IKN #183Premium

The IKN Weekly
Week 183, November 4th 2012
Contents
This Week: The calm before..., Positive feedback on United Silver Corp (USC.to), Updating the
planned change in focus for The IKN Weekly, A bit late today.
Fundamental Analysis: NOBS update report on Focus Ventures (FCV.v).
Stocks to Follow: Overview, Yellowhead Mining (YMI.to), United Silver Corp (USC.to), Primero
Mining (P.to) (PPP), OceanaGold (OGC.to) (OGC.ax), Lupaka Gold (LPK.to), Lara Resources
(LRA.v), Vena Resources (VEM.to), Rio Alto (RIO.to).
Copper Basket: Overview, 2013 Copper Basket candidates part two, Baja Mining (BAJ.to).
Regional Politics: Overview, Mexico: More on Baja California Sur and how it might affect
Argonaut Gold (AR.to), Colombia: Growing pains shown in the informal vs formal mining
debate, A Chinese copper refinery for Argentina?
Market Watching: Minera IRL (IRL.to) (MIRL.L) 3q12 numbers, Lachlan Star 3q12 numbers,
Batero (BAT.v) and CMH, Buenaventura (BVN) Fortuna Silver (FVI.to) (FSM) results & costs.
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
The calm before...
We’re now moving into the main reporting period for the stocks we follow and track here at The
IKN Weekly. A few (OGC, LSA, FCV, IRL etc) have already given us their latest quarterlies but
we’re about to get the majority dump in the next two weeks (with plenty due on November 8th
for some strange reason). So expect numbercrunching, charts, thoughts and results analysis in
the next couple of IKN Weeklies. Every so often even us lazy guys have to do some work...
Positive feedback on United Silver Corp (USC.to)
I’d just like to thank those of you who wrote in with feedback from last week’s United Silver
Corp (USC.to) NOBS report. Without going into great detail (because I can’t) I will say that the
feedback was positive and particularly interesting mails and exchanges happened with one
reader who knows the story well. As a result, I plan to add to my position next week though I
don’t plan on paying more than the current 24.5c or 25c for new shares.
There is one thing I want to add on the subject, which is about intuition or “feeling”. I base just
about every trading and investment decision I make on hard facts and numbers but when it
comes down to it, there always has to be a subjective reading of the numbers and results,
because the vague concept of “value” is one that’s harder to quantify in an empirical manner.
Therefore, although the base of the investment decisions I make is squarely on the numbers, a
personal call is always a large factor. However, there is another aspect to subjective decisions
about trades which is less about the way in which numbers, projections and results are
interpreted and more about straight, flat intuition. Every so often (and it doesn’t happen very
often) I get that pit-of-the-stomach feel about a trade or prospective trade that’s utterly
unquantifiable but just feels right. I’m also wary of it, I don’t trust that feeling blindly
1

(preferring a little auto-contrarianism to leaven any irrational exuberance) but I do recognize it
when it shows up. As my investigation into USC.to deepened last week, that intuitive feeling
came to me. It’s something that is connected to the right time/right place/right price (and
limited downside, thanks to the USC’s own revenue generation capacities) but it’s also separate
and its own reason to like the stock.
Updating the change in focus for The IKN Weekly
IKN171 dated August 12th 2012 was the edition in which I announced the change in emphasis
to The IKN Weekly. The plan was to move away from coverage mostly exploration companies
and to covering mostly producer companies, as well as moving away from the tinycap end of
the junior world and covering larger juniors. There were other sidebar thoughts as well, but
overall that’s the general shift in focus that was envisaged and the plan was also to make the
move to “mostly producers” by the end of 2012. We’re now in the first week of November, a
little more than half way between that original announcement and the end of the year, so I
thought we could check on how things are going.
Today, we’re covering six revenue generating junior mining companies out of a total of 14 (and
by next week, due to the planned sale of Yellowhead Mining (YMI.to) the total count is going to
be down to 13 or perhaps 12 if the Primero short is covered). I’ll admit that United Silver Corp
(USC.to) isn’t a producing miner, but it does have its revenue generating subsidiaries and so
I’m going to count it as “a producer” (feel free to complain). Back in IKN171 the count was
three out of 14, so at today’s 6/14 we’re going in the right direction and also at the kind of pace
with which I’m reasonably happy.
As for the general strategy decision to move away from explorecos and to the producing junior
end of the sector, that seems to have been a correct call as well. It’s not easy to accurately
quantify things over the sector as a whole, because you’re always going to get individual
winners in the explorers and losers in the producers, but overall the sense is that the larger,
more easily traded stock did better than the tinycaps during the gold rebound thanks to QE3
and have held onto those gains better, too. Traded volume has been a key factor in the sector
because there’s still a lot of doubt left in the market as to whether this rebound has legs or
whether it’s about to fatally fade on us again. In volume-blessed stocks, this allows people to
duck out more easily and as such, the flip side is a world that still doesn’t want to commit cash
to difficult to trade stocks, be they great value propositions or not. As our move to producing
stocks and away from the tinycap explorers naturally comes with a move up the food chain, this
has helped our overall performance. Yes, I’ve had to cut away some deadwood stocks and take
several cash losses on trades. I’ll name (and auto-shame) them too, as between IKN171 and
today we’ve closed:
• U.S. Silver (USA.to) for a 23.6% loss (on the ST trade around the M&A that went
wrong)
• Estrella Gold (EST.v) for an 84.6% loss (a trade that started badly and just got worse)
• Strait Minerals (SRD.v) for a 4.0% loss (the drill program is still frozen, we wait for
news)
• Sunward Resources (SWD.to) for a 17.7% loss (nothing wrong with SWD, just moving
away from the exploreco stories).
• To that bunch I now add Yellowhead Mining (YMI.to) and will probably lose something
around 35% to 40% on the trade, depending on the final exit price (we’ll know next
week).
It’s been pretty rotten in other words, but there has been a silver lining (or three) to report.
• We’ve entered and exited the producing junior Gold Resource Corp (GORO) for a 19%
profit
• We’d just opened up our position in Minera IRL (IRL.to) a couple of weeks previous to
IKN171 and at that time it was showing a 6.1% profit. Since then we’ve added twice,
2

it’s my second biggest position in monetary terms and it’s up 34.8% from our original
buy price.
• We’ve opened a position in OceanaGold (OGC.to) added to it along the way and have a
10% overall profit so far.
• We’ve opened up a new position in Lachlan Star which is up 7.3%
• We also finally closed our Fortuna Silver (FVI.to) position after waiting patiently for the
right, $5+ exit price to come along for a 397% win.
We are showing a slight loss on the PPP short and although the USC.to price last week was 21c,
our 25c entry point means there’s a slight red blob today. Those two minor reds aside, the
move to replace losing explorecos with producer stocks has, so far at least, been reasonably
successful and the pain of taking the losses has been leavened by the trade successes. So far.
A bit late today
The IKN Weekly issue 183 has arrived in your inbox late Sunday night (Americas time) instead
of in the afternoon or evening due to two factors:
• This, (1) a big fat power cut that affected the whole of the South of Peru for hours on
Saturday, the region including your author’s city of Arequipa. Those who live and work
in the US North East will surely allow me some leeway.
• The big annual “family festival” at the school of my daughters today Sunday. Fact is
that I’ve missed too many extra-curricular activities these last few months due to being
a busy little writer at the weekends and I don’t want to miss every costumed dance that
my six year old practices and performs, simply because she’s not going to be six for
very long. So I made an executive decision and took a break from my normal Sunday
morning writing schedule.
Normal service will be resumed as soon as (etc etc).
Fundamental Analysis of Mining Stocks
After having the opportunity of grilling its president for hours on end last week, we today
update on Focus Ventures (FCV.v).
NOBS update report dated November 4th 2012
Focus Ventures Ltd. (FCV.v)
Company Overview
Focus Ventures (Canada: FCV.v, Frankfurt 8FV.f) is an exploration stage mining company
operating in Mexico and Peru. Its flagship asset is the Santa Cruz/Reventón property in
Durango State Mexico. Current share structure is as follows:
3

