Potash North Resource (PTNHF.PK) & National Coal (NCOC – Nasdaq)

Dear Bottarelli Research Member,

It’s finally coming into play.

Our world leaders have finally come together on the crusade for alternative energy – and that’s why I expect to see great advances in alternative energy sources (specifically coal to liquids technology) for the remainder of 2008. On top of that, I fully expect to see offshore drilling get approved in our great country, and I must say, it’s about time!

Make no mistake about it: With all of these tailwinds working in our favor, the small-cap picks that Bryan and I are offering you stand to do very well. And this week, we have two (2) more timely plays in the powerful coal and potash sectors. With both coal and potash experiencing an intra-week pullback, we have an outstanding opportunity to add each of these plays to our small-cap ledger for attractive prices. Both new picks are detailed below…

PICK #1: Last week, Potash One (one of our big winners recently) announced that they have completed a private placement deal with today’s new potash pick. As a result of this transaction, Potash One now holds approximately 13% of this company’s outstanding shares. They also hold warrants, which if exercised, could result in Potash One holding 13,167,000 shares of this little gem. This would increase their outstanding share ownership to 23%.

Folks, this is exactly why I wanted us to own shares of Potash One. Their management is known for this savvy type of deal making, and they’ve once again pulled off another sweet deal. But it gets even better.

You see, one of the stipulations of this deal was for PotashOne to get their hands on the critical work permits they’ve been waiting for. Well, thanks to this arrangement, they got them. This alone is huge news, which frees up Potash One to focus on the Legacy Project that sits adjacent to the largest potash mine in the world (owned and operated by Potash of Saskatchewan).This incredible maneuver should benefit early investors like us in a handsome way. I truly believe this is where Potash One will make their claim to fame – and it’s coming a lot faster than anyone wants to believe. This is obviously bullish for Potash One, but in terms of today’s newest potash pick, the true question you should ask yourself is, “Why has Potash One taken on such a large ownership position in this new potash company?”

You’ll get the full details in just a moment, but the short answer is that these two small-cap companies are joining forces to become the next major producer in the most powerful potash-producing region in the world. In fact, before going any further, I must tell you that I’m truly excited to bring you this week’s first new pick. It’s diamonds in the rough like this that can truly multiply your wealth — and fast! So on that note, your first new small-cap pick is Potash North Resource Corp. (PTNHF.PK). Shares trade on the U.S. Pink Sheets and also on the Canadian TSVX exchange under the symbol PON.V.

The thesis is simple. As the population grows, so will the need for food sources around the globe. The only way to grow the food necessary to feed the population is with fertilizers. But more importantly, global potash production is currently dominated by a few “majors” who are running at (or near) full capacity. Not only that, but there have been no new potash mines in Canada in almost 40 years. That’s why I want us to own both Potash One and Potash North. We entered shares of Potash One on May 12^th and have seen a return as high as 54.37%. Now, let’s complete this small-cap potash play by adding Potash North to our ledger.

PICK #2: Our second pickis a coal stock, and the timing here is critical. You see, despite a strong increase, coal prices are expected to move even higher. This central and southern Appalachian coal producer has been taking advantage of their key coal mines by ramping up production, and you can clearly see these impressive results reflected in their latest Q1 earnings announcement.

Revenues were absolutely sizzling, increasing 88% (to $35.7 million) from $19.0 million one year earlier. They also sold 596,732 tons of coal this quarter, a 62% increase from the 368,332 tons they sold during the same quarter a year earlier.

These are truly eye-popping increases, and they look to continue. That’s why corporate executives just purchased 55,000 shares in a private placement. Insider buying is something both Bryan and I love to see, since nobody knows the growth prospects of a company better than its own executives. But that’s not all.

You see, this rapidly-growing coal company is about to get listed on the Russell 3000 Index. When this happens, it’ll open up a whole new investment arena. After all, any hedge or mutual fund indexed to the Russell 3000 will now own shares of this stock, setting in motion a bulk of new money flowing into this gem.

But the real gains will come as this company keeps accelerating the development of their new mines. And on that front, the news continues to look great. You see, this company just renegotiated some key sales contracts, and these new contracts are expected to begin during the second quarter. In other words, as these new contracts become fully effective during the second half of the year, you’ll see them reflected in their upcoming earnings. This should fuel continuous share price increases for the remainder of the year. So on that note, your second pick today is National Coal (NCOC – NASDAQ).

UPDATES

Uranium Resources (URRE – NASDAQ) & Uranium Energy (UEC – AMEX): Our small uranium stocks have been beaten down very hard, but if you’ve been with us for the last year, then you know URRE was a huge winner for us. Now that Congress is faced with a global energy crisis, our timing for jumping back into each uranium play could not be better. Bryan and I have both been alluding to this over the last several weeks, but I’m telling you, both URRE and UEC represent strong buys at these levels. Buy.

