Progress Report: Our Latin American Buy Recommendations

by: Mark Turner July 24, 2007 | about stocks: BAK / ERJ / GOL / GRZ / ILF / KRY / SIL

Mark Turner

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Two months have gone by and we are now updating our LatAm stock recommendations. This will bring us more into line with the classic quarterly progression of stocks. From here we will maintain a three month gap so our next update can be expected mid-October.

As before, each stock’s title line typically features the ticker code, the May 21st closing price (date of our previous progress report), price as of Friday’s close, percentage change in price and finally the new recommendation. Prices are in US Dollars ($), Canadian Dollars (C$) or Brazilian Reales (R$), according to the stock. General comments, comparisons to our benchmark and conclusions are found at the end.

Gold Reserve (GRZ) May 21st $5.81. Now $5.78. Change -1%. Recommend: HOLD

GRZ has spent the last two months procuring equipment and making the first moves to build its mine. In that time the stock has gone lower and come back to the same level.

There are rumblings of ‘toxic financing’ around the stock but we find those easy enough to ignore. A larger cloud over the company seems to be the changes to mining laws about to be announced in Venezuela. Only time will tell on that count, as trying to second-guess the Venezuelan government can be a very expensive hobby. However the basic fact remains; on an ‘ounces in the ground’ basis GRZ’s Las Brisas is one of the cheapest large gold projects in the world. We hold.

Crystallex (KRY) May 21st $5.08. Closed June 15th $4.55. Change -10%.

When Crystallex announced their “virtual permit” on June 14th we closed our position.

PetroFalcon Corporation [PFC.TO] May 21st C$0.68. Now C$1.10. Change +62%. Recommend: BUY

In our last update we said that we expected the fundamental value of PFC.to shine through in the months to come. And shine it has! Last week’s news on the link-up with Sweden’s Lundlin Petroleum was greeted enthusiastically by the market. Lundlin has obviously seen the same fundamental opportunities as we see in Petrofalcon and its still undervalued assets in the Venezuelan oil and gas sector.

The deal is a classic win-win (we are not going to give the full rundown here; the recent PFC.to press release is the place to look for details), and we see Petrofalcon moving higher from here. We also note the welcome return of high traded volumes. We reiterate our buy recommendation.