IKN #190Premium

The IKN Weekly
Week 190, December 23rd 2012
Contents
This Week: The move to “mostly producers” is completed next week.
Fundamental Analysis: B2Gold (BTO.to).
Stocks to Follow: Overview, Vena Resources (VEM.to), Galway Resources (GWY.v), Aurcana
(AUN.v), OceanaGold (OGC.to)(OGC.ax), Minera IRL (IRL.to)(MIRL.L), Lachlan Star (LSA.to)
(LSA.ax), Plata Latina (PLA.v), United Silver Corp (USC.to).
Copper Basket: Overview, The 2013 Copper Basket list of names, Western Copper & Gold
(WRN.to), Candente Copper (DNT.to), Copper Fox (CUU.v), AQM Copper (AQM.v).
Regional Politics: Regional Risk update thirteen.
Market Watching: Friday’s across the board liquidation, Esperanza Resources (EPZ.v) redux.
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 move to “mostly producers” is completed next week
With the closing of the successful trade in Galway Resources (GWY.v) and the decision to sell
and take the substantial loss in Vena Resources (VEM.to) this week it means by this time next
week, December 30th 2012, The IKN Weekly will have a total of 12 open positions on offer, with
seven of those stocks classed as “producers” and five as “explorers”.
In this way we call “mission accomplished” on the process that started back in IKN171 when we
announced that by the end of 2012 we’d be covering more producers than explorers. In the 3½
months since that edition we have indeed gradually, without big sudden rushes of blood to the
head, moved The IKN Weekly away from tinycap explorers and into producers and most of
them have been (are) substantially larger than the microdot market caps that were being
covered at the time. We’ve also traded in and out of a couple of producer names along the way
as well as opening up our service to the potential of recommending short-side trades (which
has seen modest success).
As of next week we have three spaces to fill on our list, too. Expect them to be filled as we hunt
for bargains in the post tax-loss apocalypse (are we allowed to use that word yet?) of early
2013.
1

Fundamental Analysis of Mining Stocks
B2Gold (BTO.to)
Today we wrap up coverage of B2Gold (BTO.to) that was deferred from last week to make way
for the M&A activity fundies there presented. So this note follows on from the IKN188 NOBS
report and does what we promised do to way back then:
“More detail on the parts, particularly the main Nicaragua and Masbate elements, next week.”
So what we do today is take a closer look at the three main producing parts of today’s BTO, the
Nicaragua Libertad and Limón assets and the Masbate asset in The Philippines, break down
their value and add them to the other parts of BTO that we’re currently calculating in an
admitting rougher, broadstroke manner. Before we continue, let’s run the adjusted top-box
from the IKN188 note again to see how BTO’s structure is estimated to stand today:
Shares out: 645.2m
Options & Warrants: 23.1m
Fully diluted shares: 668.3m
Current share price: $3.33
Market Cap: $2.15Bn
Approx cash per S/O: $0.29
All prices are in Canadian dollars unless stated. Forex U$1=CAD$1
And NB again, we remind readers that our report assumes we are looking at “New BTO”, the
structure post-merger with CGA Mining. As that deal was voted up by BTO shareholders last
week, we see no reason why that won’t be the reality very soon. So to work and each of the
three producing elements is getting boiled down to its essence, via two tables and a valuation
box to get to the nitty-gritty as quickly and directly as possible.
Limón mine valuation
The Limón mine in Nicaragua first, the smaller of the two BTO operations there. In this analysis
we break down 2011 corporate operations results as closely as possible for 2011 (some line
items are reported separately for Limón and Libertad, others are consolidated-only and when
they are, a best guess after a head-scratching session is used). Also, for the case of Limón
we’re not using the standard $1,700/oz gold price as used in the rest of the analysis but a
slightly lower $1.650/oz, as Limón tends to receive less for its gold (though it has to be
admitted that $1,700/oz may be stretching luck after the fun of last week, but for the time
being we leave the standard price in place because and fwiw it really doesn’t affect the forecast
by much, roughly 16c for Libertad and Masbate combined if $1650/oz is used all through). We
of course use realized prices of gold for FY11 and FY12 (to 3q12).
So first here’s how production and baseline revenues for the operation at Limón have and are
forecast to look from now until 2014:
Limón Production and Estimates, 2011 to 2014
Year 2011 2012e 2013e 2014e
process min. (t) 380777 373197 385000 385000
Au sold. 000s ozt 45.2 45.0 48.0 50.0
Revenues (U$m) 70.6 70.7 79.2 82.5
tot cash cost U$/ozt 769 775 800 800
MOI (U$m) 33.7 33.7 38.4 40.0
MOI/share (645.2m S/O) 0.05 0.05 0.06 0.06
source: BTO data, IKN ests
2

BTO has been investing in exploration at Limón on order to develop new resource ounces and
extend mine life. We expect the company to be successful on that score (Limón has a long
tradition of being able to extend its apparently short mine life seemingly indefinitely), but we’re
not plugging in any big production increases in FY13 or FY14, merely a modest improvement
based on tweaking throughput levels slightly higher and getting maximum recovery levels.
However, though it may be small Limón has turned into a profitable little operation and we
expect a mine operating income (MOI) of $38.4m (which includes amorts/depreciation but is
ex-G&, tax etc), or 6c per share.
We move to our second table taken from the Limón-only spread, our income statement items:
Limón: Estimated income statement items
FY11 FY12e FY13e FY14e
Sales (U$m) 70.6 70.7 79.2 82.5
Total COGS 34.8 34.9 38.4 40.0
mine site expl 3.3 4.0 3.0 3.0
SGA (pro rata) 5.8 6.5 5.5 5.5
Royalty (3%) 2.1 2.1 2.4 2.5
Op income 27.9 27.2 32.9 34.5
Interest 0.0 0.0 0.0 0.0
Tax (30%) 8.4 8.1 9.9 10.4
Net income 19.5 19.0 23.0 24.2
Shares out 645 645 645 645
EPS 0.030 0.029 0.036 0.037
Capex 21 22 15 15
FCF 0.062 0.064 0.059 0.061
Sources: BTO data, IKN ests
As you can see, BTO has been ploughing sustaining capex into Limón in order to improve the
mine. We expect that to continue into the next years, which means we’re less worried about
the bottom like earnings and more interested in what the operation achieves via its free cash
flow (FCF for the others below, too). We expect Limón to give just under 6c/share on this
metric in 2013 and based on our preferred 8X multiple to FCF
Target price & valuation data for Limon only based on
expected FY2013 results
$0.47
12-month target based on (8x FCF)
We therefore value Limon at 47c per share of New BTO.
Libertad mine valuation
The second producing asset we examine is the larger of the two Nica ops, Libertad (fka Orosi).
In this model we use realized prices of gold for FY11 and FY12, then $1,700/oz for the years to
come and we’re also combining Libertad with the separate and new Jabali operation, which is a
separate mining operation but will process its ore via the same mill in FY13 and beyond.
Libertad/Jabali Production and Estimates, 2011 to 2014
Year 2011 2012e 2013e 2014e
process min. (mt) 1.99 2.10 2.15 2.15
Au sold. 000s ozt 98.8 110.0 135.0 150.0
Revenues (U$m) 154.7 181.5 229.5 255.0
cash cost U$/ozt 541 550 530 550
MOI (U$m) 53.1 61.3 91.7 101.4
MOI/share (645.2m S/O) 0.15 0.18 0.23 0.26
source: BTO data, IKN ests
3

