IKN #196Premium

The IKN Weekly
Week 196, February 3rd 2013
Contents
This Week: Today’s abridged edition, CEOs are chosen because they’re CEO material, In a
commodity supply squeeze, nations will get their share too.
Fundamental Analysis: Deferred.
Stocks to Follow: Overview, Gold Resource Corp (GORO), B2Gold (BTO.to), Aurcana (AUN.v),
Lachlan Star (LSA.to)(LSA.ax), USA Graphite (USGT), Focus Ventures (FCV.v), IMPACT Silver
(IPT.v), AQM Copper (AQM.v), United Silver Corp (USC.to), Minera IRL (IRL.to)(MIRL.L),
OceanaGold (OGC.to)(OGC.ax)
Copper Basket: Overview, NGEx Resources (NGQ.to), Candente (DNT.to), Oracle (OMN.to),
Copper Fox (CUU.v), Western Copper & Gold (WRN.to).
The Lottery Ticket Basket: Overview, Gryphon Gold (GGN.to), Inca One (IO.v), Eagle Star
(EGE.v).
Regional Politics: Dominican Republic: Government to review Pueblo Viejo State burden
(ABX) (GG), Argentina: It’s Catch 22 at Pan American Silver’s Navidad, Colombia kidnappings:
Risk talk.
Market Watching: Lachlan Star (LSA.to) (LSA.ax): Revisiting costs, Signs of life in Sunward
Resources (SWD.to).
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
Today’s abridged edition
Thanks for the flurry of mails that arrived this afternoon after I mailed out news of the delay
and alteration in content for IKN196, there were too many to reply to so I’ll take the easy
option of saying thank you all here. As for today’s events, I’m one of those people who is “Ok,
we got robbed, nobody hurt, only stuff, no big deal in the great scheme, close-out, move on”,
but this modern world doesn’t let you off that easily and only seems to be content when it has
dragged you through its carefully constructed bureaucracy and into a full depression about
what has happened to you. I’m not sure whether the worst part was finding out about the
robbery or having to go through the seemingly endless, demoralizing, soul-destroying process
of reporting it (e.g. “Sir, that’s not the right paper; it only says that you bought the property, it
doesn’t say that you own it”). A sense of humour is also necessary when told that if I don’t
report the theft “I could get into trouble”. It was around that moment that I checked to see
whether I’d slipped through a space/time wormhole and was featuring in a Monty Python
sketch.
To quote another favourite source, in the words of Douglas Adams, “You live and learn. At any
rate, you live.”
CEOs are chosen because they’re CEO material
What with the reported near $50Bn or so in collective write-downs (1) that the mining industry
1

has seen recently along with the fall of several top CEOs from the big and bigger mining
companies out there (Albanese at Rio and Carroll at Anglo are the recent headline grabbers in
that category, though for me the defining news was when Aaron Regent ‘was resigned’ from
Barrick and replaced by the company CFO), a lot of talk has resulted about the way in which
the new crop of CEOs in the majors (along with the few that have survived until now) will be
more conservative in their approaches to company development and growth, with big-ticket
mergers or projects that threaten capex blow-out a thing of the past and smaller, organic deals
that give premium to robust economic parameters in politically safer jurisdictions the future.
Well yeah, maybe, for a while at least. A corporation (such as Barrick) may decide to rein in its
top level decision-making and go for a more conservative approach for a short while, or maybe
even into a medium-term timeframe, but it won’t last. Let’s stay with Barrick as our example
(slightly unfair, I could have chosen plenty of others, but ABS is as good as any) and imagine a
time two, three or even five years down the line. If Barrick goes into caution mode it’s unlikely
to do any systematic harm to the company itself, but if and when the economic and delamaking
climate improves, it risks being left behind by a peer (or even peers) who take a more
aggressive stance and is led by an individual who sees the market opportunity, goes for it and
makes her or his name in the process. At the same time, the “whatever happened to good old
Barrick?” questions will start cropping up in the mining world chattering classes and the
company would have picked up an image of fustiness, of resting on its laurels, or the cardinal
sin of them all; of failing to maximize shareholder value.
So promote a CFO to become the new CEO and ride out a choppy period in the market if you
will, but CFOs are very rarely the stuff that “star CEOs” are made of. The people that make
their mark and claim headline spaces in the bizrags are nearly always risk-takers by nature and
the ones that make it up to CEO will have (by luck, judgement or a combination thereof) made
risky calls, got them right and earned kudos from those who work with them all through their
career. If a sector leading company such as Barrick goes into caution mode for a while it’s not
such a big deal as long as others do the same, but it will eventually create a vacuum of
opportunity that gets filled by the up and coming company headed by the next generation of
thrusting corporate executives. Or in practical terms, now that the sector has decided not to
take risks, look out for the first deal done by a Tier 1 or Tier 2 miner that’s considered
“audacious” or “aganst the grain” by the market because whichever company it turns out to be
will probably be worth following into the next cycle.
In a commodity supply squeeze, nations will get their share too.
I listened to (and read) this interview (2) of Ross Beaty by Tekoa da Silva last week (MP3 link
to full interview here (3)) a couple of times (the second more attentively) which hit a lot of the
classic points seen in such things, but at least one of these usual suspects came over well:
“We are hitting walls of sustainability,” said Ross. “Discovery rates are declining in
metals and in oil & gas, much less is being found than is being consumed, and all of
these patterns whether it be use of water, use of land, depletion of soil, inability to
replace energy consumption as is being consumed…When you look at all those things
[you see] there’s a lot of constraints to our economic system today…The world will hit
those constraints, and that’s going to be a brake on things like economic growth, and
things like commodity consumption growth.”
Sound like a recipe for higher commodity prices to you? In our case, the metals? Yep, me too
and there’s enough commonsense behind the thought to allow it to stand up easily enough. But
as Beaty also said about a minute before the above line:
“Resource nationalism by many countries ...will constrain supply and responses to high
metal prices...continuing stress on mining companies and on developers of resource
properties which will support higher prices for most metals.”
Agreed, but with one caveat; I wouldn’t say many countries, I’d say all countries. The new
reality of non-renewable natural resources (eg hard rock metals mining) is that the host
2

