Wednesday, July 15, 2009

Junior mining Lithium, Gold, Zinc and Copper: China Regulator Relaxes Curbs on Overseas Investment TNR.v, CZX.v, RMK.v, ASM.v,, SGC.v,,

Our US Dollar Alert in action: Bearish Flag resolves into another Leg down. Uptrend line support is penetrated. Buy signal on Gold Miners now is confirmed. Juniors to follow.
Not any more my friends, not any more - will it be the last blow to US Dollar reserve status?

Put this news in perspective with recent announcement that USA has surpassed One Trillion deficit for this year and China has now Two Trillion in reserves:

"China’s Foreign-Exchange Reserves Surge, Exceeding $2 Trillion
By Bloomberg News
July 15 (Bloomberg) -- China’s foreign-exchange reserves, the world’s biggest, topped $2 trillion for the first time as the nation’s economic recovery prompted overseas investors to pump money into stocks and property."

It is a milestone in Chinese expansion overseas. They are preventing Yuan from appreciating very fast against US Dollar. It is an another sign that old sterilisation practise relying only on buying US treasuries is not the way to manage its foreign account from now on. Companies are allowed from 1st of August basically to shop around the world for necessary resources in exchange for US Dollars effectively which are overflowing the monetary system.

We would like to remind you that Canada Zinc Metals CZX.v has been waiting from January 2009 until May just to close the deal with all old currency regulations in place. Now we can expect more rapid M&A developments in our junior mining space. Will Chinese expand its stake in CZX.v from current 13% buying in the market? Stock is still trading below 0.425CAD placement price.

"Now we have not only a solid Zinc recovery play with strong cash position in a district with potential of 100 mil ton with further exploration, but dynamic M&A front runner of Chinese giant looking for further opportunities. Quick move has secured options opened in new hot area of Lithium and REE in International Lithium corp. and CEO CZX.v has opened space for speculation with his comment on Los Azules. Is Tongling up to the Xstrata's plate? Rob McEwen will be another name to mention in this context. Company now have positioned itself for dynamic recovery in Chinese production cycle even with shaky general markets in Zinc. Strategy looks like Investment expansion:
Tongling - Canada Zinc Metals - District play with TEC and Korea Zinc - Lundin Mining on board - Zinc and Lead - Cars - Growth space: China largest auto market from March - New Bull - Electric cars - Lithium and REE - TNR Gold and International Lithium Corp

News must be well known in China before in advance with recent aggressive moves in Australia and in China from Teck Resources and up to our Lithium and REE play TNR Gold TNR.v.

"TNR Gold has attracted interest from Canada Zinc Metals and its shareholders including Chinese Tongling and Lundin mining with opportunities opened in Lithium and REE market.Los Azules project is getting a new valuation with rising Copper prices, signs of recovery and its recent development.TNR Gold opens a new page in its history with access to Canada Zinc Metals solid record of developing mineral deposits and attracting Major industry players for financing and mine building expertise.Canada Zinc Metals with this move has secured its strategic entry into Lithium and REE markets and TNR Gold's Gold and Copper projects, including Los Azules opened for future strategic deals under further consideration of the company."

We expect more news on M&A developments in Junior mining sector in Canada. Next surprise can come tomorrow with China's GDP figures.

By Bloomberg News
July 15 (Bloomberg) -- China’s top currency regulator relaxed curbs on overseas investment by local businesses, allowing more funds to flow abroad after the nation’s foreign- exchange reserves topped $2 trillion for the first time.
The State Administration of Foreign Exchange said it will expand the sources of capital Chinese companies can use to finance outbound investment and will permit funds to be transferred overseas without prior approval, according to two statements on the regulator’s Web site today. The new regulations will take effect from Aug. 1.
“The rules are intended to give companies more room to develop overseas and reduce their pain in adjusting growth and models,” Liu Guangxi, an inspector at SAFE’s capital-account department, said at a press briefing in Beijing. “The changes will help China to realize a more balanced management of both capital inflows and outflows.”
China wants to diversify foreign investments to reduce the impact of any drop in the value of U.S. Treasuries, the supply of which is ballooning as President Barack Obama borrows record amounts to fund stimulus spending and end a recession in the world’s largest economy. Premier Wen Jiabao said in March that he was “worried” about the safety of the nation’s U.S. assets.
“The rapid expansion in foreign-exchange reserves is making it more difficult for China to preserve their value,” said Yang Shengkun, a currency analyst in Beijing at China Citic Bank Co., a unit of China’s biggest state investment company. “To encourage companies to ‘go global’ would be a good way” to slow the pace of reserves accumulation, he said.
Record Reserves
China, the biggest foreign owner of Treasuries, cut its holdings by $4.4 billion in April to $763.5 billion, the first monthly decline since February 2008. Its currency reserves, the world’s largest, increased a record $178 billion in the second quarter to $2.132 trillion, the central bank reported today on its Web site.
Chinese companies will be able to finance overseas investments by purchasing foreign exchange or borrowing it from local banks, as well as using any existing holdings they have, SAFE said. They will also be permitted to keep income from their offshore investments overseas and reinvest abroad.
Previously, China didn’t allow companies to retain earnings overseas or use local bank loans to invest overseas, Liu said at the briefing.
People’s Bank of China Governor Zhou Xiaochuan last month ruled out any sudden change in the management of the nation’s foreign-currency reserves and reiterated the funds should be invested to ensure “liquidity, safety and returns.” His March proposal for the greenback to be replaced as the world’s reserve currency spurred speculation China may shift its holdings away from dollar-denominated assets.
Policy makers should “moderately” increase their holdings of U.S. Treasuries and purchases this year should not be lower than the total for 2008, Wang Yong, a People’s Bank of China economist, wrote in the China Securities Journal today.
--Belinda Cao, Judy Chen. Editors: James Regan, Sandy Hendry
To contact Bloomberg News staff for this story: Belinda Cao in Beijing at +86-10-6649-7570 or lcao4@bloomberg.netJudy Chen in Shanghai at +86-21-6104-7047 or"
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