IKN #226Premium

The IKN Weekly
Week 226, September 1st 2013
Contents
This Week: Caution rewarded, And the dollar.
Fundamental Analysis: Minera IRL (MIRL.L) (IRL.to).
Stocks to Follow: Overview, Pretium (PVG.to) (PVG), Colossus (CSI.to), Gold Resource Corp
(GORO), Darwin Resources (DAR.v), Rio Alto Mining (RIO.to) (RIOM), Bear Creek Mining
(BCM.v), AQM Copper (AQM.v).
Copper Basket: Overview, NGEx Resources (NGQ.to), Strait (SRD.v), Lumina (LCC.v).
The Lottery Ticket Basket: Overview, Glass Earth (GEL.v), Cream (CMA.v), Firestone (FV.v),
Netco (NEI.v).
Regional Politics: Colombia’s informal miner’s strike comes to an end, Peru’s permitting track
speeding up, Peru: Cajamarca Communities on strike against Conga and other mining projects.
Market Watching: The Alamos/Esperanza, The rise of the copper dogs.
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
Caution rewarded
By way of reminder, here’s how IKN225 ended last week:
The bottom line to the three trades I’m making next week is one word, caution. I’ve read plenty
of market literature over the week, from those I respect greatly to others I take with a pinch of
salt to others for whom i have zero regard. The overwhelming message from nearly everywhere
is that “we’re going higher”, which is something that gets your author’s contrarian teeth (which
are directly connected to his contrarian body and contrarian mind) grating all by themselves. As
all near-term predictions on gold, the metals and the miners boil down to what the dollar is going
to do right now, and I fail to see why the dollar should collapse into oblivion on command in the
next 48 or 72 hours, I’m again obliged to return to my clearest observation that there are plenty
of overbought stocks out there which need further rises in gold&co just to maintain their new,
higher valuations. The result is that at least on the trading, near-term end of my portfolio
exposure I’m going to take some more long money off the table.
This turned out to be the correct call, for last week at least (as always, everything depends on
the preferred timescale). The decision to cash in two near-term trades and add some width to
the GORO short came at an opportune moment and all three choices look good in hindsight. It
makes a pleasant change to have called the scene right and to have acted upon the call, too.
Not that it’s a very good thing, though. The junior sector didn’t need to wait until gold started
dropping in order to go South; blame flavour-of-the-month Syria if you like, though why junior
exploreco XYZ Dot Vee that works in LatAm and trades for pennies should be affected by
yes/no decision to fire some missiles in the MidEast or a parliamentary debate in London is a
question that deserves more thought than junior traders and retail holders tend to give it
(evidence that Dirk Gently and his ‘fundamental interconnectedness of all things’ is on the right
track, perhaps) but once it was clear gold didn’t have much upside voom left to offer our focus
segment of the financial world acted in the way I expected it to. Yes, FVI.to at $4.93 on
1

Tuesday was overbought. Yes, GORO at $9.43 (!!) on Tuesday was overbought. Yes, TAHO at
$19.59 on Tuesday was overbought. But before you start rolling your eyes and thinking about
picked cherries, other things need to be said about those examples:
1) They would have stayed overbought and may even have kept moving up if gold had
obliged the bullish rah-rah brigade who’d been making all that collective noise the week
before (who in the space of a single week have either gone very quiet or have been
busy revisionists) and risen through $1,450/oz.
2) Those three above are from my list of potential short plays, but it’s equally true that
my preferred long plays also dropped hard, such as RIO.to (down 8.7% week-
over-week) B2Gold (down 8.5% WoW) or Minera IRL (down 6.0% WoW), to name but
three companies I like and consider undervalued opportunities. So dumbass me, too.
One conclusion to draw from this (and if we don’t learn from our mistakes we’re screwed, so I
try hard to rescue something from my reticence to dump all trading positions rather than a
couple of them) is that we’re not yet in a situation where bright and strong looking individual
companies get to shine out from amongst the crowd of ok plays, mediocre plays and downright
cruddy, scammy plays. We’re evidently still in an “all boats rise/fall with the tide” market that
treats the whole of “the juniors” as if it were one big stock ticker and that, my esteemed and
respected audience, is not good news. Last Thursday a mining sector pro* mailed me, put
before my eyes a rant written and published by John Kaiser on Wednesday and asked for an
opinion. Kaiser’s thoughts were mostly about one specific company that I don’t follow that
much (and have no intention of doing so either) but what grabbed my attention was the part at
the end of his rant where he announced he’d been invited to a debate on whether the current is
merely a cyclical downturn or is one that brings the potential for catastrophic structural
problems. In Kaiser’s words it “...is a debate I'd love to lose, but the reality is that a small group
of juniors will do very well going forward, while the rest suffer the death they deserve.”
I’ve never really followed Kaiser much or dwelt on what he thinks are good stock picks, but he’s
a commentator with a strong grasp the big picture for the junior world and that line sounded
spot on to me. And that’s a problem. Here’s what I wrote back to my friend (who, by the way
and before you ask, isn’t John Kaiser):
“We agree that the crud has to sink, shrivel and die. The rally we've seen this
last ~3 weeks has had at least some of the crud rising with the cream.
Therefore, if the sector isn't ready to separate itself, it has to drop as a whole.
At least in the near-term. We need to see some "de-coupling" (for want of a
better word) of the good stuff and the shit stuff. I'd float the idea that in order
to see this happen, we need first to
see producing FCF+ names rise
while the rest of the junior world
treads water.”
The problem as seen is that most
commentators on the junior exploreco scene
recognize that the sector has become flabby,
with too many companies holding too much
moose/llama/yak pasture that doesn’t have a
ghostly chance of ever becoming anything
close to a working, profitable mine. There
are hundreds of companies that need to
disappear from the TSXV (and main board
for that matter) before the junior sector can
be deemed healthier and more worthy of
serious consideration as a whole. This harks
back once again to my preferred scenario chart, last seen in IKN221 and reproduced here,
2

that’s looking for the best to separate from the rest and move up and higher first, but the worst
of the bunch has to wither and die as well.
What we saw in the relief rally in August wasn’t that; by and large what we saw was the whole
market, zeroes and heroes, cream and crud, stars and scams, moving as one. The de-coupling
of good and bad has yet to be seen on a macro level, as although we have had certain bad
stocks hit the legal and financial skids, there are enough stories out there of the bad ones that
have performed every bit as well as the good ones. Equally last week, we had the sector as
whole taking a drop, not just the crummy stocks with either no production or no chance of
making positive free cash flow at current prices in the case of producers trying to hang in there
and get lucky on a bounce in gold. Sorry folks, this state of affairs cannot continue because it
means the cleansing of the junior sector has hardly begun yet, we need a whole lot more of the
no-hope end of the market to pack up and go home, so if the better ones can’t de-couple from
the worse, it suggests the whole sector needs to drop until the weight of the no-hopers is
diminished.
The bottom line is that unless something unexpectedly good happens to gold (well, unexpected
by any normal or rational person who doesn’t live in the cloud cuckoo land of the hardcore
goldbugs) the junior sector isn’t out of the woods yet, not by a long way. Alongside those
companies I consider as undervalued (RIO, IRL etc) there’s a long list of others that are still
getting unrealistically high valuations from this market and until they go away, once and for all,
things won’t get better for the good guys.
On a practical level, here’s how I intend to manage today’s chapter of the unfolding scenario:
1) Hold the investment positions (RIO.to, BTO.to, IRL.to, LRA.v) without worry.
2) Not add any further investment-timelength positions (e.g. I’m still toying with
Buenaventura (BVN) and now that I have a relatively OK handle on the financials I feel
in a position to make an informed decision, but a buy isn’t in the cards for the moment)
3) Hold the shorts in the portfolio (GORO, TAHO) with the potential to add another
(see the IKN224 list for clues)
4) Look to sell the other trading positions at a suitable opportunity (RIO.to separate
trade, BCM.v, AQM.v).
5) Keep the boosted cash position in the portfolio the way it is. The half-sale of BTO
padded the most, the other recent trade closes have helped, the IRL addition took
some away but here today it’s still a good and comfortable padding to the port. It’s
likely to stay that way (barring minor stuff) for the moment
My thoughts once again return to Gary Tanashian’s line of weeks ago in his NFTRH239 edition
(he sent our #254 today, which I’ll read later) , reproduced here on a couple of occasions:
“This is not a time to be guessing. It is a time to be right by not being wrong.”
We’re back there again, people. Gold has come off its lows and doesn’t look likely to crash
again. It may even go higher, but for the time being I’m holding off from any endorsements of
the $3,500/oz and $10,000/oz numbers that have started to show up on the fringes and in the
freakshow blogs (or Ron Paul’s ‘infinity per ounce’, but that’s for more obvious reasons such as
the way there’d be no electricity to power my computer or let you read anything that couldn’t
be sent via the non-working world internet system). I see no reason why it should go lower or
higher and, as if by casual luck, it seems to have picked a level at-or-around $1,400/oz that is
suited to separating the Rio Altos from the Samexes (1) wheat from the chaff, the ones that will
survive from the ones that will not. Today is a time to hold the quality stocks that will do OK
(not necessarily well, but OK) at the current gold price, not to bet on the middling or plain bad
3

stocks that need gold etc to go higher before they reach financial security.
*Oh no, not again Mark, give us a break will you?
And the dollar
To paraphrase Twain, reports of its death have been greatly exaggerated. The dollar rallied last
week and it’s not a coincidence that the PM universe had a bad one at the same time. Gold
(and therefore the other precious metals) are normally the ‘anti-dollar’ so when one side goes
up, the other goes down. However there are times when the correlation is either looser or
tighter and at the moment, for the last couple of weeks at least, the correlation has been drum-
tight. So with the dollar doing well (which is the world’s true run-to safe haven, no matter what
them there bugs might tell you otherwise) the shine has been taken off the shiny metals that
weigh a lot.
Fundamental Analysis of Mining Stocks
This week, Minera IRL (IRL.to) (MIRL.L).
NOBS update report dated September 1st 2013
Minera IRL Limited (IRL.to) (MIRL.L)
Company Overview
Minera IRL Ltd (Canada: IRL.to, London MIRL.L, Peru MIRL) is junior mining company
operating in Peru and Argentina. It has one small operating gold mine at Corihuarmi in Peru,
one advanced-stage exploration project at Don Nicolas in Argentina and its flagship asset at
4