Shares out: 40.113m
Options: 3.195m
Warrants: 17.721m
Fully diluted shares: 61.029m
Current share price: $0.21
Market Cap: $8.423m
Approx cash per S/O: $0.09
All prices are in Canadian dollars unless stated. Forex U$1=CAD$1
Today’s update
We last covered our tinysmall but interesting and prospective name, Focus Ventures (FCV.v),
back in IKN165 dated July 1st 2012. That report ended with these words:
“...after running the numbers, checking the books and visiting and grilling officers for hours last
week, it’s time to take advantage of the low current share price of the well run FCV, backed as it is
today by plenty of cash per share. Downside looks limited and upside potential is very strong. We
buy with a long-term view.”
On the date of that report FCV was priced at 16c and we eventually took our position at 17.5c.
Since then FCV has hardly set the world on fire with massive volume trading and a move up
towards our (at that time) postulated 50c target price, but it’s done ok as far compared to many,
many tinycaps (and I should know, I’ve suffered holding a few of them myself) and we find
ourselves today with a modest though fairly pleasant 20% win on our hands.
On the other hand, as part of the “going to cover mostly producers” shake-up we had in the
meantime, I decided to drop the target price of FCV to 25c and considered it as potential sale if
that price was reached. The reasoning behind that call was a) it’s a very small market cap
company and pure explorer, therefore not the type of stock we’re looking to cover any longer b)
its trading is thin at best and quite often non-existent and c) it has a pretty chunky warrants
overhang of 6.6m units at 30c which may stop big time price appreciation.
Last week I had the chance to catch up with company president David Cass and I didn’t even
have to travel more than to the centre of my home town either. Pres Cass stopped at Arequipa
on his way from Lima and to Cusco the next day, as his late week and weekend was going to
be spent at the company’s Aurora project about three hours drive from the city of Cusco. I
therefore got his undivided attention for a whole afternoon and early evening, got the
presentation, got him cornered without the lame excuse of having other meetings to go to and
got to the bottom of the company’s current situation. This update report is based firmly on the
results of that meeting, but before we dive in a quick revisit of the company financials.
Financials check-up
As luck would have it, FCV also reported its latest quarter (its 3q12, ended August 31st rather
than the standard September 30th, as FCV’s year end comes at end November). We’re not
going to do all the charts today, just the most relevant ones. Assets are a lot like we expected,
FCV.v: Assets Breakdown per qtr
8
7
6
5
4
3
2
1
0
so is the liabilities chart so we’ll just present
those with no extra comment and move on.
4
80.von 90.bef 90.yam 90.gua 90.von 01.bef 01.yam 01.gua 01.von 11.bef 11.yam 11.gua 11.von 21.bef 21.yam 21.gua tse21.von
source: company filings, IKN ests
srallod
fo
snoillim
FCV.v: Debt Breakdown per qtr
0.4
fixed
other current 0.35
cash 0.3
0.25
0.2
0.15
0.1
0.05
0
80.von 90.bef 90.yam 90.gua 90.von 01.bef 01.yam 01.gua 01.von 11.bef 11.yam 11.gua 11.von 21.bef 21.yam 21.gua tse21.von
source: company filings, IKN ests
srallod
fo
snoillim
LT debt
current debt

The essence of FCV’s balance sheet is its working capital position, which has benefitted from
the cash received from the Minas Chanca sale to Buenaventura. Via this successful deal (as
previously reported in IKN165) FCV now has
the cash it needs to explore and move 7 FCV.v: Working Capital per qtr
forward on its projects, principally the main 6
Santa Cruz/Reventón project in Mexico. After 5
consulting with Cass last week and then 4
making the necessary extrapolations, we 3
expect the working cap at FCV to be sufficient 2
to take all its projects through to the end of 1
the company’s 2q13 (ends May ’13) 0
minimum, with a forecast of $1.5m at bank -1
unless the company gets its hands on more
cash by then (via another deal, a equity
placement, etc). That’s a good situation for a
very small market cap company with designs
on aggressive development of a big project in
the next two to three quarters.
Mineral property exploration costs add up like
this and the August quarter saw a little more
cash spent than the previous, again mainly at
Santa Cruz/Reventón. In the first three
quarters of 2012, FCV has expended $910k
at Santa Cruz and $191k at Reventón. After
that, general expenses came to $556k, with a
little over $180k spent on all other operations.
In other words, Santa Cruz and Reventón is
where FCV is concentrating its efforts.
According to the company, this type of expense rhythm will continue until the early part of 2013,
then extra oomph comes when the drilling program starts in January.
The net revenues chart looks like this and FCV’s latest quarter came in normally. The only bar
missing on this is the net for the August quarter, because that’s when FCV booked its big cash
gain from the sale of Minas Chanca (and
the Santo Domingo property to Fresnillo)
which turned its normal $1m or so net loss
into a $3.5m quarterly net profit. As It
would just throw the scale out on the chart
I’ve simply omitted that, after all it’s more of
a cash injection to the company that a net
profit from operations.
The bottom line to the quarter reported last
week is that there were no surprises and
the only thing we really need to note is that
FCV has the cash it needs to move forward
on Santa Cruz/Reventón and its other
projects until the middle of next year minimum. By that time we’ll have drilling results and
potentially other deals done. The future is the future, laden with mystery.
Last week’s meeting
With the financial bones out the way (we’re really doing an concise update this week, no
pretend short analysis that runs to 12 pages today) we move to the information gleaned from
last week’s meet with FCV president David Cass (from here on referred to simply as Cass for
economy of words). He had had arrived in Peru from the company’s main Santa Cruz/Reventón
property and was flying on to FCV’s Aurora property the next day. From there he’d be back in
Lima for the rest of this week before tracking back to company HQ in Vancouver and thence to
the San Fransisco Hard Assets conference, where FCV has a booth (right next to the Fortuna
5
80.von 90.bef 90.yam 90.gua 90.von 01.bef 01.yam 01.gua 01.von 11.bef 11.yam 11.gua 11.von 21.bef 21.yam 21.gua tse21.von tse21'bef tse31'yam
source company filings, IKN ests
srallod
fo
snoillim
FCV.v: Mineral Property Expenditures
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
90.bef 90.yam 90.gua 90.von 01.bef 01.yam 01.gua 01.von 11.bef 11.yam 11.gua 11.von 21.bef 21.yam 21.gua
source: company filings, IKN ests
srallod
fo
snoillim
FCV.v: Net Loss vs Exploration Expenses, per qtr
2
1.6
1.2
0.8
0.4
0
90.bef 90.yam 90.gua 90.von 01.bef 01.yam 01.gua 01.von 11.bef 11.yam 11.gua 11.von 21.bef 21.yam 21.gua
source: company filings
srallod
fo
snoillim
expl expenses
Net Loss

Silver booth, for your information if you’re making the conference) and where Cass will be
making a presentation on the company for the assembled great and good (as well as lesser
species such as brokerage anal ysts or newsletter writers).
We spent most of the time talking about the progress being made on FCV projects and there
are three main fronts on which the company is pushing at the moment, namely Santa
Cruz/Reventón, Aurora and the phosphate projects in Peru.
Santa Cruz/Reventón
These days FCV considers this big project, made up of two deals that connect to each other
and create a 20km long corridor of mineralization, as one entity. To remind, the Santa Cruz
project has been optioned from a private, family-run Mexico company that has some minor
workings on site and has agreed to let FCV earn up to 80% of the property as long as it
completes all payment and exploration expenses over the period of the deal (and fwiw, FCV is
well ahead in exploration expenses at this point). The deal is one of those typical “front end
light, back end heavy” optioning deals which lets FCV get on and explore with minor cash
payments in the first few years, but if it finds something of worth the end payments are where
the optioner really benefits (see IKN165 for more). Meanwhile, the Reventón project has been
optioned from fellow Canadian junior International Northair and since we last covered FCV that
deal has been adjusted to allow Focus to option into the same 80% amount as the Santa Cruz
neighbour. For that reason and for the way in which the two properties back onto each other,
FCV can rightfully call the whole thing one project. We’ll do the same too and call it “SCR” from
now on.
Pres Cass had just left SCR and reported good progress being made on several fronts. FCV
now has six targets at the drill-ready stage, three on the Santa Cruz end and three at the
Reventón end. The first drills are scheduled to turn at the El Fragua target, followed by the Don
Blas target and the El Padre target, all located on the eastern Santa Cruz end of SCR. Drilling
pads are now in place, the company will put in its permit application in the next couple of weeks
as soon as the exact GPS coordinates are fixed, the permitting for this stage of ops is very
straightforward paperwork and all things going reasonably correctly, FCV expects to have HQ
diamond drills turning by January 2013. The work will start with one rig and a second added a
little later. Therefore, from about early March onwards (and oh how lucky! Just in time for
PDAC) we’ll have a regular stream of solid, drill assay newsflow from the company.
As for what’s expected, SCR is basically a silver target from East to West but the mineralization
has also displayed some fairly decent gold kickers in certain areas, depending on the specific
geology. When asked what we’d want to see from a decent (without being minblowing good)
drill result at this stage, Pres Cass said (of course) that it will depend greatly on the specific
target and what each specific hole was being set up to do, but a good result from the earliest El
Fragua holes would perhaps hit two zones of silver mineralization at 70g to 80g Ag over its
300m length, while for example a decent result from an El Padre hole would show the same
type of grade over 70m of its 150m length and come with a 0.2g/t or 0.3g/t gold kicker.
One subject Pres Cass and your author talked about a lot at the meeting is the absolute size of
SCR. When you sit through several panoramic photos of the property you begin to appreciate
just how big it is and it’s something that, in my opinion at least, FCV would do well to emphasize
when it’s on the road promoting and presenting its work. It’s the kind of property that could run a
large central mill fed by three or more different pits, but it’s also a property that could easily,
really easily play host to two or three completely separate mining companies., to the point that
workers a mine/mill at one end would be unlikely to come into contact with workers at the other.
FCV hasn’t really stressed this positive aspect of SCR so far and I hope it does, because
there’s baseline asset value (or in simple terms share price appreciation) there to unlock.
We should remember that FCV is a project generator exploreco. It’s doing plenty of work and
will be drilling soon too, but the size of SCR suggests that at some point it will want to bring a
bigger mining company in on the deal that could then use its bigger pockets to really show what
SCR could achieve as a mining operation.
6

