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Overview
Freewest Resources Canada (Symbol "FWR" on Montreal Exchange) is a Montreal based mineral exploration company with eleven active platinum/ palladium, gold and base metal exploration projects in Ontario, Quebec, and New Brunswick. Freewest Resources Canada is the result of a spin-off in 1994 of the previous Freewest Resources which was amalgamated/taken over by Hemlo Mines. Hemlo was itself later taken over by major gold mining corporation Battle Mountain Gold. In the amalgamation/takeover, Freewest shareholders received shares of Hemlo Mines and also received one share of the "new" Freewest Resources Canada, which included all properties except for Freewest’s Harker Holloway mine. The Harker Holloway mine was the objective for the acquisition by Hemlo. It had been discovered and developed by Freewest exclusively. It has turned out to be one of the largest mining properties discovered in the 1980’s in Ontario. It is now a producing gold mine. The success that Freewest had in exploration is a testimony to its management, particularly its CEO Mackenzie Watson.

Mackenzie Watson’s mining, management and exploration abilities have not gone unnoticed. He was named as Canada’s "Prospector of the Year" in 1991. He owns over 880,000 shares of Freewest stock. It is extremely important that the officers of a mining company are large shareholders of the company as well. It is an indication that the primary interest of management is in the performance of the company’s stock.

History has shown, just as in the case of the original Freewest Resources, that smaller mining companies that are successful in developing proven reserves are often acquired (taken over) by major mining companies, usually for shares of the major mining companies. While nobody can promise that any company will be a buyout/takeover candidate, Freewest’s management has done it in the past. Freewest has excellent exploration properties, a solid cash position, experienced management and perhaps most importantly, the ability to continue an aggressive exploration program in what has proven to be an extremely difficult period for metals and mining stocks.

Major Palladium/Platinum exploration properties
Freewest has six platinum/palladium exploration properties in Ontario. It should be emphasized that the price in palladium has exploded up in price during the last year with palladium recently selling at over $900 US per ounce. Still, few people understand the enormity of the market for the Platinum Group Elements. Palladium is used extensively in the catalytic converters to reduce the harmful gas emissions in automobiles. There is no question that palladium is a necessary component in every automobile and its world demand far exceeds its supply. Russia is presently the world’s largest producer of palladium with South Africa holding the largest amount of world reserves. Thus, the supply can not be considered as always dependable. The demand is expected to continue to expand and mining companies will continue to aggressively explore for it. The question is sometimes asked whether the dramatic price increase of palladium could force automobile manufacturers to search for a replacement for palladium. The answer is no. The total cost of palladium in an automobile is barely $70 on average. It is not a question of cost, rather one of availability. One of Freewest’s properties is the Moshkinabi project which has shown a significant platinum/palladium occurrence. Adjoining Freewest’s Bermuda property is a large deposit of platinum group elements (37 million tones) showing significant grades. Freewest’s strategy and focus is to continue extensive exploration for platinum/palladium on their properties.

Gold Exploration Properties
Freewest has four gold exploration properties in Quebec and New Brunswick. A major drilling program will be commencing in January at their Clarence Stream property in New Brunswick, Canada, where several excellent gold occurrences have been discovered in the last year. A major gold drilling program has been carried out for the last several years at the Golden Ridge property in New Brunswick with excellent results. Work will continue there for the next several years.

Debt and Cash Position
Freewest has $1 million in cash and is expected to raise another $1 million in the next several months. The company has no debt. In the difficult field of mineral exploration, debt should be totally avoided in all but the largest mining companies.

Freewest Resources Canada stock: Who owns it?
There are 40,142,989 shares of Freewest outstanding. Management and related parties own approximately 11% of all outstanding shares. CEO Mackenzie Watson owns 880,000 shares of Freewest. It is extremely important that the officers and directors are large shareholders of the company as well.

Drilling Expenditures-Past and Future
Freewest spent approximately $1 million in drilling and exploration in 2000. In 2001, the company expects to spend approximately the same amount in its drilling and exploration programs. Joint venture exploration programs, where partial interests in properties are given in exchange for exploration with larger mining companies have been done in the past and are always under consideration.

Management and Directors
As mentioned earlier in this report, management has had excellent success in exploration in the past with the Holloway mine which was later bought out by a major mining company. Moreover management has shown it’s ability to raise capital from private investors outside of the brokerage industry. This availability to the capital markets is essential for a small mining company. Recently, the brokerage industry has focused on the underwriting of high tech and Internet companies. Most have turned out to be disastrous.

Why Mining Stocks at all?
It has been a very negative five years for precious metals, base metals and the mining stocks. Investors have been led to believe that there is no need to protect oneself against inflation since the stock market would protect them against inflation. What has transpired has shown that stocks do not always protect against inflation, particularly when investors have been led into overvalued stocks. The worlds investment markets are simply alternatives. US dollar denominated investments, particularly common stocks have been the choice of investors. That cannot continue forever. But cyclical studies as well as the strength of dollar which is due for a sharp correction could may again provide investors with the potential for capital gains in the metals stocks. Gold has not gone away. The world’s supply/demand relationship is quite positive. It should be noted that the two major Central banks of the world, the US Federal Reserve Bank and the Bundesbank have not sold one ounce of their enormous holdings of gold. Lent? Yes; sold? No!

The latest technical view of Freewest
February 7, 2001: As important as are the fundamentals of a company is the timing of the investments, particularly the low capitalization and mining stocks. One should consider utilizing technical analysis to time the purchase of any stock. It can dramatically lower the average price paid. Don’t chase a stock up in price, it is usually better to wait for a correction down in price to buy it. (Yes, there is a risk of missing a stock completely if it does happen to take off, but I find that occurs less than 5% of the time.) If the fundamentals remain sound, take advantage of price weakness to "dollar cost" average by buying when a stock drops. This will lower the average cost paid. Less than 1% of investors ever do it.

I believe that by accumulating Freewest on weakness, particularly when it is trading below .40 cents (Canadian) and trying to take advantage when it is down in price, it offers an even greater chance for excellent capital gains. When gold bullion is selling in the $265 to $270 range, I believe that it offers the opportunity to accumulate the majority of common stocks of gold companies when they are exceptionally cheap. Historically, low price gold stocks have very high percentage price moves when gold moves up $30 to $40. Put a chart of gold on top of a chart of any low priced gold stock and it is evident that a 10% to 15% move in bullion often brings with it a 30% to 40% move up in the stocks, and in very low priced stocks, sometimes an even greater percentage move up. The leverage is enormous. One should take advantage of low prices in precious metals stocks, few do. Ben Franklin said that "he who has patience can have it all." Gold will take more patience. Gold basically needs two things to occur: a weaker US dollar and a long harsh bear market in stocks that should begin, according to my analysis, between September and November 2001, after finally finishing the bull market in stocks.

A Canam Report is an overview of a company and not a recommendation to buy or sell a stock. It is not a complete in-depth analysis. We have obtained this information from sources that we believe to be reliable, but we cannot guarantee its accuracy or entirety. It is a profile, not a complete discussion of risk factors associated with this or any other investments. It is provided as a source of information about a company.

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