IKN #184Premium

The IKN Weekly
Week 184, November 11th 2012
Contents
This Week: Trades today, Trade timescales in your author’s head, “The fourth quarter will be
better”.
Fundamental Analysis: NOBS report on Aurcana Corp. (AUN.v).
Stocks to Follow: Overview, Bear Creek (BCM.v), Yellowhead Mining (YMI.to), Primero Mining
(PPP) (P.to), OceanaGold (OGC.to) (OGC.ax), Lupaka Gold (LPK.to), Minera IRL (IRL.to)
(MIRL.L), Focus Ventures (FCV.v), Rio Alto (RIO.to), United Silver Corp (USC.to), Lachlan Star
(LSA.to) (LSA.ax).
Copper Basket: Overview, AQM Copper (AQM.v), Baja Mining (BAJ.to).
Regional Politics: Overview, Peru: A quick Conga update, Mexico: The Los Cardones “change
of land use” permit is denied, Chile’s existential crisis, Uruguay’s anti-mining groups to join
forces, Nicaragua: No legal problems but potentially higher costs for B2Gold (BTO.to) after last
week’s accident, Peru: Puno region may become more militant against mining.
Market Watching: Mexico Senate to investigate MAG Silver’s (MAG.to) (MVG) activities in
Chihuahua, Hochschild buys Andina (ADM.v) and Exeter Resources (XRC.to) (XRA) gets a pop,
Gold Resource Corp (GORO) update, Liberty Silver (LSL.to) update, U.S. Silver (USA.to) quick
thought, Jaguar Mining (JAG.to) (JAG) earnings heads up.
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
Trades today
To make it nice and clear (and let those of you who don’t want to read the whole thing get
back to that decent book you were reading more quickly), here we state that the two changes
to our Stocks to Follow list this week are the sale of Bear Creek Mining (BCM.v) and the
purchase of Aurcana Corp (AUN.v). As for the reasons, you’ll find them below, all right.
Trade timescales in your author’s head
This subject has come up before, but I’ve fielded a few inquiries on it recently and as we’re now
tending to trade a few more stocks using shorter timescales, a word today won’t go amiss.
Everyone has a different idea of what “short-term” medium-term” and “long-term” trades,
investments and holding mean to them, which is fair enough. Some people’s idea of short-term
is a couple of hours for a flip daytrade (or perhaps a couple of nanoseconds if you’re a
computer), others would class half a year as a short period of time. It depends on a lot of
things but all boils down to your subjective attitude towards this wild and whacky thing we call
the stock market. As I often use these terms on these pages it’s therefore fair of me to lay out
my own views and after that, you can adapt my terms to suit your own circumstances. So here
goes:
1

• Very-near-term/Very-short-term: By which I mean a week, or perhaps three
weeks max. A recent example is my attitude in the Primero Mining (P.to) (PPP) short
position. By the way, I’ve decided to talk more about “near-term” than “short-term”
these days, because we’re now offering up the occasional short idea and I don’t want
to confuse (myself or anyone else).
• Short-term/Near-term: When talking about these, I tend to have a one month to
three month timeline ni my head. An example recently is the GORO trade.
• Medium-term: This is really my default position as an investor and it usually refers to
a 12 month investment term. That can be shorter, perhaps 6 months would be a
minimum, but I’d probably refer to that when laying out the trade.
• Long-term: These are the ones I don’t talk much about because they just get locked
away and I forget about them. The holding period is basically indefinite and there are
no active plans to sell them. Lump me in with Warren Buffett on these.
“The fourth quarter will be better”
I’ve seen this line all over the place recently, mining companies large and small. Sometimes it’s
been in logical and expected context, such as Rio Alto (RIO.to) that will have a better 4q12
because its throughput is now rising. Sometimes we’re being encouraged to hang in there
because the good news on a new event is just round the corner (step forward OceanaGold
(OGC.to)). Sometimes it’s been pretty obvious because the company in question has gone the
kitchen sink route and thrown all the bad news it could into the 3q12 report (Barrick (ABX) a
prime example). Sometimes it’s more difficult to believe because the message has come from
serial underachievers such as Gold Resource Corp (GORO). But there’s this jam tomorrow line
popping up over and again, by my reckoning even more than the usual amount in this tell-em-
what-they-wanna-hear sector we try to pick through. The above are a few, but we could add
BVN, NEM, MUX, PPP and a bunch of others to the list of promisers of wonderful futures.
For what it’s worth, of all the stocks to which I’m current exposed or we cover to a greater or
lesser extent on these pages, the one that concerns me most as it promises a better 4q12 is
Lachlan Star (LSA.to). It’s ramping up production according to the latest filings, which is good
but it also has to give us the improvement in cash costs profile else it’s not going to be
particularly profitable. I’d care about any results miss in any stock I own of course, but LSA is
the one that would most have me reaching for the sell button.
Meanwhile, one of the few companies to have beaten my (and market) 3q12 expectations was
one I was expecting to have had a weak quarter, Fortuna Silver (FVI.to) (FSM). Its 3q12 wasn’t
enough to get me back on board at its current share price, but the $41m in revenues was a
pleasant surprise and the news of its finally approved permit for the Caylloma tailings facility
was positive too. If that nice Mr. Market offers a sub-$5 share price in the near future there are
worse near-term fliptrades available, I’d venture to say.
Fundamental Analysis of Mining Stocks
This week we look at Aurcana Corp. (AUN.v):
2

NOBS update report dated November 11th 2012
Aurcana Corporation (AUN.v)
Company Overview
Aurcana Corporation (Canada: AUN.v, US pinksheets AUNFF.pk, Frankfurt UHY.f) is a
producing silver mining company operating in Mexico and The USA. Its flagship assets are the
producing ‘La Negra’ mine in Mexico and the late-stage construction ‘Shafter’ project in the USA
that’s about to go into commercial production. Current share structure is as follows:
Shares out: 455m
Options: 31m
Warrants: 83m
Fully diluted shares: 83.4m
Current share price: $1.10
Market Cap: $495.71m
Approx cash per S/O: $0.04
All prices are in Canadian dollars unless stated. Forex U$1=CAD$1
Overview
True hope is swift, and flies with swallow’s wings
Richard III, Act 5, Sc 2
For once I’m going to keep a NOBS report short, the way I first set out to write the things a few
years ago before I started to get side-tracked with details narrative and things. Today’s report
on Aurcana Corp (AUN.v) cuts to the chase in this paragraph by noting that I’m going to
buy AUN.v tomorrow Monday because it’s a producer stock that’s about to show significant
production growth. It’s finally emerging from a long period of cash burn and investment and in
2013 will start delivering profits to the bottom line as well as rapidly increasing its production
size. There’s also a fair chance that it will grow itself via M&A activity. The stock has taken far
longer than originally scheduled to get to this position and its share count has ballooned to the
point where it’s a concern, but we don’t have to be long-term holders in AUN, either. The plan
here is to take a near-term long position in AUN and benefit from its likely re-rating that’s about
to kick in over the next one or two quarters.
Today’s report isn’t going to cover every aspect of AUN. For one thing it’s a closely covered
company and there are a lot of reports available on the stock from anal ysts, be they tied to
brokerages or independent. What we’re going to do here is focus on just five elements:
• AUN’s somewhat patchy record for over-promising the market
• Its share structure
• Its financials
• Expected production growth in 2013
• Conclusion, recommendation and investment call
That’s all this time, because even though this company is a producer it’s more about the story
than the numbers. If things go to plan I’ll almost certainly go into the numbers and give you the
formal, cash flow based workings and target price rationale in an update report a couple of
3

weeks down the line. Today’s report is much more about setting the scene, opening the position
and...errr....being brief.
Under no illusions about AUN’s track record
One of the reasons I’ve passed on several occasions on this company is its propensity to over-
promise and under-deliver (UPOD). Take for example a few of many cuttings taken from an old
corporate presentation dated November that has gathered virtual dust on my office hard drive
over the years. At that time we were told that...
...which is a miss by one year, assuming of course that AUN does what it says it will do and
declares commercial production at Shafter in December. Then we have a production schedule
that looks like this (with your author’s comments in red)
Strangely it’s the 2010 result that concerns me more here, because 2012 was clearly knocked
back by the delay in Shafter (no double jeopardy allowed) so the big miss is due to that. But
back in late 2009 AUN said La Negra alone would be good for 1.25m oz Ag just a year later
(note, not AgEq but clearly marked Ag) and the miss was a fat 300,000 oz, or 75k oz a quarter
average or about a third of its final 2010 production. Then we have the ballpark math offered up
by AUN in its corporate material which looks very pie-in-the-sky with the benefit of 20/20
hindsight:
Again, the operating earnings for the first half of 2012 come to a touch under $11m, so straight
double that and you see how far we miss, even with silver at $30+/oz and not $20 as in that
model. And then there’s this:
Now admittedly AUN changed its tack and decided to pay off its stream deal instead of keep
profits away from itself. Also, we have to acknowledge that AUN’s share price has done well in
the interim, coming from around 25c back in November 2009 to around $1.10 today...nobody
should turn their noses up at a four-bagger. However, I had to chortle just a little when reading
the company’s latest corporate presentation (1) dated November 2012 and the part when they
note the company has delivered a 900% shareholder return since May 2009 and on the same
graphic note that market cap has moved from $12m to $612m, which is a 5,000% rise; the
difference is the dilution. Or put in another way...
4

