As many of you seasoned investors know, the warrant is the last remaining financial reason that the share price is under $1.

I shudder many times when I see a company announce a PP after some excellent news. Often times it means that the share price will drop to the PP level, which is often discounted to attract the large volume required to finance the PP.

In Noront's case, a 30M share (at a .50 cent strike price) PP was issued last year. This was a combination of hard and soft shares. At the time both Pinetree and Sprott had disclosed that they owned over 10%, a reporting that is required by the TSX for that level of ownersip.

What is interesting is that the proxy information that was sent out before the last special meeting (the one where we voted on the Shareholder's rights plan) indicated that no one held a 10% or greater interest in Noront.

What this tells me is that both Sprott and Pinetree sold their PP shares after the 4 month hold period for the 10 - 20% profit that they could get. This is not surprising as they new that Windfall permits and ramp would take some time to get off the ground. As many of these companies have large money and good opportunities with almost all PP, taking these small profits is how they make money. The same applies to the mutual funds.

There were also a large number of warrants attached to those PP shares. Here are the number of warrants mentioned as of the year ending April 30, 2007 (this can be found in the recent annual return):

2,265,475 .25 Expires December 2007
24,892,500 .75 Expires December 2008
2,795,700 .75 Expires December 2008
------------------------------------...
29,953,675

Normally these warrants can be traded to others who are willing to accept the risk. This typically happens then the current share price is below the strike price. As these warrants could not be traded (similar to the PP shares) until a four month hold period had expired (April 2007), it is unlikely these warrants were exercised between April and last week when we were trading at .39.

With the recent rise of the SP to above .75 cents, there is now incentive for warrant holders to exercise these rights. Remember, some of these warrants could have been sold to others after April. If these had been sold at a discount (say, .44 cents) then those who purchased the rights to those warrants are likely cashing out and taking profits.

It is important to take into consideration the large number of warrants outstanding when looking at the current share price and wondering why the SP has not rocketed like many other stocks with the same potential. This is two fold. One, warrants could be exercised and the stock sold to gather profits. Two, a warrant holder could short the stock (say, at .85 cents) knowing that they could cover that transaction with another (the exercise of the warrant) if needed. The shorting pressure often drops the price as the shorting increases supply and takes out the bids. There is no risk for a warrant holder to short as they have the option at covering at a lower price (say, .77) or, if the price sky rockets, with a warrant. The protection of a warrant allows them to short and cover many times if they choose.

This is why these warrants must be cleared out before we see a spectular rise in share price. Once this roadblock is out of the way, then we are back to regular supply and demand, assuming that naked shorting is not taking place (another topic for another day).

It is important that we do not get down because of the warrant situation. The fact that the share price remains strong with the warrant action that is occurring tells me that we really do have something special here. As many have seen, the rapid rise has not been followed by a sharp drop (as many pump and dump stocks see after two days). We are holding relatively strong after a week of trading after news. As I write this the stock is trading at .82 cents. This shows that demand is there based on the news.

I honestly believe we have at least a $10 stock here in the long term (6-18m months). This is based on not only what I see in the drill results at Windfall and James Bay, but also the extrapolated estimates that have been posted here and there since last December by those with good geo contacts. With the price of gold rising and an estimated $2000 an ounce by 2011, there is nothing but blue skies ahead based on what looks like a sizable mine being setup at Windfall. But like everything else, this takes time. Patience is required here.

I am sorry I offended some by stating that I sold 20% last week. I did as I was able to make a 40% flip on THV (now trading at a premium of 70%. The bottom action on some of the stocks I followed were too good to pass up. That being said, I am actually in with more Noront this week than I had two weeks ago as I picked some more up at .77 cents like some others on here.

Looking forward to seeing these warrants cleared, news on the permits and Windfall camp setups, and of course the upcoming halt regarding James Bay.

Misfit1.