Moving to the selected and estimated income statement items:
Libertad: Estimated income statement items
FY11 FY12e FY13e FY14e
Sales (U$m) 154.7 181.5 229.5 255.0
Total COGS 53.4 60.5 71.6 82.5
mine site expl 10.7 18.0 10.0 10.0
G&A (pro rata) 20.7 28.0 20.0 20.0
Royalty (3%) 4.6 5.4 6.9 7.7
Op income 75.9 87.6 131.1 144.9
Interest 0.0 0.0 0.0 0.0
Tax (30%) 22.8 26.3 39.3 43.5
Net income 53.1 61.3 91.7 101.4
Shares out 645 645 645 645
EPS 0.082 0.095 0.142 0.157
Capex 28 15 15 15
FCF 0.126 0.118 0.165 0.180
Sources: BTO date, IKN ests
Again, capex has been spent here. We expect that to drop now that Jabali is coming online and
providing the high-grade feed, plus most of the pre-strip work that BTO was doing here to
improve cash cost parameters is now complete. We err on the side of caution with our capex
figure but point out at the same time that what we really care for is the FCF number, which is
unaffected. With the 16.5c FCF/share figure estimated for La Libertad in FY13, here’s our
valuation box:
Target price & valuation data for Libertad only based on
expected FY2013 results
$1.32
12-month target based on 8x FCF
Masbate Mine valuation
The third of the three producing assets at ‘New BTO’ is Masbate, the mine until today owned by
CGA Mining. It takes a little bit of jiggery pokery to get the 2011 and 2012 to date production,
revenues cash costs etc lined up because until today, Masbate has reported using the Australian
financial year that runs until end June, rather than the financial year to December at BTO. This
means things such as cash cost averages may not line up exactly with published annual data at
CGA, but by breaking down the results into the respective quarters and then reconstructing
using the calendar year, it’s as close as dammit to the same reported results over time and
more than adequate for our forecasting purposes. Same gold price rules as in La Libertad apply
here, but we have assumed one key factor that hasn’t been decided upon as yet by ‘New BTO’:
we’re assuming that the company decides to pay off its 2013 hedge on around ¼ of gold
production. This would cost perhaps $35m to directly annul, but BTO may decide to collar the
hedge at a cheaper derivative cost.
Masbate Production and Estimates, 2011 to 2014
Year 2011 2012e 2013e 2014e
Au sold. 000s ozt 136.6 179.8 198.0 208.0
Revenues (U$m) 162.1 251.7 336.6 353.6
tot cash cost U$/ozt 899 794 700 720
MOI (U$m) 31.1 96.4 181.2 186.2
MOI/share (645.2m S/O) 0.05 0.15 0.28 0.29
source: BTO data, IKN ests
Here are our income statement items for this subsidiary of New BTO:
4

Masbate: Estimated income statement items
FY11 FY12e FY13e FY14e
Sales (U$m) 162.1 251.7 336.6 353.6
Total COGS 122.8 142.8 138.6 149.8
mine site expl 10.0 10.0 10.0 10.0
SGA (pro rata) 7.0 7.0 7.0 7.0
Royalty (5%) 8.1 12.6 16.8 17.7
Op income 14.1 79.4 164.2 169.2
Interest 0.0 0.0 0.0 0.0
Tax (30%) 4.2 23.8 49.3 50.7
Net income 9.9 55.6 114.9 118.4
Shares out 645 645 645 645
EPS 0.015 0.086 0.178 0.184
Capex 29 30 10 10
FCF 0.060 0.133 0.194 0.199
Sources: BTO data, IKN ests
I’ll admit there’s a bit of guesswork going on here for the pro-rata portion of company G&A, for
example. We’ll see how the consolidated company performs on this score and if it can book
much in the way of synergy economies, but we shouldn’t be too far out either side. Here’s our
valuation box for Masbate piece of the BTO pie:
Target price & valuation data for Masbate only based on
expected FY2013 results
$1.55
12-month target based on (8x FCF)
As you’d expect, the biggest single producing part of ‘New BTO’ gets the biggest asset/share
valuation, but it’s not as high as it might be due to the higher cash costs run at the mine
(compared to Libertad). We’re expecting Masbate to become more efficient on this score as the
company is now approaching 50k oz/qtr and will benefit from the resulting economies of scale.
It’s also likely that the new BTO management in charge will be able to do the same type of job
as it’s done in the Nica ops and keep cash costs under control through other methods (the team
has a proven track record of that). The two parameters to watch in FY12 at Masbate will be
production and costs, because the feeling from the incoming team is that the mine has yet to
excel. For the moment we’re not aiming too high on these parameters but not assuming the
worst, either. As 2013 develops we’re bound to learn more.
Putting it all together
To sum up, we can now put our valuations for the three producing assets together with the
asset values already assigned to the BTO exploration and liquid assets:
• Limón: 47c per share based on 2013 operations
• Libertad: $1.32 per share based on 2013 operations
• Masbate: $1.55/share based on 2013 operations
• Otjikoto: 1.4m oz gold (all categories) at $200/oz in-situ = $280m, or 44c per share.
• Gramalote: 1.9m oz gold (M+I+I total) at $100/oz in-situ = 190m, or 29.5c per share.
• Other projects*: $80m NAV, or 12c per share
• Net cash at end 2012 (BTO and CGA combined, incl debt): $190m, or 29.5c per share.
5

Add the pieces together and the BTO sum-of-parts value comes to $4.49/share, which is
rounded up to $4.50 as our price target. This is a little lower than the $4.75 of two weeks ago
and that’s for three main reasons:
• Between then and now I’ve been fiddling with the model, as these things are always
and ongoing exercise. By noting a error here or a change in circumstance there (e.g. I
was using a 3% royalty for Masbate, when that should have been 5% assumption for
The Philippines).
• I’ve adjusted the gold price used downwards a little to account for the negative market
we’ve seen in the last two weeks.
• I like them conservative and at this point, a 36% upside to Friday’s close is more than
enough to get me on board a quality gold name with growth and smart management
and cash and free cash flow and the whole nine yards. Or put another way, it’d be easy
enough to tweak the model to the upside here and there and get back to the $4.75 of
before (trust me it’s easy, if not ask any brokerage analyst ☺), but there’s really not
much point in such an exercise. By way of just one example of the thought process I
don’t see any real reason why I can’t use a 10X multiple for the producing assets,
especially the large reserves and long mine life scenario of Masbate, instead of the 8X
multiple used in the calculations.
We should also remember that we’re using a straight, plain 1.0X multiple to NAV here, rather
than assign a potential 1.3X or 1.5X that a producing, cash flow positive miner could reasonably
be afforded. All in the name of conservative, folks.
*Uruguay Cebollati, Nica exploration, The Philippines exploration, etc, see IKN188 for details
Conclusion
Our target has dropped a little in the two weeks since our report on BTO began, but there’s still
plenty to like about this company and it cannot be stressed enough that The IKN Weekly
attitude is to be conservative about valuations. We’re particularly interested to watch and see
how the Otjikoto Namibia project moves forward in the year ahead, as New BTO already has
the necessary funds to bring it to production and that alone is an obvious way to add extra
value to our model. Also, there have been rumours gong round the jungle drums that BTO is
close to a deal to sell its part of Gramalote to JV partner Anglo, which we’re not baking into our
model but if true, the ticket price of any deal will be an interesting metric.
Note that your author is already long BTO and the plan stands to add to the position if the stock
drops sharply to under $3.15.
6

Stocks to Follow
Somehow four of our open positions managed to move up during last week’s market sinkage
(LPK.to, LRA.v, PLA.v, FCV.v) but I’d quickly interject that it’s mostly cosmetic adjustments in
thinly traded or previously beaten-down stocks that managed to prop up those headline
numbers. There was also one unchanged (GWY.v), which leaves nine stocks as droppers
(RIO.to, VEM.to, IRL.to, OGC.to, LSA.to, USC.to, AUN.v, BTO.to, AQM.v) and it’s there where
the real damage was done to the larger weighted parts of the portfolio. The best percentage
moves came from Focus Ventures (FCV.v up 18.8%) and Plata Latina (PLA.v up 11.1%), while
the biggest losers were seen in Aurcana Corp (AUN.v down 23.1%), AQM Copper (AQM.v down
21.1%), United Silver Corp (USC.to down 15.0%), OceanaGold (OGC.to down 10.3%) and
B2Gold (BTO.to down 8.0%).
There are currently 14 open positions, one less than our self-imposed maximum. Five of those
stocks are green, nine are in the red. This time next week there will be 12 stocks left open.
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$4.88 139.2% $6.29 tgt
Recommends
Vena Resources VEM.to selling C$0.70 31-may-09 C$0.20 -71.4% closing failed trade
Lupaka Gold LPK.to hold C$1.12 23-oct-11 C$0.46 -58.9% holding
Lara Expl. LRA.v buy C$1.15 08-apr-12 C$1.20 4.3% solid biz model, LT hold
Plata Latina PLA.v hold C$0.79 10-apr-12 C$0.50 -36.7% considering sale
Minera IRL IRL.to hold C$0.73 22-jul-12 C$0.82 12.3% $1.56 tg, added, new avg
OceanaGold OGC.to buy C$3.03 16-sep-12 C$2.69 -11.2% $5.34 tgt growth prod
Lachlan Star LSA.to hold C$1.50 30-sep-12 C$1.16 -22.7% $2.23 1st tgt
United Silver USC.to Spec buy C$0.245 28-oct-12 C$0.17 -28.6% new position 60c tgt
Aurcana Corp AUN.v Spec buy C$1.07 11-nov-12 C$0.80 -25.2% $1.50 tgt near term play
Galway Res GWY.v selling C$2.19 24-nov-12 C$2.30 5.0% close good ST arb trade
B2Gold BTO.to buy C$3.45 28-nov-12 C$3.33 -3.5% $4.55 tgt
Smaller/Riskier
AQM Copper AQM.v hold C$0.31 16-oct-11 C$0.075 -75.8% holding thru for my sins
Focus Ventures FCV.v hold C$0.175 01-jul-12 C$0.19 8.6% 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
Bear Creek Min. BCM.v nov'12 C$3.38 07-nov-11 C$3.72 10.1% Took small profit
2009, 2010 and 2011 closed positions in appendices below
7

