IKN #217Premium

The IKN Weekly
Week 217, June 30th 2013
Contents
This Week: A state of play overview at U$1,200/oz gold, Last Friday’s rebound, In which your
author again invites you to consider unsubscribing.
Fundamental Analysis: AQM Copper (AQM.v) headsup: Coming back to life.
Stocks to Follow: Overview, Tahoe Resources (TAHO) (THO.to), Gold Resource Corp (GORO),
Bellhaven (BHV.v), Duran Ventures (DRV.v), Plata Latina (PLA.v), OceanaGold (OGC.to)
(OGC.ax), IMPACT Silver (IPT.v), B2Gold (BTO.to) (BTG), Rio Alto (RIO.to) (RIOM), Bear Creek
(BCM.v), Focus Ventures (FCV.v), Lara Exploration (LRA.v).
Copper Basket: Overview, monthly copper market update, Oracle (OMN.to), Curis (CUV.to).
The Lottery Ticket Basket: Overview, Darwin (DAR.v), Tango (TGV.v), Gryphon (GGN.to).
Regional Politics: Regional risk again deferred (I’m having trouble trying to decide what to do
here).
Market Watching: Costs are likely dropping in LatAm mining operations, That other potential
short: MAG Silver (MAG.to) (MVG), Bellhaven (BHV.v) drill results.
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
A state of play overview at U$1,200/oz gold
Did I bottom-tick the market last week by selling positions and adding shorts? Well I certainly
hope so, being net long as I am. But yes, the need to change the make-up of the portfolio has
now changed to reality and as per Wednesday morning’s Flash update (see appendix 1) the
short in TAHO was re-opened too. The ‘Stocks to Follow’ table has thinned out, several
substantial percentage losses (along with one profit) have been taken, cash has been raised,
overall exposure to the upside reduced.
In other news, I found my thoughts drifting away from the trading portfolio and settling more
on the long-term parts of my port last week. It’s not part of the normal scope and brief here at
the Weekly (round here we’re “junior mining companies (mostly) in LatAm”) so it’s seldom
mentioned, but it does get the occasional word and as it’s been on my mind a few words here,
to ring the changes, won’t go amiss. The long-term port gets very little of my attention too, as
it comprises of a few “preferred holding period forever” equities of true Buffett style, PM bullion
and real estate (to be strict the real estate part gets some of my attention, but not due to
considering any sale; it just so happens that the things in that corner of the ledger need a little
minor nannying for their own reasons) plus some cash. All that tends to look after and its
existence doesn’t affect my daily life in the slightest, even if the dollar value rose or fell by
50%. But the reason to mention it today is that last week was the first time since I last bought
physical gold bullion that I was tempted to add to the position. To give that a little more
context, the last time I bought physical gold was also the first time, it happened in late-ish 2005
and I paid U$451/oz (and bought silver at just under $7/oz at the same time too, for what it’s
worth). The purchase was chunky in size to ensure that I wouldn’t go back to the market and
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made with long-term hold in mind. Since then it (and the Ag) has just sat there doing nothing,
an integral part of the financial security that’s much less for my well-being and more for two
kids who are currently enjoying their Sunday morning immensely (a best guess from the sounds
of chatter and laughter filtering through to this office from the house living areas).
But, as mentioned above, last week the temptation to go gold rose. I’m not a gold trader, I
refuse to enter the maelstrom of gold punditry and find it difficult to read most things written
on the subject of pure gold pricer movements at the best of times, charged as they almost
invariably are with biases from politics (mostly right of my stance, occasionally so far to the
right it’s difficult to point that far, but occasionally left of where I roughly stand too) or chock-a-
block with technical analysis that’s invariably excellent in its ability to explain what’s just
happened but...well, you know the rest. Despite this aversion, gold as a trade vehicle (rather
than its mining company derivatives, which of course include the options-on-crack juniors) does
now seem a viable option for the first time in a long time. It’s not a decision I’d make lightly, as
it would entail selling shares in one of the longer-term company holdings and transferring the
exposure to gold. I won’t be in any rush to make a decision but yes, adding gold here for the
first time in eight years, looks like a reasonable option. One thing for sure (and see The Copper
Basket for more) is that I’d rather hold gold than copper right now.
Last Friday’s rebound
I want to believe, but can’t. There’s just too much coincidence that the end of the quarter saw
a pop in the price of gold and a decent (in percentage terms at least) rally in the mining
companies that look to the metals for their price cues. There was also a movement in the
mining stocks on Thursday afternoon against the direction of the metals that might be easy to
accept in other times but goes against all recent trends during this bear market.
There would be plenty of incentive for brokerages and funds to window dress their 2q13
numbers, so the rally in gold was pounced upon and the feeding frenzy quickly took off, but
after taking a step back and considering
the whole quarter, it seems highly unlikely
that a new trend was set in the last day’s
trading.
That call may be wrong (and again, it’s
one where I’d actively hope to be wrong)
but it was easy to ignore the fun and
games on Friday and it will be equally as
easy to stay out of the action during next
week’s holiday restricted trading, too. If,
by the time IKN218 gets written, things do
indeed indicate that Friday June 29th
marked the bottom of the sector and the
tide has turned, then new plans can be drawn up (and now there’s trading cash to play with in
the a/cs, too). But I have to doubt.
In which your author again invites you to consider unsubscribing
It’s been a while since we’ve done this, but as I’m still keen on not wasting anyone’s money or
keeping you around by way of bad habit only, here’s a mail received last week when reader and
long-term supporter LS unsubscribed from the service. Permission was sought and received to
share with a wider audience and the only things missing are the full name and the post script
that LS added, as the message was a little more personal in nature.
Well Mark,
The Right Lovely Edna
aka My Better Half,
Has decreed…
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We’ll proceed
To dig another shaft.
For now the bottomless pit has shifted from Mining Stocks to a Kitchen
Renovation! So energies and cash will be taking a few months off.
My stake in all this gold and silver stuff is a modest diversification component, so
haven’t lost any sleep lately – (I started investing at the height of the Tech Boom –
still here). This too shall pass and when it does Fundamentals will assume even
greater importance – and that’s coming from a TA guy!
Good Lord willing I’ll be back in a few months.
LS in Halifax
LS has always been my kind of subscriber, with clear objectives of what he wanted from the
service and a level-headed attitude towards life (we’ve swapped mails on more than one
occasion). His decision to save the money spent on the Weekly and spend it somewhere else in
his life looks a smart enough one from where I’m standing and sprouting from that, I again ask
you to consider carefully whether being hooked up to a weekly publication that has as its
subject junior mining companies (mostly LatAm) is the right thing for you at the moment. I’m
not trying to scare or shoo anyone away, but once again I am pointing to the clear and
undeniable fact that this sector is a total dog in this present time and you may want to consider
spending your hard-earned cash somewhere else. And yet again, this call applies to The IKN
Weekly and any other publication to which you may subscribe in this sector. In a post on the
blog dated June 21st (1) I had a little rant against the plethora of junior explorecos who were
raising sub-$1m amounts in placements, as the objective of that kind of small money will never
be to further the development of assets and will always be to drag out the life of the company
as a corporate going concern, which roughly translates as paying the directors’ drawings. Here’s
the nub of the argument, excerpted:
“What the junior exploration mining sector needs right now is a bit of good old
fashioned Darwinian natural selection, law of the jungle survival of the fittest
and all that jazz.... These companies need, absolutely need to wither and die
in order for the junior mining industry as a whole to survive and the sooner it
happens, the better.”
All that applies equally to the junior mining newsletter world ladies and gentlemen (and yes, I
very much include this publication in the mix and it will be up to the Darwinian forces to decide
its fate, not me). There are too many newsletters saying too many things who’ve been followed
for too long by too many people who’ve lost too much money and at some point, it’s going to
have to stop. By paying people like me, you’re encouraging more writing with an overall bullish
slant to be written and published, which will in turn hit the right greed buttons in people looking
for a fast buck. In the good times it all works well but these are not the good times and
accountability is due in all strata of the mining sector, from the boards of Tier 1 majors right
down to the parasites such as I who make a living by diverting a tiny tiny fraction of the cash
flowing through the sector into their own savings accounts. I’ve found it amusing to watch the
growing tide of indignity amongst the newsletter brigade and the anger (be it real or faked,
personally I think most is the latter) shown against those horrid nasty junior mining directors
who led the world up the proverbial garden path...but the newsletter writers themselves,
people who have earned good money from client subscriptions and/or company sponsorship
and/or advisory fees, are of course entirely innocent and blameless victims of the mess!
In the same way that the field of juniors must be thinned out in order to bring new health to
the mining sector, the field of “experts” must be hacked down to a core as well. Only time will
tell whether The IKN Weekly is one that stands or falls.
