IKN #227Premium

The IKN Weekly
Week 227, September 8th 2013
Contents
This Week: A new trade, A quiet week.
Fundamental Analysis: Starcore International Mines (SAM.to).
Stocks to Follow: Overview, Rio Alto Mining (RIO.to) (RIOM), Bear Creek Mining (BCM.v),
Focus Ventures (FCV.v), Gold Resource Corp (GORO), Minera IRL (IRL.to) (MIRL.L), AQM
Copper (AQM.v), Tahoe Resources (TAHO) (THO.to).
Copper Basket: Overview, Strait Minerals (SRD.v), Panoro (PML.v), Reservoir (RMC.v),
Candente (DNT.to).
The Lottery Ticket Basket: Overview, Marlin Gold (MLN.v).
Regional Politics: Mexico: The royalty debate is back, Chile’s MEO wants a mining royalty,
Guatemala anti-mining indigenous peoples turn to International Courts, Dominican Republic:
Barrick Pueblo Viejo and the government reach agreement.
Market Watching: Overview, Santa Barbara Resources (SBL.v) due to start drilling, A thought
on Colossus Minerals (CSI.to).
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
A new trade
See the Fundamentals section for more details, but next week I’m a buyer of Starcore
International (SAM.to). However, be clear that once again the set-up is for a near-term
objective trade rather than a longer-term investment (I’m bold-typing an underlining for
a reason) with a specific target and a limited time parameter.
I like the window of opportunity the current numbers at SAM.to offer, so I’m going to buy a few
with the intention of selling them back to the market at a higher price come late October or
early November. That’s all there is to it, really.
A quiet week
“It’s quiet. Too quiet.”
Li (Bert Kwouk), The Inn of the Sixth Happiness, 1958
Gold had a gently-sliding lower week and aside from some market shenanigans around a U.S.
jobs report that ultimately provided more heat than light, set the tone in our corner of the
market. The consolidation of gold at-or-around $1,400/oz is something I’ve underscored for the
last few weeks and with each week it’s solidifying as a market influence; after all, alongside
calling gold higher (popular amongst sector commentators) or lower (popular among Wall St
experts who want us into their preferred tech/housing/bank/retail/etc stocks) there’s nothing
wrong with calling “hold” on the denominated dollar value of anything, gold or otherwise,
though it’s certainly less popular or likely to get your fame-seeking soothsayer a place in front
of the TV cameras.
1

In other news, it’s yet to be determined how much the unveiling of the new Apple iPhone will
affect the market for exploration stage junior mining stocks with projects in South America. But
the simple recognition that it’s a distinct possibility is amusing all by itself.
Fundamental Analysis of Mining Stocks
This week we look at Starcore Intl (SAM.to).
NOBS fundamental report dated September 8th 2013
Starcore International Mines Ltd. (SAM.to)
Company Overview
Starcore International Mines Ltd (Canada: SAM.to, US pinksheets SHVLF, Frankfurt V4J.f) is a
producing junior mining company operating in Mexico. Its flagship property is the operating San
Martin gold/silver mine in Queretaro State, Mexico. Current share structure is as follows:
Shares out: 143.39m
Options: 14.255m
Warrants: 4.505m
Fully diluted shares: 162.15m
Current share price: $0.235
Market Cap: $33.7m
Approx cash per S/O: $0.03
All prices are in Canadian dollars unless stated. Forex U$1=CAD$1
2

Today’s report
As is becoming normal in these fundies reports, let’s set out the scenario here at the top so that
you don’t need to wade through all the boring numberstuff and charts. Starcore (SAM.to) is a
company that many readers have pointed out to me over time and ever since around this time
last year at least six of you (e.g. readers RL, JH, PB amongst others will probably recognize
their initials) have asked for a thought on the stock. So it’s fair to say that it’s been on my back-
burner radar for a while but up to this point I’ve never mentioned it to anyone, barring in replies
to mails from said readers. My main sticking point with SAM all this time has been the combo of
its small size and the debt that it’s carried up to this point, but in the last few weeks news out of
the company has been more than interesting and it’s because of this, along with the apparently
cheap share price we see today, that SAM is getting the NOBS fundies treatment today. My
interest has been perked in SAM for three reasons:
1) The production report for the quarter ended July 2013 (1) showed strong numbers. This
is one of those rare beasts, a truly profitable (not just marginally, but truly) small PM
miner and that’s something which grabs my attention in today’s market.
2) As per the news from last week dated September 3rd (2) SAM has now paid off its main
financial liability. I make no bones about being happily surprised by this news, as up to
this point it’s been one of the main reasons to avoid SAM in my opinion, with my default
cynic’s position of “another small miner dousing itself in debt and then likely to
underperform” in play. The financial rigor that SAM has shown in paying down its debt is
a very pleasant change to witness from this type of small mining company.
3) The share price, which is has popped a bit recently but is still cheap (and we’ll go into
that as the report unfolds).
The are still reasons to be leery about SAM as a full-scale investment, however. Firstly, its size.
It’s a small operation, will stay as a small operation and because of that, will always be exposed
to the type of operational fluctuations that can move the financial performance by quite large
margins on any given quarter. Its also one of those operations that has so far been successful
in developing resources and discovering new veins and ounces to mine at its main property on
an ongoing basis, but its resource/reserve cushion is never much more than two years so it’s
exposed to the potential of sudden and definitive depletion, the type of overhand that weighs on
a company’s stock price. Having been through the “oh, it looks very cheap compared to larger
miners” scenario when covering and recommending Gold-Ore Resources a couple of years
back (and somehow escaping with a minor profit on the trade after many trials and tribulations)
I’m leery about committing to a small PM miner, but in this case there are some specific and
punctual reasons to see SAM as a potential near-term trade.
And that’s where today’s analysis will lead us, kind readers of The IKN Weekly: In Starcore Intl
(SAM.to) I see the clear, nay compelling opportunity of a near-term trade that will cover
the next six weeks to two months and has the potential to offer us a 50% win in that time.
However, I’m not going to move into SAM as a longer-term investment and will stay true to my
current objectives of seeking out near-term trades that allow the somewhat defensive overall
position of The IKN Weekly ‘Stocks to Follow’ portfolio to stay in that mode, remain flexible and
make use of the opportunities that come up.
So, now that your greed glands are hopefully opened up, time for the analysis.
Operations
Aside from some minor land holdings that SAM is looking to sell at the moment, the story here
is all about the company’s San Martin gold/silver mine, acquired by Starcore in 2007 when they
paid Goldcorp (GG) $26m for the disposal asset which was by that time too small to interest the
tier 1 company.
Located in the relatively safe and narco-violence free region of Queretaro State Mexico (NW of
Mexico City), San Martin has a centuries long history of mining (as is so often the case with
small vein-type operations in Mexico) but its modern operational history is of more interest. It’s
been in continuous operation since 1993 and in that 20 year period (which started at a
throughput rate of ~300tpd and is now handily over 800tpd) its operation has been run in the
typical method for small mining companies; have a couple of years reserves proven up, then
3

