts and services it provides, as well as conflicts associated with such services and any limitations on the duties the firm otherwise owes to retail customers. Chet Hebert is founder and president of The Compliance Department Inc., a compliance consulting firm located in Centennial, Colorado. The firm assists broker-dealers and investment advisors in the areas of firm formation, compliance, CRD service bureau, outsourced back-office processing, and branch office audit services, including AML and Regulation S-P compliance. For more information about the firm, please visit www.thecompliancedepartment.com or call Chet at (303) 339-9870.

Upcoming MCR Life Sciences Issue Back in my days on Wall Street, I wished I had a quarter for every company that came to my firm claiming to have the next cure for cancer. From MDs to PHDs, from CEOs with long pharmaceutical careers to clinical biologists from great schools or hospitals, from multi credentialed experts in their respective scientific fields to brilliant chemists and healthcare specialists, all filed passed my investment bankers and me. Selective and patient, we found a few terrific companies and underwrote them, giving them their start to develop new molecules for new drugs or therapies or diagnostic products. When biotech company’s share prices started to move higher, more money poured into the sector. Biotech stocks became the rage in the early 1990s when many companies in the sector were underwritten or refinanced. Prospectuses flooded the street and sooner than later the biotech sector had officially been born. Genes, DNA, drug trials, and the FDA were street jargons that fell from the tongues of stockbrokers near and far. Biotech deals became over-subscribed, and investors chased deals trying to get shares in IPOs in a buying frenzy. Now years later the biotech sector is still incredibly exciting with many new companies on the horizon. The healthcare, biotech, med-tech, and life sciences industries are growing faster than bacteria in a Petri dish. The sector is now a vertical business from research through new drug development to over-the-counter successes that are too many to name. Today investors, the pharmaceutical industry, financial experts, and our readers are paying close attention. Look for our next issue of Micro-Cap Review, healthcare, biotech, medtech, pharmaceutical, and life sciences, for the exciting features you have grown to expect. www.microcapreview.com

Micro-Cap Review Magazine

V I E W P O I N T S by Jack Leslie

Ombudsman There are a number of issues facing the country. The fall elections should be a beginning of change, not business as usual. This nation is at a crossroads and decisions made in the next election will affect future generations. To quote a famous line by Sean Connery in the movie The Untouchables, “What are you prepared to do?” Replacing an old pair of shoes with a new pair that will result only in blisters is not the answer. We need to let the people in charge know that we will no longer tolerate abandoned leadership. We need leaders from all sectors who are willing to work together to solve the country’s financial problems. Every broker dealer needs to address the issues as well. Why do the regulators appear to be least accountable to the very people they serve–the investors? Why are most regulators made up of attorneys? Why can’t their ranks consist of accountants, financial planners, and CEOs? Common-sense, proactive measures need to be implemented. Panels in Washington, D.C. are not helping the public understand solutions to this complex problem, and haven’t got a clue on how to effectively administer regulations. How many regulators have ever written a ticket? If most of them cannot even manage our tax money, how can they possibly be entrusted to oversee investment regulation? Their strategy does not make sense. Printing more money is not the answer. We need to encourage the private sector to invest money in new businesses and to invest in maintaining current businesses with capital that banks are unwilling to provide. Excessive regulation is killing small business. The broker dealer, however, is not without fault. Regulations need to be designed to allow examiners to work with broker dealers to help correct problems. Instead, broker dealers are often viewed as a source of revenue for the government. These issues create an environment typical of Washington – do as I say and not as I do. This twaddle must end soon or all of our investment money will go elsewhere. That money should be put to use here to save jobs. The banks have created a mess that will take years to sort out. In the meantime, let’s bring back the enforcement of the Glass-Steagall Act. Let’s allow tax credits for investors in small businesses. Let’s create an oversight committee in the financial arena staffed by qualified, non-biased individuals. The banks need to re-establish their credibility with the public. Allowing large financial companies to engage in both banking and brokerage activities has caused a great deal of harm to our economic checks and balances. We ought to have an overseer in each industry run by retired, unbiased, and educated individuals. What are you prepared to do? n

ow many regulators

have ever written a ticket? If most of them cannot even manage our tax money, how can they possibly be entrusted to oversee investment regulation?

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