Ollachea in Peru, with a few other very early stage exploration projects on its books too. Current
share structure is as follows:
Shares out: 173.678m
Options: 28.152m
Warrants: Zero
Fully diluted shares: 201.83m
Current share price: $0.235
Market Cap: $40.81
Approx cash per S/O: $0.03
All prices are in Canadian dollars unless stated. Forex U$1=CAD$1
Today’s update
Our baseline analysis of IRL came in the two-part NOBS report found in IKN168 and IKN169,
dated July 2012. Although the significant drop in gold, the slump in the junior mining sector and
the delays encountered in the final financing deal for Don Nicolas have made the financial
analyses and target price of that report set largely redundant, the corporate and asset
overviews are still relevant enough for our purposes and therefore won’t be repeated here. As
usual, if you’d like copies of those old reports just drop me a line at the usual address and I’ll
send over by return.
Today’s update is all about the changed circumstances at IRL, what the finally closed deal for
Don Nicolas means and how the company plans to move ahead at its main project, Ollachea.
We end up by running new revised financials and setting out new target.
Production results and company financials
Before we get to the real meat, that of the way in which we expect IRL to move forward in the
next year and the expected growth strategy, we take a look backwards at the latest quarterly
results. The usual suspect charts are also a useful way of noting some operational and
corporate finance aspects of IRL that need mention. We can also cover the small production
aspect of IRL at Corihuarmi at the same time, so let’s start there.
Here’s how operations have been going at Corihuarmi, with gold production and sales on the
left and revenues, costs and resulting gross margin per ounce on the right. As you can see, the
small Corihuarmi operation has held up pretty well over the last quarter, even as it approaches
its twilight production years (we estimate it has 10 more quarters of useful life to go, taking us to
the end of 2015, but depending on gold price that could get squeezed to end 2016...we’ll see)
and it’s a fairly regular 2,000 oz per month producer.
IRL.to: Quarterly Gold Production (oz)
12000
10000
8000
6000
4000
2000
0
Meanwhile IRL has seen costs per ounce produced creep up in the last quarters, which is in line
with the rest of the industry, no more no less. However, we are coming off a pretty low cash cost
base so the 2q13 operating cash cost number of $653/oz still leaves plenty of margin.
5
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2
IRL at Corihuarmi: Costs and revenues per ounce
gold produced (oz) U$/oz avg realized price op cash costs margin/oz
gold sold (oz) 1750
1500
1250
1000
750
500
250
0
1q11 2q11 3q11 4q11 1q12 2q12 3q12 4q12 1q13 2q13
source: company filings
source: IRL filings. IKN est for 4q12 sales

This is seen in the next chart, quarterly earnings and revenues that have hung in there. The
cost creep digs into the margin in 2013 but this is still a smart little mine that returns over $2m in
gross profits (aka mine operating earnings) which is still enough to cover corporate expenses at
IRL HQ and stop G&A from burning into treasury.
IRL.to: Quarterly Earnings overview
18
16
14
12
10
8
6
4
2
0
As for net line profits, the company has basically broken even over the last quarters, with those
Corihuarmi profits offsetting normal run-of-company junior burn. The bottom line is that earnings
are still 100% Corihuarmi based and although a small mine with small revenues and margins it’s
still a useful servant for the larger company. However, it’s not and never will be the reason to
hang our investment thesis.
Moving on to balance sheet issues, and here’s how assets look. The story is that of a company
which is spending on its projects and capitalizing its
assets, while treasury drops to its current lower-than-
we’d-like $4.9m (CEO Chamberlain is on record as
being uncomfortable when treasury drops below $5m).
This situation is partly due to the lower than expected
results from the placement round in 1q13, when IRL
was looking to raise up to $32m for exploration
working capital but in the end only managed to secure
$15.5m (in hindsight, raising the amount it did seems
pretty good).
The big change in the liabilities situation at IRL has
been 1) taking on an extra line of credit in 4q12 and 2)
around $20m of that credit line moving to the current
liabilities column as of the latest quarter. If this were a
company that was trying to keep its head above water
on current operations alone, or with a long time path to
run before the next stage of growth were due, then this
might be a problem. As it is, we now have the Don
Nicolas deal done and dusted which brings all the
capex cash its Patagonia SA subsidiary needs to build
out the mine and we’re close to the moment that
Ollachea secures its funding for construction, too.
Therefore this negative working cap position isn’t so
much of a worry. We should also note that around
$21m of liabilities, including $7.1m due soon, is owed
to Rio Tinto as stage payments for the 100% purchase of Ollachea. I spoke with the company
about this part of the upcoming financial obligations at IRL and was told that 1) the next $7.1m
payment has a limit date as per the deal of October 11th, which means that any settlement
doesn’t need to happen until 4q13. But more importantly, we understand that both sides are still
negotiating the final terms of payment and although no specifics were mentioned, it’s fair to say
that both sides are looking to be flexible on the dues in a way that allows IRL to get through a
lean cash period without having to pay back using share only and seriously dilute the share
6
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2
source: company filings, IKN ests
srallod
fo
snoillim
IRL.to: Gross Profit, Operating Profit, Net Profits
10
revenues 9 per qtr
COGS 8
Gross profit 7
6
5
4
3
2
1
0
-1
-2
1q11 2q11 3q11 4q11 1q12 2q12 3q12 4q12 1q13 2q13
source: IRL filings, IKN ests
srallod
fo
snoillim
Tot comp Income
op profit
Gross profit
220 IRL.to: Assets Breakdown per qtr
200
180
160
140
120
100
80
60
40
20
0
01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2
source: company filings, IKN ests
srallod
fo
snoillim
fixed
other current
cash&ST
IRL.to: Debt Breakdown per qtr 60
55
50
45
40
35
30
25
20
15
10
5
0
01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2
source: company filings, IKN ests
srallod
fo
snoillim
LT debt
current debt

base. What we can say, in theory at least, is that it most probably suits both sides to pay the
$7.1m in cash and therefore a grace period may well come in handy.
IRL.to: Working Capital per qtr
35
30
25
20
15
10
5
0
-5
-10
-15
-20
-25
-30
7
01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2
source company filings, IKN ests
srallod
fo
snoillim
To wrap up, here’s the share count that currently IRL.to: Shares Out
200
sits at 173.68m and is expected to move to
180
182.8m during the current quarter as part of the 160
Don Nicolas deal is to emit 9.1m shares of IRL to 140
120
the financiers. It’s almost certain to move up later
100
as at least part of the deal to raise the Ollachea
80
capex is very likely equity placement cash. 60
40
20
0
Last week’s meeting
The reason to zip over to Lima last week (see appendix 1) was to talk with the brass at IRL. In
the end and due to plane delays for both myself (my domestic, 80 minute flight was delayed by
five hours) and for the members of IRL trying and failing to fly back from Europe on their chosen
day, I oly got to meet with CEO Courtney Chamberlain. However, he is the biggest cheese of
the lot and the meeting was still very fruitful as we covered just about every corner necessary.
Permitting and financing Ollachea
One of the good things about dealing with a company like IRL is that you can walk into a
meeting with officers knowing that you’re not going to get served a a large portion of bullshit. In
fact, they’ve always been as their word on all major company issues and although they are
quick to admit that things don’t always go to plan, for example the long delay to the eventual
financing agreement for Don Nicolas, what I do know is that when they say things like, “We
know we’re late on the deal, we’re still confident it will happen, we can’t say when it will close”
it’s an honest and straight answer.
The discussion last week touched on many bases, but a lot of time was spent on what I
consider to be a key point for both company and (more importantly for us, on the outside looking
in) the share price of the company, namely Ollachea and its future. We can start here with
positive permitting news, as the company reports that it’s now very advanced with its
environmental permitting schedule. They wouldn’t allow themselves to be nailed down to a date,
which considering the weirdness that is Peruvian governmental bureaux isn’t a bad idea, but I
did get them to admit that they’re certainly more advanced and further down than Bear Creek
(BCM.v) at Corani, so as BCM is now expecting its EIA permit to be awarded during 4q13, we
can likely place IRL at Ollachea before them in 4q13, or maybe even in 3q13 (this very quarter).
We understand that permitting is going smoothly enough and no big problems are expected
from here, so after the EIA comes the construction permit, which will be applied for almost
immediately and should be given out in early 2014 (best personal guess would be March or
April 2014, which would be fine). However, the main advantage to the advanced permitting track
is that once the EIA is awarded, IRL will be in position to put together the financing package for
01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 tse31q3
source: company filings
serahs
fo
snoillim