So to sum up SCR, this big long target has seen plenty of work done on its so far and the
company is encouraged. We’re now entering the next stage when the drills turn and FCV starts
to define one or several resource areas that will be the basis for a 43-101 further down the line,
then even further on a PEA for an bulk mining, open pit silver mining operation. Finally, a quick
word on community relations, and that quick word is “good”, as acceptance from the sparsely
populated area continues with people who are happy to do support work for the geology and
technical teams.
Aurora
Pres Cass made Arequipa his stop-off on the way to Cusco, where he was going to spend the
next couple of days at the relatively new (to FCV at least) Aurora property. As this project was
another first mentioned in IKN165, today
we’ll just focus (as it were) on extra
information, developments and news.
After IKN165, there were a couple of
feedback mails that wondered just how
accessible and infrastructurally
challenged the Aurora property was.
When questioned on this, Cass noted that
the location isn’t difficult, the property was
accessible by normal 4x4 transport and a
three hour drive from the city of Cusco,
with 2/3rds of that on decent paved roads.
Water supply is plentiful (one of those
“there might be too much!” comments
came) and there’s a local village (the
same that signed the recent access
agreement) that’s happy to supply casual
labour. But perhaps the most interesting
snippet is that the new and very soon to
be built Camisea South natural gas
pipeline, set to provide natgas to the
South region of Peru, will run very close
to the property site. This brings the benefit of road improvement that will allow heavier trucks to
access Aurora easily but also a potential source of cheap power supply for any eventual mine.
This map shows just how close the pipeline will be from Aurora and it’s an unexpected benefit
for the project.
As for what’s on Aurora, here’s a
photo that Pres Cass sent your author
on Saturday morning after his site
inspection visit. Sometimes geologists
look for the most subtle of clues in
their search for mineralization and
potentially economic resources.
Sometimes the clues are much easier
to note (Cass’s comment was along
the lines of “No we didn’t paint it
before we took the photo”). This
secondary exotic copper leak is typical
of the kind of thing found down-profile
of Chilean copper mines.
At Aurora, FCV has just spent about
$70,000 on a geophysical survey and
will spend another $70k or so to put
together the permitting and extensive
drilling program that the property
needs at this stage. Once the geophys has been digested and the drilling plan decided, the
7

necessary applications for a large-scale drilling program gets put into Peru’s Ministry of Energy
and Mining (MEM), with the plan to have permits in hand perhaps early to mid-2013 (that timing
depends more on the MEM dullards than the company and as we’ve noted previously,
permitting in Peru is getting evermore difficult and time consuming). However, that’s about all
that FCV plans on spending at Aurora for the time being, because according to Pres Cass
Aurora will need a drilling program of between 50,000m and 100,000m to get a 43-101
compliant resource together and that’s far too many metres for a company such as this.
Therefore, the plan for Aurora from here is fairly simple; it wants to get a bigger partner in as JV
and free-ride a portion of the project.
As for the prize, conceptually at least the guys think that Aurora’s main zone, the bit targetted
for exploration so far and drilling to date by other companies, may potentially give a 4Bn lb
copper deposit as well as byproduct credits. Upside potential to that 4Bn lb conceptual number
may come from blind type targets identified by the recent geophys programs that are on parts of
the large concession that hasn’t seen much formal exploration as yet.
Overall, my impression is that FCV is going about Aurora in the right way and it’s managed to
time its deal well to coincide and potentially benefit from the infrastructure advantages that the
new gas pipeline may bring to the project. I have two main doubts about its worth, though:
1) Will it be able to find the right partner? The smarter big copper players may consider
this period as the right time to go exploring and partnering, but at the same time the
copper market has a cloud or three of doubt hanging over it.
2) Is it big enough? At 4Bn lbs Cu conceptually (NB, that number is NOT gospel, it may
turn out to be more or less and it’s just a guide at this point, based on assumed size of
deposit and grade) Aurora might not be big enough to catch the attention of the bigger
copper players. Pres Cass did counter my view on that by mentioning HudBay’s move
into Constancia, which does have a similar size I suppose, but I couldn’t help but think
how AQM Copper (AQM.v) has seen its pps go down with all hands lost (well, mine at
least) on a similar sized deposit and in Peru, too.
The bottom line here is that once it’s spent the cash on the current geo-physical program and
then the permitting, FCV doesn’t have a lot to lose and might have a lot to gain from Aurora.
Once again, the advantage that FCV brings to the table is its tight share structure and low share
price, because even if some-or-other deal manages to add a small scale $10m to the company
asset value, that’s around 25c per share and a double in share price from where we stand
today. I’m not looking at Aurora as the big driver of FCV, because for that I like the exploration
risk/reward potential of SCR in Mexico, but it is a (near) no-lose proposition for the company at
this point and if fate smiles down may provide a winning deal somewhere down the line.
Peru phosphates
The slight surprise package to last week’s meeting was Pres Cass’s enthusiasm on progress
made by the company’s phosphate projects, both located in Peru. He said that the company
had been doing a lot of corporate work and although he couldn’t give much detail on the plans
FCV has for its two phosphate assets (one in central highland, one on the southern coast, see
the website for more and perhaps the latest corporate presentation (2) for the most succinct
overview) by piecing together what he’s mentioned on previous occasions, considering the
recent corporate level work has involved putting both assets into a wholly owned subsidiary,
and noting the absolute size of these very large projects, the most likely objective is to bring in a
JV partner, spin out the properties and add value to the FCV mothership in some way, shape or
form. This sounds good to me, because right now I’m pretty sure that FCV derives zero dollars
and zero cents of its share price from these phosphate properties so any deal that can add even
a little value is better than nothing and can only add to the FCV share price. Put simply, it’s
another virtual no-lose situation and if a partner or vehicle can be arranged we could easily see
share price value added here. It’s a good example of how a brains trust such as FCV can create
shareholder value by dedicating time to early stage properties.
Conclusion
8

I liked what I heard from FCV and its president, David Cass, during our extended and extensive
meeting last week (and I’d like to publicly thank him for dedicating so much time and patience to
my often simplistic questions, because the meeting went on a lot longer than planned). FCV
provides exploration upside potential directly from its SCR project in Mexico and as we’re now
moving from the baseline exploration phase and into the bit that the market tends to like more,
the drilling program, FCV now brings speculative potential to the table too. Its share price has
stayed relatively solid in the face of market ups and downs during 2012 and although it’s never
attracted the type of volume that makes it a daytrade candidate, it does have its moments and
isn’t that hard to move into or out of around this 20c range. The company is also looking to add
value via the Peru-based projects and if it can attract the right partner to either (or both) Aurora
or the phosphate package, the prospect generator free ride model swings into operation again.
At this time, downside seems limited (and your author bought well at 17.5c, which helps) and
thanks to that tight structure, FCV does offer the potential of big gains if the drilling from SCR
hits paydirt and the company starts building the type of silver resource held by other junior
explorecos in Mexico. After all, companies such as Soltoro (SOL.v, $34m mkt cap) or Silver Bull
(SVBL, $66m mkt cap) aren’t massive entities, but if FCV could put just $20m in asset value on
an eventual resource at SCR it’s a 50c stock and a 150% win that you might even thank me for
a year down the line.
Is this a riskless play? No way, it’s risky and it’s small and it’s not for every taste, even among
those who know their way around the junior scene. However, there’s room for some out-and-out
exploration risk in any junior portfolio as long as it’s not a dominant position and on that score,
FCV makes a lot of sense. Therefore, although I’m going to stick with my nominal 25c target for
the moment, I don’t see any reason why I should fold and sell FCV in the indefinite future and
let’s see what happens when the SCR drill numbers start hitting the wires in March and beyond
next year before making a further buy/hold/sell call here. Your author is a happy holder of Focus
Ventures and will stay that way for the next few months, come what may.
End of Report
9

Stocks to Follow
Of the 13 positions that were open this time last week, just three made upmoves (RIO.to,
YMI.to, LRA.v), three remained unchanged (BCM.v, PLA.v, FCV.v) and seven lost ground
(VEM.to, LPK.to, IRL.to, OGC.to, LSA.to, PPP short, AQM.v) with the biggest move of the lot
registered by Vena Resources (VEM.to down 18.8%). The best upmove from this time last week
was in new position United Silver Corp (USC.to up 16.7%), but as we’re marking that at your
author’s opening purchase price rather than last week’s close we’re actually recording a loss
there for the time being...so it goes.
With the addition of United Silver Corp (USC.to) to the open positions list we now have 14
stocks on display, one less than our self-imposed maximum. Six trades are in the green, eight
are in the red.
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$5.72 180.4% $6.29 tgt
Recommends
Vena Resources VEM.to hold C$0.70 31-may-09 C$0.195 -72.1% target lowered to 42c
Lupaka Gold LPK.to spec buy C$1.12 23-oct-11 C$0.465 -58.5% 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 selling C$1.00 01-apr-12 C$0.60 -40.0% selling and taking loss
Lara Expl. LRA.v buy C$1.15 08-apr-12 C$1.43 24.3% 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$0.89 21.9% $1.56 tgt added, new avg
OceanaGold OGC.to buy C$3.03 16-sep-12 C$3.34 10.2% $5.34 tgt growth prod
Lachlan Star LSA.to hold C$1.50 30-sep-12 C$1.61 7.3% $2.23 1st tgt
Primero Mining PPP short U$7.26 07-oct-12 U$7.35 -1.2% SHORT near-term play
United Silver USC.to buy C$0.25 28-oct-12 C$0.245 -2.0% new position 60c tgt
Smaller/Riskier
AQM Copper AQM.v hold C$0.31 16-oct-11 C$0.11 -64.5% 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
U.S. Silver USA.to aug'12 C$1.78 27-jul-12 C$1.36 -23.6% fail ST trade close pre 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% sold, took 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.
Yellowhead Mining (YMI.to): Selling. On October 31st YMI announced an $8.25m non-
brokered private placement, with at least $5m of the placement apparently set up via a
1