countries and governments of projects are no longer happy with the smaller slice of the pie that
was given out a few years ago. I recall during the Toledo government the bitter debate on
whether the move to introduce a 1% to 3% royalty on mining operations. The royalty was
eventually voted into law in 2004 (much to the disgust of Buenaventura’s Benavides family) but
history shows that it didn’t stop mining development or profits from being raked in Peru. And
when the royalty rates were upped significantly in 2011 by the incoming Humala government
hardly an eyelid was batted and in fact, most mining companies considered the deal that was
cut to be a good one.
The trend of countries and governments demanding more of a cut will only increase as finite
resources become scarcer and demand continues to grow (which in effect is just along-winded
way of saying “higher prices”) and for a topical example, see the note in ‘Regional Politics’
today about the growing dispute between The Dominican Republis and Barrick/Goldcrop at the
newly commercial Pueblo Viejo gold mine. This in turn means that the mining company will be
less concerned about giving or taking a percentage point of gross profits and will value more
highly those countries that can offer a stable business environment. They’ll alsobe more
interested in the quality deposits that can take a sudden bump or two in the State burden in
their stride.
Fundamental Analysis of Mining Stocks
Deferred.
Stocks to Follow
As we noted above in the intro section, it was a better week for the mining complex and that
reflects in our ‘Stocks to Follow’ list, too. Of our 15 names, nine moved up (RIO.to, BTO.to,
AUN.v, OGC.to, LSA.to, IPT.v, USGT short, GORO short, AQM.v), three remained unchanged
(LRA.v, PLA.v, FCV.v) and just three lost any ground (IRL.to, LPK.to USC.to). The best of the
bunch were USA Graphite (USGT short up 52.2%) and AQM Copper (AQM.v up 20.0%), while
the worst loss was felt by Minera IRL (IRL.to down 9.9%) mainly due to the financing news.
We currently have 15 open positions, our self-imposed maximum. Of those positions, seven are
in the green seven in the red and one is unchanged from its cost average.
3

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$5.35 162.3% $6.29 tgt
B2Gold BTO.to buy C$3.66 28-nov-12 C$3.84 4.9% new $5.70 tgt new avg
Recommends
Minera IRL IRL.to buy C$0.73 22-jul-12 C$0.73 0.0% $1.56 tg, added, new avg
Aurcana Corp AUN.v buy C$1.07 11-nov-12 C$0.87 -18.7% $1.50 tgt near term play
OceanaGold OGC.to buy C$3.03 16-sep-12 C$2.77 -8.6% $5.34 tgt growth prod
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$1.17 1.7% solid biz model, LT hold
Lachlan Star LSA.to hold C$1.50 30-sep-12 C$1.09 -27.3% lowered $1.77 tgt
Plata Latina PLA.v hold C$0.79 10-abr-12 C$0.44 -44.3% considering sale
Lupaka Gold LPK.to spec buy C$1.12 23-oct-11 C$0.40 -64.3% holding
IMPACT Silver IPT.v buy C$1.14 13-jan-13 C$1.18 3.5% new position, $1.85 tgt
USA Graphite USGT short U$0.93 08-jan-13 U$0.33 64.5% shorting otc pump, added
Gold Res Corp GORO short U$14.11 25-jan-13 U$13.61 3.5% short, $9.60 tgt
Smaller/Riskier
AQM Copper AQM.v hold C$0.31 16-oct-11 C$0.09 -71.0% holding thru for my sins
Focus Ventures FCV.v hold C$0.175 01-jul-12 C$0.20 14.3% revised tgt 25c
United Silver USC.to hold C$0.21 28-oct-12 C$0.155 -26.2% 60c tgt, avg down Dec'12
Closed in 2013
n/a
2009, 2010, 2011 and 2012 closed positions in appendices below
Now for some notes on a selection of the above stocks.
Gold Resource Corp (GORO): On January 30th GORO announced its monthly dividend of...six
cents. This doesn’t blow my short theory out of the water because the math is as good as it
was this time last weekend. What it does mean is that a little patience needs to be exercised on
this short, as the next likely window for dividend is the same one that saw GORO raise the
dividend to 6c last year, that of the
company AGM at-or-around the end of
April.
Meanwhile we note that the stock price,
already lower when the 6c divi was
announced, dropped even more after the
announcement. That surprised me a little
but it was also a pleasant surprise and as
we’re now (as they say) on the right side
of this trade it makes a longer haul short
easy to handle. I have no doubt in the
math here, it’s a case of when the Reids
decide to stop bleeding the company
treasury (and it may be when the SEC
forces the company to stop, not before). But as long as the market sees the same
unsustainable situation and marks down the stock in the meantime, I don’t mind.
One note regarding the dividend; As short positions have to pay the dividend to their
counterparty, as each and any divi is paid I will adjust the average cost price accordingly. For
example, once the Janaury dividend is paid I will move my cost average down from $14.11 to
$14.05 to show the net position on this short.
B2Gold (BTO.to): In our recent analysis coverage of BTO (eg IKN188) we estimated the share
count once the merger with CGA mining was complete. As of last Thursday (NR here (4)) the
deal is closed and done, so we now have an accurate count for you of 654.4m shares issued
4

