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The IKN Weekly
Week 200, March 3rd 2013
Contents
This Week: Near-zero tolerance, Risk reward Nassim Taleb.
Fundamental Analysis: Considering Lupaka Gold (LPK.to).
Stocks to Follow: Overview, Marlin Gold (MLN.v), B2Gold (BTO.to), Minera IRL
(IRL.to)(MIRL.L), IMPACT Silver (IPT.v), OceanaGold (OGC.to)(OGC.ax), Lara Exploration
(LRA.v), Rio Alto (RIO.to).
Copper Basket: Overview, Candente Copper (DNT.to), Strait Minerals (SRD.v).
The Lottery Ticket Basket: Overview, Darwin Resources (DAR.v), Bellhaven (BHV.v), FDG
Mining (FDG.v).
Regional Politics: Guatemala: Human rights violation case against HudBay (HBM) (HBM.to) to
be heard in Canadian courts, Mexico: Baja California projects to be delayed through 2013,
Ecuador: Lay-offs at Kinross (K.to) (KGC) Fruta Del Norte, Dominican Republic: President
Medina makes official his government’s desire to renegotiate terms with Pueblo Viejo, More
Chinese buying of resources in Peru (though not mining), Peru La Libertad:: Blockade at
Lagunas Norte (ABX) called off, The Fraser Institute 2012/2013 Mining Survey: A comment,
Mexico: TD Sec’s call on political risk in Guerrero State
Market Watching: The Rusoro (RML.v) small trade update, Word on the San Gold (SGR.to)
bought deal placement, Esperanza Resources (EPZ.v): One less to worry about.
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
Near-zero tolerance
On Monday I went through the unpleasant experience, one that I’m forced to go through from
time to time, of unsubscribing a reader of The IKN Weekly after finding out he’d been
forwarding the Weekly to other people, contrary to that little boxed sentence that appears just
above in every single edition. It was a particularly unpleasant one last Monday because the
person in question was a long-time subscriber and one I’d exchange with via mail on any
number of occasions.
People, the rule is simple; if you want to forward the Weekly to other people, for any reason
whatsoever, then ask. I’m really quite accommodating on these matters, as those of you know
who’ve kindly sought permission previous probably know already. Depending on the situation
I’m often say something along the lines of “Yes sure no problems and thanks for asking”,
without charging a dime extra. In some situations where somebody wants to share the Weekly
with another person or limited number of people on a regular basis, we might come to a
financial arrangement (as long as the group isn’t disparate or large; a typical agreement in
place with a couple of you already is one amongst half a dozen fellow office workers, for
example). However, if you don’t ask first and then I find out at a later date you share your copy
(and I’ve found out in many and varied ways over time) then I’ll almost certainly use the only
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tool I have at my disposal: I’ll unsub you, no ifs or buts, no refunds. With the market in the
state it is that may come as a relief to you, but I still won’t hesitate on this.
If you want to share the Weekly with someone, please ask. Thanks in advance.
Risk, reward, Nassim Taleb
At one point last week I was talking with someone who’ll we’ll just call “New York
Businessman”, a man that I’ve known for years on a professional level and with whom I’ve
always had a cordial relationship, but we’ve never been more than acquaintances and never
really talked about our lives to each other. But last week we started chatting on things that we
don’t normally cover and the subject of the Weekly came up. He asked me about the business
model behind it, the time it takes to put it together, this and that and I gave him the roughest
of outline sketches. Then the conversation moved to something like this:
New York Businessman: Do you trade your own accounts in line with the Weekly
calls, or would that be too much risk in one place, given that your subscription income
basically comes from the same place?
Me: The stock recos in the Weekly match my own money in the junior mining sector,
period. I've found, semi by accident initially but semi by thinking it through and seeing
the advantages early on in the process, one of the key ingredients is being
independent from a company sponsored/funded model. I don't accept any sort of
payments from companies bar site visit things, am sceptical of companies that
approach me with "would you like to cover our stock?", I do my own DD, pay my own
way then if things work out I tell the client list that I like stock X, let them buy first if
they want, buy it myself (and same system in reverse when it's time to sell). A more
straightforward model is difficult to imagine. The bottom line is the pitch "This is what
I'm doing with my own cash, folks”. So the answer is yes, there's aggregated risk but
if I don't trust my own calls I shouldn't be writing the freakin' letter in the first place.”
NYB: The new Nassim Taleb book is going to be about this kind of thing. Your model
is exactly the kind of thing he loves.
Me: What, Antifragile? [note: Taleb’s new book recently published]
NYB: No, the one he’s writing now*, not the one which just came out.
Me: How do you know that?
NYB: I’ve been friends with him for years.
Me: [Pretending not to be impressed by a seriously well placed name-drop]: That’s
the genius of Taleb! Take a plain and obvious concept, repackage it for a new
generation audience and add a layer of easily accessible academia, sell a million
books.
NYB: It’s not that obvious.
*At this point NYB named the working title of the new book, which I don’t think I should repeat as it might blow his
cover or get him into trouble with his friend.
The conversation continued on for a while after that, but it was that last sentence of NYB’s that
stuck in my mind. Perhaps in contemporary Wall St (where NYB operates) it’s been forgotten
over time but to me it IS obvious, drop-dead obvious, that if you are an entrepreneur of any
type, shape or form you have to be exposed to risk, have your head upon the block, accept a
potential downside to your actions if your venture fails. You strive for reward and that’s fine,
but risk is the yin to reward’s yang. And on further consideration there seems to be a strong
connection between the lack of personal skin in the game amongst the supposed risk-takers
and what we’re seeing in the mining sector today.
• You head up Anglo badly, make a series of strategic mistakes over the years, see your
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share price perform woefully and eventually get removed due to the board’s vote of no
confidence? No worries, you still get (1) a $4.6m leaving package that includes 70,000
shares because you’re considered “a good leaver” (presumably no doors were slammed
or staplers pilfered on the last day in the office).
• You run a tiny promo pumped junior for years on serially failed promises, a never-
ending series of highly dilutive share placements, dreams concocted by paid-for
newsletters and all that time watch the share price fail? Fret not (2), you and the other
directors with you still get a $20+k per month cash salary no matter what happens and
no frets about that share price either, because you and your director friends hold less
than 1% of all shares out between you.
• You make a series of woeful business decisions that run your mining company into the
ground (3), go into Chapter 11 and see your share price squashed from over $20 to
zero? Not a problem, just repackage what’s left (4), get some guy to slap an eye-
catching target price on your new company (5) and pay yourself over three quarters of
a million dollars per year (6) no matter how badly the company performs.
• You write a popular newsletter that gives non-stop buy recommendations on dozens of
stocks? Ok, enjoy those subscription payments but when the market turns against you
don’t berate your audience by saying (7), “...perhaps, you got carried away and
invested more heavily in this sector than recommended ” thereby absolving yourself of
any sort of blame for the disastrous state of your readership’s portfolio.
There has to be risk I repeat THERE. HAS. TO. BE. RISK. and the above are just four
examples of many, many that could be offered of people that I see in various aspects of the
world revolving around mining, big players and small, direct connection to mining or meta-
sectors that live off the main game, that these days want the reward without wanting to run
the risk. Of course it’s not always like that, for example there’s plenty that can be said about
Rob McEwen and his main company right now isn’t one that’s high on my list of potential
purchases but hot damn, the guy takes no cash salary from MUX and owns a quarter of the
company in directly held shares; that man has his head on the block and will only win from the
company if other shareholders large and small win too. So yes, McEwen and others are still out
there but I fear they’re getting rather thin on the ground.
The general theory behind risk/reward isn’t confined to the mining industry of course, but the
sector on which we focus in this publication is one of the traditionally risky ones in the world of
business. Its origins aren’t from computer modelled actuary tables, but from people who put on
a pair of leather boots and walked wilderness areas for long periods of time, mostly finding
nothing but occasionally striking it not just rich but very rich indeed. When investing in or even
considering investment in the junior mining sector, be your potential vehicle a new small
producer with any number of hurdles to overcome before making it as a real deal profit making
mining company or an exploreco at the cutting edge of risk, the stock investor is assuming her
or his part of this high risk business. That’s you sir/madam and that’s me too but we must be
clear; it’s fine and correct to take on your quota of risk in a mining venture when you buy those
stocks but if by the way in which the deal has been set up, by the director or promoter or
financial first-footer or whoever, when you buy shares you are not only taking on your share of
the risk but somebody else’s as well there’s a word for people like you, which is ‘patsy’.
The essence of risk is being prepared to lose, to say when the occasion arises “I was wrong”
and accept the consequences of your bad calls and decisions. The way in which The IKN
Weekly works is very much along those lines, as I’ve often called upon you the reader
(particularly in the last 12 months or so, wonderful market that it is) to consider whether paying
good money in exchange for this publication is a deal that works for you, brings you value and
pays its way because if not it will be better for all concerned (you now, me going out of
business and doing something else with my time) if you stopped subscribing. That’s the way my
aggregates risk works, that noted in the conversation with NYB above, that of an investment
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portfolio aiming in the same direction as my labour income, the Weekly. My reward is getting
an income stream from my market thoughts as long as those thoughts are considered valuable
by the audience. So far from telling you to stick around because just around the corner there
are better times ahead and be brave and fight the good fight against fiat currency madness and
“keep the faith” (or whatever phrase goldbug guru charlatans use these days) this is the
publication that wants you to think and keep thinking about whether investment in a risk-heavy,
scam-filled sector that’s performed terribly for months on end is the right thing for you today
and if it isn’t, why the devil are you still paying me to tell you about it?
Fundamental Analysis of Mining Stocks
Considering Lupaka Gold (LPK.to)
The news from Lupaka Gold (LPK.to) Wednesday (8) was far more appealing than the shape of
the company’s 12 month price chart. It was one of those fundamentally solid NRs that would
have moved a junior exploration stock nicely in any sort of a healthy market and along with the
news on the same Wednesday (9) that LPK had made its official start to trading on the Lima
Stock Exchange (BVL) had your author considering something as mad as a Flash update to
highlight its good features for a few minutes that morning, until common sense kicked in and
the realization of the type of market we faced in reality returned.
All the same the news was positive for LPK and today’s ‘Fundamentals...’ is dedicated to re-
visiting this to date failed trade and deciding whether there’s anything left to rescue here.
The upgraded resource
The main event Wednesday was the release of the new resource numbers for the A-1 zone of
the company’s Crucero property, Puno region, Peru. By way of a reminder, here’s how the
capped resource looked at the last official update in March 2012:
March 2012 resource highlights
cut off (g/t) tonnes Capped Au grade Capped ounces
indicated 0.4 34.641 1.03 1145000
inferred 0.4 28.966 0.69 647000
total 63.607 1792000
source: company filings, IKN calcs
(note: we prefer to consider the capped numbers in all cases that use a 17g/t limit to the uncapped ones, both for the
sake of conservative forecasting and to give a better idea of average grades in the event of an eventual mine at
Crucero).
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Here’s the new resource table:
February 2013 resource highlights
cut off (g/t) tonnes Capped Au grade Capped ounces
indicated 0.4 31.404 1.01 1,017,999
inferred 0.4 37.17 1.00 1,190,526
total 68.574 2,208,525
source: company filings, IKN calcs
Now for notes:
We’re now over 2.2m oz (I+I) at Crucero, just the type of number we expected from the
resource (and the 2.5m oz uncapped is at the upper limit of our expectations). It also means
LPK has added 1m oz gold to the resource since its first 43-101 in February 2011.
Indicated tonnage and grade has dropped slightly, while both numbers in the inferred category
have made strong gains. In the release Wednesday LPK made reference to the fact that
Wardrop Tetra Tech (WTT) is now using the ordinary kriging method to calculate the resource,
rather than the inverse distance squared method of previous years. Ordinary kriging is
understood to be a more accurate and more conservative method of counting up resource
ounces, but being no expert on matters geological I got in contact with LPK CEO Edwards and
asked him about the matter. His answer was that it’s always been in mind to move to ordinary
kriging, but the method works best with more data than they’d had in previous years. Thanks to
the added infill drilling on the A-1 target (as well as the extension drilling to the North end of
the property that had success all year) as well as extra logging work done, the WTT guys were
happier about moving to the better industry standard. In the words of WTT (that were passed
on by CEO Edwards):
“Kriging is designed to produce the best weighting among sample values
(lowest variance) when estimating block grades and is the industry standard
when there is enough data to produce a reasonable result – generally when
there is enough data to justify an indicated resource.”
In practical terms, the kriging method has slightly lower indicated resource, but the big benefit
has been seen in the inferred category, considered by the team (due to A-1 having shown up to
now a consistent and predicable grade throughout the deposit) as a “good inferred”, though
don’t try to find that term in the 43-101 manuals.
Further down the NR, we note that the resource holds up well at higher cut-offs. Take for
example the 0.6 g/t cut, which still leaves A-1 with over 2m oz Au (I+I capped). The A-1
deposit has always shown a sweet spot in the rough centre of the mineralization that has higher
average grade (the type of target that makes for a quick payback starter pit) and the results of
the higher cut—offs show the type of consistency you’d expect from this.
Updating our valuation of LPK
It’s been a while since we updated on LPK and in that time the market atmosphere has gone
from bad to worse. Junior explorers have been hit hard by ever-decreasing valuations put on in-
situ resources of all metals, with gold very much part of that. As the price chart featured at the
top of today’s note shows, LPK has been suffering along with the rest of them so today we’ll
take the opportunity to consider the new and very poor market attitude, add in the new
resource numbers and come to a new, lowered target price for our company.
In-situ valuation: Let’s start by valuing each ounce held by LPK. We use its current level of
shares out (81.752m, rounded up to 81.8m) and our baseline count is now the 2.2m I+I
capped resource announced last week (we’d previously guessed at 2..3m, so we weren’t far
out). At its current share price of 35c (and assuming CAD$1 = U$1) this means that each gold
ounce held at Crucero under 43-101 compliance is worth (whatever that might mean) $13.
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LPK.to Crucero in-situ gold valuation at various PPS and Au resource sizes
price per LPK.to share (CAD$, 81.8m shares out)
res. Moz Au
$0.25 $0.30 $0.35 $0.40 $0.45 $0.50 $0.60 $0.70
2 10.23 12.27 14.32 16.36 18.41 20.45 24.54 28.63
2.2 9.30 11.15 13.01 14.87 16.73 18.59 22.31 26.03
2.5 8.18 9.82 11.45 13.09 14.72 16.36 19.63 22.90
3 6.82 8.18 9.54 10.91 12.27 13.63 16.36 19.09
3.5 5.84 7.01 8.18 9.35 10.52 11.69 14.02 16.36
source: IKN calcs assuming 81.8m shares out, U$1=CAD$1
Please note we’re using market cap for our calculations rather than Enterprise Value. As per Eric
Edwards last week (in the Lima Stock Exchange press conference after ringing the bell) LPK has
$10m in cash and that’s enough to fund its operations for the next 18 months. We prefer not to
use an EV/ounce count at the moment because although LPK has a positive balance sheet it
fully intends on using that cash (and at some point will raise again).
In any normal market I’d be pointing and shouting at a $13/oz number for 1 g/t gold that starts
at surface and shows all signs of being economically mineable and going “Oh my stars! This is
so cheap!” (or something), but this market seems to have beaten all traces of optimism out of
me. What I can say is that if things start to get a little more optimistic in the macro scene,
there’s plenty of room for that in-situ valuation to grow, perhaps back to type of $25/oz and
$30/oz numbers we saw back in October 2011 when we first picked up on LPK as a prospective
junior story.
Eventual cash flow valuation: For this valuation we still assume the possibility of building a
working mine on Crucero, based wholly on the potential of the A-1 zone, but we also go back to
our original thesis of October 2011 and attempt to change variables to reflect the more
negative scenario of today’s junior market, version 2013. Here are the main inputs used:
• A mill throughput of 14,000 tonnes per day. This gives a 13.5 year mine life at the
current resource tonnage for A-1
• Gold grade of 1.0 g/t using a 0.4 g/t cut off, very much in line with the current
resource. We calculate using life of mine rather than expecting better results from high
grading rock in the first years.
• Recoveries at 90%, which is now indicated as reasonably likely. This is a good return
for this type of rock.
• Capex at $400m, some $100m higher than our original model. We’re going even higher
because of 1) the slightly higher throughput assumption (was 12ktpd) 2) the general
cost creep seen in the industry over the last year and 3) the desire to be not just
conservative with parameters but very conservative. This is also show in the next line
item.
• To fund construction, we assume LPK takes on $200m in debt and finishes with 250m
shares out on production day one, some 168m more than today and 100m more than
our previous model. The collapse in the share to date is the main reason for the extra
shares assumed added, along with the super-cautious and lowball everywhere attitude.
• Operating cash costs at $20/tonne. Previously we used $15/t and said at the time that
it was likely much too high. Now we’re going even higher on cash op costs, again
covering all bases fully and carefully. Then come other items that are only slightly
altered, if at all:
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• Depreciation/amortization guessed at $10m/annum, SG&A guessed at $20m/annum.
Sustaining capital costs for the operation (excluding any further exploration work) of
$2m.
• The 5% NSR owed to Buenaventura, though I’d hazard a guess and that by then any
operator would have either bought out or reduced that NSR in a cash deal with BVN.
• Peru taxation laws as now stand, including the 30% corp tax, a 5% royalty and the 8%
worker participation burdens.
With all those variables in the mix, here are our tables starting with the condensed income
items using variable gold prices (default set at $1,600/oz):
LPK.to: Income items for model year using 1.00 g/t Au, 90% recovery
At 16ktpd thruput $1,500/oz Au $1,600/oz Au $1,700/oz Au $2000/oz Au
Sales (U$m) 210.7 224.8 238.8 281.0
Cash COGS 102.2 102.2 102.2 102.2
Depreciation 10.0 10.0 10.0 10.0
SGA 20.0 20.0 20.0 20.0
Op income 68.0 81.3 94.7 134.7
Interest 20.0 20.0 20.0 20.0
Workers Part. 5.4 6.5 7.6 10.8
Tax 12.8 16.4 20.1 31.2
Net income 29.8 38.4 47.0 72.8
Shares out (m) 250 250 250 250
EPS 0.12 0.15 0.19 0.29
Capex -2 -2 -2 -2
FCF/sh 0.15 0.19 0.22 0.32
Source: IKN ests
As you can see, even by adding extra opex, debt servicing, and a bunch of extra shares to
dilute earnings, at $1,600/oz gold LPK at A-1 Crucero would still offer a reasonably decent
15c/share EPS (rounded down).
As for a target price:
LPK: Sales and earnings Target price & valuation data at various gold prices
Gold Price $1500 $1600 $1700 $2000 using four different gold prices
Sales (C$m) 211 225 239 281 12-month target $0.61 (on 4x annual EPS using
Upside to target 75% gold at U$1600/oz)
EPS 0.12 0.15 0.19 0.29 Mkt cap (C$m) $29 Enterprise value $24
Cash flow 0.16 0.19 0.23 0.33 P/sales ($1500) 0.13 EV/sales ($1500) 0.11
P/E ($1500) 2.9 EV/EBITDA ($1500) 0.3
P/E ($1600) 2.3 EV/EBITDA ($1600) 0.3
P/E ($1700) 1.9 EV/EBITDA ($1700) 0.2
cash flow defined simply as EPS + depreciation
Again considering the poor state of the market and the way in which operating and earning
companies right now today are getting little more than 8x and 10x multiples to earnings, we
hack the PE multiple for LPK right down to 4X until we get closer to production. This leaves us
with a 12 month target price of 61c, which is a mile lower than it used to be but is still 75%
higher than the current market price.
Conclusion
To date, Lupaka Gold has been a disaster investment for your author and for The IKN Weekly.
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Today’s update is far more concerned with damage limitation of an already deep loss position
than it is about recovering all losses and moving into a bright, profitable future.
The resource update of last week, combined with the potential that the new listing of LPK n the
Lima bourse will give the stock a positive boost in the way that Southern Legacy enjoyed earlier
in the year, mean that there’s decent and reasonable hope that the current low price in this
stock can improve. It will probably take a change for the better in the wider market as well,
because LPK has always been an illiquid position and hardly a market leading indicator with its
moves, but we’re not trying to sell anyone a sure thing here, it’s more about proposing a case
for not selling right now. The other alternative would be to buy more and average down, but
again the current market dictates that if you’re going to add new capital, put it in stocks that
trade freely and offer quick and simple ins and outs. LPK doesn’t fit the bill
The bottom line call here is to hold this loser for the moment, as there’s enough backbone
to the stock with a good resource of decent grade and no need to beg for financing cash in
FY12 at its current depressed price. With a little luck (yeah, I said luck, sorry) the price will
improve and as the in-situ table suggests, even 60c/share for this type of asset at this stage
isn’t an unreasonable valuation. The new price target for LPK is set at 61c representing an
upside of 75% from Friday’s close and if the market gets a little better, we could see that price
easily enough.
Stocks to Follow
Eight of our 14 positions made gains last week (RIO.to, OGC.to, LRA.v, PLA.v, LPK.to, IPT.v,
GORO short, USC.to), another two remained unchanged (AQM.v, MLN.v) and four lost ground
(BTO.to, IRL.to, AUN.v, FCV.v), in short a somewhat better week for the list thought without
setting the world on fire, but I’m good about taking this result in a week that saw the junior
ETF (GDXJ) drop 6%. The best gain was put in by Plata Latina (PLA.v up 50.0%) but that was a
wholly technical readjustment from the artificially low finish of the previous Friday and can be
largely ignored. No stock lost more than 10% on the week, with the worst loss registered by
Minera IRL (IRL.to down 8.8%).
What you may notice on the list below is a lot of green in the “this week” sentiment column
(reminder: they’re all active positions of mine so I like them all, what the “this week” column
does is to register, rather unscientifically, how I feel about each stock’s chances over the near-
term; a basic guess on how they’ll do in the next seven days, if you like). I see too much
wailing and gnashing of teeth out there in big bad marketland. I mean, we’re at the point when
bigger players that don’t often comment on mining companies, let alone juniors, are giving their
two cents’ worth to media channels. It all looks and feels overcooked, to me at least, in the
near-term hence the green you see.
There are currently 14 stocks on our open list, one less than our self-imposed maximum. Three
are green, too many are red.
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Company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
Top Picks
Rio Alto Mining RIO.to hold C$2.04 07-apr-11 C$4.75 132.8% $6.29 tgt
B2Gold BTO.to buy C$3.51 28-nov-12 C$3.01 -14.2% $5.70 tgt 3rd buy Feb'13
Recommends
Minera IRL IRL.to buy C$0.73 22-jul-12 C$0.62 -15.1% $1.56 tg, added, new avg
Aurcana Corp AUN.v buy C$1.07 11-nov-12 C$0.75 -29.9% $1.50 tgt near term play
OceanaGold OGC.to buy C$3.03 16-sep-12 C$2.42 -20.1% $5.34 tgt growth prod
Lara Expl. LRA.v buy C$1.15 08-apr-12 C$1.20 4.3% solid biz model, LT hold
Plata Latina PLA.v hold C$0.79 10-apr-12 C$0.45 -43.0% considering sale
Lupaka Gold LPK.to spec buy C$1.12 23-oct-11 C$0.35 -37.8% Holding, new tgt 61c
IMPACT Silver IPT.v buy C$1.14 13-jan-13 C$1.01 -11.4% new position, $1.85 tgt
Gold Res Corp GORO short U$14.11 25-jan-13 U$12.90 8.6% 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 spec buy C$0.175 01-jul-12 C$0.16 -8.6% revised tgt 25c
United Silver USC.to hold C$0.21 28-oct-12 C$0.115 -45.2% 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.
Marlin Gold (MLN.v): Though eventually unchanged in price on the week MLN had an
interesting five days of market action. Yes things
faded as the week went on (MLN and a thousand
other names) but the interesting bit came Monday,
when we saw sustained buying (702k shares traded
that day) which pushed the price up to 8.5c at one
point, showing that if MLN can generate some radar,
new entrants will likely have to pay up to get in. MLN
is just the type of stock that uses PDAC to generate
some interest and as we expect the post-PDAC
period to be the one in which MLN starts pressing its
case (the financing closed, the build-out at Trinidad
begun, the near-term production horizon to be
pointed at) your author detects a sniff of spring-like
promise here.
However, be clear that this is still a strictly near-term, strictly small trade that has end-April
latest as its selling window. The plan is simple and unchanged.
B2Gold (BTO.to): BTO’s travails and failure to move away from these low threes continues
(darnit, still kicking myself for buying that second tranche of three too early). For a while back
there early week it looked much perkier, touching $3.25 on a Wednesday when it traded a cool
17.3m shares. But the stock took its cue from the wider market Thursday and Friday, falling
back to the $3 level.
Two bits of news around BTO to cover. Firstly, the demonstration at BTO’s Libertad mine that
was broken up by police has attracted the attention of the Ortega government’s opposition and
also of human rights groups, who have launched official-type protests (10) and denunciations
that will be brushed off easily by this government once the press has moved on from the story.
There’s more light than heat in this one, with the main arguments of mining company brutality
9

