IKN #212Premium

The IKN Weekly
Week 212, May 27th 2013
Contents
This Week: Still trading, not investing much.
Fundamental Analysis: Stress-testing OceanaGold (OGC.to) (OGC.ax)
Stocks to Follow: Overview, Tahoe Resources (TAHO) (THO.to), B2Gold (BTO.to), Focus
Ventures (FCV.v), Minera IRL (IRL.to) (MIRL.L), Rio Alto (RIO.to).
Copper Basket: Overview, Candente Copper (DNT.to), NGEx Resources (NGQ.to), Reservoir
Minerals (RMC.v).
The Lottery Ticket Basket: Overview, Glass Earth Gold (GEL.v).
Regional Politics: Brazil’s royalty law changes moving to Congress, Peru: Prior Consultancy
law update, Dom Rep: Xstrata nickel project in problems, Chile: The Pascua Lama situation
(again), Argentina: Barrick (ABX) gives South Americans another reason to hate them, Mexico:
Esperanza Silver (EPZ.v) facing headwinds, Peru’s GDP stock market and thoughts on its
current economic situation.
Market Watching: Agnico Eagle (AEM), supplier of junior mining exploration cash.
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
Still trading, not investing much
Today’s only change in the portfolio is to cover and take profits on the Tahoe Resources
(THO.to) (TAHO) short, which was always set up as a near-term trade and even though the
disturbances around its Guatemala operation haven’t really affected its share price, the general
market malaise has seen TAHO sell off. I’ll take ‘right for the wrong reasons’ quite happily,
thanks.
Meanwhile arguably the recently closed Bear Creek (BCM.v) trade the flipside of the TAHO
trade, as that one was a long, it was a small loser and in my opinion was “wrong for the right
reasons”, but what the two trades definitely have in common is the same mindset towards this
market, that of near-termism. I have enough cash deployed in the port to suit my taste right
now and until we have some true tidal change in the wider market, I feel no need to add to the
type of investment positions that I usually seek. The bulk of the cash is stuck in fundamentally
strong companies too (RIO.to, BTO,to), while those that have taken particularly bad hits in
absolute terms (first that come to mind are Minera IRL and OceanaGold) still have enough
going for them to allow me to remain holding, particularly at these type of prices that cut the
temptation to sell even further.
1

Fundamental Analysis of Mining Stocks
Stress-testing OceanaGold Corp (OGC.to) (OGC.ax) (OGC.nz)
Today I’ve finally got round to the overdue update on OceanaGold (OGC.to) (OGC.ax) and it’s a
report that I’ve swapped and changed around a couple of times in the last few weeks. The
original idea was to write a straight NOBS update report, but since then it’s morphed into what
you see below today, best described by using that fancy buzz-phrase, a stress test on the
financials at OGC.
The reasons are twofold. Firstly and most obviously, the drop in the price of gold we saw in
April and then the relapse in May. Secondly, after conferring with fellow longs and others
interested in OGC as an investment, the two main worries voiced were 1) whether OGC would
remain profitable at the new lower price deck for gold (and copper) and related 2) whether
OGC would be in conditions to pay the slice of its debt due to mature at the end of this year
(December 22nd 2013, to be exact). The reasoning goes that if OGC can generate profits and
make enough money to cover its obligations in 2013, the company would have the look of one
that’s over the hump, past the tough financial spot and ready to show its potential thanks to
the recently opened Didipio and its ongoing New Zealand operations. If OGC can make that
debt payment without any problems, it would become a working capital and cash flow positive
gold miner with plenty of mine life in its major ops that’s not at all reflected in its current share
price. However, if things are tight and the due payment looks difficult, now would be a better
time to bail on the stock before it sees its equity crushed completely. That’s how we’re
approaching OGC today, an analysis that centres on its financial position past, present and
future. We do need to consider its production capacity and forecasts for 2013 to some extent,
as revenues depend on how much gold gets produced. But once we put our assumptions in
place it’s the combination of gold price, company revenues and company costs, compared to its
upcoming financial obligations, that we concentrate upon.
Therefore, what follows comes under into the following sections:
1) Assumptions: What we’re plugging into our financial model
2) Reserves and resources at the company mines, by way of a check on this item and to
put minds at rest.
3) Production: How much gold has been and is forecast to be produced
4) Costs: The breakdown of cash costs per ounce
5) Revenues: How earnings look under the stress test parameters
6) Balance sheet: Where the debt is factored into the story and whether OGC is going to
be able to cover everything
7) Conclusion: Buy, hold or sell?
Those sections tend to run into one another a little (for example, we can’t get an idea of how
profits might look until we combine revenues with costs), but we’re about right on the order of
things here. So without further ado...
Assumptions
There are quite a few variables played around with, but here are the main ones:
1) Gold averages U$1,400/oz in the period from April 1st 2013 to December 31st 2013, in
other words the last three quarters of this year (we already have the results for 1q13).
By the way, we’re assuming a calendar count for our annotations, therefore 2q13 runs
to June 30th, 3q13 runs to Sep 30th, 4q13 runs to Dec 31st (unlike the Australian
system) for easier following of the quarters. We’re not assuming that gold goes any
lower than it is right now, for basically the same reasons expounded in the last couple
of weeks on RIO; if you think gold goes lower, you shouldn’t even be reading this
analysis of a junior gold mining company.
2) We assume OGC has to pay U$117m in cash to the holders of its convertible debt on
2

December 22nd 2013. This is the big payment day for the company, as if it gets over
this hump and takes that debt off its hands (which started life as a Aus$100m debt
facility that pays 7.0% interest per annum and is currently held at Aus$113m on the
company books) OGC will then be able to keep the cash profits from operations in its
treasury, have less liability burden, be working cap positive for the first time since it
raised the construction cash for Didipio and a whole bunch of other good things. Put
simply, end 2013 is D-day for OGC financials and if the company gets over the hump,
its equity will be suitably revalued.
3) Costs are assumed to be roughly in line with OGC guidance for the year. We’ve
adjusted a little here and there, for example we’re assuming slightly higher costs than
normal for the Macraes mine during 2q13. Buy overall, we’re sticking to the script on
this one, both on Didipio and the NZ ops.
4) Production is inside the company guidance figures, too. In fact OGC guides for 285,000
oz to 325,000 oz Au production in 2013, figures that were reiterated after the 1q13
quarter report and we’re pitching to the low end of that number at just under 295,000
oz Au in the year in order to keep things to the conservative side, even though signs
are good that Didipio is ramping well and that the Macraes production loss in 1q13 and
2q13 (due to pit wall movement and already reported to the market) isn’t as bad as
first expected. In this report we’re not trying to show OGC in the best possible light for
the year, we’re trying to show a company that can get over its transition year hump
and come out the other side unscathed even if gold prices remain where they are and
its assets don’t perform to the maximum expected levels. It’s a stress test, you see.
5) We assume OGC is a gold mining company, therefore use the copper production and
revenue from Didipio as a byproduct credit and set any revenues against costs, rather
than adding them to net sales. In the end there were several ways to attack this issue
and the size of expected revenues from copper at Didipio in the first couple of years
made a strong case for adding the metal as a co-product. However, the decision is to
go for the easiest math option and simply subtract copper revenues from expected
costs of goods sold (COGS), also chosen because the financials are consolidated and
not just about the revenues mix from just one of the mines. We assume copper is sold
at an average of $3/lb in FY13.
6) Other bits and pieces, here are a few examples. It’s a bit of a guess as to how much
metal OGC will ship in its first quarter of commercial production at Didipio this quarter,
but to the modest amounts produced we also add sales from the near 6,900 oz Au
produced in the previous quarters before commercial production was achieved. Then
CAD$1 = U$1, which is actually an unfavourable exchange rate for OGC’s financials in
Canadian dollars compared with today’s CAD$1 = U$0.97, but we’ll stick with the parity
rate to add a little more safety margin to our numbers. Then tax and burdens as stands
(including the disputed royalty payment out of Didipio that OGC says it doesn’t need to
pay, but did in 1q13 after the Philippine tax people blocked transport of concentrate).
This list of minutae continues, but it’s time to get on with the note.
Reserves/Resources at OceanaGold
We now get down to the numbers and the rest of this piece features plenty of chartwork, as
visuals make this easier. This first section is something of a non sequitur, as it matter less to
the production, cash flows and eventual profit margins at OGC (barring exploration expenses, of
course). All the same, it is a subject worth tackling because one of the concerns I’ve
occasionally fielded from people about OGC is about its relatively short mine life at its New
Zealand operations.
There’s less to worry about than meets the eye. Here are three charts that show the position of
proven and probable reserves, then measured and indicated resources (the P+P reserves are
not included in those figures) and then inferred resources at the company’s three main assets
3

