IKN #201Premium

The IKN Weekly
Week 201, March 10th 2013
Contents
This Week: Agreeing with Rick Rule.
Fundamental Analysis: NOBS fundamentals report on Colossus Minerals (CSI.to).
Stocks to Follow: Overview, B2Gold (BTO.to), Minera IRL (IRL.to)(MIRL.L), OceanaGold
(OGC.to) (OGC.ax), Gold Resource Corp (GORO), Lara (LRA.v), Rio Alto (RIO.to).
Copper Basket: Overview, Candente (DNT.to), Reservoir (RMC.v), Nevada Copper (NCU.to),
Curis (CUV.to), Oracle (OMN.to).
The Lottery Ticket Basket: Overview, Darwin (DAR.v), FDG Mining (FDG.v), Cream (CMA.v),
Eagle Star (EGE.v).
Regional Politics: Nicaragua: When regional media notice a trend, South Korea (yeah, really)
buys more gold & Peru continues debate on the subject, Dominican Republic: Pueblo Viejo
redux, Venezuela: What to expect short-term & medium term.
Market Watching: PDAC gossip on Gold Canyon (GCU.v), Kinross (K.to) (KGC): More
evidence of cost pressure, Merging microdots, Sulliden Gold (SUE.to) re its meeting Wednesday
and its trade potential, Tahoe Resources (THO.to) (THO.to) starting to shape as a short
candidate.
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
I agree with Rick Rule
There, I’ve said it, now feel free to take fanboy potshots at me. However, this interview with
Rule at PDAC (1) hits several points on which I’m fully in line so it would be remiss not to note
it here and recommend that you click through and watch it yourself (less than seven minutes,
so concise too).
• Quality juniors will benefit from now on? Check
• Cash available for good projects but will ignore the mediocrity? Check
• Short-term doubts, medium-term bullish? Check
• Fund redemptions a core problem for current market? Check (and hey, being in the
centre of Empire Sprott the guy should know)
• And this line caught both my and mailer GB’s attention (which is why I watched the
Q&A in the first place, thank you GB): “ "I think this market goes lower, but what I've
learned in my life is that sometimes things are cheap enough.”
1

Fundamental Analysis of Mining Stocks
This week we look at Colossus Minerals (CSI.to)
NOBS report dated March 10th 2013
Colossus Minerals Inc. (CSI.to)
Company Overview
Colossus Minerals Inc (Canada: CSI.to, US pinksheets COLUF, Frankfurt 0C1.f) is an
exploration stage mining company operating in Brazil. Its flagship asset is a 75% owned Serra
Pelada advanced stage gold mining project. Share structure is as follows:
Shares out: 106.6m
Options & Warrants: 14.3m
Fully diluted shares: 120.9m
Current share price: $2.44
Market Cap: $260.1m
Approx cash per S/O: $0.70
All prices are in Canadian dollars unless stated. Forex U$1=CAD$1
Today’s report
This report will concentrate on three topical issues around Colossus, but won’t be covering
every nook and cranny of a story that’s well known to most any follower of the junior mining
scene. For back information the first place to look is the company website (2) which also
features the latest corporate presentation dated March 8th (3) that has given up plenty of space
to photos of the build-out currently happening at the Serra Pelada mine project, but today’s
NOBS note won’t feature the rich history of Serra Pelada, the Hieronymus Bosch-like photos
form the 1980’s, the original exploration set-up and promo pump or the revolving-door
directorate that has seen control move from one hand to another, as well as resignations from
key posts at a too frequent for comfort rate. We are looking at three things in particular today:
1) Company financials, to see if the CSI plan to build Serra Pelada and get to positive free
cash flow is still viable
2) Cash flow based valuation potential, which even at this fairly late stage in development
is still at a rough estimate level due to the lack of resource information (this should
change soon however, and our model can be refined)
3) The rumours, hearsay and corporate level events that have dragged this stock a lot
lower in recent weeks and months. Some of these issues have substance but there
seems to be a lot of smoke being blown around this stock as well. Therein lies the
potential advantage of taking a long position in CSI.
The bottom line to today’s piece is that it’s one to set up a potential trade in CSI in the near
future. We need four things to click into place for that trade to materialize, but as each of the
four is pretty likely there’s reason to say this is a real possibility for a future long position, not
just some sort of theoretical possible. The elements are:
• Confirmation that the construction at Serra Pelada is advancing and that initial
2

production is near.
• The new directorate at JV partner COOMIGASP, due to be elected on March 24th, is
one with which CSI can work with harmoniously.
• The end of downwards pressure on the stock price from the S&P/TSX listing deletion
alongside forced redemptions from holding funds.
• The new 43-101 resource showing the type of grades we expect from the Serra Pelada
main orebody.
It’s your author’s contention that all these elements are likely to go in the company’s favour and
if so, the current share price represents an excellent bargain and buying opportunity. However
we’re not 100% sure on any of the four, therefore today’s note should be considered a primer
that sets the scene for the potential purchase as long as everything falls into place in the next
few weeks. So with no further ado...
Company financials
We check on the company’s financials in the time-honoured manner, starting with assets and as
you’d expect, a company in construction mode
at its project is adding chunky segments to its CSI.to: Assets Breakdown per qtr
350
fixed asset items. We also see the cash added
300
to the structure via equity placements (the
250
nicely timed placing of 8.4m shares in 4q10
doesn’t really show up here) and $86.3m in 200
convertibles in 4q11 which mature in 2016, so 150
they’ll stay firmly in the LT liability column for 100
the next couple of years. In the above chart 50
we also show our forecasts for the next two 0
quarters and again, no surprise to see a call
that fixed assets increase while the cash pile
diminishes, all part of the build-out at Serra
Pelada. We’ll come back to the question of
liquidity in a moment.
This is the liabilities chart, which shows three
distinct phases. Firstly to 3q11 when CSI just
had some minor current liability position,
typical of the exploration company. Then came
4q11 to 3q12 which saw short-term liabilities
move to virtual zero and a new long-term
liability position set up, via the debentures sold
during the 4q11 period. They provided the first
stage of capex cash input to get construction
at Serra Pelada underway. Then the last part
was the addition of $75m in forward cash from a royalty stream deal with Sandstorm (Gold
(SAND) and Metals (SND)) who in return get percentages of production once Serra Pelada is
underway (we’ll come back to that deal). The $75m received is projected to be sufficient to build
the mine (including contingency) and get Serra Pelada to free cash flow positive stage (FCF+)
and until it starts to be paid down by metals
deliveries, will sit on the liabilities as
“unearned revenue”.
As for where the cash is being spent, here’s
most of the answer, the dataset “mining
activities expenditures”. CSI has duty
payments to make to its 25% partner
COOMIGASP and funds 100% of the mine
construction. Serra Pelada is a difficult mine to
build (we knew it’d be like that from the start)
due to (amongst other issues) remote location
and tough ground conditions and in mining,
difficult = expensive. Current burn rate at the project is estimated at $6m/month as the last
3
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 tse21q4 tse31q1
source: company filings, IKN ests
srallod
fo
snoillim
fixed
other current
cash
$m CSI: Liabilities position
180
160
LT debt 140
120 current debt
100
80
60
40
20
0
4q10 1q11 2q11 3q11 4q11 1q12 2q12 3q12
source: company filings
CSI.to: Mining activity Expenditures 40
35
30
25
20
15
10
5
0
01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3
source: company filings
srallod
fo
snoillim

stages of the tunnel to the main orebody (known as Central Mineralized Zone, or usually CMZ)
are built and the production facility build-out draws to a close.
Which brings us to this chart, the one that all the financials point to at CSI. The story of CSI’s
financials is about as straightforward as they
get: The company has a mine to build and it has CSI.to: Working Capital per qtr
120
raised the cash it needs to build it. However, it’s 110
100
not been an easy construction period and CSI
90
has hit glitches and delays of many sorts along 80
the way that has nudged the timeline back on 70
60
more than one occasion so we need to know, 50
very simply, whether it has enough cash to 40
30
finish the job.
20
10
0
At CSI, debt is neatly tied up in the long-term
column thanks to the royalty stream agreement
with Sandstorm (SAND) and the debentures
that mature in 2016. Apart from the interest
servicing on the debentures (which costs the company a manageable ~$3.9m every six months)
its current assets are all available to throw at the mine construction and as it happens, nearly all
those current assets are held in cold hard cash. In other words, with little or no current liabilities
and little or no non-cash currents, what you see in this working capital chart is what CSI has at
hand to build its mine. We estimate that CSI will finish 1q13 with $55m in working capital and
even if that forecast is out by an order of magnitude, it means that the company has more than
enough of a cash cushion to ride out the delays it’s been experiencing in the construction at
Serra Pelada. In short, unless the mine hits serious delays in 2013 (not minor ones, but full-
scale problems) CSI doesn’t need to go to market before its operation goes FCF+, which means
CSI is very unlikely to go back to this horrid market in order to raise. This is good.
We round off with the share count. CSI has plenty of institutional holders and due to its decision
to finance through debt raising, the share count
has been kept largely under control at a little over
100m S/O for the last two years. We expect that
to stay the way it is in the indefinite future.
The bottom line to the financials is that there are
good and bad things about the structure at CSI.
The good is that the company has kept its share
count tight while raising enough money to build
its machine, with cash to spare for contingencies
as well. This means that although the project has
seen its delays, the result is more annoying than
dangerous for the company and all who sail in
her. The negative part of the deal here is that
longer-term debt, which is never a great thing to see in large lumps at a junior with no cash flow
(at present) because if anything goes seriously wrong with this business plan, be it ops or
politics or market prices, we shareholders (or in my case potential shareholder) come a long
way down the pecking order when it comes to getting invested money out of the structure.
Valuing Colossus on cash flow potential
First up, it needs to be said first and foremost that with the information currently available,
valuing CSI on its revenue potential is little short of impossible. Due to the nature of the beast,
we still don’t have a 43-101 resource (let alone reserve) for the Serra Pelada orebody, we don’t
know what metals are recoverable and payable as yet, CSI expects to produce only gold to
begin with (platinum and palladium recovery circuits should be online in 2014), recovery levels
are estimates at best, throughput levels have eventual targets but we don’t really know when
they’ll get there, not to mention the royalty stream paybacks to throw into the mix, plus the not-
so.easy task of estimating cash costs at the mine. All those and more
Second thing to say is that playing with this model is great fun and I’ve been tweaking at it all
4
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 tse21q4 tse31q1
source company filings, IKN ests
srallod
fo
snoillim
CSI.to: Shares Out
120
110
100
90
80
70
60
50
40
30
20
10
0
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 tse21q4 tse31q1
source: company filings, IKN ests
serahs
fo
snoillim

