IKN #204Premium

The IKN Weekly
Week 204, March 31st 2013
Contents
This Week: US Macro headsup, We are not bottomless pits of money.
Fundamental Analysis: Near-term Trading ideas
Stocks to Follow: Overview, United Silver (USC.to), IMPACT Silver (IPT.v), Rio Alto
Copper Basket: Overview, Nevada Copper (NCU.to), Oracle Mining (OMN.to), Reservoir
Minerals (RMC.v).
The Lottery Ticket Basket: Overview, Cream Minerals (CMA.v), Bellhaven (BHV.v).
Regional Politics: Regional Risk update fourteen.
Market Watching: Redux on the 2013 juniors call (and chart) from last week, Fortuna Silver
(FVI.to) 4q12 numbers.
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
US Macro headsup
The March U.S employment report hits the wires next Friday morning, the main economic date
for your diary next week. For what it’s worth, according to Calculated Risk (1) (peerless on US
macro-watching and I won’t get tired of telling you about Bill McBride’s site, either) current
consensus is for an increase of 193k NFP jobs and the headline rate to stay at 7.7%, but those
numbers tend to adjust in the days and hours before the release.
We are not bottomless pits of money
I have a rant to get off my chest. It’s not at all original but seeing the whole scene now
replaying before my eyes is currently driving me up the proverbial wall. I speak as a private
individual (rather than a paid-up member of the whore’s brigade of which I freely admit to
being part) and the subject is the way in which analysts, newsletter writers and suchlike now
insist that you buy at these current price points, that you “go all in” and “make them proud” by
“scooping up the bargains” and “backing up the truck”, when all these very same people have
done over the last 24 months is try their very hardest to get you into stocks, keep you in the
stocks and refusing any thought of liquidation or selling in order to raise cash. And if all goes
the way I’m now expecting it all to go, we’ll get a whole extended chapter of intellectual
bankruptcy at the end of 2013 from these people with their “I told you so in
January/February/March/April” when the whole complex is, no matter if the best their
readership has done is to have finally broken even on their aggregate long positions .
A couple of weeks ago the weekly’s intro message was “there has to be risk”. Well this week’s
it’s “there has to be sales, not just buys”. There are a handful who can afford to throw near
unlimited amounts of money at a market, but in point of fact very few of us are bottomless pits
of money who can keep throwing cash at the market in the manner that the chattering class
publishers expect that’s akin to doubling up ad-infinitum at the roulette table until your colour
comes in.
1

I try hard to keep things real here, but I also know that my financial circumstances are different
(not better, not worse, just different) from yours and yours and yours and yours (he says,
pointing a virtual finger at a few in the readership crowd). For example today, the
‘Fundamentals...” section mulls over a few near-term potential trade ideas that might be able to
turn a buck in the space of (roughly) April, but I also know that to play these games myself I’ll
either have to go a little deeper, for a little while, into the account cash reserves that I’m
usually so keen about preservin, else bring in a bit of fresh capital. However, the bottom line to
the Weekly is what I’m doing with my own investments so if that’s how it plays out, so be it.
However I’m fully aware that I do not live in the Utopia where I can unlock the cash reserves,
stick it all into BTO at $3 or RIO at $4.70 and then scream at you all to do the same else feel
the wrath of the market Gods. Yes they are both profitable, well run growth stories on deep
discount sale right now, the odds are heavily in favour of them appreciating. However, I much
prefer to keep disciplined, keep things real and allow myself to partake of these bargains for
investment (rather than shorter-term trading) purposes only if the cash comes from sales in
other place, thereby keeping my percentage exposure to the market constant.
Fundamental Analysis of Mining Stocks
Near-term Trading ideas
Last week’s thoughts as outlined “How your author sees 2013 developing for juniors” stayed
with the potential and look of this market in 2013 and your author’s opinion that the best of our
sector has either bottomed or is now bottoming out. By the looks of the feedback received the
view seemed to go down well enough (unsurprising I suppose, the same way that a happy
ending gets better Hollywood reviews) but several subsequent exchanges were based around
potential bounce trades and how to play the bounce off the bottom (if indeed we are there) for
some near-term gains. “That’s fair comment,” thought I, “as after all I’m the one who’s been
fishing for nearer-term small wins recently (e.g. Marlin MLN.v) and if we are forming a bottom
in the sector, there’s often an interesting near-term bounce that makes for strong percentage
gains.” So mails were swapped with a few of you (no names today, but you’ll know who you
are) and as these exchanges developed, as is so often the case my own thoughts crystallized
on a subject (yup, I really get value from swapping idea, especially when you guys tell me I’m
wrong).
Ok, that’s the scene set chattily and now to the point of this section today. The idea here is to
put forward a few ideas and thoughts on potential near-term trades. Rules as follows:
• Some may already be covered stocks, some previously covered, some not. The concept
here isn’t to produce a new list or a bunch of long positions that you HAVE to buy in
automaton manner. These are ideas that you are free to consider as potentials in
context with your own position to the market.
• With that in mind, I may own some of these names already (e.g. BTO.to), I may have
them on a short-list already (e.g. CSI.to), I may decide to buy/add any of the names
next week (or the week after that, or after that) without making the position into a
formally covered on here at the Weekly. A lot of this is about sentiment and being
prepared to react to a better market atmosphere if/when it comes.
• The general theme is for stocks (or even whole subsectors) that have a potential
catalyst coming soon that might help the trade along at the right time. For example, if
gold rises by $50/oz we can reasonably expect all boats to rise on the tide, but if we
have a benign macro backdrop and then news about an individual stock or issue at the
same time, that stock gives us a reasonable shot at some alpha versus its peers.
• I’ve tried to mix up the ideas, so that there are bigger and smaller names and stories
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for you to consider. Also, this isn’t some kind of all-inclusive list and if you have a better
idea outside of these names then don’t let me stop you. Above all, what I’m trying to
do here (I suppose) is to lay out my own market-wide feeling of impending upside and
showing you how I’m looking to play it once it’s with us.
That’s more than enough blahblah, on to the companies suggested as trade ideas with no
further ado. To avoid arguments I’ve put them in alphabetical order.
Bear Creek Mining (BCM.v): Two reasons for this one. First up, take a look at its price chart
which is not only a mile off the pre-Santa Ana highs of 2011, but plenty off the levels at which
we last traded out of BCM, November 2012 at $3.70 and bits (one of only a few profitable
trades made last year, sadly)
Since then the problematic situation at
Santa Ana hasn’t changed (and don’t
hold your breath either), but on the
brighter side the main and much more
interesting Corani project has seen
progress. The EIA was filed with the
government of Peru on time and next
month, i.e. April 2103, we’re going to
get the public meeting phase of the
environmental impact permitting at
and around the Corani project in Puno
region that looks set to go very well
for BCM and generate good publicity.
A distinction should be made between
the high chance that BCM will get a positive outcome from its meeting(s) with locals for Corani
and the recent show that Sulliden put on around its Shahuindo project in Cajamarca, that was
more heat than light and has finished by looking decidedly fakey, especially as tomorrow
Monday Cajabamba locals will announce protest marches and actions against the project. No,
the area around Corani Puno is sparsely populated even in Peru terms and BCM the company
has done a good job for years with its community relations program there, an investment that’s
about to pay its own dividends.
Corani is still the same project as it was last year, with a big resource and an economically
robust mining plan. Yes explorecos with big projects are out of favour, but politically de-risked
projects are coming into fashion and BCM has that on its side, assuming a smooth ride in the
next month. This stock is at levels from which even a return to the $3.80 of less than six
months ago offers a 30% potential gain.
Bellhaven Copper & Gold (BHV.v): Due to its new deal with Anglo and the potential for an
in-company shake-up in the pipeline. I invite you to read the longer section in ‘Lottery Ticket’
today for more on this, but in a nutshell
what we have in BHV is a company
that’s taken a big beating but still has
2m oz of decent gold mineralization
and might have just added a whole lot
more to its structure. This one isn’t for
the faint-hearted because it’s down to
penny levels now and after such a big
drop, the chances of buying in at the
very very bottom and getting
immediate win are slim (or show you
have a lot of luck and you should be in
Las Vegas right now). Neither is it a
company that complies with Warren
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Buffett’s old saw, “It's far better to buy a wonderful company at a fair price than a fair company
at a wonderful price”, so this one is at the risker end of today’s ideas. Unlike the next one
offered, which is probably my personal favourite potential trade today.
B2Gold (BTO.to): The first reason is because it’s a sector leader stock, and leaders lead out
of any situation. Secondly, its 4q12 came in just fine last week (even though the stock price
dropped a touch on Friday) and as fundies
results days tend to be hiding to nothing
days at the moment, getting past the
results without seeing any real damage to
the stock price is basically a win. I’d also
expect the brokerages to come out and
say approving things of BTO after last
week’s results and ConfCall, sellside
darling stock that it is. The second is that
aside from the brokerage hype, this one
really is a top quality stock with excellent,
promise-keeping management, current
free cash flow, new growth being added
now and the type of pipeline that will see
it past one of the most interesting marker
posts in the junior game, that of becoming a 500k oz Au per year gold producer, because along
with the more than acceptable cash cost levels it makes BTO a potential target for majors keen
to turn fiat into gold. Two of you asked me exactly the same question last week; “Right now, do
you prefer BTO or RIO?”. The answer today, at the two current price decks and considering the
potential near-term newsflow, is BTO. And that’s from a guy that owns more RIO than BTO
today, as well.
Colossus Minerals (CSI.to): Subject of the NOBS report in IKN201 dated March 10th and
since then given extra franking by Alberto Arias
of ARC Fund, who has bought 10% of the
company and taken a seat on the board as well.
CSI catches the eye due to the most simple
criterium of them all; a potentially bargain
price. However, to turn this one into an active
trade we want to see company deliver on the
specified criteria we outlined in the NOBS report
that will de-risk the project. With those in line
(or at least some of them to bring sufficient de-
risking), I’ll be going long CSI.
Gold Resource Corp Short (GORO): This is a short position that I currently have open and
it’s part of the ‘Stocks to Follow’ list. As my current aspect is somewhat more optimistic than it’s
been in months I’m getting to the point where I’m considering closing this trade and freeing up
the (passive) capital for a long idea, but I’m loathe to do so at the moment because of my
belief that the central point of holding the GORO short, that the company will cut back on its
dividend, is about to come true. The company has hinted at the move in its recent literature
and ConfCall, the timing makes sense considering that it upped its dividend 12 months ago and
then told the SEC that it makes its dividend distribution decisions on a 12 month timescale
basis, the financials at the company scream of a company that’s draining too much cash away
for essential company maintenance items and its own suppose growth programs (one look at
working capital development will suffice).
So yes I’m already i this trade, but the temptation to close this hedge short and go further long
the market in another place is more than outweighed by tyhr immediate term potential of
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adding to paper gains. GORO gets at least another month of open from me and it might turn
out to be the sweet spot of the whole trade for those of you who’ve considered this one but
haven’t taken the plunge yet. For me there’s 25% to earn from today until target hitting day
and with luck, the cutting of the dividend to 4c will be the catalyst for the down move.
Lachlan Star (LSA.to) (LSA.ax): We dropped this one recently because gold was heading in
the wrong direction and at $1,600/oz or so, this high cash cost producer alternative would see
its potential profitmaking crushed to nothing. As it turned out, getting out was the right move
and LSA now languishes under 60c and it’s
there where the opportunity lies. Wholly out
of favour and in dire need of a gold price
rally, if LSA shows in its next set of results
(out very soon) that it is turning around its
production as expected, then if gold gets its
mojo working, LSA can offer a very strong
leverage to the upside and could offer a
fine percentage win. This potential trade
needs the gold price, i.e. something that is
totally out of its control, to go in its favour
and it needs to show improvement in its
own ops and cash costs profile too, but if
those two pieces fall into place LSA is a
return-to story that can offer a good win in
a short period. In its favour are good political risk address, that growth profile we’ve always
liked and the plain fact that there are a whole bunch of brokerages underwater on the stock,
which means any rally will get plenty of publicity and rah-rah (until their clients have no more
need for the scuba gear, at least).
Quality copper exploration names: This idea is covered in detail in The Copper Basket
below, but to cover the general idea in just a couple of lines, it looks as though there’s decent
reason to expect a copper price rebound in the month of April. As the whole copper junior
exploration sector has been in a big and generalized funk, the names at the quality end of the
space may be due for a near-term rebound on renewed optimism and are preferred to
producers due to their tendency for higher beta to copper. As for specific choices, there are
plenty out there and it’s as much a question of personal taste than anything else, but my own
subjective preference is given to NGQ.to and NCU.to, while NCQ.to and PML.v represent decent
alternatives.
Stocks to Follow
Of the 13 open positions in our ‘Stocks to Follow’ list, just two made gains last week (IRL.to,
MLN.v). There were two that finished the week unchanged (RIO.to, PLA.v) and the other nine
all lost ground. Not so much ground to be honest, with just one stock registering the type of
loss worthy of finger pointing (LPK.to down 15.8%). But down all the same, mainly a product of
continued nerves in the underlying metals markets (gold, copper, silver and the rest to boot).
With the jettisoning of United Silver Corp (USC.to) last week we’re left with 13 stocks on our
open list, two less than our self-imposed maximum. Three are in positive territory, one is
unchanged since conception and nine are showing a loss (four of those nasty losses).
5