(we ignore the Sam’s Creek project and its resource). The main focus here are the Macraes and
Reefton mines, but I’ve included Didipio’s numbers as well.
As you can see, at both Macraes and
Reefton the company has a good track
record of being able to add to its ounce
counts via exploration even as the assets
are depleted by mining. The last three
years are shown but the record goes back
further, for example at Reefton the 2008
reserve life was called at 3 1/2 years by
OGC, but now in early 2013 Reefton
already has a confirmed mine life to 2017
and even though the safest P+P reserve
category has dropped, it shows every sign of being able to maintain resource counts through
further exploration.
Production
Now for a closer look at production numbers. First up, here’s how gold production has been
since mid-2009 and how we expect things to go this year now that we have Didipio online. Note
that although commercial production has now been declared at the new mine (as of April 1st,
which means all this current quarter counts) we’re assuming just 12,000 oz Au are produced.
This just about covers the hole we’re forecasting for Macraes production this quarter (dropped
to 40k oz). However, as the rest of the year unfolds we forecast better things from OGC, with
Reefton steady, Macraes back up towards 50,000 oz Au per quarter and the gradual ramping of
Didipio on top, which should bring us a record company quarter by the end of the year.
OGC: Gold production (mine breakdown)
100000
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
4
90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3 tse31q4
OGC: Macraes Reserve/Resource OGC: Reefton Reserve/Resource
Moz Au Moz Au
7 P+P M+I Inferred 1.4 P+P M+I Inferred
6 1.2
5 1
4 0.8
3 0.6
2 0.4
1 0.2
0 0
2010 2011 2012 2010 2011 2012
source: OGC filings source: OGC filings
OGC: Didipio Reserve/Resource
Moz Au
3 P+P M+I Inferred
2.5
2
1.5
1
0.5
0
2010 2011 2012
source: OGC filings
OzAu
Didipio gold prod (oz)
Reefton gold prod(oz)
Macraes gold prod (oz)
source: company filings/IKN ests
To repeat, these 2013 numbers sit in line with the low-ish end of company forecasts for 2013.
We’re expecting better things from OGC in 2014, but as this market is all about the current

situation (and whether OGC can weather its financial rough patch) we’ll leave that one for
another day.
Production costs
Here’s the first chart to consider regarding costs which gives total costs per ounce, made up of
cash operating costs and “other reported” costs
in the Australian style. This total number is not
the “all-in sustaining costs” that’s gaining
traction in the world of mining these days, but
it is a better benchmark then simply operating
cash costs per ounce and at OGC has shown
itself over time to be a reasonable dataset with
which to calculate final corporate earnings. At
this point, we remind readers that revenues
from Didipio copper sales are used as a cash
credit to costs, which is why we expect cash
costs per ounce of gold produced to remain
lower than anything seen in 2011 or 2012.
Here we sit the total operating costs next to the received price for gold, with the difference
between the two in red.
OGC: Total op cost vs received gold price, per quarter
2000
1750
1500
1250
1000
750
500
250
0
-250
5
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3 tse31q4
OGC: Cash op. cost and total costs per ounce
1600
1400
1200
1000
800
600
400
200
0
U$/oz
total op cost ($/oz) received price/qtr difference
source: company filings, IKN ests
Then this next chart shows the same red bars margin made per ounce of gold (ex-financial
interest charges, property adjustments,
forex etc) in previous quarters and how
things look under our forecasts and a
flat U$1,400/oz gold price for the rest
of 2013 and, dear reader of The IKN
Weekly, the good news contained in
these two charts is fairly plain to catch.
No, we’re not about to see the type of
big margin pop we got in 4q12 from
OGC, the quarter when gold prices
were still averaging high (OGC average
received price that quarter was
U$1,706/oz) and costs were finally
under control after a difficult period at
its NZ ops, but we can report that in 2013 OGC is near certain to produce its gold ounces at a
operating profit even at the new and distinctly lower $1,400/oz gold price. This chart is acid test
number one for OGC and we’re happy to say, assuming operations go reasonably well and
according to company plans, that OGC passes.
The final chart in this section gives a breakdown of costs in absolute dollar terms per quarter
(the same data, cut and sliced in a different way. Thanks to the copper credit metal (that we
90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3 tse31q4
U$/ozAu
other cost ($/oz)
cash op cost ($/oz)
source: company filings, IKN ests
OGC: Difference between total op costs and received
revenues per ounce of gold
800
670
700
600 480
500 418 409 442
400 276 341 250 300 300
300 209 180
200 110
100
0
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3 tse31q4
U$/oz Au
source: company filings, IKN calcs. IKN ests

simply subtract from COGS), even though OGC is a bigger company with three mines instead of
two, we expect costs to remain firmly
under control compared to previous OGC: Costs breakdown
100
years. G&A has crept up a little and
90
we’re adjusting for higher numbers now 80
it has a new Didipio admin team to pay 70
60
as well, then depreciation/amortization
50
which has been a relatively steep 40
number at OGC for several quarters, due 30
20
to the maturity of its NZ mines.
10
0
Revenues
We’ve already touched on this subject above, now it’s time to focus more on quarterly revenues
and how profits are shaping up for 2013.
This is the second acid test for OGC, as what
we’re looking for here is a company that can
generate enough profit to build the treasury
required to pay off that debt maturity
payment in late December. We see in the
main earnings overview chart here how
things have been. Now that Didipio is online
and more gold is being produced, we can
expect revenues to stay above $100m/qtr for
the rest of the year even after taking into
account the drop in gold and our stress test
environment. Costs are more difficult to
forecast, especially as Didipio is offering its
first set of commercial data at the end of this
quarter, is still a fresh new mine and is still
ramping towards its full production capacity,
but with that copper credit there’s no reason
to expect a blowout here
This leaves operating earnings and net
earnings looking like this, with the same light
blue bars below showing operating earnings
as in the above chart, then net post-tax in
dark red. This is a company that will be able
to churn out $15m to $25m operating profits
in the quarters to come, even with gold at
$1,400/oz. Meanwhile, the net for the next three quarters is calculated at around $29m.
Balance sheet and the debt question
We arrive at the main event, the place where any company’s true value is shown to the world.
What we’ve seen above is generally good news, as OGC the company is expected to be cash
flow positive and generate modest net profits in the next three quarters, even at today’s new
lower gold prices. However, it’s not all good news for OGC and its shareholders (count me in).
Here’s the development of assets at OGC (going back seven years, begad!) and what we see is
that apart from that mid-2011 moment when the company had raised cash in order to finance
the building of Didipio, it’s always been a little poor on the liquid assets compared to its fixed
assets (i.e. mining property) value. What’s more, this is set to continue.
6
01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3 tse31q4
$m
G&A
depr&amort
COGS
source: OGC filings/IKN ests
OGC.to: Quarterly Earnings overview
140
120
100
80
60
40
20
0
-20
90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3 tse31q4
source: company filings/IKN ests
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revenues
COGS
Op. Earnings
OGC.to: Op. Earnings vs Net Earnings per qtr
40
35
30
25
20
15
10
5
0
-5
01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3 tse31q4
source: company filings/IKN ests
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Op. Earnings Net

OGC.to: Assets Breakdown per qtr
1100
1000
900
800
700
600
500
400
300
200
100
0
7
70q2 70q3 70q4 80q1 80q2 80q3 80q4 90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3 tse31q4
source: company filings/IKN ests
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fixed
other current
cash
By isolating the current assets situation in this next chart, we see a company that reported
OGC: Current Assets
260
240
220
200
180
160
140
120
100
80
60
40
20
0
01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3 tse31q4
$m
other current
cash
source: company data/IKN ests
a cash/eqs treasury of $27.4m as at March 31st 2013, down nearly $70m from the cash position
reported at end 2012. That’s a big drop that was expected and largely due to the end of the
construction period for Didipio (though the Macraes pit wall slide didn’t help the cause, we’d
imagine). On the other hand, inventories were swollen by the metal it had produced but not yet
sold from Didipio which kept the total current assets at a reasonable $161.8m and we can
expect OGC to turn perhaps $20m of that metal into cash over the next one or two quarters
(i.e. the gold and copper seen in line items 2, 3 and 4 here).
However, the problem with OGC less about its current assets and more about its current
liabilities. That’s a number which stood at
$192m as at March 31st and although quit e OGC.to: Debt Breakdown per qtr
550
bit of that is either run-of-company stuff 500
that’s not a particular problem or pension 450 400
obligations that are a rolling liability and not
350
going to go away ever, as noted above it 300
also contains the $113m in convertible debt 250
that matures on December 22nd this year and 200
150
that we need to assume gets paid off. 100
50
0
Here’s some very simple math, folks (my
favourite kind):
Cash treasury March 31st 2013: $27.4m
70q2 70q3 70q4 80q1 80q2 80q3 80q4 90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3 tse31q4
source: company filings/IKN ests
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LT debt
current debt

