IKN #199Premium

The IKN Weekly
Week 199, February 24th 2013
Contents
This Week: Fe erratum, When smart money isn’t just dumb money but really dumb money.
Fundamental Analysis: Darwin Resources (DAR.v) site visit.
Stocks to Follow: Overview, B2Gold (BTO.to), Minera IRL (IRL.to)(MIRL.L), IMPACT Silver
(IPT.v), Aurcana Corp (AUN.v), OceanaGold (OGC.to)(OGC.ax), Lara Exploration (LRA.v).
Copper Basket: Overview, Western Copper and Gold (WRN.to), Curis Resources (CUV.to),
Nevada Copper (NCU.to), Copper Fox (CUU.v), Panoro Minerals (PML.v).
The Lottery Ticket Basket: Overview, Bellhaven (BHV.v), FDG Mining (FDG.v), Inca One
(IO.v).
Regional Politics: Cerro Blanco: Guatemala and El Salvador opinions differ, Chile: Barrick
fined U$215,000 for environmental infractions at Pascua Lama, More Barrick, as ABX creates a
rod for its own back in Peru, Honduras passes its mining reform law, Ecuador’s Presidential
election results, Ecuador: The Intag copper project back in play, More potential Yukon political
risk, A mining snippet from Mendoza Argentina.
Market Watching: Esperanza Resources (EPZ.v): Cerro Jumil consultancy, Minera IRL (IRL.to)
(MIRL.L) meet-up, Rio Alto (RIO.to) office visit, Radius Gold (RDU.v) redux, The word on AQM
Copper (AQM.v).
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
Fe erratum
In writing about Belo Sun (BSX.to) in IKN197 on February 10th I stated that the 35.7m shares
the company placed in the October 10th placement at $1.40 were about to go free trading at
the time. This was incorrect, as those shares were free trading from the moment they were
issued and the placement closed. My mistake was to assume the placement would follow
normal protocol and didn’t check the original prospectus small print for confirmation. I
apologise for the error that resulted from that oversight.
When smart money isn’t just dumb money, but really dumb money
As noted on the blog Wednesday, it can be a distinct advantage to be out walking up and down
hills and pointing at rocks instead of watching the market. Gold dropped by over 2% on the
week and for a while on hump day the loss was nearly 4%. However, mining stocks dropped a
lot more.
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I’d picked up a few rumours about redemptions from the larger fund houses late the previous
week, but after thinking it over decided the evidence wasn’t really strong enough to make for a
comment. Cut to today and the whole market is awash with how this house says that rival
house (never seems to be themselves) are getting screwed by wholesale liquidation orders from
clients desperate to get the hell out of the mining and junior mining sectors (and into those
paragons of safe investment housing and biotech, I’d guess). Fair enough.
Which got me thinking about the concept of smart money/dumb money, that definition often
used in the market to define what the institutions are doing with their funds (assumed to be
smart, quant-enhanced, deep DD wiseheads who wear those thousand dollar suits with
justifiable pride) compared with what us retail grunts are doing with ours (assumed to be
dumb, herd-driven sheep or lemmings willing to jump off the next available cliff at the behest of
our financial masters and cannot justfy why they’re still in pyjamas at 11:30am on a weekday
morning).
Correct me if mistaken here, but if I have this straight the so-called smart money sagely places
its bets after long and careful consideration of innumerable moving parts, multi-task
investigative vetting of companies, visits to facilities, grilling of officers and board members and
thanks to all its deep DD and smart collective brainwork finishes far much wiser than us, the
mere mortals, on any given equity. But in fact the money that “smart money” uses is more
often than not OPM that’s really owned by ignorant individuals who panic and phone the insto
and pull their cash out at the first sign of trouble, thus causing a house that’s always fully
bought in (difficult to justify a large slice of deposits languishing in money market) and very
often up to its proverbial neck in margin to hit the sell button on whatever’s liquid enough to
dump at times like these, which in turn causes a knock-on vicious circle effect, lower prices and
more clientele on the phones, pulling out cash and spiralling the whole thing down further. Or
in other words, not only does the smart money participate in dumb-money led panics, it
magnifies them.
For what it’s worth, next to that level of smart I’m more than happy to remain as dumb as a
bag of hammers. With a cash reserve at all times.
2

