IKN #221Premium

The IKN Weekly
Week 221, July 28th 2013
Contents
This Week: Fed and jobs, I’d happily take gold at $1,300 from here to September thanks for
asking, On photographs and celebrity.
Fundamental Analysis: NOBS report on Fortuna Silver (FVI.to) (FSM).
Stocks to Follow: Overview, Colossus Minerals (CSI.to), Network Exploration (NET.v), Tahoe
Resources (THO.to) (TAHO), Darwin Resources (DAR.v), Gold Resource Corp (GORO), AQM
Copper (AQM.v), B2Gold (BTO.to) (BTG), Rio Alto (RIO.to) (RIOM), Bear Creek Mining (BCM.v),
Lara Exploration (LRA.v), Pretium Resources (PVG) (PVG.to).
Copper Basket: Overview. Reservoir Minerals (RMC.v), Strait Minerals (SRD.v), Copper Fox
(CUU.v), Panoro Minerals (PMl.v).
The Lottery Ticket Basket: Overview, Netco Silver (NEI.v), Bellhaven (BHV.v).
Regional Politics: Colombia’s “National Interest” projects: A complete red herring, Peru:
Gregorio Santos/Cajamarca watch, Chile: BHP invests in a desal for La Escondida, Teck’s
problems in Chile, Colombia: The La Colosa referendum today.
Market Watching: Continental Gold (CNL.to) chair sells stock,The International Tower Hill
(THM) (ITH.to) feas study and the Novagold (NG) fall-out.
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
Fed and jobs
Next week we have the FOMC (policy statement due Wednesday 2pm EDT, no Ben presser on
this one though) and then Friday pre-bell we have the U.S. jobs report for July. Both with the
potential to directly influence the markets and to those two we can add the US GDP 2q13
advance report that’s also due Wednesday (pre-bell) because that dataset has been catching
more attention recently, too. Our main market component focus point here at The IKN Weekly,
that of the gold price, can be directly influenced by all these events so a double amount of
attention to the market chattersphere required in the days to come.
As usual, your author points readers to the superlative Calculated Risk blog (1) run by Bill
McBride for all their US macro needs, be they the week-to-come or always.
I’d happily take gold at $1,300 from here to September, thanks for asking
It’s late July, metals desks are reporting slack summer period trading and more than a few
sources in the junior world are telling your author, either in code or directly, that they’re now
hanging back on news releases and specific pieces of good news that may help their causes. In
other words, we’ve now apparently hit the classic summer doldrums period and even in this
modern world of wifi connections on the beach and money that never sleeps, there’s reason to
expect a lull in the action between now and Labor Day.
Guessing about the future is fun and also part of the job of course, but for what it’s worth (and
1

come what may) I’m all for a few weeks where little of great import happens in the macro
world, metals and currencies and demand and supply and all the others. If we are about to get
a period of relative calm in issues such as the gold price, it will mean that the companies that
are traded off those underlying influences can show a little more of what they’re really worth
and, with a little luck on top, the quality
names can start separating their share
price performances from the drudging
mediocrity of the typical mining company
(management, performance, guidance,
you name your criteria and I’ll agree with
it) and start the type of separation process
your author is expecting from the blue
and the red lines in this now way
overexposed IKN guidance chart.
With a level macro playing field, we may
begin to recall that the boats that have
been rising and falling at the same rate on
the same tide aren’t all the same. Your
author is all about promoting the
ownership of quality junior mining
companies at the moment; perhaps later we can consider larger money rotating out of the top
and into the second tier, but the time now is for putting the biggest chunks of your junior cash
into the market leaders.
Whither goes gold? In the medium term I expect it (and at least want it) to move back up,
through 1.4k and to $1.5k would be nice. If it starts moving up tomorrow morning and doesn’t
stop for breath you’re not going to hear my complaints, I’m net long after all, but for the time
being I’d be happy enough to see it, silver, copper and all the others tread water for a while.
Nothing wrong with a chance to catch our collective breath.
On photographs and celebrity
After announcing the family break planned for early August up to the high country last week, a
few mails were received on topic including one from long-time mailpal and subber ‘HA’ who
mailed in this (excerpted):
“Would just like to make a suggestion that any photos from your vacation would
probably be of interest to a bunch of your subscribers. By definition they have some
interest in S.A. and the every day occurrences that don't make it into the travel clips
would be nice, imho.”
The answer to that is yes, no problem but only if it’s of interest to enough people. For the
record I’ll be in the Aymara region of Peru (South of the city of Puno, on Lake Titicaca and near
to the locality of the failed Santa Ana mine project of Bear Creek, if that helps get your
bearings) and one thing is for sure, it’s definitely off the beaten tourist track. However I’d
require some more prompting than just HA’s mail, because there’s very little connection
between this break and “junior mining companies operating in LatAm” and I don’t want to fill
up the Weekly with off-topic matters.
Which brings me to a second, somewhat related matter that gets comments on occasion and on
a more drip-drip regular level, that of my (non) appearances in photos, publications, events or
media. Here’s a quick checklist on that.
1) I’m not camera-shy and if you want an image of my happy smiling face, I have no
problem in supplying you one. I simply think that it’s not something necessary to
perform my job.
2) I don’t write anywhere else than this Weekly or the IKN blog. Not on bullboards, not in
2

other media, not as a third party, nothing. From very early on it’s been an active
decision on my part not to be a public opinionator and on the same tack, I don’t do
interviews and will never speak on “the circuit” of conferences etc (and to my own
amazement I’ve been asked to do a few over time, too). Somebody else can have the
fame, I’ll make do with just the fortune thanks very much.
3) Yes, I know I could “build my brand” (or however else it’s called these days) and I’m
apparently missing out on doing that, according to a few people with whom I’ve talked
over the years. I’m not interested, I like small, I prefer being as uninfluential as
possible under the circumstances. This rant could continue but it wouldn’t contain
much more than a few details that repeat on the basics outlined above.
From the start it’s been clear (to me at least) that The IKN Weekly, or the blog for that matter
(though the blog does have a little more leeway) isn’t some platform or springboard to
something else; they’re specific niche publications and the means to their own end, an ongoing
series looking at one small area of the big market world and is only ever going to be of interest
to a very small section of society. The Weekly in particular was born under the radar and even
though it’s turned out to be more popular than I’d ever imagined (there are no secrets today,
so for what it’s worth this edition will be read by around 400 people* which is something like
150 down from its peak last year before the unsubs started to flow) it will stay firmly under the
radar and catering to its niche and for that, do you really need the smiling, suit-and-tie-head-
and-shoulders photo (professionally produced) in order to feel better about the writing
contents? Do you want this author to appear on BNN and talk his book, get famous and
“develop a following”? Do you need to read my name on the list of contributors at Kitco, The
Gold Report, Seeking Alpha, Yahoo! Finance or wherever else? Finally, from what I’ve been told
by nearly every famous person I’ve talked to, being a celebrity and having a public profile may
have a few benefits but overall it sucks, and sucks bigtime.
So anyway, back to the original subject after that ramble and if you’d like a photoshow of me
and the girls feeding chickens or traipsing another hill walk at 12,500 feet above sea level this
August, tell me. Equally, if you don’t want The IKN Weekly cluttered up with a section that’s not
much more than some guy and his badly taken holiday snaps, I’d appreciate that mail as well.
*Some of you are freebies to friends/family/quidproquo, most of you pay
Fundamental Analysis of Mining Stocks
This week we look at Fortuna Silver (FVI.to) (FSM).
NOBS update report dated July 28th 2013
Fortuna Silver Mines Inc. (FVI.to) (FSM)
Company Overview
Fortuna Silver Mines Inc (Canada: FVI.to, NYSE FSM, Frankfurt F4S.f) is an producing junior
3

