News from Peterson Capital

Peterson Capital Update – June 2009

Hi…..

As you know, Peterson Capital assists in financing efforts and offers corporate communications and investor relations services to private and public companies in the Canadian capital markets.

The first six months of this year have seen us go through a bleak and black period of the capital markets, and then begin to emerge into an environment that appears to show some signs of recovery, at least in the capital markets, if not yet convincingly in the major economies around the world. We’ll see.

I have no clue where the markets or the economy are going in the short term. I can say, however, that I’m very close to the management teams of the companies below and know very well how they plan to steer their businesses through these tough times, and where opportunity lies. So, as we head into the summer break, I thought I’d give you a very brief Peterson Capital update on three fronts:

Very strong operational performances from Med BioGene Inc. and Columbia Yukon Explorations.

Restructuring with NovaDX Ventures and the Faircourt-Canadian Small Cap Resource Funds flow-through LPs

Peterson Capital’s European operations

Med BioGene & Columbia Yukon – strong operational performances

Med BioGene Inc (www.medbiogene.com MBI-TSXV) has just completed a fully-subscribed private placement raising the maximum total of CDN $1.6 million in a financing that is certainly a very powerful endorsement of the company from its investors in what is otherwise a very difficult market for most life sciences companies.

Med BioGene has developed a molecular diagnostic product for lung cancer that will be launched in the US market in the second half of 2009. This test, developed with three leading research and teaching hospitals in Toronto that make up the University Health Network, has the potential to save lives and reduce health care costs for lung cancer patients and their insurers.

This recent financing provides MBI with the capital it needs commercialize its product and potentially follow the same path in the lung cancer diagnostic and prognostic market that a very successful US company – Genomic Health – has achieved in the breast cancer diagnostic and prognostic market. Click here for more details on this, and the market potential for MBI. in a Peterson Capital posting I did in the last quarter.

It is worth noting that MBI has been a Peterson Capital client for the past two years, and in that time, and in a very difficult capital market environment, this company has succeeded in achieving every single business milestone it has set out, and has completed two financings in a market that has seen almost zero capital raised in the life sciences sector in Canada. Clearly, MBI is on an interesting path.

Columbia Yukon Explorations Inc. (www.columbiayukon.com CYU-TSXV) is developing a significant molybdenum deposit – the Storie Property - in north-central British Columbia, near Cassiar.

Last spring CYU announced its 2009 updated NI 43-101 Mineral Resource Estimate Report for the Storie Property molybdenum deposit. As indicated in the NI 43-101 Report, the current estimated total of both Measured and Indicated Resources categories is 139.82 million tonnes grading 0.064% Mo (at a cut-off of 0.030% Mo) and 58.39 million tonnes of Inferred Resource grading 0.059% Mo (at a cut-off of 0.030% Mo). The complete 2009 updated NI 43-101 Report is filed on Sedar (www.sedar.com) and is also available on the company’s website.
Molybdenum is used as a hardening agent in steel manufacturing, commonly as part of the assembly of pipelines, aircrafts and in nuclear power plants. The broad-based decline in commodity prices has affected molybdenum like all others: it is today trading near US $11 per lb., down from nearly $30 one year ago, but up from the lows of $8 earlier this spring. Short term moves in any commodity are difficult to predict, at best, but there’s little doubt that massive infrastructure spending being initiated around the world will have an impact at some point on steel demand, and “moly” prices should trend back upwards.

In the meantime, while other resource exploration and development companies are shutting down operations, selling assets or looking to be acquired, CYU sits on a very comfortable cash position, and continues to develop the Storie property. This summer it will continue some focused drilling on the property, complete some environmental assessment work, and has commissioned an engineering study to identify areas of interest for tailings and mill construction.

And, CYU continues to invest time and resources into getting its story into the market – again going against the current in the junior resource sector, as other companies shut down their investor relations operations to conserve cash. The company recently announced it has hired Toronto-based CHF Investor Relations (Cavalcanti Hume Funfer Inc) www.chfir.com which has offices in Calgary, New York, São Paulo and Shanghai.

2. Restructuring at NovaDX and Faircourt-CSCRF
The junior resource market collapse last year has obviously posed significant challenges for NovaDX Ventures (www.novadx.com NDX-TSXV).

NovaDX was launched in 2007 to provide direct investment capital, investment banking services and fund management services (through the Canadian Small Cap Resource Fund and Faircourt-CSCRF flow-through LPs) in the junior resource sector. In the past several months, starting in November of 2008, NovaDX is limiting its focus solely to the first of these objectives, by deploying its capital through MCoal Corporation, a wholly owned subsidiary, actively acquiring surface and mineral interests that cover the Rosa Coal deposit, part of a metallurgical coal mine project located in Blount County in Northern Alabama. You can find more details of this project on the NovaDX website.