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Fundamental Analysis of Mining Stocks
Today’s section is given over to a headsup on AQM Copper (AQM.v), which may be about to
come back to life and offer a trading opportunity.
As you may have noticed, last week AQM was halted before the open on Friday and stayed
halted with no news appearing all day. Also interesting was the sudden return of some traded
volume last week, with Tuesday seeing 683k shares and Wednesday 650k shares changing
hands, with all bar a few at 3.5c...somebody somewhere suddenly liked AQM as a trade, while
all around was death and gloom. But most interesting is the strong rumour picked up by
your author that AQM has done a deal with Asia money that will be announced pre-
bell Tuesday morning (yes, that’s in bold and underlined because I want you to read it). Just
for once, nobody in Lima seems to be very wise about the deal (which may be because AQM’s
profile in the local market has shrunk to virtually nothing) but your author has learned that AQM
has landed a financial backer that will inject the necessary cash into the structure to be able to
take its Zafranal project, 50/50 owned with Teck to pre-feas and then likely full feasibility stage.
This, if confirmed Tuesday morning, is a very positive development for AQM (this too). As
mentioned on these pages previously, partner Teck earlier this year wanted to move forward
with Zafranal and of course expected AQM to stump up its 50% of the development cash. As
AQM did not (and still does not) have enough cash to pay for its 50%, Teck appears to have
been playing hardball and looking for AQM to wither on the vine so that it can pick up more
(probably 100% eventually) of Zafranal at a deep discount and move it forward alone.
However, with a new financial backer, AQM will be able to hold onto its 505 of Zafranal, pay its
end of the development work and get the project moving forward to an advanced stage, all
while holding onto its 50% ownership.
So that’s the general situation, now for a little background refresher of what AQM has to offer
which we can do with a few numbered points
Here’s the latest corporate presentation from AQM (2) which is dated February 2013 and that
alone gives you an idea of the lack of impetus we’ve seen from the company during 2013. In it
you will see that Zafranal’s latest 43-101 resource is set at around 3.5Bn lbs copper plus gold
credits (NB: AQM is 50% owner) and although overall grade is mediocre at best, there is a
sweet spot of higher-grading material that would suit a quick capex payback starter pit and
there are plenty more exploration targets that could improve the overall tonnages too, including
the Sicera South and Sicera North satellite deposits that all-but didn’t make it into the current
PEA due to Whittle constraints.
As for the economics of Zafranal, the PEA announced in December 2012 is available on SEDAR
(and we considered its at the time on these pages) but some of the main points are:
• A capex bill of $1.5Bn
• A 26.7% pre-tax and 17.4% post-tax IRR using $3/lb copper and $1,274/oz gold (for
what that’s worth, very similar to today’s prices)
• A NPV-8% of $1.3Bn pre-tax and $588m post tax
• A high-grade starter pit area that will run for the first five years and provide capital
payback in less than two years
• Plenty of exploration and expansion potential
• Water sourced from sea,w ith de-salination plant and pipeline
Now of course that’s not a feas or even a pre-feas but a PEA level study that may change
substantially as time goes on. But it’s not that bad and it compares favourably to many other
copper projects. We are the first to agree that just about every project held by a copper junior
is out of favour at the moment and valuations all round the sector are in the dumps, but even
so AQM has been harder hit than most and that’s as much due to its sticky corporate position
and 50/50 deal with Teck than any single fatal flaw at the property.
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With 105.6m shares out, all but 1.2m warrants (those are at 10c) so way out the money that
they don’t matter and around $3m treasury today (IKN estimate), around 2.8c of AQM’s 3.5c
share price is covered by cash. Or put another way, once you strip out the cash, the 50% AQM
holds in Zafranal is currently being valued at less than $750,000 and if you think that’s cheap
for 3.5Bn lbs of copper and nearly a million ounces of gold, you’d be absolutely right.
For a further idea of what AQM might be worth, here’s a little comparative table that puts
together some of the dogs of the copper exploreco sector. It’s never easy to get a true like-for-
like comparative with two companies, let alone four, but after due consideration the companies
presented here at least give some sort of benchmark and show that AQM seems to be severely
undervalued at present, even when stacked up against some of the “most challenged” stocks in
the sector. A couple of notes underneath on each stock.
Valuing the dogs: bottom end of the copper exploreco market
ticker name develop. stage res/erve/ource* mkt cap ($m) cash (est) ($m) cents/lb in situ
PML.v Panoro pre-PEA 3.75 44 15 1.17
WRN.to Western Feas 9.9 51 30 0.52
DNT.to Candente pre feas 7.5 26 4 0.35
AQM.v AQM Copper PEA 1.75 3.7 3 0.21
*Bn Lbs Cu under % ownership (not incl credit metals (Au, Mo, Ag etc))
All these projects have their flaws, some greater than others. Here’s the briefest of words on
each one:
Re. Panoro (PML.v), we choose to value in situ on Cotabamba only, ignoring Antilla
and the other grassroots stage properties on its books. We also recognize that the
current resource size is expected to grow (the most optimistic unofficial noises out of
the company say the resource tonnage and copper count may double), so that ~1.2c/lb
in situ level may be closer to 0.6c or 0.5c if you throw in Antilla. The problems at PML
today are the relatively low grade (it’s around the same as AQM at Zafranal) and that it
doesn’t yet have a 43-101 compliant PEA for the Cotabamba project, which means is
earlier in the development track and we’re more in the dark about potential economics
than the others.
Re. Western (WRN.to), this one is big but it’s also low grade and suffers from a big
capex ticket for its main Casino project ($2.5Bn plus another $400m in sustaining
capital). There have been doubts about whether the capex estimate is too low as well,
as the remote location of the project may make life more difficult than expected.
Re. Candente (DNT.to) the resource size is good and previous pre-feas work indicates
a potentially economic mine, but community relations are nothing short of awful and
there are also continuing doubts about the metallurgy of the Cañariaco deposit, with
impurity problems (esp arsenic) that have not been fully addressed by the company as
yet. However, just the community issue is enough to see this project killed.
Re. AQM (AQM.v) the main immediate problem is that the company has in Teck a 50%
owner that wants 100%, has seen that AQM is low on cash and has been deferring the
development in order to try and get the other 50% owned by AQM at a deep
discounted price (perhaps even shooting for zero). The other main issue is that away
from the best central zone of the deposit, grade is low and there have always been
doubts to its overall economic viability.
In short, these companies might not be the pick of anyone’s bunch right now, but even when
compared with the lowest valuations around, AQM’s current 3.5c share price, which translates
into a 0.21c/Lb in-situ copper price, looks low. Even a company like Candente, which has been
beaten to merry kingdom come in the first two quarters of 2013, doesn’t have a prayer of
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getting its Cañariaco project past the locals who are up in arms and even if it does would still
have to convince the mining crowd that the impurity problems at the project can be overcome
economically, is currently valued 75% higher than AQM.v. And if you asked me which of those
projects was the closest fit, I’d certainly choose Panoro (PML.v) at Cotabamba (roughly same
size, same country, same type of grade) and then even assuming PML gets to double that
resource, it’d still be valued three times higher than AQM.
A trading valuation on AQM for the days ahead
This is obviously a very tough one to call. First and foremost, the rumbles about a deal with
Asia money have yet to be confirmed and then, more importantly, we need to see the shape
and form of the deal. Is it cash for equities? Debt? Drip-drip sponsorship? A one-time buy-in of
a big chunk of shares already outstanding? There are a multitude of factors that can change the
call here, but we can at lest give an outline of what we could expect by considering an AQM
that returns to the level of the other “dog-type” copper junior valuations of the type we see
above. Here’s a chart:
potential revalution of AQM shares
cents/lb Cu in situ AQM PPS (cents) % upside
0.2 3.3 -5.3
0.211 3.5 0.0
0.3 5.0 42.0
0.5 8.3 136.7
0.8 13.3 278.8
1 16.6 373.5
source: IKN ests
In other words, our rough idea that will do to begin with is that AQM could go back to a 0.5c/Lb
in-situ valuation for its 50% of Zafranal given the correct near-term circumstances and
assuming that doesn’t come with too much share dilution (which admittedly may turn out to be
a weak point in the argument) we could see AQM.v the share return to 8c in the near-term.
Or in other words, if the NR hits as expected Tuesday and the market likes what it sees, an
early entry point at something at-or-under 5c may well provide an interesting and lucrative
near-term trade in AQM.v next week.
Please be clear that the devil may well be in the details of any deal that AQM.v has done with
Asian backers and we need to get a
better handle on the terms before
making any sort of call (and it’s also
worth noting the prosaic fact that
AQM will stay halted until those
details are known anyway), but if the
market doesn’t catch on quickly to a
strong upside potential, even if AQM
rises by 50% when taken off its halt
there may be a decent trading gain
to be had here.
Expect a Flash update next week,
with a buy/hold call on AQM.v as
soon as circumstances allow. This
company has been an awful loser for
our list but it looks like it’s coming
back to life. There is now the opportunity for a quick near-term trade that could potentially
bring down our cost average and provide a near-term win that would lessen the losses taken
until now.
6