and outstanding and 668.5m fully diluted shares. That S/O total means that BTO now has a
market cap of $2.51Bn and is by far the biggest company we have as an open position (and the
biggest one ever, if memory serves). We’ve certainly come a long way from the first time The
IKN Weekly bought BTO shares in November 2009; back then the market cap was $248m. By
the way, if we note that since then the stock is up 336% and the market cap is up basically
1,000%, it gives us an idea of just how much BTO has relied on paper to fund its growth.
The other piece of news out of BTO last week was more interesting. On Tuesday (5) BTO
announced its exploration results for FY12 and plans plus buget for exploration in 2013. As a
collateral effect the news caved in JV partner Calibre Mining (CXB.v) (see blog for more on that
(6)) but for BTO longs the news offered went down well. Of particular interest were the decent
drill results from the new Jabali mine near BTO Libertad mine, which offered good drill
intercepts outside the current resource mineralization (which isn’t a big surprise, as Jabali was
always expected to grow, but good to confirm). There was also new on a new exploration
project in the same vicinity, Volcan-El Gallo, which may run out to give more upside. At its
49/51 JV Gramalote in Colombia (with AngloGold Ashanti), BTO now expects the delayed pre-
feas to arrive this quarter and a final feasibility in “early 2014”. Other news from all projects
was pretty much as expected, though BTO seems to be putting its Cebollati project in Uruguay
on a back burner, as the budget is set low there as is the work program. Overall, BTO programs
$35.9m in exploration work at its various projects in FY13, which covers all work included a
programmed 97,000m of drilling.
Finally, for those interested this link (7) is to a report that Nicaragua’s Channel 4 TV did at
BTO’s Limon mine. It’s in Spanish language but the images are interesting enough, especially if
you’ve never been into an U/G mine previously.
Aurcana Corp (AUN.v): AUN had a better week at market, rose Monday thru Wednesday on
good trading to a high of 91c then consolidated to its 87c weekly close on lower volumes end-
week, an acceptable result. There were some snippets gleaned second-hand by your author
from interactions with AUN at the Vancouver conference last week, some more interesting than
others. We hear that AUN plans to go into the minting business and begin to sell its own bullion
coins, which sounds faddy and irrelevant to me (fanclubs are better suited to football teams or
Mickey Mouse). But we also heard from trustworthy sources that AUN management is aware
that its 2012 was marred by promising and not delivering on several aspects, but is now
confident of hitting its forecasts going foward as well as being somewhat humbled by the way
2012 turned out. On this score, I’m less interested in the confidence of the current forecasts
because taken as a whole, the 2013 guidance frame is much less aggressive than the times and
volumes and ounces predicted this time last year and I too am pretty confident that AUN can
deliver on their word. I’m more interested in the fact that they recognize their errors and feel
suitably chastened; the less ego in mining the better, I say.
Anyway, the plan here is the plan and it’s not changing; the end of 1q13 will see if AUN can
deliver and it’s then that I’ll make my buy/hold/sell call.
Lachlan Star (LSA.to): We discuss this stock’s December quarter numbers in a little more
depth below in ‘Market Watching’. Here we note that trading in the stock remains lacklustre and
smacks of a market that’s not yet convinced of the growth story. That’s a good thing for me.
USA Graphite (USGT) (USGT.ob): Our OTC short did another stiff dive last week (very
welcome) but there’s no point in our covering yet as there’s more to come. However, I won’t
ride USGT down to the very bottom where it’s just pennies and tumbleweed, because the short
covering will be easier when there’s still volume left in the trading pit. I have perhaps the 15c or
20c level pencilled in...and it will get there.
Focus Ventures (FCV.v): We’ve mentioned this before, but there’s been more quiet, almost
stealth buying of FCv by insider and Gold Group stalwart Mario Szoltlender in the last few days.
Here’s a screenshot of this (8) link, a bit small and potentially fuzzy via PDF so click through to
5

see it better if necessary. Anyway after these buys Szotlender is now up to nearly 2.5m shares
held, or 6.2% of total shares out at FCV.
IMPACT Silver (IPT.v): We had news Monday from IPT (9) on the company’s Mirasol target,
part of the land package of the RMZ zone. The
news was positive on results of the drilling and
IPT may have found the next place at which it
can mine high grading material to feed its
main mill, but the development of Mirasol into
a working mine is still a long way off so the
shorter-term effects of this new mineralization
aren’t going to show in the company share
price that much. As for the share price, it
bumbled around in the same trading range
we’ve seen since opening out long position,
penny here and penny there. We await the
real catalysts for the stock price in the near-
term, namely the announcement that the new
mine at Capire and the 4q12 financials (with
FY13 guidance).
AQM Copper (AQM.v): Away from our review of the recent PEA above and looking only at
last week’s trading, AQM actually had a good week for a change (particularly percentage-wise)
and not only that, but Friday saw 268k shares traded including one block of 200k shares. Yes I
know that at this share price the absolute amount of cash changing hands is miniscule, but all
the same, a little interest is better than none at all.
United Silver Corp (USC.to): This one continues to trade horribly, having trended down all
January (from around the 18c price point to around the 16c level) with very bitty volumes, not
at all what I was expecting in early 2013 from a company I considered cheap at 20c and above.
Having bought twice and averaged down to 21c I’m loathe to do so again (the old “throwing
6

