Mongolian Resource Play

[Ed Monton]

Hope you don't mind if I copy your post here.

I am going to present the case for EAS.V - East Asia Minerals

First, let me provide some background information. This is a company that is widely regarded to have one of the best management teams of any junior exploration company in the business. All of the senior management team have lengthy past service with established mining companies like Noranda and Anglogold Ashanti, in senior positions directly related to Asian mineral exploration. The credentials of this team are exceptional and no doubt they are also well connected in the Asian sphere of influence, where very often the personal relationships are what drives business deals. The company has a tight share structure, strong cash position, no debt, and an excellent suite of early stage exploration projects in Mongolia, some of which have already posted extremely high grade drilling and sampling results.

Now it is important to put the company story in the wider context of the metals markets. There are wildly differing forcasts for the price range that various metals are projected to trade in, but most analysts agree on one thing: it is Asian demand that will be driving the metals markets in the forseeable future. Some of the best grass roots exploration prospects in the world are to be found in Mongolia, a country that provides a stable, pro-mining environment that welcomes foreign investment. Like any country, there has been some widely reported friction where the pace of development activity has threatened a way of life that has remained almost unchanged for centuries, but the overall atmosphere in the country is supportive of the economic opportunity that new mining projects will provide. Mongolia is most likely going to be the source of much of the resources that China and other Asian nations will demand for their own growth and security.

In regards to copper production, analysts are again widely divided, but a growning realization that is advanced by many is that we are in an era where higher copper prices can be sustained. Contrary to what many have assumed, the expansion of copper production capacity will be about 2 years away before any significant new supplies enter the market, despite the much higher current prices. There is no shortage of money floating around the sector, but the development window to bring new mines into production has become elongated due to bottlenecks in supply of critical machinery, and a shortage of qualified mining personal. It is likely that majors will be interested to deploy some of their cash positions into buying up new deposits that are high grade, large tonnage, and low cost production profiles. This in an industry that thinks in terms of decades, and not over what may happen next year or the year after.

So it is very likely that EAS will get some serious attention from deep pocket senior mining companies. But is important to note that outside of the mining industry, very few people have even heard of East Asia Minerals. There is a lack of promotion by the analysts, and the stock trades thinly with a market cap of under $30 million. To make money trading junior mining stocks, one must be able to speculate on which companies will achieve success to define large new resource deposits, and one must also be right FIRST, before other speculators figure out what is going on. By the time the retail investors ever hear about EAS, the easy money will be made. So lets concentrate on the former...

The flagship property for EAS is the Khok Adar project. The company has identified several high priority targets from sampling and trenching of surface outcrops, and many other targets on the property have never been tested. Yet the small part of the project that is currently undergoing drilling has returned results that are exceptional:

"Highlights include KA-05-08 with 85 m @ 2.11% Cu (including 29m @ 4.85% Cu), KA-05-12 with 90 m @ 1.23% Cu (including 12 m @ 2.34% Cu) and KA-05-14 with 89 m@1.76%Cu (including 11m@ 7.52%Cu)."
http://www.eastasiaminerals.com/userimages/11-02-05%20EAS%20DH%20news%20release-final.pdf

To put those results into perspective, when you have wide intercepts of copper that originate close to surface, then you can define an open pit prospect for a bulk tonnage operation. These deposits will often be economic and profitable with average grades of about 0.45% copper. The deposit also involves polymetallic zones:

"Some of the chalcocite mineralization is hosted in semi-massive to massive pyrite replacement zones associated with the major shear zone. These holes also intercepted significant zones of zinc (43m@ 2.24% Zn in KA-05-21 and 31.5m@1.34% Zn in KA-05-20). KA-04-04, located 1.5km west of this target contained 135.8m@2.04% Zn."

The drill program is still in the early stages to step out the limits of the deposit:

"We have only tested the fringes of this target so we are encouraged by the 200m by 70m zone of copper oxide float over the target. The East Zone 1 target contains supergene-enriched chalcocite copper mineralization. This type of mineralization, along with the wide intercepts of hypogene zinc, may represent the outer edges of a large, zoned, primary copper system which could be the source of the copper in the oxide deposits.”

http://www.eastasiaminerals.com/userimages/12-2-05%20KA%20nr%20final.pdf

So we are at the early stages where an exceptionaly managed junior company is outlining what could amount to a massive, high grade base metal deposit, near surface, and almost no one in the retail investor community is remotely aware of the company. In a nutshell, this is the ideal scenario that every junior mining investor should search for when selecting where they want to put their money.

The reason I am pounding the table on this company today is that the stock has drifted down to a buying range of about a dollar a share, which on the chart represents strong support levels. The mining sector is surging at this point in the cycle, with both copper and zinc surpassing multi-decade highs, and analysts are forcasting short term metals shortages, so deposits rich in those metals are going to be getting attention. And finaly, EAS commenced a larger drilling program before xmas that will begin to supply news flow with drill assay results. If those results continue to be in line with what they have reported to date, then the set-up for EAS to rapidly increase in share value is fantastic. And because the stock is relatively unknown, and trades thinly, any new surge in buying will drive the stock higher very quickly. The time to be positioned for such a run is before the stock gets attention, so that one can be buying at cheap prices and patiently accumulate a position.

I think EAS is going to be one of the premier mining juniors in the years ahead. I have not even mentioned the other properties that are gold, silver, uranium and base metals targets. Also, the company recently closed a PP to raise over $15 million, so they are well financed to aggressively drill the hell out of their projects. I think EAS could become a core holding in a PF of junior prospects, and I doubt the company will be available at cheaper prices than today for any extended period of time in the future. It is worth noting that the last PP was completed at an offering price of $1.25 per share, and the stock is now trading well below that level, so it is unlikely that there will be a flood of cheap paper to drive stock prices lower when that placement becomes free trading in a few weeks.

I have done my best to present the facts on this company as accurately as possible. I would recommend that people who are interested in the company do their own research to verify what I have discussed, and I do not write to recommend the stock or have any promotional relationship whatsoever with anyone connected to the company. But I do endeavor to share the opportunities in the market that I find, and I do not know of a better company that is has a better upside potential, and trades at a lower value.

Cheers!

mike

PS: Voluntary personal disclosure: I have owned shares in EAS since the first PP at 45 cents over a year ago. I have never sold a share, have no plans to do so in the months ahead, and will most likely be a buyer to increase my personal holdings.
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