Stocks to Follow
After cutting away the sales, the three of our ten remaining open positions from this time last
week put in gains (GORO Short, BCM.v, PVG.to) and the other seven lost ground (not naming
them all) but thanks mainly to the Friday rally which looks like window dressing to me but is
welcomed anyway, the week ended in better style and just about all trades were off their lows
(bar the shorts). The best win was in Bear Creek (BCM.v up 23.2%) and the worst loss was in
the recently opened Tahoe Resources short (TAHO short down 13.9%), and notably our two
main positions of Rio Alto and B2Gold only lost two cents apiece over the week...that could
have been a whole lot worse, too.
After the wholesale changes enacted last week we now have 11 open positions on our ‘Stocks
to Follow’ list, four less than our self-imposed maximum. Just one is left in the green.
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$1.95 -15.2% $6.29 tgt, added Apr13
B2Gold BTO.to buy C$3.07 28-nov-12 C$2.24 -27.0% $5.70 tgt added Apr '13
Recommends
Minera IRL IRL.to spec buy C$0.73 22-jul-12 C$0.23 -68.5% $1.56 tg, added, new avg
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.93 -19.1% solid biz model, LT hold
Gold Res Corp GORO short U$9.70 03-may-13 U$8.71 10.3% tgt $7.50 added to short
Bear Creek BCM.v hold C$2.06 30-may-13 C$1.70 -17.5% Cheap at $20 Ag, will wait
Rio Alto Mining RIO.to buy C$2.68 07-jun-13 C$1.95 -27.2% ST trade position, separate
Pretium Res PVG.to buy C$8.20 11-jun-13 C$6.98 -14.9% New position, M&A play
Tahoe Resources TAHO short U$12.42 08-apr-13 U$14.15 -13.9% newly re-short, port hedge
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$0.11 -37.1% revised tgt 25c
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% closed trade
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
Tahoe Resources TAHO may'13 U$18.62 08-apr-13 U$14.70 21.1% took profit on ST short
OceanaGold OGC.to jun'13 C$3.03 16-sep-12 C$1.18 -61.1% sold on gold drop
IMPACT Silver IPT.v jun'13 C$1.14 13-jan-13 C$0.62 -45.6% sold on silver drop
Duran Ventures DRV.v jun'13 C$0.045 10-may-13 C$0.025 -44.4% ST trade never worked
Plata Latina PLA.v jun'13 C$0.79 10-apr-12 C$0.13 -83.5% still trying to sell
Bellhaven BHV.v jun'13 C$0.065 03-jun-13 C$0.12 84.6% closed ST trade
2009, 2010, 2011 and 2012 closed positions in appendices below
Now for some notes on a selection of the above stocks.
Tahoe Resources (TAHO): Short re-opened. As per the Flash update of Wednesday
morning, the previously held short was re-opened. As things turned out, TAHO got a big boost
from the Friday rebound and closed up by 17% (in USA, with 17.8% on Canada THO.to ticker),
but that’s not a worry this time around firstly because of what is written in the intro today (i.e.
I’m having a tough time believing that the last day of a quarter sets a new trend when there
were plenty of ulterior motives to see stocks higher for a day) but mostly because this time
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around the TAHO short is being used more as a hedge to the total portfolio than for its own
specific woes and troubles in Guatemala.
That’s not to say those problems don’t exist any more; they do and they’re going to have to be
overcome by the company at some point else the mine is going to be in big trouble. However,
TAHO and its high market cap to asset ratio is now short in order to counterbalance a bit more
of the other long positions held (and if company specific problems show up this time, the gains
will be considered an added bonus).
As with the GORO short, recently enhanced, this short position will stay in place in order to
steady the overall ship until such time that things improve in the sector as a whole. The bottom
line is that we’re short here as part of the risk management program and if the position loses, it
almost certainly means that we’re gaining more in other places.
Gold Resource Corp (GORO): Added to short. It happened Monday and as a result, please
note the new average price above of $9.70. GORO went on to register a new 52 week low on
Thursday, under $8, before rallying with
the sector rebound Friday. Don’t worry,
we’ll see the South side of 8 again soon
enough.
The potential to add even more to the
short position was mentioned in the Flash
update of Wednesday morning with
“anything above $9 mooted as a decent
entry. As it happens that didn’t show up
(not even during the Friday rebound) so I
stuck with the addition on Monday only
and didn’t add any more. However, I’ll still
be interested in more short at a decent
price in the days to come if the market
were to be so kind.
Bellhaven Copper & Gold (BHV.v): Sold. It went at 11.5c and 12c and after worrying
myself over 10ths of cents I’ve decided to go “screw it” and book it at 12c. A nice little near-
term long-side trade that (for once in 2013) worked out well. We had news from BHV too,
which is discussed in ‘Market Watching’ below because it deserves a little more space.
Duran Ventures (DRV.v): Sold. After some annoying robo-trading of small lots Monday that
stopped real people from playing, I managed to sell the DRV later in the week. Loss taken on a
small near-term trade that didn’t come with a BHV-like happy ending, position closed, moving
on.
DRV did have news out last week too, which was basically a company update that was timed
with the AGM (all resolutions passed). The NR (3) had news of early exploration developments
at a couple of new properties, told us that the Ichuña drill program hadn’t worked out (we
already knew) but significantly, said nothing at all about progress at Minasnioc, the reason we’d
taken a chance on DRV in the first place. In short, the Thursday NR from DRV underscored the
call of closing and taking a loss here.
Plata Latina (PLA.v): Closed position. As a to-be President of the USA once said, “I cannot
tell a lie”. I didn’t manage to sell any of my PLA, what with volume being too wafer thin and
things getting rather silly Wednesday onwards, but I’m going to close the position on the
‘Stocks to Follow’ table and take the theoretical loss at the only price traded last week anyway.
I still plan to leave PLA and will sell out little by little if necessary, but I don’t see any reason to
sweat 5% or 10% either side of the closed price above, as it’s only comparing a horrid loss to a
horrid loss anyway.
8

