December 26, 1999

Ashanti Goldfields Company Limited (ASL on NYSE) Accra, Ghana Tel: (44) 171-256-9938 Price: Dec 24/99: $2.62, 52-week range: $10.75-2.50. Ashanti has been a major gold producer for many years, its Obuasi operations in Ghana dating back prior to 1900. Just at this operation alone 20 million ounces of gold have been extracted and there remains reserves of 20 million ounces and a resource of 35 million oz. at Obuasi. Over the last few years Ashanti has been expanding both in Ghana and elsewhere in Africa. Its latest discovery is the Geita project in Tanzania where a gold resource of 12 million ounces has been outlined. The current Ashanti is the product of a privatization plan initiated by the government of Ghana. Lonmin plc, a major producer of platinum, owns 32% of ASL and the government of Ghana owns 20%. In addition the Ghanaian government has a golden share in ASL which, in effect, allows them to make final decisions. Ashanti stock began trading on the NASDAQ at about $25 a share in 1996 and moved to the NYSE with much fanfare shortly thereafter where it began trading at about $20 a share. Ever since then it has been downhill. The company was doing quite well lowering its cost of production and increasing reserves all the while during a period of dropping gold prices. For the 9-month period ended September 30, 1999 it produced 1.12 million ounces of gold at a cash cost of $213 an ounce. Over the last couple of years, ASL has been enhancing its income, in this period of low gold prices, by selling forward future production at premium higher prices. Their complicated hedge program was far too aggressive. When the price of gold spiked upward to $325/ounce they were caught short and undermargined to the degree of $575 million. While the price of gold has come down and the financial exposure is somewhat diminished, the company is still in a mess in which they are trying to get out of. At one point, Lonmin, with deep pockets, considered buying out ASL on a stock swap basis equivalent to $6-7 per ASL share. Their hedging counterparties have proposed extending a standstill agreement in exchange for the right to subscribe for stock equivalent to a 15% ownership at a price of $4.75/sh. Ashanti may very well be faced with having to dispose of Geita. This would fetch a minimum of $375 million and there is no shortage of buyers. Deals could be worked out with any of Lonmin, Goldfields, Barrick and maybe even Newmont Gold. This would force Ashanti to concentrate in Ghana and neighboring countries where the prospects for discovery and production of gold remain attractive as evidenced by some recent deals ASL has made with Nevsun and Birim. Ashanti Goldfields will pull out of this, as the company’s fundamentals are too good for the stock to be valued at a capitalization of $288 million based on 109 million shares. After all, annual production of 1.5 million ounces capitalized should be worth $675 million or gold reserves of 30 million ounces should be worth at least $750 million. These two figures alone translate into a worth of $6.50-7.50 a share.

Basis 100 Inc. (BAS on TSE) Toronto, ON, Tel: (416) 364-6085. Price: Dec 24/99: $6.25, 52-week range: $7.40-2.25. Company offers on-line financial services, including a two-minute mortgage that automates the application and approval process. BAS has as main clients Bank of Montreal and Home Savings and Loan. In raising $12 million by selling stock at $2/sh it picked up the US investment banker Lehman Brothers as an adviser that may open doors in the US. Meanwhile, BAS has launched an online program e-commerce insurance, again with Bank of Montreal. Looks like this company is still in early stage of growth.

CIT Group, Inc (CIT on NYSE, CGN.U on TSE) Livingston, NJ Tel: (973) 535-3506 Price: Dec 27/99: $20.75, 52-week range: $34.20-17.75. Following the acquisition of Toronto-based Newcourt Credit Group in November, CIT, founded in 1908, is now one of the largest commercial and consumer financing companies in the world. It has $50 billion in managed assets, revenues in excess of $2.2 billion and approximately 8,000 employees working in 26 countries. Newcourt brings to the group an entrepreneurial flair. Because of the costs associated with the merger, 1999 earnings may not quit attain the consensus estimate of $2.25/sh for 1999 but if CIT achieves that forecast for next year of $2.65 based on 265 million shares out the stock could trade at $26-27 at a modest 10 times earnings.