Now for some notes on a selection of the above stocks.
Vena Resources (VEM.to): Closing position.
I made the decision to call sell on VEM on Thursday evening. It’s now Sunday evening and this
is the last piece that needs writing before IKN190 is sent out. I’ve left this piece of writing until
last because in some ways it’s a difficult sell call to make, having followed the company for
years and got to know its officers and management and ground teams in Peru. But in the end
it’s a fairly simple call:
• The trade has failed, and it’s long past the time not to just say so and leave it twisting
in the wind, but the officially admit it by selling and moving on.
• The story in 2012 changed significantly when its production asset at Azulcocha had to
be sold. From that point it became another junior exploreco, with a book of decent
looking prospects but not much cash to move them forward.
• The choice of The IKN Weekly to move away from smaller cap explorers and towrds
larger cap producers means that VEM simply looks out of place these days.
• We do have other smallcap explorecos still on the list, to mention two there are FCV.v,
PLA.v which get named because they too are after PM targets these days. The
difference, and the reason why VEM leaves while the others stay (for the time being at
least) is another simple fact: I like their plans, projects and prospects more than VEM at
this point.
VEM has been unlucky in many ways and has suffered from ill fortune far more often than from
bad judgement: Its Macusani uranium project was good enough to be sponsored by industry
bigboy Cameco, but sine Fukushima the things has been valued at mere pennies. It decision to
concentrate on Azulcocha and get its zinc mine working was correct at the time, but then Zn
spot prices fell to the point where the project was commercially marginal at best with the
subsequent decision from JV partner Trafigura to play hardball on the money owed, seemingly
due to the Zn spot price dumpage (but you never know, perhaps that was a contingency plan
of theirs all along). A decent prospect hit drill dusters here, the truth machine didn’t give a
winning hole there. Et cetera. I’m not making excuses for my support all this time and I am
telling you how I see it, but in the end it hardly matters; a fail is a fail and my decision to invest
in VEM has been a failure.
Regarding that personal position, two things to say. Firstly I won’t be selling all of it in one go,
but at least some will go i the next few days in order tyo mark and exit price (and folks, when
you’re this far down on a trade it’s not going to be a big deal if the final out is -70% or -80%).
The second is that I won’t be selling at the first possible opportunity and will wait at least one
full trading day before starting to unload my shares. The end.
Galway Resources (GWY.v): Closing position. First the nuts and bolts of last week and on
Monday the vote to accept the AUX offer went through in overwhelming style, on Thursday
GWY completed its plan of arrangement with AUX in correct fashion (1) and on Friday the stock
was halted before the bell. In other words all went exactly according to plan and now only time
is between us and the final closed deal. Now for the trade decision: The way things are in
reality is different from the way we’re going to book this trade. In order to make a clean break
I’m going to book GWY.v as a 5.0% win and a $2.30 closing price by this time next week,
though in reality the shares will be sold to AUX for $2.05 and then the two sets of spinco shares
received. From that point, I plan to 1) sell the shares in Galway Metals (soon-to-be GWM.v) as
soon as they are freely listed for trading and then afterwards check the lie of the land on the
other inherited spinco name, Galway Gold (soon-to-be GLW.v), but probably sell those too (NB:
GWY reports that GWM is likely to list and trade on the Venture exchange sooner than GLW,
see that NR for more details). Of the two, Galway Gold, previously known as “the Vetas spinco”
appeals as a potential hold more than Galway Metals, previously known as “the Victorio spinco”
8

and here’s how they were described back in IKN181 when this trade was first opened (though
before it became an “official” stocks to follow in IKN186):
As for selling prices, fundies suggest that GWM.v will be worth at least 8c on cash treasury
alone, though I suspect that a lot of people will be taking the same route as your author and
dumping this paper for a small cash return as soon as possible. I’d consider a reasonable result
as a 10c sale, though it’s anyone’s guess (6c? 15c?) what will happen on the day.
However, GLW.v looks rather more valuable, with a good address (neighbour CBJ.v has a
market cap of ~$135m thanks to some very decent drill holes) and under the auspices of a
team that has produced a winning company in PMs in Colombia. If we assume all derivatives in
GWY.v were exercised, this vehicle will have around 160m S/O and 11c/share cash, as well as a
more interesting property portfolio. I’d start my guesstimates on where it will trade once the
dust settles (no need to bail immediately on this one, can wait to see what the market thinks)
at 30c (which implies a ~$50m market cap), but if more is offered by that nice Mr. Market I
wouldn’t be at all surprised.
To sum up, we’ll have closed this modest but successful arbitrage trade by this time next week
on our pages, one that’s given some easy interest payments to a position that was always
considered part of “cash” by your author in his portfolio, for a $2.30 price and a 5% gain.
However, we’re looking for something around $2.45 once all the deals are done ($2.05 cash +
10c from GWM.v + 30c from GLW.v=, which would be an approx 11.9% win (pre-commish). I’ll
take that.
Aurcana Corp. (AUN.v): Speculative buy at 80c to 85c (if offered): Friday saw many
stocks beaten down heavily at the bell by what looks like institution book cleaning, but none
were more affected by the big dump than AUN.v which saw 20% taken off its PPS. The
interesting thing is that the dumpage looks like part of an established pattern in the stock, as
this chart indicates.
9

As the fundamentals of AUN really appeal and the Shafter commercial production
announcement came in good time the week previously, I see no reason why we cannot take
advantage of this downspike to trade a portion of AUN.v around the core holding that will be
kept fully intact. However, it all depends on getting in at the right price, so here’s what
happened in and around those previous two downspikes seen in AUN, with the big drops
happening May 15th and August 22nd:
• On May 15th AUN dumped in the same style as we saw Friday, traded as low as 76c
then closed at 78c. On the next two trading days the low was 75c and the high 83c.
After that the recovery set in and $1+ prices were soon seen.
• On August 22nd AUN.v also traded down as per last Friday, went as low as 77c then
closed at 80c. The next trading day saw a low of 82c and a high of 86c. After then the
recovery set in and $1+ prices were soon seen.
Either of those two scenarios will suit our spec trade flip proposal just fine and we therefore set
a maximum entry price point of 85c for a near-term trade idea that, if successful, will more than
provide for the Christmas table, turkey, crackers and a decent bottle of Argentine malbec to
boot. However, be clear that if 85c-or-below prices are not available your author will not
partake in this fliptrade idea, that price limit it strict as far am I’m concerned.
OceanaGold (OGC.to) (OGC.ax): Along the same lines as AUN, this one may be a place to
play a rebound trade from the nasty drop late Friday. The five day chart here shows OGC as a
real wild ride last week, with even my
stomach getting churned and thoughts of
“Hmmm, maybe I’m reading this thing wrong
somewhere” crossing my mind on Thursday as
the thing dipped under $2.60.
Then came Friday and thanks (it seems) to a
new buy rating from BMO on the stock (you
can access the report via the link in the
comments section here (2) with other names
you’ll recognize on view) OGC recovered
sharply, only to be whacked down 5% at the
close as it too suffered from book-cleansing
larger sellers. If you, like I, think that its
immediate (by which I mean next few hours of trading this time, not days or weeks) involves
an immediate return to $2.80+ then why not bend down and pick up the 5% cash-lying-on-the-
street gain on offer, but for my taste the opportunity in AUN.v is better for the spec flip cash.
Minera IRL (IRL.to): Another piece of solid fundies news from IRL last week when on Friday
morning the company announced (3) it had submitted its Ollachea Environmental Impact
Assessment (EIA) to the government of Peru and is now on the official permitting track. The NR
is worth a read as well, because it goes to great pains in explaining just how much support the
project is getting from the locals potentially affected by the Ollachea mine (the locals are really
keen for this mine to happen, as your author eyewitnessed). Talking of keen, I’m not keen
about holding my breath over the “mid-2013” permitting decision that IRL is looking for
because although the company is trustworthy enough I have little faith in the often-stodgy Peru
bureaucracy, but if my cynicism is proven unfounded it would be an excellent and very raid
resolution. I know that IRL has already involved Peru’s Mining Ministry (MEM) in the baseline
study process to a deep degree and has already answered many observations thrown back at
the company by the government, so the fast track they envisage is certainly possible.
In trading, IRL was quiet and being a less traded stock than the likes of BTO, AUN, OGC, FVI,
RIO and others, missed out on all the late Friday fun.
1

