This is an interesting opinion on VMS Ventures from SolomonSmallcaps. They have placed VMS Ventures in a Category 2. (Greatest upside for long term) VMS comment is on very end of this article.

VMS Ventures (VMS, TSX-V)

VMS continues to get excellent results from its Reed Lake discovery in Manitoba where it holds one of the largest land positions in the developing Flin-Flon-Snow Lake VMS belt. The recent weakness in base metal prices and the overall sell-off in the general market has reversed the stock’s technical condition from overbought in late May/June to oversold, and it’s now sitting at very attractive levels just above strong long-term support at 45 cents. We’re optimistic Reed Lake will develop into a significant deposit.September 1, 2008

Below are 30 stocks and two ETF’s that form our $100,000 “simulated” portfolio. We spent many hours researching countless opportunities in the resource sector, so deciding on these 30 situations was no easy task. We remain bullish on the commodity sector in general and we believe we have found the right “balance” with this portfolio which includes 22 TSX Venture Exchange companies, seven TSX listed companies, one NASDAQ company, and two TSX traded ETF’s including a big call on the Horizons NYMEX Natural Gas Bull (HNU) which we are investing 15% of our portfolio into right off the bat.

We will “sell” and “buy” individual securities as conditions warrant, and we will report each “transaction” here on the site. New stocks/ETF’s could be added and some could be deleted. This is a “simulated” portfolio that does not involve real money. We will track our performance against the overall market, and we are confident we will beat the market by a substantial margin.

“Category 1” features stocks that we believe will significantly outperform the market over the immediate to short term (one to three months); “Category 2” features stocks that we believe will significantly outperform the market over the intermediate to longer term; Category 3 consists of ETF’s. We have “double-weighted” Category 1 over Category 2 as we believe Category 1 stocks have the greatest immediate upside potential. Some brief comments on each stock and ETF will be found in this report.

Ten of the stocks in our model portfolio were released last Tuesday, August 26, following the market close that day, so the “purchase price” for these stocks is based on their respective closing prices August 26. The “purchase price” for all other securities is based on closing prices August 29, 2008.

The total portfolio is currently invested 80% and holds a total starting cash position of $20,000 ($10,000 in Category 1, $10,000 in Category 2, and $0 in Category 3).

Category 1 - $3,000 Initially Invested Into Each

“Category 1” Total Investment: $40,000.00
Total Current Value: $41,960.74
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Gain (Loss) $1,960.74 or + 4.9% vs. 2.1% market gain

Category 2 - $1,500 Initially Invested Into Each

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“Category 2” Total Investment: $40,000
Total Current Value: 40,000
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Gain (Loss) 0.00

Category 3 - ETF’s

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“Category 3” Total Investment: $20,000
Total Current Value: $20,000
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Gain (Loss) $ 0.00

Category 1 Stocks

BacTech Mining (BM, TSX-V)

Little-known company trading under 10 cents with Yamana as its largest shareholder. BacTech owns commercially-proven, bacterial oxidation and bioleaching technology that liberates precious and base metals from difficult-to-treat sulphide ores and concentrates. This company has been around for a while but now is finally starting to make significant strides with its business plan. BacTech announced its first refractory gold project in June and we expect it will close at least two or three other situations before year-end. This is an interesting turnaround play with an intriguing environmental angle as well.

Columbia Yukon Explorations (CYU, TSX-V)

Columbia Yukon is developing a world class molybdenum deposit in northwestern British Columbia near Cassiar, and current drilling outside of the known resource (an updated 43-101 was released in August) is delivering very good results. The recent 43-101 (based on drilling through 2007) showed the Storie Deposit contains an indicated and inferred resource of 170 million pounds of Mo, which means the market is giving a valuation of only nine cents per pound of Mo at CYU’s current 39 cent share price. This stock is undervalued, plain and simple, and should strengthen nicely in a better overall market in September. Assays from approximately another 50 or 60 holes yet to come.

Eldorado Gold (ELD, TSX)

Low-cost producer with a solid growth profile and a history of strong Septembers. We were very impressed with management’s takeover of Frontier Pacific Mining, a steal for Eldorado shareholders. Eldorado should produce more than 300,000 ounces of gold this year. Technically, the stock held up well during the recent market sell-off and will accelerate nicely if the gold price strengthens further as we suspect it will.