brokerage deal. The price has been set at $0.65, is for 13m shares and notably has no warrant
of any type attached. The deal is a fair one and as the chart below shows, the stock reacted
favourably to the news (3) after having sold off yet again on Monday morning. On the other
hand, volume remains light in open market trading and with this placement now the focus of
company attention, is likely to stay that way.
Overall it’s a good deal presented by YMI and the implicit message that larger insto money is
interested in taking a position in YMI at a higher than market price isn’t to be ignored.
However, rather than rah-rah this development and use it as an excuse to hold through, I’m
going to use the event as a window to exit this losing trade, declare to the world in an official
manner that I got this one wrong and move on.
I’m best-guessing that the news of larger
money willing to pay more for YMI will at least
support its current 60c price and may even see
it move to the 65c ticket price of the placement
and if so, there’ll be the type of bid volume that
will let me leave with less pain. Still painful, just
easier to leave. I have issues such as tax loss
selling on my mind and it looks as if the
weakness in the junior copper exploration
sector will continue for a while too. Majors are
not queuing up to buy out copper deposits so
lessening my exposure to the sector, beaten up
already as it might be, has plenty of logic
today. YMI will almost certainly remain as a component of The Copper Basket in 2013 so we’ll
still be able to track its progress on a weekly basis and what’s more, I haven’t given up on the
company as a potential trade vehicle in the nebulous future, if and when the copper exploration
universe shows signs of real life. But the call today is to sell and take the lumps, sadly by no
means the first time I’ve had this call to make during 2012.
United Silver Corp (USC.to): Position opened. When USC opened 24c Monday and then
traded to 25c, I thought that although the jump
was big it was still buyable compared to the last
few weeks and no just Friday. But then when 28c
and even 30c showed up it got a bit silly, even if
the story and the trade set-up sounded right to
you (as it does to me).
After all, it only takes the most cursory of looks at
the standard 12 month chart to see that there’s
no need to pay more than 25c on recent evidence
and that even though the 21c of last Friday was
less likely, paying 28c or even 30c looked like
getting ahead of yourself
I’m keen on adding to this position and making it
one that can make a decent monetary win
instead of just a percentage type of winner/loser
(see today’s intro section). It’ll take a bit of
patience in positioning and there’s no point in
taking the first price offered, as Friday’s action
showed, but it’s not impossibly difficult either and
the stock does have its days of volume action
between other, quieter days. I’ll pay 25c.
1

Primero Mining (PPP): Our short position with a limited shelf life gets its moment of truth
next week, as Thursday brings the 3q12 results. I’ll make a decision on whether to cover this
short on seeing those numbers, but as 1) this was never set up as a longer-term trade and 2)
the 3q12 results have been in the sight line as the most likely exit point, right now I’d say that
I’m likely, not certain but likely, to cover on Thursday or Friday. I still think this is overvalued
for what it can achieve but hard numbers will go some way to say whether that call is wrong or
right.
OceanaGold (OGC.to): As per the Flash update on Monday morning (see appendix 1), OGC
reported its quarter and although the
production didn’t sparkle (due to this-n-that
operational glitch in NZ) your author was
reasonably happy about the numbers. In the
ConfCall later that day, the importance of
Didipio coming on line on time, with
commissioning and first production expected
this very month of November, was
underscored by the company and those on the
other end of the call.
As for trading, OGC justified the sending of our
Flash update before the bell very neatly, as
seen on the chart above. The payoff line to the
Flash update was this...
“All the above is context, because the Australian listing of OGC came under a little
selling pressure last night on these results so if any of you are thinking of buying or
adding OGC, the next couple of days may provide a better entry point.”
...and just a couple of hours later that weakness did indeed show up, with OGC.to stock diving
as low as $3.19 (and all the $3.22/$3.23 a trader could have wanted on offer) before
rebounding nicely and trading at/over $3.50 on Wednesday and Thursday. Admittedly Friday’s
sector dive took the shine off the call somewhat, but it was still one that offered up a potential
10% win for those nimble and daring enough.
Lupaka Gold (LPK.to): News last week saw LPK report on the latest from the A1 zone and
the first reports of results from the drilling at the Chaska zone, the one on which we’ve been
betting for upside. As you might have guess simply by looking at the share price movements,
the news from Chaska wasn’t great and the first set of drills hit dusters (though with the usual
talk of encouragement about hitting alterized zones of mineral....yes yes, ok).
We’re now looking at an LPK which has a good resource at A-1, but there’s now doubt that it
will be able to grow that 2m oz (or so) of gold in multiples from outlying targets. The problem
about selling is the price, because 50c and enough treasury “until 2014” (I personally doubt
that, but 12 months before the company finances again is more reasonable) it’s really
competitively priced compared to other juniors with resources of this size. And the other thing
we must consider is that drilling is not an exact science and reporting misses on the first batch
at a new target isn’t a project killer by any stretch of the imagination. If we have another batch
of “interesting geology” without any economic gold hits I’ll be more likely to bail on the stock so
call me pig-headed, but due to the value (ugh) at current prices compared to the A1 resource
that’s goodly sized and with a strong economic story to tell (according to my spreadsheet at
least, though we’ll have to wait for a PEA for something more official on that) as well as the
chance that the outliying zones can still give us a winning drill hole, I’m going to stay on board
LPK for the time being. It’s at this point you should feel free to mail and berate me for falling
into the value trap mentality. I’ll accept those crits without pushback.
Lara Exploration (LRA.v): More news from Lara and another week with positive share price
performance away from the limelight. On Monday LRA announced (4) sample results from its
1

new Brazilian copper exploration project, Sao Juliao, which are encouraging for this stage and
are assumed by LRA to be part of an IOCG deposit (for what it’s worth, 1% average copper
returns are very typical from an IOCG). The good thing about IOCGs is that they have the
potential to become very big indeed (see Olympic Dam for a good example) so it’s a fair start
for the new property, even though not news that will ever get the retail money rushing in to
buy. LRA’s audience for this type of NR is not and never will be us little grunts, as its after
bigger fish in the shape of potential JV partners who’ll pick up the property and move it
forward, allowing LRA its preferred free ride deal.
Lachlan Star and Minera IRL (LSA.to) (IRL.to): Both stocks are covered in ‘Market
watching below, here just a note about the trading action in both which was light and slightly
downwards without ever really looking like breaking down during that Friday swoon.
Vena Resources (VEM.to):
I’m expecting VEM, via share price support from resilient buyers and corporate newsflow, to
come out fighting next week against the share price pressure we saw last week. Whether or not
it will work is another question because the company has cried wolf once too often for
everyone’s taste (mine included) but I’d venture to say that we’ll at least see some significant
price support in November and enough news to show that the company will be moving
aggressively in 2013. As mentioned last week, Esquilache will be the focus of company
attention in the months to come.
This is not the right time to sell VEM, incredibly frustrating though the stock might be. Holding
and waiting to see what happens.
Rio Alto Mining (RIO.to): Word has it that the reason RIO.to jumped to as high as $5.92 on
Thursday is that the stock was recommended by James Dines of the Dines Letter on
Wednesday evening. No matter what I might think of Dines’ record (for my money he makes
excellent macro/big picture calls and average stock pick calls) he sure has a big following and
we’ll likely see more support from Dines’ disciples at these prices.
Apart from that, little to report in RIO barring that GMP report we added to the Tuesday Flash
update (appendix 1) that saw company anal yst George Albino raise his target on RIO to $8.
Don’t think I’m going to argue with that. The stock traded steadily, sold off with the sector on
Friday, acted like the “blue chip junior” that it’s become.
The Copper Basket
After forty-four weeks of 2012 The Copper Basket is showing a 44.68% loss to level stakes.
1

