IKN #182Premium

The IKN Weekly
Week 182, October 28th 2012
Contents
This Week: Taking suggestions for The Copper Basket 2013.
Fundamental Analysis: NOBS report on United Silver Corp (USC.to).
Stocks to Follow: Overview, Gold Resource Corp (GORO), Primero (P.to) (PPP), Minera IRL
(IRL.to) (MIRL.L), OceanaGold (OGC.to) (OGC.ax), Lachlan Star (LSA.to) (LSA.ax), Lupaka Gold
(LPK.to), Focus Ventures (FCV.v).
Copper Basket: Overview, Copper Fox (CUU.v), Regulus Resources (REG.v), Yellowhead
(YMI.to), Lumina (LCC.v).
Regional Politics: Peru: Another strike/pay rise/agreement, MAG Silver (MAG.to) (MVG) has
its exploration activities suspended by Chihuahua government at Cinco de Mayo property,
Ecuador: Correa makes his pro-mining election stance clear, Chile copper production set to rise
by 23% in next three years, Mining conflicts in Latin America, Mexico: Baja California Sur polrisk
news, Bolivia doesn’t trust CIADI/ICSID, Guatemala coverage continued, Colombia mining plan
“very close”, Two from Argentina.
Market Watching: Galway Resources (GWY.v) update, Copper juniors may get a boost from
the Hana Mining (HMG.v) deal, Fortuna Silver’s (FVI.to) (FSM) problems with locals in Mexico.
I remind subscribers that no part of this newsletter can be copied, reproduced or given to any
third party without the express permission of the author.
This Week
Taking suggestions for The Copper Basket 2013
This year’s Copper Basket has turned out to be a bit of a disaster, because although it’s done a
fair job of tracking and demonstrating the sorry state of affairs in the copper exploration sub-
sector, we’ve also been dragged and held down by several small stocks that have been totally
blown out and are now nothing more than microdot pennycrapper plays. We do try to represent
all shapes and sized in the sector and some of the smallfry were chosen deliberately for that
(eg SRD.v), but there are now far too many names on the list with tiny prices as a full ten of
our stocks run a market cap of under $50m, with five of those under $20m! For sure 20/20
hindsight is a treacherous thing, but all the same there were few people who were expecting to
see $230m in market cap knocked off from Baja Mining (BAJ), just as one example.
So to the point of today’s opening salvo: We’re going to continue with The Copper Basket in
2013 and as usual we’ll make changes tro the make-up, but this time I’m looking to change at
least five of the names (perhaps more) and add some higher market cappers in with the mix to
give a better representation of the sector as a whole. As part of this, I thought I’d give my brain
a break and crowdsource for some ideas on what names you guys out there, the readership,
might like to see. I’m open to suggestions of all types and all parts of the world. Also, it’s less
about the absolute quality of the company (eg whether you personally think it’s going to be a
buyout play, or go into production, etc) and more about representing the sector as a whole,
which means I’m good about having a ....errrr, how to put this?...hmmmm...less sparkling and
1

fabulous company along with ones considered best of breed. In fact, as long as the company
fits the basic premise of “exploration stage and mainly copper”, all suggestions are welcome.
Anyway, here are three that I’m already considering:
• NGEx Resources (NGQ.to)
• Panoro Minerals (PML.v)
• NovaCopper (NCQ.to) (NCQ)
Considering yes, but be clear there’s no final decision and they’re just offered up as my own
more advanced ideas (though fwiw, of the three I think NGQ.to is the best candidate and that
one’s close to certain). So if you have ideas of your own and care to share, you know the mail
address. Thanks in advance.
Fundamental Analysis of Mining Stocks
This week we take a look at United Silver Corp (USC.to):
NOBS bespoke update report dated October 28th 2012
United Silver Corp (USC.to)
Company Overview
United Silver Corp (Canada USC.to, US Pinksheets USCZF.pk, Frankfurt UM8.f) is junior silver
mining operating in The USA. Its flagship property is its 80% ownership of the exploration stage
Crescent silver mine in Idaho. It also has cash flow from three other mining and environment
clean-up related subsidiaries. Current share structure is as follows:
Shares out: 75.163m
Options: 3.7m
Warrants:19.028m
Convertibles: 14.16m (approx, see below)
Fully diluted shares:112.05m (approx, see below)
Current share price: $0.21
Market Cap: $15.78m
Approx cash per S/O: 2.6c
All prices are in Canadian dollars unless stated. Forex U$1=CAD$1
NB: The above share count assumes the October 31st EGM goes as planned, all agenda items are approved and USC
emits the convertible notes to Hale on November 1st as planned. As there is very little reason to doubt that happening,
we’re going with this total.
Overview of today’s NOBS report
The idea of today’s report on United Silver Corp (USC.to) isn’t tro drag over its rather mediocre
past, nor gloat at those who might have bought at higher or much higher prices in previous
years and are now holding bags. Today’s report is all about the state of play in today’s USC.to
and what your author sees as a good rick/reward play which might give new buyers a good win.
2

Put simply, I think this company has low downside risk and real potential as a takeover target
that would see a buyout at a much higher price than today’s lacklustre 21c.
Hale Capital Partners overview and share structure overview
USC has a history of corporate governance that ranges between adequate and downright bad,
but during 2012 a new team has been assembled that has a much better look about it. Since
losing Stan Bharti from the board late last year (he was only there for a while), USC has
changed its corporate direction considerably. The main change is that it’s gone into business
with Hale Capital Partners LP (1) (Hale), a New York based fund headed up by one Martin Hale.
Here’s the corporate blurb from the website home page
“We focus on under-appreciated, under-followed, or under-capitalized businesses, whether they
are small public companies, non-core divisions of larger companies, restructurings, or simply good
companies in out-of-favor industries. In every investment we work closely and patiently with
management to help transform businesses into larger and more successful operations.”
So now you know. FWIW I’ve made several third-party inquiries about Hale with people I know
in or around NYC and the answer has always been more or less the same: They’re honest,
trustworthy people who are looking to make a profit by sharing the success of other businesses,
not suck other businesses dry for their own profit. For what it’s worth, I’m good about these
partners to USC being on board.
Hale has done two main deals with USC. The first came via a term sheet in November that
closed in February this year, that saw Hale lend USC U$6.3m via the sale of convertible notes
(that convert at 50c/share). The second came in June, when soon after recovering the 20% of
the Crescent mine it didn’t own at the time (barring a 2% NSR that stayed with the old owner of
the 20%), USC sold the same 20% to Hale for $2.4m. So to sum up quickly Hale is very
committed to USC, owning as it does around 20% of company shares (via converts and
warrants) and also the 20% of the flagship Crescent mine property that USC doesn’t own itself.
As a sidebar point that we’ll return to later, Hale was also an investor in RX Gold which was
recently gobbled up by U.S. Silver & Gold (USA.to) in that deal we followed quite closely here
(and failed on a trade, too).
On to the share structure, which needs some focus to see how Hale fits into it all and we can do
that via its main deal. On February 1st 2012 USC closed (2) a financing deal with Hale Capital,
in which Hale lent USC $6.3m at an interest rate of 8.25% per annum (WSJ Prime rate +5%, but
the WSJ Prime has been at a constant 3.25% for over a year), with interest paid quarterly. The
interest on this loan has been paid twice and according to both sides (and an EGM set to vote
on the matter (3)) will continue to be paid in addition convertible notes that are priced at the at
the going market rate for USC shares at any given time. It’s difficult to know exactly how many
notes USC will emit for these quarterly interest payments, but if we can get fairly close by
assuming the annual interest due on the loan is $519,750, splitting that into 4 quarters and then
assuming for argument’s sake the average settle price on the shares at 25c. This makes the
calc easy because the $0.25 share price cancels out the 4X quarters and USC emits 519,750
shares per quarter to Hale. As we’re about to see the third payment go through, this implies that
Hale now owns plenty of control over USC stock. Here’s the count:
• The original 12.6m converts from the Feb 1st deal, convertible at 50c apiece
• An IKN best-guess 1.56m converts emitted since then, best-guess average price 25c
• 5.04m warrants priced at 38c with an expiration date of February 2016
That puts Hale in charge of 19.2m shares of the company. This means that if Hale decides to
exercise the whole lot there would be 94.363m shares out and they’d hold 20.3% of them.
Away from Hale, the other big holder of USC shares is Greg Stewart, company director and the
CEO of United Mining Services (USM), the wholly owned subsidiary of USC with three cash flow
producing divisions. Mr. Stewart owns 12,318,507 shares representing 16.39% of shares out.
United Silver’s two sides
One of the interesting things about USC is that it has its own profitable, cash flow producing
businesses.
3

• Side one: Its wholly owned United Mining Services (USM) business has three divisions
that provide services to the mining industry, namely 1) mine services (basically the
supply of third party subcontract miners to other companies) 2) Contracting services
(which largely depends of government contracts for environmental remedial work in the
area around the Spokane/Idaho region, cleaning up the mess made by previous mining
operations and 3) Fabrication and machine services (basically supplying/servicing
machines needed by other mining companies. These three combine into a subsidiary
that provides useful cash flow and modest profits to USC.
• Side two: The company’s real focus, however, is the exploration and development of
the Crescent mine, located very close to the famous Sunshine mine in Idaho and just
four or five miles from the U.S. Silver (USA.to) in the same area. The mine has a 43-
101 compliant resource and according to all reports a great deal of potential upside to
exploration at depth.
We’ll now take a brief look at both.
United Mining Services (USM): Here’s how the three divisions that make up USM have
generated revenue in the last two years. 3q11 benefits from the most work out of the remedial
environmental work contract that USM won from the government two years ago and has
managed to successfully renew since then (after year three the contract goes up for tender
again). We’re expecting 3q12 to be a lot better than the other quarters of 2012 because of this
and in fact may be underestimating revenues from “contracting services” as USC is guiding for
up to 20% higher revenues this year compared to 2011. The “mine services” part of USM saw a
reversal this year when USA.to, the
nearby silver miner that we know
USC: Revenues from operations, per quarter
quite well, decided not to renew its $m
third party contract with USC and 5 Fabrication & Machine Services
directly employ more men. We’re 4.5 Contracting Services
therefor expecting less revenues 4 Mine Services
from that division going forward, but 3.5
USC dos highlight that it’s not really 3
bad bad news because it can now 2.5
use that labour force to develop and 2
explore its own Crescent mine. As 1.5
for machine services, that one is a 1
small, self-contained and regular 0.5
revenue generator. 0
1q11 2q11 3q11 4q11 1q12 2q12 3q12est
The second chart below shows the source: company filings
gross profits thrown off by the three
divisions and as you can see, this
USC: Gross profit from operations, per qtr
$m
quarter we’re closing in on $1m in
gross profits for its parent company 1 Fabrication & Machine Services
0.9 Contracting Services
USC. Yes, things get thinner in the 0.8 Mine Services
Northern winter quarters but overall 0.7
the USM part of USC is a useful 0.6
cash producing subsidiary which 0.5
0.4
brings in modest positive free cash
0.3
flow. It also allows your author to 0.2
stretch the definition of “I want more 0.1
producers” and consider USC a 0
-0.1
“producer company”. I’m the first to
-0.2
admit it’s a slight cheat, but in terms -0.3
of importance to the whole, the USM
1q11 2q11 3q11 4q11 1q12 2q12 3q12est
part of USC is roughly equivalent to source: company filings
the Corihuarmi part of Minera IRL
(IRL.to) in its financial benefit.