Fundamental Analysis of Mining Stocks
The Darwin Resources (DAR.v) site visit
Overview
Sitting back in the office, putting together the notes from this trip and considering what had
been seen, the conclusion phrase eventually came to mind. “I know”, I thought, “the way I’ll
finish off this piece is by saying DAR.v would be an obvious speculative buy if the market were
healthy, but with things as they are there’s probably no rush to get in here” and once that was
in place the narrative flowed easily enough. So instead of signing off on this report using the
snappy phrase, I thought it best to start by laying out what I think of DAR and its very
interesting Suriloma property from the top. What follows by way of photos, words and
comments revolve around that idea.
The basics
Let’s start by running a ruler over the structure and people at DAR and use our standard topbox
for the basics.
Shares out: 26,158,071
Options: 3,035,000
Warrants:4,375,000
Fully diluted shares:33,568,071
Current share price: $0.15
Market Cap: $3.92m
Approx cash per S/O: 8c
All prices are in Canadian dollars unless stated. Forex U$1=CAD$1
The first thing to note is that 8c of the current 15c share price is currently covered by cash.
Now for sure it’s not going to stay that way, as DAR runs an estimated background burn rate of
$100k per month (typical for this type of small entity) and it has a 2000m drill program in 2q13
that will need to be funded, but it does give some backbone to the PPS today.
The share count is currently a tight one, made even tighter by significant strong hand holders.
Top holder is Sentient Group with 24.1% of shares out (around 6.3m shares) and along with
that holding Sentient has a member of its team as a director, one Paul Henri Couture. Sentient
is a good backer to have, as they tend to prefer getting in early and giving the company time to
develop its story (e.g. it’s scored big wins via Cerro Negro in Argentina and Norsemont and its
Constancia in Peru). A big backer like Sentient is also a potential source of future funding while
all around wither and die. The other big insto holder is Sheldon Inwentash’s Pinetree with
11.7% of shares out. Directors and management hold between them around 10.8% of shares
out. Darwin is a spin-off from Mawson Resources (MAW.to) which took that company’s Peru
assets into a new vehicle and left MAW to concentrate on its Rompas gold (and uranium)
project in Finland. Due to that spin-out, company directors connected with Mawson Mark Saxon
(914k shares) and Michael Hudson (994k shares) are large holders of the stock. Meanwhile CFO
(and seemingly everywhere) Nick De Mare owns 413k shares and DAR CEO (and my kind host
last week) Graham Carman owns 500k shares.
Next we consider the team, led up by CEO Graham Carman, a New Zealand with bags of Peru
experience (his fluency in Spanish helps things motor along, too). The team has a lot of
experience in working with each other in other companies and several have crossed paths
previously during stints with Rio Tinto and Meridian (to name but two). For context, CEO
Carman told me that getting DAR off the ground was like the Blues Brothers putting the band
back together. The atmosphere amongst the group during the two days I spent in their
company was first rate, these people obviously like and work well with each other. Carman and
your author were joined on the site visit by Exploration Manager Rolando Ligarda, Senior
Consultant Edgardo Guizado and project geologist Luis ‘Lucho’ Giraldo, who was the one that
first spotted the potential at Suriloma early last year. I also had chance to meet Peru General
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Manager Georg Winkelmann at the head office in Lima on day one (and was rewarded with a
very interesting chat about Cañariaco, amongst other things). So before going any further I’d
like to officially the DAR guys and their support team for their hospitality and putting up with
my geology 101 questions so gracefully; thanks guys, appreciated.
Company projects
The quickest of notes on this aspect of DAR. At the moment DAR holds ten concessions, all in
Peru and most of which are on this map ripped from the
website (1). The current flagship is Suriloma, scene of last
week’s visit, with CEO Carman making mention of the
previously drilled (and they’re sure it was badly drilled)
Rurimarac property the next one on the list for exploration
and development. The company’s starter project, Alto
Quemado in the South of Peru (not so far from this office in
fact) was dropped by the company last year.
Suriloma
From this point onwards we’ll concentrate our time on
Suriloma, the flagship project at DAR. It’s located in the La
Libertad region of Peru, home to plenty of formal mining
operations (Barrick Lagunas Norte, Rio Alto La Arena,
Comarsa Santa Rosa to name but three) and understood as
one of the miner-friendliest regions in Peru. This is important to underscore, as just a few
kilometres away La Libertad changes into Cajamarca, run by the anti-mining regional governor
Gregorio Santos. La Libertad is a different kettle of fish to Cajamarca and the difference in
political risk profile is almost as great as when you cross the Southern Andes from Chile into
Argentina. La Libertad is where you want to be in this northern zone of Peru and that’s where
DAR at Suriloma is located. In fact it’s in the sub-regional province and district of Otuzco, from
the nearby town of the same name.
The above overview map of the Suriloma property, some 22,000 concessioned hectares in total,
gives an idea of what is found there. However, now that I’ve visited the place it’s clear that the
most important zone on the property is the “La Puerta” target to the right of the map. That’s
where most of the early exploration work has been done and it’s also the location for the
upcoming drill program, due to start in 2q13.
Before continuing, a few words about the blue line on that above map, with “sediments” on one
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side and “volcanics” on the other. I found out during the trip that the fact the La Puerta section
of Suriloma is hosted in volcanics, rather than sediments, is pretty significant because it’s
probably why the property has never been explored very much before DAR came along and
almost certainly why it’s never been drilled. Back in the 1990’s and early 2000’s when the
majors were combing this area after hitting upon Alto Chicama (and others), the brief given to
their teams was “find another one of these monsters”. As the previous discoveries were made
in sediment hosted mineralizations that became one of the items geology teams had on their
basic checklists, so on arriving at this property and immediately recognizing a volcanic host,
they tended to move on. In fact that was probably a mistake, as the mineralization event here
seems to have happened after the sediments and the volcanics were in place. This means (or at
least DAR supposes to this point, we’ll find out much more when the drills turn later this year)
that La Puerta may turn out to be volcanic hosted to a depth of perhaps 200m, but then the
mineralizaton continues into the sediment layer underneath. The mineralization in the sediment
zone under the volcanics may be narrower or the same width or wider (DAR geols hope it’s
wider of course, but apparently there’s decent theoretical reason to suppose that) and there
may even be a layer of high grading material in the zone where the volcanics and sediments
meet (that wouldn’t be the first time in this region of the world), but the thing to take away is
that the fact that La Puerta is hosted in volcanics explains why it’s been overlooked until now,
little explored and left totally undrilled. And indeed, DAR has already found good grades of gold
in the sediment hosted areas at the Northeastern end of the property, which is some 700m to
900m lower than the “La Puerta” end (which sits at between 3600m and 3700m above sea
level), for example the Surupampa target as seen on the above map has returned 4g/t samples.
I’ll leave this subject to rest now, but hope this little interlude has piqued the interest of readers
with more geological background than your author.
The visit
We’ll come back to the subject of rocks, grades and widths later, now it’s time to roll the
cameras and narrate the visit which started on Tuesday afternoon at the Darwin Resources
head office in Lima and included meetings, greetings, very nice sandwiches and an overview
presentation of the Suriloma property and what we were about to see. Next came an airport
transfer and a flight to Trujillo, a little over an hour North of Lima by air. By the time we arrived
it was early evening, so hotel check-in, an evening meal and to bed early because...
...Wednesday started very early. The next leg of the trip was a drive from coastal Trujillo up
into the mountains, where less than two hours later we found ourselves in the pretty provincial
town of Otuzco, home to around 10,000 people and some very typical local architecture.
Otuzco, 2,800m above sea level, is just 8km as the crow flies or 21km by the winding road to
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the Suriloma property and is used regularly by DAR as home base for exploration operations
(they’ve rented a floor in a small hostal in town).
Access to Otuzco is on paved/tarmacked road and very comfortable from Trujillo, with only the
last leg on a bumpy dirt track to Suriloma. In other words, the property is an easy one to reach.
Here below is a shot of the view from the 4x4 between Otuzco and Suriloma, a beautiful part of
the world that’s difficult to do justice to with a simple photograph.
On arrival at Suriloma we stopped first at the right-hand end of the property, where the La
Puerta target starts on the above map.This photo takes in the view looking straight up the
mineralized structure.
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We also see Dr. Graham Carman himself, as well and Senior Consultant Edgardo Guizado. To
the right is a major fault that marks the limit to the mineralized zone, but the red line I’ve
drawn in on the left only marks what’s known so far as mineralized. To the left may be the
same stuff but DAR has to wait until access agreements have been finalized with the land
owners before being able to explore and find out. On this score, it’s well worth mentioning that
relationships between locals and DAR people are good indeed. I witnessed the interactions first
hand and can confirm the friendly and welcoming nature of locals to the company, product of
smart community relations by the company from the word go. The problem with access to
some parts of the property is not one of animosity but more of respect, as the land over time
has been divided up (in classic manner) between the children of previous owners. As some of
those people then moved away from the region, DAR much prefers to track them down (they
said one was found living in Argentina!) and get formal permission before treading all over their
fields. It’s sometimes a slow process, they tell me, but it’s the type of forward thinking that
pays dividends in the long run. If only all juniors would think smart in the same way...
Back to the photo and we can say that mineralization may continue to the left, but even if it
doesn’t there’s a 60m to 80m channel already identified. According to the geological mapping
and theory applied, this channel should be around 200m deep in the volcanics and then
whatever it turns out to be in the sediments below that. As for length, it’s been mapped to
around 1.2km so far (which takes it over the crest of that hill and down the other side).
Now for the rocks, and Guizado and Carman are seen standing on typical examples of what
they’ve fund there, an oxide mineralization that’s friable (I could easily pull it apart with my
fingers) and reminded me a lot of the oxide rock that Rio Alto is mining at La Arena, though
CEO Carman was quick to tell me that the La Arena ore has more silica than the Suriloma stuff.
As for grading, the news there is good. Apart from a weaker zone at the right hand tip of La
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Puerta (behind my back as per the above photo), the grades DAR has found have been typically
above 1g/t in all samplings and trenching too. Along with that, CEO Carman tells me that the
consistent nature of the grades, with little in the way of variations as we move up the property,
is particularly good. Next, it all starts at surface bar that patch between the people on the
above photo and the hill crest, on which peas are growing in topsoil. But scrape the soil away
and the rock is there. Finally, as you may be able to see from the photo the mineralization as
marked by the red lines sits above the land on either of it, which (theoretically at least) would
make for a lower strip rate if the mine got built.
Here’s another shot of the outcrop mineralization, demonstrating its friable nature.
We then started the walk up the hill to check over the rest of the property, which gave your
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author the chance to take the 100% necessary photo of any site visit: Geologist Pointing At
Things. In this case the geol was the superfriendly Rolando Ligarda, a highly regarded
professional in Peruvian circles (for example, before the trip started I bumped into a geol pal in
Lima Tuesday morning and on telling him I was on a trip with Rolando Ligarda his face lit up
and he waxed lyrical about his expertise).
We checked out most of the major trenches that had been dug (and always covered over
immediately afterwards, as part of the deal with the locals). This one is one of the more recent
ones and can been seen on the map above highlighted in yellow, the 29m of 1.6 g/t gold and
4.5 g/t silver result. It’s worth noting that the trench started roughly in the middle of the
mineral zone and stretched left (as due to the patchwork nature of land ownership once more,
permissions hadn’t been gained for either side) and behind me when I took this photo was
room for a trench of roughly the same length.
We then crested the hill and began to make our way down the other side. This photo, taken
roughly from the point on the above map where you the the word “La” of “La Puerta Structure”
running underneath the mineralized zone, gives a good idea of the gentle camber on this side
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(again, probably easy open pit mining).
However, turn around and walk a few hundred metres more and this is what faces you:
Terrain suddenly gets very steep and doesn’t stop being steep either, not nearly as interesting
for a potential open pit mining operation and although we still find outcropping mineral (the
photo below is at the ‘Inmaculada’ zone that’s returned up to 11g/t Au in chip) it’s nothing like
the La Puerta target that we’d just left behind us. From here we trekked down and got about
half way to the border where the volcanics meet the sediments at surface, but time was against
us and we couldn’t get that far. What’s clear, however, is how the altitude drops rapidly and
then flattens out when the sediment host is reached further down.
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We then trekked back up the hill, had a spot of lunch and made our way by 4x4 to the Edelmira
zone (check that first map again) where seven side-by-side epithermal veins have been
identified by DAR. This photo below shows one of them. We saw a few informal mine workings
and adit entrances that apparently date from mining activity back in the 1970’s, though couldn’t
enter as they’d collected water. Evidence of sulphide mineralization, with the typical Andean
sulphide trio of silver, zinc and lead on display. This area had little or no gold in it, but was
geologically (and maybe eventually economically, who knows?) interesting for the team.
Personally I was less interested in Edelmira. The story here, the speculative “do I buy this
stock?” story is clearly La Puerta, what results DAR will get from the upcoming drill program
(that will see eight holes do to 200m downhole depth and get to around 150m under surface)
and then put together an oxide gold resource. Edelmira, with its relatively skinny high grading
sulphide mineralization was a completely different kettle of fish to the disseminated oxide gold
mineralization that could eventually make for a heap leach/dump leach open pit gold mining
operation that we’d seen on the first leg of the tour.
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The party then hummed and hahed on whether there was time to visit another zone , the Santa
Felicita epithemal veins, that would have entailed a 90 minute round trip in 4x4 from where we
were (the topography means that we’d have to take the long way round). But by that time,
around 4pm, the weather was starting to close in (see this last photo, a big contrast from the
bright sun we’d enjoyed all day to this point) and as it’s the rainy season in the Peru uplands at
the moment that’s not something to be taken lightly.
Also, as it was now clear in my mind that the story of Suriloma is the La Puerta oxide gold zone,
not any epithermal veins that interest geologists more than bankers I don’t feel much was
missed by skipping that part of the property. In the end it turned out to be the right decision,
as just a few minutes after climbing in the vehicles the rain and then a full scale hailstorm
opened up on us, making the dirt tracks down towards Otuzco into small rivers. So after a
careful drive down, it was time to say goodbye to the team (who were staying in Otuzco in
order to continue their jobs at the property the next morning) and I made my way back down
the hill, to Trujillo, to the airport and then waited for a delayed plane that got me back to Lima
at 1am. Thus endeth the visit.
Conclusion
The story of Darwin Resources (DAR.v) is, for me at least, a simple one.
• They’re in La Libertad. So is Rio Alto
• They have an interesting oxide gold project. Rio Alto has an interesting and very
profitable oxide gold mine.
• Early indications suggest that although smaller than the La Arena oxide deposit,
Suriloma is better grading. It’s too soon to say such a thing out loud and official, as
we’ll still only have rough ideas once the truth machine has done its work and we have
core assay results, but the nature of the trench results is encouraging and, so far at
least, indicates a deposit that may grade over 1g/t gold on average. La Arena is
perhaps 0.6g/t or 0.7 g/t global average.
• The mineralization starts at surface and the rock is friable. That matches La Arena too
and suggests easy (i.e. cheap) mining, as does the lie of the land and potential strip
rates.
If DAR drills this and the results match the current company theory of reasonably uniform oxide
mineral that goes down to at least 200m in the volcanic host, and the La Puerta zone ends up
at 1.2km long, and on average finishes 70m wide, and the grade comes to perhaps 1 g/t (let’s
not pitch too high, though admittedly from what we’ve seen at surface it may turn out to be
more), you get this from a bit of math (using a specific gravity of 2.5t/m3 for the rock)
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200m X 70m X 1200m X 2.5t/m3 X 1 g/t Au = 42,000,000 grams of gold
Or in old money, 1.35m oz of easily mineable and likely profitable gold. And if the mineralization
turns out to be of a similar size, shape and grade when the sediments are met, you can double
that.
Now for sure the above calculation is highly, repeat HIGHLY speculative and should not be
relied upon as anything except the roughest of guides. The mineralized package at La Puerta
may turn out to be smaller or a lot smaller (or larger). The grade may disappoint (or be even
better), etc etc. There’s a long long distance between us and just the first resource count at
Suriloma, let alone a PEA, a feas or any mine operation. If (repeat if) the drills return
interesting numbers later this year in the first pass program and if (repeat if) DAR gets to raise
funding again later in 2013 (it’s current $2.1m cash pile is good for 2013, not 2014) and if
(repeat if) can put together a resource by some time in 2014 and if (repeat if)...well, you
should get the point by now. CEO Carman said it well when saying, “When people ask me for
Suriloma’s potential I say it’s somewhere between half a million and five million ounces”, so if a
doctorate geologist can’t get any closer than that width of bid/ask, what chance do I have? But
assuming a few happy answers to those ifs DAR will own a decently sized, nicely grading,
robustly economic (theoretically) oxide gold deposit just a few clicks away from one of the
biggest gold success stories of the last few years, that just happens to be a open pit oxide gold
dump leach operation in the Peru region of La Libertad. Or to put it as simply as I possibly can,
either RIO buys out DAR or the company that wants to be the next RIO buys out DAR.
This is also why I took a bit of time out at the top of this report to explain about the share
structure and the tight-hand holders of DAR stock. With a market cap of $4m, the low share
count and the amount of “serious” sponsorship on board, it won’t take much of a result to see a
big percentage share price win from DAR off its current low share price. If those first drill
numbers come in positively and the market starts to speculate there might be 1m oz gold at
Suriloma, even by giving those ounces a low $10/oz in-situ valuation you’re indicating a 250%
win from current levels. It might not happen (truth machine rules supreme), but then again it
might be just the start of a price run. This is pure exploration mining speculation, ladies and
gentlemen, the risks come big but so do the rewards.
Conclusion
If this were a reasonably level market that didn’t feel like it was about to screw all participants
at any given moment Darwin Resources today would be an obvious, nay no-brain speculative
buying opportunity at current price levels. However, if the market weren’t so rough it would be
unlikely to see DAR.v trading at or around 15c, or even 20c for that matter, Such are the risks
weighed against the rewards. DAR is a pure and straight spec drill play at this time, so because
of that my best call today is to wait on the sidelines and see how the lay of the land is once the
drilling gets underway at Suriloma. In another market and with a different attitude, I’d happily
snap up a few of these cheap shares right now and not think twice about holding them for six
months to see what happens. Those of you who are more risk-tolerant than I might just do that
tomorrow morning but the way things are in the larger macro scene, I see less reason to add
yet another illiquid position that might drop to 10c before making its move on any true
newsflow. therefore the official call here is “wait and see”. If the market picks up and the
drilling starts on time I’ll be happier buying shares at a higher price deck closer to when
newsflow was due than buying now and risking a whole new chapter of ennui from yet another
tiny stock with plenty of potential. But make no mistake, DAR has found itself a very interesting
and prospective property at Suriloma and it will pay to follow developments at this one.
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Stocks to Follow
Of the 14 positions open this time last week, three of our names on the ‘Stocks to Follow’ list
made gains. That valiant trio were Aurcana Corp (AUN.v), Lara Exploration (LRA.v) and our
short position in Gold Resource Corp (GORO). The other 11 all lost ground, including the
biggest percentage losses in Plata Latina (PLA.v down 14.3%), United Silver (USC.to down
12.5%), Lupaka Gold (LPK.to down 9.2%) and OceanaGold (OGC.to down 9.1%) as well as the
biggest personal financial losers in Rio Alto (RIO.to down 34c or 6.8%) and B2Gold (BTO.to
down 20c or 6.1%).
There are currently 14 stocks on our open list, one less than our self-imposed maximum. Just
three are in the green, whilst too many are in the red.
Company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
Top Picks
Rio Alto Mining RIO.to buy C$2.04 07-apr-11 C$4.64 127.5% $6.29 tgt
B2Gold BTO.to buy C$3.51 28-nov-12 C$3.06 -12.8% $5.70 tgt 3rd buy Feb'13
Recommends
Minera IRL IRL.to buy C$0.73 22-jul-12 C$0.68 -6.8% $1.56 tg, added, new avg
Aurcana Corp AUN.v buy C$1.07 11-nov-12 C$0.77 -28.0% $1.50 tgt near term play
OceanaGold OGC.to buy C$3.03 16-sep-12 C$2.40 -20.8% $5.34 tgt growth prod
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$1.18 2.6% solid biz model, LT hold
Plata Latina PLA.v hold C$0.79 10-apr-12 C$0.30 -62.0% considering sale
Lupaka Gold LPK.to spec buy C$1.12 23-oct-11 C$0.345 -69.2% holding
IMPACT Silver IPT.v buy C$1.14 13-jan-13 C$0.98 -14.0% new position, $1.85 tgt
Gold Res Corp GORO short U$14.11 25-jan-13 U$13.07 7.4% short, $9.60 tgt
Smaller/Riskier
AQM Copper AQM.v hold C$0.31 16-oct-11 C$0.07 -77.4% holding thru for my sins
Focus Ventures FCV.v hold C$0.175 01-jul-12 C$0.165 -5.7% revised tgt 25c
United Silver USC.to hold C$0.21 28-oct-12 C$0.105 -50.0% 60c tgt, avg down Dec'12
Marlin Gold MLN.v hold C$0.075 10-feb-13 C$0.065 -13.3% small, new, near term
Closed in 2013
USA Graphite USGT feb'13 U$0.93 08-jan-13 U$0.17 81.7% tgt made, trade closed
Lachlan Star LSA.to feb'13 C$1.50 30-sep-12 C$0.95 -36.7% sold to reduce port risk
2009, 2010, 2011 and 2012 closed positions in appendices below
Now for some notes on a selection of the above stocks.
B2Gold (BTO.to): As BTO went under $3, the only complaint I had was “bought that third
tranche too early” and the only decision to make was “So do I buy a 4th time?” as this isn’t a
Top Pick for nothing. I’m not buying again because I don’t want to dip into cash reserves any
further and buy this great value. That’s because you never know in this crazy game and great
value may slip down into stupid braindead late’08 all over again value, so if it does I want at
least some arsenal left to take advantage.
Minera IRL (IRL.to)(MIRL.L): See ‘Market Watching’ below for the main write-up on IRL. As
for the stock performance, it sold off in line with the market, though notably the volumes were
thin on both sides of the Atlantic.
IMPACT Silver (IPT.v): Some of the losses last week hurt more than others, and this is one
that panged the heart. One of the reasons to have taken a position in IPT recently (as from the
NOBS report in IKN193, dated January 13th, to be precise) was the prospect that it would get a
revaluation (and let’s be clear, despite all evidence we were thinking about upwards
revaluation) from the commissioning of its new operations, namely the new
14