Company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
Top Picks
Rio Alto Mining RIO.to buy C$2.04 07-apr-11 C$4.67 128.9% $6.29 tgt
B2Gold BTO.to buy C$3.42 28-nov-12 C$3.09 -9.6% $5.70 tgt 4 buys
Recommends
Minera IRL IRL.to buy C$0.73 22-jul-12 C$0.65 -11.0% $1.56 tg, added, new avg
Aurcana Corp AUN.v buy C$1.07 11-nov-12 C$0.68 -36.4% $1.50 tgt near term play
OceanaGold OGC.to buy C$3.03 16-sep-12 C$2.89 -4.6% $5.34 tgt growth prod
Lara Expl. LRA.v buy C$1.15 08-apr-12 C$1.20 4.3% solid biz model, LT hold
Plata Latina PLA.v hold C$0.79 10-apr-12 C$0.45 -43.0% considering sale
Lupaka Gold LPK.to spec buy C$1.12 23-oct-11 C$0.32 -71.4% holding, tgt 61c
IMPACT Silver IPT.v buy C$1.14 13-jan-13 C$0.99 -13.2% new position, $1.85 tgt
Gold Res Corp GORO short U$14.11 25-jan-13 U$13.03 7.7% short, $9.60 tgt
Smaller/Riskier
AQM Copper AQM.v hold C$0.31 16-oct-11 C$0.055 -82.3% holding thru for my sins
Focus Ventures FCV.v spec buy C$0.175 01-jul-12 C$0.15 -14.3% revised tgt 25c
Marlin Gold MLN.v spec buy C$0.075 10-feb-13 C$0.075 0.0% trade closes end April
Closed in 2013 closed close price
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
United Silver USC.to mar'13 C$0.21 28-oct-12 C$0.095 -54.8% small Ag sector trade, failed
2009, 2010, 2011 and 2012 closed positions in appendices below
Now for some notes on a selection of the above stocks.
United Silver Corp (USC.to): Position closed. As advertised this time last week and in fact
only very slightly sold on a personal level (more to mark a symbolic exit than anything else) and
I’ll be damned to the fourth circle of Dante’s Inferno, Pluto and all, if you think I’m going to
settle the trade at the very silly 7.5c closing price of last week. No folks, a little decorum, logic
and the (almost as bad) 9.5c is where it’s being registered.
IMPACT Silver (IPT.v): Jumping the gun on most of the venture exchange stocks, IPT will
release its 4q12 and YE results tomorrow morning (2), Monday April 1st, pre-bell. This is one I’ll
be looking at very carefully because IPT has the look of a real bargain about it at the moment.
The FY13 guidance is more important than the 2012 results here, which is true for most sector
players at the moment but particularly so for IPT, as we expect 3q12 and 4q12 to mark the low
point in company production and finances (see previous analysis) and its 2013 potential is the
reason we’re in this stock, after all.
If the results look actionable (to the positive or negative) I’ll send out a Flash update on IPT
some time tomorrow. Therefore consider no news as neutral news.
Rio Alto Mining (RIO.to): RIO traded in a tight range and finished unchanged (to the penny)
on this shortened week. We also know that thanks to the updated share count, which stands at
175,885,682 shares out, RIO today has a market cap of $821.39m, down from the days when it
brushed over $1Bn last year and a distinct bargain amongst peers with the same type of
production and growth profile. I’ll take Rio Alto over Argonaut every day of the week.
B2Gold (BTO.to): I spent a whole day wonking out to the 4q12 numbers of BTO and RIO on
Thursday, but the strangest thing about it is that once I’d crunched in all the new data I could
hardly think of a single thing to say about either stock that hadn’t been said here before. The
idea in mind on this long Easter weekend was to run a NOBS update report on at least one of
the two, but enthusiam waned to the point where all I’m going to do is add in one little chart
here and be done.
6