OceanaGold (OGC.to): Sold. The sale came before Thursday’s NR (4) that announced a re-
tolling of plans for Reefton which include the deferral of a cutback and the shortening of mine
life to 2015 at the pit, all new strategies
aimed at cost reduction at OGC’s most
marginal asset in costs terms. The move
makes sense but it’s not going to tempt me
back into OGC, as my move is in essence
exactly the same as the company’s move,
which is adjusting plans in relation to the
price of gold. If gold goes back up OGC will
come back into consideration as a leveraged
play and, yet again, the best guess this end
is U$1,300/oz Au is the pivot point which
turns OGC into (and out of) a mine of
significant profit potential.
IMPACT Silver (IPT.v): Sold. The sale at 62c came during a ro9llercoaster week for IPT
which saw it trade as low as 56c and a high of 70c (a 25% upmove, Wednesday low to late
Friday high). Traded volumes were higher than the average as well and the takeaway is yet
again that of a company at a critical price point (which is what the fundies indicate, too).
The sign-off line for this failed trade is much the same as that of OGC above: IPT is a stock that
I’d be happy to consider in the future as a trade vehicle as it’s small, well run and decent
valued cheaply compared to its market assets.
B2Gold (BTO.to), Pretium Resources (PVG.to), Rio Alto Mining (RIO.to) (RIOM):
Here’s a five day price chart of these three rascals:
Although I place very little trust in the face-rip rebound we saw in the whole sector on Friday,
I’m equally distrustful of the BS action we saw in the days before the Friday rebound show and
therefore, for me at least, one balances out the other. With that said, I won’t disguise the
pleasure received from the Friday rebound as it was long overdue and brought a decent
amount of visceral relief to your author (and his back pocket), no matter how next week
decides to pan out. As you can make out from the comparative chart, BTO was hit harder than
the other two (and most other peers for that matter), which probably doesn’t mean much as
these things are part of the rough and tumble of the market world but may suggest that it has
a little extra catch-up left in its tank next week. In the end both BTO and RIO finished just two
9

pennies down from this time last week, which was far better than the 10%+ pain of the hump
days, but the action in PVG was the one that most caught your author’s attention. As noted last
week the Very Serious Geologist community has made PVG’s rocks its whipping boy of the day,
with no end of professional and qualified interpretation out there that will tell you the high
grade portion of VOK is too widely spaced, that bulk mining isn’t going to work, that the
analysts who were on the recent site visit and came away impressed had no idea what they
were looking at, all sorts of things besides. However, money seems to be keen on opposing the
rock naysayer views, which is one of the most bullish undercurrents I know of in this sector. Be
sure that the same naysayers will pooh-pooh the bulk sample results due at the end of 3q as
well, no matter how well they turn out.
Bear Creek Mining (BCM.v): The face-rip rebound to beat them all, Friday saw BCM zoom
back 35% on above average volume as a couple of stars aligned at the right time. The $1.70
close looks a bit tape-painty and $1.60 is
probably more representative of the day’s
action, but hey, who’s counting?
BCM’s excellent Friday was pushed by the
sector rebound if course, but it must have
been helped in no small measure by the
visit of the Peruvian Prime Minister and
head of the ministerial cabinet, Juan
Jiménez, along with other ministers
(including Mining Minister Jorge Merino) to
the official opening of the round table
talks in Corani on Friday (the talks had
been in progress for a few days already,
but the arrival of the government bigwigs
made for a decent excuse to hold an
official ceremony). Here’s just one (5) news report amongst dozens locally that has Jiménez
saying Corani is an example of dialogue without conflict and praising to the rooftops the
process underway between government, company and locals. It’s significant that the political
bigwigs would travel all the way to Corani, in the distant (from Lima) and high parts of
highlands of the provinces in the Andean winter time, and that significance was not lost on
those who watch mining in Peru (including your author, of course). It will be interesting to see
how much play BCM makes of this visit but whether or not we get a puffy NR piece next week,
the fact that the government of Peru is now focussed on this project means that it now has
heavyweight support from the country and is being selected as an example of how things can
be done right. The visit was highly significant and due only to that, I’d expect BCM to buck any
reversal trend next week and continue its recovery back into the $2s.
Lara Exploration (LRA.v): I had to go and open my big mouth, didn’t I? Just days after
extolling the defensive virtues of LRA and
noting that last week’s stubborn resistance at
$1 and above “...means it’s still (just about)
inside the trading range we’ve come to expect
from the stock”, LRA’s priced caved below $1
and in quite a fashion, too. Volumes stayed
low but the trend was set when LRA dived
under $1 on Monday, stayed there then traded
as low as 78c on Friday morning (which
smacked of panic selling) before a later day
rebound, in line with the sector that day, saw
it recoup about half of the lost ground.
10

And so the classic problem of thinly traded issues shows up again, as it only takes one (or two)
dedicated sellers to cave a price in a market where buyers stepping up are few and far
between. As for news, LRA announced last week (7) that the deal already mentioned between
itself and Antofagasta (ANTO.L) was now officially running. We understand that ANTO wants to
put a few holes in a specific area of Sami, to the West side of the big property, in order to
check for potential for a large copper porphyry system rather than aim for the multiple gold
targets already generated by LRA during its baseline work on the property in other areas. If
ANTO likes what it sees it will crank up the budget but if not, the likelihood is that Sami gets
handed back by this time next year, rather than getting the full two year option treatment.
Focus Ventures (FCV.v): As mentioned as an addendum to the Flash update of Wednesday
(see Appendix 1) FCV gave out good news that morning (6) when announcing it had struck a
deal with a private company, Red Copper Resources (RCR), to option the Aurora Copper project
in Cusco region Peru. As noted in the flash update, we like the deal because it gets the
administrative cost burden of Aurora off the hands of FCV, it means the project will be moved
forward, it means FCV is capable of getting deals closed even in this tough environment (which
also reflects positively on the Aurora deposit, of course), but we also noted that this news isn’t
any sort of near-term market mover and that turned out to be the case.
A little more about the agreement between FCV and RCR, which is a fairly classic optioning-in
agreement but has a couple of wrinkles worth mentioning.
• It’s a two stage option, with RCR having the right to earn 50% by drilling 10,000m and
spending at least $3m once drill permits are received (which is a more sensible way of
starting the clock at the moment, what with the seemingly interminable delays to
getting drill permits in Peru at the moment). Of those commitments, $1.2m and 3,600m
of drilling has to happen in the first six months, which means RCR can’t drag its feet
once the permits are granted. Then RCR can earn another 20% of Aurora by spending
another $4m, drilling at least 20,000 more metres and getting Aurora to at least PEA
(scoping study) stage four years after receiving those drill permits.
• There are also some equity placement requirements. If after the first six month stage
RCR wants to continue and complete its 50% earn-in, it has to buy $500k worth of FCV
shares at a 15% premium to the then market price. Similarly, if RCR wants to complete
its optioning of the second 20% to reach 70% ownership, it will have to buy $2.5m
shares in FCV. In other words, if RCR likes Aurora enough after running its first drill
program, it has to buy shares in FCV and add treasury to the owner company. Again,
for the second stage (but that’s a long way down the line).
• Until RCR has earned 70%, FCV will remain the operator of the project. That’s
important for two reasons, 1) it means FCV earns a small administration fee that will
mean its way is paid by OPM and 2) FCV continues to be the face of the project at
community level, which means that the goodwill already built up by the FCV isn’t lost
and new faces need to start again from scratch with locals. This will help the project
move forward more smoothly.
• The deal isn’t done and dusted yet. We’re currently at Letter of Intent stage and RCR
has until the first week of August to (put simply) come up with the cash.
As for a little more detail, on inquiring a little further your author understands that the owner of
RCR, one Ian Gendell, is a respected name in the world of copper geology who has credits as
impressive as the discovery of the Mirador property in Ecuador to his name (while working with
David Lowell). RCR made the decision to option Aurora after a site visit and spending several
days on the available core and geological data, so we can assume that Gendall also sees what
FCV Pres Cass has seen in the property, that of a “tipped over” porphyry which wasn’t in the
models of previous project operators (see the site visit report in IKN207 for more on that
subject).
11