Lachlan Star (LSA.to)(LSA.ax): This is the one that’s worrying me. The drop in gold price is
less of a drag on earnings for RIO, OGC and what-have-you (not doing the list again) but LSA is
the high cash cost/high leverage story amongst our producer coverage and as such, could see
its profitability really hit by the gold drop towards $1,600/oz (esp if gold decides to stay there).
Aside from the rise or fall in the price of gold, something that the company cannot influence,
the operational key to LSA’s success in 2013 will be fruits from its cash cost reduction efforts,
as outlines in IKN189 last week. Your author will be very keen on checking out the end-Dec’12
production numbers (and eventually the financials) to show signs of the desired improvement,
because if things aren’t developing sufficiently any ongoing inertia in the price of gold may lead
us to close our LSA trade and take a loss.
Plata Latina (PLA.v): Nothing much happened in PLA though it did score us a 10% win,
thanks to 35k shares changing hands and somebody who didn’t mind paying a little extra
premium to market for the privilege of holding. In the same way that we don’t get fussed and
bothered about heavy looking percentage downspikes on low volumes in our juniors, we don’t
start rah rah when they do the same on the upside because this type of thing is just part of the
territory (and nobody ever said that you’re forced to stick around these lands). Meanwhile we
note that Canaccord included PLA in its 2013 “watchlist” of junior exploration stocks via its
weekly Metalandia publication, along with a group of 15 or so (I didn’t spend too much time
perusing the list, though notes in passing that amongst names I care about Atico Mining
(ATY.v) is there too). With Canaccord sniffing around this, it shows that at least the business
model appeals to the anal yst community out there. PLA remains a pure drill exploreco play,
one that’s been nastily dealt with by the 2012 market and one that I may lose (if traded volume
allows) as we re-align The IKN Weekly towards producers, but there seems to be no reason to
sell it right now. Let’s see how it gets on in the first weeks of FY13.
United Silver Corp (USC.to): With its share price now down at 17c that implies a market cap
of $12.8m, USC could theoretically at least take its place amongst our “Lottery Ticket Basket”
now being assembled for tracking in 2013. But this company is much more than a lottery, it has
the wherewithal, treasury and cash flow from its subsidiary business to indefinitely ride out any
storm the market cares to offer. I didn’t expect the stock to trade under 20c (hey, if I did I
would have held off from purchasing
mine in the 20s) so I’m surprised to
see it here, tax-loss selling or not and
if these prices continue next week I
may add some to this small position
and average down (it’s a mini-position
and won’t cost much in absolute $$
terms to get a meaningful average
down, it’s not like averaging down
further in LPK.to, for example).
Can USC go down further? Of course it
can, they can all dump more as this
rather wild and particularly savage tax-
loss selling season comes to a close.
But the combo of 1) its own cash flow
2) strong insto backing from Hale 3)
good exploration properties with near-term mining potential and infrastructure all in place 4)
the potential of being a buy target for neighbour-with-big-plans USA.to (see IKN182 for the full
NOBS report and investment thesis) for me offers a lot of reward possibility with low downside
risk.
1

The Copper Basket
After fifty-one weeks of 2012 The Copper Basket is showing a 49.97% loss to level stakes.
company ticker price 1/1/12 Shares out Market Cap current pps gain/loss%
1 Copper Fox CUU.v 1.15 398.97 422.91 1.06 -7.8%
2 Lumina Copper LCC.v 13.19 43.2 392.69 9.09 -31.1%
3 Augusta Res AZC.to 3.17 144.1 327.11 2.27 -28.4%
4 Nevada Copper NCU.to 5.18 72.8 230.05 3.16 -39.0%
5 Western Copper WRN.to 1.58 93.28 88.62 0.95 -39.9%
6 Candente Copper DNT.to 0.97 121.67 40.76 0.335 -65.5%
7 Baja Mining BAJ.to 0.80 338.5 33.85 0.10 -87.5%
8 Yellowhead Min. YMI.to 0.80 52.82 33.28 0.63 -21.3%
9 Regulus Res REG.v 1.24 99.88 27.97 0.28 -77.4%
10 Duran Ventures DRV.v 0.18 184.72 17.55 0.095 -47.2%
11 Excelsior Min MIN.v 0.63 56.12 15.15 0.27 -57.1%
12 Catalyst Copper CCY.v 0.08 274.48 13.72 0.05 -37.5%
13 AQM Copper AQM.v 0.39 105.6 8.98 0.085 -75.7%
14 Strait Minerals SRD.v 0.150 56.86 5.12 0.09 -40.0%
15 Crazy Horse CZH.v 0.35 64.48 4.84 0.075 -78.6%
Portfolio avg -49.97%
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 just one of the stocks on the list, 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.
Eight of our basket stocks moved up (LCC.v, CUU.v, WRN.to, DNT.to, REG.v, MIN.v, CZH.v,
CCY.v) one was unchanged (YMI.to) and six lost ground (AZC.to, NCU.to, BAJ.to, AQM.v,
DRV.v, SRD.v), that’s the somewhat surprising result of last week as copper explorecos bucked
the general market trend. Bigger percentage upmoves included Catalyst Copper (CCY.v up
25.0%), Western Copper (WRN.to up 18.8%), Candente Copper (DNT.to up 15.5%), Lumina
Copper (LCC.v up 13.6%) and Crazy
Horse (CZH.v up 13.3%), while the 20% Copper Basket 2012 average, weekly
biggest percentage losers were 15%
10%
Strait Minerals (SRD.v down 5%
22.2%), AQM Copper (AQM.v down 0%
-5%
21.1%), Augusta Resources (AZC.to -10%
-15%
down 10.6%), Duran Ventures -20%
(DRV.v down 10.5%) and Baja -25%
-30%
Mining (BAJ.to down 9.1%), so -35%
-40%
plenty of divergence on display. -45%
The overall basket average moved -50%
-55%
back up too, getting back under the
50% loss mark (just), which is some
sort of victory but you wouldn’t
want to stare too hard at it.
As the five day chart here shows copper the metal also had a weak week and fell from the mid
3.60s to the mid $3.50s, though trading desks everywhere reported that trading was thin and
things were already winding down for the normal Christmas/New Year lull.
1
ht8naj dn22 ht5bef ht91 ht4ram ht81 ts1rpa ht51 ht92 ht31 ht72 ht01 ht42 ht8 dn22 ht5gua ht91 n2pes ht61 ht03 ht41 ht82 ht11 ht52 ht9 dr32
source: IKN Weekly calcs, TSX
2102/1/1
morf
egnahc
%

Inventories data showed a big, and I mean big, dump of stock in LME European warehouses,
where stocks rose by 22,775mt or 45% (!) of last week’s number. This plus other rises in LME
warehouses in Asia (+4.5%) and the USA +11.0%) moved LME total inventory up 14.5% to
312,400mt, though it’s mostly a holiday type blip. Meanwhile, Shanghai inventories dropped
0.2% and the smaller Comex market saw a 4.2% rise. Overall and thanks to the LME copper
dumpage, world stocks stood up 7.8% at 580,320mt. As for cancelled warrants, they clicked up
again to 17.04% of total LME inventories, again suggesting that the big stock influx is more
about a holiday blip and less about a trend change.
Cancelled Warrants at LME, IKN157 to date
35%
30%
25%
20%
15%
10%
5%
0%
1
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 581NKI 681NKI 781NKI 881NKI 981NKI 091NKI
source: Cochilco, LME
rof
yrotnevni
EML
%
latot
yreviled
resu-dne
The 2013 Copper Basket
Here are the names we’ll be running in the 2013 version of The Copper Basket. I’m presenting
them to you today because...
1) The advent of the new Lottery Ticket Basket which is coming next week too, all
ready for January 1st 2013. I’m going to cover those lottery names next week, with a
short biog on each one.
2) I still plan to be very lazy over Christmas and stick to the idea of an abridged IKN191
(as previously announced), therefore I don’t know whether I’ll get to cover all the
Copper Basket names as well and the Lottery Ticket names in next week’s edition.