Net earnings potential for next three quarters under our stress test model: Around $27m
Liquidation of held inventory: To be generous, $30m in extra cash
Total: $84.4m
Cash needed to pay off convertible debt: $117m
Shortfall on debt repayment: Around $33m
Now let’s be clear: Our model is but a ballpark model and in it we’re assuming less than
optimum criteria such as production figures, costs etc. However, we’re not being mightily
pessimistic either and we’re assuming things go more or less along the lines of company
guidance and previously indicated corporate performance. We’re also taking a few larger
assumptions about the next quarter at Didipio, because start-ups are very rarely smooth things
and extra expenses can be booked in different ways, concentrate left unsold, all sorts of
potential issues in the near-term there, no matter how promising the mine might be over the
longer term. However, under our stress test OGC comes up wanting on that final repayment
figure and will either have to raise more capital in some manner, or face a nasty cash crunch at
the wrong time. And also, if a $100/oz fluctuation to the gold price changes annual gross
revenues by $30m (assuming sales of 300,000 ounces),a rebounded gold price of $1,500/oz
makes financial life a whole lot easier at OGC, but the flipside is also true; gold down at a
U$1,300/oz average for 2013 (admit it, by no means impossible) will wipe out all profit at the
company.
However, all is most definitely not lost regarding our calculated cash shortfall at the end of the
year. OGC is a good corporate citizen and it’s also a company that’s successfully navigated its
way through the last few years with plenty of debt on board, so the chances of being able to
refi at least part of that debt, perhaps via a bank credit line, perhaps another round of
convertibles, perhaps even an equity raise, is somewhere between high and very high. In our
balance sheet model we do just that and assume OGC takes on around $65m in new long-term
liabilities during 4q13, which allows it to pay
off the maturing convertibles, half treasury OGC.to: Working Capital per qtr
200
half new debt, and kick the liability off into the
160
future. We’re assuming that gold remains
120
steady enough at-or-around $1,400/oz and
80
doesn’t start scaring off the bankers with wild
40
fluctuations or sharp downspikes (and we also
0
assume the financiers insist on the type of put
-40
option downside protection OGC currently hold
-80
on part of its production, set at $1,400/oz) but
assuming those, OGC is a good candidate for -120
a refi that will see it past any cash crunch
moment. That would do this to our working
cap forecast model, and suddenly with its
current debt paid off and some of the liability booted forward, OGC would boast a positive
working cap (without any projects to build) for the first time in a long time.
Our penultimate chart today is shares out,
because even though we’re not expecting
OGC to raise by selling equities, it wouldn’t
be a total surprise. It might be a nasty
surprise at the current dilutive levels, but is
we assume things stay the way they are
the combination of a steady share count
and a uptick in net asset value (operational
profits used to pay off debt does that to
your company) means that book value per
share would move up:
8
60q4 70q1 70q2 70q3 70q4 80q1 80q2 80q3 80q4 90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3 tse31q4
source company filings/IKN ests
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OGC.to: Shares Out
350
300
250
200
150
100
50
0
70q2 70q3 70q4 80q1 80q2 80q3 80q4 90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3 tse31q4
source: company filings/IKN ests
serahs
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And this below is the final chart of this overlong piece on OceanaGold, which compares book
value per share (red line) to the way in which the share price has performed. Up until very
recently, OGC has boasted a positive BV/share ratio that typically fluctuated between 1.2X and
1.5X. However, the gold price downturn and the resulting balance sheet pressure on the stock
has seen that ratio turn negative, and as at this moment we sit at an IKN calculated 0.82X. I
consider this to be a very clear indicator of what we could expect from OGC’s share price, as
long as the company gets past its December debt payback deadline in good shape. A return to
even the low end of that previous ratio, of 1.2X, to the type of BV we’d have in OGC by then
would see the company’s share price return comfortably to $3, and that represents a 70%
upside from Friday’s closing price in Canada.
OGC: Book value per share vs PPS end qtr
4
3.5
3
2.5
2
1.5
1
9
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 won tse31q3 tse31q4
pps at qtr end
bv/share
source: company filings, IKN calcs
Conclusion
OceanaGold (OGC.to) (OGC.ax) (OGC.nz) is today, for me, a hold. It’s not a share price without
risk, because with gold at-or-around $1,400/oz we’re at the company’s comfort limit as regards
earnings potential and what it needs to show to the market. If gold drops below $1,300/oz I
think I’d reach my own comfort limit too, dump my shares and take the subsequent loss,
because that’s the type of gold price that would get people asking serious questions about the
company’s liquidity and its potential to be crushed by its debt obligations at the in a little over
six months from now. On the other hand, with the gold price leverage point where it is, any
rally in the price of gold would alleviate worries and we can expect OGC would rally hard and
fast, so it’s a fair option for you fliptraders out there, looking for beta to GLD.
All that means it’s a company I’d rather not trade for the moment. I’m happy enough about
holding through the shares already on board, but my inner whuss doesn’t want to add risk here
(preferring more defensive plays such as BTO.to or RIO.to as personal taste). However, there is
a moment when I would happily add to my OGC and that’s on news that the company has put
together a new financing package of some shape or sort that guarantees those liabilities are
paid. Under such circumstances (assuming gold at $1,400 or above) OGC would be a lock to
make it to the promised land of 2014, over its financial hump and ready to start churning out
operational profits, pay down the debt, strengthen its balance sheet. Any corporate financing
deal done between now and November under reasonable business terms would be a clear
positive for this gold mining stock and would be a buying opportunity, especially if the share
price were still languishing where it is, under $2 a pop.
The bottom line to today’s look at OGC is that the company passes its stress test, but not with
the flying colours it would need to make it into a buy at today’s prices. There is risk, not only of
the company underperforming on its operations but also financially if gold drops significantly
more dollars from its price. If that were to happen I’d be a seller of OGC, but on the other
hand, there’s every reason to like, to really like this stock in the future as long as it gets past
end 2013 in one piece. OceanaGold today is a hold.

Stocks to Follow
Of the 12 open positions on our ‘Stocks to Follow’ list, seven went up and five went down last
week, a positive result that gets better when we note that the Top pick stocks were two of
those seven gainers. It wasn’t a massive week but it was better than receiving yet another
beating, so I’ll take it all happily enough. The top winner by quite some way was Focus
Ventures (FCV.v up 77.8%) on the news that brought your author’s decision to add to the small
position (more on that below). The other 10% gainer was Plata Latina (PLA.v up 14.3%).
Meanwhile, the biggest percentage losers were Duran Ventures (DRV.v down 22.2%) and AQM
Copper (AQM.v down 12.5%), but the percentage damage looks worse than the real reality of
trading in those two.
There are currently 12 stocks on the open list, three less than our self-imposed maximum.
Three of the positions are in the green, nine are in the red.
Company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
Top Picks
Rio Alto Mining RIO.to hold C$2.30 07-apr-11 C$2.94 27.8% $6.29 tgt, added Apr13
B2Gold BTO.to buy C$3.07 28-nov-12 C$2.28 -25.7% $5.70 tgt added Apr '13
Recommends
Minera IRL IRL.to spec buy C$0.73 22-jul-12 C$0.27 -63.0% $1.56 tg, added, new avg
OceanaGold OGC.to Spec buy C$3.03 16-sep-12 C$1.76 -41.9% $5.34 tgt at $1.6k gold
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$1.06 -7.8% solid biz model, LT hold
IMPACT Silver IPT.v spec buy C$1.14 13-jan-13 C$0.56 -50.9% $1.85 tgt Ag spec play
Tahoe Resources TAHO selling U$18.62 08-apr-13 U$14.62 21.5% taking profit
Gold Res Corp GORO short U$10.00 03-may-13 U$8.72 12.8% tgt $7.50
Duran Ventures DRV.v spec buy C$0.045 10-may-13 C$0.035 -22.2% new position, ST trade
Smaller/Riskier
AQM Copper AQM.v hold C$0.31 16-oct-11 C$0.035 -88.7% 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
Plata Latina PLA.v selling C$0.79 10-apr-12 C$0.16 -79.7% trying to sell
Closed in 2013 closed close price
USA Graphite USGT feb'13 U$0.93 08-jan-13 U$0.17 81.7% short 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
Aurcana Corp AUN.v apr'13 C$1.07 11-nov-12 C$0.55 -48.6% closed on poor YE results
Gold Res Corp GORO apr'13 U$14.11 25-jan-13 U$9.38 33.5% short tgt made/trade closed
Marlin Gold MLN.v apr'13 C$0.075 10-feb-13 C$0.065 -13.3% closing this week (def)
Bear Creek BCM.v may'13 C$2.58 01-apr-13 C$2.40 -7.0% near-term, time ran out
Lupaka Gold LPK.to may'13 C$1.12 23-oct-11 C$0.32 -71.4% towel thrown in
2009, 2010, 2011 and 2012 closed positions in appendices below
Now for some notes on a selection of the above stocks.
Tahoe Resources (TAHO): Covering short, taking profit. This might not turn out to be
the right move, as we haven’t as yet seen the type of spike down drop from TAHO due to local
pressures or problems, but the reasoning here is that 1) I’m expecting the market in general to
pick up in the next couple of weeks and therefore 2) I’d like to be a little net longer on
exposure. By covering the TAHO short, I get to free up capital and stick a little profit into the
port at the same time so it’s a way that allows me to be a little more flexible with the rest of the
port. By covering, it’s also easy to go back short TAHO if required by circumstances (a pretty
way of saying that I might be calling this market badly and gold sinks rather than rises).
Rightly or wrongly THO is viewed by the market at the “quality” end of the juniors scale. I think
10

