Resource Stock Update - V13 #20.2, - 2007 Takeovers, 2008 Targets -  Dec., 27, 2007

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The last several months of 2007 turned out to be pretty brutal, but many of our stocks have been
bouncing back strongly the last couple days from very over sold conditions. Cour d'ALene - CDE
jumped $0.55 yesterday, a 12.6% gain in one day. We own CDE from the PJO takeover.

There are many excellent bargains that could be described as a buy of a life time and I will touch
on some of these. With stocks rebounding from over sold conditions, we will probably end the year
with modest gains and out perform the bench marks, but even so it was a very dismal year and many of
you may be wondering about the stock selection and our long term hold investment strategy.

        ************ So many takeovers boost our performance **********

However, I am encouraged by the fact we had a record number of our picks taken out in 2007. I
generally do not select picks with a take over in mind, but the fact this is happening is a sure
sign that others like the picks so much they want to buy them out.

In most cases, I actually prefer these picks are not taken out, because of the fact they are good
companies - they can continue to out perform their peers and lead to further substantial gains. Then
on the other hand, quite often the take over transforms the new company into a superior performer
that can continue to out perform it's peers.

My top long term performing pick is 'The Energizer Buuny' Ultra Petroleum - UPL that is up a
whopping 14,000%. The reason why this stock has such large gains, is we have held it almost 9 years
and the stock price was always expensive in relation to it's peers, so it was never taken over.
There is no way a large company (take over suitors) could ever convince their board to pay a too
high a price to take over a company. These large companies are run by the financials and bean
counters, they have little vision and fore sight. It is obvious that UPL would have been a great
acquisition over the years, but it's expensive stock price has prevented this from happening. While
most stocks did poorly in the last half of 2007, UPL went on to new highs and hit another new all
time high just a couple of weeks ago.

This leads me to the next point. Stocks are in many cases taken out because they are priced too
cheaply. In other words they offer value and are worth buying. This is what I look for in a stock
when I select it, exceptional value or at least strong potential for future value (exploration
plays). And is the chief reason that many of our stocks were bought out this year. At this point I
want to make brief mention of each stock and the action we took or should.

                 ****************** 2007 Takeovers ************************

Bema Gold - BGO will be listed as sold at 7.32, a 1,120% gain. It merged with Kinross and we already
own Kinross. It is ok if you took Kinross stock if you did not own it

Rio Narcea - RNG will be listed as sold at 5.48 a 585% gain. It was taken over by Lundin Mining.

Miramar - MAE will be listed as sold at 6.25 a 594% gain. It is being taken out by Newmont. Newmont
is on our list, but I think it is better to put proceeds in a other junior or mid size producer.
Seniors are struggling to replace reserves so are having a difficult time growing. I expect Newmont
to make numerous other take overs with their big 1.3 billion windfall from the Franco Nevada IPO

http://www.stockhouse.com/comp_info.asp?symbol=MAE&table=LIST

Primary Metals - PMI will be listed as sold at 3.60, just a 24% gain. It was taken out early by
Sojitz Corp. before it had much of a chance to go up in value.

Shell Canada - SHC will be listed as sold at 45.00 at 180% gain. It was bought out be it's parent
Royal Dutch, already on our Millennium List. It was OK to take Royal Dutch stock.

Western Oil Sands WTO will be listed as sold at $37.70 a 251% gain. It was taken out by Marathon
Oil.

Advantage Energy Trust will be listed as sold at 15.35 a -24% loss. It was hit by new government
legislation like all trusts and was bought out by Ketch Energy at a depressed  price.

Shiningbank Energy Trust will be listed as sold at 14.52 a -30% loss. It was hit by new government
legislation like all trusts and was bought out by PrimeWest Energy Trust.

Pacific Stratus - PSE  will be listed as sold around $11.70 for a gain of 185%. It is being merged
with Petro Rubiales - PEG. PSE shareholders will receive 8.85 shares of Petro Rubiales for each
Pacific Sratus share. I suggest taking these shares and I will be adding Petro Rubiales to our list
at $0.46 per share based on our $4.10 buy level for PSE. There is strong growth potential with the
new merged company.

http://www.stockhouse.com/comp_info.asp?symbol=PSE&table=LIST

Norther Orion - NNO will be listed as sold at 7.25 a 353% gain. It was taken over by Yamana YRI
already on our list. It is OK to accept and hold the Yamana shares

Palmerajo - PJO will be listed as sold at 11.45 a 55% gain. It will just be delisted today as a
result of a take over of Couer d'Alene - CDE. I have suggested taking the CDE shares because of the
strong growth potential from the Palmerajo takeover. CDE will become one of the world's leading
primary silver producers and is expected to increase company-wide silver production to nearly 30
million ounces by 2009, and at very low costs. I will add CDE on our selection list at $2.72 base on
our $7.40 entry price for Palmerajo. Palmarejo shareholders will receive 2.715 Coeur shares and
$0.004 for each Palmarejo share.