Brigham Exploration (BEXP – NASDAQ) & Northern Oil & Gas (NOG – AMEX): As you know, our two Bakken Oil plays have been on fire. But if Congress takes drastic measures to bring down oil prices, this may have a downside effect on BEXP and NOG. Therefore, I’d like us to officially place a 50% sell stop on each position. In other words, if your profits on each position dip below 50%, lock in all of your gains. The strategy here is to lock in gains while we have them – and we can always re-enter these plays down the road. Don’t get me wrong. I want to own both NOG and BEXP, but a profit is a profit. And when it’s time to lock in your gains, this certainly takes precedence. Therefore, sell both NOG and BEXP if your profits dip below 50%.

China Finance Online (JRJC – NASDAQ): Our so-called “Goldman Sachs of the Far East” will also be added to the Russel Global Index, and this should also give it a lot more exposure from fund managers. We love this company, and it tends to move between $15.00 and $24.00 in a rather consistent 1-2 month pattern. With current prices now at $15.57, we once again feel like you have an attractive entry point. Buy.

Before signing off, I must say that we’ve really been on a roll with our recent picks, and I wanted to congratulate you on the great profits we’ve locked in during a period of dramatic market weakness. Our patient attitude combined with our diligent focus on exciting small-cap sector plays will continue to fuel our profits for the rest of the year.

On that note, if you have not yet locked in some gains on ICO, BEXP, NOG, GTE, IOC, or KCLOF, please take some of your profits off the table. This strategy of taking small chunks of profits off the table (by selling half or a quarter of your position at certain profit levels) is just smart trading. After all, taking profits is the golden rule, so be sure that you lock in a portion of gains on any small-cap position that is showing a 50% return or greater. And until next week, remember to give thanks for the abundance in your life.

Sincerely,

P.S. Many of you have written me about our new Bottarelli Research LEAPS service, and I must tell you, this exciting new service was developed with you in mind. You see, with LEAPS you don’t have to watch the picks every day. Ten minutes of your time once a week is all it takes. And best of all, this ten minutes could produce returns of 50% to 400% very quickly. How do I know this? Easy – it’s already been done! Just think, the first trade that returns 200% to 300% will pay for your entire year. And after that, the rest is a cake walk! Of course, the decision to trade these powerful new LEAPS plays is solely up to you. But for those of you who’ve asked me, I urge you to jump on board. Click below for the full details:

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Recession? Weakness? Not for Potash and Coal!

Introducing Two New Small Caps From Each Powerful Sector

We’ll begin today’s two-part alert by reviewing the investment facts surrounding potash and coal, and then we’ll transition over to the specific details on each new small-cap pick.

So let’s begin, starting with coal.

COAL: With respect to the global coal market, the single most important fact is that coal demand now exceeds coal supply. Because of this, recent estimates show thatthe global demand for coal will grow 2.2% each year until 2030.

The global coal demand is so incredible because coal remains the cheapest fuel option for electricity generation. This fuels rapid coal demand in developing countries, with China and India obviously leading the way. But it’s not just developing countries that are clamoring for coal. Here in the United States, the construction of coal-fired plants is now growing faster than any time in the past seven years. Not only that, but in Europe some utilities are converting their oil-fired plants into coal-fired plants. So as you can clearly see, strong global coal demand is set for numerous years.

Looking specifically at the U.S. markets, 93.1% of all coal is used for electricity generation. On a fuel-cost basis, coal remains the cheapest fuel among coal, natural gas, and oil – and it looks to maintain this position for quite some time. In fact, with current coal prices at $111.50 per ton, natural gas and oil would need to decline to $4.46 per BTU and $25.87 per barrel respectively to become a realistic alternative to coal. On the flipside, coal prices would have to increase to $525.00 per ton (a 4-fold increase!) to be equivalent to the current price of oil and natural gas. So as you can see, coal enjoys both demand and pricing benefits unlike anytime before, establishing a rock-solid investment thesis.

POTASH: Let’s now move over to potash, and we’ll begin by asking a simple question:

“What exactly is potash?”

Potash is a potassium-rich organic product mined from deposits left behind when ancient sea beds evaporated. Since potash can be put straight into the earth as a raw material, 95% of the global potash production is used for fertilizer.

The key ingredient in potash is Potassium (K), which is the seventh most abundant element in the earth’s crust. There are no other known nutrients that perform the same functions as potassium, which enhances water retention, increases disease resistance, and boosts crop yields. In fact, the most powerful potash argument is the fact that there are no commercial substitutes for potash fertilizers anywhere in the world. And when you look at the demand drivers, the potash investment thesis is quite simple.