wrongly because of its deep flaws in political risk, but there’s never been any doubt about the
quality of the deposit or its potential profitability if it ever gets up and fully running. Therefore
holding this stock short while also expecting
the market to rally at the “quality” junior end
first makes no sense unless we get the type
of political risk flashpoint event that sinks the
individual stock. For a while last month it
looked as though the disturbances in and
around Escobal were going to destabilize the
project there and then, but things have gone
much quieter now and the company seems
to have ridden out the worst of the storm.
In the end the decision to sell here isn’t
much more than an educated guess, but it is
one that means my port will have more
money to play with afterwards. I’ll take that
and if TAHO does end up sinking without trace in a few days/weeks time, I’ll kick myself hard.
B2Gold (BTO.to): The stock rose a little inside of natural rebound ranges and without really
threatening to break out higher, with both price and volume action positive rather than
fabulous. Meanwhile (and by way of stop-press, the link arriving Monday) reader DC kindly send
in this link to a BMO analysis on BTO (1) dated May 26th, a site visit report that updates
information and is well worth your time. The house has a reiterated $3.50 target and buy rating
on the stock.
Focus Ventures (FCV.v): Subject of our Flash update of Tuesday morning (see appendix 1)
and biggest percentage winner of the week by far, FCV rebounded well on the news of the deal
with Stonegate for the Mantaro phosphate project in central Peru. Before getting to what I
want to add to the information presented in the Flash, three short points on the week’s action
in the stock.
• Most importantly (for me at least), I did not add to my position in the company. Apart
from the very first trade in FCV on Tuesday morning the price ran too far and too fast
for my blood. I’d be happy to add at 11c, or 12c at a pinch, but 14c and 16c is not my
idea of adding value so as I’m already long, there’s no need here to take any old price.
• I still think FCV will retrace pricewise. Volumes were improved all last week, but they’re
still not massive liquidity and there were signs of waning interest Thursday and Friday.
Without decent volume, any pop in a tiny junior in this market isn’t likely to hold its
ground so I’m still optimistic that I’ll get my price.
• You note that due to my non-addition, FCV remains in the ‘smaller/riskier’ category
above. That will change if/when I add to my position, until then status quo.
Now for the other thing I wanted to say. To be honest, I think the trade reasoning is fairly laid
out in the flash update, so if you need a reminder have a look below, but I want to reiterate
loudly and clearly that there’s no reason at all to chase this price and buy in immediately. Some
more bullets to make my opinion clear.
• For one thing, FCV is a lightly traded stock. If the volume drops back the chances of
getting in more cheaply than Friday’s 16c close are high.
• This phosphate angle to the stock is interesting and potentially valuable, but FCV is too
small on its own to make a go of exploration and add value without outside help. That
means that until it gets some sort of third-party or JV or spin-out deal done, the
“Agrifos” part of FCV isn’t going to add anything bar potential speculative value. In this
crappy market that adds up to a lot of doubts and questions that need answering
11

before real value is added here.
• The flagship at FCV is still the Reventón silver project in Mexico. If that returns
eyecatching drill results FCV could rally higher, but I’m already bought in for that
eventuality.
• This market is crappy crappy crappy and only the best and most exciting things at the
tinycap end are making any significant moves. I like the deal done here, i liked it
enough to call “add on a sub-$5m stock last week in fact, but the touchstone today is
value. I want real value as an addition point, nothing else will do and it doesn’t matter
how good the brains trust of the company involved is.
FCV is cheap today, but to add I want cheaper. End of story.
Minera IRL (IRL.to): The damage to IRL was continued last week, as even though it rallied
for a while there were enough sellers (London,
then Canada) to keep the lid firmly down. The
problem is this damned financing deal in
Argentina for the Don Nicolas mine, with every
week that passes with non-news a drag on the
share price. There must come a time when
IRL has to start making tough decisions about
whether or not to put Don Nicolas on ice and
more forward only with its start project,
Ollachea.
IRL still has the potential to be a Top Pick
here at the Weekly, but it needs to get its
ducks in line on the corporate financial level
before that can happen.
Rio Alto Mining (RIO.to): A little of the previous week’s damage was seen repaired, but
it still wasn’t much of a week for our Top Pick stock as it couldn’t hold onto its early week climb,
nor stay with a 3-handle for longer than a day and a half. RIO looked laggardly against peers
and that’s not so very good, but one week’s trading isn’t going to change my opinion of these
rock solid fundies. RIO holds its AGM in Lima on Friday and I may even gatecrash the party.
The Copper Basket
After twenty-one weeks of 2013 The Copper Basket is showing a 23.13% loss to level stakes.
12

company ticker price 1/1/13 Shares out Market Cap current pps gain/loss%
1 NGEx Resources NGQ.to 3.40 168.63 379.42 2.25 -33.8%
2 Augusta Res AZC.to 2.43 144.1 357.37 2.48 2.1%
3 Lumina Copper LCC.v 9.43 43.46 303.35 6.98 -26.0%
4 Copper Fox CUU.v 0.83 399.61 263.74 0.66 -20.5%
5 Nevada Copper NCU.to 3.50 80.5 185.96 2.31 -34.0%
6 Hot Chili Ltd HCH.ax 0.72 286.78 134.79 0.47 -34.7%
7 Reservoir Min. RMC.v 2.41 41.46 109.87 2.65 10.0%
8 NovaCopper NCQ.to 1.80 51.89 97.55 1.88 4.4%
9 Western Copper WRN.to 1.39 93.78 62.83 0.67 -51.8%
10 Panoro Minerals PML.v 0.62 176.25 51.11 0.29 -53.2%
11 Curis Resources CUV.to 0.70 56.31 37.73 0.67 -4.3%
12 Candente Copper DNT.to 0.375 121.93 30.48 0.25 -33.3%
13 Yellowhead Min. YMI.to 0.59 60.97 25.00 0.41 -30.5%
14 Oracle Mining OMN.to 0.80 49.03 22.06 0.45 -43.8%
15 Strait Minerals SRD.v 0.08 56.86 3.13 0.055 -31.3%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg -23.13%
The copper basket had a good week on the raw count, with no fewer than ten of the stocks
making gains (not listing them all), one unchanged (OMN.to) and then just four losers
(HCH.ax, PML.v, DNT.to, SRD.v).
Copper Basket 2013 average, weekly
However, because most of those gains
16%
were small (barring NGEx Resources 12%
(NGQ.to up 10.3%) and the four 8%
downers’ percentage drops were typically 4%
0%
greater, led by Candente Copper (DNT.to
-4%
down 16.7%), the overall basket average
-8%
manged to lose a couple of tenths -12%
instead of putting in any improvement. -16%
-20%
-24%
This week we’ll do inventories before
prices. World copper stocks at the main
trade warehouses dropped last week by
25,677mt, or 2.9%, to stand at
871,440mt which is the lowest level since the end of March and another indication that the
stocks situation topped out in April. And yet again, it was a drop in the stocks held in Shanghai
Futures Exchange warehouses
that did the damage, as they
dropped a full 7.2% week over
week to stand at 176,624mt.
Comex stocks also had a large
percentage drop (from a lower
base), down 4.2% to 73,641mt.
Meanwhile even LME joined in this
time and dropped 1.4% to
621,175mt, while LME cancelled
warrants stayed high and set
another new record this week,
with 35.8% of stocks due to leave
warehouses, according to the LME
system, at least. Whether that
quantity in fact sees the exit doors will depend on how much the system continues to be
gamed.
13
ht6naj ht31 ht02 ht72 r3bef ht01 ht71 ht42 dr3ram ht01 ht71 ht42 ts13 ht7rpa ht41 ts12 ht82 t5yam ht21 ht91 ht62
source: IKN calcs, TSX data
31/1/1
morf
egnahc
%
Cancelled Warrants at LME, IKN157 to date
40%
35%
30%
25%
20%
15%
10%
5%
0%
751NKI 951NKI 161NKI 361NKI 561NKI 761NKI 961NKI 171NKI 371NKI 571NKI 771NKI 971NKI 181NKI 381NKI 581NKI 781NKI 981NKI 191NKI 391NKI 591NKI 791NKI 991NKI 102NKI 302NKI 502NKI 702NKI 902NKI 112NKI
source: Cochilco, LME
rof
yrotnevni
EML
%
latot
yreviled
resu-dne