week trying to come up with the best way of putting forward a model that gets a handle on what
Colossus at Serra Pelada can offer us, the speculative investor. There are so many potential
moving parts that you quickly realize that trying to nail down what WILL happen once the mine
goes into operation is a virtual impossibility, so the way forward is to consider what COULD
happen. Once that little nugget is in place, it’s not a leap logical leap to aim low, be cautious
with input parameters and see what CSI at Serra Pelada could achieve even if things don’t run
in an optimal way.
Here’s the plan:
• We calculate CSI on its 75% participation in Serra Pelada.
• We assume one year of production of gold, platinum and palladium. For three of the
four cases, we assume grades that after consideration of the assays and information
provided to the market to date, we consider to be at the low end of expectations. We
use 20 g/t gold, 4g/t palladium and 2g/t platinum. For our final case (1,000tpd (2)) we up
the gold grade to 25 g/t Au, leaving the PGMs as per the other cases. It needs to be
emphasized that in this particular line item we have been extremely cautious, the
model is set to consider what might happen at the low end of expectations and whether
CSI is a potential buy even if things aren’t so great. Be clear that any of the above
average grade numbers may turn out to be higher by quite some distance and we’ll
probably find out more once CSI provides the market with the overdue 43-101 resource
that should include
• We assume there are no other payable metals from Serra Pelada, which makes for an
obviously cautious model (no rhodium etc credits).
• Operating cash costs are set at $400 per metric tonne. This means we’re not going in
for by-product credit costs for gold only, preferring to estimate how much it’s going to
cost to process a tonne of rock and see what comes out the other end, i.e. the simple
route. We’re also aiming high on this number as well, because the relative simplicity of
processing may make $400/t look rather high in the end. The problems (and therefore
cost) are more likely to mount up in the underground ops, with the difficult conditions of
host rock to contend with. For this and for the general thesis of our valuation we’re
deliberately assuming high on costs and leaving surprises as good ones.
• The Sandstorm royalties are calculated by assuming 35% of platinum is sold at
$200/oz, 35% of palladium is sold at $100/oz and 1.5% of gold is sold at $400/oz. The
remaining production is sold at market prices of $700/oz for palladium and $1,600/oz for
both platinum and gold. Note that we’re also not touching the fact that CSI can buy back
half of this stream obligation from Sandstorm for $48.75m (limit date April 2015) if it so
desires, which would be a very attractive option for the company if things are going well
at that point. Instead we’re focusing in on a potential 2014 and assuming the stream
stays as per until then, once more the way of the conservative.
• Recovery levels used are those estimated by the company in its latest March 2013
literature, of 79% for platinum, 71% for palladium and 95% for gold.
• We round the total royalty on CSI’s 75% of production due to Coomigasp to 2.5%
(including metal plus land) and the standard 4% metals royalty to Brazil. Corporate tax
is set at the national standard of 34% and a couple of reasonable guesses are thrown in
for depreciation and G&A.
• Shares out are pitched at 107m, as we’re not expecting any further dilution as long as
the construction period for Serra Pelada isn’t delayed by a much longer time than
expected.
There are a few other minor line items (as always), but the above are the main ingredients and
what really counts. The baseline strategy is clear enough all the way through (or at leat I hope
5

so: we’re expecting Serra Pelada to go into production and using some of the published
guidelines, but in key areas, particularly grade and costs, we’re leaving so much room to the
upside that our numbers would probably be considered a real disappointment by the market
when production is underway.
The last phase is to put the above criteria through fur different production scenarios that we’re
going to assume for our target valuation year of 2014. What happens further down the line is up
for debate, but our investment thesis will be firmly based on the promise (or lack of) that CSI at
Serra Pelada shows in its first year of production. As things stand, CSI expects to start
commissioning later this year, leave 2013 running at 500tpd and move up to 1,000tpd
afterwards, but as the company seems to be behind schedule we’re going to pitch lower:
• Our base case is Serra Pelada (75% owned) running at 500tpd in 2014 and running the
whole of the year at less than expected production throughputs.
• Our second case is Serra Pelada (75% owned) running at 750tpd in 2014, which would
be a scenario roughly in line with current company guidance, that of leaving 2013 at
500tpd and reaching 1,000tpd later in 2014.
• Our third case is Serra Pelada (75% owned) running at 1,000tpd in 2014 and quickly
meeting the company’s original objectives.
• The final case is Serra Pelada (75% owned) also running at 1,000tpd in 2014 and
quickly meeting the company’s original objectives, but we also assume gold average
grade to be higher at 25 g/t. This combination gives us gold production of over 200,000
oz for the year, which has long been the thumbnail objective of the Serra Pelada mine
for planners and backers.
With the four cases outlined, here’s how we model 2014 production for CSI’s 75% of Serra
Pelada:
CSI.to: Projected revenues by metal type (U$m)
500tpd 750tpd 1,000tpd (1) 1,000tpd (2)
Pt oz 6954 10431 13908 13908
65% CSI ($m) 7.23 10.85 14.46 14.46
total Pt revs ($m) 7.72 11.58 15.44 15.44
Pd Moz 12499 18749 24998 24998
65% CSI ($m) 5.69 8.53 11.37 11.37
Total Pd revs ($m) 6.12 9.19 12.25 12.25
gold ounces 83621 125432 167243 209053
98.5% CSI ($m) 131.79 197.68 263.57 329.47
Total Au revs ($m) 132.29 198.43 264.58 330.72
Total sales ($m) 146.1 219.2 292.3 358.4
Sources: CSI data, IKN ests
As you can see, gold is the big product here with platinum (Pt) and palladium (Pd) only adding
small credits under under grade and recovery assumptions. The percentaged subtotal for each
metal give the expected revenues over 12 months for the portion of metals sold in the open
market, while the totals add in the payments from Sandstorm for the streamed metal production.
Therefore, even at our lowball 500tpd base case, we expect CSI to realize revenues of $146.1m
in 2014.
Moving on, here is our chart outlining selected income items:
6

CSI.to: Income items for FY14, four scenarios
case scenario 500tpd 750tpd 1,000tpd (1) 1,000tpd (2)
Sales 146.1 219.2 292.3 358.4
Cash COGS 54.8 82.1 109.5 109.5
Depreciation 15 15 15 15
SGA 10 10 10 10
Op income 60.7 103.5 146.4 209.9
4% nat royalty 5.7 8.5 11.4 14.0
Coomigasp royalty 3.7 5.5 7.3 9.0
Tax at 34% 20.6 35.2 49.8 71.4
Net income 40.1 68.3 96.6 138.6
Shares out 107 107 107 107
EPS 0.37 0.64 0.90 1.29
Sust Capex -20 -20 -20 -20
FCF/sh 0.33 0.59 0.86 1.25
Sources: CSI/IKN data, IKN ests
We remind again at this point that our costs input is cautious to the extreme, but even if it turns
out to be as expensive to process a tonne of rock as we assume and even if Serra Pelada only
runs at 500tpd for the whole of 2014, assuming gold roughly where it is today the mine will
generate post tax profits of $40m and will by then have tipped off the world as to its potential in
future years. And finally, here’s our target generator:
CSI: FY14 potential Sales and earnings Target price & valuation data
case study 500tpd 750tpd 1,000tpd (1) 1,000tpd (2) using four different scenarios for FY14 production
Sales ($m) 146 219 292 358 12-month target $3.59 (6X cash flow using 500tpd
Upside to target 47% base case plus cash)
EPS 0.37 0.64 0.90 1.29 Mkt cap (C$m) $260 Enterprise value $361
Cash flow 0.51 0.78 1.04 1.44 P/sales (500tpd) 1.19 EV/sales (500tpd) 1.65
P/E (500tpd) 6.5 EV/EBITDA (500tpd) 4.8
P/E (750tpd) 3.8 EV/EBITDA (750tpd) 3.0
P/E (1,000tpd (1)) 2.7 EV/EBITDA (1,000tpd (1)) 2.2
Again we’re aiming low here, ladies and gentlemen. We assume CSI runs at just 500tpd for our
price target and we’re only offering up a skinny 6X P/E ratio to cash flow (though adding
treasury per share), but even then we arrive at a price target a full 47% higher than Friday’s
close. We again note that if CSI at Serra Pelada runs at just 500tpd on low-end-of-scale grades
and high-end-of-scale costs, it would still manage a very tidy profit, as such be considered a
good growth story and therefore potentially affording a higher multiple than the stingy 6X we’re
using. But we’re the tightwad analysis, ladies and gentlemen, we want to show you that even
with most elements firmly stacked against it, Serra Pelada will register a decent win compared
to today’s share price.
What could possibly go wrong?
A good question and over the last few weeks and months, there’s been a lot said about
Colossus Minerals at Serra Pelada that’s passed this desk. Some of it has been justified, some
not. Some info has been official, other pieces of intel have been off record. What’s more, some
rumours have been accurate, while others total crocks. Here we list items of interest and
consider their effect on CSI to now and potentially in the future.
• Revolving door management. The post that’s been particularly troublesome for CSI to
fill and keep filled is COO, who’s basically the man on the ground in Brazil directing
mine construction. As we’ve noted on the blog (4) CSI has got through four COOs (or
equivalent) in less than two years, which is hardly an endorsement on the mine and
7