being very flimsy indeed and although the accusations being bandied about that Daniel Ortega
himself has a share in the mine may have substance, it’s hearsay stuff at this point and even if
true, extremely unlikely to achieve anything by way of argument. Meanwhile, 12 of the arrested
informal miners have been deemed the ringleaders of the illegal protest and formally charged
(11). In short, everything that’s happened since the protest was broken up is indicative of a
government that fully backs the BTO position and your author (often accused by those who
don’t know him well as being a lefty handwringer who’ll always take the anti-mine protester
position) has zero worries about this as a potential political risk issue going forward...and my
money’s where my mouth is on this one. To
round off this point, we also note that BTO
has reached amicable agreement with four
of the five informal miner groups working
around the Libertad area (12).
Talk of money and shares brings us to the
second issue, that of insider sales. Reader
‘JR’ mailed in to note that BTO
management took chunky money off the
table in February via insider share sales. It’s
true (as this page (13) shows) but it’s not
one that I’m particularly concerned about,
because BTO management (even when
they were at previous company Bema) has
a set pattern of selling its shares and it’s something that we’ve seen in this stock all the way up
(e.g. I remember fielding concerns about big insider selling when the stock was around $1.50 in
mid-2010. I’m not saying it’s a perfect situation and I for one would prefer the team to keep as
much skin in its game as possible, but it’s not unusual for BTO to do this, so it’s less of an issue
in my book.
Minera IRL (IRL.to)(MIRL.L): When I first bought IRL at 65c back in July last year I really
thought I’d got a full-on long-term bargain to remember, so when the decision to add on price
strength needed to be made, it wasn’t that difficult a decision. Seeing the stock under my
original selling price today is nothing short of depressing and it’s the one that’s got me
wondering whether I’m doing this analysis thing all wrong.
I’m just going to sit and watch IRL, price up or down, until its news on the Don Nicolas
financing package is known and released. That’s when active decisions will be made here, a bit
like giving Aurcana (AUN.v), another frustrating stock to hold, its chance to do things in 1q13
before making a real call. However, I do think IRL is a cut above AUN (and most other juniors
for that matter) and deserving of more patience.
OceanaGold (OGC.to): Here’s the five day chart that compares the two main tickers of
OceanaGold (with apologies to our New Zealand readers). What you need to note here is that
trades in the OGC.ax Australian ticker
happen in a different time zone and before
anything that the Canadian OGC.to ticker
experiences (i.e. looking at Monday, the Oz
market (green line) was closed before the
Canada market (blue line) opened. This is
mentioned for two reasons: Firstly check
Monday/Tuesday, as pre-Australia bell
Monday (or Sunday evening Americas time)
this NR (14) came out that announced OGC
had had some of its cargo trucks held by
local tax agencies over a dispute on the
amounts of tax due from current mine
production. As Monday progresses and the
10