The Palmarejo project is expected to begin production in early 2009 at an annualized rate of
approximately 10.4 million ounces of silver and 115,000 ounces of gold per year with cash costs, net
of gold bi-product, of an estimated ($0.41) per ounce of silver and an initial mine life of nine
years. Exploration continues on the large land package, with current measured and indicated mineral
resources of 88.7 million silver ounces and 1.0 million measured and indicated gold ounces and an
additional 61.4 million ounces of inferred silver mineral resources and 0.7 million inferred gold
ounces.

http://www.stockhouse.com/comp_info.asp?symbol=PJO&table=LIST

So there we have it, 11 take overs for 2007

    **************** 2008 potential take overs ********************

I am sure 2008 will be another year of numerous take overs in the industry and we certainly have
some good candidates on our list, so I thought I would touch on the possibilities I see

Gold Eagle - GEA is one stock that could attract a takeover very soon, recently around $8.00 with a
very advanced gold project at Red Lake near Goldcorp's huge mine. Gold Eagle continues to announce
great drill results at depth and is about to sink a shaft down to this level. This will greatly
enhance the exploration effort with underground drilling and advance the project towards production.
Rumors have been floating around for sometime on a take over and the way this project is advancing
it could happen very soon. I would not rule out 2007 with just a few days left.

http://www.stockhouse.com/comp_info.asp?symbol=GEA&table=LIST

Orko Silver - OK around $1.65 has made no bones about it and has issued news that they are open for
a take over. On Oct 1st the company's resource at La Preciosa was increased by 86% to 73.1 million
silver-equivalent ounces of contained metal. Getting close to 100 million ounces makes a silver
project a very attractive take over. Few deposits make it over the 100 million ounce mark and become
targets of the major silver producers. The resource estimate was based on 120 holes drilled by Orko
Silver. To further the objective of increasing the resource at La Preciosa, the company has since
completed hole 167 and deepened another eight previously drilled holes to further test the Martha
vein. More drilling will continue in 2008 and I expect the company could be taken out some time in
2008.

http://www.stockhouse.com/comp_info.asp?symbol=OK&table=LIST

What I see as a buy of a lifetime and also a take over target in 2008 is one of my favorites,
Paramount Gold and Silver - PZG recently $1.70. I have been quite surprised by the recent weakness
in the stock, even with the year end selling. There is definitely a seller in the market for some
reason. I have followed their exploration closely and it looks to be going very well, but I was
concerned whether I have missed something. I got a hold of Bill Reed who I have become to know quite
will over the years and have been impressed with his honesty and the fact he is a quite conservative
geologist and also very experienced.

He is not afraid and willing to warn on anything he does not like or looks inferior. In fact earlier
in the year he warned me about Tara Gold's Las Minitas project that the historic data was probably
fraudulent. Hecla mining drilled 3 holes in the late 1990s to verify the data and found nothing and
low and behold  Pershimco - PRO, Tara's recent former JV partner found the same thing. It was one
reason that I have been recommending Paramount over Tara beside the better valuation Paramount has
based on the San Miguel project. I think Tara is also over sold now, but still has down side risk.
Anyway, my concern is the San Miguel project.

Bill Reed is no longer running the detailed exploration program which is now been handled by Larry
Segerstrom, another very well qualified geologist that over saw exploration at Freeport-McMoran, but
Mr. Reed is still over seeing the exploration and is keeping a pulse on the project. Paramount has
been doing a lot of drilling as part of a 50,000 meter program. I put a blunt question to Mr. Reed
and that was - Do you see any reason why the next resource estimate will not go over 100 million
ounces silver? Mr Reed said he did not see any problem and that was a very obtainable target.

Even if one was to be very conservative and say they 43-101'd just 73 million ounces like Orko. Orko has a market cap of $162 million which is more than double Paramount's current $77 million market cap. Based on only 73 million ounces, the stock should more than double to over $3.50 a share.