the Ollachea Capex. As this is a main concern of mine in the valuation of Ollachea and of IRL
as a whole, more time in the meeting with CEO Chamberlain was spent on this topic than any
other. Some points:
• We know that with $5m at bank and a Capex of $177m (according to last year’s feas
study) to cover, IRL needs to raise a lot of cash in order to take Ollachea forward into
production.
• We know that the share price has suffered as a result of these optics. The weak
financial position compared to company plans means the share price gets bid down and
stays down while financiers circle around and wait for the best deal that suits them
(rather than the company) gets done. This results in a vicious circle of don’t want that
stock yet (cid:1) because stock is getting diluted(cid:1) so will be cheaper (cid:1) so don’t want that
stock yet (cid:1) because stock is getting diluted(cid:1) so will be cheaper (cid:1) so don’t (etc).
• We know that if IRL dilutes the stock via a large equity raising at this point in its price
cycle, it could potentially remove all the price upside that eventual success at Don
Nicolas and Ollachea might bring.
Strategically speaking, IRL’s advantage to us as a potential investment at current prices is also
the company’s single biggest weakness; that’s to say, its share price is in the dumpster. In other
circumstances of higher equity prices, it would make perfect sense to raise most or all the
capital required to build Ollachea by issuing new shares, but at 23.5c apiece we’d be looking at
adding perhaps 750m shares and bringing the total count to nearly a billion by going that way.
Clearly not an option. On the other hand, IRL has other ways it might raise capital and in those
we find a stronger position for the company. If the majority comes from debt, or if a strategic
investor is bought in who takes a portion of the IRL mine in return for a capital injection (in broad
terms, that’s what happened at Don Nicolas) the raising would be playing to stronger points,
would value the Ollachea asset (via direct purchase or collateral) at a much higher and more
realistic price than that currently awarded by the market and would therefore be a positive, non-
dilutive catalyst to the share price.
Therefore I spent a lot of my time with CEO Chamberlain on Thursday quizzing him about this
aspect of IRL’s future plans and what the company attitude was regarding the important capex
raising that would need to be done. The answers I received were always inside the limits of
what the company can disclose to a snoopy and annoying outsider such as I, but were still more
than I expected and I came away with the clear impression that the vicious cycle outlined above
is about to be cut.
The four ways of financing Ollachea can be categorized as debt (i.e. classic bank style financial
loan) equity (i.e. placement of shares) asset sale (i.e. along the lines of Don Nicolas, selling a
portion of Ollachea to a third party in return for the capex cash) and “other” (more exotic ideas
such as forward gold sales, off-take agreements, royalty streams etc). What I can report is that
none of the options are off the table, but there is preference is for a debt/equity deal. At the
moment, IRL is looking to raise a majority of the cash via debt, with perhaps 60% or 70%
coming from such a deal. Then a minority via a share placement, most likely in the form of a
rights issue that gives all the longer-term and larger institutional holders (e.g. Milton Asset Mgmt
and its 19.99m shares, or BlackRock and its 18.61m shares) the opportunity to participate, get
large chunks of cheaper stock and also maintain their percentage participation in the company.
Regarding the debt, this in my eyes is very good news because it will keep the eventual equity
dilution lower than the market probably expects. This is exactly the type of share catalyst IRL
needs at this point, I believe. There’s obviously interest from financiers to do such a deal too,
because IRL said that there were several entities already interested in financing Ollachea and
talks were relatively advanced. As noted above, one of the advantages of dealing with straight
shooters is that you can allow them your trust at moments like this, so if CEO Chamberlain says
that the raising of 60% or 70% of capex via debt financing is in the cards, well, it’s in the cards.
That leaves the 30% to 40% to cover, which is slated as an equity placement. As noted above,
a rights issue is the most probable way forward, as those longer-term large holders are likely
keen to get cheaper shares to average down positions, as well as retaining overall percentage
8

holdings in the company (as at some point much further down the line, the financial guys will be
thinking about net asset values, dividends etc). CEO Chamberlain couldn’t say as much directly,
but reading between the lines it’s pretty clear that IRL is obliged to offer cheap shares at this
point to its long-term backers. Also, it’s been understood by both miner and backers that come
the time Ollachea were permitted and approved for construction, backers would be called upon
to stump up more money for the build-out. With the stock equity in the dumpster it’s not going to
be a majority part of the deal but it’s near-certain to be a component.
However, other options are not being ruled out and when I asked CEO Chamberlain directly on
the potential for a partial asset sale along the lines of the deal done on Don Nicolas, the answer
was a solid “possible”. Clearly, IRL is keen to hold onto as much of its “crown jewel” asset as
possible and keep it inside the corporate structure. The 95% owned Ollachea (5% owned by
locals) will remain firmly in the hands of IRL, but on gauging what I heard it wouldn’t surprise me
to read of a deal that sold perhaps 10% of the company to a third party in exchange for some
very handy capex funding. That kind of deal is more likely than a gold forward sales component
or a streaming deal, from the clear vibes picked up out of the meeting. These options have
obviously been discussed by the team at some point but the way in which the ideas were
answered makes it clear they’re third-choice approaches and that the plan solidifying doesn’t
need the Sandstorms or Franco Nevadas of this world to buy a chunk of the forward production
and raise the mundane cash costs over mine life.
The bottom line is that the base case for financing is a 70% debt / 30% equity deal. There may
be some changes to that if a right terms on another offers (personally I wouldn’t rule out IRL
selling 10% or 20% of Ollachea if the price is right), but the confidence of doing debt/equity was
also clear enough and there seems to be more than enough interest from the necessary
backers on both sides of the deal to make it happen. Overall this is a good thing because the
larger-than-50% debt component will keep share dilution down, but we also need to take into
account what the ~30% in equity would do to the share count.
• If we assume that IRL needs to raise $180m in order to build Ollachea, this puts the
equity component at $54m.
• To simplify the math, let’s assume IRL raises those at-or-around today’s price, at 25c
per share in a rights issue.
• That would mean 216m shares added to the pile. In other words, taking into account
today’s S/O number, assuming equity and rounding, we’re looking at a company that
will take its share count to 400m
I agree that’s a bit of an eye-popping number and looks like pretty heavy dilution from here, but
that would be the end of the financing process for IRL and adding Don Nicolas and Ollachea
eventual production together, that would be the share count of a company producing around
140,000 ounces of lower quartile cash cost gold per
year. It’s also worth noting that if we compare equity
IRL: Equity per share
per share and price per share of the last quarter 1.60
ends (chart right) the very low ratio shows that the
1.40
market is fully expecting EV/share to be diluted by
1.20
at least half and probably more. A price/book ratio
1.00
of just 0.25X is indicative of either a company that’s
0.80
past all hope and is dying a death (which makes no
0.60
sense in this case, else IRL would never have
0.40
closed an $80m financing deal for Don Nicolas or
be in an advanced position for financing Ollachea), 0.20
or it’s a company that’s receiving much less credit 0.00
for its assets than it deserves. What this meta-data
says to your author (and it says it loud) is that the
the share count could double (I’d go as far as to say
that the market is expecting it to least least double)
and the P/BV ratio would still be 0.5X, leaving a lot of room for the share price to grow rapidly
when the market suddenly realizes that IRL isn’t about to roll over and die. This is a share price
9
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2
equity/share
share price
price/book ratio
source: company filings

that could rebound to 50c very quickly on the right catalyst.
Much further down the line the world is affected by the gold price, higher or lower than today,
and the company is bound to affect eventual share price valuations or IRL but it’s not that
difficult, given a conservatively reasonable market, to see IRL valued at $400m market
cap...that’s a dollar a share to you madame/sire. But I’m getting slightly ahead of myself now,
first let’s consider Don Nicolas.
Don Nicolas
We now know that the financing deal is done for Don Nicolas and that there’s now nothing
between us and the building and commissioning of the mine in late 2014. What we add here is
ore flavour and background, coming again from last week’s meeting. CEO Chamberlain went
through some of the anecdotals of how the deal was eventually closed and without going into
detail, it’s fair to say that the input from lawyers present created more heat than light and was
the major factor behind the delayed deal. However, the real players in the deal, miners and
financiers, see the project very much eye-to-eye and now that everything’s in place we can fully
expect this mine to be up and working in the allotted (and potentially generous) new time
window that has Don Nicolas entering into production 4q14.
Let’s be clear and repeat that part, the most important bit of the lot: The financing is done, the
permits are done, the local workforce agreements are in place and all sides are now pulling
together. Don Nicolas finally has all ducks in line and this gold mining operation, delayed by
around 12 months as it might be, is going to happen.
My questions to CEO Chamberlain around this part of IRL centred on how both sides saw the
project as a revenue generating business and what I heard coincided with my own assumptions.
The current feasibility is for a mine with a short, 3.6 year mine life but it’s always been assumed
by the company that there’s a lot more gold to be revealed by further exploration and that mine
life is very much the start of operations at Don Nicolas, rather than the whole deal. Therefore it
was interesting to hear that the funding financiers buying into the mine look at it the same way
and are not looking for fast returns or fat revenues from the first few years. This makes sense,
as between the $35m loan to the mine project and the exploration expenses we’d expect the
mine to incur in the first years in order to extend mine life quickly, we’re not going to see much
of the free cash flow from operations make it to the bottom line of the P+L and provide dividends
for the owner shareholders (e.g. the 51% shareholder of Don Nicolas, Minera IRL). However
come the assumed mature phase of the mine when exploration is done, life extended greatly
and the debt liability paid off the books, this operation looks set to become a small but very
lucrative little gold mining operation.
That’s a long way of saying that Don Nicolas isn’t going to be a big cash earner for IRL in its first
few years. The way the deal has been structured, we can expect the free cash flow to be
targetted at 1) paying off the financial debt and 2) supporting a ~$20m exploration program in
the first three years. That makes sense if we consider the feas study parameters (181k oz au
produced over 3.6 years at a basic cash cost (that doesn’t include royalty payments, debt
servicing, exploration tax etc) of $528/oz. With gold at $1.4k/oz, cash flow should cover all those
eventualities and at the end of the approximate five year process (one and a bit years to build,
three and a bit years of production) owning 55% of a valuable mine with plenty of mine life and
exploration potential still left. We should note at this point the similarity between this general
idea and the current Corihuarmi mine, at which IRL has shown its mettle in being able to
produce gold at low cash cost and high margin while extending mine life through discovery. Don
Nicolas is a bigger version of a business plan that’s already been successful.
But that’s for the future and this is now, what we need to consider is a target price that covers
our medium-term ambitions on Minera IRL.
Valuing IRL
There are three parts to IRL and as we did in IKN169, we first separate the components to
arrive at a valuation for each operation. Then the idea is to put the three together to come up
with a consolidated target.
10

