the biggest copper bargain

Hi guys,

Just remember if you believe in the China and Asian growth story you will be wishing in 12 months time that you would have jumped into EQN at these ridiculous low prices.

Just to refresh everyones memory

China population 1.3 billion
India population 1.1 billion and growing

The two factors that will drive metals and energy consumption higher are: per capita GDP growth and urbanisation.

Per Capita GDP in China is estimated at $US$2200 and is forecast to reach $US$3000 by 2010
(some 10 years ahead of its 2004 governement forecast)

Japan, then South Korea and Taiwan, experienced rapid growth in per capita metals and energy consumption until per capita GDP (as a measure of income) reached US$20.00.

Estimates suggest China could reach this by 2020.

Per capita COPPER consumption in China is around 30% of Japan's.
Thus, the impact of lifting per capita consumption rates in metals and energy by a factor of three or four on a population of 1.3 billion would have a dramatic impact on total global metals and energy demand.

When we look at china's changing rural/urban balance we see another major drive.

Its urbanisation rate is estmated at around 44%-double the level of 20 yhears ago.
Again, per capita metals and energy consumption rises sharply as urbanisation increases towards 60%.

In his recent global commodity review, Deutsche Bank's Michael Lewis forecast the Chines urbanisation rate to hit 55% by 2020.

India is China with a lag.

With a rising population of 1.1 billion (against a static Chinese one) India is yet to have China's impact on global commodity demand.
This will change.

AMP Capital's Shane Oliver compared the two economies this week. "India's growth potential is huge. Given its large population this will have a big impact on the global economy" he concluded.

Importantly, India has per capital metals and energy consumption at a fraction of China's.
Its copper consumption is about 12% of China's.

Its urbanisation rate, at 29% is well behind China - but growing fast.
Infrastucture spending, as a % of GDP is just 4%, (11% for China)

This implies signigicant upside in both coal and iron ore demand as steel consumption (on a per capita basis) will rise sharply.

Investment manager Portfolio Partners asked "ARE WE LOOKING AT A 30 YEAR RESOURCES BOOM?" in a recent paper.

Everything we are seen in terms of growth in Chaina and India tells us that THE ANSWER IS A RESOUNDING "YES".

***read the full article at this weekends AFR page45 bottom page.



Just remember guys if the above story comes right then this means that EQN is a jewel and those who stick with this company will be very well rewarded.

By my calculation Equinox will be able to produce copper at a cost around US$40ct/lb taking the Uranium credits in consideration.

This company will basically print its own money.

Good luck

jojo