The main interest in copper last week was in the price action of the metal, as the first days of
the week showed all the signs of a decent rally that was duly crimped when Chinese macro
data hit late Wednesday (Americas time) that showed a drop in factory activity growth big
enough to worry the market. As a result, copper finished basically unchanged on the week and
left bulls with a what-might-have-been feeling as, for just one example, big copper name
Antofagasta had been up by as much as 10% on the week before the China news came and
crimped the weekly gains to around 3.5%. Meanwhile the macro forcasters for the sector still
cna’t reach a consensus, so if you want your forecasts bullish (e.g. FCX’s Grasberg (2) woes to
crimp supply and raise prices) or bearish (e.g. Deutsche Bank’s call for near-term $2.90/lb Cu
reiterated Friday) all you have to do is search around for a little while and you’re sure to find an
opinion that backs your own and gets you
nodding your head. For what it’s worth, right
now I favour a continuation of the stifled
rally of early last week, as the warehosue
data from Shanghai clearly indicates
drawdowns in the less-rigged parts of the
copper market and a main consumer that’s
not so worried about factory activity
snapshot numbers when it comes to the
decision of whether or not to buy copper.
The market at $3.30/lb looks healthy and
active, which begins to put a base in the
price. However, it’s far less certain that any
10c/lb or 20c/lb move in copper metals is
going to directly affect our focus here, junior
exploreco names. I think not, so will refrain
from joining in the copper game via these
type of companies for the moment...the
single exception being Reservoir Minerals
(RMC.v) if, repeat IF it shows a bargain
pruce entry point. Today we’re still handily
over $2.50 share price in that one, which isn’t my idea of strong value. I can wait for RMC at
the right price and I can certainly wait for the rest of the copper space to show real direction
before buying/adding to anything.
Now for updates on some of the basket stocks:
Candente Copper (DNT.to): If last week’s share price action in DNT, which featured ever
lower prices on slightly raised volumes
(though nothing enormous, averaging
around the 100k mark) indicate that the
market is finally waking up to the fact that
this project is going nowhere fast, then all I
can say is that it’s about time. As for
developments at Cañaris, the blog post
today Monday (3) which told how the last
of the non-anti-mining locals in the region
have abandoned the round table talks due
to frustrations and lack of progress is all
you really need to know.
NGEx Resources (NGQ.to): The basket’s best mover traded well all week but especially
Friday, thanks mainly to a new NR (4) midday Thursday with results from its Filo de Sol target
on the Argentina side of its concession area border. News was that the drilling program had
14

been difficult and drill holes had been lost left, right and centre due to tough ground conditions,
but in one place at least the company had seen very encouraging mineralization before losing
the hole, with hole 8 returning 38.1m of
1.23% copper (+ 0.21 g/t Au kicker)
when the hole was lost. That’s really good
grading stuff of course, so NGQ must be
doubly frustrated that the conditions didn’t
let the drillers give them more core. As
we’re now late May and the Southern
Hemisphere winter is closing in, the high
country on the Argentina/Chile border
where NGQ’s projects are located
becomes extremely difficult (to the point
of mortally dangerous) for exploration
programs and we’d expect things to slow
down until September at least, when
spring is sprung.
We repeat: The reason to like NGQ is not the Argentina targets, which clearly have great
geological and exploration potential but are on the wrong side of the line in political terms to be
of interest at this point. That NGQ does not agree with this view is hardly a surprise, but the
good news here is that even if we value anything NGQ Arg at zero, the big Los Helados target
on the Chile side of the border is more than enough to justify its share price and market cap
today.
Reservoir Minerals (RMC.v): If the moves Thursday in RMC are anything to go by, it looks
as though I’m going to have to be patient for that value entry point I’m fishing for here. On the
back of the China data RMC sold off early doors with the rest of the sector, but at just over
$2.50 buyers turned up and took anything offered. By the time Friday evening came around,
RMC was back at $2.65 and it was as if nothing had happened.
The Lottery Ticket Basket
After 21 weeks of 2013 The Lottery Ticket Basket is showing a 35.08% loss to level stakes.
15

company ticker price 1/1/13 Shares out Market Cap current pps gain/loss%
1 Eagle Star Min. EGE.v 0.125 69.48 20.15 0.290 132.0%
2 Marlin Gold MLN.v 0.10 192.39 11.54 0.060 -40.0%
3 Fancamp Expl. FNC.v 0.125 118.41 8.88 0.075 -40.0%
4 Bellhaven BHV.v 0.14 121.16 7.27 0.060 -57.1%
5 Gryphon Gold GGN.to 0.085 194.64 5.84 0.030 -64.7%
6 Glass Earth GEL.v 0.155 104.79 5.76 0.055 -64.5%
7 Tango Gold TGV.v 0.13 45.59 4.56 0.100 -23.1%
8 AQM Copper AQM.v 0.08 105.57 3.69 0.035 -56.3%
9 Copper North COL.v 0.10 58.62 3.22 0.055 -45.0%
10 Inca One Res. IO.v 0.12 34.0 3.06 0.090 -25.0%
11 Darwin Resources DAR.v 0.20 26.16 3.01 0.115 -42.5%
12 Rio Cristal RCZ.v 0.025 149.26 2.24 0.015 -40.0%
13 Cream Minerals CMA.v 0.03 155.34 1.55 0.010 -66.7%
14 Firestone Ventures FV.v 0.045 36.32 1.09 0.030 -33.3%
15 Netco Silver NEI.v 0.025 47.01 0.47 0.010 -60.0%
Portfolio avg -35.08%
There were just three winners amongst our Lottery Ticket Basket components last week (EGE.v,
GEL.v, FNC.v) and the only one of those of much interest was the 18.4% upmove on decent
volume put in by the Brazil phosphate play, Eagle Star. Then two others were unchanged (IO.v,
RCZ.v) which leaves a full eleven stocks as
droppers (not listing them all) with the
25% Lottery Ticket Basket 2013 average, weekly
worst shows seen in Netco Silver (NEI.v
20%
down 50.0%) Cream Minerals (CMA.v down 15%
33.3%), Gryphon Gold (GGN.to down 10%
5%
25.0%) and Firestone Ventures (FV.v down 0%
14.3%). All that damage means another -5%
-10%
5% or so was lopped off the basket
-15%
average and underscores the general failure -20%
-25%
of our 2013 experiment (kind of reminds
-30%
me of how the ill-fated zinc basket turned -35%
out). The only things to rescue here are the
following of the one decent company to
make the list, EGE.v, plus the overall
demonstration of clear disconnect between
the no-hoper type stocks and other better quality (and higher market cap) juniors that are
showing those signs of bottoming out. At least that part of our 2013 roadmap theory is panning
out as expected. Famous last words.
However, there still might be some of you out there who follow names on this list with more
interest than your author and might even be thinking that a wager on a few of the nanocaps
might be a way to play any rebound. If so, then you’d be wise to make sure that your beaten
down name has at least some cash to play with, because the simple act of survival at this end
of the market is going to be something worthy of at least some applause and with the
necessary moolah to pay the bills, those chances drop greatly. Circumstances are always going
to be different from one company to another, but ones that seem to pass muster include this
little list:
• EGE.v (has recently raised and Sheldon Inwentash/Pinetree is now on board)
• MLN.v (the Wexford people are sponsoring this all the way to production)
• TGV.v (the new Swiss money)
• DAR.v (modest treasury today, but strong backers who’ll finance another round or two)
• FNC.v (as long as it can liquidate some of those shares it holds in other companies ok)
• And maybe BHV.v as well (though I’m not sure how long its current pot will last under
16
ht6naj ht31 ht02 ht72 dr3bef ht01 ht71 ht42 dr3ram ht01 ht71 ht42 ts13 ht7rpa ht41 ts12 ht82 t5yam ht21 ht91 ht62
source: IKN Weekly data, TSX
2102/1/1
morf
egnahc
%

its fairly aggressive drilling plans, given the market).
So, feeling lucky punk? If so, at least have the balance sheet on your side because coming up
now is an example of a company that’s running out of cash fast and shouldn’t be touched, even
for high risk spec purposes:
Glass Earth Gold (GEL.v): GEL announced its 1q13 results on Friday post-bell. Yes, that says
quarterlies post bell Friday and the timing lived up to the bad rep for junior NRs because the
numbers were not good. GEL chose to highlight P+L items in its NR (5) that show revenues
from its placer operation of $1.38m and mining costs of $1.63m and when G&A matters were
added the net loss came to $820k. GEL blamed the poor showing on “drop in gold prices and
lower than expected productivity and grade”, which doesn’t sound good at all (especially as
gold prices in 1q13 were higher than today by an average of perhaps $150/oz to $200/oz).
However, the balance sheet is in even worse shape, with negative working capital of just under
$400k as at March 31st and that’s almost certainly in a worse state now. GEL is now running on
fumes and with its share price hammered down to where it is, even if some speculator/sugar
daddy who’s rich and risk-averse enough to want a piece of this company comes along, the
dilution is going to be nasty.
Regional politics
Brazil’s royalty law changes moving to Congress
Last week there were reports, even in English (6) (which was pleasant) updating progress on
Brazil’s mining law reforms that centre on a hiking of royalties. The plan’s main target is the
massive iron ore sector (Vale etc) and is due to raise royalties from that product very
significantly, from 2% of net revenues to 4% of gross revenues. The other change mooted is
that all States are now looking to get a slice of the royalty pie, instead of just the States that
play host to mining operations. The country’s Mining and Energy Minister, Edison Lobao, is now
confident of smooth passage of the bill through Congress, a process that’s slated to start in
June.
The new royalty levels in Brazil have been part of the Dilma Rousseff government plans since
she was campaigning for election, so their passage has been somewhat delayed so far. It will
make Brazil a more expensive place to do mining, but it’s more a case of a country that’s
bringing its levels up to the world benchmark, more than becoming particularly burdensome on
a fiscal level. However, we do need to take into account the high cost of living in Brazil (its main
cities now compare like-for-like to just about anywhere in the industrialized North), which
makes mining more expensive than places like Peru or Mexico.
Peru: Prior Consultancy law update
A little more on the contentious “Prior Consultancy” law in Peru, which seems to be doing more
harm than good. The latest on the subject comes from Peru’s Environment Minister, Manuel
Pulgar Vidal, who dropped more big hints this weekend (7) that only communities with non-
Quechua non-Spanish languages would be considered “indigenous” and therefore given
automatic rights to prior consultancy talks. In the same TV interview he also said that the any
community has the “right to petition” for prior consultancy talks, which sounds like a move to
try and whitewash people into accepting the still unpublished list of those communities given
the right to prior consultancy (and those who are not given), as it says that anyone who isn’t on
the list and wants to be consulted can ask for the talks to take place, but the government can
then refuse that request. The writing is now on the wall regarding this matter and the Humala
government has clearly made the decision to exclude those Quechua speaking communities
from prior consultancy rights, the same people who were told they’d be given the right to talks
on any proposed infrastructure project while Humala was trying to get elected.
Dom Rep: Xstrata nickel project in problems
The Dominican Republic is beginning to get a negative reputation for mining activity. First came
the Pueblo Viejo problems and now we have a report from the United Nations’ Development
17