However, I have every reason to believe they will go over 100 million ounces and this would put
Paramount in the big league with a superior valuation. The brokerage and fund analysts would no
longer be able to ignore the stock like they have done so far. It would be far too embarrassing if
they do not report on a major discovery. There is no reason to believe that Paramount cannot make a
similar discovery as Palmerajo and a similar valuation. I will remind you once again that Palmerajo
was just bought out for about $1 billion based on a 149 million ounce 43-101 silver equivalent
measured and indicated resource (and additional 100 M ounce silver eqv. inferred)

When Paramount 43-101s over 100 million ounces it will be about half way to Palmerajo, and only half the market cap would be $500 million or over $10 per share. Going over 100 million will make
Paramount a take over target in 2008 and it will still have a lot of exploration potential. As of
this date they have still only done shallow drilling and finding lots of silver and gold, there is
all kinds of potential at depth still and is why I think this discovery can rival Palmerajo.

While perhaps the analysts and news letter writers have been ignoring Paramount, the major mining
companies have not, with many already visiting the project and others going on site in early 2008.
They all have deep pockets and are willing to pay what a project is worth. Imagine a major stepping
in and buying this (I doubt it would happen until after the next 43-101 which will probably be in
the next few months), but imagine if this happens in several months at between $5 and $10 a share
and not one analyst or major newsletter has covered the stock. I have never seen this happen, so it
is only a matter of time before everyone jumps on the band wagon, in the meantime, I have little
doubt this is one of or maybe the best buy out there among advanced exploration stocks.

Look at the management team, over 325 years combined experience, these types don't associate with losing stories, but winners!

http://www.stockhouse.com/comp_info.asp?symbol=PZG&table=LIST

While on silver, I would not be surprised to see two of are other picks taken out, First Majestic -
FR and SilverCrest - SVL both with growing production profiles, would be attractive to boost a more
senior producers production profile. But I think both companies want to grow further before
entertaining a take over, but that does not mean one would not occur.

http://www.stockhouse.com/comp_info.asp?symbol=FR&table=LIST

In Red Lake, I should also mention Lake Shore Gold - LSG around $1.65. They are advancing their
Timmins West project and also completing a prefeasibility study. They have about a 1.2 million ounce
gold resource with lots of potential to increase this further. It is in a prime Location, in the
Timmins gold mining district of northern Ontario, where more than 67 million ounces of gold have
been produced over the past 100 years. An ideal take over candidate with an advanced project and
good upside growth potential.

http://www.stockhouse.com/comp_info.asp?symbol=LSG&table=LIST

Other mid size producers on our list that could merge or be taken out by other mid size or large
producers are IamGold - IMG around  $8.00, Agnico Eagle - AEM around $51 and Yamana -YRI around $12.50. With valuations this low it is far cheaper for the majors to grow by buying out other
producers than finding the metals.

On our oil&gas list Connacher - CLL around $3.50 seems to be priced quite low considering their oil
sands production is about to come on stream. CLL has been circulating steam for about 90 days
heating up the reservoir. Connacher anticipates that Pod One production will ramp up to 10,000
barrels per day of bitumen from all 15 well pairs later in 2008. CLL could easily be bought out this
year and so could our remaining oil&gas trust Vault Energy but I expect a depressed buy price as
with other trusts.

http://www.stockhouse.com/comp_info.asp?symbol=CLL&table=LIST

Platinum Group Metals - PTM around $3.80 and Eastern Platinum - ELR around $2.60 are two of the very few advanced junior platinum/palladium plays around. Both companies could easily be taken out in
2008 by the senior African platinum producers.

http://www.stockhouse.com/comp_info.asp?symbol=PTM&table=LIST

European Minerals - EPM around $1.30 is valued very cheap. On Dec. 22, 2007, poured the first gold
at its Varvarinskoye gold/copper project in Kazakhstan. The project has nearly 4 million ounces of
gold reserves and is expected to produce about 150,000 ounces per year. If the ramp up to full
production goes well, EPM would be a good take over target for a mid size producer or Kinross who
also operates in the area.

http://www.stockhouse.com/comp_info.asp?symbol=EPM&table=LIST

Aurelian - ARU around $7.75 could also be taken out in 2008 as long as a potential major suitor is
able to work out some pre agreement or guarantees with the Ecuador government.

http://www.stockhouse.com/comp_info.asp?symbol=ARU&table=LIST

Exeter - XRC is going gang busters in Argentina and Chile, hitting new highs of about $5.75 in the
past couple weeks. The latest news is the discovery of two new mineralized vein sets on its
100-per-cent-owned Cerro Moro gold-silver project in Santa Cruz province, Argentina. As the company
advances their projects it could be a takeover target later in the year.

http://www.stockhouse.com/comp_info.asp?symbol=XRC&table=LIST

I am sure there is a couple candidates I may have missed and some new ones that I hope to find in
2008, but this list of 13 or 14 potentials is probably destined to become about half this size by
the end of 2008.

(c) Copyright 2007, Struther's Resource Stock Report

All forecasts and recommendations are based on opinion. Markets change direction with consensus
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