To cut a long story short, if I don’t list and present all Copper Basket names next week, as well
as explain why the ones that are leaving the list are leaving, I’ll do it the week after next in
IKN192 (when I have no excuse for slacking). In the meantime and in the wish not to keep
anyone in the dark, here are the names of the 2013 Copper Basket with their current market
capitalizations noted at the side to give an idea of the big and the little in the make-up. As
usual some are being kept in and others get dropped. We present in market cap size order.
• NGEx Resources (NGQ.to): Market cap ~$523m
• Copper Fox (CUU.v): Market cap ~$422m
• Lumina Copper (LCC.v): Market cap ~$392m
• Augusta Resources (AZC.to): Market cap ~$327m
• Nevada Copper (NCU.to): Market cap ~$230m
• Hot Chili Ltd (HCH.ax): Market cap ~$118m
• Panoro Minerals (PMV.v): Market cap ~$113m
• Western Copper & Gold (WRN.to): Market cap ~$89m
• Reservoir Minerals (RMC.v): Market cap ~$88m
• NovaCopper Inc (NCQ.to): Market cap ~$87m
• Oracle Mining (OMN.to): Market cap ~$45m
• Candente Copper (DNT.to): Market cap ~$41m
• Curis Resources (CUV.to): Market cap ~$38m
• Yellowhead Mining (YMI.to): Market cap ~$33m
• Strait Minerals (SRD.v): Market cap ~$5m
More next week (or week after), but we quickly state here that eight names stay on from last
year, seven are new to the list and the main change this time is that we’re leaving just one
tinycap name in, Strait Minerals (SRD.v), after watching all the other tinycappers get smashed
into smithereens and be basically useless as tracking media once 2012’s course had been set.
This time we go a little higher up the market cap scale, which will keep the list more relevant if
2013 turns out to be a bad year too (heaven forbid).
Finally, this is almost certainly the confirmed list, but if anyone has any specific complaints
about what been left out/left in/been brought in, you have seven days in which to convince me.
Speak now or forever hold thy peace.
Now for some updates on a few of our covered stocks:
Western Copper & Gold (WRN.to): This was last week’s star performer, with an 18.8%
increase tacked onto last week’s rally that has seen the stock do this in the last month, which is
basically a 50% gain. The reason seems to
be a combination of renewed interest in
the project (as the copper mining world
scrambles around for anything remotely
interesting by way f a project) and a deal
done last week (4) with a long-term
partner that saw WRN swap a previous 5%
net profit interest held on Casino by
“8248567 Canada Limited” for a new deal
that gives 8248567 a 2.75% NSR and WRN
$32m in cash. This makes a big difference
to the working capital position of WRN
(which was ~$2.55m as at 3q12 filings,
Sep 30th) and allows the company to move
forward with its plans without diluting the
share structure (which, at 93.3m, is reasonable and one of the better things about the
company)
1

I personally still don’t like WRN as a play, but did point to it a few weeks back as a potential
rebound vehicle by comparing it on a straight line through CUU.v. This share price rebound
must be very pleasing for holders, but I wouldn’t bank on it extending much further personally.
Candente Copper (DNT.to): DNT found buyers last week and the stock moved up sharply
through Wednesday and although it couldn’t hold on to all those gains comes Friday afternoon,
the week was certainly better. Your author suspects that the buying was speculatively driven
from Lima trading and due to the Editorial ran by Peru’s newspaper of record, El Comercio, on
Friday (5). Entitled “Cuentos chinos de los Andes” (roughly translated “Andean Tall Tales”) it
laid the blame for the protests, delays and lack of development of the Cañariaco project firmly
at the feet of left wing extremists and ignorant locals. Fair enough and the typical right-wing
view of the issue that looks from Lima down noses towards the provinces, precisely the type of
attitude that is part of the root cause of the social protests, in fact. The point here is that it
would have been known in the city that this op-
ed was planned by the El Comercio (its owners
are very much part of the Lima ruling family set)
and this may have been the catalyst for the
speculative buying seen. From where your
author sits, the truth (as is often the case) lies
somewhere between the extremes, so pointing
out the left wing agitation may have its grain of
truth, but ignoring the mistakes made by DNT
and the pro-mining camp serves no purpose
either. Until things change in and around
Cañaris, DNT is a no-go stock and according to
latest reports (6) that have roadblocks being set
up once again and 400 police officers being shipped in to the area from the nearby city of Jaen
in order to keep the peace, change doesn’t seem to be on the menu.
Copper Fox (CUU.v): On Friday afternoon, after halting the stock (which remained halted
through the close) CUU announced its long-overdue Feasibility Study (FS) for the Schaft Creek
project in Canada (7). As for your author’s opinion on the project economics and parameters,
that got a succinct summary on the blog Friday evening (8) which you don’t need to read again,
as it says in so many words “this project is not going to happen”. Hardly a new refrain round
these parts.
Let’s start with the statement that Teck will not buy into this project at these parameters. What
happens now is that CUU has a maximum of 45 days to file on SEDAR, at which point it will be
assumed as delivered to its partner, Teck. At that point Teck has to decide whether it fulfills the
parameters of “positive bankable FS”. Here’s the segment of the Friday NR that points this out:
“...the Feasibility Study may not be accepted by Teck as a "positive bankable" Feasibility Study in
accordance with the option agreement with Teck”
(Yes folks, I’m one of the guys that actually bothers reading the risk factors segments at the
end of NRs). If it doesn’t Teck can simply ignore the document and then CUU is in big trouble
anyway (after calling it “positive” on Friday then being knocked back by its partner) but if it
does according to Teck, the big company then has a maximum of 120 days to decide what it
wants to do with its optioning choices. So put simply, if the document presented to Teck is
considered “positive bankable”, we’ll have the official word of what it intends to do by end May.
The FS is mediocre at best. There are several key areas in which it comes up short, including
$4.5Bn in capital commitments ($3.25Bn capex, $1.25Bn sustaining capex), a very high “base
case” copper price of $3.25/lb, when most other serious projects currently use a low case/base
case of $2.50 to $2.75/lb. Capital payback is calculated at over 11 years once the five year
“pre-production” stage is factored in. The a 8% discount pre-tax NPV of $513m that’s less than
1

$100m higher than the current market cap. Look around the market and it soon becomes
apparent that nobody is paying a 0.8X
multiple to NPV, there are plenty at 0.2X and
below. And it’s important to recognize that
CUU has chosen to highlight pre-tax
parameters, as the base case NPV falls to just
$67m at that 8% discount, one of the
stipulations that Teck requires for its
parameters.
However, it’s fairly likely that CUU will not
dump to its real intrinsic value, because we
need to recall that over 50% of shares are in
the hands of one person, Ernesto Echavarría,
who will be keen on protecting his asset
value. Also, as reader, market professional
and mailpal ‘AM’ rightly pointed out (excerpted)...
“If only there was an easy way to short stocks like this without having to cover your
position if it trades under $1. It is a failure of our capital markets that this could trade at
a $425M market cap with so many people aware of its absurd valuation.”
This is true. Once CUU goes under $1 selling pressure will automatically drop and although I
want to be crystal clear about the lack of real value behind these overinflated shares and
wouldn’t recommend that anyone held or even tried to trade this stock, not next week and not
ever, if I had to guess I’d say that CUU will drop hard when trading resumes next week, but it
will find support and won’t be a direct road to hell. However, I fully expect Teck will not use any
of their optinioning in choices and leave CUU on its own once the final decision is made and
when that happens, it’s directly to the woodshed for CUU at some point in FY13.
AQM Copper (AQM.v): I would like to make a point:
43-101 copper projects December 2012: AQM vs CUU
item AQM Dec'12 PEA CUU Dec'12 FS
initial capex $1.52Bn $3.26Bn
copper price used $2.70/lb $3.25/lb
gold price used $1,274/oz $1,445/oz
pre-tax NPV (8% disc) $814m $513m
IRR 20.40% 10.13%
payback years 2.3 6.48
current market cap $8m $422m
source: company filings, TSX
As repeated on many occasion on these pages, these things are never apples-to-apples. In this
case we are comparing a 3.5Bn lb M+I resource (AQM at Zafranal) to a 7.1Bn lb M+I resource,
we’re comparing a lower-level PEA/Scoping study at AQM (though I’m told a fairly solid one that
has plenty of its elements at PFA-standard, however the report isn’t filed yet) to a full-scale and
more reliable Feasibility Study at CUU, we’re comparing a project in Peru to one in Canada,
AQM owns outright 50% of Zafranal and will need to finance its corner, CUU has a theoretical
25% free ride to production on Schaft Creek (best case). We could continue with the
differences, but then again:
• Both have major mining company Teck as JV partner
• Both have recently completed and announced their 43-101 compliant economic study
• Both have low grade, bulk mining copper-plus-credits project on their hands.
In other words there’s enough to reasonably stack these companies against each other and
when you do the Zafranal project, though smaller, offers far better economic parameters on
1