That’s this one, a minor thing but one I’d like to highlight about BTO today. I was pleased with
the 4q12 record production and thought that
it was about to deliver a real blowout of a
BTO: Difference between produced & sold gold,
quarter. In the end that wasn’t the case Au Oz ounces per qtr
5000
because BTO apparently decided to build
4000
inventory rather than sell it down, the course
3000
that I’d expected. This means that for three 2000
quarters running BTO has added reserve 1000
0
bullion to its assets sheet and now has
-1000
around 6,300 oz tucked away, which starts -2000
to look less like a coincidence and more like -3000
-4000
a company strategy every quarter.
-5000
4q10 1q11 2q11 3q11 4q11 1q12 2q12 3q12 4q12
How much should we care in absolute terms source: company filings
about a sub-$12m line item in a $2Bn+
company? Not so much perhaps, but what it signals to me is a company that’s not that
concerned about wowing the market with its bottom line. The 4q12 quarter is the best time to
do just that and selling down the inventory gold wouldn’t have been out of character for the
company either. The other thing to note is how 1q11 and 1q12 were quarters in which BTO
boosted its cash position with sales, so maybe we’re about to see the good quarter. However,
the inventory of gold is something I’d really like to see encouraged here so it gets a few lines.
Apart from this, BTO had a solid quarter and most every analyst that covers the stock (its
coverage popularity may be part of my problem, with nothing original left to say now) calling in
line and confirming or upping target prices and expectations. I totally agree and it’s an easy
thing to confirm this stock as a Top Pick here at the Weekly.
Gold Resource Corp (GORO): GORO declared its third 6c dividend of the year last week for
the month of March (3), which may well be its last one (last year the dividend was changed in
April) and as a short, I pay that dividend to my counterparty. As noted before, this means that
when closing the position I will adjust the entry/exit points accordingly to make sure I don’t
underestimate any gain. As for trading, GORO floated up over $13 last week on normal volume
trading. Not a problem, I can wait.
OceanaGold (OGC.to): Reader ‘AN’ kindly forwarded me a link to a fundies report published
by brokerage Macquarie brokerage on March 25th last week and as it’s a good report I urge you
to go over to link (4) below and get
yourself a copy too. In it we get a site visit
report, a NAV-based target that’s upped to
CAD$4.50 (from $4) and an overview of
community relations at Didipio (in brief,
they’re good and that’s very good). It’s also
classed as a “Macquarie Marquee” stock,
which means they’re as keen on the name
as I am. That’s good (I think).
As for trading, during the shortened week
OGC kept in a tight range with the
(personal gut) feeling being that the price
has to break through the psychological $3
barrier before anything truly nice can happen. However, we can at least credit the stock for
turning around and getting back to where it was at the beginning of 2013 as there are plenty of
other gold names still at-or-around year lows. All that could be construed as damning by faint
praise but hey, bite me.
7

Lara Exploration (LRA.v): The problem, as always, with a low trading volume issue such as
LRA is how it only takes one trade to chop a couple week’s work of good PPS action. That’s
what happened late Friday when somebody somewhere decided it was time to get out of the
stock and dumped at $1.20, after the ticker had traded steadily (though thinly) between $1.25
and $1.30 all week.
This is mentioned here as it gives the opportunity of pointing out that it doesn’t matter, not in
the slightest. Ours is not a normal sector, ours is the sector where 7.5% moves on no particular
reason, up or down, in stocks that are considered longer-term investments should be received
with a slight raising of the eyebrow at best. LRA is in fine shape right now and one person’s
need to liquidate a small position doesn’t change that fact. FWIW, expect more details on LRA
during April, as I now have a breakfast meeting booked with the catch-me-if-you-can busy
Andre Gauthier and will be able to grill him over coffee and such.
Lupaka Gold (LPK.to): Another aspect of the comment above is seen here in LPK, which last
week jumped hard and made for a pretty weekly move, only to do the exact reverse this week
(on the typically low volume we see in this stock) and give all the gains back. I’m looking to
meet up with management in April in order to get a better idea of the 2013 this company might
give, but I’m the first to admit that its profile today, that’s of a small gold exploreco, isn’t the
one I’m looking for in new positions or potential longer-term holds.
In other news, LPK reported its annuals Friday (right on time, like all good dot Tee Ohs do) and
there weren’t any surprises contained. Working cap as at December 31st stood at $9.2m which
is enough to get us through this year and into next, all things remaining equal. That’s a
reasonably good state of affairs in this tough raising market. We’re not going too deeply into a
set of financials that doesn’t have much in the way of new news, with the only detail to
underscore this one and here’s how it’s announced in the MD&A:
“As a result of the AAG acquisition, the Company owns 9,841,270 common shares in Southern
Legacy, representing approximately 17% of the issued and outstanding ownership shares of
Southern Legacy, and which the Company classifies as an available-for-sale financial asset. At
the October 1, 2012 date of initial recognition, the fair market value of this investment was
$3,985,714. As at December 31, 2012, the aggregate fair market value of this investment, as
quoted by the TSX Venture Exchange, was $2,509,524, for which the 25 Company has recorded
an impairment loss of $1,476,189 for the year ended December 31, 2012 in other operating
expenses.”
In other words LPK already admits it paid way too much for this BS asset (author sighs and
gets a bad case of toldyasos), which is at least upfront of them and correct book-keeping. Aside
that and for what it’s worth, with a book value of $41.22m and 81.751m shares out LPK’s
BV/share stands at 50.4c. This either means that LPK thinks to highly of itself or the market
thinks too lowly of the company. I’m tending towards the latter, personally, but it’s definitely up
for debate.
Aurcana Corp (AUN.v): Two bits of news from AUN last week. First up, approval has been
gained for the company’s waste-of-time 8-for-1 reverse split of shares (5) which will bring the
share count down and the share price up to where the company thinks it’ll be more attractive to
funds etc. Again, if they cared as much about operations as they obviously do about image, I’d
be a happier holder of this stock. Anyway, the consolidation means that at some point in April
when the move is closed, AUN will have exactly 58,394,705 shares outstanding instead of its
current 467m and bits.
Secondly, AUN announced the imminent arrival of its 4q12 financials (6) and has a ConfCall
scheduled for Friday April 12th (presumably the financials come out either that evening before
or that morning) to discuss said numbers, as well as the more important 2013 guidance
parameters. Around that time we should also be looking out for 1q13 production numbers and
the combination of these three events will be the definitive buy/hold decision time for your
author on this losing trade.
8

Marlin Gold (MLN.v): News Wednesday (7) was that the rights issue closed in good order
and now that it’s done, MLN has 394.3m shares outstanding. As those appreciated to 7.5c on
the week it means that MLN now has a market cap of $29.57m. We also hear that Wexford
Capital owns a full 73% of those shares out after backstopping the rights issue and mopping up
the shares that others didn’t want to pick up. After the close of the rights offering (bizarrely, it
was apparently the first rights issue on the TSXV in seven years) the MLN structure had $15m
in cash added to treasury, which should get it 2/3rds of the way towards paying for its
construction bill and getting Trinidad into production by early 2014.
From here the company is going to concentrate on mine construction but there’s still one of the
bigger hurdle to be crossed, that of raising the balance of capex cash. We hear that the plan is
to raise in a non-dilutive manner and the plans should hit the street late May or early June.
However and come what may, by that time our own small position will be closed as this is a
strictly time-limited long that has until the end of April to show itself. In fact, it’s getting to the
point (especially considering the wider market scene of awful), that I might just take 8c if it
shows and walk away with my original cash intact.
Focus Ventures (FCV.v): Along with other quiet companies in the list (e.g. PLA.v, AQM.v)
FCV doesn’t have much news to report or trading worthy of much comment, which explains
why they haven’t had much coverage recently. However, I can report that I’ve been invited to
see the company’s Aurora property in the Cusco region in April, so that trip should happen in
perhaps three weeks’ time and you’ll see the report straight afterwards. Company pres Cass is
keen to show off the property and the enthusiasm alone has piqued my interest so it’s worth a
couple of nights on the road, methinks.
The Copper Basket
After thirteen weeks of 2013 The Copper Basket is showing a 8.43% loss to level stakes.
company ticker price 1/1/13 Shares out Market Cap current pps gain/loss%
1 NGEx Resources NGQ.to 3.40 158.5 478.67 3.02 -11.2%
2 Lumina Copper LCC.v 9.43 43.46 380.71 8.76 -7.1%
3 Augusta Res AZC.to 2.43 144.1 376.10 2.61 7.4%
4 Copper Fox CUU.v 0.83 399.61 243.76 0.61 -26.5%
5 Nevada Copper NCU.to 3.50 80.5 227.82 2.83 -19.1%
6 Hot Chili Ltd HCH.ax 0.72 286.78 177.80 0.62 -13.9%
7 Reservoir Min. RMC.v 2.41 41.46 126.04 3.04 26.1%
8 NovaCopper NCQ.to 1.80 51.89 98.07 1.89 5.0%
9 Panoro Minerals PML.v 0.62 176.25 82.84 0.47 -24.2%
10 Western Copper WRN.to 1.39 93.78 81.59 0.87 -37.4%
11 Candente Copper DNT.to 0.375 121.93 48.16 0.395 5.3%
12 Curis Resources CUV.to 0.70 56.31 43.36 0.77 10.0%
13 Oracle Mining OMN.to 0.80 49.03 37.26 0.76 -5.0%
14 Yellowhead Min. YMI.to 0.59 60.97 28.05 0.46 -22.0%
15 Strait Minerals SRD.v 0.08 56.86 3.41 0.06 -25.0%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg -8.43%
With ten uppers (NGQ.to, LCC.v, NCU.to, WRN.to, PML.v, NCQ.to, RMC.v, DNT.to, OMN.to,
CUV.to), no unchangers and five downers (AZC.to, CUU.v, HCH.ax, YMI.to, SRD.v) The Copper
Basket had an overall positive week despite only gaining 0.27% overall. Top winners were
Oracle Mining Corp (OMN.to up 10.1%), Lumina Copper Corp (LCC.v up 9.8%) and Reservoir
Minerals (RMC.v up 9.7%), while the biggest losers were Copper Fox (CUU.v down 15.3%) and
the tiny Strait Gold (SRD.v down 14.3%), those two heftier losing tickers dragging the overall
average down somewhat.
9