4

The Crescent Mine
We begin here by saying that we’re only taking the briefest of looks at the main USC asset, it’s
80% owned Crescent mine. The place to go for more is the 43-101 technical report on the mine
published by SRK Consulting, last updated as per September 30th 2011 and available at
SEDAR or on the company website, right here (4). There’s a whole mountain of information
about Crescent in the report that I’m going to condense into a few way oversimplified bullet
points:
• It’s located in the North Idaho panhandle, Shoshone county and in the middle of a
famous mining zone, four miles from the town of Kellogg, 75 miles from Spokane. Its
address is impeccable, being located very close to many other well known silver mines,
as seen on this map (if the details are too small, check page 15 of the 43-101 for the
same map).
• It’s a past producing mine, with previous owners ‘Bunker Hill Mining Co’ reporting in
1982 that over 25m oz silver had come from the mine between 1917 and 1981, with
most of the production coming from the period 1951 to 1981. The historically reported
grade is high too, with that production coming from 978,750 tons of rock grading an
average of 27.0 oz/t Ag. It’s worth noting that this is historical information and notr
covered by 43-101 compliance.
• As for that resource, the next two charts ripped from the 43-101 give the overview. At a
silver cut-off of 11 oz/t Crescent holds and indicated-plus-inferred resource of 10.2m oz
Ag at an average grade of 19.2 oz/t Ag.
• The second chart below gives a more detailed look at the current resource at different
cut-offs. This second chart is important (in my view at least) because the 11 oz/t Ag cut-
5

off was chosen by SRK to reflect the cut-off used at a nearby mine, thereby assuming
costs of production would be similar to those at Crescent. That may be true, but with the
recent hike in silver prices there’s decent reason to believe a lower cut-off can be used
for Crescent these days. To take one example, an 8 oz/t Ag cut off would imply a
production of of (an IKN calculated) $19/oz Ag (as long as USC can mill a tonne of rock
for U$150), which leaves plenty of profit while silver is $30 and above.
• The other thing to like about this resource sensitivity chart is to note how much really
high grade material makes up Crescent, as even at a cut-off of 15 oz/t there’s a
combined I+I resource of 7.6m oz silver.
• The current resource is based on databases from 100 drill holes that total over 31,000m
of drilling and most drill holes spaced between 45m and 61m apart. SRK considers the
drilling, QA/QC and database collection as high quality. The resource of indicated and
inferred mineralization comes from block modelling and any block inside the drill
spacing (as above is classified as indicated, the rest being inferred.
• As for potential economics, if we draw a straight line to what’s happening at the Galena
mine owned by U.S. Silver (USA.to), they’re producing at around $20/oz Ag. However,
Crescent will almost certainly be able to produce silver at a substantial discount to that
and for two reasons. 1) USA.to rock now has to be hauled up from very deep while the
Crescent resource is based on mineralization that’s much closer to the surface. This is
a past producing mine that’s seen activity for 100 years so we’re not trying to pull the
wool over your eyes and say “at surface”, but it hasn’t been mined anywhere near as
much as other mines in the area (Galena, Sunshine, etc) and as a result, today’s
resource is more accessible than faces being worked at other mines. 2) The other
reason to prefer Crescent rock to Galena is grade, as Galena’s mineral has been
averaging something around 10 oz/t Ag in the lst few years, while Crescent can boast
averages of 19 oz /t Ag at its current preferred cut-off, nearly double (though admittedly
without the minor Zn and Pb by-product credits that Galena enjoys).
• The final bullet point is about exploration upside at Crescent, because there’s a lot of it.
The mineralization is assumed open at depth (even great depth) by simple comparison
to mines near and around it that have already been operated to much deeper levels.
The interesting thing about the current 43-101 resource is that it doesn’t take into
account anything below the current water table level or even close to it (water table is
controlled by a nearby working mine and even if that mine shut down, the Crescent 43-
101 resource wouldn’t be affected by a rise in water levels). It’s typical for mines in this
region not to develop resources too much, as the style of mining is to mine out a few
years worth and replace a few years’ worth with drilling, and continue in this way.
There’s every reason to suppose that Crescent doesn’t just have more than its 10m and
bits ounce silver resource but in fact has a lot more than that.
6

The USC Crescent development, exploration and expansion plan: So the above was a brief
look at Crescent (well, brief-ish) and for more, go look at the 43-101. What we want to do now is
consider what USC plans to do with its 80% owned asset. On Feb 28th 2012 USC announced
(5) its plans for the future of the Crescent mine. Again there’s plenty to read in the linked
material and we’re not covering every single aspect, but the general idea is that:
• The company plans to spend the next four years exploring and developing Crescent
• The goal is to substantially increase the current silver resource and put together an
economic plan for mining, followed by mining activities
• Cash flow to come from test mining production during the four years in order to offset
the cost of exploration and avoid share count dilution.
• To this end, the company has invested in a nearby mill facility to expanding milling
capacity. The investment, which is now complete, gives USC an exclusive right to mill
7000mt of rock, which is approximately 2/3rds of the mill’s new maximum capacity of
350tpd (before USC’s investmen this year, the mill was running at 100tpd).
So that’s the general plan; USC wants to develop its mine and do so via cash flows generated
by up to 7,000 tonnes per month of test mine production. This plan was put into operation and
the first batches of test mine production went to the mill during the northern summer, but an
adjustment to the plan was announced in August when USC announced (6) that it would
temporarily stop sending test production to the mill and would concentrate on exploration until
the mineralization is better understood. Here’s the main paragraph from that August NR:
Recently, the majority of underground work at the Crescent has focused on pre-development
preparation and test mining to develop material for test milling at the newly-expanded New Jersey
Mining Company mill, located 4.5 road-kilometers from the Crescent portal. Initial mill testing
using silver-bearing material excavated from the first two exploration drifts has already begun.
However, Management has recently analyzed the underground progress, noted discrepancies in
the mill head grade relative to the voluminous geochemical sampling which accompanied the bulk
sample excavation from the drifts, and, taking into account the higher grades and greater
variability recently encountered, decided to re-focus on more detailed exploration before
proceeding with additional test milling.
That’s fair enough as long as things are only on hold temporarily, because the general plan to
pay for exploration via limited cash flow (thus stopping the share structure from being blown out)
is a good one. Here’s an idea of how the economics of the test milling might work
• 7000 tonnes per month maximum capacity X 3 months = 21kt/qtr
• An average of 19 oz/t silver (based on above resource)
• 15% mine dilution (43-101 report assumption, based on neighbouring mines)
• 95% recovery levels (local mines typically return 95% to 96% recovery levels)
• Do the math and that’s 322,000 oz Ag per quarter
If we then ballpark a $20/oz cash cost (prob high) and a $30/oz market price (prob low) for our
always preferred conservative reasons, we’re looking at a test mine production that can
generate cash flow of $3.2m per quarter. That’s not bad folks, and more than enough to fund
the type of four year program USC has in mind.
Crescent mine section conclusion: Darn, this report is going on too long already, I wanted to
keep it as brief as possible but there’s just a lot of different parts that need comment. Summing
up Crescent before moving to an overview of USC.to financials, we have a past producing asset
with a great address, an 10m oz Ag resource that has obvious room to get much bigger and a
plan to develop the mine and keep down financial strain on the company by producing and
selling on a small test run that could easily produce at over one million ounces per year and
offer good cash flow.
Company financials
Ok this time we’re going to be brief, mainly going with the “usual suspects” charts we prefer for
most NOBS reports. Starting with balance sheet items.
7

Assets look like this (below left) and the main story is the growth of the fixed asset portion of
USC as it develops and adds value to Crescent by exploration (it capitalizes)
USC.to: Assets Breakdown per qtr
30
25
20
15
10
5
0
Debt looks like this (above right) and the main recent development is the chunks added to long-
term liabilities due to the convertible notes issued to Hale this year. They look chunky compared
to overall market cap but it should be noted that they’d disappear and shares added if
everything goes to plan...and what could possibly go wrong?
Working capital looks like this (right). We haven’t added in the 3q12 estimated number here
because to be frank it’s tough to know what the
combo of limited revenues from the first couple of
batches of test production (before that was
temporarily halted in August) plus the better 3q12
revenues expected from the USM subsidiary, plus
the amount that USC is going to charge to
exploration/development costs is going to work out
as. Come the 3q12 numbers we’ll know more, but
working capital isn’t one I’m particularly worried
about for the time being, as the historical numbers
suggest that the USM subsidiary will keep on
churning out a small net profit over the year and the
ballpark numbers suggest that once the test mining
production comes back on line, USC will have
enough to move forward on its four year plan. This
isn’t a company that needs to carry tens of millions
at bank in order to carry on.
Shares outstanding (right) made their big moves in
2010 and 2011 as the company was set up around
Crescent. We should note that the recent deals with
Hale don’t show up here because that fund took
convertibles and gets its interest paid in more
convertibles, which won’t show up on the share
count until they’re...well, they’re converted.
Earnings (right) have been fairly regular thanks to
the USM money, with just one bar as an outlier and
worthy of special note. In 2q12 USC took a near
$5m impairment on the P+L. This came as part of
the process where Hale paid nearly $2.5m for 20%
of the mine. As the other 80% is now valued pro-
rata to that (i.e. just over $12m) and it was being
carried at over $17m beforehand, the reasonable
adjustment was made.
If we focus on operating earnings versus post-tax
earnings (below) the same 2q12 outlier shows up,
8
90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2
source: company filings
srallod
fo
snoillim
USC.to: Debt Breakdown per qtr
10
9
fixed 8
other current 7
cash 6
5
4
3
2
1
0
90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2
source: company filings
srallod
fo
snoillim
LT debt
current debt
USC.to: Working Capital per qtr
9
8
7
6
5
4
3
2
1
0
-1
-2
90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2
source company filings
srallod
fo
snoillim
USC.to: Shares Out
80
70
60
50
40
30
20
10
0
90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 tse21q3
source: company filings
serahs
fo
snoillim
USC.to: Quarterly Earnings overview
6
4
2
0
-2
-4
-6
01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 tse21q3
source: company filings
srallod
fo
snoillim
revenues
COGS
Op. Earnings

but it’s not much more than an accounting blip and of no practical concern to us in late FY12.