...I hope the point is made.
Please don’t get me wrong on this, I’m not knocking success and AUN has indeed done a good
job to get to where it is today and those on the ride lucky enough to have bought and held from
2009 to today won’t be complaining about the performance, (especially compared to some of
the outright dogs out there in junior world). What I am saying is that 1) AUN has a tendency for
OPUD that’s been enough in the past to put me off buying and reco’ing the stock and 2) I don’t
blindly trust the company’s current guidance and want results rather than hear promises and
assurances from such people.
Share structure and holders
AUN has a whole heap of shares out, 455m and bits according to the latest company numbers
and that’s a potential problem to an
investment such as this. However, as the AUN.v: Shares Out
500
share count chart here shows, the big
450
changes happened on two occasions and 400
each has its reasons. First during 4q10 AUN 350
added no fewer than 195.2m shares to its 300
count, nearly all coming from an equity 250
placement (2) that raised CAD$60m in gross 200
150
proceeds. That cash was partially (~$25m)
100
used to pay off a silver stream agreement
50
AUN has at that time with Silver Wheaton
0
(SLW), because the company decided to
change strategy and leave itself open to silver
price appreciation. The rest was used for
general working cap and project development purposes.
The other big dilution came in 4q11, when 74m (bar a few
thou) shares were added to the pile via another placement
(3) of 52.8m shares that raised gross proceeds of $34.4m
which came in the same quarter as a whole bunch of
warrants being exercised and moved to shares out. Since
then more options and warrants have moved over to the S/O
count and we’re left today with the 455m. As stated, that’s a
lot but a quick look at this table ripped from company
literature shows that nearly half those shares are locked up
with entities that can be assumed strong hand holders:
5
90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 tse21q3
source: company filings
serahs
fo
snoillim

This brings the float down to something more reasonable for a junior, but the thing we need to
worry about more is whether AUN will move to dilute us any further. For the likely answer to that
we need to check the financials:
Financial overview
We dive straight in with the evolution of assets and debt at AUN. Assets are here left and as we
see, AUN capitalizes its assets. The last two years have been spent in developing Shafter and
growing La Negra, so all its cash (and ours too) has been ploughed straight back.
AUN.v: Assets Breakdown per qtr
200
180
160
140
120
100
80
60
40
20
0
To the right are liabilities and guess what? Yup, they dropped a mountain in 4q10 as AUN made
the strategic decision to move its burden over to the share count, print a whole bunch of new
shares and pay off its debtors. Since that time
AUN has held the normal type of modest run-
of-company liabilities that’s typical and healthy
for a junior. No problems here.
So to the chart that matters more, working
capital. Again we see how liquidity improved
immensely at the end of 2010, plus the cash
injection that came via the 4q11 raising. Since
then the company has made money on its La
Negra operations (see below) but working
capital has dropped sharply every quarter as
capex gets put into its development project,
particularly Shafter.
Next week AUN comes out with its 3q12
financials and we’ll update all these charts in
IKN185 next week, but at present we’re not
expecting AUN to need a new cash raising and
dilute its share count any further as the next
couple of charts try to indicate. This earnings
overview shows that its current operations at
La Negra are profitable and the last two
quarters show that production and revenues
are growing too. This revenue growth looks set
to accelerate even further as 2012 becomes
2013, but by then the company won’t be
spending it all on its projects.
As for where the money’s gone, here below are the big ticket expenses AUN has booked to
expand La Negra and bring Shafter to the brink of commercial production:
6
90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2
source: company filings
srallod
fo
snoillim
AUN.v: Debt Breakdown per qtr
70
fixed other current 60
cash
50
40
30
20
10
0
90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2
source: company filings
srallod
fo
snoillim
LT debt
current debt
AUN.v: Working Capital per qtr
40
35
30
25
20
15
10
5
0
-5
-10
-15
-20
90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2
source company filings
srallod
fo
snoillim
AUN.v: Quarterly Earnings overview
16
14
12
10
8
6
4
2
0
-2
-4
01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2
source: company filings
srallod
fo
snoillim
revenues
COGS
Op. Earnings

Main mine building expenses, 2010 to date
22
20
18
16
14
12
10
8
6
4
2
0
1q10 2q10 3q10 4q10 1q11 2q11 3q11 4q11 1q12 2q12
source: company filings
7
m$U
mineral property expenditures
purchases of property, plant, equipment
Since 1q11 and the big build-up started, AUN has invested $80m on mineral property
expenditures and purchases of the necessary property, plant and equipment. In the same
period it has booked net profits that aggregate slightly over $15m from its operations. This is
why it has raised cash and this is why the working capital has dropped consistently. However,
the La Negra expansion to a maximum throughput capacity of 2,500tpd is now complete and as
Shafter is about to be declared officially commercial next month, the cash drain will stop there
too and (operational glitches aside) the cash will start moving back into the company instead of
seeing the constant fracture. We may become a bit close for a while and we might be looking at
a few weeks that we saw back at the end of 2011 for Rio Alto (RIO.to), when treasury went
mighty thin and the strategy depended on getting to positive free cash flow on time.
The bottom line to the financials is that AUN seems to have calculated its needs well, with
particular emphasis on the amount of cash it decided to raise at the end of 2011 in order to
improve La Negra production and get Shafter working. Cash looks a bit tight but it’s not a
desperate situation either and if the worst comes to the worst, I’m sure that there is now a
queue of financiers willing to loan AUN a few million here or there in a bridging type deal, or
perhaps a small final equity raise that wouldn’t add so much to the pile on a percentage basis to
get AUN to FCF+. I don’t think it will need such facilities in fact, but it’s not impossible.
Production and growth at AUN
We can go into the breakdown of AUN production, both current and project from its two assets
(La Negra in Mexico and Shafter in USA) on another occasion because (hey wow surprise) this
NOBS report is already longer than I’d planned for it (I really wanted to be concise and get to
the point today, dang I waffle too much). What I want to present here is a simple, consolidated
chart of AUN production of silver and its other products (offered up as total silver equivalent) to
date and then your author’s somewhat conservative projections for production in the next five
quarters (which is to say that I’m not buying into the AUN pitch that La Negra and Shafter will be
perfect, glitchless mining operations in 2013 or that maximum throughput capacity will be hit as
from January 1st 2013 and forever and ever amen)
AUN.v: Silver & Silver Equivalent production per qtr
2010 to end 2013 estimates
1000000
900000
800000
700000
600000
500000
400000
300000
200000
100000
0
01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 tse21q4 tse31q1 tse31q2 tse31q3 tse31q4
Oz Ag
Au
AuEq
source: company filings, IKN ests