Greencastle Resources (VGN, TSX-V)

One of our favorites which we first uncovered and recommended at 15 cents May 31. Sound management, very strong financials, and solid portfolio of diversified projects (oil and gas royalties from Primate oil field, coal, shale gas in Quebec, gold and uranium). More “high-impact” projects under review. Second quarter results just released, showing revenue at a record $1 million and six-month pre-tax profit of three cents per share. With just a $15 million market cap, this cash cow is a very attractive opportunity short and long term. Just 44 million outstanding shares and CEO says company “may never have to go back to the market for capital.”

Hathor Exploration (HAT, TSX-V)

Uranium, we believe, will be a big story in the year ahead, and Hathor has made a significant discovery at its Midwest NE Property in the Athabasca Basin. Plenty of blue-sky potential here.

Kodiak Exploration (KXL, TSX-V)

Kodiak was hit hard by the recent market sell-off but has bounced off strong support at $1.20. Kodiak’s Hercules Property in Ontario’s Beardmore-Geraldton area is going to be a huge winner, we believe, with multi-million ounce potential. This is one of those stocks you probably just want to tuck away for a year or two and not worry about. Over the past year it has been quite volatile, so it also does present trading opportunities for very experienced investors.

MacDonald Mines (BMK, TSX-V)

One cannot overlook the continuing excellent exploration potential of McFauld’s Lake and the James Bay Lowlands where BMK is a huge landholder. Everyone, though, has fallen out of love with BMK, which is why we believe it’s time to be a buyer. The stock has steadily drifted all the way down from a 52-week high of $1.32 to below 20 cents where it just has to be a screaming buy in our view. We strongly believe McFauld’s will become one of the great “area plays” in Canadian mining history, and BMK will be right in the middle of it. Lots of drilling news coming out of BMK and McFauld’s in general in the coming weeks and months.

Noront Resources (NOT, TSX-V)

Again, McFauld’s Lake has got to be in any resource investor’s portfolio and Noront is King of that area with the Eagle 1 Deposit, Eagle 2, and several other very interesting situations. Noront currently controls 100% of 120,000 acres at McFauld’s, and has joint ventures covering another 168,000 acres. Their Windfall Lake Project in Quebec is significant as well. We expect plenty of news out of Noront over the next few months, and of course this company is also a ripe takeover target.

Nortec Ventures (NVT, TSX-V)

The same group that ran Frontier Pacific Mining is in charge of Nortec which is getting very interesting results from its Kaukua platinum-palladium-gold-nickel-copper project in northeastern Finland. They also have high-quality nickel-copper-cobalt targets in Labrador, one of which is currently being drilled. The individuals behind Nortec are company builders and mine finders - they will make Nortec a success story.

Pinetree Capital (PNP, TSX)

We believe a very significant rally is now underway in the Venture Exchange, and in that situation Pinetree will do extremely well with a large portfolio of junior resource companies. The recent market sell-off brought the stock down to one-tenth of its value from early 2007.

Category 2 Stocks

Clean Energy Fuels (CLNE, NASDAQ)

Clean Energy is very much the right stock at the right time - the largest provider of natural gas for transportation in North America with a broad customer base in the refuse, transit, ports, shuttle, taxi, regional trucking, airport and municipal fleet markets. The company’s founder is legendary Texas oil and gas executive T. Boone Pickens (you’ve probably heard a lot recently about the Pickens Energy Plan), so we’re parking our money with a winner.

Crew Energy (CR, TSX)

A fast-growing oil and natural gas producer, Crew Energy recently completed a strategic takeover of Gentry Resources and over the past year has assembled a dominant land position in the heart of the important Montney resource play in northeast British Columbia. This is an aggressive company well-positioned to deliver long-term value to shareholders.

Eastmain Resources (ER, TSX)

After reaching nearly $2.00 in early July, Eastmain has pulled back substantially to a very attractive $1.25 (just above its rising 200-day moving average). Eastmain, which holds an attractive package of properties, is currently drilling its million-ounce Eau Claire Deposit in Quebec where surface rock has an impressive $600 value. Its Eleonore South joint venture with Goldcorp, however, is what could really send ER soaring.

Explor Resources (EXS, TSX-V)

Explor has pulled back to its 200-day moving average after quite a run in June on favorable and interesting results from its Eastford Lake gold project, 90 kilometres east of the Timmins-Porcupine camp. Explor is also currently drilling its highly prospective Kidd Township Property. Altogether, EXS has a land position of over 10,000 hectares in the Abitibi Greenstone Belt. Strong management. We like this stock a lot at its current price which puts a market cap on EXS of only $16 million.