drill/explore/discover more ounces on a rolling basis to keep the reserves level roughly constant
and provide non-stop feed. This means that at any given point the mine’s reserves can never
guarantee a long mine life, but its track record suggests a much longer life than the bare
numbers show.
Here are the latest reserve/resource numbers from SAM, dated late 2011. Since this time of
course the depletion has continued (for about 18 months) but the latest word from the company,
in its MD&A for the end April ’13 quarter, states that it’s still good about having a 2 year reserve
and plenty of prospective rocks to drill and define, including parts of its property that have never
seen modern exploration techniques.
SAM.to: San Martin Gold Reserve/Resource
Category Tonnes (m) Au grade (g/t) Ag grade (g/t) Oz Au Oz Ag Oz AuEq
P+P 0.59 2.29 39 43,173 735,254 57,878
Inferred 1.31 2.37 27 99,830 1,137,299 122,576
Total 1.90 143,002 1,872,553 180,453
source: SAM data, IKN calcs
As this table suggests (and once again, let’s clearly state that corner-cutting rags such as The
IKN Weekly can add together P+P reserves and inferred resources if they want, but companies
can’t do that under 43-101 rules) SAM at San Martin isn’t a big mine, with around 180k oz AuEq
in reserves/resources. However, as it’s mining at around 24k oz AuEq per quarter, as long as
you take those inferred ounces as reasonably reliable, it
suggests that on known ounces alone (and without SAM: tonnes per day throughput
further exploration and discovery, which is also likely) 1000
900
there’s six years of mine life here. That’s not massive
800
stuff, but it’s good enough for he purposes of our 700
600
planned near-term trade. Also, as inferred ounces have
500
been shown as reliably mined in the past it’s probably a 400
fairer estimate than the ~2 years that straight reserve 300
200
ounces suggest. 100
0
As for operations, San Martin has an advertised
maximum throughput of 900tpd but the mine has run at
a very constant rate of between 815 and 850 tpd for the
last nine quarters, which probably represents its
maximum runrate in reality.
The mine is very much a gold mine with a silver by-
product, rather than an operation which gets its money
from a more equal mix of the metals. This chart shows
the exact story over the last quarters and it’s fair to say
that ~90% of mine revenues come from gold, with the
other ~10% from silver.
As the next chart shows, getting a consistent head
grade hasn’t been easy, which is a typical challenge for
a small mine that is obliged to process the mineral that
the limited amount of working veins offer at any given
time. We can see that grade has normally revolved
around the reserve average 2.29 g/t Au, but let’s note with interest the average grade in the latest quarter,
ended July ’13, of 2.81 g/t, as that’s part of the reason
I’ve decided to move in and trade this stock. SAM has
recently been mining a new area of mineralization, the
San Martin footwall, and the returns from the ore have
been better than expected. The likelihood of another
decent quarter on the back of the last one, which will
close end October and give SAM production numbers
4
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa 31.yluj
tpd
source: company filings
SAM.to: Revenue by metal
22
20
18 16
14
12
10
8
6
4
2
0
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa tse31.yluj
$m
silver
gold
source: company filings, IKN ests
SAM.to: Avg gold head grade (g/t) per qtr
3.50
2.81
2 3 . . 5 0 0 0 2.40 2.14 2.15 2.03 2.01 2.23 2.38
1.70
2.00
1.50
1.00
0.50
0.00
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa 31.yluj
g/t Au
source: company filings