most any level you care to look. Now, I’m not saying that just because one is bad (CUU.v) the
other is sparklingly brilliant and bound to be a mine (AQM.v) and as both the good Lord and
IKN Weekly readers know, my decision to hold through on AQM in 2012 has been an abjectly
poor one (just look at the share price for more on that). I am saying that either AQM is way
underpriced or CUU is way overpriced and I am suggesting that reality is probably sitting
somewhere between the two. AQM was hit again last week with sales that have “tax loss
selling” written all over them and for more, check the volume Friday (that’s 1,009,100 shares
worth of volume bars there).
Today’s AQM has enough treasury to ride over a
medium length tough period , has a deposit of
reasonable size with reasonable (not great, but
reasonable) economic parameters and has been
beaten to a veritable pulp. If Teck decides to fund a
2013 program there and allots budget to Zafranal,
today’s price is likely to look mightily cheap as long
as the copper market doesn’t cave in completely. On
the numbers alone, it looks much better than at
least one company that’s valued at much higher
prices. I’m going to hold my shares, horribly beaten
and lossmaking as they are. The only problems I
personally have about adding more and averaging down are that 1) I’ve done that already
therefore 2) portfolio discipline needs to be used and 3) AQM can often trade well but also goes
through long period of illiquid trading, so even if a trading win is offered in theory it may be
hard to liquidate the gain. That and I’m a coward, but I am optimistic about 2013 at AQM, else
it wouldn’t be taking a berth in the upcoming ‘Lottery Ticket Basket’.
Regional politics
Regional Risk update thirteen
It’s time for our regular quarterly check-up of regional risk for mining in the LatAm region. For
reference purposes, this table was first featured in IKN32 Dec’09. It then appeared in IKN42,
IKN58, IKN70, IKN83, IKN97, IKN112, IKN123, IKN137, IKN152, IKN163 and most recently in
IKN177 dated September 23rd 2012.
A reminder on how the scoring system works: Each country gets a four-category score and then
come notes to explain any changes in scores or circumstances as well as some commentary on
the current state of play in each country as regards mining (recall our subject here is the mining
industry, it doesn’t consider factors wholly unrelated to mining). Here’s the make-it-easy-to-
read colour coding:
Green: Good
Peach: Possible but tread carefully
Orange: Warning warning
Red: Danger Danger
1

Dec'12 updated Latin American Country Risk For Foreign Mining Companies
Country Miner Friendly FDI Friendly Mining Culture Political Stability Total
Chile 7 8 10 9 34
Mexico 7 8 9 8 32
Peru 8 7 9 8 32
Brazil 7 9 7 8 31
Colombia 6 9 7 8 30
Nicaragua 8 8 7 7 30
Uruguay 7 7 5 9 28
Panama 5 9 5 7 26
Guyana 7 7 4 7 25
Dom Rep 6 7 6 5 24
Ecuador 6 5 4 6 21
Argentina 6 3 5 6 20
Bolivia 2 2 10 6 20
Honduras 5 6 5 3 19
Paraguay 5 7 3 4 19
Guatemala 3 5 3 6 17
Haiti 6 6 1 4 17
El Salvador 2 7 2 5 16
Costa Rica 1 6 1 7 15
Venezuela 2 3 1 6 12
source: The IKN Weekly house estimates
Chile: FDI friendly down one point. The problem facing mining projects in Chile is based
firmly around the courtrooms, as noted in recent editions of the weekly (IKN187 a good
example). But what it’s more about is the way in which local communities have started to
oppose the construction of projects in their immediate areas and have found, perhaps to their
surprise, that Chilean laws as stand are more supportive of their cause than was ever known.
The bottleneck now faced by Chile’s mining sector is more energy-based than the lack of good
mining projects, but without the new energy supply coming online no new mining projects can
be built in the key northern desert zone (Atacama etc) where the majority of the large-scale
projects are located, so a lack of energy supply is just as much of a project killer as a lack of
decently grading rock. So today we see Chile going through a mini-crisis and wondering just
how it will be able to move its project pipeline forward and these delays are beginning to hurt
its worldwide brand of being one of the best places in which to invest mining money. Your
author’s best estimate is that the current blockage is temporary in nature and once the new
reality of semi-emancipated locals is brought into the equation, this pro-mining country will find
solutions and start growing its mining industry quickly once again.
Mexico: Unchanged. It was tempting to put Political Stability up one point, because the
transfer of power to new President Peña Nieto has gone reasonably smoothly and without
massive social disturbances. There were significant protests against his name around his
swearing-in date of December 1st, mostly driven by the #yosoy132 student movement (of
which we’ve made mention previously, particularly pre-vote this year) which have now died
down and in the last few days we’ve also seen the Chiapas rebel movement EZLN members
stage what’s best described as a show of numbers in several towns and cities in Chiapas State,
though all perfectly peaceful. But overall, nothing to suggest the type of political instability that
would grab headlines or make waves in Mexico currency, equity or bond prices. But on
reflection the score stays where it was because, AMLO gripes aside, the changeover was
expected to go smoothly and the assumption that the democratically correct handing over of
power was already baked into the score
1