Corihuarmi
As before in IKN169, this is the easiest part of IRL to value. The model numbers have changed
somewhat since last time around, which is due more to the price of gold (we were using
$1,600/oz in our model backin July last year). Also, we’re only going to consider it at its absolute
value at this point, rather than a per-share valuation.
Therefore our modest assumption here is that Corihuarmi brings $1.5m per quarter for the next
ten quarters to IRL and assign it a flat $15m asset value.
Don Nicolas
This valuation has been made a lot easier by the now done deal for financing Don Nicolas. We
know that the financiers of Don Nicolas have put in a $45m equity investment in the subsidiary
that controls Don Nicolas (Patagonia SA). In exchange for that, the financiers get 45% of
Patagonia S.A, as well as 9.1m shares of IRL.to at a nominal value of 33c/share. As well as
this, the financier group have guaranteed a $35m loan to Patagonia S.A. to cover the shortfall in
capex that will be needed. In strict valuation terms, the loan does not concern us much (though
arguably the financial security it brings to the project is worth some tangible asset value at this
point, we’ll leave it out of the equation for the sake of veering to the side of caution). Therefore
we base the valuation on $42m (the $45m investment minus the $3m in shares clawed back)
buying 45% of Don Nicolas.
This values Don Nicolas, according to the people buying into the project (rather than the fickle
market and its lowball judgement) at $93.3m. Therefore the 55% of Don Nicolas still in IRL’s
hands is valued at $51.3m. From there we dn’t expect automatic jumps to full NAV recognition
from the market, but as the project unfolds, de-risks and people finally cotton on that building
and operating a small gold mine in (gasp) Argentina is indeed possible under CFK’s
government, a reasonable target to set at this point in 0.8X NAV in 12 months. Therefore, we
place our asset value for IRL’s portion of Don Nicolas at $41m (rounded down).
Ollachea
There’s so many ways of cutting and slicing a valuation of Ollachea today. In the end I’m going
to stick with a cash flow model of the operation, but there’s a more general thought or three as
to why even this conservatively pitched model looks lowball afterwards. The valuation
parameters used are as follows:
• The November 2012 Feasibility Study (FS) provides a lot of our operational and
financial parameters. For example we use nine year mine, with no assumption of longer
mine life or enhanced profitability, although that likelihood is very high.
• IRL has 95% ownership, with 5% taken by the Ollachea community as per agreement
• The FS assumes an annual LoM production average of 113,000 oz. However in this
case we’re pitching slightly higher at 117,332 oz Au average per year, because a) that’s
the number we modelled previously and b) there’s every reason to expect IRL is
lowballing that FS figure.
• However, in most other categories we assume more conservatively, such as the
operating cash cost number which is set at $600/oz (the FS uses of $499/oz.
• A 5% charge for royalties, another 5% for smelter charges (both educated guesses to
the conservative side)
• As we’re confident the debt segment of financing will be larger than first expected, we’re
now assuming a bigger $20m annual service charge.
• Peru corp tax at 30% plus other smaller effects as seen in this abridged financials
model.
11

And although other gold prices are shown in this table, we base our valuation for a model years
on u$1,350/oz as out model gold price.
Ollachea: Income items for model year
At 3,000tpd thruput $1,300/oz Au $1,350/oz Au $1,400/oz Au $1500/oz Au
Sales (U$m) 137.7 143.0 148.2 158.8
Cash COGS 70.4 70.4 70.4 70.4
Depreciation 12.0 12.0 12.0 12.0
SGA 6.0 6.0 6.0 6.0
Op income 42.4 47.4 52.4 62.5
Interest 20.0 20.0 20.0 20.0
Workers Part. 3.4 3.8 4.2 5.0
Tax 5.7 7.1 8.5 11.2
Net income 13.3 16.5 19.8 26.2
Source: IKN ests
To derive a valuation from this model annual net profit figure we first run an 8X PE multiple
($16.5m x 8), pitching lower than to the median of the sector due to the time lapse before
production, then factor in the 95% ownership or IRL. This brings us to $125.4m, which is
rounded down to $125m. That’s our estimate target on the IRL part of Ollachea.
However, one thought experiment I’ve been through in these last weeks (and it can be used as
a basis for some quantifiable targets, but on consideration I think it’s best left as a conceptual) is
to assume that IRL sells Ollachea, lock stock and barrel, tomorrow morning to the highest
bidder. The question is, “What would the market buyer pay for Ollachea?”. My best two thoughts
on this:
• Ollachea’s resource is 1.4m oz Au indicated, with 1.0m of those gold ounces in reserve
category.
• It’s low cost per ounce project with robust economics. If we consider our more
expensive assumption of $600/oz op cash costs, then a cost overrun of $200m capex
(approx $150/oz), any buyer of Ollachea is getting $750/oz gold on operational margin.
Now for sure there’s always tax, G&A and their friends, but these are economically
sound ounces to mine, period, and at over 110,000 per year it’s the type of production
that makes a meaningful difference to a mid-sized mining company looking for a
bargain.
If you put those two together, and even when assuming higher than FS cash costs and capex,
and ignoring the pretty obvious upside potential offered by exploration at Ollachea concession
(Minaspampa et al) it looks very easy to pay $100/oz for the acquisition cost of Ollachea in
today’s $1,400/oz gold world and $150/oz is by no means pushing the window, either. In other
words, I’d expect Ollachea could be sold for $140m to a suitable and interested buyer and what
makes that interesting is that you wouldn’t need to dilute a single extra share from where we are
today in order to realize the gain on Ollachea at a corporate level. If we take the lower mark of
$140m (i.e. $100/oz in situ Au) and the current 182m shares outstanding, that would give us an
(95% owner of Ollachea) IRL holding 73c in cash tomorrow evening after selling its prize mine
tomorrow morning.
Putting it all together
The thought experiment of the value of Ollachea as an acquisition suggests there might be
plenty more to come from this company’s share price, but in the end it’s only ever going to be a
theoretical because the chances of IRL selling at this stage are vanishingly thin. What we do
now is set a more realistic target, something that’s in out sights for the next 12 months. We go
via the targetted asset value for the three components of IRL:
12

Corihuarmi: $15m
Don Nicolas: $41m
Ollachea: $125m
Total: $181m
That’s plenty more than the current $41m market cap of course, but we have to factor in the
share dilution expected down the line. Therefore we assume 400m shares out come this time
next year, which brings a 12 month target price of 45c, representing a 91.5% upside to Friday’s
close.
Conclusion
The IRL of last year was in a much stronger position than the version we see in 2013. Not only
is the gold price much lower, but the market’s assumption that the company would have
difficulty raising the necessary cash in order to move its projects forward and dumped the equity
value of the stock lower than most; it’s fair to say that it hasn’t been the right moment to be an
asset rich/cash poor junior exploration story.
However, valuations today are particularly oversold and they offer an excellent entry point into a
story that’s not going to stay beaten down for much longer. IRL has already confounded many
of its critics by raising the cash it requires in the difficult Argentina jurisdiction, and having raised
by going inside Argentina and finding Argentine money, the project has been significantly de-
risked. It’s important to recognize that Don Nicolas poses no further financial risk to IRL, it’s
basically a no-lose situation from here. Additionally, the finance money is coming from people
who are seasoned operators in the Argentine market, have the political and union contacts
established, have shown they can do good business there and bring more than just a
chequebook to the table.
Meanwhile, Ollachea is advancing and with the Don Nicolas blockage now removed, can now
be expected to accelerate. We should soon have the key EIA permit, which by early 2014
should be followed by the last major permit needed in Peru, that for construction. Between
those two events, the financing package should be put into place which means by somewhere
1q14 or maybe 2q14 best guess, Ollachea will get the green light and constrtuction begins.
The downside to expect here is dilution via a share placement, which is likely to be in the shape
of a rights issue. These type of issues are usually more popular with instos tan with us little
retailers, but all the same everyone will
get the opportunity to add equally and
hold their percentage as stands, big or
small.
There are a lot of conservative and
lowball assumptions in today’s target
call: gold at $1,300 and $1,350, a rights
issue that runs for $54m at 25c instead
of some lower total raise at a potentially
higher share price. Higher than
potential dilution. Cash costs and capex
above the expected. No mine life
extensions from further resource
discovery and developments. A tight
loans payback schedule. Even so (and
ignoring what IRL might get in cash if it
went and shopped those high-quality ounces at Ollachea to a willing market) we still come up
with a 45c price target and a very juicy percentage upside to Friday’s closing price. This is why
Minera IRL (MIRL.L) is now a Top Pick at The IKN Weekly.
13