Even pitching to the low side, the production upside is looking impressive and the big
acceleration starts now, in 4q12. Management has recently guided that Shafter will be declared
in commercial production in December and have said that as of last week it was running at
between 600tpd and 700tpd. They’re guiding for 1,500tpd to be reached by 1q13 (and note that
we’re leaving our projections at 1,300tpd for the whole of 2013, that’s plenty of wriggle room).
Meanwhile, management also expects La Negra to get to a constant 2,500tpd (up from its
previous 1,500tpd capacity) by 1q13 and with a small amount of extra capex, 3,000tpd is the
plan by the end of FY13.
The above chart is the plumb centre reason as to why I’m going long AUN tomorrow. There are
all the financial spreadsheets and numbery calculations that I could present to you today if I so
desired (done ‘em all) but the crux of the matter is the combination of two factors.
1) AUN is about to move into a much higher production bracket
2) According to its financials, AUN doesn’t need any more big money dilutions to move
into that higher production bracket.
This company is less about the numbercrunching and more about the optics. Now is the time to
buy AUN because it’s about to raise a lot of eyebrows and get plenty of publicity from its big
production lift that’s scheduled in 2013 (and starts to show up in 4q12). Even though it’s been
around for as long as I’ve been playing with LatAm junior names (or at least it seems that way)
this is a company with a brand new story to tell. It’s the story I wanted to get across to you
today, not the number jiving.
Sidebar: AUN is looking to expand via M&A
Your author has very nice people on his mailing list, and one of those is reader FL who attended
a presentation done by AUN in Stockholm last week. Both CEO Lenic Rodriguez and relatively
new IR guy Catalin Chiloflischi were present to give the presentation and along with other notes,
FL kindly informed me of AUN’s stated plans for M&A in the following way:
“...they are in hot pursuit of a Mexican silver producer which is listed on the TSX
(which is why AUN is not pursuing a listing on their own at the moment). The
company in question will produce 4-5M oz Ag in two years time (and if I understood
things correctly they have one small producing assets at the moment and a bigger
deposit coming online in two years time). Obviously they didn't give away the name of
the company, and your guess is better than mine. The deal might be finalized in
January or February, and should things play out as planned, productionwise
and acquisitionwise, AUN might be a 15m oz per year producer come 2015.”
Now I’m not privy to any special intel, but after thinking over the issue and doing a bit of
rummaging my best guess for the target is Scorpio Mining (SPM.to) (4) because it ticks off
plenty of the boxes:
• In Mexico.
• Listed on the TSX main board.
• Silver producer of the right size, producing ~300k oz Ag and ~500k oz AgEq per quarter
• Plenty of pipeline projects that could come on line in two years (if the pitch is optimistic
enough and the listener suitably naive).
• The right price, with a $206m market cap at present that could be swallowed by a
$500m market cap company such as AUN.
• Has taken a share price hit in 2012 and although it’s recovered somewhat the $2 prices
of this time last year are a long way from its current $1 or thereabouts.
Now for sure this is just my guess, but maybe SPM.to will turn out to be the place to bet your
spec cash, rather than AUN ☺.
Conclusion
Aurcana Corp (AUN.v) is a buy because it’s about to move out of a long and delayed growth
and cash burning period and into a new higher production period that will also, finally, see the
8

revenues flow to the bottom line. It’s not a very cheap stock at a market cap of nearly $500m,
but it doesn’t take much searching of comparative data for silver miners to see the market caps
commanded by companies producing or set to produce the type of 5m oz AgEq that AUN will
soon show the market. However, we don’t have to be here for the long run and also, the thought
that AUN plans to expand via M&A also implies that it will print a whole lot of new paper to do
so, because its current ~$15m at bank isn’t going to cover the $200m it’ll need, not even close.
What this company stock offers us today is an opportunity to ride a near-term re-ratings bounce
that your author expects between now and the end of 2012 or perhaps running into the first
quarter of 2013. This isn’t my idea of a keeper, not a IRL.to or a RIO.to, and therefore our target
can be lowered to suit the shorter timescale.
The IKN Weekly recommends AUN as a buy and sets a near term (let’s say three to four
months) target of $1.50 on the stock, representing a 36.4% upside to Friday’s close. I personally
will buy at some point tomorrow Monday and if I have to pay more than the weekend’s marked
$1.10 to do so, on this occasion it’s not going to bother me. We remind readers that AUN is due
to publish its 3q12 earnings report in the next 48 hours and on Tuesday 13th we have the
company conference call (link here (5)). By that time I’ll be a shareholder.
End of Report
Stocks to Follow
Of the 14 positions that were open this time last week, six went up (BCM.v, OGC.to, YMI.to,
PPP short, USC.to, FCV.v) two remained unchanged (LRA.v, PLA.v) and six went down (RIO.to,
VEM.to, LPK.to, IRL.to, LSA.to, AQM.v). The biggest moves were registered in United Silver
Corp (USC.to up 12.2%) to the upside and AQM Copper (AQM.v down 18.2%) to the downside,
with all other moves inside the 10% up/down range.
9

With sale of Yellowhead Mining (YMI.to) and the covering of the Primero Mining (PPP) short, we
now have 12 stocks on display, three less than our self-imposed maximum. Eight trades are in
the green and four are in the red but my stars, they’re REALLY in the red.
Company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
Top Picks
Rio Alto Mining RIO.to buy C$2.04 07-apr-11 C$5.70 179.4% $6.29 tgt
Recommends
Vena Resources VEM.to hold C$0.70 31-may-09 C$0.19 -72.9% target lowered to 42c
Lupaka Gold LPK.to hold C$1.12 23-oct-11 C$0.455 -59.4% holding
Bear Creek Min. BCM.v selling C$3.38 07-nov-11 C$3.77 11.5% taking small profit
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 buy C$0.73 22-jul-12 C$0.83 13.7% $1.56 tg, added, new avg
OceanaGold OGC.to buy C$3.03 16-sep-12 C$3.58 18.2% $5.34 tgt growth prod
Lachlan Star LSA.to hold C$1.50 30-sep-12 C$1.55 3.3% $2.23 1st tgt
United Silver USC.to buy C$0.25 28-oct-12 C$0.275 10.0% new position 60c tgt
Smaller/Riskier
AQM Copper AQM.v hold C$0.31 16-oct-11 C$0.09 -71.0% considering sale
Focus Ventures FCV.v hold C$0.175 01-jul-12 C$0.22 25.7% 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
Yellowhead Min. YMI.to nov'12 C$1.00 01-apr-12 C$0.63 -37.0% sold, took loss
Primero Mining PPP nov'12 U$7.26 07-oct-12 U$6.73 7.3% Short trade closed
2009, 2010 and 2011 closed positions in appendices below
Now for some notes on a selection of the above stocks.
Bear Creek Mining (BCM.v): Selling. I’ve mulled it over for a few weeks and the decision
comes today. BCM rushed up last Thursday, held the gains Friday and all on better than
average volume too, the type of catch-up move to silver we’d posited a couple of weeks ago,
thus taking away at least some of the feeling that selling BCM below $4 is selling too cheaply. I
think on balance that it is, but the lack of real newsflow potential to come (bar the submission
of the Corani EIA we’re expecting soon) and the way in which it seems to be spinning its wheels
and will continue to do so is the deciding factor. If I want 1-on-1 exposure to silver I can buy
SLV and if I want leverage to the metal I’m clear in the policy of putting producers in front of
explorers at this time.
There is however one extra piece of information that’s helped tipped the balance and it’s down
in ‘Regional Politics’ today. The news that rural community groups (ronderos) in the Puno
region, the whole of the Puno region including the Aymara South and Quechua North, are
1

getting together to define policy on mining companies in the region later this month isn’t
something to be immediately worried about, but there are enough signals to indicate that at
best it’s going to be neutral for the mines, projects and concessions in the northern, Quechua-
dominated areas of the North of Puno and possibly a negative development. As it happens, I
have in my portfolio quite a lot of exposure
to the Puno region at this time, due to
positions in BCM (Corani is in the North of
Puno) and Lupaka (LPK.to has Crucero in
the North Puno area) as well as Vena
(VEM.to has its Esquilache and Pucará
projects there) and to a minor level Focus
(FCV.v has the Kateandwill stakings there
but those are a very a small part of its
overall makeup). On balance I feel
somewhat yellowbelly chicken about that
much exposure to a single region today
and the decision to cut BCM was helped by
the significant lowering of regional risk it
would bring, as BCM is by some way the
biggest monetary position of those stock
holdings. Therefore we take a modest profit on BCM and part of the proceeds will be used to
replace this silver exploreco with the new silver producer position in AUN.v (see above). The
rest of the cash can wait on the sidelines.
Yellowhead Mining (YMI.to): Position sold. As per the Flash update on Friday morning
(appendix 1), we did indeed get that pop on the Taseko news and YMI.to did indeed trade up
to 65c (I got off at 63c average) so at least the end bit of this trade worked out well. Still,
hardly one to be proud about and a 37% loss booked, right next to all the other heavy losers of
this year.
Primero Mining (PPP): Short covered. Also as per the Flash update (appendix 1) and the
note in IKN183, I covered the short in this one on Friday and happily, got a better deal than
that of Thursday afternoon. In fact our short position improved 8.3% on the week and it was all
due to the reaction to the company’s 3q12 numbers.
As noted in the Flash update on Friday, I still think PPP is overvalued here and there is a case
for holding the short position a while longer, but I’ve already extended what was planned as a
very near-term trade for a couple of weeks and I don’t want to stray too far off the original
thinking here. If you’re still short PPP and stay that way you’ll hear no complaints from me, but
there are also the prosaic matters when it comes to running a portfolio and a decision is a
decision. By the way, unlike the covered position in GORO that I’ll be able to uncover easily, I’ll
be fully liquidating the PPP position next week (right now it’s simply covered as of Friday) and
totally freeing up the cash held. A small point, but one worth noting.
OceanaGold (OGC.to): OGC has a good
week and nearly had a great week when
it threatened to slip the field on Friday
morning, but the early $3.70 prices were
sold into during the day and left us up
instead of UP.
What we’re looking for from OGC this
month is one of those re-rating bounces
that results from the successful
commissioning of a new mine. That mine
is Didipio and if things go to plan we’ll
have the required NR any day now. Less
certain is whether the market will react to
1