to present to the market by mid-November, are high.
Now to recovery percentages. In 2012 the company SAM.to: Gold recovery percentage
100
reported recovery problems that came from a 95
90
change in host rock chemistry and affected
85
recovery percentages for several quarters, but 80
75
which are now reportedly solved (please note the 70
cut-down Y-axis in the recoveries chart, done to 65
60
help the eye see differences). For what it’s worth, 55
50
the company bases its reserve calculations on an
85% recovery rate, which was nearly achieved after
the recent drop in the end-July’13 quarter (84.61%).
This is good.
One thing to note about operations at San
Martin; in the quarters to April 2012, SAM ran
purchased concentrate (which provides decent
revenues, but margins are obviously thinner)
alongside its own mined mineral and this chart
shows the mix of revenues from the purchased
conc and the homegrown rock. This was phased
out in the July 2012 quarter and now SAM at San
Martin only runs its own ore.
You put all those together and you get production
at the mine. The chart below shows gold
production and sales (as noted, the lion’s share
revenue generator) and there are four things to note here:
1) production of gold has normally been in the 4,000 to 6,000 ounce per quarter range, so as
mentioned before this isn’t a big operation
2) gold production sank in the quarters of 2012/early 2013 due to the recovery rate problems
3) the latest quarter was a big improvement, with best ever gold and gold equivalent production
figures posted
4) since the end of the purchased conc days (to May 2012 approx) production and sales of gold
have been reasonably closely matched. In other words, these days SAM sells what it mines so
we’re assuming its production figures for the latest quarter will be its sales figures for our
modelling purposes.
Oz Au SAM.to: Gold producer vs gold sold, per qtr
7000
gold prod
6000
gold sold
5000
4000
3000
2000
1000
0
july.11 oct.11 jan.12 apr.12 july.12 oct.12 jan.13 apr.13 july.13
source: company filings, IKN ests for gold sold july'13
The bottom line to operations at SAM’s San Martin mine can be done with bullet points
• It’s a small operation, always has been and always will be. Call it a 850tpd machine that
produces 2,000 oz gold in a good month., that gives the general idea.
• Reserves aren’t big and mine life is always going to be under threat, but history shows
that exploration results in decent mine life extension. We’re not expecting this one to
5
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa 31.yluj
source: company filings
SAM.to: Revenue source, per qtr
22
20
18
16
14
12
10
8
6
4
2
0
01.tco 11.naj 11.rpa 11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa tse31.yluj
$m
purchased concentrate
mined ore
source: company filings, IKN ests for july'13 qtr

close up shop in the next couple of years, but on the other hand the doubts that short
“official” mine life brings are likely to crimp valuation multiples.
• 90% of revenues come from gold, which is something we like.
• It’s had its glitches along the way, with typical problems of small mines such as grade
control and recovery rates noted. The latest quarter was very good and we’re expecting
much of the same in the current quarter too, but these glitches can always reappear.
OK, that’s enough on the ops, now for some financials.
Financials overview
Before getting into the usual suspect type charts, I want to state that in the last few days of
chewing over these financials I’ve been very impressed by what I’ve seen. This company may
be small, but it’s run very well and the policies of financial and corporate discipline adopted by
SAM shine through its numbers.
SAM.to: Operations overview
22
Now you know that I like what I see 20
here, let’s get down to business and 18
16
this time we’ll start with operational 14
results (as some of them have already 12
been telegraphed by a couple of the 10
8
charts above). Here’s the operations
6
overview chart and here we can see the 4
two recent phases of SAM’s life. First 2
0
the 2011/2012 period, when gold (and
silver) market prices increased and the
comapny was also buying in
concentrate. In those quarters revenues
were much much than they are
currently, but then again so were costs (we
use the company.offered COGS number,
which also includes depletion and
depreciation)
Here’s a second chart that isolates the mine
operating earnings at SAM (the same dataset
as the blue bars in the above chart) for easier
viewing. We see that the aforementioned low
production quarters of 2012/early 2013 when
recovery issues were holding back the
company hit the financial results at SAM, but
even in those quarters the mine stayed cash
flow positive.
That’s because San Martin is a relatively
low cash cost operation. Here’s a chart
that compares cash cost per AuEq ounce
(not just gold, but gold equivalent, in this
case basically the same thing) to the
SAM.to realized price for gold per quarter.
The eye is enough to see that this
operation runs a healthy margin, no need
for the fine detail dataset.
But as usual I prefer to step away from the
“cash cost per ounce produced” yardstick
and go for a method that gives a more
reliable gauge on true profitability, the “per
tonne” method. As usual we compare the amount it costs SAM.to to process a tonne of its rock
to the amount of money it receives from each tonne of rock (sidebar: beats me why more
people don’t use this method; it’s simple to crunch, the quarterly comparatives work very well
6
01.tco 11.naj 11.rpa 11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa tse31.yluj
$m
revenues
COGS
mine op earnings
source: SAM filings, IKN ests
SAM.to: Mine Operating Earnings
10
9
8
7
6
5
4
3
2
1
0
01.tco 11.naj 11.rpa 11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa tse31.yluj
source: company filings/IKN ests
srallod
fo
snoillim
SAM.to: Cash cost AuEq vs Au realized price
2000
1800
1600
1400
1200
1000
800
600
400
200
0
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa
U$/oz
Au realized price
cash cost AuEq
source: company data