Copper Basket 2013 average, weekly
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
10
ht6naj ht31 ht02 ht72 r3bef ht01 ht71 ht42 dr3ram ht01 ht71 ht42 ts13
source: IKN calcs, TSX data
31/1/1
morf
egnahc
%
As it’s the end of the first quarter of 2013, The Copper Basket: Component performance after
here’s a different way of looking at the same 30% 13 weeks
20%
Copper Basket components, i.e. in
10%
performance order. Top of the pile is the
0%
hotpotting Reservoir Minerals (RMC.v) that’s
-10%
added 26.1% to its share price so far this
year. Also in the green (though all more -20%
modestly) are Curis, Augusta, Candente and -30%
NovaCopper. So five interim winners and ten -40%
losers, the worst of which being the nasty -50%
drop in Western Copper & Gold but all from
around Nevada Copper onwards haven’t much
to be proud about, scanty market or not.
Moving to the macro and pricewise, the red metal faded
from the high $3.40s to the low $3.40s per pound until
late Thursday, when what looks for all the world like a
bear raid on end-quarter hit prices by around 3C/lb (and
as LME had closed by then until next Tuesday morning,
there’s every reason to be suspicious about the drop you
can see on the hourly chart above).
On to the copper supply/demand scene and as it’s the end
of another month already (gosh that was quick, wasn’t it?)
here’s how our monthly tracker inventory charts are
looking. The story of March was the inventory build in LME
stocks, that now stand at 569,775t which is 111,000t
higher than the end of February. By way of another
context, that’s over double the figure of March 2012.
Shanghai inventories are at 239,273t, up a more modest
(but still notable) 13,000t from this time last month.
Comex stocks are basically unchanged at 68,085t.
v.CMR ot.VUC ot.CZA ot.TND ot.QCN ot.NMO v.CCL ot.QGN xa.HCH ot.UCN ot.IMY v.LMP v.DRS v.UUC ot.NRW
source: IKN data
Copper inventories, per month 2012/2013
1000000
800000
600000
400000
200000
0
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram
source: Cochilco
reppoc
sennot
cirtem
Copper inventories: percentage held per exchange
70 LME Shanghai Comex
60
50
40
30
20
10
0
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram
LME Shanghai Comex
source: Cochilco

The percentage holdings chart upper right is perhaps the best indication of what’s going on.
This time last year Shanghai was approaching parity with the traditional leader warehouse LME.
That’s changed enormously now, with the LME holding 64.96% of world copper stocks.
That was the month, but last week was quieter than the rest with a world inventory hike of just
0.9% to 878,133t total. LME went up 1.3%, Shanghai was neutral and Comex was up 0.4%. As
for cancelled warrants, they were marked at 11.6% of LME inventories, virtually the same as
last week (though we’d expect that number to climb in April, see below for more).
Cancelled Warrants at LME, IKN157 to date
35%
30%
25%
20%
15%
10%
5%
0%
11
751NKI 951NKI 161NKI 361NKI 561NKI 761NKI 961NKI 171NKI 371NKI 571NKI 771NKI 971NKI 181NKI 381NKI 581NKI 781NKI 981NKI 191NKI 391NKI 591NKI 791NKI 991NKI 102NKI 302NKI
source: Cochilco, LME
rof
yrotnevni
EML
%
latot
yreviled
resu-dne
More good coverage on the warehousing strategies being used by the larger market players on
this link (8), with this time the focus on Trafigura in Europe (rather than Glencore in Asia, as
per last weekend). Again worthy of a full read, but we can sum up by saying Trafi is doing its
best to sew up supply by offering premiums and financing deals to traders in order to get metal
into (and stay in) its European warehouses, but we should also look to higher flows out of the
warehouses as from next month as new LME rules come into operation. The important thing for
us here (as always) is the bottom line on how metals trading might affect the junior copper
exploreco space and although not a certainty, the likely direction of spot copper in April is up
thanks to the warehouse situation and if that holds, we could expect the overlying stocks to
rally as well.
Best suggestions? Go for the stocks with decent followings and trading liquidity, as well as
recognized projects (preferably advanced. Therefore ones to trade with from our list may be:
• Nevada Copper (NCU.to), especially when considering the news out late last week (see
below)
• NGEx Resources (NGQ.to), with the high quality Los Helados in Chile on its side
• NovaCopper (NCQ.to), which is a bit earlier on the development track but has grade,
low pol risk and a cash treasury to back it up.
• Panoro Minerals (PML.v), which has had a hard time recently but the guys inside the
recently closed placement will be looking fo market PPS improvement (and won’t be
afraid to make it so all by themselves)
• Western Copper & Gold (WRN.to), which has come off its post-feas highs and is back
from whence it came. The fact that I don’t like this project or stock is sidebar stuff,
we’re considering trades over investments.
Now for updates on some of the basket stocks:
Nevada Copper (NCU.to): Post-bell Friday NCU came out (9) with the important news (it
cannot be called anything else) that via a deal with Red Kite (who seem to be popping up

everywhere in these US-base copper deals) it had secured $200m in cash to finance the
development of Pumpkin Hollow into first stage operation in 2015. The NR makes it clear that
more cash will be needed between now and commercial production of the stage one
underground ops at Pumpkin Hollow and here’s how CEO Bonifacio puts that:
“This financing will satisfy 100% of our capital requirements in 2013 on a non-dilutive
basis while more importantly allowing us to move to commercial production in 2015
subject to receipt of permits which are expected in Q2-2013. We envisage additional
project capital as required in 2014 to be funded by way of a precious metal stream,
subordinated debt and a modest level of equity.”
However, the importance of Friday’s NR should not be underestimated; What has just
happened is a critical line has been crossed, debt is taken on with timelines that need to be hit
in order for the business plan to work. The ultimate success of NCU the company is now in
play. I’d expect NCU’s share price to move higher on this news next week, but on the other
hand we can expect every single timeline-sensitive piece of news, such as approval/delays in
the permitting process or construction of any part of the project, to be put under increased
scrutiny (and therefore make the price more volatile, upside or downside) between now and
2015. Put in the simplest terms possible, NCU delivers on its promises and the share price goes
higher, it doesn’t and the debt it has taken on will sink the share price.
However, you get the feeling that Red Kite will win no matter what happens. But that’s another
story.
Oracle Mining (OMN.to): Thanks to those who sent in feedback on last week’s NOBS report,
always appreciated. One point that was noted by someone who’s forgotten more than I know
about Arizona (the State, the mining scene there, you name it) and as it corrects an obvious
error I built into my model, here’s what Mickey Fulp told me:
I don’t savvy “5% royalty on production” + 3% NSR. There is no government
royalty on Federal or private land in the USA. Is this deposit on State of
Arizona trust lands?
Negativo, Mickey, it’s a mistake by me and thanks for putting me straight. As it happens,
building in extra conservatism (deliberately or accidentally) isn’t such a bad thing and as my
mistake tends any target to the the downside, I see no reason to adjust it at a point when there
are a ot of unknowns in the rest of the model (costs, capex etc). But it is a fair point and next
time round will be put straight. Fulp also noted that one of the problems with Oracle Ridge is
that the previous problem with its small underground ops scenario was that it couldn’t get
scaled up easily, by which I mean it was difficult to physically get a larger amount of
mineralization to surface for processing at better economics of scale (without theoretically
spending an oversized amount on capex, at least). That’s also a fair point and it’s one of the
issues that will surely be addressed as the project moves through the development stages. It’s
mentioned here because this is exactly the type of risk factor that we need to consider at each
stage, and a mining project needs to cross these hurdles, needs to de-risk in order to gain
investor confidence and ultimately see its share price go higher. Our job, that of the investor, is
to constantly weigh the risks against the rewards.
Reservoir Minerals (RMC.v): Mention must be made of the strong move seen in RMC last
week. Word has also reached this office from two separate sources* that RMC management is
very, but very happy about the way in which Timok is progressing and aside the chances of
finding more at or around the current exploration focus, feel that chances are very high that it
will become a mine one of these fine days, most likely for the current JV partner Freeport
(FCX). Therefore it should be clear that if such off-record words found their way to this humble
desk, they found their way to a lot of other places as well and this wave of bullishness is almost
certainly the cause of the move we saw in RMC last week.
In my opinion, RMC today at $126m is plenty expensive, but I also recognize that if FCX gets
the itch and can’t help but scratch it right now, RMC could double in a heartbeat. The call
12