conditions. This is a potential worry and another defection at director or officer level
before the mine is up, running and profitable would be considered a true red flag.
• Rumours of recent lay-offs. The best rumours are based around a grain of truth, they
say. On of the rumours that did the rounds at PDAC this year (I know it went round
because I picked it up from several sources, some of them unsolicited) was that CSI is
currently laying off workers from Serra Pelada, which ties in with the revolving door
upper management that the company has suffered in recent months and years so fits
on that score. However, after consulting with people who know better I can state that
this is bullshit. Construction work at Serra Pelada may be going at a slower rate than
anticipated due to underground conditions, but it’s being done by a full roster of
personnel according to a very well placed and reliable source.
• Delayed mine construction. Just by taking the corporate presentation dated January
and comparing it to that of March the setting back of the timeline is clear enough, with
the bulk sample extraction and analysis moved from 1q13 to 2q13, initial production
from “early second half 2013” to “second half 2013” and others besides. According to
best placed sources and available public information, the problem has been slow
progress made on the tunnel due to ground conditions, which has meant more steel
supports in tunnel construction and less metres per day than expected. Above ground
things are going according to plan however, so what we have here is a delayed timeline
on one aspect rather than a wholesale project-wide issue. This delay has almost
certainly caused some of the selling in CSI stock during 2013, but as we haven’t been
party to that it’s less of a problem and potentially an advantage that others have shown
impatience. What does seem to be true is that the tunnel and therefore the critical path
construction work will get done, it’s more of a case of when than if, most definitely the
lesser of two evils.
• The lack of a 43-101 resource. On this one there are two things to say: Firstly in the
very near future (currently timing from CSI is “early second quarter”) we will have that
until now elusive 43-101 report, which will apparently give us a number for the
understood resource total as well as a P+P reserve number for the rock expected to be
mined in the next 12 months. This will be solid information for your author as well, as it
will go a long way towards adjusting the current rough production and revenues model.
The second thing here is that on this issue, I have always had sympathy for the CSI
team (even when the stock was a lot higher and in my view offered no value
whatsoever) as they’ve taken a lot of “why isn’t there a resource?” flak all the way
through this project’s development. The fact is that the Serra Pelada mineralization is a
small, very high grade packet that sits safely underground and is by its very nature
nuggety and difficult to sample well via classic drilling. To get a true handle on what’s
down there, CSI could have used those amazingly high discovery hole assays (that
were in fact merely twins of previously known historic drilling holes) and extrapolated
some wildly high inferred number to shut everyone up until the day came that the tunnel
reached the orebody and accurate sampling could take place. But rather than BS the
market, CSI has always taken a position of caution and has waited until the
mineralization was exposed before taking assays and making the type of
measurements needed for a 43-101 compliant resource. In other words, it’s
understandable that Serra Pelada has no 43-101 as yet, of course it adds to the
unknowns in the overall equation and therefore the risk, but CSI cannot be faulted for
trying to rush things and potentially overpromise (or underpromise at that).
• New directorate at JV partner Coomigasp. On march 24th, the association of small
miners at Serra Pelada, known as Coomigasp, votes to elect its new leaders. This is a
potential issue at CSI, because the most recent directorate took over from another
faction that was not sympathetic to CSI’s cause and under there auspices, CSI has
developed well in the area. Therefore the upcoming vote may reverse that situation and
bring in people who are against CSI’s involvement again. This is a very difficult issue to
gauge at this point and I don’t want to raise too many fears, because a mediocre
situation for CSI may not happen at all, let alone any worst-case scenario coming to
pass. However it is a potential spanner in the works for CSI, because Serra
8

Pelada/Coomigasp internal and local politics are notoriously difficult to read from the
outside. The best course of action at this point seems to be, for me at least, to sit back
and evaluate the results of the vote, rather than try to second guess how things may
turn out. If the resulting new directorate is considered CSI-friendly then it’s one less
hurdle to negotiate, if not, we’ll see how things lie.
• The removal from the S&P/TSX big board index. On Friday we received confirmation
(5) of the previously generally understood probability that CSI was to be removed from
the S&P/TSX Composite Index (i.e. the Toronto “big board” main index) with the
removal effective March 18th, the rmeoval due to price and liquidity of the stock not
meeting minimum benchmarks. This removal has likely been the cause of at least some
of the selling in recent weeks and may cause continued selling next week until Friday’s
close, as index-tracking funds sell positions in order to recalibrate to the new index
weightings. These kind of things may have a temporary effect on a stock price but as
noted in other editions while talking other stocks, your author considers them of
transitory influence at best and nothing to do with true fundamental valuations of any
company. However, it’s another reason why it might be wiser to sit back and watch CSI,
as there may be overselling in the days to come.
• Fund redemptions hitting CSI stock. This is undoubtedly another of the reasons why
we’ve seen CSI stock hit so hard in recent days. By way of an example, an early
warning report was issued by Sprott Asset Management late last week, which reported
that it had sold 1.573m shares of CSI (though had added 70k warrants) to February
28th bringing its total managed holding in all funds to 9.948m shares (+90k warrants)
and putting it under a 10% holding of CSI for the first time in a long time. Although
unconfirmed by third parties, your author has very good reason to believe that the sales
were due to forced redemptions of the knock-on type we talked about in IKN199 intro a
couple of editions ago (the section entitled “When smart money isn’t just dumb money
but really dumb money” that also found its way onto the blog (6) and, for what it’s worth,
got a lot of hits from the general viewing public). This confirmation of selling from Sprott
(and the near-certain cause, that of the fund’s hand being forced into sales) is just one
of many that have seen the same type of selling recently so it’s reasonable to assume
that other funds have sold CSI at nay price into this sector dive. It’s also reasonable to
assume that unless gold rebounds hard, we could easily see more of this type of selling
which will likely affect the CSI share price. In other words, one more reason to hang on
the sidelines for while longer.
So these six reasons, alongside more prosaic risks such as a steep drop in the gold price or
social unrest erupting in Serra Pelada, are offered and potential explanations as to why CSI has
performed worse than most in recent weeks and why it might continue to lag in the near future.
Conclusion
It’s time to wrap up this note, another one in which I start out with best intentions of making it as
brief as possible but eight pages later find I’ve again failed miserably. What Colossus Minerals
(CSI.to) offers today, March 10th, is a potential low entry point for the risk-tolerant speculator
because it’s one of those situations where things have to go only moderately well for the stock
to appreciate significantly and if things start going very well, the win could be measured in
multiples. However, your author prefers to wait a while longer on the sidelines and potentially
buy in at a later date as long as some of the risks apparent today in CSI have washed through
some more, namely
• The Coomigasp vote goes ahead and the new directorate is one which which CSI can
work
• The redemption-led fund selling quietens down and any sag from the deletion from the
big board index subsides
• The company doesn’t come to us in the next few days or weeks with negative news on
delays or further resignations of directors (on this score, I’ll be happy with a “no news is
good news” type result over the space of a few weeks).
• The 43-101 resource is published and the market generally approves of what it sees.
9

With those in place, CSI would be clearly less of a risk for new money such as mine and thanks
to its near-production profile, would fit in closely enough with your author’s wish to hold more
producers (and somewhat larger market cap companies that trade more readily, as well). The
IKN Weekly calls “let’s wait and see for a couple of weeks” on Colossus Minerals, but it’s not
going to take much for this company to become a buy and one of our stocks to follow in the
near future.
Stocks to Follow
Of our 14 stocks currently open, four made gains last week (IRL.to, OGC.to, IPT.v, MLN.v), no
fewer than four remained unchanged (AUN.v, LRA.v, PLA.v, FCV.v) and six dropped some
(RIO.to, BTO.to, LPK.to, GORO short, AQM.v, USC.to), which sounds slightly to the negative but
in cash terms was more obviously negative, because the two Top Pick stocks were amongst the
downers. Best performance of the week by quite some distance was the 8.3% put on by
OceanaGold (OGC.to) while the worst of the losses in percentage terms were incurred by AQM
Copper (AQM.v down 14.3%) and United Silver (USC.to), even though the actual cash losses on
those small positions don’t hurt much.
There are currently 14 stocks on our open list, one less than our self-imposed maximum. Same
order as last week with three are green and too many are red.
10

