Greetings investors!

I’ve revised my top down investment strategy recently, in view of changing market conditions.

Over the last few years while the metals were travelling individually to their unprecedented highs - silver, gold, copper, nickel and lead and zinc – I put commodity at the top of the list. Now that metals appear to be moving together as a pack, and given the relative instability in the far flung regions of the world where mining occurs, I’ve put safety in the top rung. It´s broken down into four sub categories: Right locale, right environment, right exchange, and right share structure.

From the locale perspective, Chile is my hands down favourite, and in fact the only safe location for mineral exploration and development in Latin America. You can make excuses for other countries with arguably better precious metals geology (such as Peru!) but it’s hard to sell me mining - as opposed to exploration - projects in them because I simply do not trust their governments or the large populations of artesanial miners who seem to be wandering the land with torches and pitchforks looking for multinationals to kick out.

For all its picaresque seaside villages, Chile was founded as a mining nation and remains one to this day, exporting 48% of the world’s supply of copper. The industry has almost single-handedly sustained the nation’s breakaway economic growth over the past 10 years.

Given all that, one may think the country has been pretty well picked over by the majors in recent years but that’s not the case at all. In fact one of my favourite firms is an aggressive $0.50 junior called Apoquindo Minerals Inc. with a very good project there. It trades as AQM on the Venture board of the Toronto Stock Exchange (TSX-V). In a nutshell, they’re a Chilean managed deal with an impressive set of copper reserves located within a highly prospective but largely untested mineral district in Northern Chile. They have a tight share structure (i.e. no institutional investors ), and the stock is thinly traded, which is a good thing in this day and age.

Apoquindo is a bit of a rarity in that they have an almost exclusively Chilean board, which includes Juan Villarzu, the former President and CEO of the $15 billion state-owned Codelco. Moreover, they’ve optioned and drilled a going concern located near the port city of Antofagasta, which is definitely on my list of top 10 projects worldwide from a safety perspective. Here’s why: First, the project lands comprise two known copper deposits in the middle of the Atacama Desert, so there are no local townspeople with a misguided sense of entitlement to the mine, though a ready workforce is available from nearby Antofagasta; there is no overburden or local flora or fauna, and hence no environmental concerns or long term, expensive site reclamation responsibilities; there is ample power and infrastrucure, including a railway and road network; and finally, the project lands are shoehorned into a largely undeveloped copper producing district called Sierra Valenzuela, with neighboring projects owned by the likes of Rayrock, Codelco, Anglo American, BHP, and Antofagasta Minerals.

The thing to bear in mind with this deal is that they’ve already found the minerals within a working project area, which to me represents the very thing everyone should be seeking in this market: Namely R.B.I., or ‘return before investment’. Yes, they have yet to encounter the feasibility stage and those resources are not reserves, at least not yet. But I believe they will be in short order.

I had a chance to visit the so-called Apoquindo Copper Project (comprising the Elenita and Madrugador deposits 18 kilometers apart) in late September, and was impressed mostly with the efficacy and speed of the drilling which has occured under the direction of Exploration Manager Alfredo Garcia. Many penny stock investors are happy just to know their companies are drilling, but there is definitely a right and a wrong way to it. To date the company has drilled 41 thousand meters over 259 holes, almost half of that completed in the 2nd Quarter of ‘08 alone. Granted, reverse circulation drilling is much easier in the desert than the jungle or the Canadian Arctic but there is still a lot that can go wrong and didn´t. Moreover, they got better than expected results, increasing the resource from the original non standard calculation by 32 percent (It is NI-43-101 compliant now). The deposit remains open in several directions and at depth.

In fact the company has had an incredibly busy year, drilling wise. In addition to proving up the Apoquindo Project - which included the discovery of two new zones - they picked up a prospective gold, silver, lead, zinc property in neighbouring Peru (Huarman) where they cut 110 meters of 0.77 grams per tonne gold with a limited drilling program, plus 52 meters of 1 gram per tonne. They also lassoed an option for a wholly-owned interest in a leachable copper property called Pachagon and drilled into 68 meters of 3.93% copper there.

I was very impressed with the workings at Elenita, which are at surface, and look like a giant sinkhole in the ground. In fact they’re a labyrinth of caves originally dug by artesanial miners and expanded over generations. The minerals below appear as glittering black and grey traces within a nexus of veins in the rock, the copper oxides are a bright jade: It’s the colour of money, and Elenita has a lot of it, in grades ranging to 6% Cu per tonne.

Apoquindo has delineated total resources of 25 million tonnes of 0.8% Cu measured and indicated, and 3.6 million tonnes of 0.7% inferred both at Elenita and the sister Madrugador deposit a stone´s throw away. The company says it has the right data set now for a scoping study, so we have that to look forward to. Also, drilling is ongoing.

I’m curious to find out just have they have below the 300 meter depth where they stopped drilling in mineralization. I’m always very keen on potential company making projects, and given the relatively unexplored status of the Sierra Valenzuela District (there was only limited copper mining during the 20th century, with no historical production reported) that potential is definitely there. I’m less keen on deals with near-term mine start ups from the investing point of view because they´re messy and fraught with bugs and often missed early stage production targets. Apoquindo wants to have a mining plan in place by next year, and has already accomplished a lot of the ground work on the back end by acquiring an option to acquire a local heap leach solution facility (they don’t plan to produce copper cathode but merely sell the solution to the local SXEW plants). Frankly, I think that may get pushed up a little given the current prices of leaching acid, but it could happen on schedule if the economics line up well.

In any case, I´m at least as interested in what they´ve got cooking in neighbouring Peru. Certainly, the company wants to start getting cash flow from operations as soon as possible. That´s only natural. But I´m always more excited about pure exploration projects because, well - because they´re exciting. I´m a prospector at heart.

Indeed, it´s a challenging environment right now for any junior firm at their stage of development. Whether you park your nickels here or not depends on if you believe the company can go the distance. I think they can, given the advanced stage of their projects in the Atacama and the brain trust running the show. In that respect, it is worth mentioning Tom Hendricksen, the company´s consulting geolgist, who is extremely well connnected in that part of the world. He´s been very busy in Peru on behalf of Apoquindo of late and if there´s anyone with a shot at finding an Arequipa Minerals type project there, it’s him (Arequipa, a Vancouver junior, sold to Barrick Gold for $30 per share in 1996 valued chiefly on a copper gold porphyry discovery called Pierina).

As mentioned earlier, the company has a couple of less advanced, but no less interesting, gold and copper projects underway there, plus one they plan to JV with a major but won´t discuss publicly. It´s all rather exciting, actually.

These are challenging times for investors too. But the returns are definitely there, and big ones, for those who pick companies with the wherewithal not only to survive, but prosper. There´s not much middle ground in the game we´re in now! These companies will have the right stuff, or find it pretty quickly, or they´ll vanish. So it means picking management with good projects and lots of character and hanging in there for as long as it takes.