company ticker price 1/1/12 Shares out Market Cap current pps gain/loss%
1 Lumina Copper LCC.v 13.19 43.2 432.43 10.01 -24.1%
2 Copper Fox CUU.v 1.15 398.97 422.91 1.06 -7.8%
3 Augusta Res AZC.to 3.17 144.1 416.45 2.89 -8.8%
4 Nevada Copper NCU.to 5.18 72.8 258.44 3.55 -31.5%
5 Western Copper WRN.to 1.58 93.28 67.16 0.72 -54.4%
6 Baja Mining BAJ.to 0.80 338.5 49.08 0.145 -81.9%
7 Candente Copper DNT.to 0.97 121.67 45.02 0.37 -61.9%
8 Regulus Res REG.v 1.24 99.88 36.96 0.37 -70.2%
9 Yellowhead Min. YMI.to 0.80 52.82 31.69 0.60 -25.0%
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 14.03 0.25 -60.3%
13 AQM Copper AQM.v 0.39 105.6 11.62 0.11 -71.8%
14 Strait Minerals SRD.v 0.150 56.86 5.97 0.105 -30.0%
15 Crazy Horse CZH.v 0.35 64.48 4.19 0.065 -81.4%
Portfolio avg -44.68%
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.
The Copper Basket broke its losing streak as the basket average moved up by 1.12% last week.
There were seven winners (LCC.v, CUU.v,
AZC.to, BAJ.to, REG.v, YMI.to, SRD.v) four 20% Copper Basket 2012 average, weekly
losers (NCU.to, AQM.v, MIN.v, CZH.v) and 15%
10%
no fewer than four UNCHes (WRN.to,
5%
DNT.to, DRV.v, CCY.v). The best move was 0%
-5%
put in by Baja Mining (BAJ.to up 31.8%)
-10%
which finished Friday strongly on positive -15%
-20%
news. Worst of our bunch was Crazy Horse
-25%
(CZH.v down 13.3%). -30%
-35%
-40%
The main move in copper prices came -45%
-50%
Friday, with a drop on the back of a good
US jobs report that boosted the US Dollar.
This saw Cu drop below $3.50/lb, but over
source: IKN Weekly calcs, TSX
the week there really wasn’t much price
difference and with confirmation of lower price pressure next
week, nothing to base firm decisions upon when it comes to
buying or selling equities.
As for stocks, it’s now getting to the point where following the
ups and downs of just LME inventories is losing its relevance
and because of that I’ve decided to do something about it.
Shanghai Futures is nearly on a par with the traditional boss of
the metals world, at least when it comes to copper, and it’s
looking somewhat inevitable that at some point in 2013
Shanghai’s warehouses will hold more of the world’s copper
inventory than LME. With that in mind I’ve updated and
improved the dataset I’ve been using to track world copper
inventories and the result is this chart, which takes LME (red),
1
2102/1/1
morf
egnahc
%

Shanghai (blue) and the smaller Comex (grey) inventories levels and puts them on the same
chart (all data from Cochilco (5) as usual).
World Copper Inventories
700000
600000
500000
400000
300000
200000
100000
0
1
21naJ 21.beF 21.raM 21.rpA 21.yaM 21.nuJ 21.luJ 21.guA 21.peS 21.tcO 21.
voN
metric tonnes
Shanghai LME Comex
source: Cochilco
I’m not sure whether this new format for the inventory chart is useful or not, as the whole idea
is to watch the movement of inventories as a potential lead indicator to the price of copper (and
therefore our equities). This seemed to work in the early and middle point of the year just by
considering the LME inventories (and cancelled warrants percentages), but since the Shanghai
warehouse have taken more and more of the total world percentages, the correlation seems to
have lost its usefulness. Any thoughts on this or even the chart presentation (is it clear to read,
useful?) appreciated.
More potential new names for The Copper Basket 2013
After last week’s request and the names of three copper exploration companies I’m considering
for The Copper Basket 2013, several of you have been kind enough to send in your own
suggestions for components in next year’s Copper Basket. Here are four that have caught my
eye:
• Sandfire Resources (SFR.ax), an Australia-listed junior that owns the Doolgunna
project in West Australia.
• Reservoir Minerals (RMC.v), the junior working that wowed the market a couple of
months ago with some top scale drill results from its JV (with FCX, who is giving RMC a
free ride to feas level) Timok property in Serbia. RMC is from the same stable as IKN
reco’d Lara (LRA.v), so managerial quality is guaranteed.
• Oracle Mining Corp (OMN.to), 100% owners of the past producing Oracle Ridge
mine near Tucson in Arizona. The deposit is high grade (though still assuming the
historic assays are correct) and OMN has been making progress in permitting and in
getting development funds together.
• Entree Gold (ETG.to): Rather than make up my own blurb, here’s what reader MM
wrote to suggest this idea: “You're looking for stocks to add to your copper basket that
were explorers. You might look at Entrée Gold, it has decent budgets and they do a
very decent job of exploring. While they have the stuff in Mongolia, it's really totally on
the beck and call of Rio Tinto now so they're focusing on exploration and the safe
jurisdiction of southern USA, Nevada and Arizona area.”
• Hot Chili (HCH.ax): This Australian listed exploreco has three properties in Chile, has
recently raised funds to begin its move (and we hear both Rick Rule and the Lundin
family were significant takers of the stock) and its Flagship ‘La Productora’ project (6) is
due to see an updated resource report in December that will show upside to the current

report and may have plenty left in the tank after that for more resource growth in
2013. A pre-feas study is also slated for arrival in 2013 (7). At 45c or so it may offer a
cheap entry point here (if you like copper explorecos more than I do at the moment,
anyway) and I like the company name, too.
So thanks for all those and for what it’s worth, the idea of adding Aussie listed stocks to the
basket and widening the catchment area particularly appeals so I think at least one of those
two (SFR, HCH) is going to make it and maybe even both.
Now for an update on just one featured basket company, basically because last week was a
quiet one.
Baja Mining (BAJ.to): BAJ made a big move on Friday afternoon on volume, after a halt and
then a terse NR (8) that announced the Korean consortium financing the Boleo construction had
advanced another $84m in funds to allow things to move forward. According to the terms of the
stage 2 funding with the Korea consortium, BAJ has to run a rights offering to keep its
percentage stake in the project and if it can do that, raise enough and keep 40%, the company
may be worth something after all. But even if it manages to do that it’s going to be under a
veritable ocean of share dilution and it’s anyone’s guess how many shares out NAJ finishes with
or at what price they’re traded. Then there’s the small matter of the doubts still hanging over
the deposit quality and the new “improved” business plan that concentrates on copper
production to get the mine running. All in all BAJ is still a company wouldn’t touch with a
bargepole and one for those of you who like roulette more than investment.
Regional politics
Overview
To be quite honest, there hasn’t been much in the way of mining politics of great note
happening in the region these last few days, which is sometimes the way of things. So instead
of a bunch of snippety news items I offer up a couple of themes with a little more analysis and
opinion attached.
Mexico: More on Baja California Sur
From this report (9) your asleep-at-the-wheel author finally realized that the current fight over
the ‘Los Cardones’ mine project in Baja California Sur (BCS) is one that does indeed affect
publically listed junior mining, because although the Mexican capital Invecture Group is now
heading the project, it’s just a re-name of the same Paredones Amarillos project of Vista Gold
(VGZ), the same one that had its EIA rejected by the state. And that VGZ still has a 37.5%
interest in the project as minority shareholder. Because of this, the case really (10) is of direct
interest to Argonaut (AR.to) and its San Antonio project that lies very close by, just a few clicks
from Cardones.
The other interesting snippet from the La Jornada article was to find out that although the
decision on environmental permitting lies fully with the national government’s Semarnat
environmental body, the local government, the same one that has made its anti-open pit mining
extremely clear, has plenty of powers on a local level to stop any open pit mine from
happening. Not least of these is the power of the local mayor to prohibit “risky and
contaminating activities” by refusing to issue the “change of land use” (cambio de uso de suelo)
permit that all Mexico mining projects need in order to proceed. Therefore the local mayor is a
powerful figure in the mix and as the region in which lie Los Cardones and San Antonio has a
certain Esthel Ponce as mayor, this makes things rather tough. After all, this is the mayor who
told all mining companies looking to construct open pit mines in the area “to pack their bags
and leave”. She also said recently (11):
“Sooner or later, any service that’s requested in Semarnat, in the national State government or in
any scenario or sphere, will arrive at the municipality for the Change of Land Use permit
application....We want to clearly say to that company (Los Cardones) and all companies that
1

intend to use that type of mining (open pit) that the local government is not in agreement and
not because we want to close off a source of employment, but because we know that it is not
healthy and also that it is not the type of development that our municipality needs.”
Bottom line: Now that I’m really paying attention to what’s going on in BCS, my opinion has
shifted from “BCS open pit mining may not get permitted” to “BCS open pit mining is very
unlikely to get permitted” and not just because the national Semarnat gives a yea or nay: It’s
more because the locals don’t want open pit mines (we knew) and have a lot of political power
to stop it from happening (now realized). So, ladies and gentlemen readers of IKN, it’s high
time I took a much closer look at Argonaut Gold (AR.to) and made a pro-active call on its
future, rather than just saying weak and limp things such as “I prefer RIO” or “it seems a little
over-priced” because this might turn out to be a short.
What we have here is a stock that’s scheduled to produce roughly half the gold of RIO.to in
2012 but has an equivalent market cap. This must be based on projected growth forecasts on
its project, which does include a move to 150,000 oz by the time 2014 arrives on El Castillo and
La Colorada (its current mines), but you can kiss forecasts of production at San Antonio
goodbye. There is a perception amongst the analyst community that AR.to might, repeat might
have some delays to its San Antonio project
but even if things go badly with Semarnat, it
has legal recourse and ways of getting
through to production. People, I’m now
calling even that slightly doubtful position
(which is about the worst out there) as a
crock of shit and saying that any open pit
mining project, Cardones or San Antonio or
any other, is very unlikely to see the light of
day. And when we compare that to the
forecasts being made by the brokerage
community on AR.to, this might make for an
opportunity to play the company as a short.
Take for example this chart out of a research
note on AR.to by Scotia and dated July 2012
which is pretty typical amongst its breed.
Now of course AR.to currently has a friendly
bid (12) in for Prodigy Gold (PDG.v) which is
virtually all paper and would change the
asset make-up of the company considerably
if it closes successfully. The above chart and other previous opinions of AR.to need to be
altered for that change before any conclusion can be drawn and although I’ve done some
preliminary work on the deal, I haven’t really gone deep enough to be able to make a real call.
That’s going to change now as the main question of whether AR.to is too expensive today
without San Antonio projected production needs to be answered.
Then again, if a company like GORO can get away with a $900m market cap on less than 100k
oz AuEq annual production, perhaps AR.to is cheap rather than expensive. But if true it also
means RIO.to is very cheap, rather than just cheap. More on AR.to soon.
Colombia: Growing pains shown in the informal vs formal mining debate
One of the problems of a country that doesn’t have a cultural history of formal, large-scale hard
rock mining are the growing pains of the debate that happens internally. By this I mean that a
lot of the issues that are taken for granted in regions that “understand mining” (e.g. the
highlands of Peru, most of Chile, most of Mexico) because they know mining backwards and
their great-great grandfathers were miners, have to be thrashed out and debated, perhaps for
the first time, on a national level until some sort of national consensus is reached. These
growing pains are currently evident in Colombia as the country considers what it wants to do
with the growth now showing in its mining sector.
1