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$4.60 125.5% $6.29 tgt
B2Gold BTO.to buy C$3.42 28-nov-12 C$2.89 -15.5% $5.70 tgt 4 buys
Recommends
Minera IRL IRL.to buy C$0.73 22-jul-12 C$0.64 -12.3% $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$2.62 -13.5% $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-abr-12 C$0.45 -62.0% considering sale
Lupaka Gold LPK.to spec buy C$1.12 23-oct-11 C$0.33 -70.5% holding, tgt 61c
IMPACT Silver IPT.v buy C$1.14 13-jan-13 C$1.04 -8.8% new position, $1.85 tgt
Gold Res Corp GORO short U$14.11 25-jan-13 U$14.02 0.6% short, $9.60 tgt
Smaller/Riskier
AQM Copper AQM.v hold C$0.31 16-oct-11 C$0.06 -80.6% 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$0.10 -52.4% 60c tgt, avg down Dec'12
Marlin Gold MLN.v hold C$0.075 10-feb-13 C$0.07 -6.7% small, new, near term
Closed in 2013
USA Graphite USGT feb'13 U$0.93 08-jan-13 U$0.17 81.7% tgt made, trade closed
Lachlan Star LSA.to feb'13 C$1.50 30-sep-12 C$0.95 -36.7% sold to reduce port risk
2009, 2010, 2011 and 2012 closed positions in appendices below
Now for some notes on a selection of the above stocks.
B2Gold (BTO.to): I’m reasonably happy that BTO rebounded after I’d added the small amount
to the pile as outlined in the Flash update Wednesday (see appendix 1), funded by the small
profit-take in Rusoro (RML.v), but it didn’t bounce that much in the end (touching $3, falling
back) and if anyone’s looking for a vehicle to play a gold stock rebound next week, I can’t look
beyond BTO at this price.
In other news, the junior ETF GDXJ confirmed Friday that BTO is now too big to be part of the
team and the stock is being dropped from the ETF. We mused a few weeks ago on this (when
the stock was $3.50 or so) and the house attitude hasn’t changed on the subject, either: It may
cause a weak moment in the stock price or it may not (I wouldn’t be at all surprised to find that
its effect is already 100% baked in) but in the timescales we prefer, it’s of no import at all. BTO
the company will succeed or fail on its operations, no more no less.
Minera IRL (IRL.to)(MIRL.L): It’s still trading at very cheap levels in the 60s and on
mediocre-at-best volumes, but there was a spark of life in IRL last week and we’re off the worst
of prices. Meanwhile I want to draw your attention to this interview with a Jennings analyst
(KAL) in The Gold Report (TGR) last week (7), specifically this section in which they talk IRL.
Afterwards, some commentary:
KAL: Minera IRL Ltd. (IRL:TSX; MIRL:LSE; MIRL:BVL) already produces about 25 Koz
gold every year, but it also has a bigger flagship project in Peru that it wants to bring
on-line. That project's capex is about $180M, which is a bit of a tall order because its
market cap is a fraction of that. However, it could use the cash flow from its producing
mine or take on some project debt to help get this flagship project into production.
TGR: Minera is cheap compared to its junior producing peers, with an enterprise value
of $40/oz versus a median average of $79/oz. What accounts for that gap?
KAL: Investors are factoring in the financing risk of putting all its ounces into
production. Some of those ounces are at the secondary asset in Argentina, which
does have some political risk around it. The company is working on bringing in a
joint venture partner based in Argentina that can help advance the project and
11

completely decouple that risk from its Peruvian assets. If that political risk is
mitigated, it has a higher likelihood of financing its other ounces into
production.
TGR: Should investors be more excited about Minera's Don Nicolas or Ollachea
project?
KAL: Ollachea, because it is in Peru and just started underground drilling to grow the
resource. Minera has completed its exploration tunnel and is advancing the project.
That said, investors could be excited about Don Nicolas as well since it is in Santa
Cruz province, one of the more mining-friendly jurisdictions in Argentina. It's next
to Goldcorp Inc.'s (G:TSX; GG:NYSE) and Yamana Gold Inc's. (YRI:TSX; AUY:NYSE;
YAU:LSE) development projects so it has the right address.
TGR: Could it help change investor sentiment about Argentina if Minera gets Don
Nicolas into production?
KAL: It could take a lot more than that. Goldcorp is having so much trouble—if a senior
is having so much difficulty then you know it's a pretty tough environment. Inflation is
still rampant in the country at around 20%, which can force capex up. Goldcorp has
nearly doubled the capex on its project to well over $1 billion. That is why we feel it is
so important for Minera to find an Argentina-based JV partner.
IKN back and I’ve highlighted two passages in that piece, both talking Don Nicolas, for a
reason. What happens you see is that anal ysts talk to companies and companies talk to
analysts and along the way certain things get said to the anal ysts that have to remain off
record for various reasons; perhaps the info is simply unusable without references, perhaps you
give your word not to divulge, perhaps it’s a situation where telling the wider world could be
detrimential to the company (or even get you in trouble with market authorities.
So then what happens is the anal yst goes away and thinks something along the lines of, “So I
have this juicy information, something that’s going to positively affect the share price of this
company I like and i cover, but i can’t say anything out loud or directly. What can I do?”. What
then happens is something along the lines of the underlined, highlighted sentences in the above
piece. Our anal yst innocently supposes a potential scenario all out loud to the world and then
when it comes to pass, their vision and wisdom is lauded and feted by those who read the
analyses.
Therefore let’s say, here and now, that the theoretical, possible, mooted, potential situation
outlined by our friend the Jennings guy is, in the
opinion of your author, a very likely outcome to the
issue of financing Don Nicolas. In fact I’d bet money
on it. In fact I am betting money on it ☺.
OceanaGold (OGC.to): OGC had a strong week
(about time too) with above average traded volumes
in both Canada and Australia. Although bouncing
well, it came from what I consider a silly low price
and there’s no reason why it shouldn’t revalue
further.
Gold Resource Corp (GORO): Our short target rallied well and took away nearly all of the
gains registered so far. Fair enough, but next week GORO will file its annual financial report
(March 16th is limit date) which will give us the 4q12 financial numbers as well as (potentially at
least, nothing is certain with this company when it comes to disclosure) more details on 2013
guidance. As one of the main reasons to be short GORO is our expectation that it will not be
able to maintain its current dividend policy, next week’s document may be a key piece in the
2013 puzzle.
12

Lara Exploration (LRA.v): LRA finished unchanged on the week which pissed me off even
after taking into account this crappy market, that clear enough for you? The 336k shares traded
on Monday didn’t follow through, despite being
pumped as a Top Pick by Brent Cook on BNN’s
Market Call program Wednesday evening. LRA
had that good Monday at PDAC with decent
volumes but then it too suffered from a lack of
trading interest for the rest of the week, which
begs the question just what an exploration
company has to do to get some love in this
market because the Codelco JV drill holes
reported two Friday’s was nothing short of
exciting. Anecdotally, we can report that
executives from the Chilean state-run company
were seen in with LRA at PDAC and they were
reported to be very happy people.
Rio Alto Mining (RIO.to): The NR on Wednesday March 6th from RIO (8) got mentioned in
the Flash update of that day (see appendix 1) but its reception by the market was wholly
unexpected. Even taking into account market nerves it’s hard to fathom why RIO spiked down
the the way it did, to prices unseen since the dog days of July last year and although not
partaking myself I know that some IKN readers bought some of those cheapies (messages as
evidence) and brought cheer to this office,
too. Anyway and whatever, that weird drop
was quickly followed by a rally and although
the stock faded through the last two days, it
finished Friday at a better price than it
finished it finished that wretched Monday and
although still heavily discounted, my best
thought Friday evening while plugging the
weekly closes into the spreadsheet was “Well,
RIO could have been a lot worse”.
The results from the first pass at La Colorada
were unequivocally good and as the market is
currently giving no value to this end of the
RIO story, it’s all potential upside to the share price. Meanwhile, we can expect the updated
oxide gold resource count from RIO (which will not include any resource ounces from the new
La Colorada target) very soon, perhaps as soon as this week coming. What we’re looking for
from this set of figures is solid evidence that the current limited mine life for the stage one
oxide project can be increased, which can replace our current speculation that this be the case.
13