the news immediately, but according to the spreadsheet here OGC is still plenty undervalued
on its 2013 potential. It’s a very easy and comfortable stock to hold right now, that’s one thing
for sure.
Lupaka Gold (LPK.to): Hardly a wonderful week for LPK, as it dropped again and set another
end-week low. However, slight cheer can be had from the action Tuesday and Wednesday
because weakness to 42c and 43c finally, FINALLY saw some buyer step up and support the
price. It’s not some sort of stone cold bottom signal but it is encouraging and we again note in
true broken record style that the 2m oz Au in the A-1 zone is enough to support this share
price. Here’s the quickmath to back up that claim:
• Shares out 81.75m
• Share price 45c
• Therefore market cap $36.79m (with approx $12m of that covered by cash at bank)
• The IKN assumed 43-101 resource of 2m oz Au currently (which takes current M+I+I
resource and assumes ounces added by recent successful outstep drilling to the North)
That’s U$18.40 per in-situ ounce of gold and that’s cheap, with or without the Chaska zone
bringing success. And do it on an EV/ounce basis and it’s around $12/oz in-situ, though I prefer
the market cap method as we have to assume LPK is going to burn that cash on development
at Crucero.
Am I happy about my trade so far in LPK? No, not at all. Partly because the Chaska zone upside
hasn’t happened yet (the drill program got delayed, the first results haven’t hit, further patience
required, ugh) but mostly because of that dumb merger the company did with Andean
American when it would have been much better to wait a while and raise a little cash via a far
less dilutive equity raise. However and in much the same way as I’m stomping my foot and
being all stubborn about Vena Resources now, this is not the time to sell LPK, it’s too cheap,
there’s true fundamental cheapness here and it’s not as if this management team is bad at
exploring. They might have made a bad corporate level call but it’s still one that is going about
Crucero the right way, already investing in met studies, keeping locals on side, etc. So bugger
it, I’m holding and I’d go as far as repeating that “feeling lucky punk?” call of a couple of weeks
ago because the speculative risk takers amongst you might consider an in-and-out trade on LPK
at these levels.
Minera IRL (IRL.to): IRL has a soft type week on the back of its reasonable 3q12 numbers
and ConfCall Monday that held no big surprises but was solid all the same. The share price
dropped into the low 80s and as noted in the Flash update Friday (appendix 1) it’s a tempting
place to add. On sober consideration I’m not going to add to mine however, because 1) I’ve
just done so and it’s now a fairly chunky holding and 2) the plan is to wait and see how the
company builds its financing position to fund Don Nicolas (and general working cap for
Ollachea, office etc) before making the decision to add. And I’m sticking with my plan. And by
the way, the phrase ‘sober consideration’ doesn’t mean i was drunk at 7:30am last Friday
morning when writing that Flash update ☺.
Focus Ventures (FCV.v): As usual on these things I urge you all to watch the volume more
than the stock price. That pop to 27c early week might have looked pretty, but FCV again
traded thinly and most of the time boasted a bid/ask through which you could drive the
proverbial truck. Yes it’s nice to see it at 22c instead of 21c and the positive feedback received
on last week’s note is appreciated too but junior mining stocks needs real news to drive
progress, not the mutterings of market commentators no matter how gossamer-like (e.g. your
author in this stock) or heavy-hitting (e.g. James Dines in RIO.to last week) their influence
might be. Don’t fool yourself into believing that anal ysts, gurus or financial soothsayers “move
markets”, because even though opinions of market watchers can do that temporarily the real
story comes from inside the company, not outside of it. The way this publication can shift a tiny
and thinly traded junior mining stock for a couple of days is grains of sand on a beach
1

compared to the influence of the Einhorns of this world, but they’ll quickly agree that their
influence is only transitory, too. Do not chase prices, period.
Rio Alto Mining (RIO.to): We had the production numbers our mid-October and we
crunched them down in IKN181 dated October 21st. It’s now time for the 3q12 financials to
appear and they’re due this week. Back in IKN181 I forecast an EPS/share of 23c (note, net EPS
will be lower, but we prefer EBIT to gauge cash flow of this growth company) so let’s see how
bad my guesses are this time around. The other parameter that will interest (apart from any
guidance given) is the cash cost, which shouldn’t be any higher than $550/oz according to
company guidance. Our “all other costs per ounce” metric (see IKN181 chart and previous
analyses of RIO) is set at $580/oz, which means we’re looking for the “everything it costs to
produce an ounce of gold at RIO” total, G&A, tax, interest, the whole caboodle at $1,130/oz
tops. Hopefully I’m overestimating there, but we shall see.
United Silver Corp (USC.to): I ended up adding a few more at 26c because the price got
stubborn, but it was really only a handful to add and I’m still going to wait for 25c to add on my
USC bunch in the way I want to...at least I think I can wait for 25c.
Lachlan Star (LSA.to) (LSA.ax): I’ve heard this story bouncing around about how the anal
yst world thinks LSA is a prime takeover target and how this-or-that bigger miner should snap
the company up now, while it’s good for the snapping. I’m calling bullshit on this rumourmill
because LSA is still a company producing at a cash cost of over U$1,000/oz and that alone is
enough to put off any larger mining company from buying it. Big miners want to dilute their
overall cash cost profile, they do not add to it, period. End, Stop. Final. Beware the echo
chamber, people, beware of hearing what you want to hear and then telling somebody else
because you think it’s what they’ll want to hear, too. In the case of LSA it may, repeat may
become a tasty morsel for some larger miner further down the line if it can reach its targetted
75,000 oz Au annual production rate and get those high cash costs under control. It’ll then be
of sufficient size and profitability to interest a buyer, not before. I like the company’s chances
(else hey...I wouldn’t be long the stock) but I’m not taking anything for granted either and as
mentioned in today’s intro, its high leverage to gold means it’s the one in the above list of
producers that’s obliged to hit its targets in the current quarter.
The Copper Basket
After forty-five weeks of 2012 The Copper Basket is showing a 47.14% loss to level stakes.
company ticker price 1/1/12 Shares out Market Cap current pps gain/loss%
1 Lumina Copper LCC.v 13.19 43.2 421.20 9.75 -26.1%
2 Copper Fox CUU.v 1.15 398.97 418.92 1.05 -8.7%
3 Augusta Res AZC.to 3.17 144.1 381.87 2.65 -16.4%
4 Nevada Copper NCU.to 5.18 72.8 246.79 3.39 -34.6%
5 Western Copper WRN.to 1.58 93.28 63.43 0.68 -57.0%
6 Candente Copper DNT.to 0.97 121.67 45.63 0.375 -61.3%
7 Baja Mining BAJ.to 0.80 338.5 44.01 0.13 -83.8%
8 Regulus Res REG.v 1.24 99.88 36.46 0.365 -70.6%
9 Yellowhead Min. YMI.to 0.80 52.82 34.33 0.65 -18.8%
10 Duran Ventures DRV.v 0.18 184.72 20.32 0.11 -38.9%
11 Catalyst Copper CCY.v 0.08 274.48 16.47 0.06 -25.0%
12 Excelsior Min MIN.v 0.63 56.12 13.75 0.245 -61.1%
13 AQM Copper AQM.v 0.39 105.6 9.50 0.09 -76.9%
14 Strait Minerals SRD.v 0.150 56.86 4.55 0.08 -46.7%
15 Crazy Horse CZH.v 0.35 64.48 4.19 0.065 -81.4%
Portfolio avg -47.14%
1