and the results speak for themselves) and here’s the chart that comes from all that:
SAM.to: Revenues/tonne vs cash cost/tonne
300
250
200
150
100
50
0
7
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa tse31.yluj
$/mt
revs/tonne
cash cost/tonne
source: company filings
This is a strongly positive looking chart. According to our modelling, the latest quarter saw
SAM.to running a nigh 50% gross margin on operations, which is impressive when we consider
that our model price for gold in the period is $1,350/oz.
Staying on the subject of modelling for the current quarter’s financials, I want to step back and
show that calculating an estimated revenue figure for the end-July quarter is fairly
straightforward thanks to the reliable data that SAM.to gives in its quarterlies. This chart shows
the real revenues numbers per quarter (as seen in its P+Ls) compared to our “calculated
revenues number. This is done by combining the tonnage, grade, recovery percentage and
realized price for both the gold and silver production/sales, then adding the results together.
SAM: "Calculated" vs Reported revenues, per qtr
22 (calc revs = tonnage + grade + recovery + realized prices for gold and silver)
20
18
16
14
12
10
8
6
4
2
0
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa tse31.yluj
$m
total rev calc
total actual revs
source: SAM filings, IKN calcs, ests
As you can see, the “calculated” number sits very, but very closely to the real revenues number
in all previous quarters. Therefore, once the end July 2013 numbers that were offered up by the
company in its production update report (3) are put in, along with an average gold price
assumption of U$1,350/oz and silver price assumption of U$21/oz, we’re given an estimated
revenues number of $8.5m for the latest quarter. The variable in the mix is the average gold
price for the quarter (it may turn out to be higher or lower than our $1,350/oz guesstimate,
based on London Fix prices) but if that’’s near, then our guess won’t be far out. And even if it
turns out to be $1,300/oz, the revenues estimate only drops by ~$300k to $8.23m, so it’s not
that drastic. Bottom line: we’ll be close on this.
As for bottom line results, as this chart shows the SAM.to pre-tax, post-tax and comprehensive
earnings figures have sometimes varied quite wildly in previous quarters, mainly because of the
previously held hedging obligations (SAM.to is now 100% unhedged and has been that way for
a year) and financial obligations connected to the debt servicing and payments it needed to
make (as of last week however, that’s all paid off). We’re therefore expecting the three sets of
figures to show a better inter-relationship going forward but for the time being, your author’s
considered opinion is that the company’s operating earnings (as seen above) are a better
straight line comparative to any of its bottom line filings.

SAM.to: Earnings
8
7
6
5
4
3
2
1
0
-1
-2
-3
8
11.rpa 11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa tse31.yluj
$m
pre-tax earnings
net earnings
comp earnings
source: SAM filings, IKN ests
To underscore that point, here right is a chart that
SAM.to: Op.Earnings per share, per qtr
breaks down operational (i.e. before any corporate
0.07
financial influences or tax) earnings per share per 0.06
quarter. Thanks to the strong quarter SAM.to just put in, 0.05
we’re expecting it to report operating earnings of over 0.04
2.5c per share (the model spits out 2.57c to be exact). 0.03
0.02
In other words, this is a mine that will show a forward
0.01
earnings potential of around 10c/share annualized,
0.00
even under the latest lowered gold prices.
Today, this is a 23.5c share. This is why I like the look of SAM.to today, people.
Put another way, I’m of the considered and strong opinion that the market hasn’t worked out
that the quarter just put in by SAM.to, the July 2013 quarter that was announced as record
production, means that it’s about to return a sparkling set of quarterly financials. Summing up its
operational results, here’s the need-to-know
• Financially speaking, SAM is a tightly run ship with relatively low cash costs and high
margins on operations. It’s clearly profitable, even at today’s reduced gold prices.
• That’s even true in the last quarter, as higher grades made for better production and
kept margin-per-tonne milled high even as gold and silver prices dropped sharply.
• We’re expecting to see some very solid profit numbers when July 2013 current quarter
is reported, which should be in the third or fourth quarter of October.
Now to the balance sheet, which offers up more
positive conclusions from analysis. We start
with the share count, which has crept up slowly
on share exercises (options, warrants) in 2012
and 2013 since the last significant raising that
happened during the quarter ended January
12th. We expect that to continue in the next
quarters and current model around 145m
shares out, though in mid-2014 we’ll likely get a
jump when 6m options priced at 15c come due
and are very likely to be exercised into fully
paid-up shares.
However, as this company is a profit-making entity with a decent cash position, there’s no
expectation whatsoever for new placements to come along and dilute the pool.
01.tco 11.naj 11.rpa 11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa tse31.yluj
source: company filings, IKN ests
SAM.to: Shares Out
200
180
160
140
120
100
80
60
40
20
0
01.tco 11.naj 11.rpa 11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa tse31.yluj
source: company filings/IKN ests
serahs
fo
snoillim