Aurora is another example of the FCV business model working well. We’ve seen it succeed at
Minas Chanca (bought by BVN) and now, after spending less than $400k in total on the Aurora
project (everything included, from concession acquisition to airborne surveying and all other
stops) FCV has landed a deal that will see a strict minimum of $1.2m spent on the property and
most likely a lot more, as well as funding rounds for FCV built in and the potential to eventually
get to a 30% free ride of a significant copper discovery, all while remaining project operators
until stage two is completed.
Finally, our wait for news that may indeed move FCV stock is nearly over, as we understand
that partial results for the first hole have been received by the company, it won’t be long before
full assays are received and then FCV will be able to start its expected series of publications on
the property, hole one first and then more to come down the line. What those numbers turn
out to be is the big incognito, the truth machine will speak.
The Copper Basket
After twenty-six weeks of 2013 The Copper Basket is showing a 29.41% loss to level stakes.
company ticker price 1/1/13 Shares out Market Cap current pps gain/loss%
1 NGEx Resources NGQ.to 3.40 168.63 337.26 2.00 -41.2%
2 Augusta Res AZC.to 2.43 144.1 318.46 2.21 -9.1%
3 Copper Fox CUU.v 0.83 399.61 235.77 0.59 -28.9%
4 Lumina Copper LCC.v 9.43 43.46 210.78 4.85 -48.6%
5 Nevada Copper NCU.to 3.50 80.5 161.81 2.01 -42.6%
6 Hot Chili Ltd HCH.ax 0.72 286.78 140.52 0.49 -31.9%
7 Reservoir Min. RMC.v 2.41 41.46 113.19 2.73 13.3%
8 NovaCopper NCQ.to 1.80 51.89 97.03 1.87 3.9%
9 Western Copper WRN.to 1.39 93.78 50.64 0.54 -61.2%
10 Panoro Minerals PML.v 0.62 176.25 44.06 0.25 -59.7%
11 Curis Resources CUV.to 0.70 56.31 30.97 0.55 -21.4%
12 Oracle Mining OMN.to 0.80 49.03 29.42 0.60 -25.0%
13 Candente Copper DNT.to 0.375 121.93 25.61 0.21 -44.0%
14 Yellowhead Min. YMI.to 0.59 60.97 14.02 0.23 -61.0%
15 Strait Minerals SRD.v 0.08 56.86 3.41 0.06 -25.0%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg -29.41%
Four of our Copper basket stocks managed to register gains during this tough week (AZC.to,
HCH.ax, DNT.to, OMN.to) with special
mention going to Oracle Mining and its Copper Basket 2013 average, weekly
massive 106.9% rebound from the recent 12%
8%
forced selling lows we reported last week.
4%
There was one stock unchanged on the 0%
week as well (NCQ.to) which leaves ten -4%
-8%
stocks as weekly losers. The worst
-12%
percentage performances were seen in -16%
Yellowhead Mining (YMI.to down 34.3%) -20%
-24%
and Nevada Copper (NCU.to down
-28%
11.8%). -32%
We’re now at the halfway point for 2013
and in the same way as we did when
reaching week 13, here’s a chart that
shows the relative performance of our Copper Basket components so far. The gray bars show
12
ht6naj ht31 ht02 ht72 r3bef ht01 ht71 ht42 dr3ram ht01 ht71 ht42 ts13 ht7rpa ht41 ts12 ht82 t5yam ht21 ht91 ht62 dn2nuj ht9 ht61 dr32 ht03
source: IKN calcs, TSX data
31/1/1
morf
egnahc
%

where things stood at week 13 and the green (all two of them) and red bars are the current
positions and as you can see, we’ve lined ‘em up in performance order.
Top of the list and the only stock to boast
The Copper Basket: Component performance after
anything like a significant gain is Reservoir 30% 26 weeks
Minerals (RMC.v), which (sod’s law) is of 20%
10%
course the only copper exploreco that your
0%
author has any interest in buying at the -10%
moment (but frankly, with the state of the -20%
-30%
market and the iffy looking copper price
-40%
fundies, even this one is losing its potential
-50%
charm). In second position and the only -60%
other in green is Novacopper (NCQ.to) and it -70%
has to be said that this one has held up
really well to the sector pressure. Its large,
prospective and high grading project (or
projects with an S, as it’s a collection of
targets in the same area) located in a politically safe
and stable region surely help its cause, as does the
decent insto backing for the company (this is NYC
Electrum etc money, being as it is a spin out for
NovaGold and run by Rick van Alphabet) and its low
trading volume which tends to make day-to-day
moves small ones, as long as that big house money
decides to stay where it is.
The rest are all in the red, starting with the Waiting
For Godot Augusta Resources (AZC.to) (AZC) and its
Rosemont project in Arizona which would be worth
much more than its current PPS if it could only get its
hands on the right piece of permit paper, passing
through those companies down 20% to 30% (CUV.to,
OMN.to, SRD.v, CUU.v, HCH.ax) and then those over
the 40% loss mark (NGQ.to, NCU.to, DNT.to) and then
to the real dog end of the sector, down 50% or 60%
or more (LCC.v, PML.v, YMI.to, WRN.to).
Overall, it’s a disaster zone of a sector at the
midpoint of 2013, of that there is little doubt.
We’ll check in on these charts again at week
39.
Moving on to copper prices and last week
saw the metal trade in a tight range, bounce
off the $3/lb level on Monday and stay at-or-
around $3.05/lb for the rest of the week.
If we expand our timescale and go back to
see the recent era for the copper market,
even a TA-dummy and sceptic such as your
author can see (and will readily admit) that
$3/lb is a serious looking line in the sand for
the metal. t’s not a price level that has been
held in a hard and fast manner, with first and
foremost the notable breakdown in late ’08
through 2009 as the full scale financial crisis
wrought its havoc on all things, not just
copper. We also saw dips below the $3/lb
13
v.CMR ot.QCN ot.CZA ot.VUC ot.NMO v.DRS v.UUC xa.HCH ot.QGN ot.UCN ot.TND v.CCL v.LMP ot.IMY ot.NRW
source: IKN data

line in 2010 (for a full quarter) and 2011 (for a few days in September 2011, the bear move
charged by the worst Eurozone fears at the time) so this isn’t a line that, if broken, shall never
see repair. But the most cursory of glances at the recent history of copper market prices makes
the $3/lb level obviously important, so as we’re now there again we’re at a potential inflection
point for the metal and all things connected.
We move to inventories and as we’re at the end of another month (time flies once again) we
catch up on the state of the world’s stocks via our now-regular charts, but first the weekly
update. World stocks dropped by a minor 0,7% last week to stand at a total of 914,518mt. Of
that lot, LME inventories rose by a small 0.1% to 665,775mt, Comex stocks dropped by 1.6% to
66,250mt and Shanghai Futures Exchange warehouse stocks dropped 3.5% to 182,493mt.
The month-end totals compare to previous months in this way:
Once again, the strong trend away from Shanghai and towards LME continues. While the two
minor warehouse chains see diminishing stocks, the LME’s just keeps growing and growing and
has now more than doubled in 2013 alone (and way more than that if you start the count at
LME’s lowest point in September 2012, under 220kmt at the time). Stocks at the LME now
comprise 72.8% of total World inventories and totally boss the market.
Meanwhile, the strangeness in cancelled warrants grows ever larger, as LME cancelled warrants
shot up again last week to stand at 370,375mt, or 55.6% of total stocks. There can be little
doubt left that the system is being played by market participants, because if the amount of
copper under cancelled warrants was truly sold to end users, it would have left the warehouses
by now (note we’re now 12 weeks into the new system noted in IKN207 and eight weeks into
the unusually elevated cancelled warrant percentages, which just keep getting higher and
higher).
Cancelled Warrants at LME, IKN157 to date
60%
50%
40%
30%
20%
10%
0%
14
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 312NKI 512NKI 712NKI
source: Cochilco, LME
rof
yrotnevni
EML
%
latot
yreviled
resu-dne
Copper inventories, per month 2012/2013
1000000
800000
600000
400000
200000
0
This is where guessing, second-guessing and assumptions that range between reasonable and
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj
Copper inventories: percentage held per exchange
Mt Cu
80
LME Shanghai Comex
70
60
50
40
30
20
10
0
source: Cochilco
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj
LME Shanghai Comex
source: Cochilco