Program that states the Xstrata (now Glencore I suppose) Nickel Loma Miranda project
expansion’s environmental impact study “does not answer the environmental and social
demands of the country, nor does it address the demands of sustainable development”. The
report finds the nickel project to be unworkable and the EIS lacking in many areas. This
conclusion has been pounced upon by local environmental activists (8), who have pressured the
Danilo Medina government into making a detailed study into a project that they recently green
lighted in public statements and said “was in no danger (of suspension) at all”.
Chile: The Pascua Lama situation (again)
We’ve followed the Pascua Lama snafu fairly closely over the weeks, both here and on the blog.
However, the last few days have seen the issue hit the mainstream headline now that the
Chilean government has slapped a $16.4m fine on Barrick (ABX) and made its prohibition of
construction advancement official until it, quite literally, cleans up its act on site. We don’t need
to cover this one so much, now that real reporters have decided that it’s important and there
are suddenly a plethora of English language articles on the subject, but there are three related
matters I’d like to mention today.
1) As mentioned on the blog Friday, most of this bad news already looked baked into the price
(and later that day I saw other comments agreeing with that call) so this is now less about the
direct effect of Pascua Lama on the ABX share price and more about the optics of the whole
thing. ABX will be keen, very keen in fact, to play down its errors as much as possible and also
has the backstop position of having fired (ok ok, they “decided to retire en masse” if you
prefer) its top management in South America recently, which will give them a legitimate
strategy of telling the world how they’ve made mistakes but they’re putting things right.
Indeed, the first official ABX comments reported in Chile’s press (9) were along those lines and
interesting as a stand-alone, with Eduardo Flores Zelaya, the new president of Barrick South
America and Senior VP for the Pascua Lama project saying (translated), “We are deeply sorry
that Pascua-Lama has suffered construction problems and we will make our best effort to
rectify its path and comply with the stipulated conditions of the approved project”, which is the
first time I’ve seen anything approaching humility or mea culpa coming from official company
people.
2) As for the errors committed, it’s worth looking a little more closely at the eight billion Chilean
peso (~U$16.4m) fine its separate parts because it gives a better idea to the real problems at
the project. There were five infractions reported by the Chilean enviro people who slapped the
fine on ABX, but the main one was for five billion pesos and was the only one considered
“gravísima” (literally “very grave”, or “very serious”). This fine was levied because ABX had not
constructed the necessary water management system that was stipulated in the project
approval document. This system is to manage water used directly at the mine and also to
manage around the site (to make sure it wasn’t contaminated by mine-used water). According
to the Environmental Permit approved by the Chilean government and received by ABX, this
system had to be in place and working before any excavation work could take place. As ABX
decided to ignore this stipulation, it’s fair to say that it has brought a lot of the damage onto
itself. We can only speculate as to why ABX decided to ignore this clause of its EIS permit, but
reasons that include general company arrogance and potential cost savings would probably be
in there somewhere.
3) Third and last, as this decent AP story (English language) points out (10) ABX is not out of
the woods with locals around the project yet, not by a long way. Opposition to the project
remains and has grown stronger due to Chile’s government-level decision to fine ABX and
freeze development (as well as the ensuing journalistic coverage, of course), so the
David/Goliath angle is there for examination and may become a meaningful influence on the
final company decision to push forward on Pascua Lama or put it on ice for a longer period than
currently imagined (best industry guesses are now an mine that re-starts construction in early
2014 and is up and running by mid-2015). Estimates are that ABX has ploughed around $5Bn of
the $8.5Bn capex cost into Pascua Lama so far (which assumes no further cost overruns,
chances of those are now high). In other words, if ABX decides to shelve Pascua Lama for
18

whatever reason (they could point to lower gold prices, perhaps?) it would in theory at least
suddenly have $3.5Bn freed up to go and play somewhere else. As it happens, I think that ABX
will be keen to press on and build its mine but I’m not quite as 100% sure about that as I was
even late last week, on further consideration. I’d call it an 80% or 90% probability that ABX
continues with the project, not 100% now.
There are now two important women in Peter Munk’s (professional) life. One is Michelle
Bachelet, hot favourite for the Presidential election in Chile later this year. As Pascua Lama is
certain to be a topic of debate as the campaign hots up ABX will be very interested to learn
what Bachelet thinks of the project. The other women is Cristina Fernandez de Kirchner, so has
so far been a staunch supporter of the Pascua Lama project on the Argentina side. That’s likely
to continue but maybe it’s not as certain as it used to be. Read the next segment for more on
that.
Argentina: Barrick (ABX) gives South Americans another reason to hate them
An interesting report this weekend in Argentine press (11) which reports that a certain Rubén
Bufano was arrested last week for the kidnapping, disappearance and subsequent murder in
1976 of the (then famous Argentine) author Haroldo Conti during the early days of the military
dictatorship and Dirty War in the country during the 70s period. Bufano was at the time a
member of the nation’s military.
The interesting part for us is that at the time of his arrest last week, Bufano was employed by
Barrick (ABX) as a security officer at its Veladero mine in San Juan province and is said to be a
main part in a quasi-private police force (officially part of the company’s private security force)
used by ABX to keep track of anti-mining environmentalists opposed to ABX’s activities in the
country, with still unofficial word taking of phone-tapping, people following and anonymous
threat strategies having been used by Bufano and his team in recent months.
It’s uncertain how far this news will travel as yet, but it’s one to keep an close eye on because
up until now, the Cristina Fernandez de Kirchner government has always been supportive of
ABX and its operations, including giving Pascua Lama (Argentina side) support and approval in
the last few difficult weeks that the project has seen in Chile. However, if there’s one subject
that CFK is hot about, it’s Dirty War crimes, the fate of the disappeared and the bringing to
justice of perps from that period (note how ex-Prez Videla has recently died while serving his
time in a common jail, instead of the house arrest luxury his enjoyed for decades). Therefore
this news has the potential to cause political harm to ABX in Argentina and at just the wrong
time, too. Also, it once again points the finger at the arrogance and downright strategic
stupidity of the people who had been running ABX South America until very recently (the top
echelon has now been fired and replaced), which calls into question the corporate culture at the
company.
Mexico: Esperanza Silver (EPZ.v) facing headwinds
Last week the Senator for the opposition PRD party in Mexico made an official request (12) to
the country’s Environment Secretary (and member of Enrique Peña Nieto’s inner circle), Juan
José Guerra Abud, that he deny the permit for
Esperanza Silver’s (EPZ.v) Cerro Jumil project in
Morelos, Mexico. This is a statutory congressional
move that requires an official reply from the Enviro
Sec and is the latest chapter of growing opposition
to the project. Those with a memory will recall that
EPZ was on your author’s shortlist of potential
investments for a while, thanks to Cerro Jumil and
its small but good economics. Since then EPZ has
decided to dilute itself by taking on a bunch of
other projects from Pan American Silver (PAA.to)
(PAAS) and has seen what looked like a
straightforward-ish permitting track for Cerro Jumil
19

get more difficult. The fact that we haven’t talked EPZ on these pages for a while is significant
because yes indeed, it does mean that I’ve gone off the idea of using this stock as a vehicle for
my cash. However, I will take one positive from this episode, which is that I’m happy that I
don’t just wade straight into things that I like the look of, preferring these days to cite them on
a shortlist and take a closer look before committing. That price chart is why.
Peru’s GDP, stock market and thoughts on its current economic situation
As longtime readers may recall, I keep an eye on the performance of the Lima stock market
because it’s a way of taking the pulse of both Emerging Markets and markets exposed to
mining companies (not just because I have an account there). With just under 50% of its main
IGBVL “General” index weighting in mining stocks (13) (top weights are Volcan at 9.88% and
Rio Alto at 6.47%, a whole bevy of mining names then follow as part of the 34 company list)
and then at least 15% more weighting taken by infrastructure and mine supply companies that
rely partly or heavily on mining projects for their business (e.g Ferreycorp, Graña y Montero,
two cement companies, two steelmakers, electricity suppliers etc) it’s a good way of keeping
tabs on both sides of one coin. That’s the prelude and now on with business, here’s how the
IGBVL has been doing over the past three years:
The recent drop has been pronounced and we’re now back to 16,454 points, last seen in
September 2010. Also interesting is how The IGBVL has given up nearly all the gains it
managed to add versus the Canada TSX index over the last three years (below):
I’m trying to keep this piece as concise as possible and it’s impossible to sum up a market’s full
20