The Copper Basket
After ten weeks of 2013 The Copper Basket is showing a 5.35% loss to level stakes.
company ticker price 1/1/13 Shares out Market Cap current pps gain/loss%
1 NGEx Resources NGQ.to 3.40 158.5 459.65 2.90 -14.7%
2 Augusta Res AZC.to 2.43 144.1 390.51 2.71 11.5%
3 Lumina Copper LCC.v 9.43 43.46 333.34 7.67 -18.7%
4 Copper Fox CUU.v 0.83 399.61 311.70 0.78 -6.0%
5 Nevada Copper NCU.to 3.50 80.5 260.02 3.23 -7.7%
6 Hot Chili Ltd HCH.ax 0.72 286.78 186.41 0.65 -9.7%
7 Reservoir Min. RMC.v 2.41 41.46 113.19 2.73 13.3%
8 NovaCopper NCQ.to 1.80 51.89 96.52 1.86 3.3%
9 Panoro Minerals PML.v 0.62 176.25 84.60 0.48 -22.6%
10 Western Copper WRN.to 1.39 93.78 84.40 0.90 -35.3%
11 Curis Resources CUV.to 0.70 56.31 48.43 0.86 22.9%
12 Candente Copper DNT.to 0.375 121.93 43.89 0.36 -4.0%
13 Oracle Mining OMN.to 0.80 49.03 41.19 0.84 5.0%
14 Yellowhead Min. YMI.to 0.59 60.97 31.09 0.51 -13.6%
15 Strait Minerals SRD.v 0.08 56.86 3.70 0.065 -18.8%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg -5.35%
Just two stocks went up last week (RMC.v, OMN.v) and none in the unchanged column either,
which means that a full thirteen of our Basket
component stock registered a loss on the Copper Basket 2013 average, weekly
14%
PDAC week. Not listing them all, but the worst 12%
10%
losses were seen in Nevada Copper (NCU.to
8%
down 13.9%), Candente Copper (DNT.to 6%
down 12.2%), Western Copper and Gold 4%
2%
(WRN.to down 10.9%), Curis Resources 0%
(CUV.to down 9.5%) and Lumina Copper -2%
-4%
(LCC.v down 7.6%). We can leaven those -6%
heavy hits with the good win in Reservoir
Minerals (RMC.v up 16.7%) however.
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).
On to our regular macro fundies coverage, which sees a
week with few fluctuations in the market price for copper
as this price chart shows. Is $3.50/lb the new normal? If
so it fits in with your author’s forecast for the whole of
2013 (which is just another way of warning myself about
confirmation bias).
On to inventories, which saw a continuation of the trend
so far in 2013. World total inventory added 50,090
(+6.7%) to reach 803,128mt, with LME responsible for all
of that jump, up a very chunky 11.0% to 509,425mt.
Meanwhile Shanghai Futures warehouses dropped 0.3%
and Comex rose 0.3%.
14
ht6naj ht31 ht02 ht72 r3bef ht01 ht71 ht42 dr3ram ht01
source: IKN calcs, TSX data
31/1/1
morf
egnahc
%

Digging down a little further into that big jump in LME inventories, it turns out that arrivals at
its Asia warehouses are the main reason. There were 38,025mt of copper added to LME’s Asia
region warehouses, or +23.1% week-over-week. This, plus views from serious industry voices
about world inventory levels reaching a possible one million tonnes by the end of this year,
point to a continued lack of end-user demand for copper.
Cancelled Warrants at LME, IKN157 to date
35%
30%
25%
20%
15%
10%
5%
0%
15
751NKI 951NKI 161NKI 361NKI 561NKI 761NKI 961NKI 171NKI 371NKI 571NKI 771NKI 971NKI 181NKI 381NKI 581NKI 781NKI 981NKI 191NKI 391NKI 591NKI 791NKI 991NKI 102NKI
source: Cochilco, LME
rof
yrotnevni
EML
%
latot
yreviled
resu-dne
Add to the mix cancelled warrants, now at just 4.68% of LME total inventories, which also
points to continued inertia. This is not bullish, people. Not in the slightest.
Now for updates on some of the basket stocks:
Candente Copper (DNT.to): Things are moving on both pro and anti sides of the story in
and around the town of Cañaris, home to the Cañariaco project of DNT. One of the key events
this week was the announcement (9) that the central figure to the anti-mine protests, President
of San Juan de Cañaris community Cristóbal Barrios, would not be able to stand for re-election
as president in the upcoming vote scheduled for this month. The inference is that a new
committee president would potentially take a softer line towards the exploration project.
On the other side of the coin, locals again threatened to begin their protests that would include
roadblocks and other forms of civil disobedience (10) largely due to the fact that the company
refuses to stop its exploration and drilling activities before coming to the table for the rounds of
negotiation. March 16th is being mentioned as a new date for protests.
Amongst all this, one wholly positive result is that the national and local governments are finally
paying a little attention to the people living in this zone. Since the ruckus started, the national
executive has pledged connections to the national electricity grid for local residents (after years
of being ignored) and as this report notes (11) the latest initiative is to have registered 247
elderly residents as eligible for the national pension scheme ‘Pensión 65’, the local school
connected to a new national system offering free breakfast and lunch to all schoolchildren, plus
gas cookers and gas bottles donated to homes of those deemed in poverty or extreme poverty.
“El que no llora no mama” as they say round here (he who doesn’t cry doesn’t breastfeed, or
“squeaky wheel gets the grease”, as we’d probably say in English).
Overall, things are in too much of a flux at the moment to consider running a trade on DNT,
though as these things are nearly always a process that involves price, it’ll be worth watching
for a heavily discounted entry point, especially if the new elected leader of the Cañaris
community turns out to be a more moderate figure. There are pockets of distinctly anti and pro
people within the larger region, so it’s probably wise to let local politics run its course before
trying to gauge whether DNT gets any new advantages.
Reservoir Minerals (RMC.v): PDAC was a depressing place for most juniors this year, but
the occasional name received a big fillip from the bash and one of those was RMC. Your author
received several mails from various (almost certainly unrelated) contacts talking about the buzz

around this stock with the general flavour being “Timok is going to be a mine, the only
questions are what size of mine and who owns it”. There were other decently sourced rumours
on the stock about how JV partner Freeport (FCX) was currently drilling a full 2km from the
discovery hole as it tries to ascertain just how big this high-grading system is, and that land
owned by RMC fairly nearby was now subject to a bidding war from larger miners all trying to
get a JV deal closed with this junior.
Nevada Copper (NCU.to): Hit harder than most by the PDAC blue funk, NCU seems to be
suffering from the newly negative optics for the copper sector.
Curis Resources (CUV.to): The legal battles between CUV and the town of Florence, next
door to where the company wants to run its in-situ copper operation, continue and last week
CUV was obliged to release a NR (12) to reply to Florence’s Town Council decision to use its
eminent domain powers to make compulsory purchase on the land owned by CUV and thereby
stop its development as a copper operation. These reports (13) (14) in the Phoenix Business
Journal and local newspaper TriValley
Central are about the best I’ve read on
the issue, with extensive coverage of
plenty of angles. There’s plenty to read on
those links so it’s unfair to excerpt any
single part because there’s coverage of all
sides’ points of view and legal stances, so
you’re better to click through and read if
interested enough.
But it’s fair to say that despite its threats
of law suits that could potentially bankrupt
the town or get the council to back down,
CUV lost a round in its battle last week (as
the share price clearly registers) as it had
to come back from a defensive position, but its strategy is also clear enough; the company will
outspend the local town in the courts in order to win through.
Your author reiterates (until blue in the face if necessary) the numbers work here, but until
there’s definition on the legal status, this is not a company in which I’m interested in owning
shares. The nearby town of Florence clearly and obviously does not want this mine to be built
so either a) that attitude changes or b) the courts force them into accepting something they
don’t want or c) the mine happens. The timeline until one of those three is defined could be
measured in weeks, months or years and I have better things to do with my money than pin it
on hopes, lawyers and Smalltown USA.
Oracle Mining (OMN.to): OMN managed to notch up 3c, mostly by delivering a piece of
genuinely good news to market on Wednesday (15). The company has been awarded its
Aquifer Protection Permit, one of the papers it needs along the track to begin production at its
Oracle Ridge operation.
The Lottery Ticket Basket
After ten weeks of 2013 The Lottery Ticket Basket is showing a 1.69% loss to level stakes.
16

company ticker price 1/1/13 Shares out Market Cap current pps gain/loss%
1 Eagle Star Min. EGE.v 0.125 69.48 24.32 0.350 180.0%
2 Marlin Gold MLN.v 0.10 192.39 13.47 0.070 -30.0%
3 Glass Earth GEL.v 0.155 104.79 12.05 0.115 -25.8%
4 Bellhaven BHV.v 0.14 121.16 11.51 0.095 -32.1%
5 Fancamp Expl. FNC.v 0.125 109.8 10.98 0.100 -20.0%
6 Gryphon Gold GGN.to 0.085 194.64 8.76 0.045 -47.1%
7 AQM Copper AQM.v 0.08 105.57 6.33 0.060 -25.0%
8 FDG Mining FDG.v 0.13 45.59 6.15 0.135 3.8%
9 Copper North COL.v 0.10 58.62 5.57 0.095 -5.0%
10 Rio Cristal RCZ.v 0.025 149.26 4.48 0.030 20.0%
11 Inca One Res. IO.v 0.12 34.0 3.40 0.100 -16.7%
12 Darwin Resources DAR.v 0.20 26.16 3.27 0.125 -37.5%
13 Cream Minerals CMA.v 0.03 155.34 2.33 0.015 -50.0%
14 Netco Silver NEI.v 0.025 47.01 1.88 0.040 60.0%
15 Firestone Ventures FV.v 0.045 36.32 1.63 0.045 0.0%
Portfolio avg -1.69%
The Lottery Ticket Basket succumbs to the almost inevitable, despite the best efforts of eGE,
and moves into overall negative territory. We
had five stocks move up during the week 30% Lottery Ticket Basket 2013 average, weekly
(EGE.v, MLN.v, GGN.to, BHV.v, FDG.v), one
25%
remain unchanged (RCZ.v) and nine drop
20%
(GEL.v, FNC.v, AQM.v, COL.v, DAR.v, CMA.v,
IO.v, FV.v, NEI.v). As is often the case at the 15%
nanocap end of the market, just a penny or 10%
two either way makes for big percentage 5%
swings so we’re not covering all the larger
0%
moves, but to the downside Cream Minerals
-5%
(CMA.v down 25.0%), Firestone Ventures
(FV.v down 25.0%) and Darwin Resources
(DAR.v down 24.2%) stick out, while big
upmoves were in Eagle Star (EGE.v up
25.0%) and Bellhaven (BHV.v up 18.8%).
Darwin Resources (DAR.v): Last week’s action in DAR really sums up why I called “I like this
company and its project, but no buying yet” on the stock at the end of the site visit report.
• This company is run by honest, smart, experienced, no-BS people.
• This company has a very interesting prospective gold project and the cash it needs to
do what it wants to do there this year.
• This company has a share price that’s going nowhere, for the time being at least.
One of the points made two weeks ago is that there’s little reason for the small spec player to
pick up a position in DAR at 15c if there’s a real potential of it trading at 10c before the
substantial-type news starts to flow (by which I refer to the drill program set for later this year).
Though we’re not at 10c yet, last week’s thin and soft action suggests that to be a possible.
DAR is one of the exploreco stocks that suffers unjustly from this desolate capital market
atmosphere (other companies out there are suffering justly, of course) but as honest and
prospective as it might be today, I’m not jumping out in front of a steamroller to try and make
some sort of moral upstanding point at the moment. When real news starts to flow we can see
where things stand in price/opportunity terms, no need to second-guess until then.
FDG Mining (FDG.v): Further to last week’s piece that noted the new presence and influence
of newly minted Swiss-born chairman of FDG, Antonio Ponte, we had news of a director
17
ht6naj ht31 ht02 ht72 dr3bef ht01 ht71 ht42 dr3ram ht01
source: IKN Weekly data, TSX
2102/1/1
morf
egnahc
%