Stocks to Follow
It was a negative week for the metals, the miners, the juniors and for the Stocks to Follow list.
Of the twelve left on the list come Friday, five made gains (GORO short, TAHO short, AQM.v,
FCV.v, DAR.v) and seven showed losses on the week (RIO.to, IRL.to, BTO.to, LRA.v, BCM.v,
RIO.to trading position, NET.v) but the losses were by and large taken in the bigger and
weightier names we carry, so the back pocket hit was rather heavier than a 5-to-7 split.
Best moves came from Darwin Ventures (DAR.v up 28.6%) and AQM Copper (AQM.v up
23.8%), while the worst loss was at Network Exploration (NET.v down 50.0%), at least in
percentage terms. It needs to be underscored, however, that the 50% downtick on a tiny
position that moves from 1c to 0.5c and will most probably move back again pales into
insignificance for the portfolio against the 8.7% hit taken by RIO.to.
With the disposal of CSI.to and PVG.to last week we now have 12 open positions on our ‘Stocks
to Follow’ list, three less than our self-imposed maximum. Three of the positions are in the
green, nine are red.
Company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
Top Picks
Rio Alto Mining RIO.to buy C$2.30 07-apr-11 C$2.64 14.8% best LT value
Minera IRL IRL.to str buy C$0.47 22-jul-12 C$0.235 -50.0% new top pick, avg down
Recommends
B2Gold BTO.to buy C$3.07 28-nov-12 C$2.80 -8.8% sold 1/2, rest rides. Quality
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$1.00 -13.0% solid biz model, LT hold
Gold Res Corp GORO short U$9.52 03-may-13 U$8.39 11.9% tgt $5, best short, added
Bear Creek BCM.v buy C$2.06 30-may-13 C$2.47 19.9% ST trade, may sell soon
Rio Alto Mining RIO.to buy C$2.68 07-jun-13 C$2.64 -1.5% ST trade position, separate
Tahoe Resources TAHO short U$13.10 08-apr-13 U$17.90 -36.6% port hedge, easy2b short
Smaller/Riskier
AQM Copper AQM.v hold C$0.31 16-oct-11 C$0.13 -58.1% 6c buy op gone, 15c tgt
Focus Ventures FCV.v spec buy C$0.175 01-jul-12 C$0.105 -40.0% revised tgt 25c
Darwin Res DAR.v hold C$0.10 14-jul-12 C$0.09 -10.0% drill res-Aug'13
Network Expl. NET.v hold C$0.01 22-jul-12 C$0.005 -50.0% 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% closed
Bellhaven BHV.v jun'13 C$0.065 03-jun-13 C$0.12 84.6% closed ST trade
B2Gold BTO.to aug'13 C$3.07 28-nov-12 C$3.44 12.1% sold 1/2 to raise cash
Colossus Min. CSI.to aug'13 C$0.72 24-jul-13 C$0.79 9.7% trading buy, 90c tgt
Pretium Res PVG.to aug'13 C$8.20 11-jun-13 C$10.14 23.7% $11.75 tgt
2009, 2010, 2011 and 2012 closed positions in appendices below
14

Now for some notes on a selection of the above stocks.
Pretium Resources (PVG.to) and Colossus Minerals (CSI.to): Positions sold. As per
last week’s announcement, these two positions were closed last Monday. In the case of PVG I
got lucky and managed to get very close to the best price, which is a nice slice of luck and
doubly so when considering that by Friday the stock had dropped a hefty 12.2% from my exit
price of $10.14. That drop was helped quickly along by another $10m placement run by PVG for
its preferred insto holder Liberty Metals on Wednesday (2) which came on the back of the flow
through shares raising $15m of announced August 23rd (3). We know PVG is a high-burn entity
and that its exploration program is expensive, but one has to wonder why it prefers to go to
market not once but twice in the final weeks before that apparently important bulk sample
result is due. Or that could just be me being snarky now that I’ve left this position.
As for Colossus, my exit at 79c could have been better as there was plenty of 80c available
during the week (even 82c, and one trade went through at 83c) but again, no point sweating
the small stuff. And again, the gains weren’t the maximum possible because on this one i also
bought too early (low 70s) when much better entries (los 60s) became available a few days
later. Hopefully I’ll learn from both these trades on that point of order.
The bottom line: Two trades that ended up offering modest gains, which isn’t a bad thing I
suppose. The main positive I take away is having read last week quite well and sold both (as
well as adding to the GORO short) at the right time.
Gold Resource Corp (GORO): Added to short. I got over $9 on the addition (and by the
way, it was easy to get a lend this time
around) which suited me just fine. As the
week rolled on that looked even better. I’m
now full on this position to my own content
and will let it ride as stands. We did have
news from GORO Tuesday (4) that the
dividend for August would be 3c, which didn’t
surprise. However, the numbers that this
company runs means that in the absence of a
significant uptick in silver and gold, it will have
to cut its dividend again before the end of this
year and the softening-up process for holders
was evident in the NR this time around.
15

Darwin Resources (DAR.v): It was good to see DAR’s share price float back up to 9c from
the rather silly 7c sell-off prices of last week, though we need to underscore that volumes were
again very thin. I’d expect DAR to bobble around this price for the time being or until the
company offers up new news. With $1m at bank, a parsimonious attitude and a careful team,
DAR has something of a cash buffer but will clearly need more funds at some point, particularly
if it moves to drill at another spot on Suriloma or at one of its other assets (we remind readers
that DAR holds a lot of decent looking though very early stage concessions in Peru). The most
likely scenario is that this company, full to the brim with real live bootleather geologists, will do
baseline work in order to generate the next target while the lean times continue.
As made clear already, I see no need to sell out on this small and speculative tinycap play and
having “bought well” at 10c, the holding is made that much easier (and with no desire or need
to average down, either). Come the day that the market begins to recognize land assets as
having instrinsic value once again, DAR’s share price will float back up a bit. Anyone holding
through with me, however, has to be clear that any round of financing in the near or nearish
future is likely to be dilutive. The price one pays.
Rio Alto Mining (RIO.to): RIO had no special immunity against the sector weakness and
dropped away last week. I found it somewhat frustrating this time, more than normally,
because the run up early Tuesday morning to $3.05 got me preparing to sell the near-term
trading position at $3.10 or above, but my pencil-licking was premature, the reversal came too
soon and the drop was too fast. Therefore the trading chunk remains a near-term trading
position and ended the week drawing red ink once again. Rats.
In operational news, word reaches this desk that RIO placed 28k oz Au on pad during the
month of August.
Rio Alto (RIO.to): Gold ounces placed on pad monthly
35000 Jan 2012 to date
30000
25000
20000
15000
10000
5000
0
16
21naj bef ram rpa yam nuj luj gua pes tco von ced 31naj bef ram rpa yam enuj yluj gua
oz Au
source: MEM data/IKN ests
Also, with one month to go in 3q13, the company now underscores that your author’s best-
guess production/sales estimate of 55,000 oz Au
in 3q13, as seen in IKN224, is looking pretty RIO.to: Gold production and forecast for 3q13-4q13
close to reality. Our intel previously picked up 70000 68000
about a bottleneck in the production process due 60000 55973 58081 56511 55000
to essential maintenance of the collection pool 48467
50000
etc has been confirmed, as well as straight and 40000 36355
expected engineering issues that derive from 30548
30000
now placing 36,000tpd of ore onto the pads
20000
instead of 24ktpd means that gold placed on pad
10000
is going to be significantly higher than the final
0
production number, instead of the normal “just a
bit higher”. However, the bottleneck is now just
about done with and production numbers are
expected to pick up rapidly as a result, so RIO at
La Arena is expecting that previously mentioned 55k oz Au for the current quarter and a really
21q1 21q2 21q3 21q4 31q1 31q2 tse31q3 tse31q4
Oz Au
source: company filings, RIO guidance/IKN ests

strong 4q13, which we currently have slated at 68k oz (the kind of number that’s bound to
catch good headlines at market, come the day). I’m sticking with my preliminary guess of
207.8k oz Au from RIO.to in 2013.
Bear Creek Mining (BCM.v): Even during short and time-constricted visits to Lima, such as
the one last week, I like to keep my ear open and register the names of companies most
mentioned. This time around I heard Bear Creek and Corani from several places; mining people,
investor people, journalists, even the guy I sat next to on the plane back home all at least
mentioned BCM and normally wanted a view on what I thought, which I think is interesting.
As for news, BCM announced Wednesday morning (5) that the comments procedure for its EIA
permit was now complete and as long as the Peru government didn’t have anything else to
query about, the permit should be forthcoming in the normal bureaucratic course of things. It’s
difficult to second-guess Peru government office speeds or rhythms (often snail-like), but a
reasonable assumption now would be “some time in the fourth quarter” for the EIA.
Meanwhile, I received a simple yet key question on BCM from reader ‘HW’ last week. The mail
was the soul of brevity and to the heart of the current BCM conundrum:
do you have an analysis of the profitability at 20 or 22 dollar silver on this co.?
Here’s how I replied to that:
I have estimates, but this is why the upcoming feasibility update will be so
important. I think Corani works at $20 base case (i'd want 15% IRR minimum),
so interesting numbers begin to spring from the sheets at $22. However, I
really want to see what the feas says and so does the market. This is why I
have it as a near-term trade, rather than a longer-term objective with a higher
target.
BCM could go much higher given the right circumstances of a strong feas
update and rising silver. For the moment I'm sticking to the trade objectives,
though.
So there you go.
AQM Copper (AQM.v): We saw 14c on Friday and decent volume as the day wore on as well,
which brings up the need to remind those reading that I’ll sell my AQM if we see 15c. A little
more on this subject down in ‘Market Watching’ below.
17