good money after bad” rule comes to mind) even if the final amount of cash I’d need to do
some avergaing isn’t that much ( it’s in the “smaller/riskier subsction for a good reason, after
all). Last week was the first time I mentally kicked myself for buying this tinycap spec play, not
a good sign at all, so even though its only been with us on the list for one quarter and the
whole idea was to be patient and await a buyout offer from USA.to, its time may be close to up
on our list and portfolio management/weeding out a loser may have to trump the trade thesis.
Not decided yet, going to give it a week or three before making a call. It’s one of those things
that looks really cheap now, but that won’t stop it from becoming a whole lot cheaper if the
market continues to ignore its presence or potential.
Minera IRL (IRL.to): I like this equity placement as announced Monday, even if it has hit the
stcock price temporarily. More on this next week (sorry, this is getting cut short too) but this
seems like an excellent opportunity to but IRL before news of the financial deal on Don Nicolas
is announced. I’ll be chasing up on the IRL Argentina angle with a few sources next week to
see if there’s anything worth learning.
OceanaGold (OGC.to): The stock was called as very cheap last week and it’s still there today
in my opinion. Regarding this and how I waxed lyrical on OGC in IKN195, I received a mail from
reader JM with a fair question:
Given how positive you seem to be about Oceana Gold, esp. at last
week's price, why aren't they a "top pick"?
For what it’s worth, here’s my reply:
Because it isn't.
Top Picks have all ducks in line. OGC looks cheap as long as Didipio works out well,
but i don't stick top pick on a stock that has a glitch in its ramp-up at a new mine.
There's no reason to over-worry the tailings teething problem there, but Top Pick isn't a
call i make lightly.
So now you know.
The Copper Basket
After five weeks of 2013 The Copper Basket is showing a 9.47% profit to level stakes.
company ticker price 1/1/13 Shares out Market Cap current pps gain/loss%
1 NGEx Resources NGQ.to 3.40 158.5 518.30 3.27 -3.8%
2 Lumina Copper LCC.v 9.43 43.46 402.44 9.26 -1.8%
3 Augusta Res AZC.to 2.43 144.1 402.04 2.79 14.8%
4 Copper Fox CUU.v 0.83 397.65 338.00 0.85 2.4%
5 Nevada Copper NCU.to 3.50 80.5 305.10 3.79 8.3%
6 Hot Chili Ltd HCH.ax 0.72 286.78 203.61 0.71 -1.4%
7 Western Copper WRN.to 1.39 93.78 120.98 1.29 -7.2%
8 Panoro Minerals PML.v 0.62 176.25 112.80 0.64 3.2%
9 Reservoir Min. RMC.v 2.41 41.46 102.41 2.47 2.5%
10 NovaCopper NCQ.to 1.80 51.89 102.22 1.97 9.4%
11 Candente Copper DNT.to 0.375 121.93 70.72 0.58 54.7%
12 Curis Resources CUV.to 0.70 56.31 57.44 1.02 45.7%
13 Oracle Mining OMN.to 0.80 49.03 49.03 1.00 25.0%
14 Yellowhead Min. YMI.to 0.59 60.97 37.80 0.62 5.1%
15 Strait Minerals SRD.v 0.08 56.86 3.70 0.065 -18.8%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg 9.47%
7

The basket average rose 1.4% over the week thanks to the eight winners (NGQ.to, AZC.to,
NCU.to, PML.v, RMC.v, DNT.to, OMN.to, CUV.to) doing better than the six losers (LCC.v,
HCH.ax, WRN.to, NCQ.to, YMI.to, SRD.v) and one unchanged (CUU.v). The winners had
notable wins via Augusta (AZC.to up 14.3%), Oracle (OMN.to up 13.6%) and Curis (CUV.to up
10.9%), while the biggest losers were Western Copper & Gold (WRN.to down 16.2%) and Hot
Chili (HCH.ax down 10.1%). Therefore with a month of 2013 out the way we have a near 105
win from the basket and a healthy ratio of two companies in the green for every one in the red.
Moving to inventories, worldwide stocks saw yet more added and now stand at 640,323mt.
Again it was the LME that saw the big inventory increase (+9.7%) and of its regions, more than
the whole of the global move in copper was due to 31,225mt arriving at its European
warehouses. Meanwhile comex stocks moved up by 0.8% and Shanghai dropped 3.9%. Looking
more closely at the trends, we’ve reach month end so it’s time to update our inventory charts
and it’s visually easy to see that the upmove in inventories is largely to to inflows that the LME.
The traditional leader warehouse now accounts for 58.72% of world stocks, that percentage
figure having risen 9.94% since November.
As for LME cancelled warrants, this dataset adds to the bearish data from copper as they
dropped sharply once again to stand at 9.20% of inventories. This is the lowest since June 10th
2012 and for what it’s worth, at that moment the bearish sounds were in full force in the
market and copper was trading at $3.28/lb.
Cancelled Warrants at LME, IKN157 to date
35%
30%
25%
20%
15%
10%
5%
0%
8
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 191NKI 291NKI 391NKI 491NKI 591NKI 691NKI
source: Cochilco, LME
rof
yrotnevni
EML
%
latot
yreviled
resu-dne
Copper inventories: percentage held per exchange
70
60
50
40
30
20
10
0
Now for updates on some of our covered companies:
NGEx Resources (NGQ.to): The NGEx stock price went under $3 on Tuesday, then
recovered and finally jumped Friday on this news (10) out Thursday post-bell, quite simply the
best junior NR of the week. Check the drill map here (11) to see exactly where hole LHDH50 is
located, because along with several other fine looking holes it made the headlines with 1,175
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef
Copper inventories, beginning of month 2012/13
LME Shanghai Comex 700000
600000
500000
400000
300000
200000
100000
0
source: Cochilco
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef
source: Cochilco
reppoc
sennot
cirtem
LME Shanghai Comex