Apart from that quarter, the results are fairly
predictable stuff though I draw your attention to our USC.to: Op. Earnings vs Net Earnings, per qtr
final chart below for a little more colour. 1
0
Investment activities is the only “different” chart in
-1
today’s mix, as I want to show where the difference
-2
between the depleting working capital and the combo
-3
of the USM gross profits and the (mostly Hale) capital
-4
injections has been going. There are other minor items
-5
not featured here, but the main three are 1) property
-6
purchases that cover various run-of-company activities
2) investment in mill facility which is the money USC
put into that nearby “New Jersey” mill to up its capacity
to 350tpd and is now complete, then 3) additions to
mining interest that covers the cash USC has been investing in the Crescent property via
exploration and development
USC: Investment activities, per quarter
$m
6 additions to mining interest
5 invest in mill facility
property purchases
4
3
2
1
0
1q11 2q11 3q11 4q11 1q12 2q12
source: company filings
Investment thesis
We now change tack and consider just why I think USC is a good investment alternative today
and without beating round the bush here are the four basic reasons
1) The company has put together a sensible business model and has good institutional
backing from a serious fund that wants to add real share price value (and thanks to its
nominal 20% ownership of USC.to Hale has a lot of skin in the game).
2) The main asset has a lot of room to add value.
3) The share price is beaten down and it’s at a low market cap
4) I think the company is going to get bought out by U.S. Silver & Gold (USA.to)
Regarding 1 and 2, that’s really why I’ve been going on for the last few pages above. Regarding
point three, here’s the price chart:
9
01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 tse21q3
source: company filings
srallod
fo
snoillim
Op. Earnings
Net

We’re now looking at a company with a market cap of a little under $16m, which means that it
trades at almost exactly 1X book value (assets $25.02m liabilities $9.253m as at 2q12). Now
that’s cheap when you consider it could throw away all the potential upside from Crescent
exploration, put that project in mothballs and happily survive forever, pay all the bills and keep
going just on its USM subsidiary’s earnings. Risk of outright company collapse here is minimal
(or as minimal as it gets in this risky sector we know as junior mining) and if the sector shows
real recovery the value added to Crescent can only multiply on the book value and therefore
shove that share price higher.
And now for the real reason I like USC.to today. Point four up there states that I think the newly
active and under new management U.S. Silver & Gold (USA.to), now under new management
and the product of the recent fusion of U.S. Silver and RX Gold, is going to be interested in this
asset. “New USA.to” is now being run by Darren Blasutti, the former Senior VP Corp
Development for Barrick, who has made is abundantly clear to anyone who wants to listen over
the last few weeks that the goal is to take the small USA.to core and build it into a major
silver/PM company. His model, according to several reports that include off-record reports from
people present on last week’s analyst site visit of USA.to assets, is that used by New Gold
(NGD) which used paper leveraged mergers to become bigger and move away from a core of
small, relatively high cash cost gold operations to today’s mid-scale player. USA.to currently
runs production at 2.7m oz Ag per annum and its organic growth plans indicate it will be able to
take the assets currently owned and move that to 3.5m oz, perhaps 4m oz, in the next couple of
years. However, Blasutti has made it plain that he wants USA.to to be a 5m oz silver producer
by 2015. This is where USC.to comes in.
• Just on test production and the recent investment in the nearby mill alone, it can add
1m oz to USA.to’s production profile almost immediately.
• Alternatively, USA.to may decide to use its own spare milling capacity (which is also
very close by) to run the Crescent rock, which is higher grading than Galena’s current
head grade and could add production while lowering cash costs at that traditionally high
cash cost mine.
• All the resource growth upside available to USC at Crescent could be moved forward
more quickly by USA.to, as it enjoys a better treasury position and free cash flow from
operations.
• USC.to’s partner, Hale, was also a financial backer of RX Gold before it was bought out
(all paper deal by USA.to.
• It makes much more sense for USA.,to to look close to home for its growth upside than
further afield. USC’s address makes a compelling argument.
• USA is currently considered “good paper” and as USC offers a neat fit, the market
would probably approve of a friendly deal here without the need for USA.to to deplete
its own cash position and add a cash element to its offer.
• The plans USC has put together for exploration and development at Crescent are all
well and good, they’re smart and the new financial partner has put the company in a
better, more stable financial position. However, I’m not a buyer of USC.to for the four
year plan; I’m a buyer of USC.to today because it looks like a prime M&A target for a
local company with greater ambitions.
As for what USA.to might pay for USC, one thing you can bet the house upon is that it will have
to be above the Hale convertible note 50c conversion price because Hale won’t accept anything
less. In fact, the deal that closed back in February is a better benchmark for an eventual offer is
a better guide than any NAV or cash flow model I’ve worked up this week. Hale is in this for the
money rather than the love of mining and will want a winning deal all round. With that thought in
position, USC.to (Martin Hale is on the USC.to board) might entertain offers for the company or
perhaps for Crescent alone, allowing the USM subsidiary to be spun out. At, let’s say, a 60c all-
paper price that would imply USA.to offers 1 share for every 4 shares of USC.to, Hale would win
in the following way:
• The original 12.6m converts at a 10c/share profit = $126,000
• 1.56m converts emitted since then at an estimated 35c/share profit = $546,000
• 5.04m warrants at 38c, offering a 22c/share profit = $1.11m
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• Its 20% ownership of Crescent which was bought for $2.4m when the USC.to share
price stood at 24c, roughly implying a sale price of $6m and a profit of $3.6m
Total Hale paper profit: $5.38m. Not bad for an original outlay of $8.7m less than a year ago.
Conclusion
It’s always difficult to second-guess merger and acquisition action in the markets, but this is one
that has plenty of logic, has “right place right time” written all over it, has a smart fund that
seems to have set itself up to profit from M&A in the new, aggressive local player USA.to and
comes with the added bonus of limited downside, thanks to the revenue generating operations
at USC.to, the relative ignorance of the market towards the stock (it hasn’t rebounded) and the
likelihood that the buyer is out there looking for just this type of inexpensive buying opportunity
to build on its plans. We missed the USA.to merger play and in fact made a bit of a has of the
whole thing, betting on the wrong side of the counterbid opportunism and then selling at a time
just before silver put in a good rebound, thus shooting the highly leveraged USA.to higher
quickly. I’m still unconvinced that USA.to is a good investment play at the moment due to its
high costs profile and potential to disappoint new holders when it reveals it financials. However,
there does seem to be a good opportunity to profit from the “New USA.to” and its newly found
aggressive growth ambitions via this company.
The IKN Weekly recommends United Silver Corp (USC.to) as a speculative buy and sets a
price target of 60c on the stock, representing an upside of 185.7% to Friday’s close of
21c. I admit that the price target is a little plucked out of the air, but it does jive with cash flow
calculations I’ve done back office and at a fully diluted takeover valuation of around $67.2m it’s
the kind of price that a $141m market cap company like USA.to can handle in an all (or near-all)
paper deal. If you like the idea of this USC.to investment idea you must also be absolutely
crystal clear that this type of percentage upside by definition means that it’s a high risk
proposition. However, this is tempered by the revenue generation already at USC.to and the low
likelihood of the share price getting totally crushed in any scenario barring a wholesale dive in
the price of silver. This on has decent upside potential if my assumption on the ambitions of
USA.to and Hale is correct, but if not there really isn’t that much to lose unless the Mayans were
right. I’m a buyer of USC.to and will add it to The IKN ‘Stocks to Follow’ list as of next week
End of Report
Stocks to Follow
Of the 14 positions that were open this time last week, just five made ground (LRA.v, PLA.v,
LSA.to, AQM.v, GORO short) and one remained unchanged (FCV.v). That means eight of out
open positions lost ground (RIO.to, VEM.to, LPK.to, BCM.v, YMI.to, IRL.to, OGC.to, PPP) and
amongst those there were some hefty sized losers, such as Vena (VEM.to down 14.3%) Lupaka
(LPK.to down 13.8%) and Yellowhead (YMI.to down 13.2%). Definitely not a good week for our
list.
With the cover put on GORO we’re down to 13 open positions, two less than our self-imposed
maximum. Eight of those are in the green, five are in the red.
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Company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
Top Picks
Rio Alto Mining RIO.to hold C$2.04 07-apr-11 C$5.56 172.5% $6.29 tgt
Recommends
Vena Resources VEM.to hold C$0.70 31-may-09 C$0.24 -65.7% target lowered to 42c
Lupaka Gold LPK.to spec buy C$1.12 23-oct-11 C$0.50 -55.4% considering sale on news
Bear Creek Min. BCM.v hold C$3.38 07-nov-11 C$3.49 3.3% added 3rd time Fri 21st
Yellowhead Min. YMI.to hold C$1.00 01-apr-12 C$0.59 -41.0% considering sale
Lara Expl. LRA.v buy C$1.15 08-apr-12 C$1.37 19.1% solid biz model, LT hold
Plata Latina PLA.v hold C$0.79 10-apr-12 C$0.45 -43.0% considering sale
Minera IRL IRL.to hold C$0.73 22-jul-12 C$0.93 27.4% $1.56 tgt added, new avg
OceanaGold OGC.to buy C$3.03 16-sep-12 C$3.38 11.6% $5.34 tgt growth prod
Lachlan Star LSA.to buy C$1.50 30-sep-12 C$1.62 8.0% $2.23 1st tgt
Primero Mining PPP short U$7.26 07-oct-12 U$7.18 1.1% SHORT near-term play
Smaller/Riskier
AQM Copper AQM.v hold C$0.31 16-oct-11 C$0.12 -61.3% considering sale
Focus Ventures FCV.v hold C$0.175 01-jul-12 C$0.21 20.0% revised tgt 25c
Closed in 2012 closed close PPS
Soltoro SOL.v jan'12 C$0.87 07-nov-11 C$0.94 8.0% cash moved to BCM.v
Gold-Ore Res GOZ.to feb'12 C$0.84 13-oct-10 C$0.98 16.7% trade closed on ELG.v offer
Minefinders MFN feb'12 U$11.68 17-nov-11 U$14.80 26.7% target made, trade closed
Iron Creek IRN.v mar'12 C$0.58 26-sep-10 C$0.31 -46.6% time up on small bad trade
U.S. Silver USA.to apr'12 C$2.18 15-mar-12 C$1.86 -14.7% ST trade no good, cut loss
Augusta Res. AZC.to may'12 C$3.10 29-jan-12 C$2.07 -33.2% bad mkt, bad trade cut loss
Bellhaven BHV.v may'12 C$0.50 22-sep-10 C$0.28 -44.0% new mgmt not impressive
Zincore Metals ZNC.to may'12 C$0.325 29-jul-11 C$0.17 -47.7% bad mkt, bad trade cut loss
Soltoro SOL.v may'12 C$0.70 18-mar-11 C$0.41 -41.4% bad mkt, bad trade cut loss
failed ST trade close pre
U.S. Silver USA.to aug'12 C$1.78 27-jul-12 C$1.36 -23.6% split
Estrella Gold EST.v aug'12 C$0.91 27-mar-11 C$0.14 -84.6% Closed on port realignment
Fortuna Silver FVI.to sep'12 C$1.07 03-may-09 C$5.32 397.2% sell call $6.17/ Mar25
Strait Minerals SRD.v oct'12 C$0.125 09-dec-11 C$0.12 -4.0% closing coverage til FY13
Sunward Res SWD.to oct'12 C$1.47 13-mar-11 C$1.21 -17.7% selling and taking loss
Gold Res Corp GORO oct'12 U$21.47 09-sep-12 U$17.40 19.0% Short trade closed
2009, 2010 and 2011 closed positions in appendices below
Now for some notes on a selection of the above stocks.
