In a note to clients dated October 30^th 2007, which looked at the state of the Peru mining industry and the metals mined there, we wrote the following:

..it still surprises some investors to learn that the copper industry couldn’t give two hoots about how many houses are built in the USA. By way of evidence, over 85% of Peruvian copper exports presently go to Asia, comprised of: China (44.7%), Japan (29.2%) and S. Korea (11.7%). This sea change in demand has been understood inside the industry for literally years but is repeatedly denied by those that still believe the USA is the centre of everything. Therefore the next time metals spot prices drop on headlines screaming of demand slacking in the US we invite you to chuckle along with us. If they can keep the joke going it will only get funnier in the future…

Answer: Yes. Here is why:

Last week’s offer of C$455m for Northern Peru Copper (NPUCF.PK) by China Minmetals and Jiangxi Copper Company values NOC at C$13.75 per share. We had our bar set at C$20 originally. While not complaining too heavily about the deal (after all a win is a win, and this deal represents a 49.5% upside to our recommendation in just 3½ months), it does fall short of our original target.

Three months have gone by, so it’s time to report on our LatAm buy recommendations. As in our previous update, each stock’s title line typically features the ticker code, the price on July 22nd (date of our previous progress report), price as of Friday’s close, percentage change in price and finally the new recommendation. Any new positions are dated from the day of recommendation, and closures are noted accordingly. 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. All charts are courtesy of the nice people at bigcharts.com.

Aurelian Resources (AUREF.PK)

Baja Mining Corp. (BAJFF.PK) [BAJ.TO]is a stock we have been following quietly and with much interest for some time. Its Boleo copper project in Mexico has recently moved into top gear, as the company has recently succeeded in obtaining all the permitting and financing necessary to put the plan into action. The mine will have a life of at least 25 years, it will become reality in around 2 years from now, and there is little blocking the way of BAJ apart from constructing the facility on time and in budget and caring for a few protected cacti on site that need specialists to respectfully relocate them (and quite right too).

The share price has been reacting favorably to recent developments, and by the looks of things there is more to come. Management holds a touch under 30% of all stock, and must therefore be doubly pleased with progress in the last 12 months.

Wednesday saw the latest installment in Pedro Brown Productions smash hit soap opera, "Golden Dynasty".

As we all know, the "Golden Dynasty" all star cast includes Yamana (AUY), "aggressive, thrusting upwardly mobile", Meridian (MDG) "rich, tempting, save-me-from-this-brute" and Northern Orion (NTO) as "somebody-still-wants-me-after-all-these-years".

In the last episode, the rich, handsome yet cold and calculating Yamana tried yet again to win the heart of the beautiful but elusive Meridian. Let's recap some of the dialogue from a scene that had us on the edge of our seat:

On July 17th 2007, GOL Linhas Areas Inteligentes S.A. (GOL) was awarded “best performing airline in the world 2006” for its revenue category (market cap of between U$1Bn and U$4Bn) by the prestigious industry magazine Aviation Week and Space Technology. However we would be surprised if many remember this, as on 17^th July a different Brazilian aviation event made far more headlines. A TAM (TAM) airlines jet slewed off the runway at Sao Paolo Congonhas airport and crashed into a nearby warehouse, killing 199 people in Brazil’s worst ever air accident.

Bad Luck

Since obtaining the option to outright purchase at Galeno in mid 2005, the company has quickly moved forward with developing the property, with over 32,000 metres of diamond drilling done and the pre-feasibility study completed and published in January 2007. NOC is now working on the bankable feasibility study, expected early 2008.

The Hilorico property is located approx a mile from the Galeno property. An ongoing drill program is evaluating additional gold mineralization and base metal targets.

QUITO, Aug 22 (Reuters) - Ecuador's President Rafael Correa wants an upcoming special assembly on rewriting the constitution to forbid open pit mining and to prevent drilling in biologically rich areas, said the government's top candidate for the body.

Alberto Acosta, Correa's pick to lead the campaign to win a majority in the Sept. 30 vote for assembly seats, said reforms are needed to protect the country's ecology from the nascent mining industry.

Important note from SA Editors: Seeking Alpha received a letter from KAL Energy's lawyers alleging that the article below, originally published June 12th, "is replete with false and misleading statements", expressing concern that the purpose of the article was "to manipulate the Company's stock price", claiming that "the falsehoods in the article are in fact defamatory and libelous", and demanding that Seeking Alpha immediately remove the article under threat that "KAL will vigorously pursue claims for defamation and liable (sic) and the Company's rights under the federal and state securities laws". A separate letter to Mr Turner, forwarded to us, outlined the alleged inaccuracies.

Mr Turner, who is not a Seeking Alpha employee and whose opinions are not those of Seeking Alpha, assured us that "neither myself or any other member of Hallgarten and Company... directly nor indirectly, has benefitted financially in any way from our coverage of KAL Energy... when we were first falsely accused of having a short position in the company by KAL we immediately sent a mail to KAL Energy HQ explaining that this was not true". Mr Turner adds that he "stands by every word" in the article.

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

According to all sources, production at their San Cristobal mine in Bolivia is on schedule to begin as planned in 3q07. However the company has stated that capex costs have risen by about 10% from the original planned $650m. This did not come as much surprise, and the sort of teething problem that should not (and did not) shake markets.