wild can be floated, but I’m going to avoid (most of) that potential swamp and stay with the
most obvious conclusion of all: Somebody, somewhere, seems very keen about keeping a lot of
copper away from the market. The way in which this sizeable copper tonnage is being tied up
under cancelled warrant and kept away from the warehouse doors by apparently constant
recycling of the final delivery warrant means that there are people who don’t want upwards of
300,000 tonnes of copper hitting the market and depressing prices. Now of course that might
work and the bet seems to be one of keeping copper prices (artificially?) high until the China re-
stocking season rolls around in the Northern autumn and the slack is taken up, but it’s also a
game that comes with a ever increasing risk, one that increases with that percentage figure.
What, for example, will the world say if 80% of all copper held in LME warehouses were under
cancelled warrants but the metal was still leaving the warehouses at its current trickle? Or
90%? Or 95%? Or even 100%? At what point does the LME system lose its credibility as the
centre of price discovery for copper? This is high-stakes poker and if it goes against the ones
playing this apparent new bet it will finish with a big price jerk to the downside and serious
financial losses for the warrant holders.
Now for updates on just two of the basket stocks this week:
Oracle Mining (OMN.to): Last week we noted the “good and reasonably even-handed
appraisal” that the company published just before its AGM and we noted the very heavy selling
that was pretty obviously a fund or larger holder into (forced?) liquidation. On that we mused
whether the selling was over or if there were more to come and after taking everything into
consideration, the call was to stand back and wait until later this year when the company’s
revised feasibility study had been published.
Which all goes to show that fortune favours the brave.
OMN had a face-ripping rebound of a week and by the time it was all over had returned to
levels last seen in April. To be fair, volume wasn’t massively high and the rebound was luckily
timed to coincide with the Friday relief rally, but that’s nitpicking when sat next to a 107%
rebound that must have brought plenty of sighs of relief from stakeholders. Your whuss of an
author can still derive plenty of cheer from the move despite being on the sidelines, because
the OMN team have been going about their job
in the right way and cannot be lumped in with
the BS-merchants of the sector, as well as
having a project that, although small, may turn
out to be a highly profitable mine if it gets off
the ground. It will still need to raise money and
the feas results will go a long way in showing
whether the underground mine can cough up
the amount of feed needed for its conceptual
tonnage of mill, but the immediate threat of
having to raise via equity at a stupidly low price
has disappeared at least.
Is OMN still “value” at its return to 60c? Well,
probably if you like the near-term prospects for copper and have the stomach to invest with a
longer-term horizon and can take the bumps (though in my humble opinion you should at least
wait until the feas is out). Personally, I’ll pass on them all for the time being.
Curis Resources (CUV.to): There was no news out of CUV last week but the action on
Monday suggests retail is getting impatient with the lack of progress at Florence.
15

In the words of CUV in its latest MD&A
“Curis has been the subject of a well-funded campaign opposing the development of the project
by a group of out of state neighboring landowners and a local water utility company (Johnson
Utilities). This campaign has utilized a number of tactics designed to obscure and distort the facts
of the project in order to confuse and scare local elected officials and residents. This campaign
has resulted in a real harm to the Company’s reputation and ultimately to its share price. Curis’
management and outside legal counsel are taking all necessary and available steps to protect the
Company’s interests against these attacks and will continue to investigate any and all means
available by which to address these matters.”
Meanwhile, the residents opposed to the mine project recently had their voice heard in this
report (8) dated June 14th, which doesn’t hold anything particularly new but does show that
there’s a depth of local feeling that seems to go beyond “out of state landowners”. As is often
the case, the truth probably lies somewhere in between so in our words, we continue to avoid
this company until such time as its permitting hold-ups are resolved but if it gets the necessary
green lights, the mine will be highly economic and the stock an obvious buy, even if copper
goes lower than $3. In other words, no change in the plan.
The Lottery Ticket Basket
After 26 weeks of 2013 The Lottery Ticket Basket is showing a 40.30% loss to level stakes.
company ticker price 1/1/13 Shares out Market Cap current pps gain/loss%
1 Marlin Gold MLN.v 0.10 379.9 19.00 0.050 -50.0%
2 Eagle Star Min. EGE.v 0.125 69.48 14.59 0.210 68.0%
3 Bellhaven BHV.v 0.14 137 13.70 0.100 -28.6%
4 Fancamp Expl. FNC.v 0.125 118.41 8.29 0.070 -44.0%
5 Tango Gold TGV.v 0.13 45.59 7.29 0.160 23.1%
6 Glass Earth GEL.v 0.155 104.79 4.72 0.045 -71.0%
7 AQM Copper AQM.v 0.08 105.57 3.69 0.035 -56.3%
8 Inca One Res. IO.v 0.12 34.0 2.72 0.080 -33.3%
9 Copper North COL.v 0.10 58.62 2.64 0.045 -55.0%
10 Darwin Resources DAR.v 0.20 26.16 2.49 0.095 -52.5%
11 Rio Cristal RCZ.v 0.025 149.26 2.24 0.015 -40.0%
12 Gryphon Gold GGN.to 0.085 194.64 1.95 0.010 -88.2%
13 Firestone Ventures FV.v 0.045 36.32 1.09 0.030 -33.3%
14 Cream Minerals CMA.v 0.03 155.34 0.78 0.005 -83.3%
15 Netco Silver NEI.v 0.025 47.01 0.47 0.010 -60.0%
Portfolio avg -40.30%
Three Lottery Ticket Basket stocks went up last week (GEL.v, FNC.v, EGE.v) and four others
16

registered ‘UNCH’ (MLN.v, RCZ.v, FV.v,
NEI.v), which leaves eight downers (BHV.v, 25% Lottery Ticket Basket 2013 average, weekly
GGN.to, AQM.v, TGV.v, COL.v, DAR.v, 20%
15%
CMA.v, IO.v) and amongst those, there were 10%
several heavy percentage losers, namely 5%
0%
Gryphon Gold (GGN.to down 50.0%) (Cream -5%
Minerals (CMA.v down 50.0%), Bellhaven -10%
-15%
(BHV.v down 25.9%), Darwin (DAR.v down -20%
-25%
20.8%) and Tango (TGV.v down 17.9%).
-30%
Overall the basket slumped another seven -35%
-40%
points and now stands down over 40%, a
year low.
Darwin Resources (DAR.v): The interesting one of the bunch is again Darwin Resources
(DAR.v), as the company is now into its drilling campaign but the stock came under significant
pressure last week. DAR was hit down to 7c on two occasions by selling that had all the look
and feel of a liquidating position which hasn’t finished its liquidation. If you fancy a tilt at this
drill spec play, sticking in a bid at 7c may turn out to be place at which you can pick up some
cheap shares that can be flipped out later.
If you’re after a high-risk vehicle for a near-term trade, there are many worse choices than this
one. We continue to best-guess the middle of July for first drill numbers from Suriloma.
Tango Gold Mines (TGV.v): Last week we wrote that we expected its previously reported
upmove to be short-lived. I was short-lived. And yes, our assumption that Pres/CEO Antonio
Ponte was the source of the promo-type upmove has proven to be correct, according to a
couple of mailers (thank you both). Not a bad little company, but no need or rush to be long
here.
Gryphon Gold (GGN.to): News from GGN (9) was as negative as it comes, with the
announcement that due to regulatory non-compliance (mainly centred around it no longer
having control of a property of interest) GGN has now delisted from the TSX. It shares will
continue to be traded on the OTC market under the ticker GYPH, but for our purposes we’re
going to shut up shop on this one and leave it at its final dot tee oh trade price of 1c. GGN has
been done in by its strict deal with Waterton and its failure to deliver on its production
schedule. From here it’s just a case of how long it continues before officially going under.
17
ht6naj ht31 ht02 ht72 dr3bef ht01 ht71 ht42 dr3ram ht01 ht71 ht42 ts13 ht7rpa ht41 ts12 ht82 t5yam ht21 ht91 ht62 dn2nuj ht9 ht61 dr32 ht03
source: IKN Weekly data, TSX
2102/1/1
morf
egnahc
%