Gold Resource Corp (GORO): Covered. As it turned out the cover went on about a buck too
early, because come Friday GORO was down in the low $16s, but not much point in fretting
over that. The reason for GORO’s price pressure seems to be a sudden rash of class action
lawsuits filed against the company which started Wednesday (come Friday night there were
four firms vying for the trade) that will try to establish whether GORO management violated
federal securities laws by overstating guidance this year. We’ve been over the subject on these
pages before, noted the tendency for GORO management to overpromised and under-deliver
and hell, we’re the guys who went short because we considered GORO was still overstating its
forecasts for 2012 even after lowering guidance in July. To be honest I considered the first
class action filing rather speculative and even said so to a couple of mailers (while informing
them that I had indeed closed the position as planned earlier in the week. However, on further
consideration there may be a case here, especially if one of the larger holders decides to join in
on the suit (something we’ll find out about in due course).
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So anyhow, GORO sank during the week and I didn’t nail the best price. Don’t worry, I’ll live
and I still expect the company to declare a 6c dividend next week (see IKN180 for why).
Finally, reader MP gave me the headsup on a section on GORO on the Jim Puplava radio show
last week, in which Puplava and his guest John Doody discussing GORO. He sent it by podcast
in a mail, I think you can find it here (7) but that might be a pay subscription thing, so if you’d
like a listen mail me and I can send the podcast by return. The bit MP wanted to point out runs
from minute 10 to minute 17 is interesting because it’s a conversation between two people that
have pumped this stock heavily and are now left wondering just why GORO has gone South.
That for me is the interesting part, hearing what people from the bullish perspective are
thinking and opinionating. However I had to laugh at the points where Doody said GORO’s 3q12
results were “great” and then later “...was no so bad...”, while Puplava said that when he saw
the 3q12 numbers he said to himself “...this is pretty good...”. Both profess to be mystified at
the market reaction and try to lay blame on “the shorters” (oh them there beasts) for their
misfortune. Anyway, it’s quite interesting to hear the erroneous analysis going on.
Primero Mining (PPP): PPP went on some ride last week and for a while found itself the
centre of all attention for gold bulls, but come
Friday afternoon some sanity had been restored
and your author’s loss was minimal at worst. I
really have no idea whatsoever about the cause
behind the ramp and return Tuesday/Wednesday
because I wasn’t paying much attention to the
market those days, but somebody must have been
desperate enough to want to pay 10% above an
already expensive price. It’s what makes a market,
I suppose.
Anyway, we’ll find out soon enough whether your
author’s short thesis is a good or bad policy,
because in two Thursdays time on November 8th
PPP will release its 3q12 financials, pomp and circumstance and all.
Minera IRL (IRL.to): As of Thursday evening and on company information, The Ollachea
tunnel stood at 633.2m. If we consider the last update we had was the 528m reported at end
October 8th (the day before I met up with CEO Chamberlain in his office early this month), this
implies that the tunnel has moved forward by 105.2 in the last 17 days, an average of 6.2m
per day. We can tentatively extrapolate this rate into the future by assuming IRL gets 6.2m
added to its tunnel every day, which means the tunnel will reach its proposed 1.2km final
length in 91.5 days, which is three months give or take a day. This would imply that the tunnel
1

is finished at the end of January 2013 and nicely ahead of the “by end 1q13” timeline currently
guided by IRL. Meanwhile, the stock traded in a fairly orderly fashion, 90c to 95c typical in
Canada and also tight but with better volume in London. The next news catalyst we expect
from IRL is the Ollachea feas some time in 3q12, but most probably next month. Next month
starts Thursday.
OceanaGold (OGC.to): Two steps forward and one step back will do fine, as long as it’s just
the one step back and last week was it. OGC has traded well since we bought it (twice, I might
add) so last week’s retrace isn’t anything to fret over as long as it doesn’t become a habit.
In other news, this report (8) links to a New Zealand brokerage call on OGC and that guy sees
the stock undervalued by 35% (who am I to argue?). That would arb to around CAD$4.50 for
the TSX listed variety of OGC, which I think still leaves cash on the table.
Lachlan Star (LSA.to): Interesting trading action in LSA last week, as witnessed by this 10
day chart. The real fun started Wednesday morning, when the stock price was walked down to
$1.40 by Dundee (one of the houses
that’s been keen on this story for a while,
with soft coverage recos that date back
to the sub-$1 price days) who then
crossed a 2m+ chunk of shares at the
price and walked it straight back up.
Then Thursday morning saw the same
sized piece go through again, a total of
2.4m shares traded on the day and by
the end of the week, the buy end of that
$1.40 chunk was sitting on an 8.6% win.
I mailed a Dundee contact but got
nothing of worth back from the person in
question (all very tight-lipped, but it was
worth a try) so we’ll have to wait and find
out what that was all about.
Lupaka Gold (LPK.to): Ugh, so much for my “feeling lucky punk” last week. One thing to
note is that we’re now three weeks into LPK’s new expanded life after bringing Andean
American assets and share count onto its books and apart from the odd 200k block 8that
always sees the share price sink, implying somebody wants out rather than in) the share
volume has continued to be poor. There goes one of the less important reasons for “liking” this
ill-conceived fusion. We wait for Chaska zone drill results, simple as that.
Focus Ventures (FCV.v): I meet FCV company president David Cass on Thursday November
1st for an afternoon’s briefing and presenting, so expect a full report on that next weekend. If
you have any questions you’d like put to him, feel free to mail them in.
Bear Creek (BCM.v): I wasn’t there, but a trusted individual (the same one that reported
FVI’s side of its separate story below) was at the Spokane Silver Summit and talked to a
member of the BCM management. His two main takeaways were:
1) The Corani environmental permit (ESIA) would be submitted to the government of Peru
in the next couple of weeks. This will take roughly a year to go through according to
the company and that sounds about right at this end, too.
2) After chatting with management for about 10 minutes on all things BCM, including th
progress, or lack of, on both legal and community fronts as regards Santa Ana, my
trusted friend (who is a very experienced mining sector professional, it should be
added) came away with the distinct impression that aside from the ESIA there’s nothing
much happening at BCM for the time being.
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That second one is the more important, for me at least. The environmental permitting has been
a scheduled event for a while so no big surprises there, nor with the projected timeline.
However, what we seem to have on our hands apart from that is a company that is going to
have a quiet 2013. I may be wrong, silver may start shooting higher in full scale Eric Sprott
fantasy style, consequently starting a buyout mania in the sector and putting the most
advanced projects such as Corani high
on the shopping lists of medium and
large scale mining concerns (aside: I still
say that Pan American Silver (PAA.to)
(PAAS) is the most likely buyer of
BCM.v).
That’s not to say holding BCM through
for the moment is a bad idea, however.
This is the 2012 comparative chart of
BCM versus the silver ETF (SLV) which
indicates BCM offers leverage to the
metal. As silver slumped through the dog
days of 2012 BCM slumped harder. Then
August onwards, silver’s recovery saw
BCM play catch-up to its underlying metal and although still not fully there, it’s plain enough to
see that if you like silver going forward there’s reason to like BCM.v 1½ times as much.
The bottom line here is that I may sell my BCM as part of The IKN Weekly transition towards
“more producers than explorer” by the end of this year (announced IKN171), but then again I
may not. What has changed in my thinking towards the stock is that although it’s still my idea
of a top class, advanced and attractive silver project, it’s more likely to see price movements
based on how silver trades than through its own newsflow or in-company developments.
Therefore, what I need to do as regards BCM is decide my own attitude towards silver, rather
then my simple and unchanging high regard for the Corani project, then make a decision based
on that.
The Copper Basket
After forty-three weeks of 2012 The Copper Basket is showing a 45.80% loss to level stakes.
company ticker price 1/1/12 Shares out Market Cap current pps gain/loss%
1 Copper Fox CUU.v 1.15 398.97 414.93 1.04 -9.6%
2 Lumina Copper LCC.v 13.19 43.2 399.60 9.25 -29.9%
3 Augusta Res AZC.to 3.17 144.1 399.16 2.77 -12.6%
4 Nevada Copper NCU.to 5.18 72.8 262.08 3.60 -30.5%
5 Western Copper WRN.to 1.58 93.28 67.16 0.72 -54.4%
6 Candente Copper DNT.to 0.97 121.67 45.02 0.37 -61.9%
7 Baja Mining BAJ.to 0.80 338.5 37.24 0.11 -86.3%
8 Regulus Res REG.v 1.24 99.88 35.46 0.355 -71.4%
9 Yellowhead Min. YMI.to 0.80 52.82 31.16 0.59 -26.3%
10 Duran Ventures DRV.v 0.18 184.72 21.24 0.115 -36.1%
11 Catalyst Copper CCY.v 0.08 274.48 16.47 0.06 -25.0%
12 Excelsior Min MIN.v 0.63 56.12 14.59 0.26 -58.7%
13 AQM Copper AQM.v 0.39 105.6 12.67 0.12 -69.2%
14 Strait Minerals SRD.v 0.150 56.86 5.40 0.095 -36.7%
15 Crazy Horse CZH.v 0.35 64.48 4.84 0.075 -78.6%
Portfolio avg -45.80%
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Repeat Note: I DO NOT OWN ALL THE STOCKS IN THE COPPER BASKET. I DO NOT RECOMMEND THEM AS BUYS.