On Wednesday 20th IPT announced that the Cuchara/Oscar mine operation was now live (2). As
the announcement came on the very day gold dropped to $1,550/oz, dragging the whole PM
complex with it, that’s the type of timing that
reminds one of Bad Luck Brian (3). Here’s the
five day price chart and although IPT got a bit
of a bounce the next morning on the news, the
damage was already done to the stock on the
day of the announcement (that came roughly
midday....really, the IPT IR department should
have waited til pre-bell Thursday) though to be
completely fair, the late Friday jag down under
$1 looked a bit strange and unless the PMs sink
directly into oblivion next week I’d expect this
stock to make it back over a buck and be there
for IKN200.
The Cuchara/Oscar production will feed the current central mill at the Royal Mines of Zacualpan
(RMZ) production zone, with the next news expected from IPT being the start of production
from its Capire project, in the same general area but a separate production facility (see IKN193
for more). By way of reminder, here’s
a variant of the production and IPT: Ag production and forecast
forecast production chart we first 1000000
carried in the IKN193 report (the
900000
difference is that this time I’ve
800000
chopped the Y-axis to 300,000 oz Ag
to make the differences easier on the 700000
eye). The basic story is that IPT had a 600000
weak production year in 2012 (which
500000
is why we find the stock low where it
400000
is) but improvement at the RMZ
operations, including the start-up at 300000
Cuchara/Oscar, will drag production
back over 700k oz Ag this year. Then
as Capire comes online and gradually
ramps up production (we’re expecting it to hit full stride in 2015) IPT becomes a near 1m oz
silver producer.
IPT enjoyed good profitability in late
2010 and 2011, but the drops in
production last year saw net profits
turn to overall breakeven (though to its
credit mine operating incomes (MOI)
kept head above water). With the
return to higher production and the two
new operations now coming on line, it’s
reasonable to assume IPT can return to
its bottom line winning ways this year.
At a market cap of less than $67m (and
an IKN estimated $23m of that covered
by working capital) the value of this
rebound story in the making was clear when I bought it back in January. It’s even more obvious
now, some 14% cheaper.
Aurcana Corp (AUN.v): AUN was a rare winner, which was more to do with the way it had
already been sunk the week before (forced selling from redemptions?) than much else. This at
least cheers me about having a good old fashioned gripe but not selling the stock the week
previously (see IKN198), so let’s watch this pre-PDAC week and see if it can rally any further.
15
7002 8002 9002 0102 1102 tse2102 tse3102 tse4102 tse5102
AgOz
RMZ Capire
source: company filings, IKN ests
IPT.v: operating profit vs net profit per Qtr
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
-0.5
-1
90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3
source: company filings
srallod
SU
fo
snoillim
MOI net profit