appointment that backed up the new direction at FDG (17). the stock price did well enough on
the week, though on limited volume and still very much inside the recent trading range. As
stated last week, this is another one that best simply to watch for the moment, rather than to
wade in and buy.
Cream Minerals (CMA.v): Somebody wanted out of CMA late Friday and dropped 2.7m
shares at any price going onto this thin market, which was the first time CMA had traded over a
million shares since August 1st 2012. In this light the 1.5c close was understandable, so for
those of you who like fishing at the bottom (I have the mails to say you’re reading these words,
people) it might be worth watching the bids form on CMA next week; a drop-off in volume
could see this one back at 2.5c quickly enough.
Eagle Star (EGE.v): Another good week for our runaway leader of the pack, though this chart
shows that the late Friday action may have been tape-painting. Still there’s no knocking this
success too hard and the stock
traded well enough at 30c, which is
still a strong show. EGE gave up an
NR for PDAC as well, announcing
(18) that it had contracted a drilling
company to run with the upcoming
program (funded by the recent
raisings) that plans at least 150
holes (the inference is 20m depths
for each hole) in order to get an
initial 43-101 compliant resource on
the books for its flagship Bomfim
phosphate project.
Regional politics
Nicaragua: When regional media notice a trend
A direct translation of this report (19) that needs no extra additions from IKN, as we’ve stated
enough time already that Nicaragua is a good place to go mining and the best place of all in the
Central America zone between Mexico and Colombia.
Nicaragua Swims Against the Tide by Promoting Mining
Thursday 7th March
While the majority of countries in the Isthmus impose restriction or plan to prohibit
mining activity, Nicaragua is working hard to promote it.
The Minister of Energy and Mining, along with the investment promotion agency
ProNicaragua, participated in PDAC 2013, the world’s largest mining conference. The
conference is held every years in Canada, plays host to 120 countries brings together
thousands of potential buyers.
“During the event, mining industry advances around the world are highlighted and is an
opportunity for Nicaragua to show its potential in the sector and attract investment and
development,” said Sergio Ríos, president of the Nicaragua Chamber of Mining,
Caminic.
Gold exports from the country last year rose by 60%, while silver exports rose 100%.
These figures represent sales of $364m in gold and a little over $9m in silver.
According to ProNicaragua, gold has become the third biggest export product for the
ocuntry after coffee and beef.
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Mining companies such as Calibre Mining Corp, B2Gold, Conder Resources and
HEMCO operate in Nicaragua.
South Korea (yeah, really) buys more gold, Peru continues debate on the subject
Obviously not LatAm, but this Reuters report from Tuesday (20) gets a mention as much for the
reasoning offered by the South Korean Central Bank as the latest in its line of purchases.
SEOUL, March 6 (Reuters) - South Korea's central bank said on Wednesday it bought 20 tonnes
of gold in February with foreign reserves to increase its holdings of the safe-haven precious
metal.
"Gold is a real safe-asset that can help (us) respond to tail risks from global financial situations
effectively and boosts the reliability of our foreign reserves holdings," the central bank said.
It added the central bank's gold purchases were carried out from a long-term standpoint, with
immediate price fluctuations holding little meaning.
I really couldn’t put it better myself. This has taken South Korea’s gold portion of reserves from
zero to 104.4 tonnes in less than two years. It’s still just 1.5% of total reserves, however, which
means there’s plenty of room left to grow the holding. It’0s also worth noting that South Korea
is far from the only country central bank that’s adding to its gold reserves at the moment.
Meanwhile, the debate in Peru as to whether its Central Bank (BCRP) is hotting up, currently
holding a thinnish (particularly considering it’s one of the world’s top five producers of the
metal) $1.1Bn in gold bullion compared to total international currency reserves of nearly $68Bn.
Defenders of the “no more gold policy” such as the director of economic studies a BCRP and
those who want Peru to own more gold such as head of university economics departments are
now being interviewed and their opinions heard in the business pages (one good example here
(21), plenty more to Google if you so desire). What is common ground on both sides seems to
be that Peru has collected now enough dollars for its country size under its present system, one
of classic currency reserve holdings, and question is now what to do with at least some of that
total. Some say gold, others say that the setting up of a sovereign wealth fund is the better use
of funds.
Dominican Republic: Pueblo Viejo redux
After the headlines made by President Danilo Medina (see IKN200), we now have the Canadian
Embassy saying (22) that it’s willing to help mediate in any negotiation between Barrick (and
presumably 40% minority owner Goldcorp) and the government of Dominican Republic. We
also had Barrick’s director of communications telling the country that a contract renegotiation
“was not on the table” as far as the company was concerned, but it was willing to look at
“alternatives to contribute in the alleviation of the State deficit”.
Venezuela: What to expect, short-term and medium term
A week is a long time in politics
Harold Wilson, 1964
And so Chávez’s death came sooner rather than later, the wider world temporarily took notice
of Latin America, English language reports with the usual quota of bias or false facts about
Venezuela’s economy in the Chávez years made front pages in mainstream media channels
(23), and your author’s utterly insignificant trade in Rusoro (RML.v) was closed out as per
IKN200 and the Flash update last week (see appendix 1).
As for what the future may hold in Venezuela, we’ll limit ourselves once again to thoughts on
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political turns of event that might effect its economy and therefore potential investment
opportunities. Therefore:
• Acting President Nicolás Maduro will call a near immediate election and will win it, take
that to the bank. The election has to be called (not conducted, as erroneously reported
in many places) within 30 days and although the exact timing is still unknown at this
point, word filtering through Venezuelan political channels is that early April is the most
likely timing right now. As it’s in Maduro’s best interest to have the election as close to
Chávez’s death as reasonably possible (the sympathy/continuation vote is a strong
influence and although unlikely to fade within a question of months, may be slightly
diluted by delay) the vote is a cert to happen “soon”. As for the result, be under no
illusions, folks. We’ve already seen a Datanalisis poll giving Maduro a 12 point lead over
his sole rival in the vote Henrique Capriles of the M.U.D. opposition coalition (and loser
versus Chávez last October, of course). The chances of the Chávez vote defecting so
soon after the events of last year and the last few days are virtually zero and this one is
as much of a lock to predict as Rafael Correa’s chances were last month (barring a
bizarre turn of fate). UPDATE: Sunday April 14th now confirmed as the election date,
with ten days of official scheduled campaigning beginning April 1st. For what it’s worth,
the period April 11th, 12th and 13th resonate with Chávez supporters due to this period
in 2002, which took in the failed coup and Chávez’s return to power. The dates have
been celebrated every year since by the Chávez faithful. Also, I stuck this (24) on the
blog Sunday mid-afternoon regarding the role of Capriles.
• Maduro may not have the mysterious quality known as charisma that Chávez had in
spades (something even his vehement enemies always freely admitted) but when it
comes to policy, he’s a direct continuation of ‘Chavismo’ so expect more of the same in
Venezuela. There may be some modest moves to improve detente between Caracas
and Washington, but as Venezuela’s influence on wider LatAm has waned in the last
few years and the Obama administration (quite correctly) doesn’t really give a damn
about today’s Venezuela, style will be greater than substance, even if it does happen.
• The new Maduro government will have its honeymoon period. I’ve bounced ideas and
mails off a few people (North and South of Darien Gap) and six months seems to be
the average or the consensus, which sounds about right to me as well. For the rest of
2013 the Capriles led opposition would be wise to keep its head down and its powder
dry, perhaps using the ‘give em enough rope’ principle. The medium-term is tougher to
predict and at some point the opposition would hope to see “Maduro is no Chávez” talk
start to gain real traction. Or more directly, expect no change in Venezuela this year
but things might (repeat might) begin to improve for the opposition parties 2014 and
onwards.
The bottom line is that for the foreseeable future, Venezuela will remain a no-go area for
foreign investment via capital markets, mining (that’s us) or otherwise, barring those who have
access to its liquid and profitable bonds market. Ultimately, the politics of any country are
unimportant to those not living there unless said country becomes an aggressive international
threat (i.e. North Korea) and Venezuela with its limited influence in the wider region is not a
country we need concern ourselves with here at The IKN Weekly until signs of real change or
significant opposition momentum is built up. In short, it’s one less to worry about.
Market Watching
PDAC gossip on Gold Canyon (GCU.v)
There have been plenty of positive vibes floating back to this desk regarding Gold Canyon
(GCU.v) and its Dominican Republic project, now being drilled in phase two of its exploration
program. It should be fairly easy for most exploration stock players to remember the ride GCU
gave the market during 2012, so even a quarter of that type of action would make this an
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attractive trading opportunity. I’m not planning on buying GCU on the positive vibe rumours
heard personally, but there have been enough positive thoughts thrown the way of this desk
from people who I consider respectable and trustworthy to be able to add this short paragraph
today. The best thing to do with this is to throw it into the mix with any other thoughts you
might have around GCU and make your own decision.
Kinross (K.to) (KGC): More evidence of cost pressure
As noted on the blog Friday (25) Kinross (K.to) (KGC) has mothballed its La Coipa open pit
mining operation in Chile, one that produced 178k oz AuEq in both 2011 and 2012 (around 7%
of its annual total). Yes, the La Coipa mine was expected to be temporarily shuttered in 3q13
due to depletion while further exploration was done to determine whether there are new areas
of the property worth mining, but the fact remains that the company hasn’t suddenly just “lost”
a whole bunch of ounces and closed the operation because there’s nothing left to mine; au
contraire, the ounces are still sitting there but the cost of mining them is now deemed too
great.
Merging microdots
One of the latest themes doing the rounds the exploration chattering classes is the of how there
are too many companies on the Venture exchange. With a combination of “too much dross, too
little cash, too much moose pasture” being used to describe the problem and confident
predictions that companies will simply “go away”. I think the subject was kicked off by John
Kaiser (the comments here (26) seem to agree) a few months ago but it’s certainly one of the
flavours of the month, with all The Serious Commentary People in dour agreement. Fair
enough.
The inference, so far at least, is that these going-nowhere juniors will either do a Chapter 11 or
be moved to a NEX listing (the elephants’ graveyard of Canadian public companies), and maybe
one day become somebody else’s easily back-innable shell company. But we’ve seen in the last
couple of weeks a third way in which the TSXV will be able to thin out the numbers of
companies listed, that of the microdot merger.
Let’s just run with two examples today, but there have been more and your author confidently
predicts that there will be a lot more (with the recent PDAC pow-wow likely to have been a
catalyst in the process).
1) Halo Resources (HLO.v) and QRS Capital (QRS.v): Though only at Letter Of Intent
stage (27), this move would bring together HLO (with a bit of cash and not much in the
way of assets) with QRS (with a bit of an asset and not much cash). QRS is trying to