therefore is more about timing of a move by the bigboy(s) player(s) than the next set of drill
results and due to that, I’m not in an anxious rush to chase and buy after an upmove in the
stock price. Not this company, not any company in our current market.
*Who both know that they’re being referenced here and they’re both the type of person that doesn’t even like seeing
their initials featured, all the same thanks are offered via these words.
The Lottery Ticket Basket
After thirteen weeks of 2013 The Lottery Ticket Basket is showing a 3.06% loss to level stakes.
company ticker price 1/1/13 Shares out Market Cap current pps gain/loss%
1 Eagle Star Min. EGE.v 0.125 69.48 22.23 0.320 156.0%
2 Marlin Gold MLN.v 0.10 192.39 14.43 0.075 -25.0%
3 Fancamp Expl. FNC.v 0.125 109.8 13.73 0.125 0.0%
4 Bellhaven BHV.v 0.14 121.16 11.51 0.095 -32.1%
5 Glass Earth GEL.v 0.155 104.79 11.00 0.105 -32.3%
6 Gryphon Gold GGN.to 0.085 194.64 9.73 0.050 -41.2%
7 FDG Mining FDG.v 0.13 45.59 5.93 0.130 0.0%
8 AQM Copper AQM.v 0.08 105.57 5.81 0.055 -31.3%
9 Copper North COL.v 0.10 58.62 4.69 0.080 -20.0%
10 Rio Cristal RCZ.v 0.025 149.26 4.48 0.030 20.0%
11 Darwin Resources DAR.v 0.20 26.16 3.66 0.140 -30.0%
12 Inca One Res. IO.v 0.12 34.0 3.40 0.100 -16.7%
13 Cream Minerals CMA.v 0.03 155.34 3.11 0.020 -33.3%
14 Netco Silver NEI.v 0.025 47.01 1.65 0.035 40.0%
15 Firestone Ventures FV.v 0.045 36.32 1.63 0.045 0.0%
Portfolio avg -3.06%
The Lottery Ticket Basket slipped back into overall negative territory last week and we’re now
3% down with just three of our 15 showing YTD profits, all rather gloomy. On the week we saw
five stocks make gains (MLN.v, FNC.v,
DAR.v, CMA.v, IO.v), four stay unchanged
30% Lottery Ticket Basket 2013 average, weekly
(GGN.to, COL.v, RCZ.v, FV.v) and six lose
25%
ground (BHV.v, GEL.v, AQM.v, EGE.v,
FDG.v, NEI.v) with the biggest winner 20%
Cream Minerals (CMA.v up 33.3%) and the 15%
biggest loser Netco Silver (NEI.v down
10%
22.2%).
5%
This basket isn’t really offering up much of 0%
a signal at the moment, as volumes have -5%
drifted off again (after the recent
improvement) and until the tinycap end
gets more trading interest, be it to the
upside with new money willing to risk a
move in or to the downside with wholesale capitulation, it’s likely to stay that way.
Cream Minerals (CMA.v): Down at the tiniest end of the tinycaps, CMA seems to be
bouncing round the bottom and as we kind of hinted at a couple of issues ago, for those with
the time and inclination to play small money for big gains, there has been a profit to turn in
CMA. This five day chart tells enough of the story, with jags down to 1c and up to 2.5c on
spikey-type volumes that represent juicy percentage gains (but let’s keep things in perspective,
that 750k trade at 1c cost the buyer a mere $7,500 pre-comms...we are NOT talking about
13
ht6naj ht31 ht02 ht72 dr3bef ht01 ht71 ht42 dr3ram ht01 ht71 ht42 ts13
source: IKN Weekly data, TSX
2102/1/1
morf
egnahc
%

serious money here).
Fundies-wise Cream is anything but that, with a grotty asset and a failed business model.
However that doesn’t preclude speculation at these pps levels. It’s why we included stocks like
CMA in this basket in the first place, in fact.
Bellhaven Copper & Gold (BHV.v): This one may be worth putting back nearer to the centre
of the radar going forward. Along with a very interesting NR last week (10), there are rumblings
about executive changes now doing the jungledrum rounds which, considering the disaster
state of the stock price performance in the last couple of years, cannot be a bad thing.
Regarding the NR, the news that BHV has optioned the La Garrucha property from Anglo didn’t
make any sort of splash in the market, probably due to story fatigue from this stock and a
general “we don’t care” about low grade bulk mine potential gold stories in Colombia (e.g. seen
the Sunward Resources price recently?), but that might be an oversight too many when it
comes to BHV and here’s why. If you check out the maps that arrived with Tuesday news on
this link (11) you’ll see how Anglo’s La Garrucha property joins onto the current BHV La Mina
property both to the East and the North. The North is the bigger
chunk of land, but it’s the bit at the East we should care about
more because of the recent drill numbers the company returned
from the recent drill program at the edge of its property. Here’
right is the close-up of figure 3 at the above link that shows
where BHV drilled and as they got down deeper and to the
border (black/yellow line) that joins its property to Anglo La
Garrucha, the interesting bit is how returned grades rose to
between 0.75 g/t AuEq and 1.10 g/t AuEq (recall, this La Mina
system is gold/copper in nature with most weighting to gold).
That increase in grade also matches the magnetic intensity
mapping of the area which has been pretty accurate in
predicting mineralized zones already (see the full map on the
link for details, but basically turquoise = good hunting).
BHV has committed to spending $8.5m at Anglo La Garrucha
over three years and produce a 43-101 resource in order to
earn in to 100%, including $1m in the first year (which
shouldn’t be a problem, as the company CFO informed your
author late last week that BHV has $3m in cash treasury) but
the deal has its ins and outs and there’s a back-in clause to consider in particular, so rather
than make it long-winded here’s the bit that matters from the NR:
14

Under the terms of the Agreement, Bellhaven will invest US $8.5 million over a three-year period,
including US $1.0 million in the first year, and define a NI 43-101 compliant resource in order to
earn its interest.
After the earn-in period, should the newly discovered mineral resource be less than 3.0 million
ounces of gold or gold-equivalent, Bellhaven will have earned 100% interest in the Property. In
case the new resource exceeds 3.0 million ounces of gold or gold-equivalent, AGAC will have a
one-time option to back-in to 51% interest in the La Garrucha concession and form a joint-
venture. In order to exercise this option, AGAC must elect to pay Bellhaven US $17 million in
cash, which is two times the amount expended by Bellhaven during the earn-in period, within 60
days of receiving confirmation of the earn-in and a compliant mineral resource that meets the size
criterion. If AGAC backs in to the La Garrucha Project, it can earn an additional 24% equity (for a
total of 75% ownership) by fully funding the preparation of a NI 43-101 compliant pre-feasibility
study. If the back-in conditions are not met or AGAC elects not to exercise its one-time back-in
right, it will retain no further interest in the Property except for a 2% NSR royalty on future gold
production and a 1% NSR royalty on future copper production (Bellhaven has a right to purchase
half of these royalties).
One thing to note here is the careful choice of 3m oz AuEq as the cut-off level for the back-in
option. Considering that 1) neither BV nor Anglo are stupid about rocks 2) the uniform nature of
grade so far encountered at La Mina and environs and 3) the fidelity to mag intensity footprints
already seen, it’s a fair bet that both teams have done their ciggypack calcs and both suspect
that there are at least 3m on AuEq to be drilled out as long as things go reasonably to plan.
That would be a fun number, ladies and gentlemen, especially added to the 2m oz AuEq or so
that BHV has under 43-101 compliance already. The key will be the grade and as BHV at La
Mina has better than average numbers on that score to boast (than the average porphyry gold
or gold/copper project in the country so far), an increase to a potential 5m oz resource would
put the project into a newer and altogether more interesting asset value bracket.
Or at least that’s the theory. What could possibly go wrong?
Well, a dozen things could go wrong as we all should know by now, starting with the way in
which this miserable market is, rightly or wrongly, giving short shrift to the tinycap juniors and
making their chances of obtaining the funding they need to move forward either highly dilutive
or plain non-existent. However, we should recognize that in this crazy game, what goes out of
fashion can come back into fashion. We should also recognize that BHV is committed and
believes in what it’s doing at La Mina (why take on an $8.5m, three year commitment
otherwise?). And if things turn around at the right time, we’d be looking at a company with a
potential 5m oz gold equivalent under 43-101, at a better than average grade for the country in
which it works (a country that by then would have hopefully got its mining law sorted out once
and for all and would let development happen) and which is currently priced at a piddling
$11.5m market cap.
Those of you who’ve been around The IKN Weekly for the longer haul know that I bought BHV
as a smaller spec play long for 50c back in September 2010, then sold it after feeling the pain
at 28c in early 2012. The taking of that loss turned out to be the right decision and as I said at
the time, it was mostly due to my dislike of the new management team and its MO. If things
change again at officer level in the near future, as the jungledrums are suggesting, I might just
tack on some cash to a newly re-founded interest in this now extremely beaten down play.
15