The Copper Basket
After thirty-five weeks of 2013 The Copper Basket is showing a 18.95% loss to level stakes.
company ticker price 1/1/13 Shares out Market Cap current pps gain/loss%
1 NGEx Resources NGQ.to 3.40 168.66 328.89 1.95 -42.6%
2 Augusta Res AZC.to 2.43 144.35 319.01 2.21 -9.1%
3 Copper Fox CUU.v 0.83 402.96 269.98 0.67 -19.3%
4 Reservoir Min. RMC.v 2.41 41.68 181.31 4.35 80.5%
5 Nevada Copper NCU.to 3.50 80.5 181.13 2.25 -35.7%
6 Lumina Copper LCC.v 9.43 43.61 173.13 3.97 -57.9%
7 Hot Chili Ltd HCH.ax 0.72 297.46 127.91 0.43 -40.3%
8 NovaCopper NCQ.to 1.80 53.02 104.98 1.98 10.0%
9 Panoro Minerals PML.v 0.62 204.71 73.70 0.36 -41.9%
10 Western Copper WRN.to 1.39 93.68 59.02 0.63 -54.7%
11 Curis Resources CUV.to 0.70 63.13 42.30 0.67 -4.3%
12 Candente Copper DNT.to 0.375 122.05 35.39 0.29 -22.7%
13 Oracle Mining OMN.to 0.80 49.03 19.12 0.39 -51.3%
14 Yellowhead Min. YMI.to 0.59 63.45 13.96 0.22 -62.7%
15 Strait Minerals SRD.v 0.08 57.26 5.73 0.10 25.0%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg -18.95%
Seven went up on the week (NGQ.to, AZC.to, PML.v, RMC.v, DNT.to, YMI.to, SRD.v), one was
unchanged (CUU.v) and seven went down
(LCC.v, NCU.to, HCH.ax, WRN.to, NCQ.to, Copper Basket 2013 average, weekly
12%
OMN.to, CUV.to) but the bigger
8%
percentage wins we saw in components 4%
Strait Minerals (SRD.v up 25.0%), 0%
-4%
Candente Copper (DNT.to up 23.4%) and
-8%
Yellowhead Mining (YMI.to up 12.8%) -12%
outweighed the bigger losses topped by -16%
-20%
Lumina Copper (LCC.v down 10.8%) and
-24%
Oracle Mining (OMN.to down 10.3%) and -28%
mean that by the close of fun Friday our -32%
Copper Basket average had moved up
2.59% on the week and now stands at the
best level (or least worst level if you
prefer) since mid-April.
The story of last week’s copper market price is simplicity
itself, from higher to lower, which blew a hole in many a
bull’s ideas of a new level reached at $3.30/lb (and even I
was starting to think that if $3.30 could hold, we’d be in for a
good time amongst market leaders). This time, Copper
reacted to the rising dollar and weakening appetite for hard
commodity stories in much the same way as precious metals
did; little in the way of story separation for a change.
It’s the end of another month so let’s catch up on our
tracking charts for world inventories on a week in which
world stocks rose for the first time in a long time, by 2.7% or
20,148 metric tonnes (mt) to 778,046mt. Of the grand total,
LME stocks rose by 4.2% to 588,000mt, Shanghai rose 0.3%
to 156,568mt and Comex dropped sharply once again, for
the third week running, by 10.9% to 33,478mt. That
exchange has a look of one that’s being totally abandoned by the main players.
18
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 ht4gua ht11 ht81 ht52 ts1pes
source: IKN calcs, TSX data
31/1/1
morf
egnahc
%

Thus to our monthly charts. Overall stocks are now down and the cream-coloured part that
shows Comex stocks has been squashed very hard, but Shanghai and LME numbers are also
lower than they were one and two months ago.
As for overall percentages, the LME has now broken the 75% mark (75.57% to be exact) and
August has simply confirmed that there’s only one game in town these days. Shanghai stocks
haven’t been this low since July 2012. The overall picture is of shrinking world stocks, which is
normally bullish for prices. However, this year has seen the larger players blatantly gaming the
world warehouse system, using it to keep copper away from end-users in order to prop up
prices and keep premiums for deliverable copper high. We’ve talked on the risks of this high-
stakes game before and those playing it may be starting to sweat, what with reports (6) of
premiums dropping and as a result, China holding off from deliveries. My best guess for the last
few months has been that we won’t get definition on the copper market and some semblance
of a real market signal until after Labor Day swings around. Well people, that’s tomorrow. The
bottom line is that I remain unconvinced in either direction about copper and remain mostly
passive and on the sidelines.
Finally, a bit of a shift in LME cancelled warrants, now at 48.3% of total LME inventories. The
chart still shows this number to be high, but we’re off the 50%+ numbers now and it might
trend lower now Labor Day is here. If that’s the case, it’s unlikely to be seen as bullish for
copper prices as it suggests a whole bunch of copper that’s been held back from end-users
artificially by those that control warehouse flow is about to hit the real market.
Cancelled Warrants at LME, IKN157 to date
60%
50%
40%
30%
20%
10%
0%
19
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 322NKI 522NKI
source: Cochilco, LME
rof
yrotnevni
EML
%
latot
yreviled
resu-dne
Copper inventories, per month 2012/2013
1000000
800000
600000
400000
200000
0
Now for updates on some of our basket stocks
NGEx Resources (NGQ.to): My potential near-term trade pick had a positive week, but
barring a single block trade of 300,000 shares on Wednesday morning the volumes remained
light (Friday’s upmove which basically added all the week’s win was particularly thin) which
means NGQ is still, for me, one I’d rather watch than play. If real and sustained market interest
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj luj gua
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 luj gua
LME Shanghai Comex
source: Cochilco

returns, it’s the type of story that we could ignore until it breaks through $2.20 to the upside,
as the potential to race back to $3 is decent enough.
As you know, I’m much keener about the ‘Los Helados’ part of the Vicuña Area project than I
am about the two targets on the Argentine side of the
border, namely Josemaria and Filo Del Sol. The company
looks upon all three as one and an interconnected system
of three deposits that could form a big mining operation,
but the market seems to consider the Argentine targets as
less asset and more liability. One of the problems is being
in Argentina, another is being in the middle of a provincial
nature reserve, the San Guillermo, which will automatically
give any anti-mining campaign (something that we know
Argentina can do well) a large stick with which to beat the
project. If you want a bigger and easier-to-see version of
this map, look here (7))
I think NGQ is making a strategic mistake by pushing its
story on the Chile/Argentina double bill story, especially as
it already had 18.75 Bn Lbs Cu (indicated and inferred
added together...I can do that, the company can’t) along
with decent gold and silver kickers under 43-101
compliance for its Chile-only Los Helados project. Yes it
would be nice to sell the whole caboodle on the prospects
of all three together, with 30Bn 40Bn or 50Bn lbs Cu to
develop, but isn’t 19Bn lbs enough for you? I get the impression that this team of exploration
geologists are getting wrapped up with the story of the rocks, are forgetting that political risk is
at least as important for the wellbeing of a junior these days and that Argentina is toxic to their
chances (see LCC.v below), either on a market perception or a reality-based level.
With an IKN estimated $20m in cash ($23.1m in cash as at June 30th, but things tend to slow in
high-Andean exploration projects during the southern winter) , NGQ isn’t desperate to raise
fund yet but its work is cash intensive and it will need to raise for any aggressive 2014
exploration campaign. Liquidity, rock-prospectivity or management brainpower are not issues
here; the problem is what looks like a strategic wrong-turn. It was April this year that First
Quantum paid $5.1Bn in cash and share for Inmet Mining and its Cobre Panama project. Now
admittedly that’s a bigger (33Bn lbs Cu) and more advanced (most of the rock is 43-101
compliant reserve status), but if the market pays $5Bn for that it can surely find more than
$330m for 11.25Bn Lbs Cu at Los Helados (i.e. the 60% that NGQ owns, with Japan-capital Pan
Pacific Copper owning the rest).
Strait Minerals (SRD.v): The 269,000 shares that SRD traded on Tuesday was the best
single day total since August 2012, which was followed by nearly 200k on Thursday and
although volumes didn’t follow through on Friday (just 10k that day), the two days’ trades
indicate that people have started to look again at this tiny copper play and in fact, it’s now just
one of three that’s making a year-to-date profit on our list.
The key to SRD is knowing when Teck will begin its drilling program for the Alicia property (SRD
is officially operator, but we should be under no illusions about who makes the real executive
decisions). Until that time (and if I had to guess, I’d say it’s not going to start until 2014 now)
SRD isn’t one that’s on my own shortlist for a possible return trade. I still like the potential of
Alicia and SRD is doing its best to survive in a tough market, with more evidence this week on
news (8) that the 3m warrants priced at 35c and held by Teck were being exercised at a
reduced price of 12c. In other words, Teck gets another 3m shares of SRD and SRD gets $420k
into its treasury that will helpo see it through (e.g. pay salaries) until the drilling action begins.
But until the drillbit begins to turn, it’s one to watch rather than play.
20