silver mining company operating in Peru and Mexico. Its two main operations are the Caylloma
mine in Arequipa region, Peru and the San José mine in Oaxaca State, Mexico. Share structure
is as follows:
Shares out: 125.3m
Options & Warrants: 7.2m
Fully diluted shares: 132.5m
Current share price: $3.79
Market Cap: $478.7m
Approx cash per S/O: $0.53
All prices are in Canadian dollars unless stated. Forex U$1=CAD$1
Today’s report
Sometimes what I need is the right nudge at the right time, one that grabs my attention on an
issue that’s topical but for some reason or another has been shuffled to the sidelines for a while.
So it was with Fortuna Silver (FVI.to) (FSM) this week when Gary Tanashian, highly respected
owner of Biiwii, shot me a mail on Thursday afternoon asking for a short, general opinion on the
fundies situation at this company. I hit the reply button at Google Mail and at that moment, blank
screen waiting to be filled with words, I realized that although I had a general idea about the
state of FVI I hadn’t looked at it closely for quite a while and before I wrote back I should do
some real work instead of just having an educated guess. Which is what I did and a couple of
hours later, Thursday evening, here’s what I wrote back to Gary (the whole reply here, like I say
there are no secrets today):
That was a very good question and I've been working on it all afternoon, ever since you
mentioned it.
In fact, I think after consideration and numbercrunching that FVI isn't a long and at best is an
avoid, but I'm beginning to think it might be a short here. Could easily return to CAD$3 (that would
be approx U$2.90 for FSM).
Still working on it, but by the looks of things the 2q13 results are going to suck. And 3q13 won't be
any better at current silver prices. It currently runs a price/book of 1.75X at tonight's close and that
could drop to 1.3X if the mkt thinks FVI is only going to (do little more than) tread water from now
on That would be CAD2.90/U$2.80 more or less.
Thanks for the prompt here, i needed to revisit and i had an inkling feeling that it was overvalued
to peers at current levels.
Think about it this way (more ballpark): At the current gold/silver ratio, FVI produces around 75k
AuEq oz per year. Its mkt cap is higher than RIO.to's, which will produce 200k oz AuEq...all in
gold, too.
I'm going to give a full write-up on FVI in this weekend's edition of the weekly, I think. This is an
interesting case and with the FSM ticker, it's potentially easily shortable. I still like MVG as a
potential short though, too. m
After sending that I continued playing with the model for FVI into the wee small hours (the
strange ways some people get their kicks, no?) and come Friday morning decided I had enough
interest to indeed make this the subject of this weekend’s report, hence the CotD post that day
(2). But before we get to the meat of the report, a quick overview of today’s FVI. The company
is executing on its plan well enough and although we haven’t seen any M&A activity from the
company despite its intentions having been made pretty clear already that it wants to get bigger
via acquisitions, the corporate and managerial side of the company leaves little for complaint.
There are organic growth plans in place, with the next significant step being the upgrade of
throughput at San José to 1,800tpd and then another step up planned in 2015 when the
Trinidad vein comes online there, but these alone won’t get FVI to the guided future production
levels.
In other words, no particular problems with the company and what it’s been doing per se. Our
issue with FVI isn’t its operational viability and more about its current share price valuation in
the face of lower market prices and cost increases. In other words today’s report all about the
numbers at FVI and it’s numbercrunch work with three basic chapters:
4

1) Production
2) Costs
3) Revenues
From those three, most importantly the expectations of those three in the next two quarters to
come, we can get a handle on whether FVI is overvalued, as my initial number work on
Thursday suggested. Let’s start with the easiest one:
1) Production. As its name suggests (and unlike sillier companies such as Gold Resource Corp
(GORO)) FVI derives most of its income from silver. The gold revenue component at San José
and the zinc and lead (plus a little gold) by-products at Caylloma certainly help the revenues
and those metals are an integral part of the mix at the company, but as we’ve shown previously
(when we closely covered and owned the stock) FVI’s company performance can be reliably
tracked via its silver production alone. Here’s a chart that shows how production has been in
recent quarters, along with an estimate for 3q13:
Fortuna Silver (FVI.to) (FSM): Ag production by qtr
1200000
1000000
800000 377377 468865 486296 502835 491181 492773 580570 630000
100790
600000
400000
559959 536426 484226 509897 524906 519549 499445 493438 500000
200000
0
5
11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 tse31q3
source: company filings
rtq/gA
secnuo
San José Silver prod (oz)
Caylloma Silver prod (oz)
6
As you can see, 2q13 was a pretty decent quarter production-wise thanks to improvements at
San José. Those are expected to continue as the mine starts processing at a higher rate and
moves towards the targeted 1,800tpd by end year. Caylloma has slight fluctuations, mainly due
to grade differences and slight changes in recovery rates due to the mix of host rocks mined at
any given time, but is a reliable mine that churns out around half a million ounces of silver per
quarter. As stated above, FVI is a good mining company and knows how to operate its assets
well and there’s every reason to expect it to make good on its production targets going forward.
2) Costs. This one isn’t quite as straightforward and worth our time to take a closer look at the
costs mix at the company. The first thing to state is that we get a much better handle on the true
operating costs situation at FVI (and at any other junior for that matter) by ignoring the “cash
cost per ounce” figure offered up by the company, be that “operating” “total” “before by-product
credits” “post-credits” “co-product” or any other combination you care to mention. The way to go
here is by using the tonnages mined and it’s done like this:
a) How much did it cost to mine one tonne of rock?
b) How much revenue did one tonne of rock provide the company?
c) Subtract. That’s your margin. The end.
This way gives a simple (I really like simple) and reliable yardstick that not only shows mine
income and margin, but is easy to reconcile with the Cost of Goods Sold (COGS) that appears
on the P+L in the financial quarterlies. It’s easy to get bogged down by the cash cost per ounce
number and do something like “Oh well, they say their silver cash cost was $6.60/oz and they
say they sold a million ounces of silver, so their costs must be $6.6m right? Wait a moment!
What’s this? Quarterly COGS were nearly $24m?????” so we’re by-passing all that nonsense,
we’re considering FVI on the tonnages of rock it moves.

Here’s our first chart, that of cash costs per metric tonne at both its assets:
FVI: Cash costs per metric tonne
100
90
80
70
60
50
40
30
20
10
0
6
01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2
source: company filings
tm/$U
caylloma
san jose
The story here is fairly simple: Caylloma has seen a rapid cost increase in the last two years,
moving the price paid to process a tonne from the $50/$60 range to the $90/$100 range.
However, the last couple of quarters have seen FVI managing to reel in the cost inflation and
take a couple of dollars per tonne off the bill. It’s roughly the same story at San José, but as that
mine only kicked off in 3q11 the cost inflation was limited to 2012. Again in 2013, costs per
tonne have been cut slightly and we should note that overall, San José is a more efficient mine
and moves its tonnes at a lower price (e.g. 2q13
FVI: calc. tonnage costs vs reported COGS, per qtr
saw Caylloma at U$93.34/t and San José at $m
30
U$77.18/t). tot tonnage calc cost
25 tot reported COGS
We can then do some mathematics and come up
20
with a chart like this one (right). This shows the
relationship between the COGS reported in the 15
company quarterly financials and the direct
10
calculation of tonnages X cost per tonne that FVI
also reports. As you can see, there’s a pretty 5
steady relationship between the two datasets and 0
that isn’t so surprising, as the cost-per-tonne in 1q12 2q12 3q12 4q12 1q13 2q13
mine is always going to be the majority of the source: FVI filings, IKN COGS est for 2q13
COGS reported by a miner. The main difference
between the two is that of depletion and depreciation (eg in 1q13 that line item was $4.65m)
along with a few other smaller items. The point here is that by calculating the tonnage X cost
per tonne we have a decent and reliable handle on the total costs that FVI will report in any
quarter. When it comes to 2q13, the quarter that FVI is about to report in August, we expect
COGS to come to around $24m (and a little further out the best guess for 3q13 is $25m).
3) Revenues. This is where the fun really begins (well, “fun” as in “maybe people don’t realize
yet how little fun FVI is having with its revenues”). The first thing we do is simple, that’s to dial
up the 2013 spot price for silver using the London Fix and the Kitco chart:
We note that just by eye it’s clear that 1q13 had much (and I mean much) better average prices

for silver than 2q13 and that 3q13 is currently looking even worse than 2q. Step two is to
compare the London Fix price for silver the the FVI reported realized price for silver per quarter,
which looks like this:
FVI: London Fix Ag versus FVI realized Ag price
U$/oz Ag per quarter
35 realized $
London fix
30
25
20
15
10
5
0
1q12 2q12 3q12 4q12 1q13 2q13est 3q13est
source: Kitco, FVI data, IKN ests
As you can see, rare indeed is the period in which FVI’s realized price varies from the world
spot price average by more than a couple of pennies either side. In other words, the London Fix
is a very good proxy to what we can expect from FVI’s realized price and that’s what we’re
assuming for 2q13. In the quarter just gone the London Fix averaged U$23.11/oz and that’s
what we guide for FVI’s revenue per ounce. Meanwhile, your author’s best guess for our current
quarter (feel free to disagree, as there’s still a long way to go to September 30th) is for U$21/oz
Ag average.
Step three is to consider exactly what “realized price” means for FVI, because there’s more to
this one than meets the eye. Before FVI gets a cheque delivered to HQ from the metals buyers
it has to pay (and I quote from the company
MD&A) “metal deductions, treatment and
London Fix Ag avg for each quarter, minus FVI Net
refining charges”. Once those are subtracted
realized price for silver
we’re left with “Net Realized Price”, which is 5 4.63
the money FVI gets for each ounce of its 4.18 4.34
3.79 3.85
silver. Here’s a chart that maps the difference 4 3.55
3.18 3.11 3
between the London Fix average per quarter 3
and the Net Realized price per ounce at FVI:
2
As you can see it’s ranged between $3.13/oz 1
and $4.63/oz in the last seven quarters (since
0
San José started operating). Considering that
1q13 was the lowest of the bunch and being
generous to FVI, we’re going to assume a $3-
or-thereabouts per ounce difference for the
next two quarters. Which allows us to modify that previous chart above and come up with this:
FVI: London Fix Ag versus FVI realized Ag price
U$/oz Ag versus Net realized price, per quarter
35
Net realized $
30 realized $
London fix
25
20
15
10
5
0
1q12 2q12 3q12 4q12 1q13 2q13est 3q13est
source: Kitco, FVI data, IKN ests
Or to isolate the money shot, here’s the Net realized price per ounce for silver at FVI, plus our
7
11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3
source: FVI data, Kitco, IKN ests for 2q13/3q13