Goldsource Mines (GXS, TSX-V)

Goldsource has once again settled back to its 200-day moving average where it has to be regarded as a strong buy. They have made a significant coal discovery in Saskatchewan, though the coal stock frenzy has certainly cooled off (at least for now). There is also now a pause in GXS drilling, so it’s possible this volatile stock could bottom out at a lower price but we would “average down” if that were to happen. Goldsource will bounce back strongly - it’s only a question of when.

GoldQuest Mining Corporation (GQC, TSX-V)

GoldQuest is entirely focused on the Dominican Republic and has a strategic alliance with Gold Fields covering a number of high quality targets. GQC is also developing its 100% owned Las Animas gold-copper-silver-zinc property which is showing good potential. This is one of those stocks you hold for a “major hit” - they’re exploring in a favorable area with an excellent geological team, so sooner or later they’re likely to deliver some rather stunning drill results and discover a decent deposit.

IMA Exploration (IMR, TSX-V)

IMA is an interesting situation. It’s actually trading at a 38% discount to its cash value. The company is currently sitting on $25 million in cash and in a month or so will begin drilling its Island Copper Project in the Port Hardy Mining Division of Vancouver Island. IMA does have a bit of a history, and at 30 cents the stock is at an all-time low. But we just can’t see it drifting much lower and in all probability it’s likely to stage a significant recovery, if for no other reason than the fact it’s at such a discount to its cash value. IMA’s Island Copper Project does has some merit, however. It hosts at least six copper-gold-molybdenum porphyry-related systems, and the most advanced of these systems has a 43-101 measured and indicated resource of 231 million tonnes grading 0.28% copper and 0.31 gram per tonne gold.

Junex Inc. (JNX, TSX-V)

We’re bullish on the shale gas play in Quebec, and Junex is certainly a major player there. They recently started their 2008-2009 exploration program that foresees the investment of about $10-million in the St. Lawrence Lowlands over the next 18 months. The stock is down considerably from its high of just over $8 per share in early June, and just recently bounced off its 200-day moving average. This will be a volatile stock in the months ahead but the current price represents an excellent entry point.

Legend Power Systems (LPS, TSX-V)

This intriguing company finally became public in early July after several frustrating years of trying to satisfy the TSX on a reverse take-over of Texas Oil & Gas. Legend Power is an electrical energy conservation company that uses a patented device to achieve significant energy conservation results through voltage optimization. This is not a theory - it’s a proven concept and one that we believe Legend Power could have great success with. They already have a significant client base that includes the likes of BC Hydro, Canada Post, Honda Canada, and IKEA. Installation results have yielded clearly measureable reductions in electric bills, maintenance costs and greenhouse gases. It’ll be very interesting to watch how this company develops in the months and years ahead.

Ontex Resources (ONT, TSX-V)

The strength of this stock during the recent market sell-off (it actually went up in value significantly) was impressive to say the least, which speaks volumes we believe about the encouraging development of its Brookbank Gold Deposit in the Beardmore-Geraldton area. The action we’re seeing in the stock suggests to us that ONT wants to take a run at the $1.00 level - time will tell, but we like the results that are coming out of Brookbank.

Pediment Exploration (PEZ, TSX-V)

The recent market sell-off took its toll on Pediment which has been beaten down to a market cap of only $55 million. Pediment recently filed a 43-101 report on its San Antonio Gold Project in northwestern Mexico with a preliminary resource estimate of 1.45 million ounces (inferred). We believe San Antonio holds excellent potential for two million or more ounces of proven reserves, and Pediment has numerous other 100% owned properties in Mexico including its other flagship, La Colorada. The company is well financed. The current stock price is a steal, plain and simple, and it’s interesting how it filled a “gap” recently around $1.20.

Probe Mines (PRB, TSX-V)

Probe disappointed investors with recent drill results from its McFauld’s West and Victory Projects. But we believe both properties (McFauld’s West in particular) still hold excellent potential, and Probe also has a good prospect in its Tamarack Property in addition to other landholdings it’s currently starting to explore in the James Bay Lowlands. At just 25 cents Probe is trading not far below its cash value, so now’s the time to be a strong buyer of this stock. PRB is not likely to get a whole lot cheaper, so the risk-reward ratio here is very attractive.