news was understood in greater depth, the conclusion reached by Australian market
participants was that it’s a minor and temporary glitch rather than a major issue, so Tuesday
morning Australia time saw buyers move back in. Then we cut to Thursday 28th and the
weakness in OGC, driven by the poor showing (Americas overnight) in the gold price. The
reaction to the constant selling in Australia was an immediate sell-off in Canada.
The inference here is clear enough: look to the Australia market for your cues on how the
Toronto tick of OGC will trade on any given day. Unlike other Oz/Canada dual listed stocks (eg
LSA) OceanaGold does good volumes and liquid trading in Toronto but that should disguise the
fact that the stock’s main market is Australia and that’s the price driver here.
IMPACT Silver (IPT.v): The default price for IPT during the thick part of the week was $1.03,
which dropped to Friday’s $1.01 close as gold dumped again and the sector saw sell buttons
being hit, so even though IPT is my idea of a real bargain price at the moment it had a better
week, there wasn’t much sell-at-any-cost trades going through and the stock did well enough.
We hear that IPT has news to offer the market tomorrow, so let’s see what that brings.
Lara Exploration (LRA.v): I got a quick post out on the blog Friday (15) after the NR from
LRA (16) but before the stock came off
its halt. As opined in the post the news
was very positive and once LRA started
trading, the market reaction (on a
general down day) confirmed the
opinion.
This below is the table ripped from the
NR that highlights the holes that moved
the stock. Although hole #2 is the one
that LRA lead the NR with, #6 is at least
as interesting, as much for the fact that
it ended in mineralization grading over
1% Cu as the grade it offered.
Liberdade Table 1 - Best Intercepts - Primary Chalcopyrite Zone
Drill hole Target From (m) To (m) Intercept (m) Copper (%) Gold (ppb) Cu Eq(%) *
LBCD-02 Fortuna 49 246 197 0.65 118 0.72
LBCD-06 Fortuna 72.6 200.7 128.1 0.69 104 0.75
The happy mood around the results is well summed up by this quote, also from the NR:
Miles Thompson, Chairman and CEO of Lara Exploration commented: "The Company
believes these drill results represent the possible discovery of a large IOCG ("iron oxide
copper gold") mineralized system, consistent with the style and average grades of
mineralization from known deposits in the Carajás District."
I got to speak with Chair/CEO Thompson on the phone Friday (managed to catch him just after
he’d finished far too many hours inside planes and had landed in Canada for PDAC) and
although he couldn’t give much detail, due to the exploration being run by Codelco rather than
LRA, he could give some background to the news. First off the team is very pleased with the
result, as it’s exactly the type of assay that shows the potential a world-class mining company
such as Codelco needs to reach its minimum barrier size for development. Next, it’s significant
that Codelco’s first pass program just reported came to around 2,000m of drilling, but as soon
as the results were known Codelco committed to a new program of between 3,000m and
4,000m. Also, the limits to the next round of drilling are administrative more than anything else,
11