metres of 0.65% CuEq (0.52% Cu and 0.19 gpt Au) that included a richer zone of 308 metres
at 0.82% CuEq (0.70% Cu and 0.17 gpt Au). Quite a hole and reminds your author of the
famous 1km+ hole that Antares hit at
Haquira before that project was old to
First Quantum (though admittedly, the
Haquira grade was stronger). And
LHDH50 wasn’t the only fine hole
reported, as 51 (outstep) and 52 edge of
current mineralization) show plenty more
to like, just as two examples.
The best part of hold 50, drilled in the
central part of the known deposit, is that
it shows the type of grade continuity that
an economic prophyry needs to impress
the majors. NGQ isn’t a cheap stock at
over $400m, but it’s price that way
because it already has a quality copper project on its hands in Chile (and who knows, maybe
the other parts of the cluster sitting unfortunately on the other side of the Chile/Argentina
border may be worth something some day). If you want to play the M&A second-guessing
game, NGQ has to be either at the top of very high on your candidate list. Personally I prefer to
wait out this iffy looking copper market for the time being, but what I will dare to predict is that
NGQ will be bought out before LCC.v.
Candente Copper (DNT.to): We’re not going to have a long, drawn-out analysis on the
political risk woes of DNT at Cañaris every week, but as this report (12) dated Saturday makes
clear, the problem has not gone away in the slightest and locals have vowed to continue their
protests and roadblocks until DNT has put its current drilling campaign on hold and a
negotiation table is set up in the town of Cañaris, rather than in the regional capital many hours
drive away. Meanwhile, for those Spanish speakers amongst you who’d like to know more
about the peculiarities of the Cañaris people who live at the the locality and their long history
(which dates back to Inca times), this article (13) in Peru’s La Republica is an interesting read.
Oracle Mining (OMN.to): Last week we wrote, “If it can re-take the $1+ level last seen in
October we’d probably see traded volumes improve, too” and bizarrely, both of those things
happened in the last five days (oh gosh, they’ll be expecting me to produce stock tips news...).
OMN is now at $1 having continued its rebound rally nicely and although the ~140k sghares
traded on the week is hardly a candidate for fliptrade vehicle of the year, it was the best single
week’s volum in OMN since September...and you gotta start somewhere.
The very decent week for OMN came with news too, as on Thursday it reported (14) on its
ongoing underground definition drilling program that returned decent hits where expected and
has added more confidence to the resource (in particular, when at the NR click through and see
the drill map OMN provides, as it shows where the drills were placed in relation to the
understood resource and what they’ve achieved in knowledge advancement.
Copper Fox (CUU.v): According to SEDAR rules, CUU has to file its feasibility study for public
viewing next week (in fact, I’m not 100% sure I have the count right, but I think tomorrow
Monday is the limit day). This should in turn (though technically at least there are ways in
which the decision can be delayed, I’m reliably informed) start the clock on the 120 day period
that Teck has for its decision on what it wants to do with Schaft Creek. The decision has several
potential nuanced categories but it will boil down to whether Teck wants to buy/build it or leave
it on CUU’s hands. I say that Teck will want nothing to do with this project, but you knew that
already.
Western Copper & Gold (WRN.to): Last week’s biggest loser in out basket, WRN didn’t
disappoint anyone with news but seemed to get its own private hangover after the fast run-up
9

that happened pre and post FS release (see issues past). There’s nothing much to really read
into this droop, bar that WRN had flown too fast too soon (which we assumed back in IKN193
three weeks ago). My personal view of not liking WRN much while admitting that I might be
making an error on that call remains intact.
The Lottery Ticket Basket
After five weeks of 2013 The Lottery Ticket Basket is showing an 9.15% gain to level stakes.
company ticker price 1/1/13 Shares out Market Cap current pps gain/loss%
1 Marlin Gold MLN.v 0.10 192.39 17.32 0.090 -10.0%
2 Bellhaven BHV.v 0.14 121.16 14.54 0.120 -14.3%
3 Glass Earth GEL.v 0.155 104.79 13.62 0.130 16.1%
4 Eagle Star Min. EGE.v 0.125 60.73 13.36 0.220 76.0%
5 Fancamp Expl. FNC.v 0.125 109.8 13.18 0.120 -4.0%
6 Gryphon Gold GGN.to 0.085 194.64 11.68 0.060 -29.4%
7 AQM Copper AQM.v 0.08 105.57 9.50 0.090 12.5%
8 Copper North COL.v 0.10 58.62 7.33 0.125 25.0%
9 FDG Mining FDG.v 0.13 45.59 5.47 0.120 -7.7%
10 Cream Minerals CMA.v 0.03 155.34 5.44 0.035 16.7%
11 Rio Cristal RCZ.v 0.025 149.26 5.22 0.035 40.0%
12 Darwin Resources DAR.v 0.20 26.16 4.19 0.160 -22.5%
13 Inca One Res. IO.v 0.12 34.0 4.08 0.120 0.0%
14 Netco Silver NEI.v 0.025 47.01 1.88 0.040 60.0%
15 Firestone Ventures FV.v 0.045 36.32 1.82 0.050 11.1%
Portfolio avg 9.15%
Just four of our penny warriors went up last week (AQM.v, CMA.v, IO.v, NEI.v), five were
unchanged (GEL.v, EGE.v, FDG.v, COL.v, RCZ.v) and the other so lost ground (MLN.v, BHV.v,
GGN.to, FNC.v, DAR.v, FV.v). The biggest move was the 60% rise (no less) in teeny tiny Netco
Silver (NEI.v) on no news whatsoever but bits of volume (maybe our original thesis about NEI.v
needing to get back to 5c has legs?), and other decent moves were seen by Inca One (IO.v up
26.3%) and AQM Copper (AQM.v up 20.0%). To the downside, the worst was Gryphon Gold ‘s
(GNN.to down 14.3%) on the news we note below.
10