It was also tempting to mark down the miner-friendly score by a point due to the rise of talk
about extra taxes and/or royalty payments that should be levied on miners, but again this is
really baked into the story by now. What we can expect from Mexico on this score in 2013 is a
new level of royalty payments, perhaps around the 3% mine gate level, to be at least debated
and probably passed next year. A rise in the corporate income tax level is unlikely.
We again make the point that Mexico is a blanket “great for mining” country, because Baja
California Sur (up in the North) and Chiapas (down in the South) along with certain other areas
for their own reasons (specific areas of Veracruz for the nature reserve questions, specific areas
of Chihuahua/Guerrero for the narco-violence questions) need to be trodden carefully. But as
long as you stay on the beaten track and show the necessary responsibility and respect that
any 21st century mining company must show, Mexico is still a top location to do mining
business.
Peru: Political stability up one point. The changes in the last quarter in Peru have been for
the better when it comes to the political scene and the mining politics scene. Firstly and most
generally, the improvement in Ollanta Humala’s approval ratings, up seven points to 48% since
our last Regional Review (9) is a catch-all way of noting the overall countrywide stability.
Secondly, we’ve seen real and concrete pro-mining results with the deal to move the big Anglo
owned Quellaveco project forward in the Moquegua region after wholly successful round-table
negotiations with the regional government there, plus the start of operations at the Xstrata
Antapaccay mine which is now shipping its product. Thirdly and for the future, the edge has
definitely come off the anti-mining protests that centre on the Conga project of Yanacocha S.A.
mainly due to a new ministerial attitude of playing down the issue and not giving the anti-mine
groups so much media attention. The other move has been to shine a light on the dubious
practices of Cajamarca governor Gregorio Santos, who isn’t the only corrupt and self-serving
politico in Peru by any means, but is one that has decided to oppose the sitting government,
thereby attracting unwanted attention to his past actions. We’re now moving towards the point,
slowly and using all necessary legal and congressional mechanisms, where Santos could be
formally charged with wrongdoings on at least two fronts.
The government has also decided to make pro-development noises about two of the most
contentious big mining projects in the country recently, with the Vie Minister of Mining saying
that Tia Maria (Southern Copper) and Conga (Yanacocha) will be moved forward in 2013, a
sure signal that they believe they’re winning the battle against the anti-mine brigade (10) (but
we’ll only find out if that’s the reality come the time, of course).
Peru is still “noisy”, as evidenced by the polemic projects that tend to grab more attention and
in the same way as noted in the Mexico section above, it pays great dividends to know about
the precise area and its attitude towards mining projects, rather than ignorantly assuming that
Peru is a good/bad place to invest mining capital (which is hardly a new message from these
pages, but worth reiterating). But as long as you’re not in one of the “wrong places” (and
they’re vastly outnumbered by the “right places”) Peru is also a great place in which to go
mining as long as your chosen company has a 21st century attitude.
Colombia: FDI friendly down one point. The problem, very simply, is the delays. The
debate and changes to the current mining law that have already been set back more times than
can be counted are now slated for mid-2013, which should be interpreted as “mid-2013 at the
best” and at least another quarter has therefore been added to the clock. As usual at executive
level the talk is positive and the outlook for the mining boom is positive with an example last
week as good as any, an extensive Q&A with Colombia’s Vice_Minister of Energy and Mines
Henry Medina in Semana magazine that uses a quote as a title (translated): “There’s no mining
boom, but there will be if we manage to develop and put in order the mining sector” (11) but
it’s once again a case of the spirit being willing but the flesh weak. Meanwhile, the
environmental movements have been trying to make their anti-megamine case better known in
the country though it has to be said that they haven’t been getting much traction as yet,
especially in the areas that matter to us junior investors, in the Middle Cauca or the Santander
regions.
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As for the ongoing negotiations between the government and the FARC terrorists, they’re
proceeding slowly and any effect they might have isn’t getting factored in as yet. If a positive
result comes from the talks, we can improve Colombia’s figures but until that time it’s best to
remain sceptical.
Brazil: Unchanged. Brazil gets another quarter of “no news is good news” as its main
commentary. The country on a macroeconomic scale is seeing quite significant slowdown and
this is affecting the biggest of the big miners there, starting with Vale (VALE) and its reduction
in investment programs now factored in for the next three years. According to the CEO of Vale,
Murilo Ferreira (12), “The commodities supercycle is over and our philosophy is that we’re not
going to generate such generous profits in the near future”. However, this opinion is something
to factor into the overall mining picture rather than that of simply Brazil.
Nicaragua: FDI friendly up one point. With this one point move, Nicaragua joins the top-
level “green for go” nations and deservedly so. Despite its left wing Sandinista government that
puts off a large chunk of potential investors for mere ideological reasons, the Nica of Daniel
Ortega has proven itself to be welcoming of mining FDI over the last few years and as a result
now has a growing reputation as a happy hunting ground among exploration companies. The
surge has been led by current (and past) IKN holding B2Gold but is accompanied by plenty of
other these days (GRR.v, CXB.v, CNR.L, Hemlo etc in the mining sphere, with a sidebar word
due for RPG.to in the energy sector) and nary a word against them from government or locals
alike (as long as they obey the rules).
Uruguay: Mining culture up one point. The pro-mining noises being made by Uruguay’s
government, added to the debate that’s being conducted in true Uruguayan style (plenty of talk
and on a mostly civilized level, with both pro and anti mine people getting their airtime) and the
very recent decision (13) made jointly by Uruguay’s government and Zamin Ferrous, Brazilian
owners of a large scale iron ore project, to accelerate development of the mine and look to
begin production in 2016, all add up to an improved score for the country. It’s fair to say that
the Zamin project will be a pathfinder for the country into large scale mining so there’s a lot
riding on its success (or failure, because it’s not too late for the antis to win the day), but as the
debate seems to be going the way of the pro-mining camp for the moment at least, Uruguay is
on course to become a new place open for mining business in the medium-term future.
Panama: Unchanged. From this point down we’re not going to make much comment on the
countries with unchanged scores, but Panama needs a word because its home to the Cobre
Panama project, owned by Inmet (IMN.to) and now coveted by First Quantum (FM.to) as well
as potentially by other bidders. The hostile bid move by FM is an endorsement of the country,
because as well as buying out IMN for the ticket price of $5.2Bn, there’s the little matter of
funding the $6.2Bn project to completion. It goes without saying that a $10Bn market cap
company such as FM isn’t going to roll the dice on political risk when the stakes are at “kill the
company” level, so it also goes without saying that the aggressor here has done its Panama
political risk homework and considers the risks acceptable.
Panama still has significant problems regarding bureaucracy and specific areas of community-
based opposition to mining, but the national government is keen to attract mining FDI and with
Cobre Panama as a potential flagship project, if all goes well the country’s reputation would get
a solid boost. But as we hiked Panama two points last time due to the improvement in mining
culture, there’s no need to change scores here unless more true development is seen so for the
moment, we’re calling UNCH on Panama.
Ecuador: Political stability up one point. We’ve examined the country’s split personality
towards mining on umpteen occasions, with the basic story of local opposition to large-scale
formal mining projects common, national state burdens prohibitive, negotiations to a deal
difficult but with a head of state and a government that wants mining investment to move
ahead. None of that has changed a jot since we last spoke on Ecuador, but the country gets an
extra point for political stability because the election campaign process, about to move into
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official campaigning, is going as smoothly as can be desired (for any South American country)
and the present incumbent, Rafael Correa, is a long odds-on shot to be re-elected, thereby
providing continuance of government in a country infamous for its rapid-fire changes at the top.
Argentina: Political stability down two points. This quarter’s biggest single move is made
by Argentina and it’s made in a downwards direction. The problem here is that the CFK
government is coming under both political and economic pressure, which wouldn’t necessarily
be a bad thing if there were a reasonable and logical alternative on the political horizon. The
Mauricio Macri led PRO party is a right wing choice that is strong in Buenos Aires city, but
doesn’t have the reach or infrastructure to make it on a naitonal level as yet. The centre-left
UDR (Radical) party looks both long in the tooth and is having its political position eaten into by
the Cristina form of Peronism, which is moving to the left. This leaves the so-called “traditional
Peronist” (PJ) members who swear loyalty to Juan Domingo but take a very different stance
towards his worship than the current government.
Economically, Argentina isn’t under great pressure as yet but the political scene is changing
fast. CFK has lost the support of the main union leaders and is gradually alienating the
intellectual Peronists with evermore populist policies, as well as clamping down on media
channels such as Clarin. This move to fracture ownership of media and break the majority of
print and visual media away from the control of just a few families has unsurprisingly turned
said media against the current government, with many now joining the fiercely anti-Cristina
stance of Clarin under the catch-all banner of free speech (which is an overrated concept in all
countries, but that’s for another day).. Argentina is not yet unstable, but it is less stable
politically than it was three months ago and its score has dropped sharply to reflect this. As
long as CFK can keep the lower socio-economic groups on her side, the government will
continue but she is playing with fire by making an enemy of the largest union groups, as these