Follow the logic…

The two main drivers of potash demand are population growth and economic growth. Pretty simple, right? Break this down even further, and you’ll see that the world’s population is currently increasing at the rate of approximately 75 million people per year. By the year 2050, population experts predict that the earth will be inhabited by 9 billion people. That’s a 2.3 billion increase from 6.7 billion people currently living on earth! (Note that the majority of this growth will occur in developing nations.)

Now, take the population increase forecasts one step further. As the incomes in developing nations grow, there is a natural inclination for a more protein-rich diet. In other words, people will eat more meat – and this directly leads to fertilizer demand. After all, just look at the break-down of kilograms of grain required to produce one kilogram of meat:

• 2 kilograms of grain produces 1 kilogram of poultry.
• 4 kilograms of grain produces 1 kilogram of pork.
• 6 kilograms of grain produces 1 kilogram of beef.

As meat consumption soars, more grain is needed to feed the livestock. But another problem is that a soaring global population needs somewhere to live. So, as cities and suburbs expand, the available (and fertile) farmland diminishes. Therefore, more production must be squeezed out of the remaining farmland. And the ending result is an unrelenting demand for the best fertilizer ingredient in the world: potash.

And here’s the interesting aspect of this situation. The Saskatchewan region of Canada is commonly known as “the potash capital of the world.” They hold the world’s largest reserves of potash, which obviously make them the world’s largest producer of potash. But the majority of the world’s potash comes from only 20 commercial deposits, and 85% of this global potash capacity is more than 25 years old.

Therefore, the imbalance between global potash supply and production capacity is likely to continue over the next 11 years. Case in point, Sinofert (China’s largest distributor of imported fertilizers) expects a shortage of up to 3 million tons of potash in 2008. This massive demand is why potash prices experienced a 3-fold increase within the past year. And all signs point to continued increases.

So as you can see, the forward-looking investment thesis on any company that can meet our global coal and potash demand remains very strong. And on that note, National Coal Corp. (NCOC – NASDAQ) and Potash North (PTNHF.PK) eachrepresent two of the best small-cap companies in each sector. Let’s dive into each pick.

Starting with NCOC, they’re one of the smallest publicly traded coal mining companies in the U.S. As of April 1^st 2008, NCOC operated two underground mines, four surface mines, and one high-wall mine on 65,000 acres in Tennessee and Alabama, where they estimate 28.7 million tons of recoverable coal reserves.

NCOC has grown every year since its 2004 inception, with yearly production as follows:

• 2006: Produced 1.33 million tons with sales of 1.64 million tons.
• 2007: Produced 1.35 million tons with sales of 1.76 million tons.
• 2008: Expected to produce 2.4 million tons with sales of 2.3 million tons.

Looking forward, NCOC is projecting to achieve production of 5.0 million tons by 2010, which would more than double their coal production in 2.5 years. This would make them one of the most rapidly-growing small-cap coal plays your money can buy.

In the same spirit, Potash North is also a junior resource company focused exclusively on the exploration, evaluation, and development of two sub-surface potash permit areas (referred to as KP416 and KP417) that total 185,000 acres in the powerful Saskatchewan Potash Basin.

Their deposit sits immediately adjacent to Mosaic and Potash Corp’s Esterhazy operations which is truly the “mother load” of global potash production. If Potash North discovers deposits anywhere near that of POT and MOS, they could quickly emerge as the next major global potash producer. And as Mark said above, the chances are quite good that major potash deposits lie beneath the surface. In fact, the latest technical reports estimate the following:

• Indicated Mineral Resource: 36.8 million tons of K2O.
• Inferred Mineral Resource: 360.4 million tons of K2O.

With 3D seismic and interpretation studies being completed as we speak, Potash North hopes to move towards feasibility by 2009. And since there is already infrastructure in place throughout their permit areas (rail, hydro, and roads), potash production could begin rather quickly.

Note: Since Potash North just began trading in June, the chart only has a handful of price ticks to display.

And don’t forget, a takeover is also a major possibility. After all, I’m sure a company like MOS, POT, or AGU would love to get their hands on Potash North and assume control of their potash-rich landholdings. But no matter if a takeover occurs or not, the potential for Potash North is truly explosive.

Therefore, let’s add both NCOC and PTNHF to our small-cap ledger now!

PLAY #1: Buy shares of Potash North Resource (PTNHF.PK) at or under $3.50, god for the week.

PLAY #2: Buy shares of National Coal (NCOC – NASDAQ) at or under $10.00, good for the week.

Sincerely,