CPL Long Term Care Real Estate Investment Trust (CPL.UN on TSE), Toronto, ON, Tel: (416) 929-5450. Price: Dec.24/99: $16.50, 52-week range: $25.25-14.50. This REIT is the largest owner and operator of nursing homes in Canada. It owns 68 and manages another 13. Main concentration is in Ontario, building up in BC and is also in the states of Vermont, New Hampshire, Connecticut and Washington. It is growing in an organized expansion mode under the guidance of the famous Reichmann family. Distribution payments of 13.5 cents/unit are paid out on a monthly basis, thus providing a current yield of close to 10%. The market cap of $323 million based on 19.6 million shs. outstanding provides growth potential as well.

Gildan Activewear Inc (GIL.A on TSE, GIL on NYSE) St.Laurent, QC, Tel: (514)735-2023, Price: Dec 24/99: C$28.25, 52-week range: C$36-11.75. Company has captured 23% of the all-cotton T-shirt market in North America in the face of established competition from Fruit of the Loom and from Hane’s, a division of Sarah Lee. Sales for the year ended Oct.3./99 increased 55% to $334 million and net income 66% to$24.2 million, equivalent to $2 per fully diluted share. The company has achieved these results by concentrating on quality produced at low cost through heavy capital expenditures involving state of the art technology. Gildan has taken advantage for T-shirt demand as an advertising medium from organizations wishing their logo or message to appear printed. The company is now moving into the market for 50-50 cotton/polyester blend category and just in the month of October captured 2.7% of the North American market. It has also moved into Japan and Europe where, combined, it expects to reach sales levels of $200 million over the next 3 years. Gildan has targeted revenues of $1 billion by 2003, 5 years after having gone public (at $10.35 a share). Management feels it will be able to maintain a 10% return on sales. Capital expenditures of $40 million are planned for this year in order to drive this growth. A net profit of $40 million on sales of $400 million this year implies e.p.s. of $2.70. A 15 multiple points to a stock price of over $40 compared with the current C$28 level.

Koch Pipelines Canada, L.P. (KPC.UN on TSE), Calgary, AB, Tel: (403) 716-7600, Price: Dec.24/99:$4.82, 52-week range:$7.00-4.65. Koch is a limited partnership organized in Nov. 1997 to acquire a package of pipeline assets in Alberta from US-based Koch Industries. The system is designed to carry about 300,000 bbl/d of crude oil. Current load is about 240,000 bbl/d and another 22,000 will be taken on as a result of modest expansion into Billings, Montana. The current toll rate KPC is charging is 90 cents a barrel. This and the load could be expanded offering the possibility of some growth. Management is also cognizant of the fact that the IPO price of $10 a unit is a far cry from today’s price and would like to factor in some increase to shareholder value. But basically this is an income situation. The 16cents quarterly distribution could possibly increase a penny over the next year, but in the meantime the units yield 13.3%, 40% of which is taxable, 60% considered a return on capital.