develop a big copper target in Chile and will need all the cash it can get its hands on to
get 43-101s under the project and the combo of these two should give the new merged
company about $2m, which isn’t much but it is a start.
2) Wildcat Silver (WS.to) and Riva Gold (RIV.v): This deal (28) is between WS.to (with
not much cash and a very large low grading silver project that I’ve never liked) and
RIV, which was spun out of Wildcat Silver (Oh! Coincidence!) back in 2006 and then
came alive when another spin-out, Ventana Gold, was sold to Eike Batista and the
management team tried to make RIV its next success with projects in Guyana that went
nowhere. Once RIV went lame the company got smart about its cash treasury and
protected it carefully, thus giving WS something to buy with its paper. The combo
wants to get WS’s silver project “through pre feas and into feas” stage, which translates
as “treasury good for a while, but it’s not everything we need”.
We’re not going any further into the merits of the four companies above (suffice to say I pass
on all of them) but instead, let’s have a look at all four of those companies on a single, 12
month comparative chart:
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You’ll note that the recent M&A activity hasn’t exactly set any of them alight.What we’re seeing
in these two proposed mergers are four companies that will try to turn themselves into two
companies for survival reasons more than anything else. Yes the director jobs will be thinned
out as well, but it’s also the head honchos making sure their salary cheques continue to be
written. But it’s also two names that will “disappear” from the TSXV and thin down that
company count that the chattering classes are now so concerned about. Expect more of these
deals to come.
Sulliden Gold (SUE.to), its meeting Wednesday, its trade potential
As page 19 of Sulliden Gold’s (SUE.to) latest corporate presentation will show you (29) the final
public audience for the company’s flagship Shahuindo project is a key event on the permitting
track and there’s a lot depending on it going well. That meeting is scheduled to happen on
Wednesday March 13th (i.e. next week) and this report (30) has details of what’s been going on
in the run-up to the meeting. The main issues covered:
Doubts have been raised about the validity of recent (and necessary in the process) satellite
meeting in the small communities potentially affected by Shahuindo. At one of the supposed
meetings a local journalist showed up, time date and place confirmed, and found that there was
no meeting taking place when there should have been. There have also been complaints that at
previous satellite meeting, people who don’t live in the zones have turned up to approve the
company plans at the vote.
Locals are concerned that the start of Shahuindo will mean that the small artisanal-type mining
on which many support their family economies will be shuttered. They understand that formal,
large scale mining is less polluting than the informal mine operations in the locality, but also see
that the economic benefits will be taken out of the hands of the locals and into the national
state coffers, with little if any of that cash returning to the local area population.
On the subject of the meeting scheduled for March 13th, the report states the following: “...the
company, Sulliden, says that the meeting will have a favourable outcome for the company as
there are many authorities in the Cajabamba region in favour of the project. “ [A local
commentator states], What they (the company) want is that people show up to agree only so
that they can say we want mining. It’s all a lie form the company because they don’t comply
with what they say.” Meanwhile, there is still no solution regarding the problem of informal
miners who are demanding Sulliden that they be allowed to work for a longer period of time on
land that’s part of the mine concession. “Now they are blackmailing the Sulliden Shahuindo
mining company. The informal miners say that if they don’t give them this land (on which to
mine), on March 13th they’re going to the meeting to say that that the mine shouldn’t go
ahead.”
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It’s clear that SUE wants to keep things as low key as possible and not attract attention to this
key meeting on Wednesday. It will certainly be a case of “no news is good news” for the
company up to and including Wednesday evening, because it will then be in the position to
announce a strongly positive event to the market on Thursday. With the recent beating the SUE
stock has taken, those with a penchant for speculative trades may be interested in taking a
near-term position in SUE.to before Wednesday and riding up on good news at the end of the
week. Overall, it’s not without issues but the set-up we have pre-meet looks pretty positive for
the company (and at this point, let’s note that SUE did a smart thing early last year by hiring a
professional social negotiation group (31) to take over the community relations and negotiation
work, as things have improved since that time) and I’d gauge the chances of SUE getting the
local approval vote in its favour as fairly high, but we have to be clear that the importance of
next week’s meeting and approval vote means that it’s not without risk either. On the other
hand that risk has been ameliorated by the recent drooping share price and taking everything
into consideration this one has the look of a decent risk/reward opportunity for the nimble
traders amongst you. FWIW, I’ll be watching the newsflow from Cajamarca carefully this week
and anything worthy of mention will get passed on in a Flash update (nothing on the blog).
Tahoe Resources (THO.to) (THO.to) starting to shape as a short candidate
In the right corner we have companies assuring the markets and their shareholders that they’ve
spoken with the country’s President about the matter and operations permits will be granted
‘soon’* (32). In the left corner we have Guatemalan indigenous and rural community
organizations demanding that its national government place a moratorium on all permitting,
exploration or production, for mining activities in the country (33). In the middle we have Otto
Pérez Molina, a President who is obviously keen on promoting mining activity in his country but
who finds his hands somewhat tied by both public opinion in the places that really matter (in
the cities, polled opinion is split 50/50 on whether mining is a good thing, in the rural areas it’s
70/30 against mining) and a congress which has enough of an anti-mining lobby to have been
able to block the mining reform law bill for years (both during his tenure and the Colóm
presidency before him). The potential for civil disobedience is very real if he decides to push
through and grant permits/licences by some sort of executive order technique, as the recent
disturbances around the Tahoe Resources Escobal and KCA Tambor projects clearly show.
However, Guatemala’s President also has tax dollar revenues and the international business
trustworthiness elements to consider as well.
*To return to that word “soon”, when I read last week Tahoe CEO McArthur’s words, “We have
met with Guatemalan President Otto Perez Molina and he continues to assure us that the final
Escobal permit will be issued soon," I physically shuddered. As those who’ve read my thoughts
on Guatemala and THO over the months (years?) will testify, I’m not against the idea of the
mine at Escobal but I have always been extremely leery of a company of this scale and market
cap (currently ~$2.5Bn, was over $3Bn not so long ago) having its sole asset in a country as
politically unstable and institutionally weak as Guatemala. My beefs with THO itself are that it
hasn’t been open and transparent about its obvious political and permitting issues with its own
shareholders (and the wider market) and that it hasn’t done a good job with its community
relations (and is now reaping what it sowed, unfortunately), but in the end these are lesser
issues that can always be resolved by the smarter company. Neither of these issues are
shudder fodder, but the shudders do come when I see the CEO of the company basically
hanging the fate of the whole project, and all the cash that it implies, on a word that might
mean something in general timescale terms in the English language and mindset, but means
absolutely utterly totally nothing at all when you cross the Rio Grande to the South and enter
the world of Latino culture.
The upshot to all this is that with the recent ping back of THO from $14 to $17 (we touched
$17.56 on Friday) I am now considering Tahoe Resources (THO.to) (TAHO) as a potential short
for The IKN Weekly. The current short in GORO does provide some hedge to the long elements
in the portfolio but it’s a very minor weight against the whole and GORO is also something of a
special circumstances position (i.e. it wouldn’t surprise me in the slightest to see that share
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price drop heavily on its own company news in a week where the mining sector and my other
stocks jumped strongly...one can but dream, no?). I’ve been considering potentials that are
reasonably easy to play to the short side and Tahoe is one of those, due to its NYSE listing
(TAHO) and chunky share price. This wouldn’t be a play on THO’s fundamentals or valuation
that weighs its economic potential against its current valuation, because there continues to be
no doubt in my mind that given a clear run, the magnificent rocks that THO will mine at Escobal
would make it into a very profitable silver mining operation, with grade, size and infrastructure
all in its favour. No, this would be a short call on the way in which political risk for THO been, is
and will continue to be significantly underestimated by the market, due to the Ostrich Theory
strategy used by its proponents.
The tipping point for going short will be, quite simply, price. If THO remains on a roll and keeps
floating back up there’s a point when the value of shorting will override the risk of getting the
call wrong. THO may on consideration that the mine will be permitted “soon”, or it may see a
strong price spike on issuance of a permit that the market considers to have settled the whole
affair and extinguished once and for all the opposition to the mine opening. In either case,
taking the under and expecting further political/community risk problems looks like a valid
option. On considering the THO chart, something above $20 would be preferable but as this
would be a news-driven trade, rather than fundies-driven, circumstances will dictate timing
more than the market price on any given day.
Conclusion
IKN201 is done, we close with bullet points:
• Colossus Minerals (CSI.to) has its market doubters and some of those doubts may be
well-founded. It’s also suffered from a combo of factors that have seen its share price
hit hard recently, but that in turn is the reason why your author is interested in the
stock today. When all is said and done, it’s a near-term producing, fully permitted gold
name that only has to deliver on some of what it has promised the market to offer
tremendous value at current prices.
• However if CSI doesn’t grab you, look no further than the two best stocks we cover
which are still trading at significant discounts. We throw out ideas on a regular basis
here, but that shouldn’t cloud the basic fact that your author recommends you own RIO
and BTO above all others covered in The IKN Weekly, period.
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• Copper fundamentals continue to shape as weak and because of that, those cheap
stocks we see in the Copper Basket may well get cheaper still. Even with the value on
show in good names such as NGQ, it’s fairly easy to pass right now.
• Tahoe a potential short on politics and Sulliden a potential quickflip on community
approval news? Yes, and why ever not? We see it’s a crappy market and until the
atmosphere changes, we who are daft enough to want to invest here need to adapt our
patterns and adopt new strategies.
• PDAC came and PDAC went, the world goes on. Just like it does every year, in fact.
The top long-term picks are Rio Alto Mining (RIO.to) and B2Gold (BTO.to). I thank you in
advance for any feedback sent in. Flash updates will be sent promptly if required by events.
I wish you good trading fortune, ladies and gentlemen.
Otto
Footnotes, appendices, references, disclaimer
(1) www.youtube.com/watch?v=ad2pNnTypAU&list=UU9ijza42jVR3T6b8bColgvg&index=4
(2) http://www.colossusminerals.com/English/Home/default.aspx
(3) http://www.colossusminerals.com/files/CSI%20corporate%20presentation%20March%207.pdf
(4) http://incakolanews.blogspot.com/2012/11/colossus-minerals-csito-revolving-door.html
(5) https://research.tdwaterhouse.ca/research/public/Stocks/NewsArticle/ca/CSI?documentKey=100-067c0282-1
(6) http://incakolanews.blogspot.com/2013/02/when-smart-money-isnt-just-dumb-money.html
25

