Strategem Balance Sheet Shows Exposure To Resource Sector

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Ken Morgan
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VANCOUVER, BRITISH COLUMBIA – December 1, 2003 –Strategem Capital Corporation’s (“Strategem” or the “Company”) (TSX-V: SGE) latest quarterly report shows that its timely move into the resource sector is showing value for its shareholders. When Strategem announced it was “getting into gold” earlier this year, the Company had assets of less than fifty cents per share, primarily cash, and it was not showing a lot of activity. Since then it has picked up a portfolio of investments in publicly traded resource exploration stocks, including Adrian Resources Ltd. (“Adrian”) (TSX-V: ADL) and Goldmarca Limited (“Goldmarca”) (TSX-V: GML), whose stock trading prices have moved up sharply.

“We decided late last year that the resource sector was the place to be,” said Kenneth W. Morgan, the president and CEO of Strategem. “Uncertainty surrounding the US dollar and a lack of exploration are just some of the factors creating a bull market for precious and base metals. Resource and resource exploration companies with good management and good properties are
likely to do well in this environment.”

As at September 30, 2003, Strategem held 6,000,000 shares of Adrian and warrants to purchase an additional 3,000,000 shares at $0.25. It held 1,125,000 shares of Goldmarca and warrants to purchase an additional 1,125,000 shares at $.20. Strategem also holds a debenture convertible into 680,000 shares and 680,000 warrants of Rare Element Resources Ltd. (TSX-V: RES) and had cash and other working capital of $459,000. Details of the above are more accurately described in Strategem’s unaudited September 30, 2003 financial statements and in other disclosure documents available on SEDAR.

As a result of these investments, the “break up value” of each Strategem common share outstanding was approximately $2.20 per share based on the November 28, 2003 closing trading price value of Strategem’s investment holdings, plus available cash and other assets. By comparison, Strategem’s Net Asset Value per share based on GAAP accounting on September 30, 2003, was $0.47 per share. Readers are warned that the ultimate value that Strategem may realize from its investments, if any, could vary significantly from the November 28, 2003 value.

The market prices of Strategem’s investments are extremely volatile. In addition, a number of other factors may influence Strategem’s ability to realize on its investments, including a lack of liquidity in the trading of the investment companies.

About Strategem Capital

Strategem Capital Corporation is a publicly-traded merchant bank focused on the development of emerging companies with growth potential. The Company invests in debt and/or equity positions in these companies.

This release and prior releases are available on the Company’s Internet web site located at


“Kenneth W. Morgan”
Kenneth W. Morgan, CA, CPA
President, CEO and Director

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.