guidance for the next two quarters:
FVI: Net realized price for silver, per qtr
30 27.99 25.66 26.06 28.3 27.2
25
20
20 18
15
10
5
0
8
21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3
U$/oz Ag
source: FVi data, IKN ests
The writing’s on the wall, FVI is going to get a lot less money for its silver. The 3q13 estimate of
$18/oz is tougher to call because we don’t know what silver’s going to do in the next couple of
months. However the 2q13 estimate of $20/oz net realized isn’t going to be far out. The problem
here is that FVI got $27.20 in 1q13 or $28.30 in 4q12 (examples could continue flowing) but the
bottom line is clear. If FVI sells its million ounces of silver in 2q13 it’s going to get around $7m
less for its wares than it did in 1q13. That’s a lot of money for this size of company.
1)+2)+3): Putting it all together: Here’s how we see the financials developing in 2q13 and
3q13 compared to previous quarters at FVI. First up a straight fight between revenues and
costs:
FVI.to: Revenues vs Costs
50
45
40
35
30
25
20
15
10
5
0
01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3
U$m
revenues
COGS
source: company filings
As is clear, with revenues estimated at $33m for the quarters and costs steady the margin is
dropping fast. This chart shows the difference, via Mine Operating Income (MOI)
FVI.to: Quarterly Earnings overview
50
45
40
35
30
25
20
15
10
5
0
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3
source: company filings, IKN ests
srallod
fo
snoillim
revenues
COGS
Mine Op. Income
To recap:
• Costs are going to come in roughly in line with previous quarters.

• Revenues (and here we’re using silver as our guide metal, but remember FVI also get
cash from its gold, zinc and lead) are going to be significantly less than previous
quarters due to the market price drop.
• Therefore margins are squeezed and mine operating income suffers as a result. Our
model estimates MOI at $9m for both 2q13 and 3q13 (in 3q13 lower average metals
prices are offset by better production numbers from San José).
Before we get to operating income and hence net profits, we have to deduct the “other
expenses” line item at FVI, which is mainly G&A. In the last two reported quarters that’s been
$5.29m and $5.78m, but there’s reason to
suppose that FVI will make good on its cost 22 FVI.to: Net Earnings per qtr
20
cutting promises at corporate level as well, so 18
until proven otherwise (by the 2q13 numbers, 16
14
basically) I’m estimating $5m per quarter for this 12
10 line. Once tax is paid, here’s how the company
8
numbers are estimated for net profits: 6
4
2
We’re expecting between $2.5m and $3m net 0
-2
for the next two quarters at FVI, or and EPS of
around 2c to 2.5c. And that above, ladies and
gentlemen, is the short idea in a nutshell: From
the looks of things FVI is about to return a much
reduced net profit for 2q13 and if metals prices don’t pick up soon, even with more production in
the pipeline it’ll become clear to those who crunch numbers that 3q13 isn’t going to be much
better. We’re staring at a company with a 10c forward annual EPS and when your share price is
$3.79, that implies a 38X P/E ratio, the type of number that could tumble very easily, which
means the share price is pulled down. Which means today, at $3.79, FVI looks expensive and
potentially shortable.
To short or not to short, that is the question
And it’s the question I’ve been considering all weekend.
• I definitely know that I’m not a buyer of the stock at these levels. FVI looks priced to the
hilt and I’m pretty sure that people aren’t expecting 2q13 to come in at a 2c or 3c EPS.
• I know that FVI looks expensive here, compared to its earnings potential and compared
to peers (e.g. if I wanted a spec long in the silver space today, IMPACT Silver (IPT.v)
would make much more appeal due to its leverage and smaller market cap).
• I know that if I held FVI today I’d take at least some money off the table (and notably,
that’s what Chairman Simon Ridgway has done very recently (3) by cashing in 87k of
his options for a net of around $200k), which is a “soft short” of its own calling I
suppose.
But would I go actively short today? After much consideration the answer is “No” and the
answer lies in the balance sheet items, but if FVI goes much higher I will short it. Here’s why.
Yes, I’m that boring old fogey who likes companies with strong balance sheets and that’s what
FVI has. Being a growth-oriented company it’s
spent a lot of its free cash flow on improving
its assets, running exploration programs,
investing for its future etc and when you check
the numbers it stands out. Here’s the
development of assets, which show the ever
growing value of its fixed portion, while current
assets (cash etc) might have dropped a bit but
they’re still in very good shape and the
company has tons of liquidity to see it through
Meanwhile, liabilities show that FVI has kept
its books tight.
9
01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3
source: FVI filings
srallod
fo
snoillim
FVI.to: Assets Breakdown per qtr
350
300
250
200
150
100
50
0
90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3
source: company filings
srallod
fo
snoillim
fixed
other current
cash&ST

FVI.to: Debt Breakdown per qtr
60
55
50
45
40
35
30
25
20
15
10
5
0
10
90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3
source: company filings
srallod
fo
snoillim
LT debt
current debt
We’re forecasting a slight drop in overall working capital for 2q13 and 3q13, but that will depend
greatly on whether FVI decides to defer any of its
capex and development plans due to the crappy
market for metals. But even if it ploughs ahead this
is a company with no problems cashwise in the
indefinite future.
Finally, we must remember that FVI has done very
well in keeping its share count low. This is a tightly
structured company and with just a tad over 125m
shares out (and not that many options on top) the
lack of share dilution has helped to maintain the
above average share price performance. As I said
at the beginning, the market for its wares may
have screwed things more than a touch for FVI,
but it’s a very well run company.
This meta-data (to use a latest fashion buzzword
and attract the NSA crawlers to your e-mail
inboxes) chart below underscores the value
that’s been added by FVI and its capital
expenditures program. We currently estimate
Book Value (via the oldschool definition of total
assets minus total liabilities) per share at $2.23,
which for example is 40c higher than end 2011.
This means the price per share is backed up by a
higher asset value and the P/BV ratio of 1.7X
may be a little high, but provides decent
backbone.
FVI.to: Equity, BV, PPS, ratios
3.40
3.20
3.00
2.80
2.60
2.40
2.20
2.00
1.80
1.60
1.40
1.20
1.00
90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 won
FVI.to: Working Capital per qtr
110
100
90
80
70
60
50
40
30
20
10
0
BV/share
BV/PPS ratio
source: company filings
90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3
source company filings
srallod
fo
snoillim
FVI.to: Shares Out
140
120
100
80
60
40
20
0
90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 tse31q2 tse31q3
source: company filings
serahs
fo
snoillim

Yes that could drop to 1.3X if the market decides to whack into FVI on a set of bad revenues
results. That would imply a $2.90 downside target which is 23.5% lower than today and
probably enough for a short trade. However, it’s not at all certain that FVI will drop that low, as
we note that the lowest seen since end 2009 (when FVI traded at $2-and-bits per share) is
1.5X, which suggests FVI will only drop to $3.35, a little over 10% down and not really enough
for a short trade (in my personal opinion, again feel free to disagree).
Conclusion
I’m not a buyer of FVI, not before what promises to be a underwhelming 2q13 financially. Not
with a 3q13 looming that doesn’t look any better, either. I also recognize that the market is
paying a lot more attention to earnings ability and less attention to underlying NAV valuations
than it was just six months ago (and the world is a better thing for it, imho) so if the anal ysts
who cover FVI decide to punish it for a weak bottom line in 2q13, the stock may suffer from
downgrades and suchlike. However, for the time being and at this price, expensive though it
might look, I’m not a shorter of FVI (or more correctly FSM, because its NYSE listing makes
shorting a whole lot easier) because its asset value and the way in which it has prudently
invested in its future looks enough to soften any immediate share price weakness on straight
quarterly earnings.
However, my attitude will change if FVI goes much higher. At perhaps $4.20 (getting close to
2X P/BVshare) there would be enough downside to get me to take a short position, so if the
market decides to price FVI up any further there’s still a potential short here. Therefore at the
moment the official IKN Weekly call on Fortuna Silver Mines Inc. (FVI.to) (FSM) is avoid, but a
close eye will be kept for a shorting opportunity in the near future.
End of Report
Stocks to Follow
A sudden expansion of names on the list and we now have 14 open positions. Of those, seven
made gains last week (BTO.to, LRA.v, BCM.v, PVG.to, CSI.to, AQM.v, DAR.v) one was
unchanged (NET.v, though we could claim it’s up 100% from the 0.5c of last week, the real
story here is that it traded constantly at a penny) and six lost ground (RIO.to, RIO.to trading
position, IRL.to, GORO short, TAHO short, FCV.v). The worst percentage loser was Focus
Ventures (FCV.v down 11.8%) while the biggest winners were Darwin Resources (DAR.v up
11