as according to the system used in Brazil, Codelco has to file a report with the Brazil ministries
on a specific date about what’s been done at the project in order to get a (near) automatic
extension to the drilling permit. From what Thompson said on Friday (be clear that not quoting
but reading between the lines and also that LRA isn’t running this drill program) there’s a very
high likelihood that Codelco will continue drilling once the next 3k to 4k of drills are done (which
is just another way of saying “it’s going to happen” without using absolutes and inviting fate).
People, LRA has a live one here and although it’s too early to start speculating as to what the
Liberdade project could do for LRA’s share price, the contractual set-up that would eventually
LRA a 25% free ride through to a resource that’s 500,000t minimum, if things go as well as
that, mean the company is on a potentially big win. The risks to this project working should be
clear enough, that of working with a company such as Codelco that’s looking for an elephant-
sized deposit and if it doesn’t find what it’s after, it’ll move on and hand back to LRA. But
there’s no doubt that we’re off to a good start at least here so if, if, if things continue well and
Codelco starts finding the deposit size needed to go with this good grade and length, here’s a
little calculation to mull over:
0.6% copper x 500,000mt x 2204.62lbs per tonne X 25% ownership = 1.65Bn lbs Cu
Lara has a $36m market cap today and due to the hit announced Friday, I wouldn’t be at all
surprised to see LRA rally further next week
Rio Alto Mining (RIO.to): We got the news expected from RIO last Monday (17) in which the
company set a production guidance of 190,000 oz to 210,000 oz gold, the same as the 2012
upwardly adjusted target that was hit, as well as a cash cost guidance of $675/oz to $725/oz
which was slightly higher than expected. We also got details of how RIO expected the leaching
to perform on a quarterly basis and how the second half of the year was forecast to show
higher production than the first half. Overall, the guidance numbers look fair enough to me (as
long as gold doesn’t collapse on us), the cash cost window is slightly higher than I expected but
it’s not a biggie, either.
The other main talking point came from the amount of capex RIO has budgeted for FY13,
putting the range between $80m and $100m, both number higher than most people’s
expectations. I even saw a downgrade from one of the houses, I forget which one, that cited
the extra capex as reason to drop the price target on the stock which for me is plug dumb
stupid analysis. I like that RIO isn’t afraid of spending what amounts to the free cash flow it
expects from operations in FY13, because otherwise you’d have a company more intent on
putting together a cash treasury which would in turn drop its EV and leave it more open to a
predatory takeover move (either that or we’d have the daft situation of a growth story paying a
dividend out to its shareholders before reaching any sort of maturity). Why make yourself an
easy target? Also by investing its cash into its assets RIO implicitly states it is making best use
of the cash available and adding to its future value incrementally, not just in the storage of
dollar bills. Each free cash flow dollar spent on development means less dilution for the share
count.
Finally, I took a few queries on this part of the NR:
“As part of an ongoing focus on cost control, the Company has identified a number of
opportunities to lower the cash cost from the stated guidance at La Arena during 2013.
These opportunities include optimizing drill and blasting activities in both ore and
waste, improving the productivity of shovels and haul trucks and the potential for an
over-call of the grade of the ore that is mined as was experienced during 2012.”
On asking CEO Black about this, I was told that RIO has probably aimed its cash cost guidance
slightly high for the sake of being cautious and that measures they are almost certain to
implement are expected to cut costs down, at least from the upper end of guidance. The other
part, that of over-call of grade, was mentioned because RIO has continued to experience a
phenomenon of getting higher recoveries from the placed mineral than expected. They’re still
12

not absolutely sure why this should be so, but have decided in 2013 guidance to assume the
better than expected recovery numbers
don’t continue thus leaving production
surprises to the upside.
As for the reaction to the NR, that was
positive enough as this chart comparing
RIO to GLD demonstrates. It was the
first winning week for RIO for a while
and we’re plenty down from the $5.42
of just one month ago, but a winning
week in the current market atmosphere
isn’t to be sniffed at and gave the
company’s 2013 plans a frank of
approval.
The Copper Basket
After nine weeks of 2013 The Copper Basket is showing a 0.78% loss to level stakes.
company ticker price 1/1/13 Shares out Market Cap current pps gain/loss%
1 NGEx Resources NGQ.to 3.40 158.5 462.82 2.92 -14.1%
2 Augusta Res AZC.to 2.43 144.1 394.83 2.74 12.8%
3 Lumina Copper LCC.v 9.43 43.46 360.72 8.30 -12.0%
4 Copper Fox CUU.v 0.83 397.65 334.03 0.84 1.2%
5 Nevada Copper NCU.to 3.50 80.5 301.88 3.75 7.1%
6 Hot Chili Ltd HCH.ax 0.72 286.78 200.75 0.70 -2.8%
7 NovaCopper NCQ.to 1.80 51.89 99.11 1.91 6.1%
8 Reservoir Min. RMC.v 2.41 41.46 97.02 2.34 -2.9%
9 Western Copper WRN.to 1.39 93.78 94.72 1.01 -27.3%
10 Panoro Minerals PML.v 0.62 176.25 86.36 0.49 -21.0%
11 Curis Resources CUV.to 0.70 56.31 53.49 0.95 35.7%
12 Candente Copper DNT.to 0.375 121.93 49.99 0.41 9.3%
13 Oracle Mining OMN.to 0.80 49.03 39.71 0.81 1.3%
14 Yellowhead Min. YMI.to 0.59 60.97 33.53 0.55 -6.8%
15 Strait Minerals SRD.v 0.08 56.86 3.98 0.07 -12.5%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg -0.78%
The Copper Basket saw six stocks make
Copper Basket 2013 average, weekly
gains (AZC.to, CUU.v, HCH.ax, RMC.v, 14%
OMN.to, SRD.v) and nine stocks return 12%
losses (NGQ.to, LCC.v, NCU.to, WRN.to, 10%
PML.v, NCQ.to, DNT.to, YMI.to, CUV.to) on 8%
the week, which left the overall average 6%
down a touch and still in negative territory, 4%
but the atmosphere wasn’t that of wholesale 2%
dumpage as in the previous two weeks. Best 0%
of the bunch was Strait Minerals (SRD.v) -2%
which jumped on a technical-type rebound,
while the worst performances came from
13
ht6naj ht31 ht02 ht72 r3bef ht01 ht71 ht42 dr3ram
source: IKN calcs, TSX data
31/1/1
morf
egnahc
%