So to the assets chart and what we have is a company that’s consolidated its fixed asset
position and is now in the process of adding to its cash pile thanks to those profitable
operations.
SAM.to: Assets Breakdown per qtr
70
60
50
40
30
20
10
0
9
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa tse31.yluj tse31.tco
$m
cash+ST other current fixed
source: company filings/IKN ests
The small chart below right homes in on that cash position and it’s an important part of the mix,
because three items of SAM’s 2013 corporate strategy are directly related to these numbers.
1) SAM has already achieved its goal of paying off its financial debt (see liabilities below
for more). Payment of the final installment was announced very recent (8) and we also
know from the latest State of the Nation NR (8) that cash at bank currently stands at
$4.6m
2) SAM is setting aside $1.2m for the next stage in its drilling and exploration program that
is due to add more resource ounces to the mine.
3) Finally, it’s been SAM’s long-term strategy to start paying a dividend to shareholders
once it’s in position to do so. The company criteria to begin this are a) debt free (now
achieved) b) profitable operations (also good) and c) to have a cash reserve pile of at
least $5m at all times. At the moment we estimate that SAM will have $5.9m in
cash+ST by the end of the current quarter (October 2013) but that doesn’t take into
account the $1.2m exploration drilling program expenses. We’d also assume that SAM
would look to pay 1c/share divi in any given quarter (~$1.5m) and would want to
maintain its $5m cash pile once the dividend had been paid. Therefore we’d probably
need another $1.8m extra in the bank on top of the end October financial position. The
bottom line to this is that I’m not expecting SAM to start paying on its dividend policy on
2013, but a penny per quarter 2014 onwards, as long as margins and production holds
up, is looking likely.
SAM: Cash & short-term investments
There’s plenty of evidence out there to say that if a 7
small mining company such as SAM starts paying a 6
dividend, its share price would greatly benefit, so we’re 5
not going to examine this part of the equation too 4
3
deeply. However, as a very simple rule of thumb we can
2
say that if SAM starts paying a penny per quarter in
1
2014, it would give the stock a very tasty 10% yield
0
even if the stock price goes to 40c. If circumstances
allow that kind of policy to be put into place, I wouldn’t
bat an eyelid if I saw SAM.to trading this time next year
for 60c or more.
Next, liabilities and I’m very impressed with the evolution of SAM on this chart. The 2008 deal
came via a debt payment and along the way SAM has refinanced, but its financial discipline has
seen the company paying down its financial debt all the way to the very recent announcement
that the company is now debt free and outright owners of San Martin. What’s left in current
liabilities is just an IKN estimated $1.5m in trade/payables (i.e. normal run-of-company stuff)
while there’s around $11m in deferred tax and closure provisions, which are nothing that affects
life much. Today’s SAM is for all intents and purposes debt free and that’s one hell of an
impressive achievement when set against the normal crappy way in which juniors go about their
balance sheet business.
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa tse31.yluj tse31.tco
$m
source: SAM filings, IKN ests

It also shines through on the working capital table and we expect Sam to sit at $12+m to the
good come the end of October (that drill program expense notwithstanding), the mirror opposite
of the situation just two years ago.
To sum up the balance sheet items, we see a company that’s used the cash generated by its
profitable operations to pay down its debt smartly and in a disciplined way. Today’s SAM is
financially strong and is getting stronger, to the point where it will probably be able to put the
last part of its strategic commitment into place, that of paying a meaningful dividend (esp
compared to the low share price) from 2014 onwards.
The balance sheet, key to showing that SAM is undervalued
So we’ve seen that the San Martin operations are profitable and we’ve seen that the corporate
financial situation at SAM has improved in leaps and bounds over the last two years, what’s left
is to demonstrate that its current share price is lower than it should be. For this, we consider the
relationship of the share price to the book value (aka equity), defined in its classic way as total
assets minus total liabilities. Here’s a chart:
SAM.to: share price vs book value/share
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
10
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa 31.yluj won
SAM.to: Liabilities Breakdown per qtr
45
40
35
30
25
20
15
10
5
0
pps at qtr end
bv/share
source: company filings, TSX, IKN calcs
What we see here is the book value (BV) of SAM.to, as estimated by IKN for end July 2013 at
29c per share and now (mid-September) at 30c/share. We also have the share price at end
each quarter and now (23.5c). The argument goes as follows and to make it easy to read, bullet
points are coming your way right now.
• Our estimated BV/share today is 30c. The share price is 23.5c. The ratio on that is
0.78X
• There’s a whole range of things we can say here, but put in the simplest terms possible
(and they may be simple but they’re also 100% correct, so no worries) a company
trading for under BV (i.e. a 1.0X or less ratio) is assumed to be in trouble, not doing its
job, making a loss, fundamentally flawed etc.
• This is not the case with SAM.to today. Hear this, loud and clear, that SAM is a
company that’s doing very well, despite its small size, and is about to post a very decent
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa tse31.yluj tse31.tco
source: company filings/IKN ests
srallod
fo
snoillim
14 SAM.to: Working Capital per qtr
12
LT debt 10
8 current debt 6
4
2
0
-2
-4
-6
-8
-10
-12
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa tse31.yluj tse31.tco
source company filings/IKN ests
srallod
fo
snoillim