On an investment front, the Norwegian Central Bank has recently disclosed that it has taken a 5.1% stake in SIL. This kind of strong institutional backing can only be welcomed. We also note the renewed interest in silver at market and the price surge in recent days.

As for the loyal longs, the shareholders that CEO Thompson called “the greatest shareholders in the world” have been rewarded for their patience. Unashamedly guilty of having "fallen in love with a stock", having suffered a seemingly interminable wait and having withstood innumerable and often anonymous barbs about “their company” over the years, they should also allow themselves a moment to celebrate.

All that said, we recommend finding a price and taking profits on KRY at this point. However, those who do so should wish every fortune to those who remain long.

Gustavo Larrea, the Ecuadorian government minister and confidante of President Rafael Correa, was reported as saying on Thursday evening that miners would be hit with a tax regime so strict that it would take away 70% to 80% of revenues. Or did he?

Larrea in fact told news agency Agence France Press that (translated) “in the new contracts with petroleum companies, the percentage (of revenues) left for the private company will vary between 20% and 30%, and 70% or 80% for the state”. He then went on to say that “these are the rules in Brazil, Colombia, Mexico and in Venezuela…and they will also be in Ecuador, same as for the mines issue.”

The stocks are looked at in the chronological order of their last recommendation and the title lines feature the ticker code, closing price of the day of the buy recommendation, yesterday’s (May 21st) closing price, 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. So without further ado, let’s see how we’ve done.

Gold Reserve (GRZ) Jan 30th $3.58. Now $5.81. Change +62%. Recommend: HOLD

Via this process a string of names were rendered bankrupt or scarcely operable. The US airlines moved in with proliferating networks across the region. These channeled flights to the US and particularly through Miami. The local travelers were glad of the chance to use these airlines as the service was better than anything offered by Iberia-controlled groups and many Latins also had relatively unobstructed access to US via visa waiver programs. This in particular pertained to the Argentines who were flush with cash under the Convertibility regime that lasted the whole decade. Most of the flow was northbound with Latins heading to the US to spend their pesos and reales in US malls. Latin America hadn’t shaken off its tawdry political image and the countries down there were just not dirt cheap compared with other locations.

Since 2000 the equation has changed. It was the US airlines that stalled as 9/11, the Argentine economic collapse and the surging price of oil removed clientele and sent operating costs soaring. Pricing power was weakened just as costs needed to be passed on. Draconian visa rule changes in the US resulted in a plunge in visitors from Latin America. The US airlines retreated on mass hacking back the number of flights and reducing destination options. The quality of service dived. Europe became more problematical as a travel destination as the dollar dived taking Latin “dollar-linked” currencies down with it.

To recap: In two reports published Tuesday by Raul Gallegos of Dow Jones Newswires, Mr. Hernandez stated that a) Venezuelan steelmaker SIDOR, majority run by Ternium (TX), was being considered as a target for nationalization and b) the new mining laws currently going through legislative review in parliament would force KRY into a joint venture operation with the Venezuelan state, comments that caused TX and KRY to drop in Tuesday trading on heavy volumes.

However, on Wednesday afternoon Peter Millard, also reporting for Dow Jones Newswires, quoted Hernandez’s boss, José Khan, as saying that there were no plans to nationalize SIDOR. Khan flatly refuted the idea and apparently got close to calling his inferior at the ministry a liar, saying that “It was not true”. Other sectors the Venezuelan business community also had harsh words for Hernandez; the head of the steelmaker’s union said that Hernandez had turned his back on the steelworkers, and the head of the steelmakers management confederation called Hernandez “irresponsible”. Rare indeed to see management and unions at a steelworks united as one voice!

Below we can see in graph form the cash at bank held by GG at each reporting year end, and the present amount in its coffers. It is clear that this amount of cash is unusual for the company.

The rise in revenues from established metals mining in the Latin America region has been exponential. Codelco, the world’s biggest copper miner and owned by the Chilean state, is an excellent benchmark to show how money has flowed into the region via base metals. In 2002 they produced 1.62MT copper and received revenues of U$3.49Bn. In 2006, production had upped a little to stand at 1.78MT copper, but revenues were up an impressive fivefold to stand at U$17.1Bn. On the precious metals front, South America’s biggest gold operation Yanacocha, owned by Newmont (NEM) (51.5%), Buenaventura (BVN) (43.5%) and the IFC branch of the World Bank (5%) had revenues in 2002 of $540m. In 2006, revenues had climbed to a whopping U$1561m even though production volumes had again stayed basically flat.

Dusting Off Old Plans

A perpetual bugbear, ironically enough, was the fear that Lula would get elected. Then he finally gets elected and it is like there is “nothing to fear but fear itself”. Well, not quite, as the thing to fear appears to be hot foreign money. The two pullbacks (we dare not call them corrections) in recent times have both been externally generated and both have at their root the mechanisms of the yen carry-trade. In both instances hot international flows usually attributed the bogeyman hedge funds have retreated in a rush and sent the Bovespa into a tailspin. Neither of these corrections have been lasting. It is not clear if the same money rushes back in when the coast is clear or it is “bargain hunters” exploiting the situation.

Charles Drevna of the National Petrochemical and Refiner's Association said,