are populated by the foot soldiers of the Peronist movement, the so-called descamisados
(unshirted ones). When it comes to mining, it also needs to be said that any eventual fall of the
CFK government doesn’t automatically mean Argentina gets a new government that is better
and friendlier towards it (and all FDI). Argentina at 20 points is a faithful reflection of the risks
involved with investing here today and it’s one place that I want minimal exposure. My partial
exposure via IRL, due to its low overall project cost, mitigating circumstances of zero
local/community risk and in mining friendly Santa Cruz (that needs the jobs), is just about
acceptable. This is as far as I go.
Bolivia: Political stability up one point. It’s still not the place for your mining FDI, let’s be
crystal clear about that. But the political scene has improved somewhat for sitting President Evo
Morales and the worst of the worker protests have died down. It’s never going to be paradise
politically, but the Morales MAS party continues with clear institutional control and is faced by
fractured opposition that can’t force any real agenda changes. Economically Bolivia is going well
too, despite its stagnating mining industry, as natgas export revenues have hit an all-time high
in the country and Bolivia even went to the debt market to place sovereign bonds during the
last quarter, the first time it’s made such a move for six decades. The issuance went well too
and the yield is comparative to other countries that stand two or three rungs below standard
investment grade.
Honduras: Political stability down two points. The “institutional coup” that was flagged
by President Porfirio Lobo in November as a possible coup d’etat to remove him from power,
turned out in the end to be a Senate move in December, led by the coup-leaders that ousted
Manuel Zelaya in 2009, to force the resignation of four of the country’s five Supreme Court
judges because, in simple terms, the traditional power centre of Congress had taken an disliking
to some “progressive” judgements recently handed down. The episode was a reminder of just
how institutionally weak Honduras is and how its democracy isn’t much more than a thin
veneer. Not anywhere you’d trust your FDI money as safe, no matter what line of business.
Guatemala: Miner friendly down one point. This wasn’t an easy call and there’s even a
line of reasoning that might see Guatemala’s score rise a little, thanks to mining now being
debated as a headline issue and all the cards getting laid out on the table. However, the call is
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to drop Guatemala’s score by a point due to the upsurge in anti-mining protests and ensuing
bad press, with the dynamite-theft protest around Tahoe’s Escobal project and the
confrontation between communities and workers/police at the Tambor property (KCA Assoc)
being the main events. As we’ve mentioned in recent editions, Guatemala is now treated as a
frontline cause by environmental groups and anti-mining NGOs now that the government is
trying to push through a new mining law that would bring more royalties into State coffers but
also provide a favourable platform for mining companies to receive operating permits and get
new exploration projects off the ground-
We’ve followed the headline cases (Escobal and Tambor) quite closely in the recent weeks and
as there’s no material change in either situation we’ll leave the details unrepeated today. What
we can say is that to improve its country score the Otto Pérez Molina government will have to
get public opinion moving back towards its pro-mining stance and that’s something which will
need serious debate in the public arena. Also, as the current mining bill project stands it’s not
likely to get passage, so some concessions will have to be made to the community leaders who
want more say in whether any given project goes ahead or not. Overall though, what we expect
to see in Guatemala in the first quarter of 2013 is more delay and potentially more conflict
between the two sides, while progress on improving the law is less likely.
Haiti: Unchanged. It’s still one tough jurisdiction politically, but at least we can say that
Haiti’s new government has made good on its pledges to permit open pit mining operations in
the country with the news this month that the first permits have been granted (14). As this is
not a surprise and already part of that 6 point score miner friendly score, the needle doesn’t get
budged but it’s a story worthy of note.
Venezuela: Political stability up one point. Seriously. We know all about the Chávez illness
and recent treatment, we also know that there are large questions about the January 10th
inauguration date and whether or not Chávez can take his vows, delay the date and suchlike.
But what we do know is that the Chávez opposition lost in October and lost more ground in the
December regional elections, which at least affords a more solid political background on a party
level. Unless it’s for a wild and near-term swing at the fence (such as your author’s recent and
very small foray into RML), this isn’t a place that should carry your investment cash, mining or
otherwise, point gained since September or not.
Conclusion: This brings our quarterly overview to an end, the next one is due end March-ish.
Market Watching
Friday’s across the board liquidation
The late Friday action was missed by your author who was at the supermarket with his eldest
daughter, buying a turkey. Some pretty gutwrenching numbers awaited me back at the office,
with several reasons offered for the late-day dump but the most likely reason (and it’s not the
first time that it’s happened) being the options expiries coinciding with (near) end of quarter
book-squaring that saw plenty of the larger players hit the sell button. One of the main drivers
of late selling was Credit Suisse and on a modicum of further investigation, it seems that house
had also made decisions about the the near-term future of the gold price based on technical
analysis (15) with un-named Credit Suisse strategists earlier making the call that if gold doesn’t
support or improve in the next few days, further downside is likely. With the end of the year
looming and bearish thoughts on the last truly liquid volume day of the trading year, somebody
in some CS office pulled a big plus and let’s be clear, that wasn’t the only house doing big
selling Of our stocks, Aurcana (AUN.v) was hit hardest down to 80c, wiping nearly 20% off the
market cap in seconds. Other stocks to feel the hit were B2Gold, Rio Alto and although not
currently held, Fortuna Silver is worth mentioning.
With crisis comes opportunity, they say, so if the market still offers prices such as the heavily
discounted AUN at 80c next week, this must be considered a great opportunity for an easy win.
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Esperanza Resources (EPZ.v) redux
The quickest of words here. After our feature last week, your author’s strong temptation as
reported back then is still just as strong. We
also note that there is plenty of room on the
‘Stocks to Follow’ list for a new name or two,
your author has the dry powder to add if
wanted, adding a new exploreco no longer tips
the balance away from the producers and also
this, the five day chart of EPZ:
While all around names faded and died last
week, EPZ stayed strong in its mid-$1.30s
range. I found that interesting.
Conclusion
IKN190 is done, we close with bullet points:
• After somewhat ignoring The Copper Basket for too many weeks than was healthy, it
was good to catch up on that section and get a few pages of thoughts down. It was
interesting, to me at least, that the copper explorecos seem to do much better than the
rest of the mining universe last week and the hammer came down and heavy
liquidation was seen all around.
• Esperanza (EPZ.v) is still on the radar, but with the way the market traded last week
there was no rush to grab at the first price offered (that’s an understatement if you
hadn’t gathered, by the way).
• We say thanks and goodbye to Galway (GWY.v) for its modest arb win that worked as
planned (pitifully few trades in 2012 of which we can say the same). We also say
farewell to long-held Vena Resources (VEM.to), a stock that had a lot going for it, but
turned into a losing trade and then just kept on losing. We wish the company well in
the future, but won’t be a part of their development any longer. I take my hard knock
loss and move on.
• The weakness seen late Friday has thrown up lots of cheap price points if next week is
kind enough to offer them again. Catching the eye are RIO.to, OGC.to, BTO.to and yes,
even FVI.to (I’ve was asked about that one a lot late week and see no reason why you
can’t play it for a decent quickflip). But the one that stands out for me is Aurcana
(AUN.v) because not only was it hit hard but it also has a past history of staying hit for
a day or two after the big drop before rebounding sharply. If that nice mister market
offers a sub-85c (or 85c max) entry point, I’m going for my free turkey and trimmings.
• The other name that really tempts is United Silver Corp (USC.to), but the set-up is
different because 1) absolute cash amounts for an addition would be small and 2) the
idea would be to average down and make the overall position larger, rather than play a
near-term flip around the core and sell for a quick win as in AUN.v. However, if they
give me 17c next week I’ll take it.
• A merry Christmas to one and all! I hope you have a great time and spend the day with
people close to your heart.
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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
Footnotes, Appendices, references, disclaimer
(1) http://finance.yahoo.com/news/galway-completes-arrangement-aux-191500150.html
(2)http://www.incakolanews.blogspot.com/2012/12/juniors-that-deliver.html
(3) http://finance.yahoo.com/news/minera-irl-commences-permitting-ollachea-070000246.html
(4) http://finance.yahoo.com/news/western-copper-gold-sell-royalty-145900751.html
(5) http://elcomercio.pe/actualidad/1512641/noticia-cuentos-chinos-andeseditorial
(6) https://www.google.com/news?ncl=ddLm-wNrqjOWc9Mc5wX8vloQqDfJM&q=ca%C3%B1aris&lr=Spanish&hl=es
(7) http://finance.yahoo.com/news/copper-fox-announces-positive-feasibility-201100314.html
(8) http://incakolanews.blogspot.com/2012/12/copper-fox-cuuv.html
(9) http://incakolanews.blogspot.de/2012/12/peru-presidential-approval-ollanta.html?m=0
(10) http://elcomercio.pe/economia/1512662/noticia-gobierno-impulsara-ejecucion-tia-maria-conga-2013
(11) http://m.semana.com/nacion/articulo/no-boom-minero-pero-va-haber-logramos-desarrollar-poner-orden-
mineria/269124-3
(12) http://www.mineriaaldia.com/para-el-ceo-de-vale-%C2%93el-superciclo-de-las-commodities-
termino%C2%94/?utm_source=dlvr.it&utm_medium=twitter
(13) http://www.espectador.com/noticias/254080/gobierno-y-zamin-ferrous-acordaron-acelerar-proyecto
(14) http://noticias.terra.com.mx/mundo/america-latina/haiti-permite-minas-de-oro-y-cobre-a-cielo-
abierto,a40f6d44edcbb310VgnCLD2000000dc6eb0aRCRD.html
(15) http://www.marketwatch.com/story/gold-futures-tick-higher-as-gop-cancels-tax-vote-2012-12-
21?link=MW_latest_news
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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