Gryphon Gold (GGN.to): We’d already laid out the financial problems facing GGN due to its
stiff payback schedule to lenders Waterton and the production glitch at its mill which shut
things down for a while, so the news last week didn’t come as much surprise (15). GGN tried its
best to put some lipstick on the swine by “announcing a JV”, but what it boils down to is that
Waterton has grabbed 60% of the GGN Borealis Mining Company in exchange for forgiving
$17m of its $25m debt and not putting GGN into chapter 11 come the moment when the soon-
to-be payments were due. This is how the shark end of the mining financing world operates
and it’s why investing juniors who take debt from these people is very risky stuff indeed.
The future for GGN now is that the company should be fine, but the stock is dead money. If
you own it’s time to sell and take your loss before it gets crushed further and on that score,
please note that I will sell my very small position next week and be done myself (recall, as
announced in the introdcution edition to the Lottery Ticket Basket on December 30th I have
bought a small or very small amount of each member of the Basket for skin-in-the-game
purposes). If you don’t own don’t even think about this one, at least not until the rest of the
debt is successfully paid off at the end of 2014. It’s a pity we chose this one for the Basket this
year as although the risks were clear from the start, we now have what amounts to a dead
position to carry for a full 11 months of 12. Oh well, I suppose it’s a good object lesson of the
risks involved at this pennies-galore end of the market.
Inca One (IO.v): Last week’s second biggest mover on the list (behind the resurrection
shuffle on no news over at NEI.v), IO.v had two pieces of news for the market. First on
Tuesday it announced (16) it had applied for the necessary enviro papers which would then
allow it to get water permits and land access permits that would then allow it to eventually drill
its Las Huaquillas project in Cajamarca (and if that sounds like a lot of time and bureaucracy
between now and drilltime, you’re right, it is). In the second NR IO.v announced (17) it had
staked a further 16,400 hectares around La Huaquillas, bringing its total land position to over
20k Ha. Again, somewhat lightweight news; after all, the world isn’t exactly queuing out the
door to stake exploration land in Cajamarca region, so competition for these GPS coordinates
probably wasn’t tough. Anyway, the thing rose 26.3% and even managed to see some modest
buying interest on Thursday and Friday, though volumes were still thin.
Eagle Star (EGE.v): EGE was UNCH on the week, but we should take a look at the five day
chart on this one because it looks as though the close Friday was somewhat false. The stock
rose hard once again on volume Friday and
was the kind of pop and buying pattern that
suggests some sort of analyst or newsletter
reco went out. Well maybe or maybe it was
just one or two people wanting in at nay
cost, as although volumes of 1.5m Friday
were strong, in cash that’s only something
around $400,000 so if it was a third party
reco it was a limited one.
Anyway, we seem to have picked a hotpot
for our Lottery Basket list, which it nice in its
own way and makes up for the instant dead
money loser that GGN.to seems to have
turned out to be.
Regional politics
Dominican Republic: Government to review Pueblo Viejo State burden (ABX) (GG)
An interesting situation is growing up around the Pueblo Viejo gold mine (ownership: 60%
Barrick (ABX) and 40% Goldcorp (GG)) that recent completed its commissioning cycle and is
now in commercial production. According to reports in DomRep, the government isn’t happy
about the current cut of the deal that means something between $25m and $40m will flow to
11

State coffers this year and is after a number more akin to $800m (18). The issue was reported
briefly and with little detail by AP in English but in this case the devil is in the details, the
nation’s government may well have a point and we will probably get some sort of deal struck
between the two parties. The main point of study in the deal between Pueblo Viejo and the
government is the clause that states Pueblo Viejo will not pay the nation’s corporate and
income tax rates (28.75% and 25%) until the capital costs of the project are paid back. Until
that time, the only payment to be received by the State is the 3.2% gold royalty. All well and
good and both sides signed onto this agreement as well, but at the time of signing the
expected investment was $700m (and gold was sitting at around $300/oz). The final bill for
Pueblo Viejo is estimated at $4Bn (19) which means the State is going to have to wait a long
time before that income. The image of a gold mine reaping in profits and accounting for around
15% of DomRep’s total exports (20) without seeing any revenue from the operation for the first
years now sits badly with public opinion and the new congress now seeking to amend the deal.
For its part Barrick, 60% owner and the company most active in lobbying in DomRep, points
out that the deal means the Pueblo Viejo revenue is split 50/50 between mining company and
State over the lifetime of the mine and estimates that each party will take away around $11Bn
when all said and done, but the politicians are not happy with the jam tomorrow promises,
especially as they feel cheated in the way that capital costs have risen and are now being used
in their entirety as a set aside to the mine’s tax bill. And in fact, even though Barrick claims that
the only way to change the terms of the deal is by mutual consent (therefore implying that the
company will play hardball and try its best to retain the status quo), the DomRep constitution
grants Congress the right to review and if necessary reject any contract agreed upon by the
country’s Head of State (who was indeed the signing party on the Pueblo Viejo deal). Due to
this, the chances of a negotiated settlement between the two sides looks high once the rhetoric
has run its course.
When countries “renegotiate” deals with mining companies it never sits well within the industry,
so it remains to be seen how the fallout from this review will affect other operations and
projects in DomRep, with particular thought going to the growing number of exploration stage
companies working there.
Argentina: It’s Catch 22 at Pan American Silver’s Navidad
We knwo that Pan American Silver (PAA.to) (PAAS) has at the very least put on ice its plans to
develop the Navidad silver/lead/zinc project in Chubut Argentina. We’ve also heard that office
staff have been laid off by the comapny on a local level which got the anti-mine NGO’s cheering
the company’s “pull out” a few weeks ago, something that PAAS denied at the time. But now
we read (21) that not only has PAAS tried to lay off its employees on site at Navidad (between
37 and 70 persons according to the way in which the count is done) but the government of
Chubut has told PAAS that it isn’t allowed to lay them off and must re-hire the workers
immediately, else face the total loss of the concession due to “abandonment”! We therefore
find ourselve in the position where the regiona Chubut government’s recently imposed tax and
royalty burdens are too much for PAAS, who say the project can’t go ahead under such
circumstances, but when the company tries to curtail activities the same government says it
must continue and there’s nothing to stop PAAS from bringing Navidad into production.
Welcome to Argentina, ladies and gentlemen.
Colombia kidnappings: Risk talk
The unfortunate episode being suffered by five people contracted by Braeval (BVL.to) that
we’ve covered in the last two issues has brought the subject of employee security in Colombia
back as an issue, so here’s some concise practical advice on how to gauge the risk any given
company is running at the moment:
1) Ask your company! What’s more, keep asking until you get a response that your happy
with. As part of obligatory DD into any company operating in rural Colombia (mining,
O&G, whatever else), ask them a) about security measures on site/camp etc b)
whether the immediate zone in which it is operating has a history, past or recent, of
12