THEY ARE CHOSEN AS A REPRESENTATIVE BUNCH OF THE COPPER JUNIOR EXPLORATION SECTOR, NO MORE NOR
LESS. In fact I currently own two of the stocks on the list, namely Yellowhead Mining and AQM Copper. From the
outset, back in 2010 when the first version of The Copper Basket made its debut, the idea has been to select a range of
names in the junior copper exploration sector that offer a fair representation of what’s out there, the big, medium and
tiny, the well-run, acceptable and nasty, the world class deposit potentials and the small, scratchy assets, ones that
might get taken out by majors, others that might get moved to production by the same company. The Copper Basket is
nothing less than an index, a measuring the pulse of the sector if you like.
Down again last week and The Copper Basket is now threatening those mid-July lows. No QE3
relief here. Since IKN181 the component
score is just three moving up (AZC.to, 20% Copper Basket 2012 average, weekly
AQM.v, SRD.v), two unchanged (BAJ.to, 15%
10%
CCY.v) and ten moving down (LCC.v, 5%
CUU.v, NCU.to, WRN.to, DNT.to, REG.v, 0%
-5%
YMI.to, MIN.v, DRV.v, CZH.v). The worst -10%
-15%
of the losers were Crazy Horse (CZH.v
-20%
down 16.7%), Yellowhead (YMI.to down -25%
-30%
13.2%) and Excelsior (MIN.v down
-35%
8.8%) with no winners of note to report. -40%
-45%
-50%
Moving to our underlying copper fundies
coverage we see the main reason for the
sector weakness. Copper market prices source: IKN Weekly calcs, TSX
trended down all week, with the blame
stuck squarely on poor demand from the
big consumer, China. It’s a bit of a broken
record commentary these days but it’s the
single most important driver of Cu prices
(40% of Global demand) so repeat we
must.
As for inventories, we saw a small overall
drop of 3,052mt worldwide to 463,241mt.
LME stocks dropped 0.5% and Shanghai
also dropped this week by 2%, reversing
the recent trend of quick inventory growth
there. Cancelled warrants made up 19.1%
of LME inventories, a slight drop on recent
weeks.
Now for an update on some of our
featured basket companies.
Copper Fox (CUU.v): Spookily (it’s nearly Hallowe’en after all) CUU behaved just the way we
posited that it might last week, dropping quickly to the $1 level Monday (it even traded under
for a few ticks) then bouncing back hard Tuesday. There was all the $1.00 you could have
wanted and the snazzy, nimble traders amongst you (count me out) could have picked up an
easy 10%+ win in the space of 24 hours.
Also significant, however, was the continued weakness once that “technical rebound” (aka
bullshit PPS manipulation as per usual in the stock) had taken place, no buyers around and a
drift back to the $1.04 finish on the week. This suggests CUU might well make the same kind of
rebound come the $1.00 price again, but common sense suggests that if so, the rebound won’t
make it back to the highs of last week.
1
2102/1/1
morf
egnahc
%

Regulus Resources (REG.v): Despite news last week REG continued its poor recent run. First
a line on the news (9) which came Thursday and told us that REG had found a mineralized zone
close to and deeper than the best part of the Southwest zone at Rio Grande (best visualized in
this diagram (10) that came with the NR). The area headlined by REG returned 224.75m of
0.52 g/t gold and 0.18% copper, which points again to our working thesis that Rio Grande is
turning more into a gold project that has copper than the other way around...well, in this corner
of the project where REG is now concentrating its efforts, at least. The results weren’t of the
market-moving variety but give the company something to work on. The mineralization is
buried deep so isn’t the type of high grade material that catches the eye but if, as the company
seems to be theorizing, the zone can be connected to the previously reported higher grading
material than the company might have a big tonnage, multimillion ounce resource to grow.
However, we need to say that Rio Grande is showing complicated geology, REG hasn’t
managed to follow up with the type of killer hole you’d want to confirm its late 2011 discovery
hole in the zone and that the depth needed on each hole means that it’s pretty expensive work,
too. This is old-school exploration with all the risk involved. The team is top class (John Black,
Kevin Heather etc) and they’re honest, straight-shooters too. Those are advantages but Reg is
where it is today pricewise because it hasn’t hit the type of assay longs wanted from it in 2012.
There is one other thing about REG that I feel needs to be aired, which goes back to the
December 2011 shares price downs and ups we can see on the left of this 12 month chart. Back
then we had a big slump in the price was set off by the December 6th NR from REG that
announced a disappointed 43-101 resource for the deposit (along with a separate NR on early
stage metallurgy results). Then on its heels came the December 14th NR (11) that announced
the discovery hole in the Southwest zone of Rio Grande, including the very impressive RGE-11-
86 hole that returned 257.2m of 0.53% Cu, 1.2 g/t Au, 1.59 g/t Ag (which included 54.5m of
1.34% Cu, 4.52 g/t Au, 2.68 g/t Ag). As is evident from the chart Reg shot back from that early
slump on strong volume to close the year well.
What’s not so evident are two things, firstly the way in which REG had previously kept the
market waiting and waiting and waiting for the resource report and secondly the bad feeling it
left with those of us (note ‘us’) who’d waited patiently for this news, decided to bail and then
watched from the sidelines as the stock powered higher just a week later on a completely
different piece of news. It was some of the worst PR I can remember from a company to have
guided for a resource in the middle of 2011, delayed for the longest time, then announced a
poor result just days before new groundbreaking news that would have kept those who’d been
loyal well long. Why REG couldn’t wait another week before announcing that mediocre resource
at the same time as that superhole is a mystery to me to this day. And yes, the thing is that I
was one of those people who’d waited all through 2011 for the resource that was delayed and
delayed. I was one of those people who bailed on REG on its eventual news. And I was one of
those people who watched on the sidelines and nursed a nasty case of whiplash as a result. Cut
to day and although I’m aware that REG is now in the hands of the world-class and highly
1

successful John Black, now the active Pres/CEO instead of being the passive director at that
time, I can’t help but feel a big block to owning
this stock again after the shenanigans it threw
at me and others less than 12 months ago and
that’s just the way it is. Trust is the single most
important asset for a junior mining company
that has a story and a promise with shich to
sell itself and make a difference and once that
trust is damaged, dented, broken or smashed
into a thousand tiny pieces it’s tough to regain.
The other thing: Rio Grande is in Argentina.
I’m not happy that REG has slumped (like
many others, including ones I own). This isn’t
some sort of shadenwhatnot moment where the stock picker gets to gloat about missing a
bullet; far from it, as in fact I’d like to see a REG in a successful position and a viable option as
an investment. Drill results this year haven’t been great but they haven’t been bad, either. The
country risk has turned against the company and (as far as I’m concerned at least) there’s the
baggage it carries from the way the company dicked its shareholders around in 2011 (most of
whom having been Antares longs that inherited the REG shares “for free” and had been patient
holders until that point). The combo makes for a company that’s languished in this horrid 2012,
but until there’s a real moment of change in the company’s exploration fortunes and a signal or
four that Argentina isn’t going to be a continued disaster zone for juniors, it’s an easy one to
stay away from. Sorry guys, great company and a very prospective project but all things
considered, it’s an avoid.
Yellowhead Mining (YMI.to): Ugh. YMI started badly on Monday (was it something I said?)
and just got worse as the poor week for the sector in general wore on. And so here I am again
in the dreaded Value Trap, the fundy guy’s worst nightmare of deciding whether it’s best to cut
away from a losing position that’s drip-drip-dripping its way down or hold and see if the
reversal, that could come at any moment and is fundamentally justified, turns up. I’m not going
to rush into a decision but then again, it’s a call that I’m going to have to make in the next
couple of weeks.
Lumina Copper (LCC.v): On Thursday LCC announced (12) the closing of its $23.75m round
of financing, which has put the shares out total up to 43.2m (according to our count at least).
LCC plans on using the cash raised to “to fund the Company's capital needs through late 2013,
including US$2.6 million to fund all remaining costs to complete a Preliminary Economic
Assessment on a mining and milling operation at the Company's Taca Taca project, $12.4
million to repay loans outstanding to Lumina Capital Limited Partnership, and the remainder for
general corporate purposes”, so now you know. LCC has set itself up for another year of
development if it feels necessary and has, by inference, re-set the window to sell the company
to the highest bidder. Considering the state of play in Argentina, that’s reasonable corporate
strategy.
Regional politics
Peru: A strike, a pay rise, an agreement
That Peru costs pressure pattern shows up again. We saw it at BVN Orcopampa and couple of
weeks ago, we have it at the ongoing strike at Shougang Marcona and even if it doesn’t reach
industrial action there’s plenty of evidence of cost pressures in the financial quarterlies. This
time it was the turn of Volcan (VOLCABC1), a company that doesn’t get a lot of coverage in
English language press but still one of the biggest players in Peru, a company with a long
history and the world’s third largest zinc miner. Workers at four of the Volcan mine divisions in
the centre of the country went on strike last week over pay demands and 24 hours later (13)
the strike was over, with syndicate leader Arsenio Pérez telling Reuters, “We have reached an
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agreement with the company. Volcan raised its offer for pay rises and today we have gone back
to work.” Personally, I like the fact that the profits are being spread in Peru and the country’s
middle class is getting larger. Let’s see how it affects remittances to Canada, though.
MAG Silver (MAG.to) (MVG) has its exploration activities suspended by Chihuahua
government at Cinco de Mayo property
Further to the story noted on the blog last week (14). In the post we noted the story of a local
anti-mining activist who headed up a farmer’s organization who was murdered along with his
wife last week. Ismael Solorio Urrutia has been leading protests against the presence of MAG
Silver’s (MAG.to) (MVG) in the locality because, according to the locals at least, the MAG Cinco
de Mayo project was taking away water from their farming supply, and the company was
drilling illegally. We note that Cinco de Mayo was recently the subject of an 43-101 compliant
initial resource that outlined 52.7m oz Ag in inferred, along with zinc and lead kickers (15) and
is considered by MAG to be a “major discovery”.
The latest on the story is that the regional government of Chihuahua (16) has put a freeze on
exploration work at MAG’s Cinco de Mayo property until an investigation into the deaths of
Ismael Solorio Urrutia and his wife, along with reports of beatings suffered previously by both
him and his family members, has taken place.