Regional politics
Regional Risk update fourteen
It’s time for our regular quarterly check-up of regional risk for mining in the LatAm region. For
reference purposes, this table was first featured in IKN32 Dec’09. It then appeared in IKN42,
IKN58, IKN70, IKN83, IKN97, IKN112, IKN123, IKN137, IKN152, IKN163, IKN177 and most
recently in IKN190 dated December 23rd 2012.
Yet another reminder on the scoring system: Each country gets a four-category score and then
come notes to explain any changes in scores or circumstances as well as some commentary on
the current state of play in each country as regards mining (recall our subject here is the
mining industry, it doesn’t consider factors wholly unrelated to mining). Here’s the make-it-
easy-to-read colour coding:
Green: Good
Peach: Possible but tread carefully
Orange: Warning warning
Red: Danger Danger
March'13 updated Latin American Country Risk For Foreign Mining Companies
Country Miner Friendly FDI Friendly Mining Culture Political Stability Total
Chile 7 7 10 9 33
Mexico 7 7 9 9 32
Peru 8 7 9 8 32
Brazil 7 9 7 8 31
Colombia 6 9 7 7 29
Nicaragua 7 8 7 7 29
Uruguay 5 7 5 9 26
Panama 5 9 5 7 26
Guyana 7 7 4 7 25
Dom Rep 5 7 6 5 23
Ecuador 6 4 4 7 21
Bolivia 2 2 9 6 19
Honduras 5 6 5 3 19
Paraguay 5 7 3 4 19
Argentina 4 3 5 6 18
Guatemala 3 5 3 6 17
Haiti 6 6 1 4 17
El Salvador 2 7 2 5 16
Costa Rica 1 6 1 7 15
Venezuela 2 3 1 4 10
source: The IKN Weekly house estimates
Overview: After considering every line item country region and adjusting its score to taste, i
was surprised this week to see the overall result of seven countries scoring lower, eight
unchanged and not a single, solitary region improving its score (and in some cases I reckon
that I was pretty lenient, too). To illustrate this, here’s a hastily thrown together chart that
looks back on the totalled points for each regional risk updates of yore (except the first one in
IKN32, when the feature was still finding its feet) and underscores the feeling developing in the
region, that mining companies, overall and in general, are picking up more negative sentiment
in LatAm than ever before. This reflects in the overall scores of our feature and the aggregate
16

of 457 today is a full 11 points lower than the last two editions of Regional Risk Update.
Total Scores in Regional Risk Updates
475
470
465
460
455
450
445
17
07nki 38nki 211nki 321nki 731nki 251nki 361nki 771nki 091nki 402nki
source: house
Chile: FDI friendly down one point. The dropped point is due to the cost creep being seen
in the Chilean mining sector, no more no less. We’ve covered the judicial appeals against
projects by locals unwilling to have new industries pop up nearby in previous episodes (both the
mines themselves and energy generation plants that new projects need, particularly in the
Northern Antofagasta/Atacama addresses) but rising costs are now a hotly debated issue in
Chile, both on a capex (all the inputs, typified by the blowout capex at Pascua Lama) and an
opex (electricity is now 20% of the cost total for copper production, up from 10% five years
ago) basis. In fact, the close scrutiny has seen the government bring down its estimates for
electricity marginal costs forecasts for the period 2013-2017 by 13% (12) a likely product of
new brains being put to the problem (and a little early-stage electioneering, perhaps). On that
subject, in the last few days ex-President Michelle Bachelet has thrown her hat officially into the
ring and is set to become the Concertacion candidate for President in the end-year elections.
The media hype has already begun thanks to Bachelet’s call (she is hot favourite for the job)
and there’s going to be plenty of noise out of Chilean politics for the rest of 2013, but for us it’s
all a side issue as policy towards the mining industry is very unlikely to change meaningfully
under a new government of either side.
Mexico: FDI friendly down one point, political stability up one point. The Peña Nieto
government has started well enough and continuation of institutional respect is a good thing to
see in any LatAm state (never take it for granted). For that reason (and for the arrest of the
corrupt teacher’s union boss Esther Gordillo, the move of a President keen to stamp his
authority on things) we add a point to the already good national political stability score.
FDI friendly comes down a notch due to the news that Mexico is indeed about to add a royalty
onto its mining sector this year. It’s not going to adversely affect longer-term prospects as it’s
more a case of Mexico coming into line with the rest of the world (or the serious mining country
world at least), but it does remove an advantage enjoyed by companies in the country until
now.
Finally, it’s worth highlighting here that we cover Mexico at a national perspective here, but it’s
vital to understand the country at a regional level to get the political risk factor right. A project
can be made or broken by regional politicians, traditional acceptance/rejection of mining activity
or being in/avoiding the worst of the narco-hot areas.
Peru: Unchanged. It took me quite a while to decide on leaving all four sub-scores
unchanged because as always regional factors play an important role in the Peruvian mining
scene and things are very different depending on exactly where you are in the Cordillera (see
comments on Mexico above and Argentina below, they apply here as well). Negatives are
picked up from the regions of Cajamarca, Lambayeuqe, and coastal Arequipa area, while inland
Arequipa and most other places known for mining activity are as good as ever. However,
balancing out Cajamarca (Shahuindo will now get its name in the same lights as Conga, so

watch out), Lambayeque (that’s DNT at Cañariaco and like the idea or not it’s a project that’s
unlikely to happen, and even less likely to find a buyer) and coastal Arequipa (if Southern
Copper moves the Tia Maria EIA forward as expected in April/May, there are your protest and
roadblock headlines for the next quarter guaranteed) we need to mention the improving climate
for large-scale formal mining in the Puno region, where local, regional and national government
officials have been doing a good job of promoting the formal mine projects at a time when
locals are becoming increasingly fed up with the highly polluting informal miners in the region
who are doing nothing less than poisoning rivers and water bodies and as a result putting local
agro activities at risk.
It’s not a blanket thing in Puno either, as the main thrust is in the northern Quechua-speaking
areas and the Amazon basin tropical zones (i.e. not the Aymara speaking areas and we’ve been
through this before so no duplicity, but forget Santa Ana). However, we can expect a real result
from the Corani public meetings due to happen next month and I fully expect that Bear Creek’s
(BCM.v) headline project will begin to look good to the market from then. (see above for more).
Brazil: Unchanged. At the moment the Brazil score stays pat, but we do recognize the
rumblings coming out of Brasilia about the possible hiking of mining and hydrocarbons royalties
(13) that has the country’s industry a little on the nervous side. The issue that’s gaining most
attention in the metals mining sector is the mooted plan to raise a special tax on large-scale
operations (e.g. the Vale sized iron ore ops) but talk of royalties hikes also abounds. On
consideration (and considering that much that’s whispered in Brazil never comes to pass), we’ll
leave adjustments on this for next quarter, by which time the rumours would have either
solidified or dissipated.
Colombia: Political stability down one point. Colombia gets a political stability downgrade
due to the combo of the now stagnating peace talks between government and FARC, as well as
the drop in approval for sitting President Juan Manuel Santos, who’s down to a multi-year lows
for any Colombian president of as low as 44% approval in a recent Gallup poll (though others,
such as CM& published a couple of days later than Gallup, put him at 55%).
On the mining front it’s been more jostling for position than anything groundbreaking, as least
in the hard rock and exploration mining sector. The big story should come mid-year when the
country’s long overdue mining law re-haul gets its debate and eventual approval in the
country’s parliament. However, we’d look negatively on further delays to the timeline on this
score, it’s getting past a joke.
Nicaragua: Miner friendly down one point. The reasons for the point dropped are firstly
costs and secondly some public opposition to mining projects that’s starting to show through.
On costs, the benchmark id the country’s biggest producer B2Gold (BTO.to) and that’s covered
closely enough for our purposes in the Fundamentals section today.
The issue beginning to surface in Nica is one of rising costs, not something unique to this
country of course but there’s definitely a look of catch-up about it here. We can also add to that
the potential for energy costs rising, as Nica greatly benefitted from cheap fuel supply from
Venezuela in the Chávez era and that cheap supply may start tapering off, even under a new
Maduro government.
Uruguay: Miner friendly down two points. Uruguay is turning distinctly unfriendly towards
the mining industry, a state of affair which, when combined with its relative newcomer status as
a (potential) mining country, does not bode well. Since the last update mining has turned into a
hot political issue, with the Pepe Mujica government keen on promoting its cause (the word
“responsible” always close at hand when the government talks mining, of course) but politicians
from all sides joining the growing anti-mine feeling coming from the population (marches,
petitions and general NGO-sponsored activities as per the standard model, though happily no
particular violence to report).
18