OceanaGold (OGC.to): OGC got hit hard in the selling, though managed to rally a bit from
the sub-$2.30 level it found itself in after Wednesday (and Thursday due to the knock-on effect
of having its main listing in Australia, as well as trading in New Zealand). Sadly nothing out of
the ordinary to report on this company’s share price performance last week, one of many in the
same boat.
Lara Exploration (LRA.v): An unusual deal, for LRA at least, was announced last week (4)
when the company said it was spending $220,000 to acquire 13.3% of the private Colombia
coal mining company Carbhid. The cash injected by LRA will be used by Carbhid to complete
development of its new mine in Colombia that’s due to start producing 1,000 tonnes per month
of thermal and coking coal this year. It’s reasonable to assume LRA has moved on an
opportunity to buy a piece of a near-term cash generating company for straight investment
purposes and although not he biggest operation in the world at 1k per month coal production, it
should be a good percentage cash flow generator and presumably provide private company
dividend returns.
In a welcome change from most of the market, LRA was up slightly on the week. Volumes were
better than the stock average too (though still thinnish in absolute terms).
The Copper Basket
After eight weeks of 2013 The Copper Basket is showing a 0.26% loss to level stakes.
company ticker price 1/1/13 Shares out Market Cap current pps gain/loss%
1 NGEx Resources NGQ.to 3.40 158.5 477.09 3.01 -11.5%
2 Lumina Copper LCC.v 9.43 43.46 378.10 8.70 -7.7%
3 Augusta Res AZC.to 2.43 144.1 374.66 2.60 7.0%
4 Copper Fox CUU.v 0.83 397.65 318.12 0.80 -3.6%
5 Nevada Copper NCU.to 3.50 80.5 306.71 3.81 8.9%
6 Hot Chili Ltd HCH.ax 0.72 286.78 196.44 0.685 -4.9%
7 Western Copper WRN.to 1.39 93.78 104.10 1.11 -20.1%
8 NovaCopper NCQ.to 1.80 51.89 99.63 1.92 6.7%
9 Reservoir Min. RMC.v 2.41 41.46 93.29 2.25 -6.6%
10 Panoro Minerals PML.v 0.62 176.25 88.13 0.50 -19.4%
11 Curis Resources CUV.to 0.70 56.31 58.56 1.04 48.6%
12 Candente Copper DNT.to 0.375 121.93 52.43 0.43 14.7%
13 Yellowhead Min. YMI.to 0.59 60.97 39.63 0.65 10.2%
14 Oracle Mining OMN.to 0.80 49.03 39.22 0.80 0.0%
15 Strait Minerals SRD.v 0.08 56.86 2.84 0.05 -37.5%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg -0.26%
We’re under zero for the year. The second
Copper Basket 2013 average, weekly
week of strong sector selling has seen The 14%
Copper Basket wipe out all its gains for the 12%
year and show a small loss to date. It wasn’t 10%
all bad, with Nevada Copper (NCU.to) up and
8%
Yellowhead up big (YMI.to up 12.1%), then
6%
there were two unchanged as well (CUU.v,
4%
SRD.v). But it was more than bad enough with
2%
the biggest of the eleven losers showing in
0%
Panoro (PML.v down 13.8%), Western Copper
-2% jan6th 13th 20th 27th feb3r 10th 17th 24th
and Gold (WRN.to down 11.2%), Candente
source: IKN calcs, TSX data
16
31/1/1
morf
egnahc
%

(DNT.to down 104%) and NGEx Resources (NGQ.to down 9.3%).
All rather depressing for longs, with the downdraft driven by the sinkage in the price of copper,
that moved quickly from the $3.70s back to the previous line in the sand at the $3.50s.
Meanwhile over at inventories, the world’s warehouses took on a chunky 5.1% more copper,
moving up by 34,003mt to break back through the 700,000 level (700,137mt to be exact). LME
stocks rose by 5.6% to 424,350mt, Shanghai stocks also rose by 5.6% to 207,709mt and
Comex rose 0.5% to 68,078mt. More bearish news came from the LME cancelled warrants data,
which dropped again to 27,775mt or 6.55% of total inventory. Nobody wants that copper.
Cancelled Warrants at LME, IKN157 to date
35%
30%
25%
20%
15%
10%
5%
0%
17
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 791NKI 891NKI 991NKI
source: Cochilco, LME
rof
yrotnevni
EML
%
latot
yreviled
resu-dne
Now for updates on some of the basket stocks:
Western Copper and Gold (WRN.to): Back at the end of January we wondered (5) whether
the price gap that formed when WRN unveiled its new feasibility study would fill.

And indeed it did.
Curis Resources (CUV.to):
I’m a little late to this story, but this report (6) in the newspaper local to the town of Florence
dated February 14th goes into some detail about the fight going on between CUV and the town
council of Florence that’s trying to stop the mine from becoming a reality. It starts like this:
If the town of Florence continues its ban on large amounts of sulfuric acid, Curis Resources is
demanding compensation of almost $140 million for loss of fair market value of its land off Hunt
Highway.
This is the value of the property as an in-situ copper mine, as determined by consulting firm
Deloitte LLP, as of Aug. 6, 2012, the day the Town Council passed the ordinance. This
compensation demand is contained in a notice of claim from Curis legal counsel to the town dated
Feb. 1.
Florence has argued that it actually took nothing from Curis, and the company’s property remains
viable for residential development in keeping with its zoning. But another appraiser concluded that
as residential property it would be $7 million in the hole, after the costs of closing the mine and
accounting for archaeological resources.
Curis President and CEO Michael McPhie noted in an interview that the $140 million in fair market
value was as of Aug. 6, a time when the project had yet to receive any permits. Another more
recent report values the project much higher at about $748 million
It’s worth reading the whole report as it covers plenty of ground. However, the reporting does
have an anti-mine position to its style (not overtly mega-anti, but more of a case of leaning that
direction) so you’d be wise not to take it all in one swallow without chewing over the matter for
yourself.
Nevada Copper (NCU.to): A blip of green amongst the carnage, NCU continued to rally on
the back of the positive sounding tone of the previous week’s permitting track update. Nothing
else to say here, I just wanted to add a small line and note that it’s still possible to get a
positive reaction from this godawful market if your company brings genuinely good news to
light.
Copper Fox (CUU.v): Friday afternoon brought (7) yet another small non-brokered private
placement for CUU that’s wholly taken by majority shareholder Ernesto Echavarria, this time the
sum is $2.5m, the price is 79c per unit (1 unit ? 1 share + 1 warrant at $1.00) and the number
of units placed 3,164,557. It’s not factored into our overall shares out count yet, but once it
closes CUU will be over 400m shares, with Ernesto owning nearly 226m of those (plus nearly
20m warrants). It’ll all end in tears.
Panoro Minerals (PML.v): Wednesday pre-bell PML announced (8) a $15m bought deal run
by Canaccord, with the plan to sell 27.3m shares at 55c a pop (no warrant). The rest of the
18