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 had another bad week and lost 2.5% over its average and we’re now
closing in on the lowest level of the year again. Only one week has been worse, the one that
ended July 29th with the Copper Basket at -
48.28%. By looking at the tracking chart 20% Copper Basket 2012 average, weekly
15%
we see the surprisingly weak Bernanke QE3
10%
effect come and then go thru the BMs. 5%
0%
-5%
As for component performances, there -10%
-15%
were just two weekly winners (DNT.to,
-20%
YMI.to) and two stocks stayed unchanged -25%
-30%
(CZH.v, CCY.v). Of the eleven left (not -35%
listing them all) the worst shows were seen -40%
-45%
in Strait Minerals (SRD.v down 23.8%), -50%
AQM Copper (AQM.v down 18.2%), Baja
Mining (BAJ.to down 10.3%) and Augusta
Minerals (AZC.yo down 8.3%). source: IKN Weekly calcs, TSX
Copper the metal didn’t have a good week and for the quicklook reasons here’s Reuters (6)
LONDON, Nov 9 (Reuters) - Copper hit its lowest in more
than two months on Friday as a stronger dollar, a looming
U.S. fiscal crisis and renewed euro zone worries sapped
investor risk appetite and darkened demand prospects.
Personally I’m not buying that potted explanation, because the underlying demand story,
especially that of China, surely trumps any “dollar up things down” explanation for market
weakness. Once again we saw big inventory gains in the world last week with total copper
stocks up 4.0% to 502,872mt, a move driven by the Shanghai futures exchange warehouses’
+6.3% move, representing 2/3rd of the increase. We also note that Shanghai Futures Exchange
now bosses 40.7% of world inventories and it seems to creep a couple of tenths higher every
week. Cancelled warrants were also down again, to 16.34% of LME totals. The bottom line is
that stocks are going up and the amount of metal leaving for end user consumption is going
down. We’re now into November and the assumed Chinese re-stocking period hasn’t
materialized yet, so if things don’t start moving down soon the bearish sounds are sure to get
louder. We did indeed get
reports last week (7) that
China would start restocking
soon ...
"The NDRC is going to do it soon," said a source with
links to China's influential
state planner, the National
Development and Reform
Commission (NDRC), who
has direct knowledge of the
plan.
...and that may be true, but
we also had “soon” a few
weeks ago and since then all
we’ve seen is rising inventories and the drop-off of cancelled warrants from 24% to 16%.
1
2102/1/1
morf
egnahc
%
Cancelled Warrants at LME, IKN157 to date
35%31.91%
30%
25% 21.91% 20.89%20.6 1 7 9 % .81% 24.6 2 0 3 % .17% 21%
20% 16.21% 19.1 1 0 6 % .0106%.4 1 0 8 % .3 1 9 6 % .06% 18.1 1 8 5 % .89 18 % .61% 19.1 1 0 7 % .3186%.34%
13.76% 13.78%
15% 11.07% 11.5911%.7210%.81%
10% 8.71 6 % .87%
5%
0%
751NKI 851NKI 951NKI 061NKI 161NKI 261NKI 361NKI 461NKI 561NKI 661NKI 761NKI 861NKI 961NKI 071NKI 171NKI 271NKI 371NKI 471NKI 571NKI 671NKI 771NKI 871NKI 971NKI 081NKI 181NKI 281NKI 381NKI 481NKI
source: Cochilco, LME
rof
yrotnevni
EML
%
latot
yreviled
resu-dne

Now for commentary on some of our covered stocks
AQM Copper (AQM.v): My stars this company is pissing me off. The last news release we’ve
had from them is dated June 15th (8) as history repeats on delays and radio silence on project
delivery with the PEA now way overdue on the Zafranal project. It’s as if this management
team is actively trying to repel all its shareholders and annoy them to the point that they just
walk away, something that brokerages such as Cormark have already done with their coverage
(one month ago on October 10th and quite frankly I don’t blame them).
However, the blame for this bad trade doesn’t rest with the company but with me. My task is
therefore to learn from the mistake else be condemned to repeat it and the main lesson needed
to be taken on board and put through thick skulls is “If junior exploreco doesn’t deliver, leave”.
The writing was on the wall in the way it dragged its heels on delivery of it 43-101 resource
update earlier in the year but I preferred to stick with my “value” and subsequently get
trapped. In most situations I’m clear and cognizant about how people are the most important
part of a junior and that it doesn’t matter how good the project is, because the success or
failure of an investment relies much more on the quality of the team sitting on top of the rocks.
But when it comes to the delays thrown at me by these companies I’ve often been too slow to
see the danger to my back pocket. People like Bruce Turner can have all the great CVs and
backgrounds you could wish for but if they start BSsing you and failing to keep their word they
aren’t much better than the Stan Bharti’s of this world who are much more proactive in the way
they strip cash from your back pocket.
So here we are today, an AQM at 9c and a stupid looking anal yst waits another week to see if
this PEA shows up before the Mayans get their way. Ugh.
Baja Mining (BAJ.to): Further to last week’s note on BAJ and its cash injection at Boleo by its
Korean backers, we note that the stock didn’t fly higher and the initial enthusiasm for last
week’s short’n’sweet NR wore off quickly. That sounds about right here. BAJ continues to be an
alternative to roulette or blackjack, except that you don’t get the complimentary cocktails while
at the table. Feel free to play these games as long as your eyes are wide open going in.
Regional politics
Peru: A quick Conga update
Just a line or two to note that our general working hypothesis on the immediate and near-term
future of Conga, that Yanacocha SA (NEM and BVN in JV) will continue to work on the reservoir
systems for the next few months and then look to move forward in 2014 once current regional
governor Gregorio Santos (or ally) is voted out in the 2014 regional elections, is on course. We
hear from eyewitnesses who were in the Cajamarca area last week that work continues
unabated on the reservoirs and the minor number of protesters at the site (based around one
of the threatened lagoons) have little or no chance of stopping the machinery thanks to logistics
and the heavy security presence that Yanacocha is using on site. Workforce at Conga has been
reduced but those left in employment are busy enough on the project’s reservoir infrastructure.
Mexico: The Los Cardones “change of land use” permit is denied
As noted on the blog last week (9), Mexico’s Semarnat enviro body denied the “change of land
use” permit (one of the main environmental permits needed by any mining project in Mexico
and an essential piece of paper to move forward) to the Los Cardones project. After our recent
coverage, including that of last week, this comes as little surprise.
One of the quirks of the Mexico system is that any company denied this permit is allowed to re-
submit its application indefinitely. Los Cardones has seen two Change of Use permits denied to
it so far, but the company has already said (10) it intends to re-submit very soon. Meanwhile,
Argonaut Gold’s (AR.to) stock price merrily ignores the clear dangers to its San Antonio project
right next to Cardones and continues to move higher. Real analysis on that stock soon.
1

Chile’s existential crisis
Ok ok, maybe not as dramatic as that title suggests, but there’s a new mood of dissatisfaction
inside Chile about the way in which mining is hitting problems there. Chile prides itself on being
the most miner-friendly of all South American countries and there’s no doubt that its economic
growth over the last two decades has a lot to thank for this policy and attitude. It’s therefore
something akin to a crisis for Chilean business circles to see the recent rulings that have gone
against mining in the country and the resulting delays or postponements to big mining projects.
The main area of contention (11) is the Atacama region and the two main problems there are a
lack of power supply and a lack of water. With the Castilla power station project currently under
suspension due to a Supreme Court ruling that went with locals against the development and
against the power company (financed by Brazilian billionaire Eike Batista) as well as delays to
two other power generation projects, the knock-on effect is partly (or mostly) to blame for the
delays announced at Teck’s Relincho copper project, the San Antonio JV between Panaust and
Codelco, the (not to be confused) San Antonio project wholly owned by Codelco and most
recently, Barrick’s decision to freeze development of Cerro Casale. Add those four up and its
$11Bn (with a B) of FDI and along with that ABX also has its own problems at its Pascua Lama
project, with massive cost overruns (12) and now the news that Chile’s government body
Sernageomin (13) has halted some construction at Pascua Lama (and slapped a fine on the
company) for bad environmental practices that are causing too much dust to fly as it pre-strips
the deposit. All this has been leavened a little by the news that Hochschild (HOC.L) thinks it has
a bargain by paying $100m or so for Andina Minerals (ADM.v) and its Volcan gold project in the
Maricunga zone (see below), but that’s kind of small beer compared to the delays and decisions
that the big money has seen going against it recently in Chile. Now for sure Chile’s judiciary is
only going with the letter of the law here and that’s also true for the government’s
Sernageomin, which inspected Pascua Lama, didn’t like what it saw and told ABX to do
something about it now (plus a fine). I’d also say out loud and clearly that miner-friendliness is
just one of the problems facing any company that decides to work the Atacama, because water,
power (though related), hostile weather and high salaries are all part of the same deal. But
Chile’s image as being accommodating towards mining companies is beginning to take hits and
get open criticism from the players, including Eike’s famous “...investing in Chile is becoming
impossible....” and “...If they don't want us there, we'll go! Bye Bye...” tweets (14) on the
subject of Castilla. We’re now moving into election season in Chile, the current Piñera
government is likely to be represented by star Minister Laurence Golborne and for the centre-
left Concertacion party, it’s either Michelle Bachelet or a massive surprise on the ticket. How
many these apparently new barriers to mining development in Chile can be surmounted in an
election year is one thing, how much of an election issues they are is another part of the
equation. The last thing a proud (arrogant?) race such as Chile needs is to be compared by
foreign mining money on the same light as its neighbours.
Uruguay’s anti-mining groups to join forces
A country that rarely comes up on our radar, but we have some news for you this week. This
weekend, a conference was held (15) by various anti-mining groups and factions in Uruguay in
order to strengthen and “professionalize” their protest actions, as well as organize a public
awareness campaign this summer and collect names and signatures against mining operations
that will also be able to gauge the depth of feeling there is against (or for) mining operations in
the country (typically, Uruguay stops everything in January and February and goes to the
beach, where it’s easy to canvass a lot of people in one fell swoop). In the words of the leader
of “Movimiento por un Uruguay Sustentable (Movus) (Movement for a sustainable Uruguay) in
the above linked report in El Pais, Uruguay’s newspaper of record :
“We want to leave behind the talk that we’re just a few radical environmentalists who are making
noise and show that our argument is real, that it’s from a very large group of people who are
willing to influence the type of development (we want in Uruguay) in each region.”
According to the El Pais report there are 35 separate pressure groups in Uruguay that campaign
against “megamineria”, a term typical in Argentina that implies large-scale open pit mining.
These groups say that they are disappointed with the policy line being taken by the government
of President José Mujica, who they say supports mining, manages to deflect any criticism by
1

