the problem with geothermal, page-16

Ha ha I have got a couple of other investments! GDY, at this price, is just under 50% of my portfoilio, and is the largest stake I have ever taken in a stock.

I'm sure these folks won't mind a quick plug for another company. It's a greenie too, in a way.

ARU's primary focus is it's Rare Earth deposit Nolans Bore. Rare Earths are a collection of oxides that have many uses in current and emerging technologies, particularly in electronics and magnets. The deposit is also host to large amounts of phosphate, and significant concentrations of uranium, and is arguably the most economically attractive RE deposit in Australia.

The man in charge, Alistair Stevens, is a veritable powerhouse. There is very little that can be said in criticism of him - he's done a great job, and you know what they say about good management....

The current resource stands at a huge 18.6 million tonnes, of which 3.1% Rare Earths, 14% phosphates, and 0.47lb/T U3O8. The sides and bottom of the deposit are yet to be identified, and, as such, upside is enormous.

Whilst there is huge scope for increases in the basket price for RE's, the phosphate will be a key revenue stream for the company (particularly if they ever upgrade to phos acid), and the uranium may see ARU, quite possibly, as Australia's next Uranium producer, as the red tape for by-product production is significantly reduced.

Extraction methods for this tricky deposit seem to have been defined in theory, with a recovery rate slightly upwards of 90%.

Diversity is achieved via two small gold deposits, a stake in NUP, and a high-quality vanadium deposit. Vanadium is uneconomical to mine in isolation, and this will most likely sit in the ground unless V prices lift.

ARU is a growth story, well positioned to leverage off the expected increase in Hybrid vehicles (of which REs are a major component for the magnetics), and continued growth in the electronics industry, particularly consumer goods such as high-performance television screens.

Risks include a niche market that is controlled by the Chinese (90% world supply), questionable homogeneity of the deposit and recovery paths, Uranium as a contaminant, and no major market for the trade of REs.

I jumped ship on many of my ARU to buy GDY, as I see the upside in GDY to be vastly larger for similar risk, even when weighted against the larger market cap. I still hold, but ARU are offering useful dirt, and GDY is offering unlimited, renewable, base-load power.

As disclosure, I'm 1:5 Aru:GDY.

My temptation has always been to put more in GDY, but no matter how sure you are.....