Yellowhead Mining (YMI.to down 15.4%), Western (WRN.to down 9.0%) and Curis (CUV.to
down 8.7%).
We check in on the macro situation and top
story is the slump in copper prices. At this
point I usually include a five day price chart
for copper futures, but this time I’m adding a
few extra days to show that the recent trend
that bounced us between $3.55 and $3.65 has
gone (we’re also a long way from the $3.80/lb
prices at the beginning of February).
Underneath the headlines, the deterioration in
data continues with world aggregate
inventories up a whopping 7.6% to 753,038mt
since this time last week as the demand slump
shows evermore clearly. LME inventories were
up 8.1% to 458,775mt, Shanghai up 8.9% to
226,201mt and Comex dropped a tiny 0.02%
to 68,062mt (down precisely 16 tonnes on the
week). As it’s end month here are the updated inventory tracking charts for your consideration,
starting with the tonnage held at the three warehouse groups (left) and that’s a big jump in
February, folks. Meanwhile the chart right takes the same data and shows the percentage held
in each system.
Copper inventories, beginning of month 2012
800000
700000
600000
500000
400000
300000
200000
100000
0
The LME once again seeing a bigger share of the pie again and make no mistake, 2013 is not a
replay of 2012 as demand from
China has not returned post-New
Year celebrations in the same
way this time around.
The slump looks set to continue
if our cancelled warrants
indicator is anything to go by
(and so far this year it’s called
the situation reasonably
accurately), with just 5.45% of
LME inventories now under
cancelled warrants.
14
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef
source: Cochilco
reppoc
sennot
cirtem
Copper inventories: percentage held per exchange
70 LME Shanghai Comex
60
50
40
30
20
10
0
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef
LME Shanghai Comex
source: Cochilco
Cancelled Warrants at LME, IKN157 to date
35%
30%
25%
20%
15%
10%
5%
0%
751NKI 951NKI 161NKI 361NKI 561NKI 761NKI 961NKI 171NKI 371NKI 571NKI 771NKI 971NKI 181NKI 381NKI 581NKI 781NKI 981NKI 191NKI 391NKI 591NKI 791NKI 991NKI
source: Cochilco, LME
rof
yrotnevni
EML
%
latot
yreviled
resu-dne

Now for updates on some of the basket stocks:
Candente Copper (DNT.to): Strangely enough, there may be a long trade left in this stock
after all. Three pieces of news to report, firstly that the government held information workshops
in the Cañaris locality last week (18) that explained to residents that the current phase of
exploration poses no danger whatsoever to the quantity or quality of water supply. This may
seem like a small step and one potentially countered by “exploration is one thing, what happens
at the production stage” but it does show that the Peru government has got round to a little
grassroots consulting work (long overdue) and is now countering the type of scare stories put
forward by the anti-mining brigade.
Secondly, the anti-mining protesters re-started activities to promote their cause last week (19)
but pledged it as 100% pacific, with their leader stating that the protests would not include
road blocks (the usual cause of flashpoints in these situations). A peaceful tone to those against
mining activity is a welcome development.
Finally and perhaps the most interesting development because of its potential tradeability, a
segment of locals have announced a pro-mine demonstration set for March 10th (i.e. next
Sunday (20). At the very least it will be an opportunity to gauge the amount of support DNT
has for its project amongst locals and in a best case situation of a large group of pro-project
marchers showing support for DNT, reason to move and buy the stock on any resulting
promotion. You author’s best call on this is “wait and see” until next Sunday, because previous
promotional pushes from the DNT side have seen momentum gains on prices over days, not
just a couple of hours. If the ball starts rolling on the morning of March 11th from this there’s
time to grab a a few shares and ride a quick turnaround trade. If the pro-mine demo turns out
to be a damp squib, no harm done from a sideline position.
Stop press: Today March 3rd the Ministry of Mining decided to change the venue for a meeting
at the last minute and “forgot” to tell those opposing the Cañariaco mine of the change (21),
which smacks of a government playing dirty tricks. This latest development plays against the
rest of today’s note on DNT, so watching brief only at the moment.
Strait Minerals (SRD.v): A nice percentage rebound move from the stock we chose to
represent the tinycap end of the copper exploration field this year, whgich was even better for a
few hours and was up 100% on the
week for a trade or two before jagging
back. It even did a bit of volume too,
with over 100k shares traded on both
Wednesday and Thursday, which isn’t
much in cash terms but much better
than the normal nothingness.
We had news Friday too, with SRD
confirming (22) that it now had 100%
control of its main Alicia property after
completing the terms of agreement
with previous owner and optioner
Panoro (PML.v). The NR had news of
the JV deal with Teck as well, which
mapped out some of the previously disclosed terms of the deal which we’ve already covered
here (in ten words, the deal is a fair one and good for SRD) but the bit that caught my eye was
this:
“A community agreement for local employment, procurement and social benefits is in
place as part of an Environmental Impact Assessment (EIA) that has been approved
by the Ministry of Mines for initial drilling.”
That’s because the community agreement was the piece that was required at the last minute by
15

Peru’s Environment Ministry and was the missing that stopped the drill program in its tracks last
year. Now that this is in place we can expect Peru’s Mining Ministry to expedite the permits and
the show can finally get on the road....which is why we got interested in SRD in the first place.
Horribly delayed that it might be, there’s reason to keep an eye on newsflow from Strait
Minerals at last. The real proof will happen when the first assays are returned, however.
The Lottery Ticket Basket
After nine weeks of 2013 The Lottery Ticket Basket is showing a 1.31% 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 19.45 0.280 124.0%
2 Glass Earth GEL.v 0.155 104.79 12.57 0.120 -22.6%
3 Marlin Gold MLN.v 0.10 192.39 12.51 0.065 -35.0%
4 Fancamp Expl. FNC.v 0.125 109.8 12.08 0.110 -12.0%
5 Bellhaven BHV.v 0.14 121.16 9.69 0.080 -42.9%
6 Gryphon Gold GGN.to 0.085 194.64 7.79 0.040 -52.9%
7 AQM Copper AQM.v 0.08 105.57 7.39 0.070 -12.5%
8 Copper North COL.v 0.10 58.62 6.74 0.115 15.0%
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 4.32 0.165 -17.5%
12 Inca One Res. IO.v 0.12 34.0 3.57 0.105 -12.5%
13 Cream Minerals CMA.v 0.03 155.34 3.11 0.020 -33.3%
14 Firestone Ventures FV.v 0.045 36.32 2.18 0.060 33.3%
15 Netco Silver NEI.v 0.025 47.01 2.12 0.045 80.0%
Portfolio avg 1.31%
The Lottery Ticket Basket again kept its head above the breakeven level for the year, adding
around a point to finish at +1.31%.
However just five of our stocks made 30% Lottery Ticket Basket 2013 average, weekly
gains (COL.v, DAR.v, IO.v, FV.v, NEI.v) so
25%
a lot of credit is due to biggest percentage
winners Inca One (IO.v up 23.5%), Netco 20%
(NEI.v up 12.5%) and Darwin (DAR.v up
15%
10.0%) for lifelines. There were also six
10%
(!) unchanged prices (MLN.v, GEL.v,
FNC.v, AQM.v, FDG.v, RCZ.v) and four 5%
weekly losers (BHV.v, GGN.to, EGE.v,
0%
CMA.v), with the biggest of those the
25.0% lost by Cream Minerals /CMA.v).
Darwin Resources (DAR.v): DAR had a modest week, with a few nibbles at market without
any big volumes running through and a 10% price gain that looks much more important in
percentage terms than it really is. I know at least a couple of readers of The IKN Weekly were
responsible for some of the buying (because they mailed in and told me) so it was very
pleasant to see no big rush and prudent picking at a decent price, rather than a headless
chicken rush at any ask that would have seen a stupid, unnecessary price spike.
16
ht6naj ht31 ht02 ht72 dr3bef ht01 ht71 ht42 dr3ram
source: IKN Weekly data, TSX
2102/1/1
morf
egnahc
%

The other positive from last week is that DAR now has its 43-101 technical report on Suriloma
filed on SEDAR (23). It’s the type of 43-101 that speaks from geology pro to geology pro, but
it’s still worthy information for those of us who follow the stock. On this subject, amongst
feedback from last week’s note on the DAR site visit (thank you by the way) came a couple of
mails from pro geols who noted that my description of the volcanics/sediments hosting aspect
of the Suriloma project, particularly at La Puerta, was lacking. Well yes folks, I totally agree on
that. To begin with I’m not (and will never pretend to be) a geologist and have enormous
respect for the amount of knowledge a
person has to put in their head before
becoming a qualified geol, let alone a good
geol. Secondly, the limitations of the
explanation were almost certainly due to a
bunch of pros thinking “ok, how do we
explain this concept in a manner that a
dumbass non-geol with some lay knowledge
can capture” and thirdly, as noted in that
paragraph, the reason to mention the
volcanic/sediment issue was 1) to give an
idea as to why this property was overlooked
previously and 2) a start-off point for your
own research, rather than any definitive
answer. If you are interested in this project and company and want to know more, I
recommend you contact the DAR team (they’re pleasant, educated, accessible) and ask them
for more details, get it from the horse’s mouth
Bellhaven Copper & Gold (BHV.v): Your author’s fears and speculation turned out to be
unfounded (don’t worry, it’s just a fancy way of saying “i was wrong” but anal ysts aren’t
allowed to say things like that directly) and BHV successfully closed its placement on Monday
(24) with amongst others previous sponsor IAMGOLD (AIG) (IMG.to) exercising its option to
maintain its total percentage equity position by taking 2.17m or the 15.65m units placed.
However the market price weakness continued at BHV, 10c was only spotted briefly on two
occasions in the week and trading only really happened at or around the 9c level. In other
news, BHV announced an update from its flagship ‘La Mina’ project (25) including modest
results from its La Garrucha target zone. As this isn’t part of the total resource at La Mina yet
even the modest numbers returned will likely add to the 43-101 compliant numbers eventually,
but they were still ignorable results and that’s just what this tough market did. The problem is
that low grading deposits are out of fashion and although the main La Cantera target on the
property grades well (0.77 g/t Au and 1.26 g/t AuEq thanks to a very decent copper in that
target) the ounces added since then are either lower or much lower grading and still being
added are diluting overall grades.
FDG Mining (FDG.v): Changes at the top at FDG, as the company has done a deal in which
new money ($3m) comes on board (26) as well as at least one of the men behind the cash.
Here’s a segment of the NR.
Concurrent with the closing of the Financing, it is anticipated that Mr. Antonio Ponte, of Zurich,
Switzerland, will be appointed to the Company's board of directors (the "Board") as its Executive
Chairman. Mr. Ponte will also be entitled to nominate additional directors to the Board who will
represent a majority of the Company's Board after closing. Subject to the acceptance of the
Exchange, closing of the Financing is anticipated to take place within the next 7 to 10 days. Mr.
Ponte is a Swiss based financier who brings 25 years of asset management and mining corporate
finance experience and a vast network of strategic contacts to FDG. He is the Chairman and
Founder of Raifin SA, a European Mining Finance Consultancy. Mr. Ponte in the past has held
positions at UBS Switzerland, Citibank Switzerland and other private banking institutions.
17