Ecuador: Correa makes his pro-mining election stance clear
Following on from his visit to the Codelco Gaby mining operation in Chile while visiting that
country on Thursday (as mentioned in IKN180 last week and photos here (16a)), Saturday saw
President Correa in the Zamora/Tena mining districts of Ecuador for his customary weekly radio
show and address. Here’s what he had to say (17) on mining:
“They are complex, difficult situations, but the political decision is that if I am re-elected one of
the proposals will be to develop the mining potential of the country”. He went on to say “Not
one single dollar will leave the Zamora/Tena region from mining if a single poor person exists”,
which is a good stump speech at least. During his visit, he also had meetings with the Chilean
Sociedad de Formento Fabril (Sofofa), a business promotion body that’s interested in placing
Chilean investment in Ecuador, at which he reportedly talked up his plans for mining. We again
see this Chile/Ecuador mining axis touched upon.
Chile copper production set to rise by 23% in next three years
According to a study published by Chile’s State beancounter of all things copper, Cochilco, the
stagnation we’ve seen Chile’s copper industry over the last few years is about to change (18).
Thanks to new mines now under construction such as Caserones (JX Nippon, Mitsui), Hales
(Codelco) Antucoya (Antofagasta) and Diego Almagro (Copec) amongst others, the sector
expects to add 23.4% to current production levels which will move from the 5.2 million metric
tonnes (tonnes) of 2011 to 6.4mmt.
Mining conflicts in South America
Chilean national César Padilla is a well-known anti-mining activist and part of his activism is
keeping keeps tabs on the number of mining-related conflicts going on in the LatAm region at
any given time. This is done by his organization OCMAL (Observatorio de Conflictos Mineros)
and the information can be accessed at his website (19). Although not yet updated on the
OCMAL site, Padilla gave a press conference last week (20) at which he stated that there are
currently 165 mining related conflicts in the LatAm region, with the most conflicts registered in
Peru (28 conflicts), Argentina (25 conflicts), Chile (25 conflicts), Brazil (21 conflicts) and
Colombia (16 conflicts). This leaves 50 others to be spread around the other 25 countries and
dependencies (Mexico to Suriname and all points in between).
Mexico: Baja California Sur polrisk news
Last week saw (21) the public audience concerning the Cardones open pit mining project in the
Baja California Sur region of Mexico, the same reported on last week in IKN180. The
atmosphere was reportedly hostile towards the project and locals against the project greatly
outnumbered its defenders. Those against the project who are worried about the loss of water
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to the mine didn’t even want to hear about the Cardones plan to source 100% of its water from
the sea, clearly not a time for measured and reasonable dialogue.
The meeting was followed by an open letter from the region’s governor, Joel Ávila, to the head
of the national environment office Semarnat (the people in charge of giving a yea/nay decision.
Ávila wrote (22) that after exhautive investigations by his region the Los Cardones project was
“environmentally unacceptable” because it doesn’t fit with the State Development plan 2011-
2015. The permit submission also has inconsistencies in aspects such as the effect of tourism,
water, organic farming, local population and environmental impact and presents severe risks to
the ecological balance of the zone.
We reiterate that the Los Cardones project, being run under Mexican private investment cash,,
is not a direct threat to any company we might follow on the Canadian and other stock
markets. However it’s a clear precedent setter for any project that might want to set up shop in
Baja California Sur and a permit denial will hurt companies such as Argonaut (AR.to) far more
than they’re currently letting on.
Bolivia doesn’t trust CIADI/ICSID
On Wednesday Reader SM mailed in to ask about South American Silver’s (SAC.to) decision
(23) to start international arbitration at CIADI/ICSID (The World Bank tribunal) over the loss of
its Mallku Khota project to the State of Bolivia, a story we covered quite closely over time and a
result that was fairly predictable (it was going to end badly of SAC, the only question was how).
SM’s question was “Do you have any thoughts on this?” and my answer was short and simple,
“Wait three years. Then don't get paid anyway.” And confirmation of my cynical viewpoint came
Friday, when Bolivia’s government made noises that expressed its doubt over the impartiality of
the tribunal. The country’s Minister of Mining Mario Virreira said (24), “I’m sure that South
American Silver will try to pay anything this tribunal asks (by way of bribe) to get a favourable
judgement”, which is pretty cool from a government minister. The fact that SAC.to’s share price
moved nary a jot on the announcement is its own indication as well, as the market sees little
chance of SAC getting any sort of payout from a government with now entrenched views on
this matter, let alone a payout that materially affects the company share price. This one will go
on for years and even if SAC gets a favourable ruling (with or without bribery of World Bank
officials) the chances of ever seeing a payout from Bolivia are between slim and none. Bottom
line; this stock is and will continue to be dead. Whatever principle you might think there’s
involved, walk away. Do the same with any Bolivia position, in fact.
Guatemala coverage continued
Back on August 31st Radius Gold (RDU.v) announced (25) the sale of its portion of the Tambor
Gold 50/50 JV to its partner Kappes Cassiday & Assoc (KCA) in return for reimbursement of
previous expenses to the tune of $400k and a portion of revenues on any eventual production,
i.e. a fairly cheap price. A small payoff it might have been but that choice to leave Tambor looks
smart in the light of last week’s protests (26) in the local town, that reiterated the community’s
rejection of the project, noted that no machinery has been allowed into the mine since March
2nd and called upon the government to rescind its licences.
Colombia: Mining plan “very close”
Last week Colombia’s quality medium La Republica ran a Q&A (27) with Maria Constanza
García, president of the State’s National Mining Agency (ANM), basically the government’s
chamber of mining and one of the key bureau in the promotion of sector growth. It was a wide-
ranging interview that touched on many aspects for general public type consumption (a lot
about the so-called mining “locomotive” and how it was moving forward) so those of you with
Spanish language ability are urged to have a full read, but this for me is the most interesting
part, in translation:
The mining development plan is close
Another of the points on which ANM president Maria Constanza García is working is
the formulation of the new 2012-2016 Mining Development Plan. According to García it
will be “very important for the sector as it will be the roadmap that will orientate the
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actions of the State, companies and communities in the development of a sustainable
mining industry.” Although the document is still being drawn up, the ANM president
hopes that it will be published very soon. Finally, the sector will be able to become
more competitive with this initiative. “The country can benefit from a profitable and
responsible sector, in both social and environmental terms. We will therefore contribute
to the overall objectives of the national government of security, development and
equality”, García said.
IKN back and away from all the politicking and nebulous aspirations for growth, what the sector
really needs is to finally settle the playing field, get the now much delayed new mining
regulations onto statute and allow those projects that are looking to move from exploration to
production to do just that. It’s good that Maria Constanza García seems aware of this ongoing
bottleneck and knows it has to be unblocked, but whether Colombia can keep to the current
guidance for the mining law update and get it voted through congress during 1q13 remains to
be seen. In general terms Colombia the country has best intentions for its mining industry, but
the delays are now irritating companies and investors alike. The sentiment from this interview
was positive, but now it’s time for action.
Two from Argentina
Two snippets that show how, on a national policy level at least, the basket case country
Argentina is trying to attract and be nice with mining companies. The first is a strange news
release from the government’s official news agency Telam (28) that informs readers about the
progress being made at the Barrick (ABX) Pascua Lama project, the big bi-national gold project
now under construction 5,000m up on the border with Chile. Nothing strange about that you
might think, except that on reading the government official press release it’s clearly something
written by Barrick and for the betterment of Barrick, a real live puff piece that’s then released
as official Argentine government news on its official news channel.
The second example came from an interview (29) with Argentina’s Minister of Mining, Jorge
Mayoral, who told reporters that Argentina was looking for Xstrata to move on the construction
of the Agua Rica project next year and its other big copper project in the country, El Pachón, “in
2013 or 2014”. This reminded your author greatly of the occasion early this year when Mayoral
told reporters that Argentina was looking to permit and see Pan American Silver (PAAS) move
on its Navidad silver/lead/zinc project in Chubut by the end of June 2012, which was then taken
as some sort of automatic green light by the ignorant press corps. Since then of course, PAAS
has frozen the Navidad project due to the unfavourable economics of working in Chubut.
Indeed, my favourite line in last week’s interview on the Xstrata projects came not from the
constantly optimistic Mayoral but this one:
“Xstrata preferred not to comment on the matter.”
What with Xstrata having plenty on its plate at its Chilean projects and having already hinted
strongly that its Argentina projects could wait a while, I’d bet decent money on the company
position being far more tepid than that of the country’s sector minister.
Market Watching
Galway Resources (GWY.v) update
For the record, I bought the slug of GWY and paid a little more than planned at $2.17, but as it
turned out to be the best price of the week (bar the short period at $2.16 early Monday) and
the stock rallied into the weekend, there are no complaints.
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Also for the record I was contacted by two market professionals regarding last week’s call, both
of them with methods and track records worthy of envy, who fully agreed with our call to buy
some GWY here and that the arb opportunity was screamingly loud.
Copper juniors may get a boost from the Hana Mining (HMG.v) deal
We reported the deal of the week on the blog (30), when privately owned Cupric Canyon
Capital (CCC) made its friendly, all cash 82c bid for the 80% (plus a few shares) of Hana Mining
(HMG.v) that it doesn’t already own. I
added in a chart that shows how CCC may
be paying over the odds compared to 2012
prices but pre-FY12 HMG was quite a
different story (including the large piece of
HMG that CCC took back in late 2011 at
$1.25) then finished the post musing on
whether this might make a few of the
extremely beaten down copper exploration
juniors more attractive as speculations in
the future.
I think it does, frankly. This is the kind of
deal done by a group of smart base metals
people (CCC is made up of ex-Phelps
Dodge blood, all highly regarded upper
management people) who have had this particular project as their main target for a while, but
that won’t stop other projects from getting interesting to other monied up entities who are
looking to actually build a mine and want to take advantage of this the current, deeply
discounted prices.
So, which ones? Well folks, I hate to say it out loud and I know it’s fraught with risk, not least
the fact that we still don’t have a PEA from the company, but on considering the nastily beaten
up names on our Copper Basket list the one that most appeals is AQM Copper (AQM.v). It has
size, location and as long as AQM can (take your time guys....sigh) eventually deliver a
workable PEA to market, it will be able to show an economic plan for the future. I’m not saying
“it’s a mine” and I know just how far underwater I am on this position (answer: a lot) but if you
want to bet on a high risk rebound opportunity, you could do a lot worse.
Others on the list that I don’t like nearly as much but can at least make a case for a rebound
play from current pennycrapper deep discount include Western (WRN.to), Regulus (REG.v),
Excelsior (MIN.v), Candente (DNT.to) and Duran (DRV.v), though I hasten to add that I’m
personally not tempted to buy any of those because all of them have serious problems eg REG
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Argentina, eg Candente locals and arsenic, eg Western grade and capex size, etc). Meanwhile,
the only really beaten down, pennysized plays that I’d absolutely not touch under any
circumstances are Baja (BAJ.to), Catalyst (CCY.v) and Crazy Horse (CZH.v), all of which have
the hallmarks of permanently broken stocks.