week brought pain and suffering to the company share price, set off by the deal announcement
and made no better by the sectorwide drop. It’s also intriguing to think that the other houses
may have it in for Canaccord, as this is a
bought deal and therefore (theoretically at
least) fully backstopped by the brokerage.
Now that shares are available at 10% lower
than the asking price (and it was worse than
that for most of Friday) the only people who
would be interested in filling a bought deal at
55c are those larger players, instos etc who
would want to take a significant chunk of the
company.
Perhaps this deal will close fully taken,
perhaps the terms will be changed (it wouldn’t
be the first time that a Canadian house has
reneged on the terms of a bought deal in the last 12 months (9)) but it is once again a stark
warning sent out by the market to those that would run a placement: unless you’re raising from
a position of strength (newsflow, surging share price, pre-arranged finance, etc) go to market
at your share price’s peril.
The Lottery Ticket Basket
After eight weeks of 2013 The Lottery Ticket Basket is showing a 0.33% gain to level stakes.
company ticker price 1/1/13 Shares out Market Cap current pps gain/loss%
1 Eagle Star Min. EGE.v 0.125 69.48 20.84 0.300 140.0%
2 Fancamp Expl. FNC.v 0.125 109.8 12.08 0.110 -12.0%
3 Glass Earth GEL.v 0.155 104.79 12.57 0.120 -22.6%
4 Marlin Gold MLN.v 0.10 192.39 12.51 0.065 -35.0%
5 Bellhaven BHV.v 0.14 121.16 10.90 0.090 -35.7%
6 Gryphon Gold GGN.to 0.085 194.64 8.76 0.045 -58.8%
7 AQM Copper AQM.v 0.08 105.57 7.39 0.070 -12.5%
8 Copper North COL.v 0.10 58.62 6.45 0.110 10.0%
9 FDG Mining FDG.v 0.13 45.59 5.24 0.115 -11.5%
10 Rio Cristal RCZ.v 0.025 149.26 4.48 0.030 20.0%
11 Darwin Resources DAR.v 0.20 26.16 3.92 0.150 -25.0%
12 Cream Minerals CMA.v 0.03 155.34 3.88 0.025 -16.7%
13 Inca One Res. IO.v 0.12 34.0 2.89 0.085 -29.2%
14 Firestone Ventures FV.v 0.045 36.32 2.00 0.055 22.2%
15 Netco Silver NEI.v 0.025 47.01 1.88 0.040 60.0%
Portfolio avg 0.33%
Two of our basket stocks managed to register a winning week and in fact both scored strong,
though somewhat artificial, big percentage wins (GGN.to up 28.6% on a technical rebound,
FDG.v up 21.1% on a late Friday tape paint). Then two were unchanged on the week (FNC.v,
CMA.v) which leaves eleven that registered a weekly loss. No need to list them all, but bigger
percentage losses came from Firestone (FV.v down 38.9%), Rio Cristal (RCZ.v down 16.7%),
Copper North (COL.v down 15.4%), Darwin Resources (DAR.v down 14.3%) and even recent
hotshot stock Eagle Star was caught in the selling (EGE.v down 11.8%) though admittedly
there’s logical cause for people to take profits in that one.
With all that (and unlike The Copper Basket) our overall average just about managed to hang
19

on to its overall positive position as we move towards PDAC, though with just +0.33% and 5
out of the 15 stocks in the green isn’t much to shout about.
30% Lottery Ticket Basket 2013 average, weekly
25%
20%
15%
10%
5%
0%
20
ht6naj ht31 ht02 ht72 dr3bef ht01 ht71 ht42
source: IKN Weekly data, TSX
2102/1/1
morf
egnahc
%
Bellhaven Copper & Gold (BHV.v): With regard to our comments last week on the 11.5c per
unit offering, BHV traded between 9c and 10c all week which may have put further pressure on
the company to re-price this deal (unless a firm buyer was lined up a priori).
FDG Mining (FDG.v): A Friday evening NR from FDG (10) which brought just the type of
news a junior wants to bury, the resignation of its CFO. As the stock was artificially painted
higher late Friday, expect a big loss booked in this name next weekend.
Inca One (IO.v): In its NR on Friday (11) entitled “Inca One Announces a 3.5 Ounce Gold
Bullion Giveaway” IO explained how it was sponsoring a stock picking contest that concentrated
on Peruvian exposed miners and stumping up the first prize of 3 ½ ounces of gold. In other
words, for less than $6,000 this tiny junior gets to be remembered by anyone who decides to
join in on the free to enter stockpicking competition that kicks off mid-March and runs to mid-
September (by the way, I won’t be playing). For sure it’s a bit gimmicky, but if it gains traction
it might just turn into a cheap and effective PR exercise, so I see nothing wrong with the ploy.
Regional politics
Cerro Blanco: Guatemala and El Salvador opinions differ
This is a store we mentioned two weeks ago (IKN197) and from here on we’ll be watching
closely, because we now have the two country Presidents, Pérez Molina and Funes, agreeing to
meet to discuss the potential for pollution from Cerro Blanco reaching the lake in El Salvador,
we have El Salvador’s government now setting up an official commission to look into the issue
and the very latest is President Otto Pérez Molina of Guatemala (the country that wants to build
the mine on its territory) saying (12) that Cerro Blanco poses no risk because that’s what the
approved EIA documents say, even though the same documents have been strongly criticized
by watchdog bodies in both countries as being incomplete.
Chile: Barrick fined U$215,000 for environmental infractions at Pascua Lama
Headline news from Chile last week (13) was the fine imposed on Barrick (ABX) of 120 million
Chilean Pesos (around U$215,000) by the government’s Environmental Evaluation Service due
to environmental infractions at its Pascua Lama gold project. The agency found that of the 8
charges brought against ABX the company were guilty of seven, with most connected to the
amount of dust being thrown up by pre-stripping activities at the project that was in turn
affecting the nearby glaciars and air quality further down the slopes. The fine in the end is
small change for a company such as ABX (and a drop in the ocean next to the continually

upwards adjusted capex at Pascua Lama, now slated for around U$8Bn). The main potential
problem for the company (aside the bad publicity) is potential timeline setbacks for
commissioning at the mine, which is currently planning first gold pours in 2014. In its latest
report, ABX said that the halt on pre-stripping wasn’t affecting its plans but the suspension
won’t be lifted by the government of Chile until ABX can supply a new plan for the pre-strip
operations that authorities approve, so if things stay suspended at some point this aspect of the
project will become critical path.
More Barrick, as ABX creates a rod for its own back in Peru
It pays to know the differences in root causes for social protests against mining companie in
Peru. Last week, news was made by a blockade to the Barrick (ABX) Lagunas Norte (aka Alto
Chicama) gold mine in the La Libertad region of Peru (the same region that hosts Rio Alto,
Darwin and a whole bunch of other mining names). Here’s how Dow Jones News Wire began its
report of the event (14):
Canada's Barrick Gold Corp. (ABX, ABX.T), the world's largest gold producer by
output, said Thursday that a group of about 200 people have set up blockades to its
Lagunas Norte mine in northern Peru over demands for jobs and development
projects.
The reason behind the protest is a little more complicated than “demanding jobs” however and
once again points to Barrick as the aloof mining company. The deal ABX has with the
community around Lagunas Norte is that at least 50% of employees come from the local area.
However, many of the people that work at the mine are contracted via third party deals, which
ABX says do not come under the agreement. Meanwhile, said locals see the amount of people
working at the mine and that clearly a lot more than 50% of the headcount are from other
places, thus complain. The complaints are duly ignored until such time, months down the line,
that the locals set up their roadblocks and finally get some attention.
Who’s right here? According to the letter of the law, ABX is in the clear, but according to
common sense you can’t have clearly a lot more than 50% of your workforce shipped in from
out of town and then claim that you don’t have over 50% of non-locals working at your facility,
not without antagonizing people anyway. However, my sighs of frustration come when you see
that it needs a roadblock, a strike and a national headline that does nothing for the image of
Peru mining stability before a stubborn-headed company like ABX will even come to the table to
negotiate and reach a mutually satisfactory agreement.
Honduras passes its mining reform law
And it’s very mining company friendly, too. Away from the main headline makers (15), such as
the new 5% royalty (of which 0.5% goes to the municipal authority where the mine is located
and 4.5% goes to the nation) there are plenty of clauses in the law that make it different from
the trend seen in LatAm (and the world for that matter) of tightening up on mining company
activity. Examples include:
• Exploration concessions are priced at just U$150 per annum for a 100 hectare
concession package (by comparison, Peru is $700/for the 100 Ha standard concession
block. Maximum size for any single concession is 10,000Ha.
• Metals mining concessions are granted for a 15 years period that is then renewable for
another 15 years.
• Mining companies are allowed to freeze operations for up to three years with no loss of
rights (in the event of a low metals price period, for example).
• An EIA must be submitted and approved for a mine to go into operation, but from that
moment no environmental controls are necessary.
• Mining companies have the legal right to move population zones (eg villages) off a
concession that will move to production.
• New operations receive a five year tax exemption.
And there’s more where that came from. Honduras is obviously keen to make itself attractive to
21