50.0%), Bear Creek (BCM.v up 24.6%), AQM Copper (AQM.v up 14.3%) and B2Gold (BTO.to
up 13.4%) and of that little lot my favourite by a long way was the move in B2Gold. You’re
unsurprised, I can tell.
With the changes of the last week we now have 14 open positions on our ‘Stocks to Follow’ list,
one less than our self-imposed maximum. Six of the positions are in the green, one is
unchanged and seven are in the red.
Company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
Top Picks
Rio Alto Mining RIO.to Str buy C$2.30 07-apr-11 C$2.25 -2.2% $6.29 tgt time to buy
B2Gold BTO.to hold C$3.07 28-nov-12 C$3.13 2.0% $5.70 tgt added Apr '13
Recommends
Minera IRL IRL.to spec buy C$0.73 22-jul-12 C$0.21 -71.2% waiting on finance news
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.90 -21.7% solid biz model, LT hold
Gold Res Corp GORO short U$9.70 03-may-13 U$8.20 15.5% to tgt, port hedge cont.
Bear Creek BCM.v hold C$2.06 30-may-13 C$2.13 3.4% Cheap at $20 Ag
Rio Alto Mining RIO.to Str buy C$2.68 07-jun-13 C$2.25 -16.0% ST trade position, separate
Pretium Res PVG.to buy C$8.20 11-jun-13 C$8.72 6.3% New position, M&A play
Tahoe Resources TAHO short U$13.10 08-apr-13 U$15.07 -15.0% added to short, port hedge
Colossus Min. CSI.to buy C$0.72 24-jul-13 C$0.75 4.2% trading buy, 90c tgt
Smaller/Riskier
AQM Copper AQM.v hold/add C$0.31 16-oct-11 C$0.08 -74.2% want to add at 6c
Focus Ventures FCV.v spec buy C$0.175 01-jul-12 C$0.075 -57.1% revised tgt 25c
Darwin Res DAR.v spec buy C$0.10 14-jul-12 C$0.15 50.0% drill res-Aug'13
Network Expl. NET.v spec buy C$0.01 22-jul-12 C$0.01 0.0% V. small spec, foothold
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.
Colossus Minerals (CSI.to): Position opened. The lowest price traded once the halt was
lifted after the financing announcement was 68c, but that dried up very quickly, 72c was
basically the best real offer around and I was more than happy to get in this cheaply. The Flash
update (see appendix 1 below) called the buy and hoped for 75c, but when the half warrant
that came with the unit was set as low as 90c, it became clear what kind of discount was being
demanded by the big money market and the equity was depressed a little further than expected
as a result.
No matter: With this trade in place we can now set a price target of 90c for our CSI 8 (i.e. the
12

warrant exercise price) and I’m very confident we’ll see that number once the financing is done
and the pump machine goes into
operation, and sooner rather than later,
too. Remember this is a specific trade
with a specific target, there won’t be
any messing around and if 90c is seen
it’s taken (for the +25% pre-commish
result). Your author is on CSI to ride
the Canadian brokerage bullshit pump
machine, not to be holding through on
CSI and giving them copious rounds of
applause when (if?) they announce first
gold pour at Serra Pelada.
Network Exploration (NET.v): Position opened. I got what I wanted, namely a tinysmall
position at a penny (without ever worrying about whether I could get anything at half a cent).
Volumes weren’t that great but on the other hand, it’s notably the first week since July 2012
that NET.v has shown trades on every single day of a market week, five days in a row.
This position is now set and we won’t be dwelling on it regularly, because of its tinysmall size
and because it’s all about 1) the company nailing down its financing deal in order to 2) drill
Picha. If those two things happen this one could turn us a decent buck in profit, but until they
do there’s going to be somewhere between little and nothing to talk about. However (and a
final reminder), be clear that this is a near-term trade, not some ultimate bet on the next
potential multimillion ounce deposit in Peru. If the share price moves up and trading takes hold,
there’s nothing that will stop your author from selling the position and taking his that’s-
Christmas-paid-for small profit. End.
Tahoe Resources (TAHO): Added to short position. You’ll note that the cost average has
bumped up a little on the above table to U$13.10 and that’s because I added a few (not so
many, but a few) extra to my short position when the news about the court ruling started
moving around last Wednesday. As it turns out, the market decided to believe the spun-to-
within-an-inch-of-its-life version put forward by the company (4) and summarily reject the
merest thought that the company might have a serious and growing legal problem in
Guatemala and so be it, but this issue is not going to go away, ladies and gentlemen. With FVI
(or even NG below) I have my doubts about its merits as a short, but this one is starting to look
easier and easier to hold for the downside move, both as a portfolio hedge and for a potential
waterfall drop. The opposition to the Escobal mine is growing in Guatemala and with this partial
court victory it will feel even more encouraged about using legal recourse. By the same token,
more local violence is definitely on the cards if the company and the government decide to try
and play it dumb and ignore (or interpret to their own satisfaction) the court rulings handed
down.
Darwin Resources (DAR.v): Fifteen minutes before the end of the show on Friday,
somebody decided to strip all the asks from DAR and popped the stock up to 15c, for a 50%
win on the day and a 66.7% win on the week. I’d be more impressed if it had taken a decent
amount of cash to do the job, but at 15,000 shares we’re talking just over $2,100. just goes to
show how little cash you need to make an eyecatching price move down here at the lower
shelf. What I can guarantee you, ladies and gentlemen, is that if DAR starts to trade seriously
around 15c next week I’ll sell my little packet of shares and walk away with the trading win I
was looking for, but I’d also venture to say that come Monday DAR will be back at 11c or 12c.
However, we did have news from the stock and that’s of far more fundamental interest. On
Thursday the company announced (5) that its drill program had finished at Suriloma and that
13

results would be forthcoming in mid-August on the holes. I have a few thoughts brewing on this
but as we’re talking about a thinly traded stock and we have at least two, perhaps three weeks
before drill results showtime comes around, I’m going to defer comment until next week when
I’ve had chance to talk to a few people and make a couple of calls. For the time being I’m still
interested in snagging a few more shares at 10c if possible, but be clear that this has always
been one of the small-sized, “round the edges” near-term trades. If you want a larger paddling
pool, DAR isn’t the one to own right now and I’d suggest RIO.to or CSI.to for all your trading
needs.
Gold Resource Corp (GORO): A Friday night NR from GORO (6) announced that production
at the Arista mine had been temporarily suspended due to a rockfall death. The suspension was
expected to continue “several days” according to the NR and the investigation will be under the
auspices of Mexico’s Work and Social Security Ministry (normal procedure there), though under
normal circumstances such stoppages aren’t for more than 48 or 72 hours, so I’d expect an
announcement early this week to say that GORO is back to work.
By the way, last week I forgot to mention the 20,500 oz AuEq production for 2q13 that GORO
announced on July 18th (7). That was basically in-line with expectations and the main concern
longs must have here is about costs. It’s really easy to remain short here, especially as HOC is
certain to dump its next chunk of shares as soon as it can (i.e. at the start of 4q).
AQM Copper (AQM.v): A bit of interesting gossip picked up from a reliable source. It seems
that before the deal AQM struck with Mitsubishi recently (the one that made the price pop (8)),
Teck already had an offer on the table to buy out AQM from Zafranal. However, it was a pretty
measly offer (I’m not privy to the details) and wasn’t interesting enough for the AQM
management to take seriously. However, talks at that point had already advanced with
Mitsubishi to the point where the Japanese-based company had already laid out its tentative
offer. At this point AQM honcho Bruce Turner apparently went to Teck’s Lima office and played
it as straight as he could, told Teck that its offer wasn’t good enough and that they had a better
one already from a third party, but they were still interested in doing a deal with Teck if the
offer were to be improved. The people at Teck thought AQM was trying to bluff them and didn’t
make any improvement, at which point AQM did its deal with Mitsubishi. Once it became clear
to Teck that AQM, hadn’t been bluffing, there were some rather upset and red faces in the
company, particularly amongst those members of its staff that were very keen on the Zafranal
project. What we now have is a big JV partner that has its nose somewhat out of joint and
unhappy with the way in which it’s lost the chance to buy the other half of Zafranal that it didn’t
own. This pricking of the pride gland may mean the decision to move forward and begin the
necessary development program may take a little time (my personal best guess is that 2013 is
now a write-off) but Teck should come round in the end and the inference from the games that
the boys and girls have played is that this project is far from dead in the eyes of its owners.
B2Gold (BTO.to): Our Top Pick had another good week, but I can’t help but feel it’s getting to
the top of its potential as a runner in the
near term and I’m thinking of re-allocating
at least part of the cash held here into
other places. I’m not shifting out, but I
wouldn’t stop anyone from reallocating at
least some of their cash from BTO to RIO
right now.
Rio Alto Mining (RIO.to) (RIOM): The
flipside to BTO today, RIO is lagging its
peers at the quality end of the junior PM
sector. On watching the first batch of 2q13
results come in from the larger miners, it
occurs to your author that his model until
now that assumed RIO has sold its wares at
14