Up to now, Colombia as a country has shown that its heart is in the right place when it comes
to mining. It is protective when it comes to sensitive environmental issues and will give anti-
mining groups the nod if a particularly eco-sensitive area is “threatened” (is that the right
word?) by mining activity, as the episodes around the Angostura project of Greystar(Eco Oro
(EOM.to) show very clearly. However, the “must be environmentally responsible call from the
national government does come hand in hand with pro-mining policies and attitudes, along with
a State taxation burden (or at least a projected one, as we’re going to have to wait until 2013
at least before the debated changes to the mining law become reality) that is nowhere near
that of a country such as Ecuador, which has successfully frightened everyone away from its
clichéd ‘nascent mining industry. Perhaps stillborn is better analogy these days.
Back to Colombia and although the message of “If you’re environmentally responsible you’re
welcome” from government to foreign miners has been clear enough so far, there is still the
potential for the debate to get hijacked by more extreme environmentalist messages, simply
because the jury is still out, Colombia collectively is still coming to terms with its potential future
as a mining country, things are still unknown or lack the fuller understanding that you get in
traditional mining nations. One aspect of this spirit willing for formal mining is the current
governmental plans to make all informal mining illegal. Of course the government is thinking of
its back pocket first (after all, informals rarely pay tax on their labours while AngloGold, AUX
and Drummond do) but it’s also moving to stamp out informality because of its assertion (quite
correctly in my opinion) that informal mining does far greater damage to the environment than
well-controlled, larger-scale formal mining operations. This link (13) to a report from the
country’s prestigious university, the Universidad Nacional de Colombia (UN, founded 1830)
quotes professors and investigators at the UN Faculties that cover environmental matters (the
“Institute of Natural Sciences” and the “Institute of Environmental Studies” or ‘IDEA’). Here’s a
translation of the most relevant extracts from the report:
The environmental impact of legal and illegal mining is the same. This is what Gonzalo
Andrade, professor of the Institute of Natural Sciences of the UN, said in reference to
national government declarations that are trying to make informal mining an illegal
activity.
“The issue isn’t about confiscating machinery, making informal mining illegal or jailing
those people who make their living from informal mining. The issue is what we are
going to do as a country about mining, be it formal or informal, so that we don’t cause
the type of environmental damage that we’re currently seeing.
[He said that] it is not possible the distract the debate or public opinion by using the
damage caused by informal mining activity, when the damage is exactly the same from
formal mining. “Sustainable mining does not exist. It’s the worst lie they could use”, he
emphasized.
Julio Fierro, investigator of the Institute of Environmental Studies (IDEA) of the U, said
that from an environmental point of view the government plan to make informal mining
illegal is an adequate and necessary measure... However he was emphatic when
saying he did not agree with the government’s proposals that “that mining is going to
be replaced by large-scale mining, by a supposedly responsible mining activity,
something that we have not seen in this country.” He added, “It’s a seize and control
policy of some sort against thousands of Colombians who are in an activity that is
environmentally unacceptable, and then replace it with trans-national conglomerates
who are going to generate even worse pollution.”
IKN183 back and we warn those reading that this type of opinion isn’t something that can be
brushed off as the biased opinion of mere academics at this point, precisely because Colombia
is having the type of national debate on mining that will decide if it goes the direction of
Nicaragua that has a positive attitude towards responsible mining and a growing industry that
positively affects both country coffers and population back pockets, or the way of Ecuador that
stymies the growth that mining wants to bring to Colombia. At times like these, the opinion of
academia, be they right or wrong, can substantially affect the outcome of debates.
1

A Chinese copper refinery for Argentina?
A interesting report out of Argentina last week, as it was reported the country’s mining minister
Jorge Mayoral, in Beijing for the 14th China Mining conference (14) met with Chinese business
people who are looking to build a copper refinery. Said Mayoral (translated), “We are working
with the Chinese company NFC on the possibility of defining a project to build the first ever
copper refinery in our country.” On one level this project would make sense, because
Argentina’s export laws slap a 10% tariff on exporting metals concentrates but do not charge
that levy on finished metal products such as copper cathode or silver/gold doré. Therefore, any
expansion of copper mining makes sense if it comes hand in hand with a refinery (and if you’re
thinking Taca Taca when you read that I don’t blame you, even if I’m no fan of the company’s
share price). However, a copper refinery is just the type of project that will get Argentina’s
environmental lobby up in arms so we’ll have to watch carefully for pushback or protests if and
when an eventual location for the copper refinery plan is announced.
Market Watching
Minera IRL 3q12 financials
As I’m on the company mailing list, at 00:01 on Sunday morning local time (November 4th by
just one minute) I got a mail through from Minera IRL (IRL.to) that announced its 3q12
numbers in a news release. This was interestingly early, especially as the NR was dated
November 5th and after checking with the company it was indeed a bit of a snafu; the mail
service provider that IRL uses mistakenly sent the NR out 24 hours early! Therefore IRL have
reported 24 hours before expected, but it’s no biggie because all markets were closed at the
time anyway. So here are the bullet points as collected from the 3q12 NR, which do a good job
in summing up things
• Gold sales 7,520 ounces (Q3 2011: 9,718 ounces). Average realised gold price $1,667 per ounce (Q3 2011: $1,683 per
ounce)
• Revenue $12.5 million (Q3 2011: $16.4 million)
• Gross Profit $5.8 million (Q3 2011: $9.1 million)
• EBITDA $4.8 million (Q3 2011: $8.6 million)
• Profit after tax $1.7 million (Q3 2011:$3.6 million)
• Cash balance of $10.4 million at end of quarter (Q3 2011: $21.0 million)
• Post Q3 2012 end, availability of second $10 million tranche of Macquarie Bank Finance Facility and extension of
Facility Repayment Date to 30 June 2014
• Gold production from the Corihuarmi Gold Mine was ahead of management expectations at 7,660 ounces (Q3
2011: 9,718 ounces). Production declined due to anticipated lower grade ore
• Corihuarmi site cash operating cost increased to $552 per ounce (Q3 2011: $356 per ounce) due to anticipated lower
production
• Environmental Impact Assessment has been approved for the Don Nicolas Project in mining friendly Santa Cruz
Province, Argentina and the development permit issued. Financing discussions are progressing
• The Definitive Feasibility Study on the Company's flagship Ollachea Project, Peru, is on track for completion
during Q4, 2012
• Excellent progress has been made on the exploration drive at Ollachea, reaching 669 meters as of 31 October 2012.
Exploration of the eastern strike of the deposit by diamond drilling is scheduled to commence in Q4 2012.
Underground access to the orebody is expected in Q1, 2013
Overall all that is close to the way we saw things in the last serious update on the company,
back in IKN180 (even if I do say so myself). Regarding operations, in IKN180 we used a very
rough $1600/oz realized sales price and $600/oz cash cost (the upper end of the likely cost
result) and in fact that $1,000/oz margin came in better, due to the higher realized gold price of
$1,667/oz and lower cash cost parameter ($552/oz) than our simple guess scenario. The green
bar chart below left shows the margin run at Corihuarmi and...
1