simply ignoring the issue; “The government is blindly supporting megamining”, they say and
also note that there have been four or five occasions that Mujica has spoken negatively about
environmentalists.
Nicaragua: No legal problems but potentially higher costs for B2Gold (BTO.to) after
last week’s accident
After the tragic accident last week that saw a pregnant woman swallowed up by a land slippage
near the B2Gold (BTO.to) El Limón mine in Nicaragua (and reported on the blog (16))
subsequent reports seem to have established in a preliminary manner (eg here (17) but lots of
other reports to choose from) that no blame should be attached to BTO, the event happened in
a zone where houses had been built on very old mine workings that date back 50 years and
that records of those tunnels had been lost in time, so nobody had a clue where those houses
were being built. This makes sense because BTO has always shown itself to be an exemplary
operator and has taken the Limón mine, often prone to strike actions in previous years, and
turned it into a profitable and growing operation. We also applaud the way in which BTO helped
in the rescue operation.
However, the episode may turn out to be financially costly, as the government (and locals,
understandably) now want the houses left around the sinkhole death zone to be abandoned
and new housing set up. BTO is being asked to foot the bill for this and as its own employees
are those in the affected zone (the husband of the dead woman works at the mine), it’s likely to
happen that way. The immediate zone precisely around the sunken house has just six houses
and that’s not such a big deal, but the zone that the very worried locals and government want
(18) moved has between 350 and 400 houses as well as a school that caters for 250 children, a
bigger deal for the company, so we should watch for extra expense provisions in this quarter or
in 2013 projections.
Peru: Puno region may become more militant against mining
Something worth keeping an eye on. A meeting (19) is scheduled to happen between rural
community organizations in the Puno region on November 22nd and 23rd in the town of Ilave,
Puno. The agenda is mining concessions in the Puno region, their application and mining
companies’ respect for the law (including national, regional, local and consensual agreements
with communities). The meeting is for all community organizations in the Puno region, including
the Quechua speaking North and the Aymara speaking South and judiciary figures at a local and
national level (eg the president of the Supreme Court) have been cordially invited to attend.
In other words this is a formal meeting that’s looking to establish protocol and attitude towards
mining activity in the Puno region for all rural communities. The interest here is that up to now
the militant anti-mining attitude has been seen in the Aymara South of the region, while the
Quechua speaking North of the region has been largely accommodating towards mining activity,
Also, up to now the thought of the anti-mine feeling in the South (that put paid to the Bear
Creek Santa Ana project, for example) contaminating the North’s viewpoint has been difficult to
swallow, because Aymara leaders have not one shred of influence or authority over Quechua
communities. However, if these two separate peoples are now getting together on a round-
table basis to decide on a common front and attitude towards mining, the Northern position
may (repeat may, underscore and bold type may) change for the worse. For example, one
quote on the upcoming meeting gathered from a member of the organizing committee by local
media channel Pachamama Radio was (20) (translated): “Mining companies enter our territory
without any prior consultation, and the worst is that we are not informed about the
environmental impact they’ll generate and the equipment they’ll use.”
Meanwhile, in an apparent separate story this week has seen locals protesting at the Minsur tin
mine in the Quechua northern region of Puno, with locals complaining about company practices
and resulting pollution. There have been some reports (21) that Cajamarca regional governor
Gregorio Santos was planning to arrive at the protest and lend his support. Finally, to wrap up
this note I’d just like to say that if you want to annoy me just start misquoting this section and
saying how we now all know without a shadow of a doubt that Puno will become the next
1

mining company wasteland in the next 48 hours. This is a story that needs to be watched, but
on the other hand there’s no immediate alarm bells to ring either. We watch.
Market Watching
Mexico Senate to investigate MAG Silver’s (MAG.to) (MVG) activities in Chihuahua
Again, one of those segments that could sit in either ‘Regional Politics’ or ‘Market Watching’, but
on consideration I think the potential effect on a single company is the takeaway so it’s going
here.
Mexican senator Javier Corral of the outgoing PAN government party announced Saturday that
(8) a senate commission would be set up to investigate accusations of violence, environmental
irregularities and corruption by mining companies in the Chihuahua region. The investigation is
at the behest of the “Barzonistas” farmers group that was led by Ismael Solorio until he was
murdered recently (see IKN182 for previous coverage) which is the catalyst for the senate
committee. Said Corral at a press conference this weekend (22):
“The investigations will also shed light on the growing concerns of land owners and the
accusations of “barzonsistas” that the Canadian mining company MAG Silver and its
subsidiary Cascabel in Chihuahua are behind acts of violence that cost the life of the
barzonista leader Ismael Solorio and his wife Martha Solis”.
Corral led a six-senator cross party initiative to set up this committee that petitioned the leader
of the house Wednesday (23) and then received approval. The mention of this protocol and
officialdom on our humble pages is to make clear that this issue is unlikely to go away quietly
for MAG and may eventually affect its other operations. It’s also one of those situations where if
it’s found to be at fault, may hinder the long-long-long (but never forthcoming) supposed
buyout or move to production on its main Juanicipio project (44% MAG, 56% Fresnillo). Of
course there’s a long way to go in this investigation and anything might happen, but it’s
definitely a story you’ll have to keep an eye on if you’re exposed to MAG stock in any way. The
potential for a left-field event here (I think the trendy call them Black Swans these days) is
growing.
Hochschild buys Andina (ADM.v), Exeter Resources (XRC.to) (XRA) gets a pop
Last week we had Peru’s CMH buying 35% of Batero. This week (24) we have Peru’s Hochschild
(HOC.L) making an all-cash 80c friendly offer for Andina Minerals (ADM.v), the underperforming
junior in the Maricunga region of Chile that’s another I’ve never, but never liked. However,
considering the buyer and considering the $100m approx ticket price on this, there is at least
logic to observe. ADM has forever been o my “avoid” list which over the long term has been the
right call, but it’s also true to say that a speculative purchase over the summer would now
mean you have a double on your hands, so even though my fundies analysis on ADM held
water (especially when it traded over $1.50 and $2 and was a market darling) I’m not going to
preen and strut and tell you how freakin’ wonderful I am, because if I were I’d be holding a
winning trade and a three month double today, not just a sideline observer’s position.
Anyway, to business and here’s what HOC, via this interview (25) in Peru’s Gestion newpaper
with HOC CEO Ignacio Bustamente, has to say about its vision for the deal (translated):
“This is a deal that we’ve spent a long time analyzing. Purchases are one of the pillars
of our growth, along with current operations and explorations to find our own mines.
Due to this, the offer that we have launched today (Thursday) has been agreed upon
by our board to buy 100% of the shares of Andina minerals, a Canadian junior mining
company, for the sum of U$100m (CAD$103m), for the El Dorado (Volcán) open pit
gold deposit located in Maricunga Chile, one of the most prolific gold regions in the
world.”
The Q&A continues with normal-type stuff and isn’t particularly enlightening, but the fact that
HOC is looking at M&A for at least one part of its future growth is the signal I wanted to record
here. In USD terms HOC is a U$2.6Bn market cap these days and at its last financial quarterly
1