(7) http://www.theaureport.com/pub/na/15071
(8) http://finance.yahoo.com/news/rio-alto-intersects-78-meters-120000944.html
(9) http://www.rpp.com.pe/2013-03-08-rechazan-reeleccion-de-presidente-de-canaris-por-tercera-vez-
noticia_574202.html
(10) http://www.larepublica.pe/05-03-2013/canaris-suspende-dialogo-y-alista-nuevas-protestas
(11) http://gestion.pe/politica/ana-actividades-candente-cooper-canaris-no-tienen-impacto-ambiental-2060447
(12) http://finance.yahoo.com/news/curis-statement-recent-action-town-001000546.html
(13) http://www.bizjournals.com/phoenix/news/2013/03/05/florence-votes-to-seize-land-in-500m.html
(14) http://www.trivalleycentral.com/casa_grande_dispatch/area_news/florence-council-wants-copper-project-
land/article_5335c28c-8807-11e2-81b5-001a4bcf887a.html
(15) http://finance.yahoo.com/news/oracle-mining-receives-aquifer-protection-110000940.html
(17) http://finance.yahoo.com/news/fdg-mining-inc-appointment-director-130000003.html
(18) http://finance.yahoo.com/news/eagle-star-minerals-contracts-drilling-143000619.html
(19) http://www.centralamericalink.com/es/Noticias/Nada_contra_corriente_Nicaragua_en_promover_mineria/
(20) http://www.cnbc.com/id/100524613
(21)http://gestion.pe/economia/bcr-oro-activo-muy-volatil-y-nosotros-buscamos-seguridad-2061018
(22) http://diariolibre.com.do/noticias/2013/03/09/i374489_embajada-canada-dispuesta-mediar-entre-barrick-
estado.html
(23) http://www.cepr.net/index.php/blogs/the-americas-blog/new-york-times-reports-false-statement-on-venezuelas-
economic-growth-during-chavez-years
(24) http://incakolanews.blogspot.com/2013/03/capriles-delays-but-will-accept.html
(25) http://incakolanews.blogspot.com/2013/03/inross-kto-kgc-oh-look-its-second-half.html
(26) http://myownmarketnarrative.blogspot.com/2013/03/our-daniela-interviews-adrian-day-at.html#comment-form
(27) http://finance.yahoo.com/news/halo-qrs-announce-business-combination-020000147.html
(28) http://finance.yahoo.com/news/wildcat-silver-acquire-riva-gold-123000775.html
(29) http://www.sulliden.com/files/doc_presentations/2013%20English/1303_Corporate%20Presentation_R.pdf
(30) http://www.gatoencerrado.net/store/noticias/72/72562/detalle.htm
(31) http://www.s-c-g.net/SCG/main/index.php
(32) http://finance.yahoo.com/news/tahoe-reports-2012-results-escobal-130000772.html
(33) http://www.prensa-latina.cu/index.php?option=com_content&task=view&idioma=1&id=1185301&Itemid=1
Appendix 1: Flash update of Wednesday March 6th
Good morning, around 08:30am, a hour before the open.
A quick note to say that as per the note in the 'Market Watching' section of IKN200 last Sunday, I'm looking to sell my
small position in Rusoro Mining (RML.v) today/tomorrow. I'd prefer 10c or above, but on consideration will take
what's offered above at 8c and above (though not right at the opening bell this morning, i'll be waiting a couple of hours
at the very least to see how things look) as long as there is the necessary volume and liquidity. I honestly don't know
how the thing will trade on the Chávez death news but the general plan is to step out of this small, non 'Stocks to Follow'
trade and book a modest profit cashwise (but pretty decent percentage-wise).
With the funds raised (realized or "borrowed' from the personal cash reserve for a day or so) I plan to add a few more
B2Gold (BTO.to) to the pile today. Although I'm clear about the risks of catching falling knives, the current sub-$2.80
price of this Top Pick is too much of a bargain to ignore in my book. To quote Oscar Wilde, "I can resist anything except
temptation".
While we're here, a comment on Top Pick Rio Alto's (RIO.to) NR from this morning...
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http://finance.yahoo.com/news/rio-alto-intersects-78-meters-120000944.html
...which provided initial results from the company's La Colorada target at La Arena. The interest here is the area to the
North end of the drilled oxide host rock (so far) which has returned some very strong looking grade numbers, e.g. the
headline 78m of 1.34g/t Au. As explained to your author recently, the plan at La Colorada would be to build a
heap/dump leach operation in very much the same style as the current operations, with the pregnant solution gathered
processed at RIO's exiting ops. The results today are a very good start and we can expect RIO to work with these
results to eventually expand the resource size. Early days of course, but the strong grades found there are an excellent
start to a project that RIO is looking to for either production increases or mine life increases for the oxide gold part of its
operations. As long as the gold price behaves today, I'd expect RIO to rally on this NR.
Finally, after a couple of mailed-in inquiries a word here about Colossus Minerals (CSI.to), as per yesterday's blog post.
Yes I am interesting in buying this stock but no decision has been made yet. Expect a full NOBS report analysis on
CSI.to in IKN201, out Sunday.
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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