At the same time we’ve seen Brazil’s Zamin Ferrous pull out of its massive iron ore project in
the country (which would have been the first truly big hard rock mining operation ever seen in
Uruguay), citing costs and the preference for a similar project on its books located in Brazil.
We’ve also seen B2Gold slowing down projected development and exploration budgets at its
Cebollati gold project.
Guyana: Unchanged. There was a slight vote of
confidence in Guyana as recently as this week, when
Troy Resources (TRY.to) (TRY.ax) made a friendly
bid for fellow Australian junior Azimuth, which has its
fairly advanced exploration properties in the country.
But when it’s benchmarks you need, Guyana
Goldfields (GUY.to) is the one to really consider and
that’s down from $4 to $2.60 so far in 2013, which
means it hasn’t done any worse than a lot of sector
companies at the same stage of development, but it’s
hardly inspiring stuff either.
Dominican Republic: Miner friendly down one point. Reaching the decision to chop one
point from this score took some balancing of the negatives, particularly the very negative
optics, coming from the current argument between the Danilo Medina government of Dom Rep
and Barrick Pueblo Viejo (60% ABX, 40% GG), and the positives, particularly the mining sector
of the same government that now pledges to permit any exploration project within four months
of receiving any formal application. In the end it’s just down one this quarter but it could have
been more and if things continue to deteriorate between the country and Pueblo Viejo, Dom
Rep could easily find itself with a more permanent red flag next to its name, just at the point
when it’s trying to promote mining as well.
Ecuador: Political stability up one point, FDI friendly down one point. Political stability
gets a nudge up thanks to the smooth way in which the Presidential and Congressional
elections went in Ecuador duting the quarter, as well as the way in which the outcome of the
Presidential vote went according to all expectations. The bonus on this score is that President
Correa’s Allianza Pais party now has full control of congress and as a result, his desire to push
through pro-responsible mining legislation will become easier to achieve.
However, FDI friendly is down another notch, as the country continues to get precisely nowhere
in its development plans due to the strong anti-mining sentiment in the places where it matters,
the stodgy bureaucracy that gets nowhere and the government insistence on welter State
burdens (of at least 51% of gross revenues from metals mining) that makes this country an
unattractive place to go prospecting or mining, even before its naivete and anti-miner sentiment
is taken into account. Great rocks, though.
Bolivia: Mining culture down one point. Traditionally welcoming and understanding about
mining, Bolivia is now adding to its highly negative image of a country in which mining is
difficult by showing significant anti-mining protests among locals around mines and projects.
It’s not everywhere and it might be related to the generally good economic progress Bolivia has
made in other parts of its economy, but there’s a rise in the number of locals who prefer not to
have a mine set up near them any longer. Hence the drop of a point and a move into official
red zone “do not touch” territory on our table, which has been the advice for as long as this
segment has existed, anyway.
Argentina: Miner friendly down two points. Where do we start with this trainwreck? The
main problem facing mining exposure in Argentina is the acceleration of costs, particularly op
costs, due to Peso inflation and the disconnect between the unofficial exchange rate (currently
8.45 to the U.S Dollar, which is a fair reflection of the change in purchasing power of both
currencies inside Argentina) and the official rate that currently oscillates around 5.10 to the
19

dollar (at which price business do their exchange business, can remit profits, books costs etc).
Next comes resource nationalism, better seen at a regional level where provincial governments
are hiking project and operations costs by demanding more of a cut (example Chubut). Then of
course there’s the well organized and supported anti-mining movement in the country, which
has stopped and will continue to stop projects from moving ahead. Despite the best will and
marketing-style promotion of the national government, who are sincere in their desire to grow
the mining industry in the country, Argentina is a crazy place in which to dedicate capital at the
moment and it came as no surprise to see Vale officially pulling out of its massive potash
project in Mendoza earlier this month. On that subject, according to latest reports Vale is in the
process of laying off its workforce of 11,000 at the Rio Colorado potash project in Mendoza (14)
which runs directly against the wishes of the Argentine government (who have taken the
company to arbitration to make sure it keeps paying its workforce there) and may trigger more
serious consequences, such as the expropriation of the asset.
Meanwhile on the macro-financial side, things are coming to a head in the vulture fund vs
Argentina fight, as last week saw Argentina make (15) what amounts to a final offer (that’s
basically the same as the one it gave to acceptors of its haircut deal in 2010). If the New York
judges reject that offer and insist that Argentina pay 100% of its debts to the vulture funds in
cash (as is the current soft ruling, yet to be ratified) the likely chain of events in practical terms
includes Argentina refusing point blank on the ruling, its bonds and currency taking another jag
spike down and more inflationary pressure moving through its financial system. It’s more
difficult than first meets the eye to decide whether the judges in charge of the case side with
the funds or the country, as Argentina has a decent argument on the pari passu issue and has
at least some reasonable logic behind its assertion that offering the vulture funds the same as
previous creditors fulfills the terms of equity. I’m guessing that Argentina will lose the next
round and things get more serious, though. That will be bad for everyone in the short-term, no
guesses available on who wins out in the long run.
My current personal direct exposure to Argentina is via the section of Minera IRL (IRL.to) that’s
covered by Don Nicolas and my fandom for River Plate Football Club. That second one aside,
I’ve hung in on IRL.to because the company is set to close a deal that will all-but neutralize its
risk exposure to the country in exchange for a JV deal on Don Nicolas, which will leave it to
concentrate on its Peru assets. I’m as anxious as the rest of you that this deal be finalized, so
hoping (ugh, but true) that we hear things soon, what with April and 2q13 now with us. If
things don’t go the way we’d like on that, it may be time to review our exposure to IRL. After
all, this explains why we haven’t waded in with a full ‘Top Pick’ on IRL from the getgo.
Guatemala: Unchanged. It’s still a horrid jurisdiction in which to do business. It’s still the
place where companies will tell you that they’ve spoken with the President, no less, who told
them that everything will be just fine and dandy. It’s still the country with such weak
institutional presence where it matters, in the rural/provincial areas where the mine projects are
located, that any vaunted development is at the mercy of local concerns (be they altruistic or
nefarious).
Therefore and until blue in the face, by all means go for a high risk punt at something with very
low market cap and potentially explosive upside if things fall into place (e.g. FV.v, RDU.v), but
investing in Tahoe (THO.to) and trusting a country like Guatemala with a 2.5Bn market capper?
No way, not ever.
Venezuela: Political stability down two points. Hugo Chávez Frias is dead, and although
Nicolas Maduro is a shoo-in to be his replacement come election day April 14th there’s enough
uncertainty about his potential as leader (especially coming after the larger-than-life Chávez) to
warrant a downgrade in the political side of the country. Not that it makes much difference to
us, firmly on the outside and not going in (bar the odd trade on the specific Chávez soap-opera
that turned out quite well in RML.v during the last quarter...but it was smallstuff).
20

Wrap-up: And that brings us to the end of this edition of regional review, the next will come at
or around the end of 2q13 in June. One thing I’m considering here is to pare down the
coverage on the more peripheral countries (e.g. Haiti, El Salvador) where nothing of great note
seems to happen in the mining scene. When it comes down to it, our focus should be on those
countries that provide a mining dynamics (be they improving or deteriorating) and those places
in which companies that are good for investment, trading or speculative flipping are operating.
It’s a question I’m mulling over and no decision will be made until the end of next quarter, but
if you have an opinion I’d be glad to hear it.
Market Watching
Redux on the 2013 juniors call (and chart) from last week
By which I refer to this one:
Last week’s section elicited plenty of mail and a good few exchanges, which was nice. The one
thing that tended to repeat was an argument about the precise timing of the turnaround that
the chart (and I) forecast. Some say it’s already happened, others say the timing I propose is
too tight and we’ll need through 2014, others argue that the overall timing looks about right but
the bottom isn’t in yet, others still say that a “spike bottom” (sounds painful) needs to be drawn
in, as major bottoming patterns tend to have a moment of full-on capitulation which shows up
as a very-short-term spike down as towels are thrown in for all angles.
I’m good with all of those suggestions. All of them.
The above chart was not, is not and will never be a shot at nailing the precise moment when
our horribly performing sector of focus bottoms out. My guess that the quality end of the sector
has just about bottomed out around now and will enjoy a recovery from here to end 2013 (and
beyond into 2014) is just that; a guess. It doesn’t try to take into account the buffeting that
short-term issues bring, nor does it try to predict the most obvious of all the influences out
there, namely the performance of the price of gold (to which all other metals are attached, in
some form or another) because if gold decides to put in a sudden rally/dump, those curves up
there won’t be anything like as smooth as my cool computed curves make out.
I stand my idea in its conceptual nature, but deciding when that bottom moment comes (and
let’s face it, I may think we’re close but if I thought the bottom were in and the only way were
up, I wouldn’t have a short position and two empty spaces in the ‘Stocks to Follow’ list right
now) is far less science, more constant monitoring and weighing of daily circumstances. The
chart offered last week is a general guide, but the details and most importantly the timing is
21