held around U$870 in Cash&Eq, so the $100m it intends to shell out for control of ADM is not
much more than pocket change. The development capex might be another thing however, what
with the heavy costs increases we’ve seen in the industry in general and the Maricunga in
particular, not to mention the potential problems of water, power and community approvals
(see above). Overall, what we have here is a bigger company taking advantage of the beaten
down nature of the current market and making a cash bid for something it likes, probably with
longer-term timelines in mind for its eventual production.
One knock-on from the ADM deal is that Exeter Resources (XRA.to) 8XRA) got a big boost,
what with its Caspiche project being in the same area, its stock beaten down in the same way
as ADM’s in recent times and its obvious desire to get M&A as its exit strategy. Here’s the ten
day chart for XRC.to and just for fun, below we have the 12 month chart of XRC.to and ADM.v
Andina is “HOC sized” and although I personally don’t rate the project and think the company
may regret its purchase, I do recognize that it’s cheap ounces at the buyout price (and hey, it
wouldn’t be the first time I call one badly). The capex ticket in the 2011 pre-feas is $547m and
that will almost certainly be lower than the final price to get to production day one, but if it
doesn’t blow out entirely HOC will probably be able to build its mine (water, power, locals etc
permitting of course).
But Exeter Resource at Caspiche is a different animal. Yes there is the new “stepping stone”
type oxide stand-alone project there which is designed at a low (ish) $335m capex to produce
210,000 oz gold per year, but it’s only a 5 year mine life and the real banana there is the 20+
years of sulphide production that comes with a $4.8Bn capex bill (which would also likely
expand). This is exactly the same sort of project that the world is eschewing (see Donlin,
Livengood etc), right up to and including Barrick’s majority owned Cerro Casale project that’s in
the very same neck of the woods. For a cash rich medium sized South American miner with an
eye for a bargain and its eyes on growth, I can just about palate HOC buying ADM and who
knows, they may just make it into a success. But drawing a line from that deal and buying XRC
is not my idea of a smart trade. At all.
Gold Resource Corp (GORO) update
Between September and October this year your author analyzed Gold Resource Corp (GORO) in
detail twice, opened a short position on the stock with a near-term perspective, got the news
regarding production shortfall we’d forecast and then closed the position for a quick and
pleasant 19% win, one of a few successful trades that have offset the majority of losers in this
utterly forgettable year for juniors. However, this short’n’sweet update isn’t to gloat at the
wonderful past but look at developments since we last mentioned the stock a couple of weeks
ago, then make a call on what might happen to GORO in the next couple of months. There are
four main developments:
1) GORO tried to stay above $17 after we’d sold but has failed, so in rough terms I can
confirm that I left about a buck on the table due to covering the short in the mid-$17s
1

instead of the $16. As previously alluded, this horrific development is bound to weigh
heavily on my professional and personal life, not.
2) GORO declared its 6c monthly dividend at the end of October, as we’d forecast it would
in the analysis of IKN181 dated October 21st. This helped GORO stock briefly regain $17
until the last of our developments kicked in...
3) The class action suits that we noted in IKN182 on closing our coverage are now
multiplying against GORO. I don’t know if the page catches them all (and frankly I’m
not going to bother checking further) but the Yahoo Finance GORO new page has 11
firms now with class action files open against the company.
4) GORO reached agreement on those “missing” 2,300 oz Au that we mentioned in
IKN181’s NOBS analysis, has taken a $3.7m charge related and re-stated its 1q12 and
2q12 filings as a result. The size of the re-state isn’t that big a deal under normal
circumstances and the grand scheme of things but 1) when it’s from a company that
needs all the free cash flow it can muster to cover the all-important monthly dividend,
it’s a pain for them and 2) it makes the company look amateurish (which was my
personal and wholly subjective opinion already, but it surely adds objective fuel to the
fire).
So with all these four in position, we come to the reason behind today’s brief update on GORO,
prompted by a mail received from reader and regular mailpal MP who wrote:
“Surely they will have to cut the dividend to pay the legal fees to defend against the
piling class action lawsuits...”
The answer is that I don’t think so in 2012, but that’s probably the case in 2013. The reasons
are that 1) I still think, even with that $3.7m restatement of earning in the first half of 2012,
that GORO will have enough “cash flow from mine site operations” (if you recall that weird,
semi-BS metric it uses and the way it dedicates 1/3 of it to dividends) to cover its 6c/month
dividends in what’s left of 2012 (basically two months). Then 2) we note that GORO calculates
its dividends on a yearly basis using projected cash flows, not on any given quarter’s results.
This means that the company is more likely to adjust downwards (or even suspend fully)
dividends when it comes to calculations for 2013 and 3) we note that the class action suits
being gathered against GORO right now are set to close their lead plaintiffs in late December
(I’ve seen December 24th on several of the releases). This suggests that even though GORO
may be preparing its defence already, the big bills and legal wranglings that will cost them (i.e.
their shareholders) plenty in billed hours won’t start until 2013. Again, this leaves the cash
generated in 2012 in the hands of the dividend payees.
The bottom line is that I’m fairly confident about calling GORO to pay its final two months of 6c
dividends in 2012. However, all eyes should be on the 4q12 production report that should
appear some time mid-January. If that’s soft, then the writing will be on the wall for the
January 2013 dividend at the end of that month and subsequent months as well. The bottom
line is that although the legal sharks are now circling in a pack around GORO, there’s every
chance that it will retain status quo until the end of this year and as such keep its current share
price intact. However, 2013 looks less certain and it will all depend on whether (and for the first
time ever) GORO management can deliver on the higher production rates it has guided for in
the quarters coming. Don’t hold your breath on that, but for the time being I’m not uncovering
my short shares and remain neutral on GORO.
Liberty Silver (LSL.to) update
"If it looks like a duck, and quacks like a duck, we have at least to consider the possibility
that we have a small aquatic bird of the family anatidae on our hands."
Douglas Adams
We note the extreme moves made by Liberty Silver (LSL.to), all on mostly low volumes, since
the stock’s LBSV.ob ticker was moved to the U.S. grey sheets (where OTCs go to die) and the
TSX LSL.to ticker was subsequently freed up for business again:
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When the stock re-opened in Canada and shot higher I was asked by a couple of you whether I
was so sure this company is a scam. I answered that yes, I’m 100% sure. The way things have
gone since its halt was lifted have done nothing to dissuade me from that point of view and I’d
add that certain well-placed market professionals, who will not be named but are unconnected
to my original reports and the third party investigations we’ve noted on these pages and on the
blog, have made it abundantly clear that our call on this stock is absolutely correct.
How the details of this story plays out and on what timeline are unknown to me, but I do know
that eventually it will end badly for anyone long this stock. I just hope Genovese hasn’t sold too
many of his already and gets what’s coming to him via the back pocket.
U.S. Silver (USA.to) quick thought
A short note here, nothing more than an observation. I watched with interest as several
brokerages promoted the site visit organized by “New U.S. Silver” (i.e. the post RX Gold merger
entity that’s headed up by ex-ABX Darren Blasutti, sponsored by Sprott, Canada All-Star push
etc) The visit was a big beano type thing and had plenty of the suited wonders we know as
brokerage analysts on board and happened on October 23rd and 24th, coinciding with the
nearby Spokane Silver Summit conference just a day or two later.
The effusive coverage came from plenty of corners pre-tour and revolved around how us retail
grunts shouldn’t miss the re-rating” of this
growing company. Here’s the one month
comparative chart of USA.to and the silver
ETF (SLV) and folks, if the visit had
impressed those gathered the stock price
compared to silver wouldn’t look like this,
even taking away the particular weakness
of the last three days in USA.to. The fact
remains that USA.to is a high cash cost
operator that’s highly leveraged to the
price of silver and nothing has changed
on that score, which means that if silver
does well then USA.to will do well. If not,
it won’t. I’ll stick to United Silver (USC.to)
for my area play here, I like the odds a a
lot more than trusting a broker hype campaign or the vagaries of the underlying metal price.
Meanwhile, we note that this Tuesday (November 13th) sees USA.to’s 3q12 earnings and
ConfCall, so perhaps the late week drop are bad auguries for the numbers to come. We shall
see.
Jaguar Mining (JAG.to) (JAG) earnings heads up
As noted in IKN180 and hinted on in editions previous to that, Jaguar Mining (JAG.to) (JAG) is a
stock that I’ve been looking at very closely in the last few weeks, as although it’s been an
2