dynamics in one paragraph, but to wildly oversimplify and sketch the situation Peru’s stock
market has been hit by three main headwinds. namely 1) the drop in miners (natch), then 2)
clear signs of economic slowdown, with the 1q13 GDP growth at “only” 4.8% (instead of the
regular 6%+ numbers we’ve been getting so used to down this way, driven by infrastructure
and commercial/residential construction, as well as export and import growth) while 3) the
market itself has been going through a prolonged hangover period that comes from the
partytimes of before when valuations and PE ratios were driven up by overexpectations. If the
plateau we saw for a year between mid-2009 and mid-2010 is anything to go by, the IGBVL has
to revisit 14,000 before it will stabilize. That’s if you believe in TA, of course.
Meanwhile, fundamentals watchers will be looking at the April 2013 preliminary GDP number for
signs of resilience in the local economy. The March figure was forecast for around the 5.5% to
6% mark by the local dumbasses in suits (you probably know them by their standard job title,
economists) but in fact came in at a very disappointing 3.1%. When that number hit, apologists
pointed to the fact that Easter this year came in March but last year in April, which they now
say took the edge from the economic performance. Therefore the same dumbasses are now
calling for 7% growth in April and a nice clear sign that March was a mere bump in the road but
personally I’m not so sure, as the atmosphere at ground level is somewhat more austere these
last few weeks.
That of course is just an impression from ground level and has to be taken as anecdotal, but it’s
also one based on watching copper and gold prices drop/production stagnate and an Peru Sol
(PEN) exchange rate that’s suddenly popped from the low $2.50s to the high $2.60s (just after
Christmas the street gave no more than PEN2.48 for one dollar and as I’m paid in USD, that
makes a difference to day-to-day expenses; yesterday I changed some at 2.67).
Peru: Imports, Exports, Trade Balance, 2009 to date
monthly data
5000
4000
3000
2000
1000
0
-1000
21
90naJ raM yaM luJ peS voN 01naJ raM yaM luJ peS voN 11naJ raM yaM luJ peS voN 21naJ raM yaM luJ peS voN 31naJ raM
U$m/month
Trade Balance
Exports
Imports
source: BCRP
All these things add up and now that gold (which averages at around 20% of everything Peru

exports in dollar terms per month, eg $750m of $3.5Bn in March 2013) . Not to mention the big
“Ten Percent Off!” sign that’s just been stuck on copper, which is 25% of all Peruvian exports.
Officially Peru is playing it calm and confident, its institutions having just reiterated their 6.3%
forecast for GDP growth in 2013 and all falling into line with the “March was a mere roadbump”
line. However, there’s more than enough evidence that nerves are getting a little frayed over at
the Ministry of the Economy and Finances (MEF), with exhibit A being FinMin Castillo’s
declarations over the weekend that Peru wasn’t protected from the world economic downturn
and that about 55% of the economy was directly affected by what happens abroad.
Another, more concrete example of the nervousness is that last week, President Ollanta Humala
declared that foreign and domestic investment was officially “In The National Interest”, the type
of statement that usually has more soundbite than substance, but this move was backed up by
new measures that have been rolled out “to avoid economic deceleration” (in the words of this
report in Gestion (14)). They include the setting up of a working group to identify ways in which
industrial development can be improved and several measures that are designed to speed up
paperwork for large infrastructure projects and get money flowing more quickly, such as easier
permitting for Environmental Permits, speedier bureaucracy regarding archeological and cultural
matters (as any mining company in Peru will tell you, the nightmares begin if you find signs of
an ancient settlement on your concession) and the improvement of laws for compulsory
purchases (e.g. not 10km from this office, there’s a project for a badly needed new urban
bridge in Arequipa that’s been stopped in its tracks because one guy refuses to sell his house to
the local government).
This piece on Peru has turned into a ramble and touched on several themes, so it’s time to
wrap it up. The general conclusion is more political than economic and touches again on the
shift to the right we’re seeing in South America and mentioned a couple of issues ago. It’s
strange to look back at all the scare stories propagated in world media about Ollanta Humala in
late 2010 and 2011 when he was on the campaign trail, because back then he was cast as a
Chavez-ally, a left winger, a danger to business, civil society and all the other hype that goes
with the line. That’s because these days he heads a government that’s arguably one of the
most right wing on the continent. With Colombia’s Santos moving from the right to the centre,
Chile’s Piñera in his final year (and his party will lose to Bachelet’s and the Concertacion) and
places such as Paraguay of very little international or economic importance (as long as the
soybeans keep flowing), we’re left with Humala, his government and a country that’s firmly set
in Neoliberal economic practices and (largely) free-market thinking, run less by its Head of
State and more by the traditional ruling families of its capital city. I’m not entirely sure that’s a
good thing because its right wing economic policies clash with provincial preferences (more
social, populist, typically left leaning) and leave those who voted Humala feeling somewhat
betrayed, but prima facie it means Peru cares about its growth and wants to promote
investment from abroad, so overall I consider the country’s way of doing business as a net
positive. It means that the people in charge of Peru care about the macro stats, cares about
maintaining its growth and are taking proactive steps now to attract investment, instead of
doing what we saw in the Alan García government, blythely stating that Peru is armour plated
against world economic downturns and then wondering what the hell hit them. The country is
these days centre-right or even straight plain right wing in all aspects of macro policy (and
some of its supposedly lefty social policy thrusts, too), a direction that’s unlikely to change in
the near or medium term. It’s not a perfect place to do business by any means, but it’s still a
good place and will stay that way; just make sure that you have the local communities on your
side, dear kind junior mining company.
Market Watching
Agnico Eagle (AEM), supplier of junior mining exploration cash
To re-cap on the blog post of Friday (15), here’s what Agnico Eagle (AEM.to) (AEM) has being
doing in the way of strategic investments in junior mining companies this year so far:
22

• March 19th: $12.96m investment in ATAC Resources (ATC.v)
• April 9th: $24m in Sulliden Gold (SUE.to)
• April 23rd: $6.25m in Kootenay Silver (KTN.v)
• May 23rd: $11.15m investment in Probe Mines (PRB.v)
That little lot adds up to a touch over $54m, which isn’t a bad little spending spree. But the
cash amounts invested in each specific play don’t seem to be the real the constricting factor,
because each time AEM has bought into just under 10% of each company (ATC 8.48%, the rest
just a few hundreds under the 10% point) which gives it a foothold in each junior without
having any sort of reporting obligations or rights to directorial control. Here are a few points
arising from the trend we’ve seen from AEM this year:
• As at March 31st, AEM had a cash pile of $232.3m which is down from the $298.1m of
2012 year end (probably due to the ATC.v purchase, a $37m dividend payment to
shareholders and then normal run of company stuff), which means that in theory at
least, AEM has enough cash to make a couple more of these moves if it sees fit.
• We note that AEM has a track record of investing in juniors in this manner. Sometimes
those trades have worked out and other times, less so. For a couple of examples of
failures see this post from April which (16) notes the failures AEM has had in WRY.v
and CBI.v, or for another check the way in which AEM bought $73.8m in shares of
Rubicon (RMX.to) (RBY) in July 2011 at $3.23 a pop, only to dump a little over half of
them for $30.7m in June 2012 for a small loss (AEM took a $6.7m loss to its available-
for-sale securities line item). That decision to reduce exposure to RMX was the right
one, what with RMX.to now at $1.59, though we can assume AEM is kicking itself for
not having dumped the other 10.67m shares it still holds (according to latest filings, at
least).
• Therefore we can say that AEM is out there looking for bargains. We can also say that
it has the cash to do a couple more of these deals if CEO Boyd so decides. We’re clear
that AEM is throwing out very welcome cash lifelines to specific projects which meet its
approval and we can assume there are plenty other cash-strapped juniors out there
who’d love to get a phonecall from AEM. We also tip our hat to the “vote of confidence”
angle that juniors are quick to put forward after AEM comes a-visiting (which was the
exact phrase used by poor misguided SUE.to brokerage analysts in notes to clients (17)
for what it’s worth). However, AEM’s track record of picking winners and avoiding
sinners with its investment cash is patchy at best, so although these deals give the
lucky juniors some asset backbone, they’re not some sort of cast-iron guarantee of
future success.
• Indeed It’s possible to argue with the choices of juniors to fun made by AEM in the last
ten weeks or so. By way of two examples, your author’s personal position regarding
Sulliden (SUE.to) should be clear enough by now (i.e. avoid like the plague for pol risk
reasons), while conversations your author has had with other analysts in the last 72
hours show mixed feeling about all other names (with ATC.v in particular being called a
long shot to become a real mine under current market conditions by three separate
professionals...personally I have no opinion on it, so don’t kill the messenger if you’re
long ATC.v, ok?).
Overall, AEM’s moves here are interesting without being either a) out of place or b) of great
temptation for your author follow the company in to its choice of investments. However, if a
tiny backwater of the junior mining world such as The IKN Weekly has noticed what’s going on
at AEM in 2013, you can bet your mortgage that its Tier 1 gold company peers are watching the
action unfold, too. Herein lies the rub, because if AEM remains the only big cash rich goldie out
there that uses this strategy to buy into newly cheap exploreco juniors with (at the very least)
interesting rocks, it’s a modest positive for the sector but not out of corporate character, either.
But if other big names start making this type of strategic investment, we’re suddenly opening
23

