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James Hodgins Avalon Rare Metals Inc. AVL-T PAST TOP PICK Nov 15, 2010

(Top Short Oct 7/10. Up 4.6%.) (Pairs Trade – Long Molycorp (MCP-N) and Short this.) Rare metals. Rare metals are in a bubble, likely 2 years at the outside but this company won’t be in production for at least 3 years and will need a lot of CapX.

James Hodgins

Owned

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metal mines

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TOP PICK

Top Short (Pairs Trade – Long Molycorp (MCP-N) and Short this one.) Thinks rare earth sector is in a bubble and will be trading much lower in 2 to 3 years. This company won’t be in production for 4-5 years while Molycorp should be in full production next year.

DON'T BUY

Trouble with the rare earth space is that China produces 90%+ and they’ve been playing political trade games. Cut Japan off and now cut back because they say they need it for domestic productions. This has spurred a huge race. 20-30 companies are looking to convert early explorations into deposits. Would be inclined to use a basket approach.

PAST TOP PICK

(Top Pick Oct 7/10. Down 100%.) (Pairs Trade – Long Molycorp (MCP-N) and Short this one.) It will be at least 3 more years before they bring their project into production. Still short on this one.

DON'T BUY

Has a development project in Alaska. Because it is going to require such a large amount of CapX to bring the project into development, he would stay away. It is at least 3 years out from ever being able to come into production. Has a small short position on this one.

DON'T BUY

Rare earths in Northwest territories. A bit Expensive. Cap X is very high. There are always a lot of questions about the metallurgy of a lot of rare earth companies.

COMMENT

Good rare earth project up north. Huge, heavy rare earth resources that everyone is interested in. Because of the location and the logistics, it will cost a lot of money to build a mine and process. The project makes sense, but there are other names that you could own as well.

BUY

Likes it. Rare earth space is for real. Countries are going to require rare metals to create electronics. Is a made in Canada story. Will ultimately get this property up and into production. This will bounce back with the market.

SELL

It is just breaking down. There is no spike in volume to indicate the bottom. It is way too risky at this point.

DON'T BUY

He shorted the name a couple of years ago, but has almost no position now. It is highly speculative. There is a lot of resource and it will take a lot of money to take it into production.

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James Hodgins Avalon Rare Metals Inc. AVL-T PAST TOP PICK Nov 15, 2010

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