Rubicon Minerals Corporation (RMX, TSX)

We’ve been keeping an eye on Rubicon for a while now, and sure enough last week it reported bonanza grade gold (27 ounces per ton) over two metres at its flagship Phoenix Gold Project. Rubicon controls over 65,000 acres of prime exploration land in the prolific Red Lake camp. With strong management and a portfolio of excellent projects, Rubicon is well positioned to move very swiftly in a stronger market this fall. Technically, the stock has turned bullish with reversals in its 100 and 200-day moving averages. RSI shows a short-term overbought condition, but we believe this stock has much further to go through the balance of the year.

Selwyn Resources (SWN, TSX-V)

Selwyn is a “dog” right now, and an abandoned one it appears, so we’ve decided to adopt it. The Selwyn Project in the eastern Yukon is a huge zinc property (the largest of three giant undeveloped zinc deposits in the world) that this company has been aggressively exploring and developing over the past few years. The drop in zinc prices has taken its toll on the Selwyn share price which just recently bounced off a 52-week low of 9.5 cents (it was as high as nearly $2.00 in early 2006). When times look the bleakest, it’s time to buy. The stock closed Friday, August 31, at 11 cents. Zinc prices will recover, sooner or later, and so too will Selwyn.

Sherwood Copper (SWC, TSX-V)

Sherwood Copper is a producing company with excellent growth potential and superb management that consistently meets its goals and timelines. The stock has formed a nice base around $4.50 and appears ready for lift-off. Commercial traders have massively increased their long copper positions in recent weeks, suggesting copper could be ready for a break-out which would certainly benefit SWC.

Shore Gold (SGF, TSX-V)

We’ve watched with amazement at how Shore, with one of the world’s largest diamond deposits near Prince Albert, SK, has been absolutely hammered by the market after topping out at nearly $9 in early 2007. At just $1.49, Shore is just 19 cents off its multi-year low of $1.30 that it plummeted to last week. We’re putting Shore in our portfolio as this diamond play does have solid intrinsic value and the stock is currently heavily oversold and due for a near-term technical rebound if nothing else.

Solex Resources (SOX, TSX-V)

Solex is very active in Peru where its flagship project is the Macusani uranium play. Macusani “East” is a joint-venture now with Eldorado Gold, following its takeover of Frontier Pacific, while Solex is also advancing its three 100% owned Macusani projects. We’ve followed exploration very closely at Macusani over the last few years and we’re impressed by the potential there. The uranium is low grade but widespread and very near surface. Solex is also eyeing the possibility of re-acquiring 100% of Macusani East if Eldorado decides not to keep it. Solex is well off its all-time high of $1.60 and appears to have ended a brutal year-and-a-half decline that brought it all the way down to just 16.5 cents in early August. The company is well-funded and has a current market cap of a modest $15 million.

Uranium One (UUU, TSX)

Uranium stocks have been hit extremely hard since topping out in early 2007, but the uranium price is recovering and we believe the demand for uranium will be high in the years ahead. Uranium One is a growing producer whose stock price bottomed out at $3 earlier this year after reaching nearly $19 in 2007. As the uranium “story” picks up again, investors will be paying much more for Uranium One than they are now. The stock is starting to look much healthier, technically, and once it blasts through resistance and finds its way to about $6, the path is clear for significantly higher prices.

Vast Exploration (VST, TSX-V)

Iraq is a smart place to invest at the moment, believe it or not, and Vast recently completed a $35 million financing to participate with Niko Resources (operator) in the exploration, development and production of petroleum resources in the 846-square-kilometre Qara Dagh block in the Sulaymaniya governorate of the Federal Region of Kurdistan. The stock reached a high of $1.40 in June before pulling back to its rising 200-day moving average. It has since formed a nice base around the 60 cent area and appears ready for another leg up.

VMS Ventures (VMS, TSX-V)

VMS continues to get excellent results from its Reed Lake discovery in Manitoba where it holds one of the largest land positions in the developing Flin-Flon-Snow Lake VMS belt. The recent weakness in base metal prices and the overall sell-off in the general market has reversed the stock’s technical condition from overbought in late May/June to oversold, and it’s now sitting at very attractive levels just above strong long-term support at 45 cents. We’re optimistic Reed Lake will develop into a significant deposit.