IKN back and it’s good to see risk capital that’s savvy about mining unafraid to enter FDG at
this shaky moment in the market, which reflects well on the quality of its Nicaragua assets. I
got more flavour about this deal from a well connected reader (who know who you are, thank
you, very appreciated) who said that after visiting the FDG assets in Nica Ponte made his move
and would be taking control of the board. He’ll also be bringing several new board members
with him, including a new CFO (which explains why ex-CFO Tinajero left the week before last).
The money currently being raised is earmarked for some specific development projects and also
potentially moving on a smaller scale production facility that would run some of the higher
grading material at FDG’s projects, which might not be a world-beating production schedule but
would be a potential near-term source of cash flow and decently profitable, according to in-
house company models. Further down the line FDg has its plans as well, but let’s see how the
next few months pan out first.
Overall, the changes (and inflow of cash) at FDG last week has to be considered a positive,
particularly for a company with a market cap (up to the closure of these latest placements at
least) of just $5m. Add this one to the sub-group of The Lottery Basket that already includes
DAR, EGE, AQM and MLN as “well worth watching more closely”.
Regional politics
Guatemala: Human rights violation case against HudBay (HBM) (HBM.to) to be
heard in Canadian courts
The week’s important political development around mining in LatAm came Monday, when this
NR (27) hit the wires. Here’s how the NR kicks off with the moneylines underlined by your
author.
TORONTO, ONTARIO--(Marketwire - Feb. 25, 2013) - In an important precedent-setting
development for the accountability of Canadian mining companies for alleged overseas human
rights abuses, victims of rape and murder at a Guatemalan mine are now able to sue a Canadian
mining company in Canadian courts.
Guatemalan Mayan villagers who are suing Canadian mining company HudBay Minerals for the
alleged gang-rapes of eleven women, the killing of community leader Adolfo Ich and the shooting
and paralyzing of German Chub at HudBay's former mining project in Guatemala recently learned
that HudBay has abruptly abandoned its legal argument that the lawsuit should not be heard in
Canada, just before an Ontario court was set to determine the issue. As a result, and for the first
time, a lawsuit against a Canadian mining company over alleged human rights abuses abroad will
be heard in Canadian courts.
It’d be nice to say that I was surprised about the lack of coverage about this precedent-setting
decision in he Canada and mining press, but of course it wasn’t surprising at all. This isn’t the
type of news that the industry wants at the front of people’s minds during the run-up to the
biggest mining social event of the year. However, this will be news eventually and the
precedent set last week would have made legal teams in major mining companies sit up and
take notice.
Mexico: Baja California projects to be delayed through 2013
An interesting one. The new head of Mexico’s environmental agency Semarnat, Juan José
Guerra Abud, was in Baja California Sur (BCS) State last week (28) to sign an environmental
18

ordinance agreement with the regional government in a ceremony led by Governor Marcos
Covarrubias, known for his his opposition to open pit mining in the region (e.g. the San Antonio
project of Argonaut Gold (AR.to)). At the meet it was resolved to hold a consultancy forum at
which the BCS general public could offer their opinion on what the government (both regional
and federal) should do to achieve environmentally sustainable growth of the type that new
President Peña Nieto promotes. Señor Guerra said that all opinions would be taken into
consideration, though stated that in the specific case of mining Semarnat would not become a
hostage to environmental activist opinion. He said that his thrust will be to promote
environmentally sustainable growth that will allow Mexico’s biodiversity to remain intact while
trying to improve the lot of the seven million Mexicans who live in poverty. He emphasized that
economic growth was a priority of President Peña Nieto but not at any cost.
All fairly standard politik-speak stuff that was clearly well rehearsed to allow people with
opposing views of mining development in the State to look happy together for the presser, but
the interesting thing came at the end when it was announced that part of the deal signed was
to set up a working committee comprising Semarnat and BCS regional parliament members that
would work this year and when its findings were published, form the basis of another working
committee to recommend law changes. In other words, thanks to a large slab of self-
congratulatory and self-serving bureaucracy all environmentally sensitive projects in the BCS
region have just been put on hold in 2013 at the least.
When Argonaut Gold (AR.to) announced its 2013 budget this week (29) it assigned between
$3m and $15m to work at San Antonio, with the final amount “subject to permitting process
timeline”. Expect the final number to be much closer to $3m than $15m.
Ecuador: Lay-offs at Kinross (K.to) (KGC) Fruta Del Norte
Last week, Kinross (K.to) (KGC) laid off 67 employees at its Fruta del Norte gold mine project in
Ecuador, which is a significant percentage of the workforce which according to the local
company website (30) previously stood at 101 full-time contracted and 288 “colaboradores” (a
term used for unskilled/semi-skilled local and part-time workers). The company stated to
Ecuador press (31) that the lay-offs had been previously budgeted as part of the 2013 work
program at the project and that this year there is a “lowering of activities” in fieldwork.
However, those left unemployed said the news came as a complete surprise, blocked the access
road by way of protest and demanded a fair severance package.
Dominican Republic: President Medina makes official his government’s desire to
renegotiate terms with Pueblo Viejo
There were literally hundreds of Spanish language news reports (32) on the speech President
Danilo Medina of Dominican Republic gave to his country’s Congress on the 169th anniversary of
the country’s independence, a traditional speech at which the sitting administration reports on
its previous year’s work (a sort of State of the Union address, if you like) with most headlines
grabbed by the extensive time Danilo set aside to talk about the current situation at the newly
commissioned Pueblo Viejo gold mine (60% Barrick, 40% Goldcorp) that we covered in IKN196
dated February 3rd. Medina did not mince his words that included these two quotes (translated)
“I want today to give a last call to the executives of Barrick Pueblo Viejo to
agree to revise fiscal aspects of the contract”
“If [the Pueblo Viejo gold mine] maintains the intransigent that it has
displayed up to now, the government [of Rep Dom] cannot remain with its
arms crossed*”.
This position regarding Pueblo Viejo got him a standing ovation from the Congress and also got
him a quick tactical retreat from Pueblo Viejo, who until then had been firm about its “contract
signed, deal’s a deal, no change” position. Suddenly the president of Barrick Pueblo Viejo,
Manuel Rocha declared via an NR that the company was (33) “...disposed to dialogue with the
government about aspects of the agreement [previously] approved by Congress”. Finally, The
19

Economist Intelligence Unit covered the Medina speech pretty well in this report (34) and here’s
the part that pertains to the Pueblo Viejo issue:
Barrick under the spotlight
A large part of the speech was dedicated to the announcement that the government would
demand renegotiation of a contract for a US$3.7bn gold mine in Pueblo Viejo granted to Barrick
Gold (Canada). The Dominican Congress approved the contract, and it was signed by then-
President Leonel Fernández, in 2009. In the past few months the legislature has requested a
revision to the contract in order to account for an increase in the price of gold. Mr Medina's
statement was received with a standing ovation from the audience, but was met with scepticism
from critics who fear that a falling-out between Barrick Gold and the Dominican government could
negatively impact prospects for future foreign investment, particularly in the growing mining
sector.
Should the president succeed in revising the contract with Barrick, he will probably boost his
already high public approval rating (it stood at a healthy 82% in January, according to a Gallup
poll). Contract changes might also ease pressure on his administration to introduce additional
austerity measures and tax increases in order to address the weakened public finances he
inherited from the previous administration. Newly released Central Bank data reveals that the
fiscal deficit was a large 6.6% of GDP in 2012 (up from the government's previous estimate of
5.45 of GDP).
*a literal translation from a typical Spanish phrase “quedar de brazos cruzados”, which means not doing anything
More Chinese buying of resources in Peru (though not mining)
A quick line to note that China is still hunting for takeover opportunities in the Peru resource
sector, though in this case it’s fishery and not mining. Last week (35) shares of Copeinca, that
trade on the Oslo stock exchange in Norway, jumped 30% on news that China’s ‘China Fishery’
had made an unsolicited hostile bid for the company. Copeinca has rejected the bid and advised
its shareholders not to tender.
Peru La Libertad:: Blocade at Lagunas Norte (ABX) called off
Unsurprisingly, the blockade that caught plenty of headlines at Barrick’s (ABX) Lagunas Norte
(aka Alto Chicama) gold mine in the La Libertad region of Peru was called off after negotiations
between the two sides, veyr much along the lines of our piece in IKN199 and disappointing
those who crave more political risk to handwring about in Peru.
The Fraser Institute 2012/2013 Mining Survey: A comment
The Fraser Institute took another step towards making its annual mining survey redundant last
week with the publication of its 2013/2013 Mining Survey that offers plenty of evidence as to
how out of touch with reality the institute has become. Seeing Chile, a world-class mining
jurisdiction, shuffled down to 23rd position by the survey results was bad enough, but there was
worse to come. Along with unsolicited comments reaped by your author from readers after last
week’s blog post that gave the link to the report (36) such as...
MF: “The annual rankings by Fraser Institute “global survey of mining
executives” carry about as much weight as the USA Today Men’s Basketball
Coaches Poll.”
IB: “The DR, Namibia, Turkey, and Bulgaria are all more politically stable than
Colorado, Minnesota, and BC. WTF?”
...the one that jumped out of the page at me was seeing three regions of Argentina ranked
higher than Mexico and five of them (in order Salta, Neuquen, Rio Negro, Catamarca, San Juan)
higher than Peru, while arguably the best and most welcoming Argentina province of them all,
20