an average of U$1,400/oz Au during 2q13 (eg IKN219 and a couple of previous issues, too)
may be on the high side and that U$1,350/oz is probably closer to the mark, as prices in the
month of June were at their lowest for gold and that’s when RIO produced the most on a
monthly basis. If so, that would cut your author’s earnings forecast for the quarter from 11c to
9.5c-10c per share.
But it’s of small effect, in fact. At current prices RIO is trading a forward PE of around 5.7X and
that’s supercheap next to peers. On the above table we’ve bumped up the reco from buy to
“Strong Buy” in the short-term, because this lag is giving a great trade opportunity. I’d expect it
to last until RIO publishes its 2q13 financials at which point, the worst rumours that have done
the rounds in Lima will have been disproven and the block on the share price removed. As long
as gold doesn’t cave in on us again, RIO is a sparklingly good buy at these levels.
Bear Creek Mining (BCM.v): A good week for the share price, though we need to remind
readers once again that without a significant uptick in volume, any gain such as the one we
saw last week must be considered at least vulnerable. The best day was the 83k traded
Tuesday and if that’s the best, you don’t want to know about the worst.
In Corani news there was this Q&A with the mayor of the Corani district published in the
regional newspaper Los Andes (9) that had the mayor saying he and his fellow citizens were
very happy about the way in which things were going between the locals and the company.
There are a couple of dates in August and in September that concern the round table working
group (company, locals, Mining Ministry) and there’s an inference we can pick up between the
lines that if all goes well at those stages, there will be reason to expect the environmental
approval permit (EIA) to be awarded to BCM at Corani. That, ladies and gentlemen, is one of
the two stock-moving catalysts we’re waiting for here. The other is probably more important,
the update on the feas study, because the market seems to be confident about BCM getting its
EIA and has more doubts about the economics at the new lower price deck for silver.
Lara Exploration (LRA.v): A small gain on the week pricewise, but the fun was on
Wednesday when 442k shares of LRA changed hands, that’s a lot for this normally lightly traded
stock. No news from the company. But we’re waiting on some word from the Liberdade copper
JV in Brazil. Codelco likes it, why shouldn’t we?
Pretium Resources (PVG.to) (PVG): Pretium had another good week and thanks to that,
even your author’s premature long position that didn’t take advantage of the lowest prices is
now showing a profit. Last week’s performance came on decent and positive fundamental news
too, with PVG unveiling its new discovery, the “Cleopatra” vein in the VOK target that shows
another target with off-scale grades, much like the original discovery on-site. We’re again sure
to hear from the “b-b-b-b-but how will they be able to mine it?” brigade who’ll tell you about
the thin structure and the mine dilution problems. They would have enjoyed telling you how
Goldcorp at Red Lake in the 90s was doomed to failure, too.
The Copper Basket
After thirty weeks of 2013 The Copper Basket is showing a 29.06% loss to level stakes.
15

company ticker price 1/1/13 Shares out Market Cap current pps gain/loss%
1 Augusta Res AZC.to 2.43 144.1 324.23 2.25 -7.4%
2 NGEx Resources NGQ.to 3.40 168.63 290.04 1.72 -49.4%
3 Lumina Copper LCC.v 9.43 43.46 208.17 4.79 -49.2%
4 Copper Fox CUU.v 0.83 399.61 195.81 0.49 -41.0%
5 Nevada Copper NCU.to 3.50 80.5 161.81 2.01 -42.6%
6 Hot Chili Ltd HCH.ax 0.72 286.78 126.18 0.44 -38.9%
7 Reservoir Min. RMC.v 2.41 41.46 123.14 2.97 23.2%
8 NovaCopper NCQ.to 1.80 51.89 109.49 2.11 17.2%
9 Panoro Minerals PML.v 0.62 204.7 57.32 0.28 -54.8%
10 Western Copper WRN.to 1.39 93.78 52.52 0.56 -59.7%
11 Curis Resources CUV.to 0.70 56.31 44.48 0.79 12.9%
12 Oracle Mining OMN.to 0.80 49.03 20.59 0.42 -47.5%
13 Candente Copper DNT.to 0.375 121.93 18.90 0.155 -58.7%
14 Yellowhead Min. YMI.to 0.59 60.97 12.80 0.21 -64.4%
15 Strait Minerals SRD.v 0.08 56.86 3.41 0.060 -25.0%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg -29.06%
A reversal for the names last week, as after improvements all through July the overall basket
average lost 2.67% on the week. No fewer
Copper Basket 2013 average, weekly
than ten of the names showed weekly losses
12%
(not listing them all) with one staying 8%
unchanged (DNt.to) and four weekly winners 4%
0%
(HCH.ax, WRN.to, NCQ.to, CUV.to). The best
-4%
two were Curis (CUV.to up 12.9% and Hot -8%
Chili (HCH.ax up 10.0%) while the worst -12%
-16%
numbers were posted by Strait Minerals
-20%
(SRD.v down 21.4%), Copper Fox (CUU.v -24%
down 21.0%), NGEx Resources (NGQ.to -28%
-32%
down 17.7%), Panoro Minerals (PML.v down
17.6%) and Reservoir Minerals (RMC.v down
10.3%), which means that chunks were
taken out of several of the larger junior
coppers.
The price action in copper was dominated by the
late-week slump, which according to all market
commentators was caused by China and a
decision to “re-allocate resources” (I think that’s
how they phrased it, but Mandarin isn’t my
strong point so I have to go with the
translations) inside the state plan. The
assumption on Friday on the news was that
copper imports will drop because smelter
capacity will be curtailed. Well, that’s maybe yes
and maybe no, because these things rarely work
out as badly as the West thinks it’ll go for China’s
economy.
We’re at the end of another month (my stars,
they zip by quickly) so it’s time to catch up with
our tracking inventory charts for copper. The
story of July is of a metal that started to see
some de-stocking in the world’s warehouses, with all three systems with less copper in them
now than they had end June (LME down from 665.8kmt to 621.2kmt, Shanghai down from
16
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 ht7luj ht41 ts12 ht82
source: IKN calcs, TSX data
31/1/1
morf
egnahc
%

182.5kmt to 161.6kmt, Comex down from 66.3kmt to 59.8kmt). That little lot means that there
are now 842,509mt of copper in the total world warehouse system, down 7.9% on the month.
Not bad.
However, we also note that the concentration of stocks towards the LME warehouses has
continued, with those inventories now claiming 73.73% of the total. The people who control the
LME stocks have a big say on world pricing for copper at the moment and if we’re to believe the
recent spate of reports, Goldman Sachs and Trafigura are the head players in that game.
As for the weekly totals, world stocks dropped by 2.8% or 24,432mt to the aforementioned
842,509mt. LME dropped by 2.7%, Comex dropped by 2.3%, Shanghai dropped by 3.5%.
Meanwhile, LME cancelled warrants remained high while dropping another point and a bit, now
showing 51.5% of total LME inventories under cancelled warrant. It’s a fix, for sure.
Cancelled Warrants at LME, IKN157 to date
60%
50%
40%
30%
20%
10%
0%
17
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 912NKI 122NKI
source: Cochilco, LME
rof
yrotnevni
EML
%
latot
yreviled
resu-dne
Copper inventories: percentage held per exchange
80
70
60
50
40
30
20
10
0
Now for updates on some of our basket stocks
Reservoir Minerals (RMC.v): Post-bell Monday we had news (10) out of RMC on its flagship
Timok property, the one that all the fuss is about as
Freeport (FCX) option in to up to 75%. On the
whole the news was good and it’s gone a long way
to confirming the absolute prospectivity of Timok,
but you wouldn’t have guessed it from the way in
which the stock price reacted. Howover (and begad
I have witnesses) I wasn’t in the least bit surprised
to see RMC selling off on the news ad that’s
because this current market atmosphere might
have improved a little (from Flatlining to Intensive
Care?) but it’s still one in which the market will grab
at any excuse to take a profit. In this case, after I’d
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj luj
Copper inventories, per month 2012/2013
LME Shanghai Comex 1000000
800000
600000
400000
200000
0
source: Cochilco
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj luj
Mt Cu
LME Shanghai Comex
source: Cochilco