NovaDX ceased being a Peterson Capital client as of January 2009, but I’m personally a significant shareholder in NovaDX and have been assisting the management team in its work with Faircourt Asset Management of Toronto on the five flow-through resource funds the two companies were administering under the CSCRF and Faircourt-CSCRF names.

To that end, we were able to obtain unit-holder approval earlier this month to merge the five outstanding flow-through LPs into a single fund called the Faircourt Resource Fund LP, which will be managed by Doug Waterson of Toronto-based Faircourt. This merger cut fund administration costs for unit-holders and will pool together capital from the funds and invest in mid-cap and large-cap resource companies while giving additional time to liquidate many of the remaining junior resource holdings in what is hoped will be better markets.

Feel free to call me if you’d like more information on this merger and the ongoing status of the Faircourt Resource Fund LP.

3. Peterson Capital in Europe
I’ve been back to Europe several times in the last year, meeting with my network of Investment Advisors, Fund Managers and Family Wealth Advisors in France, Switzerland, Italy and Monaco. It’s this network, developed over the past 20 years that I’ve been involved in capital markets activities, that provides a unique breadth and depth to the support I’m able to provide my corporate clients.

As well as my own contacts, I’m developing new partnerships and contacts with three very strong European-based capital markets professionals:

Axelle Vuillermet of Paris-based NewCap Investor Relations and Financial Communications (www.newcap.fr)
Marc Moreau, based in Paris as well, and a former top institutional equity salesman with Loewen, Ondaatje, McCutcheon & Company
Robert Seguin, a former European institutional sales colleague at Midland Walwyn Inc. and who today is president of Geneva-based Westmount Capital (www.westmountcapital.com). Working with him is Philippe Soubiran, a very strong life-sciences analyst and corporate finance professional.

To that end, I’ve had the pleasure in the past few weeks of working with Baron Group International (www.barongroupintl.com) - a Hong Kong-based merchant bank with offices in Bejing, Macau, New York and Vancouver - helping them market a very interesting institutional fund product into my European network.

The economic crisis and credit crunch that has affected several Hong Kong-listed blue-chip Chinese companies has created an interesting M&A opportunity in the distressed securities markets there that the Baron Group is aiming to target with its Century-Baron Special Opportunities Fund.

This Fund is a joint venture between the Baron Group and Century City Holdings, a large real estate and financial conglomerate in Hong Kong, and the Baron Group International.

It is targeting a US $200 million raise, and has recently completed a series of meetings with institutional clients in Asia and in Europe, where I helped in the marketing effort along with my European-based partners mentioned above. The Fund’s management team plans to finalize a road-show through the United States by the end of June before closing its first round early in the summer.

The Fund has a blue-chip list of advisors with access to deal flow and capital in China and Hong Kong, and is targeting Chinese-based companies that are publicly listed on the Hong Kong’s Hang Seng Index, in the belief that China will be leading the way out of the worldwide slowdown.

The Fund’s timing seems to be excellent. At the end of last month, China’s Shanghai Composite Index was up by about 47% year-to-date and 55 % from last year’s low reached on Nov. 4, spurred by the Chinese government’s 4 trillion yuan ($586 billion) stimulus package and removal of lending restrictions. Stocks traded on the exchange were valued at 26.9 times reported earnings, compared with 13.1 times in November last year, but well below the 48.7 times seen in October 2007. Conversely, Hong Kong’s Hang Seng Index at the end of May was only up 29% year-to-date and the C-B Fund Group believes that the Hong Kong market will lag its Chinese counterpart by about 6 months.

If you have any questions or would like further details on the Fund from the Baron Group management team, please let me know..

Summer Plans
I hope you have a great summer. I will be spending the month of July in France, near Avignon, on holidays and relaxing with some of my European clients, and will be back in Vancouver on August 1st. I’m available by email, phone and skype (petersoncapital) throughout July if I can be of any help to you.

For those of you who will be in Vancouver on Thursday, August 13th, I hope you’ll join me for the 8th annual Memorial Golf Tournament to be played out at UBC. Given the economic environment, this year’s tourney will not be selling sponsorships or raising money – but will instead simply offer a chance for whoever wants to come out and play a round with us to share in the memories of family members, friends and colleagues from our industry in Vancouver who have passed away over the past few years. Cost is $140 – let me know if you need more details.

Thanks again for all your interest and support of Peterson Capital. I’m very grateful for it.