profit on operations as well as likely following through in the current quarter to end
October.
• Therefore I put it to you that SAM.to at 23.5c today is very undervalued and a very good
looking share price opportunity, because when the market works out that this is a
profitable miner that’s adding cash and looking set on fulfilling its dividend policy
ambitions, the current share price will be left for dust.
For a different illustration of this, here’s a chart that compared SAM’s BV/share today with six
other mining companies. Notes on the peer companies below
Comparative Price to Book Value (i.e. equity) ratios for
P/BV small, producing PM miners
2.5
2.08
2.0
1.58
1.5 1.35
1.0 0.77 0.86 0.93
0.49
0.5
0.0
USA.to SAM.to AUN.v IPT.v LSA.to GPR.to SVL.to
source: company filings, TSX
First thing, it’s very difficult to choose comparative companies for SAM.to because it all
becomes apples-to-oranges very quickly out there. I see few if any companies that stack up as
a) profitable gold producers b) small (eg sub-$50m) market cap c) in LatAm d) short reserve life
e) other stuff and all the etc. Therefore it’s always going to be tough to make direct
comparisons, but I’ve chosen a selection to give a representative broadstroke idea of what’s out
there. As you see, SAM at 0.77X (0.78X) isn’t the lowest ratio stock out there, so a few words
need to be written about each case.
• USA.to: U.S. Silver is this cheap compared to book because it’s a operational disaster,
high cash cost, unprofitable and probably in need to a write-down on its fixed assets.
• AUN.v: Aurcana is bigger miner but also a loss-making, underperforming company with
debt on its books, a misfunctioning mine at Shafter, bullshit merchants running the
company and overall deserves to be valued where it’s valued. Probably lower, in fact.
• IPT.v: This one is probably the closest direct comparative to SAM.to, but even with its
similarities of location, reserve depletion and market cap size, differences are clear as
it’s a silver miner rather than a gold miner and is nowhere near as profitable due to a
higher relative cash cost.
• LSA.to: Lachlan Star is another high cash cost lossmaker, but this time it’s getting a
much higher valuation than book (1.35X). This is the type of multiple I expect SAM.to to
be able to demand from the market easily enough.
• GPR.to: This is one of the reasons why I’m seriously considering GPR as a short play.
High cash cost, loss-making but commands the type of multiple we should only get from
a decently run mining company.
• SVL.to: Finally in Silvercrest we get to a PM miner (in silver not gold) that is a decent,
profitmaking entity. It’s also a much bigger mining company than SAM.to, so it can
command a higher multiple from the market. For the moment I wouldn’t expect SAM to
be able to get 2X or more, but maybe once the dividend is in place it can (assuming all
goes well in 2014).
The point that I’m trying to make here is that SAM.to at 0.77 or 0.78X is being priced by the
market down with the dregs, the crappily run BS-merchants that can’t make a meaningful profit
11

at current metals prices. Sam doesn’t deserve to be down here and once the significance of the
latest production results and the debt paydown are digested by the market, its ratio will improve.
That’s what we’re betting on here.
Discussion
I’ve mad the long case for SAM all through this financially oriented, numbercrunch of a report.
What I want to do in the wrap-up is explain why I don’t want to take SAM on as a longer-term
investment and much prefer it as a near-term trade with specific time and price targets.
The basic answer is that SAM.to is a small company. It’s small in market cap, it’s small in
production and those things bring natural and normal problems to the table. We’ve discussed a
little on how small companies get grade control or recovery problems come along and are more
prone to see fluctuations in production than the larger miners that are capable of smoothing out
short-term glitches. And also how a small company typically doesn’t have the resources on
hand to dedicate millions to development campaigns that can prove up hundreds of thousands
of ounces and extend mine life in a guaranteed way. These issues and others weight against
the small mining company and as a result, mean that the stock price can’t benefit for the same
type of higher multiple to assets or earnings that the larger companies can command. At the top
of the note I made mention of my experiences covering Gold-Ore Resources (ex-GOZ, now part
of Elgin Mining) and back then, my head full of numbers would scream relative value to other
stocks, but the market never seemed to see it in the same way. I don’t want to go back there
again.
In the case of SAM.to here, I haven’t gone into depth on a earnings-based valuation or target
price because it’s not really needed for a position i plan to hold for a maximum of ten weeks, but
to cut a corner or seventeen, it’s easy enough to model a company that can return an EPS of
1.5c/quarter. At a FWD eps of 6c therefore, we’re currently a 4X P/E multiple. Now that’s cheap
by any standard, but the question is then to estimate what the market is willing to pay for a
profitmaking company that’s small and will stay small forever. 6X? 8X? I’d guess at 8, but would
suspect that I’d end up feeling disappointed this time next year with the 6X result.
So SAM is small and by its very nature, that size brings traps and problems, of that we must be
well aware. The potential for a disappointing quarter on production or costs is always around the
corner, the risk evident in the lower share price multiple to fundies etc etc. But with that said,
what I see right now is a particularly good window of opportunity, one that sees SAM.to priced a
lot lower than “true value” (whatever that means) instead of just lower. On its asset valuation,
SAM is priced as a dysfunctional company when it most certainly is not, it’s a quickly improving
company on all metrics and about to stick in a great quarter’s worth of financials that are likely
to act as a great catalyst. Then if SAM can add to the mix by reporting strong production for the
current quarter (which ends Oct 31st) in mid November, and get people talking up the imminent
arrival of that dividends policy, and even the potential for good results from the drill and the
$1.2m exploration program, we’re in a timeframe that should see SAM’s share price move up to
above the 1.0X P/BV ratio and to a place more fitting for a well run, financially solid gold mining
company, no matter what size it might be.
Put simply, I don’t just think SAM.to is going to move up, I think it’s going to move up in the next
ten weeks and because of that, I’m going to buy some shares now and sell them back in
October or early November at a higher price. What could possibly go wrong?
Conclusion and price target
I’m not aiming for the stars on this play. If you’re of a different mindset and think that buying
SAM today and holding through for 2014, higher gold prices, a 1c/qtr dividend and perfectly
unglitchy production quarters is a risk worth taking compared to the potential reward (seriously,
if things go perfectly this could be a 200% winner by this time next year) then go for it, don’t let
me stop you. However I’m going to play SAM for the re-rating on the clear turnaround in
fortunes it has displayed and I want to get on before the rest of the world, which means I’m
buying tomorrow.
The IKN Weekly considers Starcore International (SAM.to) as a speculative, near-term
buy opportunity and sets a two month price target of 36c on the stock, representing a
12

