Cohen still thinks this is the most undervalued stock he has in his portfolio.

Buy recommendations:

Aurelian Resources Inc.
San Gold Corp.
Andean Resources Ltd.

Sell recommendation:

NovaGold Resources Inc.

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Commentary:

"Aurelian is one of the most exciting discoveries in this cycle. They already have compliant resources of 13.7 million ounces at around 7.3 grams which is high grade for an underground mine with wide mining widths. We still have to get better clarity on the mining laws that will be put in place in Ecuador and the market is basically waiting to see how the new mining act will look. There seems to be more worry embedded in the share price that what reality will be but we think it will wash out quite nicely. We feel that the valuation is probably trading at one-third the valuation of where it ought to be. Probably a $24 to $25 target would be reasonable.

San Gold is a restart of the old Rice Lake mine in Manitoba except the story is really a different story and the market hasn't understood that very well. (Rea Gold, who built the current 1250 tonne per day mill and Harmony Gold both had unsuccessful stints at Rice Lake in recent years. Gold City took over Rice Lake from Harmony and merged a couple of years ago with San Gold, who had claims to the east)
What the company has done since last August is ramp up the old Rice Lake mine to 400 tonnes per day and at the San Gold-1 ore body, they built a new mine and are mining from there about 400 tonnes a day as well. Now, they are going to be breaking ground on a new zone called Cartwright and by the end of this year they will be feeding 400 more tonnes per day. So what you're really doing is filling up the original mill with three mines producing 400 tonnes per day.
Unfortunately the memory that the market is still left with is that this mine doesn't work. You have to wipe the slate clean and look at it with a clean slate. There are a lot of companies out there with a similar or greater market capitalization who only wish to have right now what San Gold has. You get a lot of value for this market capitalization. It's an operating mine, it's permitted, you have all your infrastructure and it's in mining-friendly Manitoba which has power costs about one-third that of Ontario. There's a lot of benefits here.

Andean is pure exploration play down in Argentina and run by a couple of former Meridian Gold guys, namely Wayne Hubert. Geologically, this a very unique property. At the Eureka West zone, we feel there will be approximately greater than 2 million ounces of high grade gold equivalent. The main Vein zone which does have a compliant resource is 1.7 million ounces of gold equivalent. Located in Santa Cruz province, this a very friendly mining state. It's not a cheap stock but you're paying for quality exploration potential. If I were to arm wave, I'd say this camp will rival the size of Meridian's El Penon property which is around 6 million ounces.

NovaGold's net asset value is largely driven by two projects, Galore Creek in British Columbia and the Donlin Creek project in Alaska. In the case of Galore Creek there was a bad combination of rising capital costs and a gross miscalculation of initial capital when compared with the detailed engineered estimate. That really whacked the stock. The Donlin Creek project is probably going to see increased capital expenditures and while we don't know exactly where it's going, we do feel its going higher, so we're avoiding the stock altogether."

Selected holdings:

Aurelian Resources Inc.*
Eldorado Gold Corp.*
Goldcorp Inc.*
San Gold Corp.*
Red Back Mining Inc.*
Andean Resources Ltd.*
Dynasty Metals and Mining Inc.*


One-year return: 5.6%
Three-year return: 29.4%
(Through Dec. 31, 2007)