FARC, ELN and/or paramilitary activity and c) whether the wider region in which it
operates is considered “cleared” of terrorist groups (far left wing and far right wing) by
the national government and of course, don’t forget to ask d) whether the company
has suffered from any form of attack from these terrorist groups during its time in
Colombia, which can include anything from intimidation of workforce, buses set on fire,
kidnappings etc. As an example, recent attacks include the downing of two oil
extraction rigs (22) as reported by the national army.
2) The above point is the most important, but in general terms, if your company is
operating in the Middle Cauca region or the Santander region (where most juniors that
have been making news this past couple of years are located) and the necessary safety
and securty measures are used by the company, then you should be safe. Consider this
a rule of thumb only, however, as there are often pockets of terrorist activity inside
otherwise safe zones.
3) In general (and again, rule of thumb and there are safe areas in what comes up now),
places to avoid are the West, Southwest, Southeast and Northeast of the county, plus
specifically any region close to the national borders with Venezuela, Ecuador, Brazil and
Peru. One region that’s seeing an uptick of illegal activities is Antioquia, so consider that
one a yellow flag too.
4) The final point to make is that in the process of doing your DD, if you get the
impression that the company is under some sort of duress or paying protection money
type bribes, then run away fast. This is an unlikely one, but it has crossed this desk on
one occasion and even though there wa nothing firm on which to base my suspicions,
just being suspicious is more than enough to go look somewhere else. The company
roped into protection rackets is capable of slicing your invesment into piece in more
than one way.
In general, the companies currently working Colombia are not stupid, are smart about safety
matters and are in the “safe” zones, so overall this isn’t something that should keep you up at
night. However, it makes sense to ask your IR rep, therefore do so.
Market Watching
Lachlan Star (LSA.to) (LSA.ax): Revisiting costs
After Lachlan Star (LSA.to) announced its December quarter production and some of the
preliminary earnings numbers last week (23) and the decent bump up in gold production was
featured on the blog (24), along with a
very quick passing commment on cash LSA: Mine operating earnings and post-tax earnings,
costs, I received a straightforward $ 5 m per quarter
question on LSA (from a reader who 4
prefers not to be mentioned even in 3 gross op. profit
2 post-tax profit
initials) that noted the company cash 1
costs at around $1,000/oz for the 0
-1
December quarter, gold at around
-2
$1,700/oz selling price in the same -3
period but the company registers a gross -4
-5
operating loss for its mining activities, -6
rather than a profit. This is correct and Sep'11 Dec'11 Mar'12 Jun'12 Sep'12 Dec'12
as we can see from this quarterly source: LSA filings
breakdown chart of operations earnings
and post tex earnings, LSA has in fact filed a quarterly loss for every period in 2012 (assuming
the post tax number for the dec’12 quarter, out soon, doesn’t load up with tax breaks and offer
us a surprise).
13

But back to our mailer who asked why this should be so. The answer to the apparent anomaly
is that LSA does not charge stripping as part of
its baseline “C1” cash costs calculation. Here’s
LSA: Strip ratios at CMD
how the strip rate has been in 2012 (and our
6
forecast on what it will be in 2013), which shows
that in 2012 calendar year the strip rate at CMD 5
has been a lot higher than the estimated Life of 4
Mine (LoM) average of 1:1. LSA has run a high
3
strip ratio at CMD for various reasons. Firstly, it
2
was doing pre-strip work at the high grading
1
Chisperos pit before development of that was
temporarily halted due to the proximity to 0
electricity pylons. Secondly, the Tres Perlas has
seen pre-strip work to prepare it for more
concentrated production this year, thirdly, LSA
has used the higher strip ratio pits of Toro, Las
Loas and Churrumata for most of its production recently. However, we believe this is about to
change and from the high strip ratios you see on this chart, we expect to drop much closer to
the 1:1 expected life of mine rates in the quarters to come.
LSA has made a point in its recent literature of guiding lower on cash costs (due to new plant
and equipment now comng on line, higher production schedule) and that’s a good thing, but
the line item that will really make a difference to the company’s bottom line is the drop in strip
rates expected in 2013. And in fact it’s a near
certainty to happen as LSA did all that costly
legwork in 2012 precisely in order to benefit in this
year ad really show the world it’s turnaround
story. This chart shows the company benchmark
C1 costs with stripping costs per ounce added on
top (which is worked out by reverse engineering
the per-tonne figures for stripping supplied by
LSA) and it clearly shows how stripping in 2012
has been an expensive extra for the company,
with the better news that stripping costs are set to
drop now that most of the heavy lifting (quite
literally is done).
This is the high leverage play that is LSA and although signs are so far good that the plan is on
track and schedule, we’ll not have hard data to back it up until the end March ’13 numbers
come out. We never expected the quarter just gone to run a profit and that’s how it’s turned
out. The next few quarters, and the one we’re in now in particular, is when LSA has to show its
mettle and turn its preparative work into bottom line profits.
Signs of life in Sunward Resources (SWD.to)
It was with a somewhat heavy heart that I sold my Sunward (SWD.to) at a loss last year,
because although the whole sub-sector of large
tonnage low grade bulk mining gold projects is
firmly out of favour (and in many cases
deservedly so), SWD’s Titiribi project still looks
like the best of the bunch from where your
author sits thanks to its strong infrastructure
background that will help keep both capex and
opex much lower than peers in the event of the
things getting off the ground.
However sell we did last year and it turned out to
be the right decision, as the price dropped
14
11'ceD 21'raM 21'nuJ 21'peS 21'ceD tse31'raM tse31'nuJ tse31'peS
source: LSA data, IKN ests
Lachlan Star: Reported cost + strip cost/oz, per qtr
2000
1800
1600
1400
1200
1000
800
600
400
200
0
11'ceD 21'raM 21'nuJ 21'peS 21'ceD tse31'raM tse31'nuJ tse31'peS
U$/oz
stripping cost/oz
reported cash cost/oz
source: LSA data, IKN ests for FY13