53.2% upside to Friday’s close. I’ll personally be buying this stock in the week to come and it
will become a part of our ‘Stocks to Follow’ list as of next week. However there are some strict
criteria to this trade.
1) It’s near-term only. It has until mid-November at the very latest to perform, else be
dropped. In reality I expect that its quarterly results filing near the end of October will be
the main catalyst, but if there’s nothing doing by the day the October quarter production
figures are announced, the trade will be dumped and it’ll be time to move on. This one
is strict near-term, no ifs or buts.
2) This means there is 10 weeks, which does means there’s time to get on so no need to
take the first price offered. A reasonable window of price opportunity here is 2 to 3
weeks, which means it’s a better buy on the day gold sags by 1% rather than the days
in which all the spec goldbugs are piling on. If you like the idea of this trade and are
thinking of joining me on it, pick your entry points.
3) Therefore I want to pay the current price, but will take a foothold position at 25c
tomorrow if that’s all there is. There’s no reason for impatience on this trade.
Overall, I’m not planning on it being a big trade, but it will be larger in monetary terms than the
recent tinyshots at NET.v, DAR.v etc. Your author is in trading mode and buys this stock.
End Of Report
Stocks to Follow
A quiet week for the list. We saw four stock make weekly gains (IRL.to, BTO.to, GORO,
BCM.v), five make losses (RIO.to, LRA.v, RIO.to trading position, TAHO short, AQM.v) and
three remain unchanged (FCV.v, DAR.v, NET.v), but there were no wild swings either up or
down and aside from the theoretical back pocket loss in RIO.to on lightly traded weakness,
there was nothing that stood out for me (though must say, glad I jettisoned CSI.to when I did).
Considering that gold had a mildly negative week, I’ll take that score.
We currently 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.
13

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$2.52 9.6% best LT value
Minera IRL IRL.to str buy C$0.47 22-jul-12 C$0.25 -46.8% new top pick, avg down
Recommends
B2Gold BTO.to buy C$3.07 28-nov-12 C$2.85 -7.2% sold 1/2, rest rides. Quality
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.97 -15.7% solid biz model, LT hold
Gold Res Corp GORO short U$9.52 03-may-13 U$8.20 13.9% tgt $5, best short, added
Bear Creek BCM.v buy C$2.06 30-may-13 C$2.50 21.4% ST trade, may sell soon
Rio Alto Mining RIO.to buy C$2.68 07-jun-13 C$2.52 -6.0% ST trade position, separate
Tahoe Resources TAHO short U$13.10 08-apr-13 U$18.29 -39.6% port hedge, easy2b short
Smaller/Riskier
AQM Copper AQM.v hold C$0.31 16-oct-11 C$0.12 -61.3% 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
Now for some notes on a selection of the above stocks.
Rio Alto Mining (RIO.to) (RIOM): Depressingly, the weakness last week seems to be
founded once again in another
round of Lima-based badmouthing RIO.to: Monthly gold production figures
ran on RIO. This time it’s
25000 24401
connected to the July 2013 mining
22500
production figures published (4) by 20000 20144 19560 20184
Peru’s Ministry of Energy and 17500 16692 17639 1542615091 15998 17039 15635 15431
Mining (MEM) on September 3rd in 15000 1379313670
12887 12897
its regular monthly publication and 12500 11871 1071210114
the case of RIO, the monthly 10000
production looks like this (right). 7500
5000
Although we know that the issue is 2500
about the scheduled maintenance 0
of the pregnant solution collection
pond, the rest of the market
14
21naJ bef ram rpa yam nuj luj gua pes tco von ced 31naJ bef ram rpa yam nuj luj
Ozt Au
source: MEM