Regional politics
Regional risk update deferred again
I’m having trouble in deciding what to do with this section so I’m going to be utterly pathetic
and defer it once again. The silver lining is that if this decision annoys you sufficiently to get
you to unsubscribe from your author the flake, it’s probably for the best.
Market Watching
Costs are likely dropping in LatAm mining operations
A little fundamental cheer for you, after having been serially whacked over the head by the
margin squeeze between revenues and costs for what seems like forever (but is probably
something like a year to 18 months in most cases). We have a combination of announced, firm
and emerging anecdotal evidence that costs for mining companies in LatAm (at least, you’ll
know more about other regions than I) are dropping in dollar terms.
The announced evidence is the most straightforward and comes from the companies
themselves, as cost cutting a the new and urgent policy du jour. From explorecos cutting down
on geology team headcounts, to deferred budgeted capex projects such as infrastructure for
production expansions or drilling campaigns, to head office layoffs, juniors have been keen not
only to tell the world they’re cutting costs but to do so, too.
Next for the firm evidence, which is in this chart...
...that gives the last three month of the US Dollar (USD) versus the Brazil Real (blue line), Peru
Sol (red line), Chilean Peso (purple line), Mexico Peso (yellow line) and Colombia Peso (yellow
line). Exchange rates of LatAm regional countries have changed considerably in the last six
months, with the accelerated depreciation of the major freely (or freely-ish) traded currencies
happening in the last part of the current quarter.
It is of course true to say that some cost inputs are not affected by forex changes, such as fuel
(which are priced in dollars on the world market, so even if it’s purchased with local currency
the forex cost effect is neutralized under normal circumstances). However labour, office rent,
local supplies and a range of other direct and indirect costs that a mining company working in
LatAm stacks up. It depends on the company and its costs make-up (e.g. an open pit miner
normally has a bigger cost input from fuel, while an underground miner tends to be more
labour-intensive per tonne moved) but to use a rule of thumb we can assume that 50% of costs
18

are sensitive to changes in the USD/local currency movements. If, therefore, we’ve seen a 7%
average devaluation of LatAm currencies to the USD this quarter, that would imply a $35/oz Au
cost saving in dollar terms if your operating cash cost was running at U$1,000/oz previously.
As for anecdotal evidence, that’s been reaching this desk via several channels and was kicked
off a couple of weeks ago by a comment made to your author by an industry executive (all
names in this paragraph protected to protect the innocent and guilty alike) who mentioned in
passing that a geology consultant that his firm used had suddenly cut his fees by nearly 50%
(the daily rate dropping from a four figure sum to a three figure sum). It was part of a wider
conversation but it piqued my interest, so it’s been a little side-mission these last couple of
weeks to ask around and get a feel for cost reductions being enjoyed by corporate entities.
Information garnered comes from several quarters, including other examples of independent or
third party consultancy rates being dropped (third party fees are less sticky than classic wages),
budget cuts in departments deemed non-essential (e.g. several off-record comments about
deep cuts in IR departments and related conference budgets), suddenly lower prices for
essential supplies such as sodium cyanide (around 6% to 8% of a heap leacher’s total cash
cost) or truck tires (down 10% in dollars since this time last year), and multiple reports of new
low rates from drilling companies for any drill work to be done due to a whole stack of idle
machines out there.
We’ll probably see the flush through of lower cost parameters as 2q13 results start rolling and
in some cases, we may be given a tip of the hand when production numbers arrive (in the next
two to three weeks) without having to wait for the formal financials (45 days from now,
assuming your company isn’t reporting its annuals this quarter). We still remain at the mercy of
top line revenues of course (which means watch that gold/silver/copper/etc market price), but if
we assume a steady state for market prices going forward there’s reason to believe that the
worst of the margin squeeze is at an end. That’s not to be discarded lightly now that the street
has decided it doesn’t give a damn about NAV-valuations and wants all its producers to show
cash flow for valuation purposes (and potential cash flow for the projects).
That other potential short: MAG Silver (MAG.to) (MVG)
Last week made a passing mention of a potential short that was overlooked in preference to the
addition to the short in Gold Resource Corp (GORO) and a handful of readers mailed in to ask
which was the other, un-named target. The answer to that is MAG Silver (MAG.to) (MVG).
Reasons:
1) Quoted in USA under ticker (MVG) and of a sufficiently chunky price per share to make
the act of shorting the stock relatively easy (compared with TSE-only stocks and those
under $2 or $1 barriers, at least).
2) It’s a junior silver exploreco, which is the wrong place to be at the moment.
3) Its main (in fact probably its only) exit strategy is to sell its main asset, the 44% held in
the Juanicipio project, to JC partner Fresnillo (FRES.L). As the trend is now clearly that
of major mining companies selling assets rather than buying them, cutting all excess
expenditure and deferring project development, the chances of this junior getting its
big payoff in what we can call a reasonable timeline future are low.
4) Its other significant project, Cinco de Mayo, is in big trouble due to bad community
relations and is unlikely to move forward in the indefinite future.
5) MAG has been spinning its wheels through 2013 to date. Cash burn dropped to $2.83m
during 1q13 (way down on previous heavy burn rates it shows when active) and from
the lack of meaningful news in the last three months, that trend has probably
continued. On June 20 (10) when announcing its upcoming new Pres/CEO, MAG did say
that it was “transitioning from a highly successful exploration venture to preproduction
and ultimately a producing company” and by reading between the lines, we’re
supposed to deduce that the big push to “pre-producer” (whatever that term means)
will start in 4q13.
6) Despite having battened down its hatches, MAG still has a chunky G&A bill to cover and
a lot of that comes from the hefty salaries paid to its management and directors. Under
19

the 2012 contract the CEO took home $420k in cash and the CFO took home $285k,
both with options on top, by way of example.
7) With 60.14m shares out and a share price (Friday’s close) of U$5.84 after something of
a recovery from lows, the $351.2m market cap is not cheap even after the recent drop
(that put me off the short idea when it happened). With an IKN estimated $35m
treasury and similar amount in working cap. MAG isn’t in any sort of liquidity trouble
but a) that’s nowhere near enough to pay for 44% of any development to production at
Juanicipio, even if Fresnillo surprises us and decides to fast-track the asset (at long last)
and b) that cash doesn’t cover much of that market cap, which is a red flag in the world
of the junior version 2013.
I know the upside and bullish case for MAG because I know enough people who like the stock.
The main point for bulls is that the rocks at its main project are world class and on that score
you’ll get no argument from me; the veins in question impress both in grade and in width,
which would make for very robust economics come the day they’re mined. But as long as they
stay underground and a deal with Fresnillo isn’t forthcoming, all that wonderful silver
mineralization will not be an asset but a liability that will cost MAG to look after its share, both
in money and time. With the market in its current state, the likelihood of near term
development diminishes greatly for the good and bad deposits alike. This short isn’t questioning
those rocks (because after all, if the rocks weren’t great we wouldn’t have a MAG at this
current, potentially shortable price level in the first place), it’s questioning how long those rocks
are going to be where they are.
As the chart above notes, I missed the window for the MVG short and it dropped just as I was
preparing my case. So be it, but on further consideration and after the pop it put in on Friday,
it’s still a live prospect for further downside and is therefore still a potential short play going
forward. Let’s see how next week pans out first, as I’m still very much in near-term mode
(though it’s hardly a comfortable place to be), daily/intraday action matters at least as much as
wider strategy and having added short hedge to the portfolio via the re-opening of the TAHO
short last week, that might be enough for the time being.
Bellhaven (BHV.v) drill results
I’d already sold my position when Thursday came around and this NR (11) came from BHV. My
first impression on seeing the results was that I’d made a mistake in selling, but this market
quickly chewed that thought into very small pieces and spat it out, as this chart indicates. The
reception reminded your author of the way follow-up results in Goldquest (GCQ.v) and Coloraod
(CXO.v) have been treated, where an exceptional discovery hole saw good-but-not-as-great-as-
the-first-NR follow-up news that was received by wholesale market dumpage. BHV’s wasn’t
quite that bad or heavy (circumstances are always different if you look hard enough) but the
way in which Thursday’s news was dumped with no recovery in line with the sector looked
pretty heavy.
20