Corihuarmi: Cash operating cost per ounce
700 604
600 522 502 552
500 365 378 366 401 392 356
400
300
200
100
0
2q10 3q10 4q10 1q11 2q11 3q11 4q11 1q12 2q12 3q12
source: company filings
2
zo/$U
Corihuarmi: Gross margin per ounce
1600 (realized price minus operating cash cost)
1327 1400 1121 1160 1197 1115
1200 1001 988 1007 1000 836 858
800
600
400
200
0
2q10 3q10 4q10 1q11 2q11 3q11 4q11 1q12 2q12 3q12
source: company filings
...if we sit it alongside the cash costs chart (above right), it’s testament to the way in which
cash costs isn’t the whole of the story and margin
gives a truer picture of a precious metals miner’s
financial health. Barring the pleasant outlier 3q11,
when production really rocked thanks to a high grade
area and costs dropped as a result, IRL has seen
margins in a fairly constant range even though cash
costs are up in 2012 compared to last year.
As for the financial results, they look pretty good.
The 3q12 revenues was higher than 2q12, COGS
lower than 2q12, so the gross profit of $5.8m and
net of $1.7m is one of those numbers that gives the
UK anal ysts (who seem to over-emphasize the
Corihuarmi ops’ importance) something nice to tell
their clients.
Moving on to balance sheet items, assets now look like this (above right) and here’s the liability
position:
zo/$U
IRL.to: Quarterly Earnings overview
18
16
14
12
10
8
6
4
2
0
11q1 11q2 11q3 11q4 21q1 21q2 21q3
source: company filings, IKN ests
srallod
fo
snoillim
revenues
COGS
Gross profit
200 IRL.to: Assets Breakdown per qtr
180
160
140
120
100
80
60
40
20
0
01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3
source: company filings, IKN ests
srallod
fo
snoillim
IRL.to: Operating Profit vs Total comprehensive
7 earnings per qtr fixed
other current
6 cash&ST
5
4
3
2
1
0
-1
1q11 2q11 3q11 4q11 1q12 2q12 3q12
source: IRL filings, IKN ests
srallod
fo
snoillim
Tot comp Income
op profit
IRL.to: Debt Breakdown per qtr
30
25
20
15
10
5
0
01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3
source: company filings, IKN ests
srallod
fo
snoillim
LT debt
current debt

However, in much the same way as FCV above those two are not as important as knowing
where the working cap lies, which looks like this (below) after 3q12.
IRL.to: Working Capital per qtr
40
35
30
25
20
15
10
5
0
-5
2
01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3
source company filings, IKN ests
srallod
fo
snoillim
This might sound alarm bells at first sight, but worry not because that negative working cap
position at end 3q12 was largely due to the line of credit IRL has with Macquarie Bank, which at
that time was due paid in December but has since been booted back to June 30th 2014 and
means that IRL has short term liquidity. In effect, the above is very much in line with our
previous guidance and indicative of a company that
$m IRL.to: Exploration expenditure per quarter
will have to raise at least a little cash in some way
16
or another in the near future (we went into all
14
those options and permutations back in IKN180).
12
What we can say from the drop in cash balance to
10
$10.4m is that IRL really was spending hard on its
8
explorations during 3q12 (the one bit I got wildly
6
wrong in my model).
4
2
This shows over at the statement of cash flows
0
which reports IRL burning through $15.881m on its
1q11 2q11 3q11 4q11 1q12 2q12 3q12
exploration projects in the quarter, which means source: company filings, IKN ests
that it’s advancing them well. We again tip our hat
to the positive free cash flow that comes from its small but useful Corihuarmi mine, as it has
again softened the blow and made the exploration cheaper when it comes to future share
count. We also note that we’re sticking to the call made in IKN180 that 3q12 was the big hump
in exploration costs, 4q12 will be less and then come 1q13 and the completion of the Ollachea
tunnel, this burn will drop considerably. However we’d expect exploration costs to turn into
construction costs by that time, as Don Nicolas starts to become a reality.
As a bit of a sidebar and regarding the Ollachea tunnel, the NR notes progress at 669m on
October 31st. According to reliable company info published in IKN182 last week, October 25th
saw the tunnel at 633.2m and at that time, we calculated recent progress at an average of
6.2m per day. If we do the math for the last six days (669-633.2 / 6) we get progress at 5.97m
per day, which is close enough and still showing the same very good progress. Therefore end
January for completion, as postulated last week, seems on course.
Final point: We get a ConfCall from IRL tomorrow, Monday November 5th at 10am
Toronto/Lima/EDT time. That’s one I’ll be spending time on.
So overall a quarter in line with our expectations. It’s good to see an operating profit at IRL but
as the big drains for exploration take more cash than that operation produces, the treasury
position is the key here. We’d expect IRL to announce some sort of financing package soon,
potentially an interim one while the main Don Nicolas financing deal solidifies or maybe a full
deal for all its needs in one shot. As we’ve mentioned on many an occasion, a look at that deal
will decide whether this strong looking stock is going to be retail friendly enough in 2013 to be
moved up to a Top Pick recommendation.

Lachlan Star (LSA.to) 3q12 numbers discussion
This is a shorter look at the LSA quarterly report numbers and more conceptual in nature than
the piece on IRL (or OGC for that matter). The thing I didn’t like about the Lachlan Star
(LSA.to) (LSA.ax) 3q12 numbers (15) out last week was its cash cost profile, because even
though it dropped by $1.05 per tonne to stand at $20.92/mt processed, it’s still too high for the
company to make a profit. To illustrate that simply, let’s take the on-pad gold grade of 0.51 g/t
Au, the assumed recovery rate of 76% and a gold price of $1,700/oz (which is $54.66 per
gram).
0.51 X 76% X 54.66 = $21.18
Nobody’s going to get rich on a 26c per tonne operating margin, ladies and gentlemen.
There are reasons for the higher than expected cash cost profile in 3q12, which are
understandable because we’re still in growth mode at LSA and not expecting massive profits or
glitchless operations. The main expense added on top of things seems to have been some extra
stripping costs, that were capitalized to the balance (which implies, asset that they are, future
value to be unlocked). All good and setting up for the future is fine by me, we’re here for the
promise LSA offers in 2013 and beyond and all that. However, we need to see improvement in
costs as the future of this company depends on it getting the cash cost down to the type of
range it’s now forecasting, that of $150/oz (or a little under $5/g) less than the current costs
profile.
There was good news about its throughput and the amount of gold stacked onto its leach pads
is rising as per forecasts, so as long as it keeps on track in 4q12 we should see LSA register
stronger bottom line numbers and set itself up for a 2013 at 75,000/oz annual production.
However, this one is a fairly tight margin proposition so we need to watch its costs profile
carefully. Also, it needs to be made clear that and any serious weakness in the price of gold
would have us jettison this position long before any sale of other producers such as RIO, IRL or
OGC, such is the nature of its thinner margins.
Batero (BAT.v) and CMH
Batero Gold isn’t my idea of an investment, but it did bring positive, market-moving news to
market on Thursday when it announced (16) that Consorcio Minero Horizonte (CMH) (17), a
privately owned Peruvian mining company, was making a strategic investment in BAT. There’s
plenty in the NR to consider (so don’t take this short paragraph as the whole thing) but the
grain of the news is contained in this excerpt:
As a result of this agreement, Horizonte,
together with its affiliates and shareholders
(the “CMH Group”), will acquire ownership
of 35% of Batero’s issued and outstanding
shares (together, the “Transaction”). The
equity financings associated with the
Transaction, together with a loan of up to
$2,210,150 to be provided by Horizonte to
Batero, will raise up to an aggregate
$20,000,000 for the development of the
Batero-Quinchia Project. Batero also gains
a strategic alliance partner in Horizonte, a
privately owned company and the fifth-
largest gold producer in Peru. The
Transaction is intended to further Batero’s
efforts in advancing the Batero-Quinchia
Project in Colombia towards a production
decision.
This was enough so see a 10% rise in the BAT pps on 5X normal volumes Friday (all on a down
day for the market too).
2

I’ve been asked for an opinion on this deal by a few of you, so here we go with the basic issues
to cover in bullet point form:
• CMH is a well established, profitable mining company. Its main asset is the producing
Parcoy mine in the La Libertad region, an underground mine with mineral grades of
between 10g/t and 12 g/t gold and a 1,500tpd mill that’s been producing on site for
many years. The company has a good reputation in-country and makes a pretty penny,
too. To give an idea of the scale of operations, this chart shows the last two years of
monthly production at Parcoy compared to that of our old friend Rio Alto (RIO.to), a
company and story we know well.
CMH at Parcoy vs RIO.to at La Arena: Monthly Au production
25000
22500
20000
17500
15000
12500
10000
7500
5000
2500
0
2
11'naj bef ram rpa yam nuj luj gua pes tco von ced 21'naj bef ram rpa yam nuj luj gua
source: MEM filings, company data
uA
tzO
Parcoy (CMH)
La Arena (RIO)
• As we see, now that RIO has established its production schedule there’s a similarity
between the two, with Parcoy running a steady state 15,000 oz Au per month and RIO
slightly above that. We’re expecting RIO to move ahead in production schedule in 2013,
but it still gives an idea of what CMH and its asset is worth. We also note that both La
Arena and Parcoy are located in the northern La Libertad region, something else in
common, though there is a big difference in how the two companies mine and produce
their gold, with RIO an open pit oxide dump leach or low grade material instead of the
Parcoy U/G of higher grading gold rock.
• We can therefore say that CMH isn’t to be taken lightly. However the overall net value
of the company dwarfs the investment made in BAT.v, so although the $22m CMH is
putting into BAT is significant cash, it’s not critical company making/killing size either.
• Importantly, we also note that it’s not the first incursion CMH has made into Colombia
junior miners, as the same company started building a position in Antioquia Gold
(AGD.v) back in 2010 and after its latest round of buying holds 54% of the company
(on a fully diluted basis). It has also put its own CEO, Felix Navarro, in as Chair of
AGD.v and has two other people on AGD’s board as well. CMH has been patient in its
accumulation of AGD stock so now it has a majority position, the move to take a large
chunk of BAT may be the start of the same process.
• At a best guess, CMH seems to see its longer-term future in Colombia as well as in Peru
and has made the strategic decision to buy into beaten down explorecos in the country.
It must of course like something that it sees at both companies and in the case of BAT
I’d wager that it’s looking to BAT’s new and somewhat revised plans of concentrating
on the potential for production from its oxide gold mineralization instead of relying on a
big machine to process the low gold grading sulphide rock (the plan that sank the stock
price earlier this year).