the mining industry. It might be attracting the wrong sort of company, however.
Ecuador’s Presidential election results
A quick mention was made last week that Correa had won, but the scale of the victory only
became apparent in the days following the vote and the arrival of solid count results. Rafael
Correa and his party, Alianza PAIS, won 57% of the popular vote for President (2nd placed
Guillermo Lasso of right wing party CREO got 23%), but perhaps as important is that his party
won at least 100 (potentially 102 once the dust has 100% settled, as the official results have
not yet been published) of the 137 seats in the national parliament, thus guaranteeing laws
promoted by Correa will get passed. Correa’s party also took 23 of the 24 provinces of Ecuador.
Theoretically this is good for the prospects of the mining industry in Ecuador, as Correa made
his approval of responsible large-scale mining an overt part of his campaign. And as this quote
from Correa on Saturday 23rd February (i.e. yesterday) in his weekly address suggests, he’s not
going to be afraid to push forward on the policies he believes matter:
“It’s now or never to definitively change the country, and you know that we’re going to
achieve it, we’re not going to disappoint our citizens: not one step back, not a moment
to lose.”
However, with the lack of large scale mining culture, continued strong indigenous opposition to
mining in the places around many of the projects that matter and the new country mining laws
that demand at least 51% of gross revenues go to the State via tax and other burdens, Ecuador
is still a very iffy proposition for mining investment. Also, with so many deep bargains available
in countries exposed to more serious mining countries that offer a stable and level playing field
(Chile, Mexico, Peru etc) why should we add extra risk by jumping into the unknown and
unknowable Ecuador at the moment?
Ecuador: The Intag copper project back in play
Hot on the heels of the Correa election victory came the first signal of his new term’s intent to
push forward on mining development in Ecuador (16). The regional government of Cotacachi
voted 5 to 4 (the five votes cast by the mayor of the region and four councillors who belong to
Rafael Correa’s party) to approve the report submitted by Ecuador’s state mining company
ENAMI in joint venture with Chile’s State mining company Codelco that will allow the JV to
explore and move forward on the Llurimagua project. This is the new name for the copper
project previously known as the Junin project or the Intag project that caused large scale social
revolt a few years ago, as well as conflicts between locals and the Canadian junior Ascendant
Copper which eventually had to leave the scene. Local antipathy towards the project is
(reportedly) still as strong as ever and the decision by the local government was met with anger
and disappointment by those who are against the mine development (which is, by all accounts,
a sizeable portion of the local communities). If you require a test case as to what might happen
to the Ecuador mining scene under Correa’s new period, look no further for the next few weeks
and months.
More potential Yukon political risk
Consider this a headsup, no more. I was sent this link (17) to a report dated February 14th by a
reader who will remain nameless but is very well versed in the ways of the Yukon mining scene
. It begins like this:
The White River First Nation of Yukon Territory Feb. 14 called on the Yukon
government to halt all activities for Kaminak Gold Corp. and all of its licenses,
pending consultation and accommodation with the aboriginal group.
The Conference Board of Canada recently stated that the future of mining in
Yukon will be determined by the status of government relationships with First
Nations. Its report stated that, “It’s only possible to the extent as well that we
settle some of the land claims. This patchwork across Canada, in terms of
settled and non-settled, land is a huge impediment to growth, and we can’t
22

stress enough in the report the need for cooperation between government,
industry and aboriginal groups.”
Those of you with an interest (financial or otherwise) in Kaminak (KAM.v) should click through
and read the rest, then perhaps try to find out more as I’m making no call on this and am the
first to put hands up and say “I know nothing about the Yukon”. Meanwhile, it would be unfair
of me to quote the accompanying mail that the Yukon expert reader sent over as he’s the type
of person who wants no publicity or even clues to his ID, however I can report that he believes
KAM might be suffering as a pawn in a larger chess game between the regional government
and the First Nations peoples. He also notes that normally accepted maps show that KAM’s
Coffee is not part of the First Nations land, however there are trails that lead from the generally
accepted First Nations lands to the Coffee property area (perhaps some 50 miles distant), which
would be cause for debate on the validity of the mapped borders at the very least.
A mining snippet from Mendoza Argentina
The governor of the Argentine province of Mendoza, Francisco ‘Paco’ Pérez, was interviewed
this week (18) by local newspaper Diario de Cuyo. Part of the Q&A covering the sensitive
subject of mining in the province, as the locality is notoriously stickly about the presence of
metals mining (recall the Coro Mining (COP.to) San Jorge affair) but wants the massive Vale
(VALE) Cerro Colorado potash project to move forward. Here’s what the governor, who is
ostensibly pro-mining in his policies, had to say
“If we’re talking about metals mining there’s no social acceptance to let (the industry)
move forward, but if we’re talking about Vale, I have to say that we’re in negotiations
which is difficult and hard ones in both mine operative and political terms.”
Which translates as “the Vale potash project is really big and the Brazilians want to pull out, so
we’re trying our hardest to keep them here. At the same time, metals mining is smelly and
horrible and we don’t want that here. We want to have our cake and eat it, you see.”
Market Watching
Esperanza Resources (EPZ.v): Cerro Jumil consultancy
Another one of those reports that could easily slot into either “Regional Politics” or “Market
Watching”, but as it’s about a stock that your author is watching carefully and likes, let’s make
it stock specific and put it here.
Last week saw the open public consultancy meeting for Esperanza Silver (EPZ.v) Cerro Jumil
project, a key step on the track for permitting the environmental impact study (EIA) that EPZ
has already submitted to Mexico’s State enviro body, Semarnat. This report from Mexico’s left-
leaning newspaper La Jornada (19) covered proceedings closely and reported on plenty of
details, though always trying throughout the note to find the worst aspects to the EPZ case in
true Jornada style. Meanwhile, this report (20) of proceedings in Mexican daily Proceso is
somewhat shorter and more balanced, but the main points made by both these complete
reports are similar
• The governor of the State of Morelos, Graco Ramírez, is opposed to the planned mine
at Cerro Jumil and said he would not permit the opening of any mine due to it being
close to, or even part of, the archeological complex at Xochicalco, which is according to
him the most frequented ruins site in the state of Morelos.
• Plenty of other environmental groups and bodies support the view of the governor and
his regional government’s official position, with one of the main arguments being that
the hill itself, Cerro Jumil (which would be converted into an open pit mine if the
project goes ahead) is the site of an ancient astrological observatory connected to site
23

nearby ruins.
• Other arguments used to support the anti-mine position offered include how the EIA
submitted by Esperanza does not explain what happens to the cyanide used in the gold
production process, nor does it take into account several of the species of flora and
fauna that are indigenous to the zone.
• On the pro-mining side, all detractors to the planned mine, from the governor down,
concede that the decision to approved or deny the EIA does not sit with them at a
regional level, but with the national federal Semarnat. They can recommend, urge or
whatever else, but if the decision made by the national body is to approve the mine EIA
their hands are tied.
• Also, the local town that sits next to Cerro Jumil, Tetlama, was present and stated that
it was in favour of the mine’s development because not only would it bring 500 new
direct jobs to the region but also EPZ would construct new water wells for public use,
fund education programs for local children and also provide income for those landowner
(Ejidarios) on whose land the mine would sit, via rents and profit sharing.
• As for the company their lawyer and main representative at the meeting, one Hugo
Rosales, was reported as taking a somewhat aggressive tone and saying things like,
“This is not (foreigners coming to The Americas and exchanging) glass beads for gold,
this is jobs and right now it (the regional government) could bring an industrial project
to set up a carmaking plant and hear it was also ecological murder....If the governor
doesn’t want the mine we’ll leave and if the EIA isn’t approved we’ll leave....the mining
company has other projects in other viable States (in Mexico). This project is the most
advanced (but) id this project doesn’t happen the investment will go to another State
where there are acceptable conditions, where there’s a governor that says “yes, i want
to create jobs”.
Meanwhile, tomorrow (Monday Feb 25th) the Canadian Ambassador to Mexico, Sara Hradeckly,
is due to visit Morelos and meet with the State governor to specifically discuss the planned
Cerro Jumil mine. The governor said last week that he will gladly meet with the ambassador
and listen to her arguments, but his reply will remain a flat “no” when it comes to his approval
of the project.
Overall and on reading as much as possible on the subject, my best guess is that EPZ isn’t
going to have a great deal of trouble in getting its EIA approval. The governor of the State does
have enough power to become a nuisance to the project timeline after that, but there’s also
more than a whiff of political opportunism about this stance, as he seems to be taking a
populist position in trying to protect the
environment but knowing full well that his
opinion won’t count for much and further
down the line he’ll be able to claim
development, jobs and extra wealth for his
State under his tenure. The process needs to
be watched, not only for the Semarnat
decision (that should be out in the next few
weeks) but also for quotes and reaction to the
decision.
Finally, a line or two about trading potential
here (after all, that’s why it was included in
‘Market Watching’ and not ‘Regional Politics’.
As stated above, my best guess is that EPZ will get its EIA permit approved by the Federal
Semarnat body, which should in turn provide a share price pop on the positive newsflow
generated. The tough on is knowing when to take a position (and a chance) on the stock, as
24