Santa Cruz, ranked as the lowest of them all on the Fraser list, below even Mendoza and its
notoriously bad risk factors for metals mining, as well as below Panama, Colombia and Guyana.
This segment could turn into a long refutation of the Fraser findings but it’s difficult to know
where to start. The report is asinine, wide open to ridicule on several fronts, useless as practical
reference material due to its cornerstone findings, patently unaware of the situation on the
ground in the region and shines far more light on the failures of the survey compilers than the
Latin American mining scene (or the world for that matter, though I’ll stick to LatAm for my
own commentary). The good news; it’s one less thing I’ll have to read this time next year.
Mexico: TD Sec’s call on political risk in Guerrero State
On Friday March 1st, TD Securities’ Daniel Earle and Shey Ylonen issued this alert report:
Torex Gold Resources Inc. (TXG-T)
• Business News Americas has reported that Torex is establishing a new
security strategy at its Morelos gold project in response to heightened criminal activity
in the region
• The company is reportedly compiling a detailed security plan to federal
authorities in response to a 30 member criminal gang moving into an area ~30km from
the project
• This development follows news reports of vigilante groups overtaking parts of
Guerrero State, where the Morelos project is located
Impact - Negative
The article reinforces, in our view, the potential for further security issues at the
Morelos project, with serious incidents having occurred in 2007, 2008 and more
recently in March 2011, when the company was forced to suspend surface exploration
programs for three months as a result of criminal activity and violence that culminated
in the armed robbery of several of its trucks.
We have included a link to the article, below:
http://subscriber.bnamericas.com/Subscriber/index.jsp?idioma=I&tipoContenido=detalle&pagina=
content&idContenido=610582&tipoDocumento=1
The worsening security conditions are developing as the company looks to complete
project permitting (anticipated in June) and arrange US$250mm in project debt with a
syndicate of banks. Assuming the company secures the US$250mm project finance
facility, we model an additional $100mm being raised through an equity offering at
$2.00/share to fully fund development and provide a small buffer for working capital
purposes.
Anticipated Timeline
• Drill results from Media Luna discovery – Ongoing
• Completion of project permitting and construction decision – Mid-2013
• Initial resource estimate (Media Luna) – Q1/14
Feel free to contact us for further information.
This one day chart (yes I know it might be an unfair time sample snapshot, but we’re homing in
on Friday due to the TD Sec call) shows that TXG and another well-regarded Guerrero junior
play, Newstrike (NES.v, green line) both did worse than silver (purple line) gold (red line) or the
junior mining ETF (yellow line), which I’d suspect is due to the above call.
People, this is something that’s been mentioned here on many an occasion (even a couple of
times on the blog). Guerrero State in Mexico is a politically risky place to go mining and it’s the
main reason I’ve never warmed to Newstrike (in particular, great rocks there), Torex or any
other company working the region. Added to this, I’ve heard more than one on-ground opinion
that backs up my call on this region including one from a South American born geologist who
was working for one of the explorecos until two years ago but quit and found a job with a
21

different company in a different LatAm country. No names no packdrill, but this is a seasoned
professional who knows his way around LatAm, plenty of street smarts and experience who was
genuinely scared of working in Guerrero
after a minor brush with a local gang
member and a subsequent phone call
from some anonymous who’d by then
found out everything about him including
background, place of birth, names
addresses and current location of family
members, the whole nine yards.
Most of Mexico is a good, very pro-sector
place to go exploring and mining. Some of
the regions have higher narco-risk factors
than others, some have extra regional
political risk, some specific areas have
issues, but as long as you’re careful and
prudent that risk is manageable. However, the three States that I’d specifically avoid for mining
exploration companies always have been and still are Chiapas, Baja California Sur and Guerrero.
Market Watching
The Rusoro (RML.v) small trade update
Back in IKN188 and then followed up in IKN189, we took a look at the political situation in
Venezuela surrounding President Hugo Chávez’s cancer and health issues and as a result, I took
a small long position in Rusoro Mining (RML.v) on the back of what I thought would be a
potentially quick trade. Please note that as stated back in IKN188/IKN189 this minor trade is
still considered a ‘side bet’ type of speculation and as such is not a formal part of our Stocks to
Follow list (and more’s the pity, as a splash of green up there would brighten things up no end
at the moment). The whole soap-opera has continued long after the original January 10th
inauguration date and all this time I’ve quietly kept hold of my RML shares and as a result of
that, I’m now sitting on a 50% pre-commish win for the position, having bought at 5c
compared to Friday’s close of 7.5c. But I’m not selling them yet. Here’s a quick three-stage
update, which takes in the latest rounds of news/rumours, the trade in RML.v shares and then
your author’s commentary and opinion.
First the newsflow. Last week brought a new round of rumours and hearsay, including ones
that he was already dead. However, those came from the same Panamanian ex-diplomat who
was fired by his country (and who forced President Martinelli to issue an official apology to
Venezuela) for faking a photo of Chavez that made the front page of Spanish daily El Pais.
Slightly more substantial was the rumour (37) from Spain’s longtime anti-Chávez right wing
paper ABC that he was close to death, that 35% of his lungs were now cancerous, that he’d
been sent home from the Caracas hospital to die in peace. However this and all other rumours
were flatly denied by Venezuela’s Foreign Minister (and part of the Chávez inner circle of
power) Elías Jaua, who said yesterday Saturday that the “evil rumours” were a “criminal
pressure” on Chávez, “blackmail” and false. He stated that Chávez “is giving battle for his life”
(which is slightly less urgent in tone than the English language phrase “fighting for his life”, but
is obviously along the same lines) and confirmed VP Meduro’s statement on Friday that Chávez
was receiving chemotherapy treatment, though was “in good spirits”. However, today Sunday
President Evo Morales of Bolivia, who went to visit his peer and friend a few days ago but even
he wasn’t allowed to see him directly by his doctors, reported (38) that (translated), “There are
moments in which he is well, strengthened, according to medical information and his family, but
quickly he also has problems, a type of relapse.”. “Now he is fighting to save his life after
having saved his country.”
22

As a slight aside, in the last few weeks we’ve also seen a clear change in rhetoric from VP
Nicolás Maduro in the sense that his speeches are quasi-campaign stumping in nature, rather
than those of a normal sitting politician or main voice for Chávez and his health issues.
Now to look at RML’s week. The rumours and talk also sparked buying in Rusoro (RML.v), with
1.5m shares traded Thursday (plus another
620k Friday) and this by way of a five day
chart. It’s also worth noting the insider
transactions in recent weeks, as
management/officers have been steadily
adding. Director Peter Hediger has added
nearly 4m shares to his pile since September
(including nearly 3m since Feb 1st) and
director Gordon Keep (a man with deep
connections to Venezuela along with plenty of
other places and is the right-hand man of
Frank Giustra) has added nearly 600k shares
to his holding.
Now for some comment. First, I have no position as regards Chávez the public figure in this
report, however I wish Chávez the person the best of health and remind readers of my opinion
that nobody at all deserves to die of of malignant and aggressive cancer, it’s not the way for
anyone to go. With that out the way (and sadly speaking from experience, though I hasten to
add not by own body) it seems that we are either approaching the endgame for Chávez or that
we’re there already, with the amount of time he has left the only unknown (be it days, weeks
or months) as the nature of cancer is difficult and the highly restrictive newsflow out of
Venezuela on his present-day health makes it very difficult to make anything more than
educated guesses. But all inferences and indications, both from late last year and this, are that
Chávez is dying and it’s more about when than if. All reports, topped off by the words of Evo
Morales today, point clearly in that direction.
As for the hard-nosed capitalism, last week the reaction of the market o the louder Chávez
health news was to nibble at RML (it wasn’t massive buying and at 7c or 8c each, it takes a lot
of shares moved to be considered a significant cash amount). The stock is hardly the perfect
vehicle for investment speculation, due first to its asset ownership doubts and awful looking
balance sheet, but considering the dearth of opportunities out there to trade Venezuela risk
(unless you’re a bond pro and have access to that market) it’s an understandable option for
shares trading. I’d fully expect this to continue and grow in the days and weeks to come and it
would likely reach a peak round some moment when the Venezuela government makes a more
open signal that things are reaching the end for Chávez. That’s when I’ll sell my position in RML
(when everyone else is looking for a way in, it’ll be exit stage left round here).
This is a small trade and it’s one that I’ve held onto longer than expected, but last week saw a
modest percentage gain turn into a decent one and most importantly, the market reacted to the
newsflow (gossipy as it might have been) in the way that you’d want if the plan is to trade
around bad news for Chávez the person. Therefore I’m a happy holder and aiming for
something at or above 10c, be it on a spike or incremental momo, before considering a sale.
Volume will be a key factor as well, because this one can go dry but also trade heavily on any
given day. Getting out successfully may mean taking a day of volume instead of a perfect price
point.
Word on the San Gold (SGR.to) bought deal placement
First we need a little background to set up this segment: Firstly, pre-bell on February 8th San
Gold (SGR.to) announced On February 13th announced (39) operating results and 2013
guidance for its flagship Rice Lake mine that the market didn’t like at all and the stock that day
dropped 13.4%, from 67c to 58c. By the close on Feb 13th SGR was down to 37c. Late that
23