digested the generally very positive information on Monday evening i went back to the NR and
looked at it with a pure trader’s optic. The answer I got was “Ok, decent grade and decent
thicknesses, but the grade is lower than the previous holes and the mineralization starts way
underground this time...take cash off the table before the other guy does.” The result was
logical and can be seen in this five day chart, with a waterfall drop Tuesday morning and
further weakness midweek. The recovery Friday was good however, and there are more
positives to be taken away by longs from the traded volume all week, which saw 200k and 300k
days from a stock that averaged less than 70k per day previously (and then only in fits and
starts).
Yes, it’s all unfair of the market to sell RMC off on good results. That’s because these very long
holes being reported cannot possibly give the same type of results as the ones that catapulted
Timok to fame. That’s because they were never intended to do so, as these holes are all about
FCX trying to find out real information and get a handle on what Timok really contains, rather
than drilling by a bullshit junior that’s trying to wow the market at every turn. The holes
reported last week (e.g. 700m of 0.7% copper for crying out loud!!) were world class assays
but due to the depth (mineralization starting 800m to 1.2km down) wouldn’t make for an open
pit mine on their own. However, you sit the mineralization next to the stuff already found and
you get to see that access to that depth becomes more logical and makes perfect economic
sense for a block caving method once the easier access rock has been mined out.
There’s an awful lot to like about this company today and if you take a wholly positive view of
the thing, as does shareholder Brent Cook, you like him would call Timok (and I quote) “...the
most exciting copper/gold play in the world right now”. However, from where I’m sitting that
smells like being damned by faint praise, because Timok could also be called and using the very
same token the only copper/gold play in the world right now. This is not a vibrant sector of the
market, not by any stretch of the imagination and the copper sell-off we saw Friday (on slack
China demand talk) again underscores the nerves and potential weakness here.
Yes, FCX obviously likes Timok and likes it a lot. Yes, it’s drill assays have been nothing short of
world class. Yes it’s going to be mined in some shape or form some day, because rock of that
calibre doesn’t stay underground once it’s discovered. But how much is there? Will it be big
enough for FCX? And in the meantime, will copper spot go under $3, or (heaven forbid) move
towards $2.50/lb? The person dismissing that potential market move out of hand hasn’t been
paying attention recently.
I’m on record as saying that yes, I want to own RMC.v stock. Not as a flippy trade (all too
common in my investment patterns these last few months) but as a real live investment with a
long-term outlook and multi-bagger potential. That’s still true but I’m also keen on getting a
value entry point and I suspect that entry may come soon. Copper is showing weakness, the
whole copper junior exploreco universe is in the doghouse, it won’t take much for a lightly
traded stock to get sold off sharply...and then I’m a buyer.
However, and a final wrinkle, is that the clock may well be ticking on my procrastination and I’ll
need to make a decision soon-ish. That’s because RMC is hosting an analyst’s site visit to Timok
on September 11th to 13th and I strongly suspect that all the cheap stock will evaporate once
the anal ysts have seen first-hand what Timok has to offer the world and been one-on-one with
18

a bunch of geologists that think all their Christmases and Birthdays have come at once by
getting a place on this gig. Mid-September is shaping up as the poop-or-off-pot moment for
your author. Time will tell.
Strait Minerals (SRD.v): Good news for SRD on Thursday when the company announced
(11) it had finally secured its drill permits for the Alicia project from Peru’s Mining Ministry
(MEM). The question now: When will the drilling start?
This time last year SRD and Teck were all ready to drill and champing at the bit when the arch-
idiots who run the Peruvian bureaucratic mess put a halt to things, but now that the permits
are issued, we hear that internal strife in the Lima offices of Teck, where a whole bunch of lay-
offs have just been order down from HQ in Canada, mean that there’s doubt on exactly when
Teck, the operator of the Alicia program, will get its act together and drills on site.
I like this tinycap and think it may be a trade, especially if it stays at the current 6c to 8c price
range for the time being. But I’m not interested in picking it up again, even as a tiny trader in
the DAR.v or NET.v style, until it announces that the drills are turning at Alicia. Then we’ll see
where things stand.
Copper Fox (CUU.v): The drop doesn’t surprise but the speed of it does. Last week I floated
the idea that CUU would now be dead money and gently tail into the land of the ignored, but
the speed at which it’s sold off now suggests that even its hardcore fanclub has finally seen a
bit of sense and will leave Ernesto Echavarría so find out that he’s been had all by himself.
Panoro Minerals (PML.v): Last week we suggested that the pop in PML would have limited
legs. This week made that call look smart (luck or judgement, you decide). The person who
sold their 10k shares at 34c on Monday did well, trading was either thin or non-existent the rest
of the week and Friday saw the selling down movement of a stock that was promoted too
quickly in this bearish market.
The Lottery Ticket Basket
After 30 weeks of 2013 The Lottery Ticket Basket is showing a 32.27% 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 17.37 0.250 100.0%
3 Bellhaven BHV.v 0.14 137 17.13 0.125 -10.7%
4 AQM Copper AQM.v 0.08 105.57 8.45 0.080 0.0%
5 Fancamp Expl. FNC.v 0.125 118.41 6.51 0.055 -56.0%
6 Tango Gold TGV.v 0.13 45.59 4.79 0.105 -19.2%
7 Darwin Resources DAR.v 0.20 26.16 3.92 0.150 -25.0%
8 Glass Earth GEL.v 0.155 104.79 3.67 0.035 -77.4%
9 Inca One Res. IO.v 0.12 34.0 3.23 0.095 -20.8%
10 Copper North COL.v 0.10 58.62 2.34 0.040 -60.0%
11 Gryphon Gold GGN.to 0.085 194.64 1.95 0.010 -88.2%
12 Rio Cristal RCZ.v 0.025 149.26 1.49 0.010 -60.0%
13 Netco Silver NEI.v 0.025 47.01 1.18 0.025 0.0%
14 Firestone Ventures FV.v 0.045 36.32 1.09 0.030 -33.3%
15 Cream Minerals CMA.v 0.03 155.34 0.78 0.005 -83.3%
Portfolio avg -32.27%
19

We had a big improvement for The Lottery Ticket Basket last week, thanks mainly to the
percentage moves in just two stocks. The
scores were six winners (MLN.v, BHV.v, FNC.v, 25% Lottery Ticket Basket 2013 average, weekly
AQM.v, DAR.v, NEI.v), six unchanged 20%
15%
(GGN.to, GEL.v, TGV.v, COL.v, RCZ.v, FV.v) 10%
and three losers (EGE.v, CMA.v, IO.v) and one 5%
0%
of those three losers was the chunky 50.0% -5%
-10%
lost by Cream Minerals (though it was only
-15%
half a cent). However, the winners included -20%
-25%
the very big percentage gains in Darwin
-30%
(DAR.v up 66.7%) and Netco (NEI.v up -35%
-40%
66.7%) as well as the wholly laudable moves -45%
in Bellhaven (BHV.v up 25.0%) and Fancamp
(FNC.v up 22.2%).
So overall we’re back to where the overall
table percentage loss stood in May and June, which kind of makes sense in the greater scheme
but we must recall that we’re now carrying several zombie companies in this basket of tinycaps,
companies that are never coming back to life.
Netco Silver (NEI.v): Up 66.7% but don’t ask me, because I don’t have a clue as to why. No
news and no SEDAR filings, either. At a market cap of $780,000 it’s expensive compared to the
current going rate for a shell in Vancouver, too.
Bellhaven Copper and Gold (BHV.v): BHV had a very decent trading week and importantly
we saw volume too. Monday 173k traded, Tuesday a thin 30k, then Wednesday 1.4m, Thursday
nearly 800k and Friday over 500k. Not bad at all and has the look of people coming in on a
recommendation from some quarter or other (I haven’t bothered to look around the web to see
if that’s true or who it might be, it’s just the impression picked up from the size and shape of
the trades).
Regional politics
Colombia’s “National Interest” projects: A complete red herring.
Earlier in the week Colombia’s government published (12) an official document list of forty
mining projects that it officially considers “in the national interest” and it got plenty of column
space in the country, not least because the Eco Oro (ex-Greystar) controversial ‘Angostura’
gold project in the Páramo high country was included as one of the projects. Along with several
non-metallic mining projects (coal, salt etc) here’s the section of the list that covers the metals
mining projects deemed worthy of consideration.
In short along with Angostura you have the Cerro Matoso nickel expansion project that’s
already had its environmental licence refused, you have Cosigo’s going-absolutely-nowhere
20
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 ht7luj ht41 s12 ht82
source: IKN Weekly data, TSX
2102/1/1
morf
egnahc
%