Overall, I’m not in a hurry to suddenly buy into Batero Gold due to CMH’s new interest. The
Peruvian company is big enough to see this as the start of a strategy that will reveal itself over
a longer term and we also note that its first move into AGD was at 20c, while the latest is at
10c and 11c...these guys aren’t driven by shorter-term share price appreciation. However, when
a successful and smart mining company such as CMH moves like this it’s a fool that completely
ignores it, so I’ll probably be paying a little more attention to the failed promo BAT.v in the
medium-term future. But first let’s see if Colombia can get its act together on its mining laws
and make the place look stable and attractive for new investment cash in hard rock mining.
Do Buenaventura (BVN) results suggest a short in Fortuna Silver (FVI.to) (FSM)?
I almost feel guilty about putting those title line words into print. Almost. Last week’s quarterly
results from Buenaventura (BVN) were such an eye-opener that I decided to mention the tier
one player on the blog (18) (19) not once but twice due to its much heavier than expected
costs hike seen in 3q12. Here’s the chart that best captures that cost pressure, the quarterly
COGS comparative:
BVN’s results are a strong indication that costs of mining in Peru are rising sharply but also
point to greater costs pressures the type of mining that BVN does (and does very well, we
might add) of underground vein mining for gold and silver. If that reminds you of what FVI
does at Caylloma (and San José in Mexico) and also the nasty costs surprise and upward
guidance FVI announced in March this year (when the stock sank badly and we called sell),
then I’m not surprised. Here’s a chart of the FVI share price this year and what we note is the
decent rebound in recent days, that
isn’t back to the $6+ levels of early
year but has seen trading above $5.50
on a number of occasions, including a
strong surge last week (until Friday’s
sector selloff on those US jobs
numbers crimped its style.
With FVI due to release its 3q12
numbers on Thursday November 8th
(ConfCall Friday 9th) it’s tough to be
empirical about a smaller mine’s costs
profile, but at the moment I’d lean
towards FVI’s results showing higher
than expected costs, particularly for
the Caylloma operations. On balance I’m not one to try and pre-empt a quarterly and take a
short position in FVI today, but by the looks of things there seems to be a lot of good news
assumed in the price and if the results come up short, there may be a quick short play in the
stock available. You’ll need to consider your own position regarding silver in the week ahead too
2

and the good Lord only knows how the U.S. election between now and Thursday will affect the
general market. The call here is to watch the wires closely and if FVI misses, there may be a
short trade on offer for the nimble amongst us. On this one, just for once, count me in on that.
Conclusion
IKN183 is done, we close with bullet points:
• The main changes to the portfolio next week are the sale of Yellowhead Mining
(YMI.to), a miserable failure of a trade, and the purchase of more United Silver Corp
(USC.to) to go on top of the ones bought last week because I really like this one’s
chances, even more than I did when getting all enthused over the NOBS report last
week.
• Results season has started with OceanaGold (OGC.to) and Lachlan Star (LSA.to) both
potentially summed up in the same way: slightly off expectations but good guidance for
the 4th quarter. Of the two I have more time and room for maneuver with OGC as long
as it commissions Didipio in good order this month and keeps its word. As for LSA, I
want a better 4q12 operationally and particularly lower costs.
• Meanwhile, Minera IRL (IRL.to) gave us decent enough results from its modest
Corihuarmi mine and no big surprises from the good news already out at both Ollachea
and Don Nicolas that we’ve previously covered.
• Focus Ventures (FCV.v) isn’t one to give up on, contrary to my views of 12 issues ago
when I was prepared to let it go at a small profit. Its small and tight structure and low
share price means that any good news will be quickly reflected in share price
revaluation. We should look to Santa Cruz Reventón for the main news driver, but don’t
discount something happening with the Peru phosphate projects as right now FCV gets
zero value from them; anything that comes will be a bonus.
• As for the election on Tuesday, I’ll watch with interest but truly don’t care a damn who
wins, because the only real way that the USA affects my life is in its foreign policy and
as both the Republican and Democrat parties have a long history of treating Latin
America like shit it hardly matters who gets the job. Thanks for asking.
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
2

Appendix 1: Flash update of Tuesday October 30th
Good morning, it's Tuesday 07:25am local time and we're still a day or two before the NYSE opens for business.
Two points of order in this Flash update, but no changes to recommendations today.
OceanaGold (OGC.to) (OGC.ax)
OGC came out with its 3q12 results this morning...
http://www.newswire.ca/en/story/1061079/oceanagold-third-quarter-2012-results
...and you can get the real financials here...
http://www.oceanagold.com/assets/documents/filings/2012-Press-Releases/Q3-2012-Financial-Statements.pdf
for those you care enough. In the IKN Weekly analysis when we set up our long position in OGC (IKN172) and then the
update report (IKN176) when we opened our long position, we had forecast sales of 54,000 oz gold at a cash cost of
$1,000/oz and an operating profit of $8.9m. Therefore, the OGC numbers of 54,750 oz gold sold at $1,081/oz and an
operating profit of $4.393m is close enough. The main differences are slightly higher costs per ounce, which OGC
mostly blames on NZ Dollar forex movements, plus a depreciation charge of nearly $22m, $2m higher than we'd
modelled. Overall, the quarter is slightly off our model but is close enough for our purposes and there's no real problem
with the OGC operations.
OGC has once again guided the new Didipio mine as on schedule. This is good and we remind readers that this is the
real reason we're long the stock. The company has a Conf Call at 5pm today so we'll be looking for more information on
Didipio then.
Overall, this quarter can be classed as "in line with expectations", perhaps a semi-notch lower than we'd prefer but with
Didipio coming online it's all fine. All the above is context, because the Australian listing of OGC came under a little
selling pressure last night on these results so if any of you are thinking of buying or adding OGC, the next couple of
days may provide a better entry point. Personally I'm not going to add because I have enough OGC already, but I'm
definitely a happy holder on the numbers seen.
Bottom line: OGC current ops worked acceptably well, the Didipio growth seems in good shape. No problems here and
if the price drops, a entry/addition window is available.
Rio Alto (RIO.to)
Yesterday GMP published a report on RIO by George Albino who has just come back from a site visit to La Arena,
calling buy on the stock and raising its price target to $8. Several of you have been kind enough to send me a copy of
this report and it is attached here for your consideration. We repeat on RIO: Top pick.
I hope this mail finds you all well, with particular thought for those in the USA Northeast.
Best, O
Footnotes, Appendices, references, disclaimer
(1) http://www.larepublica.pe/03-11-2012/apagon-afecto-varias-ciudades-del-sur-del-pais
(2)http://www.focusventuresltd.com/s/Presentation.asp
(3) http://www.newswire.ca/en/story/1061909/yellowhead-announces-private-placement-offering
(4) http://finance.yahoo.com/news/lara-samples-2-15-copper-110000172.html
2

(5) www.cochilco.cl
(6) http://www.hotchili.net.au/projects/productora/
(7) http://www.miningweekly.com/article/hot-chili-eyes-a355m-raising-for-productora-2012-10-16
(8) http://finance.yahoo.com/news/baja-mining-announces-additional-funding-180100274.html
(9) http://www.jornada.unam.mx/2012/10/30/opinion/030o1eco
(10) http://www.vistagold.com/downloads/reports/1%20Paredones%20Amarillos%20NI%2043-
101%20Technical%20Report%20Feasibility%20Update%20September%202009%20172900%20080%20MLN%20009.
pdf
(11) http://peninsulardigital.com/extra/deben-las-mineras-%E2%80%9Cir-haciendo-sus-maletas%E2%80%9D-advirtio-
la-alcaldesa-ponce/69695
(12) http://finance.yahoo.com/news/argonaut-gold-prodigy-agree-friendly-111000599.html
(13) http://www.agenciadenoticias.unal.edu.co/ndetalle/article/el-impacto-ambiental-de-la-mineria-legal-o-ilegal-es-el-
mismo.html
(14) http://noticias.terra.com.ar/mayoral-avanza-con-proyecto-para-construir-refineria-de-
cobre,33a48f93808ba310VgnCLD2000000ec6eb0aRCRD.html
(15) http://www.lachlanstar.com.au/images/LSA_quarterly_report__sept_12_final.pdf
(16) http://www.baterogold.com/en/news/batero-announces-private-placement-178-million-46-premium-and-forms-
strategic-alliance
(17) http://www.cmh.com.pe/front/default.aspx?i=1&s=123
(18) http://www.incakolanews.blogspot.com/2012/10/the-buenaventura-bvn-3q12-results-its.html
(19) http://www.incakolanews.blogspot.com/2012/10/chart-of-day-is_31.html
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
2

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.
2