same day SGR announced (40) a bought deal placement led by Scotiabank and CIBC to raise
$50m via the sale of 50,000 debentures priced at CAD$1,000 apiece, that carry an 8% interest
rate over a life of five years until maturity (March 2108) and a conversion price (at holder’s
option) of 50c. The deal is supposed to close on March 6th (i.e. Wednesday this week).
As per Friday’s close, SGR is down another leg to just 28c, down a full 58.2% since February
8th. All very negative stuff for long-term and long-suffering SGR holders (the 12 month chart
above shows the pain, the two year chart is even worse but check that one at your own leisure)
however that’s not the reason for this piece on a stock that’s not previously been featured in
The IKN Weekly and one that your author has never covered with much more than a glancing
eye.
No, the reason is that after hearing a whisper early this week from a decently placed source,
then scouting around for opinions that might back the whisper up, we hear that the majority of
the bought deal placement (sadly an exact number eludes me) has not been taken up and is
still in the hands of the brokerages. And as this is a bought deal, said brokerages pledge to
underwrite the offering and will end up taking the debentures themselves and paying SGR out
of their own pockets.
Which makes for an intriguing scenario. On a couple of occasions last year we had bought deals
that didn’t run successfully and brokerages managed to renegotiate the deal with the mining
company so as not to be left holding a big bag (possibly a “you’ll never raise in this town again”
type of warning), but with the poor state of the credit market, SGR may decide to stick to its
guns on this one (it’s not a small number for a $91m market cap company, after all) and leave
Scotia/CIBC holding a big bag. But what it does mean is that brokerages are going to be
extremely cautious about committing in such a way again and going into the next bought deal.
Esperanza Resources (EPZ.v): One less to worry about
After that long-ish piece last weekend in IKN199 about the public consultancy around
Esperanza Resources (EPZ.v) Cerro Jumil property, we had news early last week (41) that made
both our note and our latent interest in the company redundant. The decision made by EPZ to
take three properties from Pan American Silver (PAA.to) (PAAS) as well as change a key
member of management, Laurence Morris who was brought in as a mine builder to take charge
of the Cerro Jumil property, has transformed EPZ from a company moving on one project and
looking to build one good looking property in the near future to a multi-project exploration type
entity that spreads itself over several not-quite-as-good properties. La Bolsa, Pico Machay and
Calcatreu all have their positives of course, but they also come with potential problems and are
simply not as advanced as Cerro Jumil. The sense of getting potential upside diluted away is
strong here, especially in a market that gives scant reward to exploration plays (and there’s also
a feeling that by taking on these new assets EPZ has suggested it isn’t so sure that the
permitting for Cerro Jumil is going to go its way).
24

It all adds up to one thing, that EPZ is off the
shopping list here at The IKN Weekly and
with hindsight I’m glad that I sat and waited
on the sidelines for a while, instead of
wading in at the previous 2013 prices. This is
why and the cute bit of tape painting at the
end of the week shouldn’t fool anyone.
As an aside: I really don’t understand what
PAAS is doing as a company these days.
Conclusion
IKN200 is done, we close with bullet points:
• I hope all those attending PDAC have a good time. Do overdo it, people.
• Lupaka (LPK.to) has been a sad case up to now, but hope springs eternal and I see no
reason to sell at the current depressed price. The resource update was good and there
may be new interest from the BVL listing to come. Holding for the moment.
• Want a trade? Rusoro (RML.v) may be a fun ride to come around the Chávez situation.
Ride it however you want but be clear I’m out at 10c and taking my double if it’s seen.
• But our most upbeat comment has to be left for Lara Exploration (LRA.v), as it’s the
first time in a long time that I’ve read a wholly positive piece of exploration news from
a stock I own, and news that managed to shift the share price upwards on volume, too.
More where that came from next week please, Mr. Market.
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
25

Footnotes, appendices, references, disclaimer
(1) http://wtaq.com/news/articles/2013/mar/01/outgoing-anglo-boss-to-get-over-46-million-on-exit-source/
(2) http://finance.yahoo.com/q/bc?s=MTO.V+Basic+Chart&t=5y
(3) http://uk.reuters.com/article/2009/01/13/apexsilver-bankruptcy-idUKN1340615220090113
(4) http://www.mineweb.com/mineweb/content/en/mineweb-silver-news?oid=80866&sn=Detail
(5) http://incakolanews.blogspot.com/2011/08/golden-minerals-aumn-aumto-whatever.html
(6) http://finance.yahoo.com/q/pr?s=AUMN+Profile
(7) http://incakolanews.blogspot.co.uk/2013/03/good-news-ther-bottom-in-gold-is-in.html
(8) http://finance.yahoo.com/news/lupaka-gold-corp-increases-gold-142500227.html
(9) http://gestion.pe/empresas/lupaka-gold-dio-campanazo-bvl-y-anuncio-inversion-us-3-millones-2013-2060173
(10) http://www.agenciapulsar.org/dd-hh/en-nicaragua-denuncian-represion-contra-mineros-artesanales/
(11) http://noticias.terra.com/crimenes/nicaragua-juzgara-12-mineros-por-protestar-contra-minera-
canadiense,7c5ed298f041d310VgnCLD2000000ec6eb0aRCRD.html
(12) http://www.elnuevodiario.com.ni/nacionales/279058-cosep-aboga-b2gold
(13) http://www.canadianinsider.com/node/7?menu_tickersearch=bto
(14) http://finance.yahoo.com/news/oceanagold-didipio-mine-003000902.html
(15) http://incakolanews.blogspot.com/2013/03/the-lara-exploration-lrav-nr-today.html
(16) http://finance.yahoo.com/news/lara-exploration-ltd-codelco-intercepts-170501429.html
(17) http://finance.yahoo.com/news/rio-alto-produce-190-000-110000356.html
(18) http://www.andina.com.pe/Espanol/noticia-confirman-no-existe-peligro-contaminacion-proyecto-minero-canariaco-
449425.aspx
(19) http://www.rpp.com.pe/2013-02-25-lambayeque-comuneros-de-canaris-reanudan-protestas-en-forma-pacifica-
noticia_570387.html
(20) http://www.larepublica.pe/25-02-2013/pobladores-favor-de-canarico-haran-marcha-por-la-paz-el-10-de-marzo
(21)https://www.youtube.com/watch?v=vpWV3XeeeRw&feature=player_embedded#!
(22) http://finance.yahoo.com/news/strait-exercises-option-acquire-100-141000903.html
(23) http://finance.yahoo.com/news/darwin-files-ni-43-101-194000844.html
(24) http://finance.yahoo.com/news/bellhaven-announces-closing-non-brokered-123000351.html
(25) http://finance.yahoo.com/news/bellhaven-expands-la-garrucha-discovery-123000279.html
(26) http://finance.yahoo.com/news/fdg-mining-inc-announces-3-130000726.html
(27) http://www.marketwire.com/press-release/breakthrough-in-legal-liability-of-canadian-mining-corporations-for-
abuses-overseas-1760975.htm
(28) http://www.oem.com.mx/elsudcaliforniano/notas/n2898812.htm
(29) http://finance.yahoo.com/news/argonaut-gold-announces-2013-production-130256131.html
(30) http://www.kinrossecuador.com/quienes-somos/fruta-del-norte.html
(31) http://www.lahora.com.ec/index.php/noticias/show/1101472542/-
1/Minera_Kinross_despidi%C3%B3_a_67_obreros.html#.UTE6nKK_WFA
(32)
https://www.google.com/search?hl=es&gl=mx&tbm=nws&q=republica+dominicana+mineria&oq=republica+dominicana+
mineria&gs_l=news-cc.1.0.43j43i400.775.8257.0.9882.28.3.0.25.25.0.193.493.0j3.3.0...0.0...1ac.1.yg3jp9G7xOY
(33) http://noticias.lainformacion.com/economia-negocios-y-finanzas/mineria/barrick-gold-dispuesta-a-dialogar-con-r-
dominicana-sobre-cuestionado-contrato_AIRjIuCTB9FpcdGYJiIQU3/
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(34) http://country.eiu.com/article.aspx?articleid=940228478&Country=Dominican
(35) http://gestion.pe/empresas/acciones-copeinca-subieron-30-oferta-china-fishery-2060317
(36) http://incakolanews.blogspot.com/2013/02/fraser-institute-mining-survey-2013-is.html
(37) http://www.abc.es/internacional/20130301/abci-chavez-isla-orchila-201302282104.html
(38) http://elcomercio.pe/actualidad/1544921/noticia-hugo-chavez-tiene-recaidas-repentinas-revelo-evo-morales
(39) http://finance.yahoo.com/news/san-gold-provides-rice-lake-120000715.html
(40) http://finance.yahoo.com/news/san-gold-announces-50-million-203700974.html
(41) http://www.epzresources.com/news/2013/index.php?&content_id=132
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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