up a whole new avenue of potential cash for the chosen juniors. Perhaps our friends at Barrick
(ABX) have enough on their plate as it is (Pascua Lama to fund/build on time, recent debt
offering closed, potential liquidity problems still there in the medium term if gold doesn’t pick
up) but Newmont (NEM) as at March 31st had $1.38Bn in cash and a total working cap of just
under $3Bn, Goldcorp (GG) had $1.46Bn cash and a working cap position of ~$2.2Bn, even
poor old beaten up Kinross (K.to) (KGC) had $1.42Bn in cash and a working cap of ~$2.2Bn as
at the end of last quarter, which is more than enough to be able to assign $50m of foothold
positions in the style of AEM if the board so chooses.
The bottom line to this section today is that to date the AEM moves are interesting without
being game-changing. However, if another of the majors takes up the baton and emulates the
strategy, we would have another strong bottoming out signal for the sector. There’s enough
agreement amongst industry players that “juniors are cheap”, but the nerves of the market are
still very much on edge, few are willing to commit, people like me myself I have been shying
away from the longer-term investment ideas and searching for flippy-type trades, $10/either
either way in gold on any given trading day sends over-exaggerated ripples through gold-
exposed sectors and stocks, etc etc ad infinitum. But if those controlling real money inside the
mining sector step up and start copying AEM, we’d soon get a floor put in on the prices of
decent-to-good mineral assets. If the same mining executives who are complaining that their
assets are woefully undervalued by the market today (and let’s recall, it’s people like the CEO of
Goldcorp who are saying that gold prices today are in a temporary lull that won’t continue for
long, Google “Jeannes” and “gold price” for all the evidence you need) want to draw a line
under the prices, this is a solution that rests in their own hands which has the potential of
creating a virtuous circle, as more juniors access this new source of funding and have less need
to go the the more usury end of the financial sphere for cash to simply survive.
Conclusion
IKN212 is done, we close with bullet points:
• On reviewing today’s edition pre-send, I’m struck on how much politics and how little
company news is featured. That’s almost certainly connected to do with this market
and my attitude towards it, so the political/macro angle can fill in my time until
something truly interesting turns up in the world of juniors.
• I’m happy about holding OceanaGold (OGC.to) for the time being and its price point
vis-a-vis gold makes it potentially interesting as a leveraged play to the metal right now
(not for me, but if any of you out there are so inclined then I wouldn’t put you off the
idea). However, gold goes too low and I’ll sell the thing for a loss without much thought
because operationally it’s doing fine and the Didipio news is generally good, but OGC is
a corporate financial beast more than a miner.
• Copper still has me scratching my head, but put a gun to my head and I still prefer to
own gold exposure than copper exposure today, particularly in the juniors sphere.
• Being up close and personal to the subject of Peru makes it an easier subject to tackle
in some respects, but it’s also one that can get too subjective if I’m not careful. On re-
reading that article above I’m forced plead slightly guilty to that crime, but after the re-
read (Monday afternoon, two days after writing the bulk of the piece) it didn’t get much
of an edit, either.
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
24

Footnotes, appendices, references, disclaimer
(1) http://research-ca.bmocapitalmarkets.com/documents/689C2A47-E738-433C-AEC6-71A2B1C99782.PDF
(2) http://www.bloomberg.com/news/2013-05-22/mine-tragedy-jogs-memories-of-supply-shortfall-chart-of-the-
day.html?cmpid=yhoo
(3) http://incakolanews.blogspot.com/2013/05/looking-forward-to-reading-how-candente.html
(4) http://finance.yahoo.com/news/ngex-intersects-38-1-metres-160743127.html
(5) http://finance.yahoo.com/news/glass-earth-gold-limited-financial-203000940.html
(6) http://www.miningbusiness.net/content/brazil-congress-debate-royalty-increase
(7) http://gestion.pe/politica/minam-ninguna-empresa-se-exonerara-consulta-previa-2066998
(8) http://www.elnuevoherald.com/2013/05/24/1483697/dominicana-evalua-informe-contra.html
(9) http://www.construhub.cl/titulares/pascua-lama-multa/
(10) http://bigstory.ap.org/article/chiles-indians-take-worlds-largest-gold-miner
(11) http://diariohoy.net/politica/el-asesino-de-haroldo-conti-trabaja-en-la-seguridad-de-la-barrick-gold-10860
(12) http://www.oem.com.mx/elsoldecuernavaca/notas/n2995286.htm
(13) http://www.bvl.com.pe/estadist/IndGral.htm
(14) http://gestion.pe/economia/ollanta-humala-anuncia-medidas-acelerar-economia-peruana-2066973
(15) http://incakolanews.blogspot.com/2013/05/agnico-eagle-aem-aemto-continues-its.html
(16) http://incakolanews.blogspot.com/2013/04/agnico-eagle-aem-aemto-or-when-high.html
(17) http://www.canadianminingjournal.com/news/agnico-eagle-investment-a-vote-of-confidence-in-
sulliden/1002218426/
Appendix 1: Flash update dated Tuesday May 21st
Good morning, trying to get this out before the opening bell Tuesday (and failing by 10 mins or so...sorry)
On the back of this news...
http://finance.yahoo.com/news/focus-stonegate-enter-letter-intent-100000401.html
...from Focus Ventures this morning, I'm going to a few shares to my pile this week a) as long as reasonable liquidity is
seen and b) as long as the price doesn't fly too high. I am in no hurry to buy at the first possible moment on this trade,
be clear.
The deal concerns its phosphates business, and it's a good one. FCV has signed an option to earn into up to 70% of
Stonegate Agricom's Mantaro phosphate deposit in Peru. The terms are reasonable and as Mantaro is close (~30km) to
FCV's own Machay phosphate concession, the synergies make sense. Points:
1) Size matters in phosphates and with this deal, FCV has added serious size to its "Agrifos" book of assets. It now has
4 phosphate concessions, three in Peru and one in Colombia.
2) Stonegate's Mantaro is a very big (one of world's 4 biggest undeveloped properties) but has been a problem on a
social/community level, not least because the Sprott-controlled project (under previous mgmt and under Stonegate) has
never done a good job of relations in a tricky area and paid the price. We like that FCV is taking over, due to its strong
track record of community relations in Peru and its understanding of the country.
3) There's always been talk of a doing a JV deal on FCV's "agrifos" projects (we've heard that "Asia money" is
interested and has been sniffing around for months) so this deal with Stonegate may be the catalyst required. It's
certainly the type of deal that adds critical mass to FCV's phosphate game and will get it noticed. We also understand
that an option being considered by the company is spinning out the "agrifos" side and floating it on the stock market,
potentially the Lima stock market (BVL) first. We underscore that to this point, FCV is getting zero zip nada nothing in
the way of share price credit for its phosphate "division".
4) On that subject, as Stonegate comes with 6 (if my info is correct) brokerage analysts already covering the stock
officially, this deal automatically brings FCV's phosphates to the attention of both them and presumably the wider
market. This is a good thing.
5) FCV has a brand new corporate presentation up on its website dedicated exclusively to its phosphates side, with the
new deal part of the show (they're quick off the mark here, which is also interesting). You can access it on this link...
http://www.focusventuresltd.com/i/pdf/Pres_Web_Phosphate.pdf
25

...and it does a good job in showing its wares and also comparing it to other junior phosphates projects in the Americas,
including Eagle Star (EGE.v) in Brazil, the hotpot junior that we've been following in the Weekly this year.
6) One potential downside is that FCV has 90 days to raise the first $2m to dedicate to the Mantaro project, which may
mean FCV the stock takes a dilutive round of financing. We understand that FCV currently has $1.2m to $1.4m in
treasury, so it's not totally out of cash but it's going to have to finance in some shape or form before the end of FY13,
that's clear.
The bottom line here is that despite the potential for dilution to the share count and my basic fear of adding to an illiquid
position and getting stuck further, at around $4m market cap today, $1m+ in cash and a deal that brings critical mass to
a side of FCV that has been deemed worthless by the market until today has forced my hand a little. I'm going to add a
few shares to my losing position and average down on this news, as long as market conditions for the trade (see above)
are correct. Any eventual addition will also mean that FCV.v moves out of the "smaller/riskier" category of the IKN
Weekly and into the main section of Stocks to Follow.
Best, O
PS: I may make mention of FCV and this deal on the open public blog later today or tomorrow. As yet undecided on
that, though (i prefer not to come over all pumpy on stocks i own on the blog these days)
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
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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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