Lumina Copper (LCC.v): With its dip under $4 last week (and it tried and failed to rally out of
that hole on Friday) LCC has become the poster-child for what Argentina can do to your junior
mining company. It has great size, great grade and a management team that’s always done
well by selling its development copper projects to the highest bidder, but this time it’s all come
undone and the reason that LCC hasn’t sold Taca Taca is that the project is in Argentina,
period. Once bitten, twice shy major mining companies will no longer commit the quantities of
capital and time towards a major project that would be a severe political risk to its owner at all
points along its timeline.
The Lottery Ticket Basket
After 35 weeks of 2013 The Lottery Ticket Basket is showing a 34.21% loss to level stakes.
company ticker price 1/1/13 Shares out Market Cap current pps gain/loss%
1 Marlin Gold MLN.v 0.10 680 47.60 0.070 -30.0%
2 Eagle Star Min. EGE.v 0.125 79.13 16.62 0.210 68.0%
3 Bellhaven BHV.v 0.14 136.81 16.42 0.120 -14.3%
4 AQM Copper AQM.v 0.08 105.57 13.72 0.130 62.5%
5 Fancamp Expl. FNC.v 0.125 177 8.85 0.050 -60.0%
6 Tango Gold TGV.v 0.13 76.24 8.39 0.110 -15.4%
7 Copper North COL.v 0.10 58.7 2.94 0.050 -50.0%
8 Inca One Res. IO.v 0.12 34.0 2.72 0.080 -33.3%
9 Glass Earth GEL.v 0.155 105.67 2.64 0.025 -83.9%
10 Darwin Resources DAR.v 0.20 26.16 2.35 0.090 -55.0%
11 Cream Minerals CMA.v 0.03 155.34 2.33 0.015 -50.0%
12 Gryphon Gold GGN.to 0.085 194.64 1.95 0.010 -88.2%
13 Rio Cristal RCZ.v 0.025 17.259 1.38 0.080 -68.0%
14 Firestone Ventures FV.v 0.045 36.82 0.74 0.020 -55.6%
15 Netco Silver NEI.v 0.075 9.4 0.71 0.075 -40.0%
Portfolio avg -34.21%
The Lottery Ticket Basket saw six upmoves
(MLN.v, AQM.v, TGV.v, DAR.v, CMA.v, 25% Lottery Ticket Basket 2013 average, weekly
20%
RCZ.v), three unchanged stocks (GGN.to, 15%
10%
COL.v, IO.v) and six downmoves (BHV.v,
5%
GEL.v, FNC.v, EGE.v, FV.v, NEI.v). Biggest 0%
-5%
to the upside were Cream (CMA.v up -10%
50.0%), Darwin (DAR.v up 28.6%) and QM -15%
-20%
Copper (AQM.v up 23.8%), biggest to the -25%
downside were Glass Earth (GEL.v down -30%
-35%
37.5%), Fancamp (FNC.v down 33.3%), -40%
-45%
Firestone (FV.v down 25.0%) and Netco
(NEI.v down 25.0%).
Glass Earth (GEL.v): This one dropped on the announcement (9) on Thursday post-bell of a
major strategic refocus (the company’s words, not mine) that involves dropping its placer
mining operation due to ongoing loss-making, staff reductions and other cash saving initiatives
and to focus company attention on its WKP project.
This reminds me to apss on a piece of advice that works not just in this case but in just about
every other case I’ve come across: If a junior decides to get involved in a placer gold project
because it’s a “simple, low cost” alternative that will “generate near-term cash flow”, the run a
mile in the opposite direction.
21
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 ht4gua ht11 ht81 ht52 ts1pes
source: IKN Weekly data, TSX
2102/1/1
morf
egnahc
%

Cream Minerals (CMA.v): Days after mentioning that CMA was being shelled out and looked
destined for the NEX, the company’s plans change. Instead and as per the NR (10) of Thursday,
the Nuevo Milenio asset isn’t being sold, the company is running a 10-1 share rollback, a new
private placement to raise $1m (with $600k of that coming from chair Frank Lang), the
wholesale resignation of directors and entry of new blood (see the NR for all the names if
you’re bothered enough) and a name-change as cherry on top, to Agave Silver. Once this is all
done we’ll have a very different corporate entity here. It’ll be the same shitty asset though, so
it’s still untouchable.
Firestone Ventures (FV.v): A post-bell Friday announcement (11) (which is rarely a good
sign) announced that FV’s planned merger with Melior Resources (MLR.v) had fallen through
and as a result, the $500k MLR was going to advance to FV hasn’t been forthcoming. This
leaves FV with no cash and the need to “pursue other financing options”. This stock is now
broken, stay away.
Netco Silver (NEI.v): Another rollback was registered at Netco Silver, which completed a 5-
for-1 consolidation last week and means its share count now stands at 9.401m. The new price
allowed a few people to escape this one.
Regional politics
Colombia’s informal miner’s strike comes to an end
It went on for 45 days, much longer than most expected, but the strike action of informal or
“artisan-type” miners in Colombia came to an end this weekend (12) after strikers and
government agreed on a plan of action that will formalize many of the informal mining
operators. In return, the strikers won plenty of concessions from the government plan that
started their actions, including protection against the indiscriminate destruction of unlicenced
machinery currently being used for mining by the small mining co-operatives and companies,
the right to mine is what are called “ancestral mining areas” by local communities, as well as a
more nebulous agreement from the government that it’s not possible to lump all small/informal
mining operations together into one group and call them bad per se. Both sides agree that
there are “criminal mining operations” (a term that seems to have been coined in the last few
days in order to make the separation) and the government will still go after those people, but
small/informal miners seem to be happy that they are now being separated from the bad end
and the tacit message is that they’ll be able to get on with their working lives once again.
As a slight sidebar, this pact to end the strike will be greeted warmly by the mining community
of Marmato, who at the start of the week were marching in order to protect their community
rights of mining against the pretensions of Gran Colombia Gold (GCM.to) (13). The government
22

agreement is tailor made for their cause and a clear setback to GCM.to and its plans to build a
open pit megamine once locals were out of the way.
Peru’s permitting track speeding up
This comment is anecdotal and comes from overall observation of the sector rather than relying
on specific examples to make its case. One of the regular criticisms regarding Peru’s mining
sector on these pages is the inordinately long time it often takes to get permits out of its
government offices, not just for the “big permits” such as environmental or construction but for
the regular permits needed for drilling, etc. A few months ago the government pledged to
speed up the permitting process and I cynically rolled my eyes at the announcement, but to be
honest there does seem to have been a palpable change in the government offices and permits
are appearing quite regularly for mining companies both large and small these days. This is a
good thing.
Peru: Cajamarca Communities on strike against Conga and other mining projects
August 29th saw the start of another round of strikes and local protests in the Cajamarca region
against the Conga project, along with other mining projects that, according to said locals,
threaten the potential water quantity and quality of the area. Thursday and Friday saw the main
trunk road connecting Cajamarca to the South blocked, but it was re-opened (14) after a police
operation that saw four people arrested (later released) but thankfully very little in the way of
violence. The locals in three provinces of Cajamarca are on strike, namely San Miguel, Santa
Cruz and Hualgayoc, all of which are strategically important to the Conga project.
Their demands include the end of all concessions granted in water source and/or lagoon areas,
that all underground water source permits be revoked, that the murders of their environmental
activist leaders be properly investigated and solutions found to the pollution caused by tailings
compounds in the Hualgayoc province. The strike action is expected to continue this week.
Market Watching
The Alamos/Esperanza saga
Sometimes it’s necessary to state out loud that you read a situation completely incorrectly, and
one such for me is the Alamos/Esperanza saga. This time last week I still doubted that the deal
would go ahead, with the evidence from
the NR of nine days ago called into doubt. I
did think it might improve the share price a
little, but was by no means sure that the
deal would close correctly.
The only thing I can say in mitigation about
my mistake on reading the situation is that
it didn’t make much difference to any
potential trade, because come last Monday
morning EPZ shot higher as the market
assumed the deal was now a virtual done
(which means there was no time for anyone
to make a trade that would result in a
meaningful profit). Indeed it turned out
that the deal closed quickly once EPZ’s shareholders had overwhelmingly voted pro-deal and
Friday brought confirmation (15) that the deal had closed. The thing that hadn’t crossed my
mind was that maybe, just maybe, AGI didn’t have an out as per the terms of the contract and
as per the problems being handed to it by the Morelos government. It’s clear from the reaction
Monday, where I was expecting a little bounce and we saw a great big bounce, that other
people had done better homework than I and were confident that the deal would be done.
23