further than our $1.20-ish bail and has been sub-80c recently. So with the in mind, it was
encouraging to see the stock put in something of a rally last week, with the main driver on the
main day of Friday coming from Canaccord buying. It was good to see a recound on (some)
volume finally appear in this stock as I’m far from having given up on it. Not only do I wish the
team well, but if things really do turn around I’d be comfortable enough about re-taking a
position in SWD. Back on the watching brief.
Conclusion
IKN196 is done, we close with bullet points:
• Once again, thank you for your understanding today. The supportive messages in the
mail read are greatly appreciated.
• If you like the copper space more than I, for what it’s worth I can’t see anything
beyond NGEx (NGQ.to) at the moment, barring perhaps the more speculative end of
the game (AQM.v, OMN.to etc). My doubt is when the buyout for Los Helados (or the
cluster, or the whole company) comes, not if, as the copper market shows plenty of
signs of demand fatigue and with those rising costs already sidelining projects such as
Antucoya (ANTO.L), why should the world be rushing to buy the next deposit right
now?
• Last week wasn’t so bad for our sector and with volume spurts here and there as well.
Overall I feel comfortable about my exposure to the market after watching the action
last week, even taking into consideration the new positions (admittedly two of them
short) and additions to positions previously opened, particularly the chunky extra on
B2Gold (BTO.to). Other can get their kicks in trying to call a top in this-or-that index, I’ll
stick with my value-oriented thoughts on mining companies.
• Greed isn’t confined to mining companies wishing to maximize profits or speculators
such as us trying to find a winning return in a stock; countries are also keen on getting
their fair share of natural resource proceeds and we’re not confined to the so-called
“miner unfriendly” places, either. Resource nationalism isn’t a new phenomenon, but
anyone who thinks that it’s reached some sort of plateau and we won’t see any more
pressure from governments on burdens for mining is heading for a disappointment or
two, I’d safely say. However, there is reasonable demands from nations wanting more
share of mining process and then there are freakshows such as the Chubut regional
government in Argentina, or Ecuador. The concept of win-win must still apply.
• As last week, Lupaka (LPK.to) remains a decent spec buy on its Lima listing process and
the path beaten by cousin stock LCY.v recently. The unknown in the mix is exactly
when LPK will move to list in the Bola de Valores de Lima, as it might be days or a
couple of months.
The top long-term picks are Rio Alto Mining (RIO.to) and B2Gold (BTO.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
15

Footnotes, Appendices, references, disclaimer
(1) http://www.aminera.com/mas-noticias-nacionales/46306-amortizacion-de-mineras-se-acerca-a-los-us-50-mil-
millones-tras-fiascos-de-compras.html
(2) http://bullmarketthinking.com/ross-beaty-well-see-price-here-are-the-reasons-why/
(3) http://bullmarketthinking.com/wp-content/uploads/2013/01/1312013beaty.mp3
(4) http://finance.yahoo.com/news/b2gold-corp-cga-mining-limited-113000767.html
(5) http://finance.yahoo.com/news/b2gold-corp-announces-2012-exploration-170000803.html
(6) http://incakolanews.blogspot.com/2013/01/what-made-calibre-mining-cxbv-drop-like.html
(7) https://www.savetubevideo.com/?v=cGaOULSyUnM
(8) http://www.canadianinsider.com/node/7?ticker=FCV
(9) http://finance.yahoo.com/news/impact-silver-corp-mirasol-prospect-171957116.html
(10) http://finance.yahoo.com/news/ngex-intersects-0-65-copper-214438802.html
(11) http://media3.marketwire.com/docs/ngq131i.pdf
(12) http://gestion.pe/politica/pobladores-canaris-seguiran-paro-indefinido-pese-acuerdo-autoridades-2058144
(13) http://www.larepublica.pe/columnistas/sucedio/el-conflicto-en-canaris-30-01-2013
(14) http://finance.yahoo.com/news/oracle-mining-intercepts-47-feet-110000346.html
(15) http://finance.yahoo.com/news/gryphon-gold-announces-joint-venture-140356253.html
(16) http://finance.yahoo.com/news/inca-one-submits-environmental-impact-140000349.html
(17) http://finance.yahoo.com/news/inca-one-stakes-16-400-140000321.html
(18) http://diarioadiario.com/sociedad/subcategorias/economia/604-gobierno-quiere-us-800-de-la-barrick-gold-en-el-
2013
(19) http://www.diariodigital.com.do/articulo.php?id=24851
(20) http://www.entornointeligente.com/articulo/1346308/REPUBLICA-DOMINICANA-Barrick-proyecta-aportara-15-de-
las-exportaciones-23012013
(21) http://www.elpatagonico.net/nota/183326-minera-argenta-tiene-plazo-hasta-manana-para-reincorporar-
trabajadores-en-la-meseta/
(22) http://www.vanguardia.com/actualidad/colombia/194237-el-sector-minero-energetico-esta-en-la-mira-de-guerrilla
(23) http://www.lachlanstar.com.au/images/130130_LSA_Quarterly_Report__Dec_12_Final.pdf
(24) http://incakolanews.blogspot.com/2013/01/lachlan-star-lsato-lsaax-december.html
16

Stocks To Follow Closed Positions, 2012
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-ene-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-dic-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-abr-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
Vena Resources VEM.to dec'12 C$0.70 31-may-09 C$0.18 -74.3% Failed trade (caps F)
Galway Res GWY.v dec'12 C$2.19 24-nov-12 C$2.30 5.0% closed good ST arb trade
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
17

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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