Fortuna Silver (FVI.to) (FSM) in Mexico: Trouble with locals
Last week we said that we’d cover FVI once its 3q12 numbers were published. That’s still true
from a fundamentals point of view, but this week we look at a different aspect of the FVI story,
news that’s potentially negative for the company from its Mexico operations. There are two
basic threads and although separate stories they may possibly be connected. At the least, it
indicates that things are coming to a head.
The first issue is the lesser of the two. On October 16th Mexican police arrested (31) two men in
connection with the March 15th death of Bernardo Vásquez, the community leader in the San
José del Progreso region, location of Fortuna Silver’s San José mine (aka Cuzcatlán to locals,
the subsidiary name). As you may recall, at the time of his death Vásquez was one of the
leaders of the small but vociferous anti-mining group at San José who were demanding the
closure of the FVI mine, had previously set up roadblocks, caused confrontations with police
etc. Therefore, when he was shot dead by persons unknown the anti-mining lobby immediately
laid the blame at the door of FVI, an accusation that the company flatly and vehemently denies
(and quite right too). So to cut a long story shot, October 16th saw two arrests made in
connection with the case. It remains to be seen whether the arrests turn into prosecutions, a
trail and any eventual conviction. It also remains to be seen whether the pistoleros in question
(the two are known to be hired bullies/contract killers and with a history of alleged violent
behaviour) have anything to say for themselves.
The second issue is the main one as far as we’re concerned today. On October 22nd FVI started
the work to lay a pipeline to its mine. From what we’ve gathered from various sources, it’s a
50cm diameter water pipeline that’s set to provide “grey water” (i.e. used water from the local
town, part of FVI’s original plan for water supply). However, between 140 and 200 locals
(depending on which report you read) who live between the town and the mine showed up,
blocked the road and stopped the pipeline from being laid, despite the presence of around 50
police officers brought in to protect the contracted workers during the civil works. The
protesters were complaining about the lack of water for their farmland, potential pollution from
the mine and the pipeline and also (cutting back to the first part of today’s note) adding in
accusations of bullying by the mine, in cahoots with the local municipal governor, which include
the death of Bernardo Vásquez (and again, let’s clearly underscore that accusation is according
to the protesters, because I personally would be greatly shocked to hear of any proven
connection between that incident and Fortuna Silver).
During the protests, the locals turned up with machetes and poles to threaten the workers.
Apparently, two of the FVI San José employees, a father and son, didn’t help things when they
turned up brandishing a gun. There was a minor showdown which resulted in one black eye
and one broken nose, fortunately nothing more serious than that (considering that between
protesters, police, pipeline layers and San José employees there were probably 300 people at
the scene and perhaps more, that’s really not too bad) but the work to install the water pipe
was suspended, so on that score at least the protesting locals got their way.
Cut to Wednesday, a local conciliatory body, best described as a type of public protection
ombudsman, published and “early warning report” on the situation at and around the San José
mine that states work on the pipeline should be halted until both sides in the dispute have sat
down together, had a meaningful dialogue and come to agreement. This move, to your author
at least, was probably a wise one and was taken with the specific objective of calming the
atmosphere and preventing further confrontations, that may have escalated further into more
serious violence and loss of blood, something we should all be keen on avoiding.
Cut to Friday and the protest group, known as “Coordinadora de los Pueblos Unidos del Valle de
Ocotlán” (COPUVO) held a press conference and read a statement that accused the Oaxaca
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State government of protecting the mine to the detriment of the locals in the area. They also
listed their grievances with the mine and its workforce, accused the company of human rights
violations, accused the company of polluting the local water supply, accused the company of
not having the permits to lay the water pipeline earlier in the week and demanded the right to
protest against the company’s presence without being constantly bullied by thugs, police and
local government people. Finally, they also demanded the cancellation of the San José mine
concession, the closing of the mine and the withdrawal of FVI from the region.
To be honest there wasn’t much new in that list, but due to the showdown earlier in the week
the COPUVO protest group managed to get its message across and into numerous local and
national media channels. To give an idea of that, here are a few of the source reports your
author has been reading on this issue in the last five days (32) (33) (34) (35) (36) (37) (38)
and there are plenty more where that little lot came from, local, regional and national Mexico
press all represented. This anti-mine group around San José has made its case for years and
has at times made the news, for a while blocking roads and often stopping exploration drilling
from happening in other parts of its concession area. FVI has always depicted the group as a
small minority, not representative of the general population, a pain at times but not much more
than a nuisance But there was one new development that we should pay heed to last week as
COPUVO said that between the 18th and the 22nd of November, a “Misión Civil de Observación”
(literally a Civic Observation Mission, which means a group of outside observers) had been
invited to the locality to register the community’s complaints, to document what COPUVO calls
“human rights violations by the mine since it arrived in 2006” and see how their lives are being
negatively affected by the presence of the San José mine. This observation group will be called
“Justice for San José del Progreso” so from the title alone you can safely assume that it’s not
going to be an unbiased affair. We also understand it will be made up of national and
international observers from several different NGOs and civil organizations.
We had one final salvo from the anti-mining group on Saturday, when it accused the municipal
governor of being in the pocket of the mine, of accepting bribes, of organizing groups of thugs
and police brutality against the protesting locals and all such things.
As for the FVI side of the story there’s nothing to report because apparently, there’s nothing
going on down in Oaxaca that’s cause for concern. During the Silver Summit Show in Spokane
on Thursday, a trusted and experienced mining professional (no names, sorry) had chance to
quiz FVI on events after we’d exchanged on the subject. He reported back that he had chance
to talk with the Vancouver IR representative Holly Hendershot who expressed total ignorance of
any problem in or around the San José mine, but did say that the company would of course
issue a news release if there were any problem. Now, it’s up to you to decide whether a massed
protest that resulted in minor violence and the halting of a pipeline laying, then an
ombudsman’s call to freeze all work at the site in order to calm nerves, then widespread
coverage of events in the Mexican press (local regional and national) then the announcement of
a four day visit by an observation group to document human rights violations by the mining
company can be classed as “any problem”. However, what I am sure about is that FVI would
have preferred the events of last week to have stayed in the Spanish language and not made it,
in any shape or form, into English (and note full disclosure here: currently no position or
recommendation on FVI stock).
FVI note conclusion: After careful consideration and plenty of invetsigation over the last
several days, I think that FVI currently has a delicate situation in San José to manage and it
needs to start managing things proactovely, rather than pretending it doesn’t exist. It’s not a
critical situation as yet and there are certain things that the locals are clearly exaggerating or
saying to mislead the general public. For one example on that, it’s extremely unlikely that FVI
didn’t have permission to lay its pipeline on Monday 22nd and it has been very clear about
following correct procedure in its permitting track all the way through this project. However it’s
undeniable that locals around the mine have, for whatever underlying reason be it right or
wrong, serious and long-standing greviences with the company so this event and the
ombudsman-led suspension of pipeline works may provide a useful opportunity for both sides to
come together, lay out their problems, have a proper dialogue and reach solutions. Or it might
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not and I’m being hopelessly naive about a situation that may never change, but unless FVI
does something it’s going to attract more negative attention to its operations in Mexico, be
those negatives fair or unfair, with the observation visit just one example of what might be in
its future (and you can bet on reports and publications coming from that in the days that follow
from all types of NGOs). FVI can’t hide behind the “only a minority” line because these people
may be a minority in the general region, but they’re the ones living right next to the mine and
they’re the ones most affected. The company needs to sit down and hear out the people that
most disagree with its presence there, no matter how unpleasant (or previously repeated) the
idea might be to the company, the directors and its community relations people. At this time
there’s no great formal political pressure on the company, but if this small anti-mining group
starts getting traction, there’s a whole bunch of headaches awaiting FVI around the corner so
now’s the time to act. I’m not long FVI but if I were, I’d want to know the company’s side to
this story in much more detail than the one given by IR to my trusted contact last week (and as
your author is still apparently off the FVI Christmas card list after correctly calling sell on the
stock on March 25th at $6.17 and I haven’t heard a peep from anyone there in the ensuing
seven months, don’t expect me to phone them for you; if they have something to say they
phone me). I’d want much better transparency about an issue that may turn into a price
pressure on the stock if not handled well now.
Conclusion
IKN181 is done, we close with bullet points:
• I like the chances of United Silver Corp (USC.to) from here. A beaten down price, a
revenue generating operation and the right asset in the right place at the right time to
be an M&A candidate that could bring a really decent win. I buy.
• If you hold FVI don’t worry too much and if I were a holder today I wouldn’t bail on the
political/social risks developments outlined in the above note alone. However, you need
to keep a careful eye on developments and not give the company a free pass.
• I need to make a real decision on whether to hold or sell Yellowhead (YMI.to) and as
from today I need to consider BCM.v in the same way (for the first time). The BCM
decision will be easier because it’s more a “If silver goes up so does BCM, so do you
like silver or not?” than a call on the relative merits or problems faced by a company.
That’s what makes YMI tougher to call.
• I’m looking forward to meeting up with David Cass of Focus Ventures (FCV.v) next
week, finding out the latest about Santa Cruz, Reventón, Aurora, and anything else he
has on his mind. Full report on that one next week.
• Happy All Saint’s Day. And have a spooky evening on the eve of the hallowed day, too.
The top long-term pick is Rio Alto Mining (RIO.to). I thank you in advance for any feedback
sent in. Flash updates will be sent promptly if required by events.
I wish you good trading fortune, ladies and gentlemen.