this 12 month price chart shows EPZ to be a volatile creature.
When I zeroed in on this stock as a potential position recently, it was flitting in the $1.30 to
$1.40 range. Since the first mention it’s been higher and lower and has been particularly hard
hit in the sectorwide selling of the past two weeks. I personally consider EPZ as a potential
investment rather than a potential trade and want to see that projected (though not
guaranteed, put a gun to my head and I’d give it a 75% chance of happening) EIA approval
actually happen, as well as gauge local reaction to the news, particularly from the governor,
before making a call. However, risk-takers amongst you may logically see the recent dip as a
place to enter for a trade and if the EIA comes out the other end of the Mexico bureaucracy
system in the nearish future, a decent fliptrade win is in the cards.
Minera IRL (IRL.to) (MIRL.L) meet-up
Part of last week’s trip to the big bad capital city found me in the HQ of Minera IRL once again,
with chance to chat with both company CEO Chamberlain and company president Benavides in
successive meetings. What was found out:
1) IRL is very happy with the way in which the tunnel at Ollachea has turned out. Ahead
of schedule and $1.1m under budget are good things, though now part of past history.
As suspected by these pages, the market shrugged its collective shoulders at the news
(engineering achievements tend to be no-wins when it comes to market pricings, with
the only moves being negative ones when delays and cost overruns get reported) but
the guys in-house know that what they managed was a big boost to the company, both
internally and in the eyes of those financiers who might eventually fund the main capex
bill.
2) CEO Courtney Chamberlain was particularly keen to stress the bonus and advantages
that IRL will get from the lower than expected water flow from the Ollachea rock inside
the tunnel. This will turn out to be an advantage for both capex and opex at the
eventual operation, as although detailed engineering adjustments have still to be done
to the current feas study which assumes higher water flow rates (and therefore specific
cost benefits aren’t possible right now), lower flow rates will mean lower capex bills for
water treatment facilities (less water means less infrastructure needed) and lower opex
for the same basic reason. We both agreed that the capex benefits would be good but
the real benefit will be cutting an edge from the operating expenses over the life of
mine; that means lower cash costs and more operating profit margin.
3) The recent round of financing didn’t go as well as the company would have liked. There
was indeed the decent support from a bunch of mainly private investors through the
Lima market (local brokers Kallpa handled that end of the gig) but the bulk of the
financing, expected from the Europe roadshow, was thinner on the ground. IRL opened
the book on $32m and after receiving pledges for just over $15m had a decision to
make; either close the book then and take the reduced sum, or let it ride for a longer
period. In the end the strategic decision was made to go for a quick closing (the book
was only open for just over a week) and that call was probably made because IRL’s
cash position was already thin. When asked later on, Chamberlain said that IRL
treasury stood at around $15m post closing (“maybe a little more”) which is basically
the money raised.
4) The lower than expected cash influx from the raising means that IRL has made clear
decisions on priorities. As of now IRL will push forward on two fronts, namely
development of Ollachea and the finalization of the financing package to build Don
Nicolas in Argentina.
5) At Ollachea, the drilling program to test strike extension from platforms inside the
access tunnel has already started, with one hole complete (visually things are as
expected, which is good, but we wait until the assay labs have had their say) and the
25

second already in progress. Results from the program won’t be used to put together a
new resource count immediately, as the plan is more to demonstrate that the orebody
is as expected in-company without the pressing need to add extra resource ounces at
the moment. Meanwhile, corporate efforts are to concentrate on the environmental
permit (EIA) currently in progress, with “mid 2013” as the date expected for approval.
After that the other key permits, such as construction and production, should fall into
place. The company is lining up the long-lead deals and contracts so that once the EIA
is in place and the subsequent financing package arranged for Ollachea, work can start
promptly. As for the progress being made on the EIA track, president Benavides (who’s
in overall charge of this aspect) says that things are going smoothly and one of the
strategies being used is to have an IRL guy knocking on the door of the Peru mining
ministry (MEM) nearly every day, asking if there’s been any progress and importantly
whether the ministry has any ‘observaciones’ (i.e. official questions regarding the enviro
study). What IRL wants to do is to get and be able to field these queries one by one,
thus speeding up the back and forth process between ministry and company, instead of
waiting then receiving 50 or 100 of these observaciones from several different
departments inside the MEM and then facing a big backlog to wade through them all.
This is a smart move and one of the reasons why IRL has a 7 or 8 month timeline for
permitting. As regards community in Ollachea, things are good between company and
town, with the strong support unwavering. This is a case of a mine that country, people
and company want built; this is not Conga or Cañariaco. Finally, although not said out
loud, it’s now clear enough for my taste that once IRL has the necessary permits in
place, it will look to raise cash to build Ollachea via a typical debt/equity package, the
classic type of raising rather than looking to run offtakes or bring in funding JVs (see
below) for this mine.
6) At Don Nicolas, the planned exploration drilling along strike has been deferred as part
of the cost cuts, in order to concentrate all efforts on closing the financing package. On
this score, IRL was obviously cagey about what they could say because there’s still a lot
in flux, the company is under confidentiality agreements and there’s due diligence work
being done by both sides of the potential deal, but what I heard confirmed to a great
extent the word I’d received from the potential financial end of the deal that’s based in
Argentina. Terms and conditions are unknown, but piecing it all together it appears that
IRL is doing a deal where it brings in a financial entity as JV partner, the money people
put up the cash to build Don Nicolas, thereby financially de-risking IRL from the whole
Argentina thing. In exchange IRL brings the asset and the mining expertise and
remains operator of the mine, directing the build-out and the eventual operations. If
this turns out to be the way in which IRL funds Don Nicolas it will be a strong positive
for the company share price, in my considered opinion. The one thing that this desk
gets by way of a doubt about IRL as a potential investment vehicle is “the Argentina
exposure”, so by bringing in a partner that can fully fund the mine, IRL gets to lower its
political risk profile considerably in the eyes of the market, while still benefitting from its
new operation and the cash flow it will achieve. One thing that I did get was that IRL
wanted to get the deal closed for PDAC, but it’s going to take perhaps another month
to get a final agreement, the legal stuff done, etc. Therefore let’s tentatively pencil in
April for an announcement on this, which would mean that as long as the company can
hit the ground running once the cash is in place its timeline of commissioning and first
pour from Don Nicolas in 1q14 will still be good. Any extra delay would probably mean
that Don Nicolas would be set back a bit and IRL, fully aware of that and cognizant that
its word is on the line, is keen on making the current schedule stick. Rightly so.
7) Meanwhile at Corihuarmi, all is fine. This operation continues separately, is doing well
and all in all feels quite separate from the exploration and development projects at Don
Nicolas and Ollachea. Because grades are dropping as the mine matures, operational
tonnages will increase in stages this year in order to keep production at the target of
around 6,000 oz per quarter. This may slightly affect cash costs but it won’t be by
much and with a couple of specific cost savings that they’re expecting to offset this,
26

Corihuarmi will continue on its small but merrily profitable way. It’s wroth recalling that
although a small mine, it’s also a poster child to show the potential financial backers of
IRL that shows the company sure knows how to produce gold at a good margin. The
only other news is that IRL will have a small geology team dedicated to Corihuarmi that
is looking to extend mine life further than the current end due in 2015. The company
has apparently identified an area of mineralization that could provide the necessary
feed and extend the mine for perhaps another 18 month or two years.
The bottom line from the IRL office visit is of a company that’s champing at the bit to get
moving on its plans and is on the cusp of doing so. All three of its moving parts have seen
progress, but the big piece of the puzzle will fit when IRL can nail down the financing for Don
Nicolas. Once we know the exact terms of that, we’ll have a better idea as to whether IRL is
Top Pick material or not.
Rio Alto (RIO.to) office visit
Before catching my plane back home on Thursday, Alex Black gave me some of his time (before
jetting off North himself) at RIO HQ (now enlarged to fit expanding staff numbers...that
G&A...is being spent on real productive things, folks...and with a better reception area for those
of you who know the place). Here’s a list of takeaways, nothing of which changes RIO’s Top
Pick status here at The IKN Weekly:
• RIO reports tomorrow Monday (pre-bell, if I’m not mistaken).
• Guidance for 2013 will be given, and although I’m not privy to the numbers (obvious
reasons) the hint was clear enough: 2013 production will be very much along the lines
of what we say in 2012, so let’s put our baseline at 200,000 oz gold and then see what
RIO has to say for itself in the MD&A next week.
• Cash costs are trending higher at the mine, which is not an isolated case of course but
it’s still going to affect RIO in 2013. Again no fixed numbers to give you because a
straight-up guy like Black doesn’t give out non-disclosable information, but let’s expect
something like 10% higher operational costs for RIO compared to the last part of FY12.
At the outside this would mark cash costs at around $700/oz (an IKN in-house
guesstimate).
• The mine is now running at its target throughput of 36,000tpd, which is good. RIO
expects grade to improve as the year progresses, which suggests a better second half
production.
• Away from the normally headline grabbing production and guidances, CEO Black was
very enthusiastic about the exploration program for 2013. Main thrust will be moving
forward on the stage two sulphide deposit at La Arena, with the company moving to an
in-house pre-feas level of understanding for that project. The other main exploration
project is the La Colorada oxide gold target at the South end of the La Arena
concession, which will get drill results flowing soon. This part of RIO is shaping up to be
a big part of 2013 and shouldn’t be underestimated; from the general ballpark numbers
that were used I expect RIO to use most if not all of its 2013 net revenues on
exploration
• Aside from the exploration projects at La Arena, we also talked about its recent
sponsorship of Duran Ventures (DRV.v) and in the most recent deal (21) the $200,000
worth of shares bought into, Santa Barbara Resources (SBL.v). First some specifics and
the drill program at Duran’s Achuña property is just about ready to begin, with the only
thing missing a final sign-off from the Peru ministry. The plan there remains the same,
one of straight and plain exploration which if successful could lead to greater things
and if not, would see the property handed back. As for the SBL deal, Black said that
RIO was taking a small foothold position in this grassroots exploration company as a
27