project in the South, you have Eike Batista’s AUX (poor Eike doesn’t have the cash to build that
one any more) and you have AngloGold Ashanti’s several projects that include La Colosa.
Suspicious to say the least, which gets your author scratching beneath the surface of the simple
“government source” to find out exactly where it came from. The answer is that the paper is a
resolution (i.e. a document that can be emitted without peer review by any government
department) dated June 19th and so unimportant that it was only officially passed through the
public disclosure system a full month later. It was signed off by the vice-president of oversight,
control and mining security, one of the departments of the National Mining Agency (ANA), or if
you prefer, an underling to a department head, one of several department heads in the one of
the government mining offices. In other words, this whole thing in an exercise in governmental
bureaucracy that bears little resemblance to any sort of practical list of projects or companies to
move forwards, almost certainly created by a department out of touch with sector reality and
that hasn’t bothered to do the slightest by way of interdepartmental investigation to see
whether all branches of the executive agree with its findings. This is an example of the
officialdom crap that comes from LatAm governments of all shapes and sizes and is 100%
ignorable. However, that didn’t stop the bullshit merchants at Eco-Oro (EOM.to) from publishing
a NR on the subject (13) and trying to make it out to be some sort of important step, clowns
that they are.
Peru: Gregorio Santos/Cajamarca watch
Your author is keeping more than just half an eye on the Cajamarca region of Peru at the
moment, because we’re now starting to see the main players jostle for position for the 2014
regional elections which will define the new governor. Along with Roque Benavides (BVN) giving
an interview to Peru bizmedia Gestíon on Friday (14) that had “we’ll decide end 2014 whether
Conga goes ahead or not” as its headline, the most interesting report came from La Republica
on Wednesday (15) that had Gregorio Santos saying he’d like to step aside and let somebody
from the ranks of his own party contest the election instead of himself. It’s too early to tell
whether that’s some sort of headfake or political strategy move, but if it turns into reality I’d
expect there’d be an opportunity to trade stocks exposed to Cajamarca closer to the date, once
the North catches on that its main bugbear figure is out of the picture. Not a tradeable story as
yet, but definitely one on my radar now.
Chile: BHP invests in a desal for La Escondida
Last week (16) the operator of the world’s biggest copper mine, BHP Billiton, approved a
$3.43Bn (with a B) expansion plan for the mine that will be implemented between now and
2017. The jewel in the crown of plans is the $1.972Bn budget (57% of the total) set for a brand
new desalination plant that will supply the mine with fresh water, with construction set to start
in 2015 and completed in 2017.
This is the future of the North Chile region writ large; we’re now at the point where any new
mine or mine expansion will need to include a large and probably expensive desal plant in with
its capex plans, which goes a long way to explaining why Peru is now capturing more copper
exploration dollars than Chile now.
Teck’s problems in Chile
A quick one here. On the subject of large mine projects in Chile, we hear that Teck is in the
process of severely cutting back its plans for the Quebrada Blanca and Relicho projects in Chile
due to oversized costs and the need to reduce capex at corporate/worldwide level.
Colombia: The La Colosa referendum today
We mentioned it was about to happen in IKN219 and today’s the day (17). The town of Piedras
in the Tolima region of Colombia will vote in a non-binding referendum designed specifically to
send an anti-mining message to the country’s government (and to the wider world, perhaps).
The question is loaded in such a way that it’s obvious which way the approximately 5,000
voters will lean, as they have to respond to this (translated as carefully as possible to retain the
message as well as the precise vocabulary):
21

“Do you agree, as an inhabitant of the municipality of Piedras, Tolima, that in our
jurisdiction the exploration, production, treatment, transformation, transport and
cleaning of materials from the activity of large-scale gold mining take place, including
warehousing and employment of materials hazardous to health and for the
environment, specifically cyanide and/or any other substance or dangerous material
associated with said activity, and that surface and subterranean waters from our
municipality are used in said developments or in any other activity similar that could
affect and/or limit the availability of drinking water for human consumption, the vocation
of traditional production and agriculture of our municipality?”
Have a guess as to which side will win the vote tomorrow?
Market Watching
Continental Gold (CNL.to) chair sells stock
I keep an eye on insider trades but most of them, even the selling and even sellers in the
companies I follow closely, don’t warrant enough for mention. After all, I don’t have anything
against insiders selling their shares and making a profit, it’s capitalism and the rules of winning
and losing apply to all. However there are occasions when trades are notable enough to
mention and those last week of Continental Gold (CNL.to) chair Robert Allen (who apart from
his CNL position is head of the central player in Colombian exploration mining, Grupo Bullet,
and other posts besides) fall into that category.
We need to note that even after selling those blocks Mr. Allen still owns 5.36m shares of CNL.
But still, that’s a lot of shares to dump onto
the market at a strategically sensitive moment
for CNL and the signal is not a good one. It
could also be a case of a man selling the
amount that he knows the market can support
at any one time, but with the intention of
selling more soon.
The company stock started the year at $9 and
dropped as low as ~$3 in late June (at which
time Allen bought 30k shares, which has
worked out well for him) before staging its
recent recovery to the $5 or so of early last
week. The Allen sales last week coincided (?)
with a price drop from that level and the stock finished the week at $4.50.
The International Tower Hill (THM) (ITH.to) feas study, the Novagold (NG) fall-out
Longer-term readers of this publication and the blog know that (to put it mildly) your author
was never a fan of International Tower Hill and its Livengood project. And on-subject, I’ve been
leery at best and downright dismissive at worst of nearly all the “low grade high tonnage high
22

capex gold” projects out there in the world, with the notable exception of Sunward Resources
(SWD.to) at Titiribi for a long time, because the lower capex threshold at that project made the
theoretical economics (and note that theory word in there) at least workable, with the decent
copper kicker adding to the numbers well. But in the end, I even had to bow to market
pressure on that one and sell (at $1.21 in October 2012, which was a very smart loss to take in
hindsight).
Back to the point. The long-delayed feasibility study for the ITH Livengood project came out
last week and the news was featured on the blog (18) as well as the table from the NR that
sums up the whole ballgame:
I knew it was going to be bad, but this is above and beyond a simple adjective and is truly
abysmal. The internal rate of return on this project is negative at current gold prices and let’s
be clear, even if gold returns to $1,700/oz, 1,800/oz and moves up to 42k/oz one of these fine
days, the Livengood project and its then positive IRR will still be way down the queue of
potential development projects because at higher gold prices, a whole bunch of deposits will
show vastly better economics than this thing.
But this piece is less about ITH, a company that’s already dead and buried (more fool the
people who actually believed the sponsored stock pump behind this stupidity) and more about
its peers. Ones that spring to mind immediately are NovaGold (NG) (NG.to), Seabridge (SEA.to)
(SA), Exeter (XRA) (XRC.to) and yes, Sunward as well (SWD.to) because they’re all dependent
on the same kind of big capex, big tonnage, low grading deposit that Livengood is (or better
put ‘was’) and the signpost is now
very clear about these things; they’re
not going to happen.
The other interesting point is that
although there was some reaction
from peers to the ITH news there
wasn’t that much and the chart right
shows the reaction of our named
stocks. Sunward (SWD.to), which had
been on a roll for two days, dropped
sharply. However on that one we
must take into account its normally
light volume and its tendency to
bounce around a lot in percentage
terms recently. NovaGold (NG), which
had also rallied hard recently, saw its improvement stopped in its tracks. Seabridge (SA)
23

(SEA.to) saw selling that stopped a rally too. Finally Exeter (XRC.to), which has been out of
favour for quite a while, was sold on Friday. But indeed, there was nothing massive about any
of the downmoves with 10% here and a crimping of a rally there, not much negativity passed
on from the ITH snafu and that to me means there could be a lot more to come; in other
words, there are shorting opportunities here.
Of the companies mentioned here, the one that stands out as a shorting opportunity is
NovaGold (NG) (NG.to) and that’s despite the way it’s already come down from way up on high
in the last two years, as seen in this chart:
Here are a few bullet points with some cut-down basics about today’s NG:
• Friday’s close of U$2.87 values NG at a market cap of $802m (~279.5m shares out)
• As at May 31st (the end of the last reported quarter) NG had a cash treasury of $222m,
virtually zero current debt and a burn rate of around $15m per quarter while in its
current tick-over mode.
• Therefore its other assets have to justify the difference of around $580m (now perhaps
closer to $600m now that cash has been burned a little since end May).
• The two major fixed assets at NG are the Donlin Creek JV with Barrick (50/50) and the
Galore Creek JV with Teck (also 50/50).
• Of those, Donlin Creek is now very unlikely to move forward in the near future
considering the project economics and also the poor state that NG’s partner on the
project finds itself. In fact, ABX has already clearly signalled that it has no intention of
advancing Donlin in the indefinite future. On its books, NG doesn’t assign much asset
value to Donlin today (around $4.6m) which makes sense.
• Which leaves us with the more intriguing situation at Galore Creek (which is more a
copper/gold project than gold/copper, for what it’s worth). NG carries its 50% of Galore
Creek as a $376m fixed asset, which is almost all to do with the $373m Teck paid to
buy into its 50% of the project way back when. Then in 2011 the pre-feas for Galore
gave the project a 14% IRR at U$1,613/oz Au, $4.44/lb Cu and $40 silver (the base
case IRR was 7.4% at $1,100/oz au, $2.65/lb cu and $18.50/oz Ag), but even from
those marginal economics we’d have to factor in the very significant cost inflation we’ve
seen in the industry in the last two years in order to get a real handle on things at
Galore Creek. It is of course a bigger subject than can be covered in this type of short
update, but the bottom line is that I don’t think Galore Creek shows anything better
than we’ve seen at Livengood in the last few days and its current asset valuation is
based on a figure that comes from what’s basically another age in the mining industry.
It’s an asset ripe for a write-down but beyond that, its a big and very low grade prject
that’s simply not going to fly in the new world of mining, version 2013. The simple fact
that Teck spent $373m to buy in does not mean the other 50% is worth the same
24