something that will come as the year unfolds.
Fortuna Silver (FVI.to) 4q12 numbers
I have been asked for a bit more on FVI since last week and the problems that seem to be in
the pipeline. There is good about the story and as any smart company does, it will put those
examples in front of your eyes for your consideration. In FVI’s case the good is San José, as
that mine is now running well, cheaply, efficiently and is set to expand its throughput in FY13.
The potential downside to FVI at San José is a deterioration in community relations and we’ve
documented on these pages recent and ongoing protests from one section of the local
community in San José del Progreso. However the company has never shied away from this
subject and has always maintained that the trouble is caused by a small but vociferous minority
of the total population, while most of the rest favour the mine’s presence and operation. Also,
on a practical level (especially in a pro-mining country like Mexico), it’s much, but much easier
to stop a project from becoming a mine than stop a mine from operating once it’s up and
running, so the law of possession counts in this case. Overall, the pol risk scene at San José
isn’t one I’m really concerned about at the moment and it would only become an active factor if
things took a new direction.
No folks, my problems with FVI stem from the Caylloma operations and there are three
branches to these concerns:
1) Costs of production are rising fast (and I’m unconvinced about the 2013 guidance on
this item)
2) The company’s Caylloma exploration program again earmarks serious cash for 2013,
but the cash spent in 2012 seems to have been for little or no result.
3) Mineral reserve updates suggest that 2014 onwards will see significant grade
deterioration for Caylloma, not just the slight decline seen in 2012 (and projected for
2013).
I’m not saying that Caylloma is about to close down. I am saying that if things don’t change
there, Caylloma’s contribution to margin and overall corporate profit will drop, setting off the
gains expected in the San José operation and leaving FVI treading water, rather than it being
the growth story that allows it to maintain a relatively high 16X P/E with its market supporters
and shareholders.
Let’s address these one by one starting with costs. This table shows cash costs per tonne of
rock processed by FVI at both Caylloma and
San José (our preferred method that keeps 110 FVI: Cash costs per metric tonne
things as apples-to-apples as possible). It 100
90 includes all results to date, plus the company’s
80
own quarterly guidance on costs per tonne for
70
FY13. In the case of San José, both we and 60
the company expect costs per tonne to drop 50
as the programmed throughput expansion 40
30
kicks in later this year (yup, moving to
20
1,500tpd will help all sorts of metrics, that’s
10
commonsense). However, Caylloma saw a big 0
kick up to $96.80/t in 4q12 and FVI currently
guides that level (well, between $95/t and
$97/t, depending on the quarter) for the
current year, which means that even at best
those new cost inputs aren’t going away. However, even that new high level looks a little rose-
tinted to my eyes, as Caylloma has seen costs rise non-stop since 1q11. so after two years of
creep it’s not so easy to suddenly assume things will flatten out. I may be wrong (and I’ll admit
it if it comes to pass, too), but what I see around me here in Peru is a workforce that’s militant
about better pay deals and suppliers that are looking to pass on higher input costs to mines
with strong free cash flow. These trends don’t suddenly disappear from one year to the next.
22
01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 tse31q1 tse31q2 tse31q3 tse31q4
source: company filings
tm/$U
caylloma san jose

Next, grade at Caylloma, specifically for its FVI Caylloma: Silver head grade (g/t) per quarter
G/t Ag
main product silver, dropped in 2012 and is 200
scheduled to continue dropping in 2013.
180
Here’s the chart with ongoing results of
average silver head grade, which has seen
160
a move off of the 180 g/t Ag average and is
set to average 170 g/t in Fy13, according to 140
company guidance.
120
That’s one issue, but the longer-term 100
problems are found in another dataset. 1q11 2q11 3q11 4q11 1q12 2q12 3q12 4q12
Please consider this chart, which gives us
source: YE2012 MD&A
the December 31st 2011 mineral reserve
count (i.e. proven and probables, this is a mine folks, we need to know what’s going to be dug
out the ground next).
Now consider this chart, the same one but updated to December 31st 2012 and released last
week, with a couple of notes added in red by your author:
Caylloma runs on two sets of mineral feed, the main, wide Animas vein that provides the bulk
of the tonnage and then around the area the smaller, thinner higher grade veins that boost the
overall silver content. Those are mixed at the head of the mill and we get average grades,
predicted production, the whole nine yards. Once we compare the end 2011 numbers to the
end 2012 numbers, the severe drop in available high grade silver ounces, the ones that boost
the head grade totals, is clear enough. Pray tell me, how does a mine that produces around 2m
oz of silver in 2012 see its high grade ounce count drop by 6m oz P+P in the same period? It
isn’t by mining them all out, that’s for sure, and put a gun to my head and I’d say its the combo
of possibly overenthusiasm in previous counts combined with a new, higher cost cut-off that
makes uneconomic some of the rock previously counted as reserve.
At current numbers, Caylloma has the high grade mix for 2013 and probably 2014, but the 180
g/t head average is due to drop to 170 g/t and if more good stuff doesn’t come down the
pipeline, the trend towards the Animas vein averages (P+P 112 g/t Ag) is bound to continue.
That’s a scenario of costs rising plus metals recovery dropping, which equals margins squeezed
23

and profits down.
The implication is clear enough: Caylloma is running out of good high grade material, the stuff
that props up its gross margin, and that despite the 16,000m of drilling and exploration drifting
that went on last year and was budgeted at $7.2m (money that could have otherwise made for
a much healthier bottom line at FVI). This year another $6.7m is earmarked for brownfields
exploration there and hopefully, the company will get a better return for its cash. This also
explains why FVI has quietly dropped its plans to up throughput at Caylloma to 1,500tpd, as the
FY13 guidance is for an average daily throughput of 1,270tpd, the same as (or even slightly
less than) last year.
The bottom line is that we should indeed look favourably on FVI at San José and remind
ourselves that this is a team that really knows how to dig stuff out the ground, pull metal out
the stuff and sell it for a fat profit. But if the metal isn’t there that mining gig becomes far more
difficult and my prediction is that
we’ll see words like “mature” and
phases such as “long in the tooth”
being used around Caylloma as
2013 wears on, and that’s not
something to be laughed off by
those long. If FVI loses its aura of
being a upwardly thrusting growth
company, the chances of the
market paying the type of multiple
to earnings that it’s currently good
about paying will diminish. FVI now
has the look of a company with one
asset moving forward well, but
another retreating from its zenith.
I’m not a buyer of that scenario,
nor am I buyer of any silver stock
that requires me to pay the same multiples as a gold stock.
Conclusion
IKN204 is done, we close with bullet points:
• I cannot stress enough times that RIO.to and BTO.to are the two to own above all
others covered in The IKN Weekly. However, we’re at the point when these bigger
names get enough coverage and this weekend I found myself scratching ideas and
column inches because there’s no real need to say again what’s been said before.
• Away from the top two, I’m looking forward to seeing the numbers out of IMPACT
Silver (IPT.v) tomorrow as it has all the look of a turnaround play at a critical moment.
If there’s news to report on that, a Flash update will come your way. On the other
hand, IPT may go the way of my Aurcana (AUN.v) and become a heel dragging mess of
trade. That one has until
• I’ve been approaching the market in a more conceptual way recently, as opposed to a
numbercrunching way, which goes a way in explaining the FVI piece today. It just
seems to me that getting the bigger picture right and knowing whether to move into
24

any company in a sector (silver juniors, gold seniors, tungsten, copper iron ore, rare
earths or a dozen others) is more attuned to the market than puzzling over the merits
of a single company’s business and model. As being absorbed in the details and missing
the bigger picture has always been one of my weaknesses as an analyst, it does me
good to flex this muscle a bit more I think. Whether I get the calls right is another story
that gets told later, of course.
• I hope you enjoyed your Easter break and made the most of it with family and loved
ones. For what it’s worth, today’s egg hunt at this house was another annual dose of
great, though chaotic, fun.
The top long-term picks are Rio Alto Mining (RIO.to) and B2Gold (BTO.to). I thank you in
advance for any feedback sent in. Flash updates will be sent promptly if required by events.
I wish you good trading fortune, ladies and gentlemen.
Otto
Footnotes, appendices, references, disclaimer
(1) http://www.calculatedriskblog.com/2013/03/schedule-for-week-of-march-31st.html
(2) http://finance.yahoo.com/news/impact-silver-corp-release-2012-172552780.html
(3) http://finance.yahoo.com/news/gold-corporation-declares-march-monthly-214300599.html
(4) http://www.investorvillage.com/uploads/8056/files/OGC_250313_Siperco.pdf
(5) http://finance.yahoo.com/news/aurcana-announces-shareholder-approval-share-182955570.html
(6) http://finance.yahoo.com/news/aurcana-announces-end-financial-results-130000364.html
(7) http://finance.yahoo.com/news/marlin-gold-announces-details-oversubscribed-200700292.html
(8) http://www.metal.com/newscontent/47846_eu-copper-premiums-up-on-trafigura-storage-play-chile-strike
(9) http://finance.yahoo.com/news/nevada-copper-closes-us-200-220130289.html
(10) http://finance.yahoo.com/news/bellhaven-options-la-garrucha-concession-113000317.html
(11) http://file.marketwire.com/release/bhv326_F1-3.pdf
(12) http://www.aminera.com/mas-noticias-nacionales/47213-gobierno-reduce-en-13-proyeccion-de-costos-de-energia-
para-2013-2017.html
(13) http://portosenavios.com.br/site/noticias-do-dia/geral/21297-mineracao-teme-cobranca-de-taxa-especial
(14) http://tn.com.ar/politica/la-minera-vale-insto-a-contratistas-y-proveedores-a-despedir-personal_376823
(15) http://www.bloomberg.com/news/2013-03-30/argentina-one-sixth-bond-offer-seen-as-thumbing-nose-.html
25

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'11 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
26

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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