Otto
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Footnotes, Appendices, references, disclaimer
(1) http://www.halefunds.com/
(2)http://finance.yahoo.com/news/United-Silver-Corp-Hale-iw-4271155224.html?x=0
(3) http://finance.yahoo.com/news/united-silver-corporation-announces-extraordinary-114500364.html
(4) http://www.unitedsilvercorp.com/s/TechnicalReports.asp
(5) http://finance.yahoo.com/news/United-Silver-Corporation-iw-493754590.html?x=0
(6) http://finance.yahoo.com/news/united-silver-corporation-announces-reorganization-212100022.html
(7) http://www.financialsense.com/financial-sense-newshour/guest-expert/2012/10/24/john-doody-phd/silver-stocks-
small-universe-great-opportunity
(8) http://www.stuff.co.nz/business/industries/7765813/Broker-says-OceanaGold-shares-still-undervalued
(9) http://finance.yahoo.com/news/regulus-discovers-southwest-gold-stockwork-233826682.html
(10) http://media3.marketwire.com/docs/REG_Fig2.jpg
(11) http://www.regulusresources.com/LinkClick.aspx?fileticket=fqBa41BgoKo%3d&tabid=136&mid=469
(12) http://finance.yahoo.com/news/lumina-copper-announces-closing-c-131400979.html
(13) http://noticias.terra.com.co/internacional/latinoamerica/trabajadores-minera-peruana-volcan-levantan-
huelga,d0f7f81ffd39a310VgnCLD2000000dc6eb0aRCRD.html
(14) http://incakolanews.blogspot.com/2012/10/mag-silver-magto-mvg-has-problem.html
(15) http://finance.yahoo.com/news/mag-silver-reports-initial-mineral-114500413.html
(16) http://www.conflictosmineros.net/contenidos/23-mexico/11101-asesinan-a-dos-opositores-a-minera-canadiense-en-
chihuahua
(16a)http://www.flickr.com/photos/codelco/sets/72157631852576862/
(17) http://andes.info.ec/econom%C3%ADa/8195.html
(18) http://www.nuevamineria.com/revista/2012/10/24/produccion-de-cobre-de-chile-crecera-23-a-64-millones-de-
toneladas-en-solo-tres-anos/
(19) http://www.conflictosmineros.net/
(20) http://www.generaccion.com/noticia/171684/cesar-padilla-coordinador-ocmal-peru-encabeza-lista-paises-con-
mayor-conflictividad-america-latina
(21) http://www.milenio.com/cdb/doc/noticias2011/96a40c0d7cdd67d4dae4f7a38e04202b
(22) http://www.oem.com.mx/elsudcaliforniano/notas/n2748076.htm
(23) http://finance.yahoo.com/news/south-american-silver-notifies-bolivian-212556619.html
(24) http://spanish.china.org.cn/economic/txt/2012-10/27/content_26919830.htm
(25) http://www.radiusgold.com/s/NewsReleases.asp?ReportID=545012&_Type=News-Releases&_Title=Radius-Gold-
sells-Interest-in-Guatemala-Gold-Property
(26) http://www.prensalibre.com/noticias/comunitario/Vecinos-reiteran-rechazo-actividad-minera_0_797920431.html
(27) http://www.larepublica.com.co/asuntos-mineros/%E2%80%9Cse-acabar%C3%A1-la-especulaci%C3%B3n-con-
los-t%C3%ADtulos-mineros%E2%80%9D_24132
(28) http://www.telam.com.ar/nota/41544/
(29) http://economia.terra.com.ar/noticias/noticia.aspx?idNoticia=201210262106_RTI_SIE89P066
(30) http://incakolanews.blogspot.com/2012/10/hana-mining-hmgv-bought-out.html
(31) http://www.proceso.com.mx/?p=322903
(32) http://www.adnsureste.info/index.php/noticias/regiones/48002-edeeq
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(33) http://ciudadania-express.com/2012/10/26/denuncia-ong%C2%A8s-que-gobierno-de-oaxaca-protege-a-minera-
canadiense/
(34) http://www.milenio.com/cdb/doc/noticias2011/00eff9b81caf08a6aede199fbfad1cc8
(35) http://www.proceso.com.mx/?p=323361
(36) http://www.oaxacain.com/noticias/8448-policia-campesinos.html
(37) http://www.radioformula.com.mx/notas.asp?Idn=279882
(38) http://www.tiempoenlinea.com.mx/index.php?option=com_content&view=article&id=12919:edil-de-san-jose-del-
progreso-un-represor&catid=25:mixteca&Itemid=5
Stocks To Follow Closed Positions, 2011
Closed in 2011 closed close PPS
Sunward Res SWD.v jan'11 C$1.05 21-nov-10 C$1.63 55.2% target made, trade closed
Serengeti Res SIR.v mar'11 C$0.245 05-dec-10 C$0.285 16.3% sold pre-tgt, ST trade fail
Fronteer Gold FRG apr'11 U$2.37 03-may-09 U$15.24 543.0% buyout, trade closed
Minefinders MFN apr'11 U$9.09 07-nov-10 U$16.89 85.8% target made, trade closed
Metalline Min. MMG may'11 U$1.04 26-jan-11 U$0.89 -14.4% exit, resource disappointed
Peregrine Met PGM.to jul'11 C$0.87 06-mar-11 C$2.60 198.9% buyout offer, closed
Dynasty Metals DMM.to jul'11 C$4.20 03-may-09 C$2.85 -32.1% Sold. Fail. Move on.
Aura Silver AUU.v aug'11 C$0.22 13-oct-10 C$0.16 -36.4% Bad pick. Take loss
U.S. Silver USA.v aug'11 C$0.52 26-jan-11 C$0.71 36.5% closed to make room
B2Gold Corp BTO.to sep'11 C$2.80 12-may-11 C$4.27 52.5% target made, trade closed
Bear Creek Min. BCM.v sep'11 C$3.80 27-may-11 C$4.17 9.7% macro sell call victim
Minefinders MFN sep'11 U$14.70 10-aug-11 U$15.15 3.1% macro sell call victim
Great Panther GPR.to sep'11 C$3.03 22-aug-11 C$2.64 -12.9% macro sell call victim
Fortuna Silver FVI.to sep'11 C$1.07 03-may-09 C$5.36 400.9% sold 20%, macro sell call
Focus Ventures FCV.v nov'11 C$0.40 20-apr-10 C$0.20 -50.0% cut losses, bad trade
Regulus Res. REG.v dec'1 C$1.17 14-aug-11 C$0.52 -55.6% cut on news of poor 43-101
2009 and 2010 closed positions in appendices below
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Stocks To Follow Closed Positions, 2010
Closed in 2010 closed close PPS
B2Gold Corp BTO.to Jan'10 C$0.88 08-nov-09 C$1.49 68.2% target made, trade closed
Radius Gold RDU.v Jan'10 C$0.18 23-aug-09 C$0.40 122.2% target made, trade closed
MAG Silver MVG mar'10 U$5.60 23-nov-09 U$7.28 30.0% closed in pdac week
Riverside Res RRI.v mar'10 C$0.435 20-sep-09 C$0.60 37.9% closed in pdac week
Amarillo Gold AGC.v mar'10 C$0.81 31-may-09 C$0.70 -13.6% closed in pdac week
B2Gold Corp BTO.to apr'10 C$1.24 18-feb-10 C$1.50 21.0% target made, trade closed
Lumina Copper LCC.v apr'10 C$0.84 14-jun-09 C$1.55 51.2% total position now sold
Troy Resources TRY.to may'10 C$1.10 03-may-09 C$2.25 104.5% sold on negative results
AuEx Ventures XAU.to may'10 C$2.51 24-may-09 C$3.38 34.7% trade closed
Nevada Copper NCU.to jun'10 C$3.27 14-mar-10 C$2.03 -37.9% need to lower Cu exposure
Carpathian Gold CPN.to jun'10 C$0.39 14-mar-10 C$0.35 -10.3% too exposed to cap raising
Amerix PM Corp APM.v jun'10 C$0.065 08-nov-09 C$0.05 -23.1% victim of macro bear
Antares Minerals ANM.v jun'10 C$1.42 06-dec-09 C$2.10 47.9% sold half
Vena Resources VEM.to jun'10 C$0.37 31-may-09 C$0.23 -37.8% sold half
Minera Andes MAI.to sep'10 C$0.75 28-jul-10 C$0.95 26.7% ST trade closed
Gold-Ore Res GOZ.to sep'10 C$0.52 01-aug-10 C$0.75 44.2% target made, trade closed
B2Gold Corp BTO.to sep'10 C$1.45 25-may-10 C$2.01 34.5% target made, trade closed
Blue Sky Uran BSK.v oct'10 C$0.41 19-may-10 C$0.22 -46.3% v small v bad trade closed
Dia Bras Expl DIB.v oct'10 C$0.14 30-aug-09 C$0.35 150.0% target made, trade closed
S. Amer. Silver SAC.to nov'10 C$1.38 24-oct-10 C$1.60 -15.9% loss on short, small fail
Ventana Gold VEN.to nov'10 C$7.92 27-jun-10 C$13.51 70.6% trade closed on buyout
Lumina Copper LCC.v nov'10 C$1.42 11-aug-10 C$3.65 157.0% trade closed
Antares Minerals ANM.v dec'10 C$1.42 06-dec-09 C$8.40 491.5% trade closed
Rio Alto Mining RIO.v dec'10 C$0.69 23-mar-10 C$2.16 213.0% trade closed
Coro Mining COP.to dec'10 C$0.585 03-oct-10 C$1.24 112.0% target made, trade closed
Stocks To Follow Closed Positions, 2009
Closed positions closed closing PPS
Cardero Res CDY/CDU.to May'09 U$1.20 03-May-09 U$0.87 -27.5% sold on negative news
Eastmain Res. ER.to May'09 C$1.04 06-May-09 C$1.315 26.4% trade closed
Radius Gold RDU.v May'09 C$0.165 03-May-09 C$0.235 42.4% trade closed
Latin Amer Min. LAT.v May'09 C$0.12 03-May-09 C$0.158 29.2% trade closed
Aquiline Res. AQI.to July'09 C$2.03 16-Jun-09 C$1.68 -17.2% took loss, bad timing
Chariot Resources CHD.to Aug'09 C$0.20 12-Jul-09 C$0.415 107.5% trade closed
Castle Gold CSG.v Sep'09 C$0.64 02-Aug-09 C$0.60 -6.3% ST trade didn't work out
Guyana Goldfields GUY.to Sep'09 C$2.30 12-May-09 C$4.50 95.7% profit taken
Los Andes Copper LA.v Sep'09 C$0.09 21-Jun-09 C$0.09 0% trade closed
Pediment Gold PEZ.to Oct'09 C$0.80 09-Aug-09 C$1.00 25.0% trade closed
Minera Andes MAI.to Oct'09 C$0.68 03-May-09 C$0.71 4.4% too much bad news
Dynasty Metals DMM.to Nov'09 C$4.18 03-May-09 C$6.01 43.8% half sold
Rusoro Mining RML.v Nov'09 C$0.55 03-May-09 C$0.57 3.6% underperformed
Important Disclosure
The information and opinions contained within this report reflect the personal views of the author and therefore all
material within should not be construed as accurate or reliable or be utilized as advice for investment or business
purposes. Independent due diligence and discussions with ones own investment and business advisor is strongly
recommended. Accordingly, nothing in this report should be construed as offering a guarantee of the accuracy or
completeness of the information contained herein, as an offer or solicitation with respect to the purchase or sale of any
security or as an endorsement of any product or service. All opinions and estimates included in this report are subject to
change without notice. It is prohibited to copy or redistribute this report to any type of third party without the express
permission of the author.
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