amount today. Not even close.
In other words, NG’s current market cap is supported by about 75c in cash and not much else.
The company promotes itself as one with “optionality on gold” or “leverage to gold” and that
sounds fine (very similar to Seabridge in this respect) until you start looking at those millions of
gold ounces and how uneconomic they’d be to get out of the ground, not just at $1,300/oz gold
but at $1,500/oz or even $1,600/oz. And again we’re faced with a Livengood ITH-type Catch 22
situation where even if gold zooms to $2k and beyond, there’d be a whole bunch of projects
that offer better economics for mining than either Donlin or Galore. NG is a modern mining
equivalent of The Emperor’s New Clothes by Hans Cristian Andersen and as a company today
owns assets that aren’t worth anything near the U$2.87 close of Friday or the $3.00 price it
traded on Thursday.
So why aren’t I NG short yet? The potted answer to that one is “I might be soon”, now for
a longer answer. The last time I personally talked short talk about NG was a few weeks ago in a
private e-mail exchange with another one of these nebulous figures in my life that have to be
called “a market professional” here (and I know how cheesy these things look when repeated
too often, and I’m sorry about that). There are two things I’d like to note here. First he floated
the idea of going short NG and here’s the bulk of my reply to him:
“I've thought about NadaGold (NG) but passed on it as a short. Electrum will
defend the stock and if a fight develops it (still) has the muscle to return
shorters' hind quarters to them on a silver platter. So it's not for a retail
minnow such as I, however if an insto got busy on the trade and had enough
serious money to throw at it, it may be a viable target.”
In other words, NG has some financially powerful backers (including Electrum (Kaplan) Paulson
& Co (Paulson) Toqueville Asset Mgmt and others) and that kind of insto backing gives a strong
position to defend its vehicles’ share price. A short in NG that aims to take the company
towards what I believe to be its true intrinsic value isn’t one for the minnows of this world,
rather it’d be for a company that can handle placing big bets and one that can handle the idea
of the constantly moving playing field that gold brings as well.
The second thing is that our exchange re. NG happened on June 30th this year and back then
NG had just climbed back from a sub-$2 share price to sit at U$2.11. If you’d gone short that
morning, you would indeed have had your hind quarters served to you on a silver platter to the
tune of 36%, in less than a month. However, that was then and this is now and after seeing the
dog’s dinner that is the ITH Livengood feas, there may be new interest and at this new higher
share price in finding the next victim of a drooping share price.
The bottom line is that I’m not ready to short NG just yet, but it’s looking more attractive now
than it did when “what can we short?!?” was the question of the day in mining brokerage circles
at the beginning of July. For the moment I’ll stick with “avoid” on the stock, but along with MAG
Silver (MAG.to) (MVG) and Primero (P.to) (PPP) it’s now up there on the literal short-list.
Conclusion
IKN221 is done, here are some bullet points:
• Rio Alto (RIO.to) (RIOM) is a buy. I’m happy about the way Pretium (PVG) has
recovered and B2Gold (BTO.to) has done very well in the last two weeks, but RIO .to is
the one to be on through 2q13 results.
• The long trade in Colossus Minerals (CSI.to) opened last week thanks to the early
decision to finance (and yes, I called it well last week). Now on board, this one is all
about riding up the promo that will surely come behind CSI now that the bigger money
25

has its cheaper, average-me-down shares. On this trade, we see 90c and we sell and
take profits. A simple plan, what could possibly go wrong?
• As for other potentials, I’m holding cash back for Reservoir (RMC.v) if it swoons to an
interesting entry point. Sub-$2.50 is where I’m setting my line in the sand today, but
circumstances will prevail I suppose. The fact there’s an early September clock ticking
on this trade is a good thing.
• Lots of short thought today, with Fortuna (FVI.to) (FSM) and NovaGold (NG) both
considered as hedge potentials and Tahoe (TAHO) (THO.to) looking juicier as a collapse
candidate every week. That’s the way it looks right now, some companies are
overvalued to $1.3k gold, others are undervalued.
• Meanwhile, it’s good to finally see a few splashes of green ink appearing on the ‘Stocks
to Follow’ list. There’s a long way to go yet and the summer doldrums may slow any
sector rebound down, but the last few weeks have offered a better aspect to our
beaten to death market sector.
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
26

Footnotes, appendices, references, disclaimer
(1) http://www.calculatedriskblog.com/
(2) http://incakolanews.blogspot.com/2013/07/chart-of-day-is_26.html
(3) http://www.canadianinsider.com/node/7?ticker=FVI
(4) http://finance.yahoo.com/news/tahoe-resources-clarifies-pea-disclosure-181613884.html
(5) http://finance.yahoo.com/news/darwin-completes-maiden-drill-program-152701736.html
(6) http://www.marketwatch.com/story/gold-resource-corporation-sustains-fatality-at-its-arista-mine-2013-07-26
(7) http://finance.yahoo.com/news/gold-corporation-reports-preliminary-second-120000256.html
(8) http://finance.yahoo.com/news/aqm-copper-announces-mitsubishi-materials-113000633.html
(9) http://www.losandes.com.pe/Sociedad/20130725/73464.html
(10) http://finance.yahoo.com/news/reservoir-minerals-reports-drill-intersections-232241919.html
(11) http://finance.yahoo.com/news/strait-receives-approval-drilling-alicia-160553752.html
(12) http://static.elespectador.com/archivos/2013/07/2916572399e6ef1f06ef3d6ef718f91f.pdf
(13) http://finance.yahoo.com/news/eco-oros-angostura-project-declared-114500032.html
(14) http://gestion.pe/empresas/roque-benavides-decision-sobre-conga-no-depende-proximas-elecciones-regionales-
2072048
(15) http://www.larepublica.pe/24-07-2013/santos-quiere-dar-un-paso-al-costado-para-que-surjan-nuevos-liderazgos
(16) http://noticias.lainformacion.com/economia-negocios-y-finanzas/mineria/bhp-billiton-invertira-1-972-millones-en-
desalinizadora-para-mina-en-chile_9w9i0kG1bO0gmr8WUWXDX1/
(17) http://www.eltiempo.com/colombia/tolima/piedras-tolima-se-alista-para-votar-si-quiere-mineria_12948174-4
(18) http://incakolanews.blogspot.com/2013/07/international-tower-hill-ithto-hey-you.html
Apprendix 1: Flash update dated Tuesday July 23rd
Good evening, Regarding the ideas put forward in the NOBS update report in IKN220 on Sunday, we didn't have to wait
long. This afternoon (while halted through to the close) Colossus Minerals (CSI.to) announced its financing.
http://finance.yahoo.com/news/colossus-minerals-inc-announces-overnight-192800811.html
The placement has yet to be officially priced, but the term sheet that's been sent out by the company includes:
• Indicative unit price of 75c
• Looking to raise $30m
• Which implies a placement of 40m units
• One unit = 1 share + 1/2 warrant (exercise price on the warrants as yet undecided, but I'd personally guess
something around $1.10 to $1.20)
• A 15% over-allotment facility to the book runners, which means the placement could run to 46m units and
raise $34.5m
• Proceeds to cover all expense shortfall to production (or so the company says)
• No minimum holding period or escrow on the new shares (though that may need to be confirmed)
• Other minor details
Overall, the placement is slightly larger than I'd guessed it might be in IKN220, but apart from that it's along the lines
envisaged in the note. It's also priced competitively (though that may rise a a penny or two before the official price is set,
we'll see on that) and I'd fully expect all the units and the overallotment to be placed successfully (for just one thing, we
can expect ARC Fund to want more in order to average down and boost its already big 10.5% direct position...it has
significant exposure via its holding of Sandstorm, too).
My first reaction to the deal was positive, but as the stock was halted through the close there was no need for a snap
decision. After consideration I still like the near-term set-up and the unofficial conditions (via the term sheet) look friendly
enough for a trade, therefore I'm a buyer of CSI.to on the open market tomorrow. Criteria for the trade:
•
It will be a near-term trading position, not a longer term investment. I'm looking to make a difference once the
big money has taken its position and then allows the stock to go higher. I don't care whether Serra Pelada gets to
production or not in 2014, I'll be happy with a 20% or 30% near-term trading win and goodbye.
•
I'd like to get in at or under 80c, with 75c a near-perfect entry point (if near-perfect isn't asking too much). I'm
not sure how the market will react on first blush tomorrow and if i have to pay a little more than I'd like then so be it.
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However I won't be offering a running commentary during the week and a lot will depend on how the trading pans out
tomorrow/Thursday etc.
•
The strategy behind this trade was laid out clearly enough in IKN220 and there's no need to repeat too much
here, but I will reiterate that I want my position on the open market shares and I'm not interested in taking any of the
placement, as flexibility is a key ingredient of the trade.
Assuming it opens (near certain), it will be a new position in the 'Stocks to Follow' list in the main 'recommended'
section. More thoughts on the financing this weekend.
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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