Look Communications Inc. (LKC on CDNX), Toronto, ON, Tel: 1-888-439-2897, Price Dec.24/99:$6.10, 52-week range:$7.50-0.81. Look is a wireless broadband carrier, delivering a spectrum of communications services including digital television distribution, Internet access and Web-related services. It is the result of a combination agreement between a publicly traded Vancouver-based I.D. Internet Direct LTD and privately-held Look Communications. Its digital television distribution service, currently in operation in certain parts of Ontario and Quebec and waiting approval in BC, is a land-based system using microwave technology. It faces stiff competition from cable, telephone and satellite systems. I.D.Internet Direct is a leading ISP with 150,000 customers in BC, Alberta, Manitoba, Ontario and Quebec. Look came with an impressive group of shareholders, including Telesystem Limited, Teleglobe Incorporated, CTV Incorporated, Covington Wireless Communications (Ontario) and GTC Transcontinental Group Limited. They also ended up with the bulk of the shares in the merged company, 75 million of the 125.5 million. Furthermore, 35.5 million of these shares have two votes, thus affording the Sirois-led Telesystem group with 55% vote control. The company hired David Parkes as president & CEO; he was a senior officer at Telespectrum Canada, Cantel and Sprint Canada. Then a CFO was hired away from Bombardier. The question is: At $6.10/sh, is Look worth $765 million? Also, how do you live with such a stock price knowing there are 14.1 million Look warrants outstanding with an average exercise price of 33.15 cents/sh and 2.1 million Look options at an exercise price of $1.3112/sh, 3.4 million I.D. Internet Direct options at 53 cents and another 1.3 million IDX options at 59 cents?

Maax Inc. (MXA on TSE), Ste-Marie-de-Beauce,QC, Tel: (418) 387-3641, Price:Dec.24/99:$12.25, 52-week range:$17.50-11.70. Over the last few years, the company has been expanding its business both geographically as well as by product line. Until only a few years ago it was manufacturing acrylic bathroom showers in the Beauce region, south of Quebec City. Since then it has expanded into spas and kitchen cabinets. Just in the last year, the company made 6 acquisitions. Sales for the first 6 months increased 52% to $225 million mainly because of acquisitions. However, sales of existing operations nevertheless increased by 18%. Management will no spend some time integrating these new divisions. This should reflect better over the next few years in higher profit growth rates. For the current year ending Feb 28, 2000, sales should be $445 million vs. $313 million last year. Net per share of $1.00 on 23.6 million shs out would compare with 88 cents and 68 cents over the last 2 years on fewer shares outstanding. Estimates for next year range from $1.25/sh to $1.45. If any growth company should trade at 20 times earnings it should be Maax. But even a 15 multiple would peg the share price at $19 at some point over the next 12 months.

Pier 1 Imports, Inc (PIR on NYSE) Fort Worth, TX Tel: (817) 252-8400 Price: Dec 24/99: $6.12, 52-week range: $12.75-5.25. Pier 1 is North America’s largest specialty retailer of imported decorative home furnishings, gifts and related items with stores in 48 states, Puerto Rico, Canada, the UK, Japan and Mexico. The 800-store chain carries a line of 5,000 imported items. The company may be bouncing back from some recent poor performances. In the 3rd quarter ended Nov.27/99 sales increased 8.6% to $298.2 million and same store sales grew 2.8%, a turnaround from previous quarters. For the 9 months sales grew 5.5% to $851.0 million while comparable stores sales were flat for the period. December sales appear to be encouraging, so that earnings for the year could come in at $0.69/sh. This would still be down from last year’s 78 cents/sh but nevertheless indicating a turnaround. Next year should see $0.80/sh. And perhaps more down the road if the planned online shopping works out well. This would provide a return on equity of 19% based on a book value of $4.20/sh on the 100.8 million shares outstanding. A return to a stock price of 11 times earnings combined with a modest yield on the 12 cents dividend makes this stock appealing over the next 12 months.

Schuler Homes, Inc. (SHLR on NASDAQ) Honolulu, HI Tel: (808) 521-5661 Price: Dec 24/99:$6.50, 52-week range: $9.00-5.75. Schuler designs, constructs, markets and sells single-family residences, townhomes and condominiums primarily to entry-level and first-time move-up buyers. The company has spread out in recent years from its home base in Hawaii and now operates in Colorado, Hawaii, Oregon, Washington, Northern California and more recently Southern California and Arizona. In the nine months ended September 30, 1999 the number of sales closed were 1,906 for revenues of $355.9 million and average sales price of $194,000 compared with 1,333 closed sales a year ago for revenues of $202.1 million and average price of $180,000. For the 3rd quarter net income increased 87% to $6.7 million or $0.33/sh. For the nine months net income increased 115% to $18.2 million or $0.91/sh. Backlog at September 30, 1999 was 1,032 units at an average sales price of #211,000 compared with 608 units a year earlier at a price average of $183,000. Company has 20.1 million shares outstanding and equity value/share of $9.65. Earnings this year should come in at $1.24 compared with $0.63 last year and next year should be about $1.35. At $6.50 the shares appear to be undervalued trading at 5.2 times earnings and at a considerable discount to book value.

