Now for some stocks:

TransGlobe Energy Corporation (TGL-TSX, C$8.11, 57.86 M SO)

One of our favorite junior oil stocks is TransGlobe Energy Corporation. TransGlobe is currently producing and exploring for oil in Yemen, and in 2006, the company will begin exploration efforts on a large rift basin in Egypt where it holds a 50% interest in 7,500,000 acres that we believe to be highly prospective.

The company recently provided an update on Block S-1 in Yemen where it holds a 25% interest (Vintage Pete 75%). A recently completed 18-mile pipeline was commissioned, with startup on July 1, 2005. Prior to startup of the pipeline, approximately 8,300 bopd were being trucked to a terminal facility. The new pipeline will allow an increase in production to 15,000 bopd and a reduction in operating costs of $1.50 to $2.00 per barrel. We expect that continued exploration and development in Yemen will lead to further significant production increases over the next several quarters.

TransGlobe is an exceptionally well-run company and possesses a debt-free balance sheet as an added bonus.

GMP Capital Corporation (GMP-TSX, C$26.90, 28.198 M SO)

GMP is a leading investment dealer primarily serving smaller and mid-sized corporate clients and institutional investors. GMP has 41 partners and 105 employees in offices located in Toronto, Calgary, Montreal, and Geneva. The company was founded in March 1995, and its strategy is to focus on businesses with strong management teams and superior growth potential.

In our opinion, GMP has built an extremely strong franchise that is capable of competing with the bank-owned dealers, especially in the financing of the oil and gas sector. A highly entrepreneurial and energetic staff has succeeded in gaining tremendous market share in both trading and corporate finance. We expect that GMP will continue to be highly successful in the quarters ahead.

Fairborne Energy Trust (FEL.U-TSX, C$10.80, 44.978 M SO)

Fairborne only recently converted to a trust structure in June of this year. The company possesses significant unexploited reserve opportunities and reserve upside potential through a 300-well drilling inventory. Also of interest is the successful coalbed methane (CBM) production at Clive, which has a low-risk development plan of 150 wells over the next three years. Fairborne’s principal assets are focused in the Peace River Arch, the Deep Basin/West Pembina, and the Wood River/Clive regions (refer to map). We consider them all to be extremely attractive.

A payout ratio of 60%, a strong balance sheet of 1.0x debt to cash flow, and proven management suggest to us that Fairborne has the right factors to be a success.

Metals and Mineral Fuels

Galileo holds a balanced position in the metals and mineral fuels sector. Our aim is to focus on investments with well-defined resources or with sufficient continuity in mineralization to warrant a resource statement within two quarters.

Highlight: Uranium

The industrial world is looking positively on nuclear fuels as a solution to both the depleting petroleum reserves and excessive carbon emissions (for example please see that the attached article published by the Financial Times). For this reason, Galileo continues to hold an early position in the keyhole institutional uranium investment, Cameco Corporation (CCO-T, $57.18, $9.9B MCap). With only a few sellers and two hundred buyers, the price of uranium is highly illiquid. A tight market developed in Q1-2004, and since then the weekly quoted price double to $29.50 per pound U3O8 (July 13, 2005). The arithmetic growth in the uranium price has led to an exponential increase in the number of uranium-related listings on the international mining exchange. However, 90% of some 100 new uranium listings are engaged in grassroots exploration and very few have access to legitimate resources with robust enough grades to justify a prudent investment. Indeed, very few of the spawning uranium prospects can or will become permitted or even profitable mines. We have reviewed the spectrum of uranium listings and most are simply too pricy or illiquid. Investors in this sector should operate on the assumption that the supply of the mineral fuel-uranium and thorium is just like the Earth: low grade and open in all directions. And if you want a ceiling on price, uranium dissolved in seawater can be removed for about $140 per pound.

The industrial world is looking positively on nuclear fuels as a solution to both the depleting petroleum reserves and excessive carbon emissions (for example please see that the attached article published by the ). For this reason, Galileo continues to hold an early position in the keyhole institutional uranium investment, . With only a few sellers and two hundred buyers, the price of uranium is highly illiquid. A tight market developed in Q1-2004, and since then the weekly quoted price double to $29.50 per pound UO(July 13, 2005). The arithmetic growth in the uranium price has led to an exponential increase in the number of uranium-related listings on the international mining exchange. However, 90% of some 100 new uranium listings are engaged in grassroots exploration and very few have access to legitimate resources with robust enough grades to justify a prudent investment. Indeed, very few of the spawning uranium prospects can or will become permitted or even profitable mines. We have reviewed the spectrum of uranium listings and most are simply too pricy or illiquid. Investors in this sector should operate on the assumption that the supply of the mineral fuel-uranium and thorium is just like the Earth: low grade and open in all directions. And if you want a ceiling on price, uranium dissolved in seawater can be removed for about $140 per pound.

Western Prospector Group (WNP-V, C$3.10, 30.149 M SO, 41.6 M FD, $25 M Cash)

Galileo was an early investor in mining companies working in Mongolia. The mineral potential in the Country has since been recognized by the world’s resource giants. In recent months CVRD, Rio Tinto, and BHP-Billiton have all announced new investments in the country. Although the market is focused on the growing Oyu Tolgoi copper-gold system owned by Ivanhoe Mines (IVN-T) and Entrée Gold (ETG-V), there are also vast coal and uranium deposits. To best participate in a potential supply of future fuel to neighbouring China, Galileo has invested in Western Prospector Group which has known resources on a project encompassing 1,900 square kilometres of a uranium-rich sedimentary basin in eastern Mongolia.

The beauty of Western Prospector is that it owns 12 exploration licences covering four known resources already defined by the Soviets, plus there are also numerous exploration targets (refer to the radiometric anomaly map below). In mid-April Galileo visited Western Prospector’s office in Vancouver to review the existing geologic sections and historic drill data from the Gurvanbulag deposit. We believe it could take only a short period to redefine and upgrade the historic Russian C1 and C2 resources to Canadian regulatory standards. Subsequently, in early May the Company announced an inferred resource at Gurvanbulag of 4.2 million tonnes grading 0.245% U3O8 (22.7 million pounds). In mid-June, Western Prospector started a 100-hole diamond-drilling program using two drilling rigs. Approximately 40 holes will be completed within the boundaries of this inferred resource. Of interest to the market will be the “payback” tonnage of high-grade bodies occurring above offsets in underlying stratigraphy. In late May, Western Prospector released a summary of the intersections from Russian drilling. One hole in the Gurvanbulag core zone graded 3.88% U3O8 over 10.6 metres. Overall, we see a potential based on geologic assumptions for over 100 million pounds of U3O8 at grades better than many existing in-situ leach mines operating in Kazakhstan or the western U.S. Using peer-group comparisons and current market discounts per pound of resource in the ground, we believe Western Prospector could be worth over $10.00 per share.

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