unmitigated disaster company so far (a view I held for years on the stock and as such I’ve
never been burned by its bad execution and overexaggerated claims on its wonderful future)
it’s one that may yet turn into a successful long trade in the near future on its potential as a
turnaround story.
The reason to mention JAG today is that tomorrow post close (26) the company is due to
deliver its 3q12 financial results, a set of numbers that may turn out to be key in deciding
whether JAG is a viable trade option. We do note that since naming the stock as a potential
back in IKN180 it’s down around 10% and we also note that the NR out October 29th of a
bridging loan (27) that provides the company with short-term liquidity in return for a high
overall interest servicing rate (if used as expected, it will cost JAG $5m in the first 12 months
for the $30m facility, hardly a cheap loan) is hardly the type of news you’d want from a
company we want to see cash flow positive as soon as possible. However, I still have a good
idea of the set of parameters I want to see from tomorrow Monday’s numbers and if they hit or
get close you can expect a Flash update in your mailbox before the Tuesday bell (or in other
words, no news isn’t good news yet again). JAG is a numbercrunch investment possibility, it’s
not a “story stock” or a hunch. If it can stop bringing the almost constant disappointments to
market every quarter and its new management start delivering on more modest targets, there’s
a potential for very decent upside. If not, there isn’t. As I said to one mailer a couple of weeks
ago, JAG may be very expensive at $1.00 or very cheap at $1.30 and right now I simply don’t
know. Once we have fresh numbers, I hope to be able to get closer to an answer to that
mystery.
Conclusion
IKN184 is done, we close with bullet points:
• I’m buying Aurcana (AUN.v) for the near-term trade it looks like offering as the
company transforms from the cash-fracturing junior the market has watched for the
last two or three years to a suddenly bigger and bottom-line profitable silver play of
note. It’s not cheap now but it’s about to get more expensive (or at least I think so).
• Meanwhile, I’m looking forward to the chance of pulling the Jaguar Mining (JAG)
monkey off my back and (hopefully) being able to make a buy/avoid call on the
company. In AUN’s caase, the story trumps the numbers but this time at JAG it’s all
about the spreadsheet. It would be nice to get in early on a turnaround story, but the
big caveat is that is has to be able to turn around.
• Meanwhile our move to covering more producers and less explorers takes another step
with the sale next week of Bear Creek Mining (BCM.v).
• As for shorty stories, as I reckon GORO will continue paying its 6c divi to the end of the
year I’d rather look somewhere else for the next one (though it’s worth noting that
both our short trades in the last few weeks have delivered a profit....hmmm, maybe the
Market Gods are trying to tell me something...). There’s that inkling for both AR.to and
MAG.to perhaps, but both of those would be potential shorts on political risk
developments rather than internal operations, so a close eye on the newswires is the
order of the day. And for sure Liberty Silver (LSL.to) is going down, but it’s impossible
to get a lend in that one.
• Today is Remembrance Day, a day in which your number nerd author remembers that
some debts are truly incalculable. How petty our troubles of 2012 really are when we
think of who have come before us.
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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
Appendix 1: Flash update of Friday November 9th
Good Friday morning, just gone 8am local time and an hour and a half before the open. A flash update with a mixed bag
of loose-ish ends with a comment or two on stocks we follow.
Yellowhead Mining (YMI.to): I haven't sold my shares yet (as noted in IKN183) buy hopefully will find the 60c+ price
required today, as yesterday evening Taseko Mines (TKO.v) (TGB) revealed...
http://www.newswire.ca/en/story/1067781/taseko-announces-purchase-of-shares-in-yellowhead-mining
... that it was the recent purchaser of the $5m shares at 65c. This puts TKO's position up to 16.8% of shares out and
may provide enough market interest to fill the rest of the placement and also push the share higher on volume. We shall
see. I'm still a seller, but no need to take a sub 60c price here and if need be, I'll wait until next week.
Primero Mining (P.to) (PPP): Covering short. Primero came out with a missed 3q12 yesterday, the stock sold off as
expected, but then the market decided it was a buying opportunity and moved the price back over $7. On reading
through the MD&A the company spin is all about minor operaitonal troubles that caused the miss and how 4q12 will be a
lot better (which incidentally is a recurring theme from several companies this 3q season, something I'll comment on in
slightly more detail Sunday). The fact is that I still disagree with the market and still consider P.to as overpriced,
however as this short position was conceived as a very-near-term trade and its time is now up (and it's not that big in
monetary terms either) I'm not going to argue the toss with the market any longer and will cover it today (as mentioned
likely in IKN183 last week). It shows a minor (pre-commish) win, no harm done either way. The end.
Fortuna Silver (FVI.to) (FSM): There was no flash update on FVI yesterday, which meant that I'm not going to take a
position (long or short) on FVI after reading its 3q12 numbers, but a few mails came in from you guys so a quick word
here. Basically the revenues numbers was good and offset enough of the costs rise to make give the company a decent
quarter, with FVI revenues around $5m higher than my own estimate, which is good. Silver sales over its production
number accounted for about $1m of the $5m, but the rest seems to have come from good timing on market price sales.
Costs were higher again, but not excessively and there was enough pre-guidance for it not to have shocked anyone
much. I remain neutral on FVI at the moment.
Minera IRL (IRL.to): IRL saw weakness yesterday and its current low 80s price looks a good entry/addition point to my
eyes. The reasons behind this weakness on low volume (in both Canada and London) is unknown, but may have
something to do with your author's best guess that IRL will raise some working capital soon. Unlike things such as
Primero, IRL is considered a long-term prize and one that's worth accumulating when a nice price shows up.
Bear Creek (BCM.v): Really interesting action on BCM yesterday, as mentioned on the blog. One to keep an eye on
today. Holding.
A new buy. Forgive me for keeping it under wraps until Sunday, but as I'm on this Flash update for the above
comments and have made the decision already a quick word of warning that we'll have a new buy reco in IKN184 this
weekend. A producing miner.
Footnotes, Appendices, references, disclaimer
(1) http://www.aurcana.com/s/Presentations.asp
(2)http://www.aurcana.com/s/NewsReleases.asp?ReportID=432552
(3) http://www.aurcana.com/s/NewsReleases.asp?ReportID=493139
(4) http://www.scorpiomining.com/s/NewsReleases.asp?ReportID=556684
(5) http://www.gowebcasting.com/4005
(6) http://www.reuters.com/article/2012/11/09/markets-metals-idUSL5E8M93S620121109
(7)
http://www.mineweb.com/mineweb/view/mineweb/en/page504?oid=161484&sn=Detail&utm_source=twitterfeed&utm_m
edium=twitter
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(8) http://www.aqmcopper.com/s/NewsReleases.asp?ReportID=531438&_Type=Press-Releases&_Title=AQM-Copper-
Shifts-Focus-on-Zafranal-From-Exploration-to-Development
(9) http://incakolanews.blogspot.com/2012/11/mexico-denies-environmental-permit-to.html
(10) http://uniradioinforma.com/noticias/bajacalifornia/articulo157622.html
(11) http://www.aminera.com/mas-noticias-nacionales/44560-barrick-suspende-cerro-casale-y-proyectos-frenados-en-
atacama-ya-suman-us11-mil-mills.html
(12) http://finance.yahoo.com/news/barrick-announces-third-quarter-2012-104556600.html
(13) http://incakolanews.blogspot.com/2012/11/barricks-abx-pascua-lama-project.html
(14) http://incakolanews.blogspot.com/2012/08/eike-batista-and-chile-are-made-for.html
(15) http://www.elpais.com.uy/121106/pnacio-674108/nacional/crece-el-movimiento-contra-la-mineria-y-critica-a-mujica/
(16) http://incakolanews.blogspot.com/2012/11/b2gold-el-limon-mine-nicaragua-today.html
(17) http://www.prensa-latina.cu/index.php?option=com_content&task=view&idioma=1&id=687911&Itemid=1
(18) http://pacoherrera62.blogspot.com/2012/11/nicaragua-alerta-roja-en-mina-santa.html
(19) http://www.larepublica.pe/08-11-2012/rondas-fijaran-posicion-sobre-mineria-en-puno
(20) http://www.pachamamaradio.org/08-11-2012/puno-encuentro-de-rondas-campesinas-abordara-tema-de-las-
concesiones-mineras.html
(21) http://www.expreso.com.pe/noticia/2012/11/09/alarma-en-puno-por-llegada-de-gregorio-santos-y-wilfredo-saavedra
(22)
http://www.elnorte.com/libre/online07/preacceso/articulos/default.aspx?plazaconsulta=elnorte&url=http://www.elnorte.co
m/estados/articulo/716/1431225/&urlredirect=http://www.elnorte.com/estados/articulo/716/1431225/
(23) http://www.radioformula.com.mx/notas.asp?Idn=282788
(24)
http://markets.cbsnews.com/cbsnews/news/read/22709256/andina_minerals_inc._agrees_to_friendly_business_combin
ation_with_hochschild_mining_plc
(25) http://gestion.pe/empresas/grupo-hochschild-compras-son-uno-pilares-nuestro-crecimiento-2051396
(26) http://finance.yahoo.com/news/jaguar-mining-sets-date-third-204400623.html
(27) http://finance.yahoo.com/news/jaguar-mining-inc-announces-arrangement-110000109.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
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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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