Storm Energy Inc. (SME on TSE) Calgary, AB Tel: (403) 264-3959 Price: Dec 24/99:$2.30, 52-week range:$3.00-1.40. With the recent acquisition of some oil and gas properties in Alberta from Phillips Petroleum, Storm will exit 1999 with production of 3,800 bbls of oil equivalent/day and a cash flow of $12.9 million or 0.46/sh. Under its planned $30 million capital expenditure program for next year, the company expects to produce 4,100 Boepd and $24 million cash flow, or $0.83 per sh. on the 28.7 fully diluted shares. Since Nov 1998, the company is managed by former senior officers of Pinnacle Resources. If the company reaches its target, the stock could trade at 5 times growing cash flow, i.e. $4.25 per share over the next 12 months.

TransAlta Corp. (TA on TSE) Calgary, AB Tel: 1-800-387-3598. Price: Dec 24/99: $14.85, 52-week range: $25.15-12.25. The company received a setback in November when the Alberta Energy and Utilities Board handed TA the lowest rate of return in Canada, that being 9.25^ for 1999 and year 2000. Beyond this time, TransAlta will grow earnings in a deregulated Alberta market and increasing non-regulated generation in other markets such as the US and New Zealand. The $1.00 dividend is safe, thus providing a yield of 6.7%. At this stage, earnings of $1 and $1.10 over the next 2 years does not spell out much potential for growth. However, management is committed to provide return to shareholders.

Transcanada Pipelines Ltd. (TRP on TSE) Calgary, AB Tel: 1-800-361-6522. Price: Dec 24/99: $12.75, 52-week range: $23.15-11.50. Doug Baldwin, president and CEO was given the mandate to streamline and unlock value to shareholders, particularly after TRP’s purchase of NOVA. So he sold ANGUS for $1 billion. Then he was a bad boy, he cut Traps dividend from $1.12 to 80 cents. Analysts wanted it both ways, growth and income. That way, the don’t have to think. The company will now write off in the 4th quarter $700 million after tax by getting rid of all non-core assets. It. will concentrate on natural gas transmission, power generation and marketing activities in Canada and the US. The company feels that there is much more scope at both ends of the stream without getting involved at the midstream level. From a marketing point of view, the test trial of getting involved with Sears, marketing gas in the Ottawa area is interesting. Once all the tax loss selling is over, investors may realize that the company will be earning $1.20/sh and the stock will be once more trading at $18. Even if it takes 3 years, the capital appreciation is 14%/year and at 80 cents, the dividend kicks in another 6.3% a year. Not too difficult to live with a 20% return a year for a few years.

Vermilion Resources Ltd. (VRM on TSE) Calgary, AB Tel: (403) 269-4884 Price: Dec 24/99: $4.65, 52-week range: $6.85-2.00. The company produces oil and gas in Alberta and also from two fields in France. It plans to exit 1999 at a production rate of 13,000 Boepd and with a capital expenditure program planned for next year of $100 million (70 in Alberta, 30 in France) VRM expects to produce a cash flow of $70 million or $1.25/sh based on 56.1 million fully diluted shares. This would consist of average production of 14,500 boepd with a 2000 year exit of 16,000. For 1999, cfps should be almost $1. With the type of growth Vermilion has shown, a price to cash flow of 5.5 may be warranted, implying a share price of $6.75 over the next 12 months.

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