first step and would see how things developed. From this comment the conversation
developed and it became apparent (to this author at least) that RIO was planning on
doing more of these type of deals. There seems to be a strategy evolving where RIO
may become a source of funding for Peru based exploration companies that are
suffering from beaten down share prices. Black likened the idea to buying lottery
tickets, saying that neither he nor the company expected all of these small investments
in third parties to become winners, but if just one out of 20 hit the jackpot RIO would
be there with both a win to cover its other tickets and first foot advantage with the
junior exploreco in question.
• In other news, the resource update for La Arena that concentrates on the oxide gold
numbers was expected to have been published by now. Black says that will happen in
1q13 (which gives the company another month) and has been delayed due to new
results and interpretations that they wanted to add into the mix before publishing.
Radius Gold (RDU.v) redux
A quick note to follow on from last week’s case study on the fundamental value offered by
Radius Gold (RDU.v) at the moment. Although it was tape painted at the end of Friday to finish
up on the week, RDU showed enough staying power through the worst of the selling last week
to underscore the theory floated in IKN198. Underlying, objective value still seems to have a
place in this juniors market, even at the tough moments. It’s way too soon to start talking of a
asset-founded rally in this stock (or in those in the same situation, please remember we chose
RDU as a case study and there are plenty more companies in the same boat) but the stock did
go through a type of stress test last week and came out unscathed the other side.
The word on AQM Copper (AQM.v)
This overdue status report comes after casting around for information on the company from
several sources in the past couple of weeks. We’ll do the information in bullet points and after
each point put either “confirmed” for solid info, “probable” which means just that (i.e. true as
far as can be gathered, but very difficult to fully corroborate or confirm), then “conjecture” for
things that aren’t as solid by way of intel, but are still worthy of airing
• There is no work currently underway at Zafranal. Confirmed
• The company has around $4m in cash left at bank. Confirmed
• AQM is keen on preserving a level of liquidity given the current state of the market, as
there aren’t that many sub-$10m market cap juniors with $4m at bank and underlying
burn is now low, at perhaps $120k/month. Probable.
• Talks are ongoing about a 2013 exploration and development campaign at Zafranal
with JV partner Teck (by way of reminder, Zafranal is a 50/50 JV between AQM and the
bigger company). Probable.
• However, talks are not at an advanced stage for any 2013 campaign at the moment.
Probable.
28

• Teck wants to move forward on Zafranal and wants to spend more money on the
project than AQM has at its disposal. Probable.
• Teck is keener on Zafranal than the market believes. Conjecture.
• The best guess from more than one source is that eventually AQM and Teck will cut a
deal in which AQM cedes a percentage of its ownership of Zafranal in exchange for a
free ride through the next stage of development. One potential scenario (again heard
more than once) is that Teck receives 25% of Zafranal, bringing its ownership to 75%,
in exchange for fully funding the project to Bankable Feasibility status. Conjecture.
If the above is true, AQM is a reasonable speculative buy at current levels. After all, if that last
part turns out to be true, which is obviously conjecture and subject to plenty of potential
variations on both the timeline and the exact details of any final deal, let alone whether it
happens at all, we’d talking about a company that might hold 25% of four billion pounds of
copper to feasibility stage level and currently worth less than $10m. However, Teck is clearly in
the driving seat here and if it decides to squeeze, would be able to get a deal that’s less
amenable to AQM equity holders, because the bigger company isn’t under any sort of time
pressure and could let AQM wither on the vine.
What to make of this? I know I’d like to believe that Teck and AQM could hammer out a deal
that allows AQM to keep a part of Zafranal and get a free ride to a feasibility. I’d also like to
believe in other scenarios, such as Teck buying AQM out of Zafranal completely (as AQM would
almost certainly walk away with far more than 10c/share cash in pocket).
On the other hand, Teck has the cards in its favour and there’s no legal reason why it should be
generous to AQM. With the state of the copper market as it is and the big miners all cutting
back on project pipeline spending, Teck can’t feel itself in much of a rush to nail down the next
deal.
However, what I can fully believe is that a deal is perfectly possible. Zafranal, as a “medium
sized” copper project, may fit into Teck’s plans around very high capex big copper projects such
as Quebrada Blanca 2 or Relincho, both in Chile. Also, Teck is doing smaller scale deals as
witnessed by the $2.5m purchase from Coro Mining (COP.to) of the Chacay property that sits
next to Relincho (22). But most of all (and as bad as my track record is with this stock recently)
I’m sure that selling AQM at this point would be the wrong move, because it’s been battered
down so far (and yes, with me on board, guilty as charged) and if any type of deal is struck
that monetizes or releases AQM from financial obligations towards Zafranal, a rally (modest or
serious) is very likely indeed. This is by no means a perfect situation for a deeply underwater
bagholder like myself, but risk/reward looking at the present day situation says that AQM is at
least a hold. Those out there who like to speculate may even consider the above as a buying
opportunity, as long as you’re clear of the risks involved.
Conclusion
IKN199 is done, we close with bullet points:
• I read back over today’s edition and see just how much of a yellow-streaked, lilly-
livered chicken I really am. AQM Copper (AQM.v) Darwin (DAR.v) and Esperanza
(EPZ.v) all show the type of beaten down price and potential newsflow set-ups that sit
well with the speculator in tinycap stocks, but in each case I end up wringing my hands
and worrying my way out of pulling the trigger and risking some cash. After all, they’d
only be small trading positions at this time and it wouldn’t be the end of the world if
one loses while two win, would it? Even one good win versus two medium losses would
see me good. My stars, I wish i had a bit more in the way of guts sometimes.
• However, the reasons to personally sit and watch include one of the underlying factors
in The IKN Weekly, the desire not to have recos sitting on 53 stocks and then just
cherrypicking results from them afterwards (while conveniently sweeping the nasty
29

ones under a carpet. It’s one of the worst traits in the anal yst biz to expect your
audience to have a bottomless pit of cash at their disposal and keep shouting but, all
the way down, on a whole host of stocks and then when the sector finally rebounds,
turn round and say “Y’see? Toldyaso!”. Our job here is to keep things real and as I’m
generally happy with the smaller spec positions we currently have on board (barring
USC.to, which I could jettison without fretting too much) until there’s space there has
to be a limit to what we formally reco round here. Keep it real.
• As for Minera IRL (IRL.to) and Rio Alto (RIO.to), both larger positions that got a more
extensive write-up this week, I’m happy to let both stories develop. The one with the
most chance of provide a pop-up moment is IRL as long as the Don Nicolas financial
deal comes to pass, while RIO now seems a bit oversold compared to the market and
having already demonstrated its quality, could provide a trade for those inclined to
move in and out more readily than I. Anyway, that one should provide its 2012 annual
and 2013 guidance tomorrow, so let’s see how the market reacts to the details.
• Next weekend you’ll all be talking about (or visiting) PDAC. Have fun.
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
Footnotes, appendices, references, disclaimer
(1) http://www.darwinresources.com/s/Home.asp
(2) http://www.impactsilver.com/i/pdf/IPT-Feb%2019-2013-rl.pdf
(3) http://knowyourmeme.com/memes/bad-luck-brian
(4) http://finance.yahoo.com/news/lara-acquire-shares-carbhid-coal-123000481.html
(5) http://incakolanews.blogspot.com/2013/01/ta-question-of-day.html
(6) http://www.trivalleycentral.com/florence_reminder_blade_tribune/news/acid-ban-is-said-to-cause-m-loss-in-
land/article_baa662a0-7628-11e2-8f11-0019bb2963f4.html
(7) http://www.newswire.ca/en/story/1119133/copper-fox-announces-a-2-500-000-private-placement-unit-offering-
insider-commits-to-100-participation
(8) http://finance.yahoo.com/news/panoro-minerals-announces-c-15-122400224.html
(9) http://incakolanews.blogspot.com/2012/03/when-is-bought-deal-not-bought-deal.html
(10) http://finance.yahoo.com/news/fdg-mining-inc-resignation-chief-230732995.html
(11) http://finance.yahoo.com/news/inca-one-announces-3-5-224551974.html
(12) http://www.noalamina.org/mineria-latinoamerica/mineria-guatemala/presidente-perez-descarta-contaminacion-de-
mina-cerro-blanco
(13) http://www.aminera.com/mas-noticias-nacionales/46619-minera-barrick-dispuesta-a-proponer-plan-de-mitigacion-
para-seguir-adelante-con-pascua-lama.html
(14) http://www.foxbusiness.com/news/2013/02/21/barrick-says-access-to-peru-mine-blocked-by-residents/
(15) http://www.aminera.com/noticias-generales/118-internacionales/46539-ley-general-de-mineria-de-honduras.html
30

(16) http://ecuador.indymedia.org/es/2013/02/40034.shtml
(17) http://www.petroleumnews.com/mnfriends/07-07-4.html
(18) http://redimin.cl/2013/02/24/argentina-paco-en-san-juan-y-sus-dos-posturas-sobre-la-mineria/
(19) http://www.jornada.unam.mx/ultimas/2013/02/21/19122343-realizan-foro-sobre-explotacion-de-mina-de-oro-cerca-
de-zona-arqueologica-de-xochicalco
(20) http://www.proceso.com.mx/?p=334294
(21) http://finance.yahoo.com/news/santa-barbara-closes-private-placement-221500933.html
(22) http://finance.yahoo.com/news/coro-sell-chacay-property-140707957.html
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
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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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