After the June fall they reassessed the position but have stayed...

After the June fall they reassessed the position but have stayed in and are now averaging down which must be a positive ?


All but one stock in the portfolio contributed to the investment losses in the month. No new stocks were added to the portfolio and no existing holdings were removed. The Manager invested 17.4% of the opening cash balances of the Fund.

At the end of the month, cash holdings were equivalent to 13.4% of the Fund’s asset value. The stock that subtracted most from the value of the portfolio, accounting for 26% of
the loss for the month, was Pluton Resources. Its share price fell by as much as 69% after it released details of a pre feasibility study completed by an external consultant into the economics of its Irvine Island iron ore project.

After releasing the study results, the company told investors that the economics of the project were significantly better than outlined in the report because operating and capital costs would be lower, the mine life longer and the scale of operations larger than
assumed by the consultant responsible for preparing the study.

The events surrounding the release of the study raise several important questions about the role of consultants and the appropriate use of their work by companies. The
Manager spoke at length with the managing director of Pluton Resources to clarify the intentions of the company and independently assess the potential investment return.

Following those discussions and completion of its analysis, the Manager decided to retain a holding in the company.

http://www.eimcapital.com.au/monthly%20reports/2011-06_ERCSF.pdf