The rise of the copper dogs
It’s not escaped my notice that a whole bunch of what can be grouped as “copper dogs” have
suddenly started moving together. This chart shows five such examples (ones we cover to some
extent or other) along with the copper producers ETF (COPX) and the junior PMs ETF (GDXJ).
The reasons could be anything, but there is a whole school of thought now emerging about
how copper players will be forced into lower grade, higher cost projects because the
combination of size and grade in new discoveries is now on the way out and in the future,
unless you get very lucky, you’re going to have to choose one or the other. Therefore all these
overlooked plays might be attracting speculative attention from people with the kind of deep
pockets and long-term patience needed.
Conclusion
IKN226 is done, only one bullet point today:
• An investment in Minera IRL (IRL.to) (MIRL.L) at current levels makes a helluva lot of
sense, as long as you don’t think the gold mining sector is about to go the way of the
dodo. Its main Ollachea project alone is worth more than today’s share price, even
after the share count dilution so feared by an overcautious market. We’re moving into a
phase in which high quality ounces will be rewarded and that’s what Ollachea is, so
hold back your concerns about the ability for IRL to get financing, because the cash will
come and it won’t be too onerous, either. The price alone has de-risked this story to
the core, it’s time to own IRL. Top Pick.
The top long-term picks are Rio Alto Mining (RIO.to) and Minera IRL (IRL.to). I thank
you in advance for any feedback sent in. Flash updates will be sent promptly if required by
events.
I wish you good trading fortune, ladies and gentlemen.
Otto
24

Footnotes, appendices, references, disclaimer
(1) http://incakolanews.blogspot.com/2013/08/samex-mining-corp-sxgv-blueprint-for.html
(2) http://finance.yahoo.com/news/pretivm-announces-non-brokered-private-122300898.html
(3) http://finance.yahoo.com/news/pretivm-announces-private-placement-flow-204900547.html
(4) http://finance.yahoo.com/news/gold-corporation-declares-august-monthly-120000532.html
(5) http://finance.yahoo.com/news/bear-creek-announces-official-submission-123000605.html
(6) http://www.reuters.com/article/2013/09/01/china-copper-imports-idUSL4N0GX0EP20130901
(7) http://3.bp.blogspot.com/-
jH9rTbaF6FQ/T_CaslbY5sI/AAAAAAAAQZk/GF2FHnOtFS4/s1600/San+Juan,+la+tercera+provincia+con+m%C3%A1s
+%C3%81reas+Protegidas.jpg
(8) http://finance.yahoo.com/news/strait-announces-early-exercise-warrants-115300426.html
(9) http://finance.yahoo.com/news/glass-earth-gold-initiates-major-200000650.html
(10) http://finance.yahoo.com/news/cream-minerals-announces-non-brokered-174845380.html
(11) http://finance.yahoo.com/news/firestone-ventures-inc-melior-terminates-203000353.html
(12)
http://www.elcolombiano.com/BancoConocimiento/P/paro_minero_mineros_y_gobierno_llegaron_a_un_acuerdo_para_l
evantar_el_paro/paro_minero_mineros_y_gobierno_llegaron_a_un_acuerdo_para_levantar_el_paro.asp
(13) http://www.lapatria.com/economia/mineras-pidieron-respetar-el-derecho-al-trabajo-42177
(14) http://elcomercio.pe/actualidad/1624992/noticia-policia-detiene-cuatro-ronderos-durante-paro-antiminero-cajamarca
(15) http://finance.yahoo.com/news/alamos-announces-closing-esperanza-resources-100000957.html
Appendix 1: Flash update dated August 28th
Good Wednesday evening, 7:30pm local time after a day of stormy weather; this year's winter is going out with a bang.
Minera IRL (IRL.to) (MIRL.L)
Further to the incomplete analysis on IRL from last Sunday, it came to my attention at the same time that all the main
players of IRL will be in Lima at the same time tomorrow Thursday afternoon. This is a rareoccurrence, as some of them
have been in Argentina until today and others doing necessary rounds in Europe. Therefore I'm going to take the
opportunity offered and will be in Lima for Thursday and Friday in order to pick their brains on several issues and see
how they see the future of the company. As mentioned in last week's edition, IKN226, I'm particularly interested in
thoughts on how they plan to raise capex for theOllachea mine, now that the Don Nicolas deal is done.
I repeat that I see particularly strong opportunity in this stock, as it's one of the rare few 'serious' juniors with quality,
advanced assets that have seen their share price hit overly hard along with the more deserving mediocrity out there. My
reticence in setting a target price today is more about not wanting to either undervalue IRL, nor be too optimistic. The
shape of any eventual financial deal for Ollachea will go a long way to determining this.
Therefore, as this somewhat short notice trip has come up, expect the blog to be quiet for the next couple of days.
However it should be worth our collective time in order to get more flavour on what IRL has in its plans.
General Market thoughts
The call last weekend was caution in the near-term and due to that, the sales of Pretium (PVG.to) and Colossus (CSI.to)
went through on Monday, as well as an addition to the Gold Resource Corp (GORO) short the same day. The way
things have developed since then justifies said caution and although things are getting cheaper in general, I see no rush
to use any more of the freed-up cash on near-term long trades as yet.
Until Sunday and IKN226 (unless you're in Lima tomorrow, in which case drop me a mail and I'll tell you where I'll be
quietly sipping on a decent Malbec in the evening).
25

Stocks To Follow Closed Positions, 2012
Closed in 2012 closed close PPS
Soltoro SOL.v jan'12 C$0.87 07-nov-11 C$0.94 8.0% cash moved to BCM.v
Gold-Ore Res GOZ.to feb'12 C$0.84 13-oct-10 C$0.98 16.7% trade closed on ELG.v offer
Minefinders MFN feb'12 U$11.68 17-nov-11 U$14.80 26.7% target made, trade closed
Iron Creek IRN.v mar'12 C$0.58 26-sep-10 C$0.31 -46.6% time up on small bad trade
U.S. Silver USA.to apr'12 C$2.18 15-mar-12 C$1.86 -14.7% ST trade no good, cut loss
Augusta Res. AZC.to may'12 C$3.10 29-ene-12 C$2.07 -33.2% bad mkt, bad trade cut loss
Bellhaven BHV.v may'12 C$0.50 22-sep-10 C$0.28 -44.0% new mgmt not impressive
Zincore Metals ZNC.to may'12 C$0.325 29-jul-11 C$0.17 -47.7% bad mkt, bad trade cut loss
Soltoro SOL.v may'12 C$0.70 18-mar-11 C$0.41 -41.4% bad mkt, bad trade cut loss
U.S. Silver USA.to aug'12 C$1.78 27-jul-12 C$1.36 -23.6% fail ST trade close pre split
Estrella Gold EST.v aug'12 C$0.91 27-mar-11 C$0.14 -84.6% Closed on port realignment
Fortuna Silver FVI.to sep'12 C$1.07 03-may-09 C$5.32 397.2% sell call $6.17/ Mar25
Strait Minerals SRD.v oct'12 C$0.125 09-dic-11 C$0.12 -4.0% closing coverage til FY13
Sunward Res SWD.to oct'12 C$1.47 13-mar-11 C$1.21 -17.7% sold, took loss
Gold Res Corp GORO oct'12 U$21.47 09-sep-12 U$17.40 19.0% Short trade closed
Yellowhead Min. YMI.to nov'12 C$1.00 01-abr-12 C$0.63 -37.0% sold, took loss
Primero Mining PPP nov'12 U$7.26 07-oct-12 U$6.73 7.3% Short trade closed
Bear Creek Min. BCM.v nov'12 C$3.38 07-nov-11 C$3.72 10.1% Took small profit
Vena Resources VEM.to dec'12 C$0.70 31-may-09 C$0.18 -74.3% Failed trade (caps F)
Galway Res GWY.v dec'12 C$2.19 24-nov-12 C$2.30 5.0% closed good ST arb trade
Stocks To Follow Closed Positions, 2011
Closed in 2011 closed close PPS
Sunward Res SWD.v jan'11 C$1.05 21-nov-10 C$1.63 55.2% target made, trade closed
Serengeti Res SIR.v mar'11 C$0.245 05-dec-10 C$0.285 16.3% sold pre-tgt, ST trade fail
Fronteer Gold FRG apr'11 U$2.37 03-may-09 U$15.24 543.0% buyout, trade closed
Minefinders MFN apr'11 U$9.09 07-nov-10 U$16.89 85.8% target made, trade closed
Metalline Min. MMG may'11 U$1.04 26-jan-11 U$0.89 -14.4% exit, resource disappointed
Peregrine Met PGM.to jul'11 C$0.87 06-mar-11 C$2.60 198.9% buyout offer, closed
Dynasty Metals DMM.to jul'11 C$4.20 03-may-09 C$2.85 -32.1% Sold. Fail. Move on.
Aura Silver AUU.v aug'11 C$0.22 13-oct-10 C$0.16 -36.4% Bad pick. Take loss
U.S. Silver USA.v aug'11 C$0.52 26-jan-11 C$0.71 36.5% closed to make room
B2Gold Corp BTO.to sep'11 C$2.80 12-may-11 C$4.27 52.5% target made, trade closed
Bear Creek Min. BCM.v sep'11 C$3.80 27-may-11 C$4.17 9.7% macro sell call victim
Minefinders MFN sep'11 U$14.70 10-aug-11 U$15.15 3.1% macro sell call victim
Great Panther GPR.to sep'11 C$3.03 22-aug-11 C$2.64 -12.9% macro sell call victim
Fortuna Silver FVI.to sep'11 C$1.07 03-may-09 C$5.36 400.9% sold 20%, macro sell call
Focus Ventures FCV.v nov'11 C$0.40 20-apr-10 C$0.20 -50.0% cut losses, bad trade
Regulus Res. REG.v dec'11 C$1.17 14-aug-11 C$0.52 -55.6% cut on news of poor 43-101
2009 and 2010 closed positions in appendices below
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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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