More is given in the charts and maps that were supplied with last week’s NR (12) and readers
are urged to click through and see all the offerings, as they give a more complete story than
the overview here. I’d like to home in on just one of the maps, figure 5 that shows the
relationship between the mag anomaly, the original discovery hole at the new La Garrucha
target that shot the stock up in early June and the two holes announced last week. As we can
see, hole 1100 (the discovery hole) as well as 1101 and 1102 (last week’s) all point back
towards the main part of the BHV concession and are enclosed in just part of the mag anomaly.
As they all hit the mineralized zone as well, what the latest holes show (along with fig 4 in the
map PDF) is that
there is vertical continuity in the mineralization first hit by 1100, to a depth of roughly 300m.
This is a good thing and now it’s BHV’s job to expand the target and see where the contacts to
the mineralization lie on either side. Right now it’s fair to say that if La Garrucha acts in a
similar way to the other main mineralized zones already discovered at La Mina (to the left of the
above map), La Garrucha could add another 2m oz of gold to the already 43-101 resource. This
would bring the whole project to around 4m oz Au and as La Garrucha looks to be a booster to
average grade, that kind of ounce count at a grade that’s substantially higher than most
porphyry systems in Colombia would set this project apart from the mediocrities that are often
promoted as potential mines of the future (BAT.v, SVV.v, SFF.v etc).
This is not a trouble-free project, with several questions having already been raised about the
potential to build a mine in an area that has some scattered population areas and is also
picturesque and used as a rural retreat. However, those arguments can be outweighed by
absolute size and if, for example, BHV does get to 4m oz Au, it’s the type of cash that can see
gains for all stakeholders and if there’s a pretty church to move, then it can be moved to a new
and safe area.
I’m no longer a holder of BHV because of my own portfolio needs (I wanted the cash,
remember) and because our recent trade was always going to be a near-term one. However,
BHV may be about to separate itself from the dross and recover a lot more of the lost ground of
recent years than just the six or seven cents we witnessed in June. This one is not dead, the
results last week show that there’s a strong potential to add millions more ounces to La Mina
and it’s now back in the centre of your author’s radar of potentials.
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Conclusion
IKN217 is done. But instead of closing with bullet points this week (which would have been “i
don’t trust the Friday sector pop and want to see confirmation”, “I’m happy with the new
reduced exposure + cash”, “gold bullion might be a buy”, “watch AQM.v for a trade” “I’m still
watching DAR.v” “I’m still chatty rather than analytic and probably for a good reason”) i want to
close in a different way.
As most of you probably know by now, I’m a fan of the ‘My Own Market Narrative’ blog, run by
a guy up in Canada who goes by a couple of pseudonyms (and fwiw I know his real name) but
over at the IKN blog is usually referred to as Iwnattos.
On Friday Iwnattos stuck up a little post (13) and got this, from reader FL, put in the comments
section:
Well, very little of all the gold that has been produced has actually been consumed. It is still out
there. And if my memory serves me well I think that annual global gold production is still
increasing. Maybe that will change in 2014/2015 unless the gold price get its act together, but I
don't think closed mines will drive the price of gold higher in 2013. Other factors are more
important.
Here’s what Iwnattos wrote in reply and as this is the bit that I’d like you to read carefully, I’m
going to stick it in bold type:
It's still out there but it's been converted into an asset class. "Asset
class" gold is a lot stickier than "commodity" gold - it will only come
back on the market in crisis situations. Go look at scrap numbers for
2006-2013 and you'll see a surge in scrap coming on the market during
the 2008 crisis. Otherwise that gold will stay right where it is.
Gold is an asset class OR it's a commodity depending on where it is.
GLD gold is a commodity. Parvinder Dhaliwal's gold bangles are "asset
class" gold, as is the 30 tons of gold that George Soros owns in a vault
in Singapore.
But you're right, global gold production has been increasing, and it's
been increasing in Russia and China. Their gold is being mined without
any involvement from the London/ASX/TSX exchanges; maybe that's
why the gold analysts have been completely fucking ignoring it?
And that gold is just like 1960s English coal, or 2000s Spanish coal:
subsidized for political reasons. That's the possible downside to gold:
whether it re-enacts China's rare earths situation in the 2000s.
So yeah, that production is a problem. But you gotta remember, the
recent outflows from gold-backed ETFs completely swamp the increase
in true gold production. Thing is, GLD shows up on the supply side right
now, but 2008-2011 it showed up on the demand side.
GLD flows are the real concern. But when the ETFs all fall to zero
holdings, their commodity gold will have been entirely converted into
asset-class gold; then you'll get clean commodity-market type behaviour
from gold, and if supply doesn't continue to improve gold will have
nowhere left to go but up.
Ladies and gentlemen, the above is the most elegant and succinct overview of the current state
of the gold market I’ve seen, it condenses into a few paragraphs everything you need to know
about the current physical/GLD gold dynamic, it goes a long way to explain just why gold has
caved in on us all pricewise and beats into a cocked hat 99% of the thinking you’ll read
anywhere else from so-called gold market experts (and is the equal to the other 1%). Also,
22

those on the pro-side of finance and mining who read these words (and you know who you are)
would do well to consider just what type of strategist they really want in their organization; a dolt
with a piece of paper that says they are qualified to say exactly the same thing as everyone
else, or someone who can speak truth to power (and clients)?
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://incakolanews.blogspot.com/2013/06/sub-1m-placements-in-explorecos.html
(2) http://www.aqmcopper.com/i/pdf/CorporatePresentation-eng.pdf
(3) http://finance.yahoo.com/news/duran-updates-activities-optioned-projects-160000729.html
(4) http://finance.yahoo.com/news/oceanagold-provides-reefton-mine-zealand-081400531.html
(5) http://www.andina.com.pe/Espanol/noticia-pcm-destaca-dialogo-sin-conflicto-distrito-puneno-corani-
464317.aspx#.UdCPqTu_Wi4
(6) http://www.marketwire.com/press-release/focus-options-its-aurora-copper-moly-project-peru-tsx-venture-fcv-
1805985.htm
(7) http://finance.yahoo.com/news/lara-options-sami-property-antofagasta-200500185.html
(8) http://www.trivalleycentral.com/maricopa_monitor/county_state/cobbled-together-group-rallies-against-proposed-
mine/article_55bd9212-d520-11e2-95f5-001a4bcf887a.html
(9) http://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aGGN-2082394&symbol=GGN&region=C
(10) http://finance.yahoo.com/news/mag-silver-appoints-george-paspalas-130000329.html
(11) http://finance.yahoo.com/news/bellhaven-drills-158-m-1-110000608.html
(12) http://file.marketwire.com/release/bhv0626.pdf
(13) http://myownmarketnarrative.blogspot.com/2013/06/you-learn-who-your-friends-are-when-you.html
Appendix 1: Flash update dated Wednesday June 26th
Good morning, 30 minutes before the opening bell on this sunny Wednesday morning, but real winter chill in the air
now at 8,000 feet above sea level in the Southern hemisphere.
Tahoe Resources (THO.to) (TAHO)
In light of the continued precious metals weakness (even though gold is off its overnight lows now) I am re-shorting
Tahoe Resources (THO.to) (TAHO) today. To be exact, uncovering the previously covered position.
My seller's regret about covering too early has been growing and although I've missed out on a decent gain by having
covered these last weeks, there seems to be more downside to come. This and the hedging opportunity to the overall
trading portfolio makes adding more short side exposure the logical choice here.
Gold Resource Corp (GORO)
23

As planned I re-opened the short earlier this week. However, I may look to add more to the position today. Anything
above $9 looks a fair addition point to my eyes.
Focus Ventures (FCV.v)
A slice of good news for our long positions and worth a quick addition to this Flash update. FCV today announced...
http://finance.yahoo.com/news/focus-options-aurora-copper-moly-123000110.html
... it had nailed down its optioning deal for the interesting Aurora copper project in Cusco region, Peru. It's a pretty
decent achievement to have closed a deal in this market which again points to the prospectivity of the property (see
previous site visit report in IKN207, dated April 21st). The optioning in agreement looks fairly standard (they always
have their own specific details) and if all goes well, FCV has a free ride on 30% of the property. This is a medium term
horizon project and we don't expect it to move the FCV share price in the near term, but it does bring the immediate
advantage of lightening the administrative load at FCV with resulting financial benefits of lowered burn rate. We hold
FCV and await the Reventon drill results news.
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.
25