Resource Stock Update - V15 #4.2 - NCX, Other takeover targets, HBU   Feb. 23, 2009

PO Box 1020  Owen Sound, Ontario, Canada   N4K 6H6

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Big news on Nova Chemicals today - NCX - I hope many of you loaded up on my Feb 2nd update when I pointed out how it was a real buying opportunity.

Feb 2 Update:
"This strange market we have has created a real buying opportunity. Real value - The stock is at US
$1.30 with a book value of US$13.96 per share. That is a whopping 90% discount to book value. The
company claims they could probably not replace their assets for less than $5 billion."

Nova was still trading at $1.60 on Friday and shot up to $6.60 today on a buyout offer of US6.00 or
C$7.50. That is about 4 times where the stock was trading. Which makes an important point, these
various resource stocks that have been beaten down to ridiculous values can be bought out for
multiples of the current prices.

There will be many more stocks on our list that get bought out this year, from ridiculous cheap
levels, and after Nova probably my next candidate would be Paramount. Gold and silver stocks are
gaining strength, it is the only sector that is recovering thus far. Everyday there is large
financings, money pouring into the sector and there is going to be a rash of takeovers. Many senior
and mid size gold companies are loaded with cash and they are going to go on a buying spree.

The PDAC is next week in Toronto, this is the largest mining show in the world each year and it is
known to be the place where the ground is struck on many deals. It would not surprise me to see a
deal struck next week on Paramount among probably dozens of others. There has been numerous
companies visiting the project and talking with management. The rumors I am hearing is that one or
more are very serious.

With Paramount's recent acquisition, they surround Coeur D'Alene's Palmerajo project that was
acquired for $1.1 billion. Paramount has 2.7 million oz gold equivalent valued at just US$13.50 per
ounce in the ground, this is less than half of the going average valuation out there at this time.

Sooner or later, the market is going to adjust this valuation a lot higher and it might happen with
some type of merger or acquisition and very soon.

Another thing I have noticed since last Thursday on PZG. Market Makers have almost always been
pressuring the stock, but starting last Thursday, they have been buying. Do they see the stock about
to move as well?

And a reminder, I have 20 or 30 of you on an email list that I have been providing a daily update on
market trading activity, it is a real eye opener in how the markets have changed in the past couple
years. If you own PZG and are interested, send me an email to get on this list.

There is a number of other junior PM stocks on our list I see as takeover candidates this year as
well.

Canplats - CPQ we just bought 4M ounces at US$28/oz
Exeter - XRC no 43-101 yet, but plus 8M ounces likely
Adina Minerals - ADM 9.4M ozs at US$14/ounce
Lakeshore - LSG already 35% owned by Hochschild Mining
Orko Silver - OK  2.4M ounces at $28/ounce
Cardero - CDU is subject to a buyout on one of their projects

Adina might be another deal struck at the PDAC, the talk is Kinross as the buyer, and I suspect
there will be other surprises too!

Nova Chemicals    TSX/NY  NCX                   Recent Price C$6.60
Entry Price 5.65  and $1.55 (avg 3.60)           Opinion - hold/ sell

International Petroleum Investment Company (IPIC) and Nova Chemicals Corp. have entered into an
agreement providing for the acquisition by IPIC of all of Nova Chemicals' outstanding common shares
for a cash consideration of $6 (U.S.) per share. The acquisition will be implemented by way of a
court-approved plan of arrangement under the Canada Business Corporations Act.

The consideration per share represents a 348-per-cent premium over the Feb. 20, 2009, closing price
of the shares on the New York Stock Exchange (NYSE), and a 204-per-cent premium over the combined
and currency-adjusted 30-day volume-weighted average price of the shares on the Toronto Stock
Exchange and NYSE up to and including Feb. 20, 2009. The total value of the arrangement, including
assumption of Nova Chemicals' net debt obligations, is approximately $2.3-billion (U.S.).

Based on a Canadian-dollar/U.S.-dollar exchange rate of 1.2541, the cash consideration equates to
$7.52 per share. The actual Canadian-dollar-equivalent cash consideration per share will be based on
the Canadian-dollar/U.S.-dollar exchange rate at the time when the arrangement is closed.

Nova Chemicals' operations are geographically complementary, bringing together IPIC's existing
petrochemicals capabilities in Europe, the Middle East and Asia, and those of Nova Chemicals, which
are primarily in North America.

The arrangement is intended to enable Nova Chemicals to meet all of its obligations to all of its
stakeholders and will strengthen Nova Chemicals' balance sheet so that its strong assets will
continue to operate and expand. As part of the arrangement, IPIC has agreed to a $250-million (U.S.)
credit backstop facility to provide Nova Chemicals with sufficient liquidity.

Under the arrangement, Nova Chemicals will operate as an independent chemicals and plastics company.
It will continue to invest substantially in its Alberta and Ontario operating facilities, and also
in its large and very productive research and development facilities in Calgary, Alta.

The stock is still trading at a discount to the takeover offer, My only guess would be some small
risk that the deal does not get approved and no closing date is known yet. So arbritrage traders
will be happy to buy the stock around US$5.30 to $5.40 and pocket the 10% or so appreciation when
the deal closes in 2 or 3 months. You can sell at this price if you wish, but no hurry, as it will
move closer to US$6.00  (C$7.50) as we approach the close date when it becomes known.

However, if you bought around $1.50, you have probably seen 85% of your gain, so nothing wrong with
selling some and buying other bargains and take out candidates.

http://www.novachem.com

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

Horizon Beta Pro Gold Plus ETF   TSX:HBU          Recent Price C$20.30
Entry Price $18.80                              Opinion - sell at $20.50 or higher

One thing I have discovered with these ETFs, they work great over the short term for trading, but
over the longer and medium term they do not give as good leverage. It has to do with how they reset
them with expiry months in the future contracts.

Since the November bottom at $700, gold has gone to $1,000. This is a significant 43% up move in a
short period. The HBU ETF has gone from a bottom of $11 to about $20.30 a move of 84% so it has
pretty much done its  job, a double performance, because this move was short term, about 3 months.

However if you bought the ETF back in August around $15 when gold dropped to about $790, gold has
now appreciated about 27% and the ETF about 35%, not even coming close to the double performance.

With that in mind, and gold now testing major resistance at the previous highs just over $1,000, I
am going to sell this Gold plus ETF and will follow the chart and may consider hedging with the
Horizon Pro Gold BearPlus ETF.

Gold is due for a correction, I thought we might have seen it at the $920 resistance area, but with
some consolidation and see/saw back and forth, it broke through  this resistance and is why it was
best to take the 6% loss on the HBD ETF back then.

I will send out an email alert if I think it is good timing to buy the HBD again. Any pull back in
gold, would probably be modest, with the old $920/930 area acting as support now.

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

(c) Copyright 2009, Struther's Resource Stock Report

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