doesn’t know that and the BS rumours of low grades, truck drivers strikes and other made-up
nonsense started doing the rounds. I’d venture to
say that this will continue to be a problem until
the middle of October, because until RIO comes
out with its production number for the whole of
3q13, the rumour-mongers are going to have little
in the way of pushback. Again, let’s make a clear
statement that we expect RIO to finish 3q13 with
production and sales of 55k oz Au, with strong
numbers at the tail end of this quarter as well as
every reason to expect a strongly outperforming
4q13 as the production end of the mine plays
catch-up with the dirt-moving end.
Bear Creek Mining (BCM.v): Volumes went back to thin and BCM typified many other
ignored or semi-ignored stocks in that respect last week. In other news, the extended and very
bad winter weather in the highland regions of Peru has been making lots of headlines down this
neck of the woods (it’s the worst winter in at least 10 years and particularly nasty because this
final cold snap has come at the normally benign tail end of the season). The Corani/Carabaya
region has been one of the hardest hit of the lot, with for example tens of thousands of llama
and alpaca reported dead, so it was pleasing to read in the local news (5) (not covered
nationally and not a peep in English language anywhere) that BCM had teamed up with the
Ministry of Health to donate and distribute humanitarian aid in the area and last Wednesday
(September 4th) feedlots (hay etc) for livestock, vaccination shots, non-perishable food,
clothing, shoes and other equipment such as nebulizers (that help young children suffering from
early pneumonia symptoms breath and recover more quickly) were distributed in the local
villagaes of Chacaconiza, Quelcaya, Chimboya, Corani-Acconsaya and Isivilla. Yet another
example from BCM of how to do community relations the right way.
Focus Ventures (FCV.v): This stock has gone stone cold again after the pre-summer
(Northern) signs of it waking up, with volumes again down to a trickle and zero radar from
anywhere. The last time I heard from the company, the word was that the drilling results from
the main Reventon program would be presented in early September, once Labor Day was out
the way, in order to drum up some interest in what they’re doing (because FCv is going to have
to finance at some point, either this year or early next). We’re now in that timeslot so at least
one eye should be ready for some new news out of Focus.
Gold Resource Corp (GORO): I’m now ~10% up on the latest chunk of GORO added on the
pop of around two weeks ago and on checking the deeper numbers in my portfolio was a little
surprised to notice that it’s now grown to my third largest position (behind RIO.to and the
newly increased IRL.to), larger in exposure terms than the recently reduced BTO.to long. That’s
not a problem either and it gets a mention here today in order to underscore my conviction on
this short position.
Minera IRL (IRL.to) (MIRL.L): IRL went on the charm offensive regarding the Don Nicolas
deal last week as first on Monday September 2nd it had a photo-op type meeting with Argentina
President Cristina Fernández de Kirchner in her presidential offices, a meeting that was carried
by a lot of the local press (6) and then made the meet known to the English speaking world via
its own NR on Thursday (7). Which is fair enough and shows the type of official government
backing that we knew existed (and exists) to a wider audience. Nothing wrong with putting
your best foot forward on these things, I suppose.
More interesting to me is that IRL is now getting decently traded volumes via its Toronto IRL
dot tee oh ticker nearly every day now. The days of molasses-type liquidity seem to be behind
us and sub-100k volume days have been rare indeed in the last month, with last week’s 200k to
700k range now pretty typical. This is an important step for the company, it’s becoming a
15

tradable stock in Canada (at last) and along with a similar type of pick-up in its longer-standing
MIRL ticker in London, means that IRL should be getting on more people’s radars.
AQM Copper (AQM.v): Aside from last week and thin volumes, AQM is another one that’s
arguably benefitting from a recent improvement in traded volumes, as the volume bars on the
right hand side of this two year price
chart indicate (in a rough manner, at
least). I’ve also draw in a red line at
15c, which is what I’m now aiming for
as a dumping point for this failed
trade. Not asking for the world here,
just for a reasonable spot to leave.
With Perumin 31 coming up in
Arequipa this month (see ‘Regional
Politics’ last week), AQM Copper’s
main Zafranal project located very
close by and the knowledge that
members of the AQM/Teck team will
be present and talking up its
prospects, I’m pencilling in the week of 16th-20th September as the one in which my sell target
is reached. For those of you not on board and perhaps looking for a fliptrade vehicle, the
proximity to Perumin and the newly found, fairly reasonable daily volumes (without being
gangbusters, but it’s ok for small money) might make this one an option. For example, an in at
12c and an out at 15c would give you a straightforward 25% (ex-commish) win. Just a thought
to float at you, nothing else.
Tahoe Resources (THO.to) (TAHO): Via its corporate social responsibility blog, THO on
Friday published (8) a “dispelling the myths” post (in both Spanish and English language
versions) that set out its version of the myths being created around its Escobal project and
what it says is the truth. Go read the post for more, but here are the six myths it lays out and
then answers in detail:
MYTH: A Guatemalan court of appeals has suspended the operating license for Tahoe
Resources’ Escobal project.
MYTH: Escobal will drain and contaminate the local water supply.
MYTH: Tahoe Resources’ mining license was attained fraudulently.
MYTH: The Escobal project does not have any community support/social license. Tahoe
Resources does not consult with local community members and continues to operate in spite of
requests by the community to cease operations.
MYTH: Tahoe Resources does not respect human rights. The Escobal project’s private security
uses lethal and aggressive force against protestors and the company uses intimidation tactics to
silence vocal opposition to the mine and is actively trying to destabilize the project area.
MYTH: The mine will not contribute to the overall wealth of Guatemala and will take all profits out
of the country.
Overall, it’s a nice job of public relations that sets out its agenda on six carefully selected
subjects. Neither can I blame THO for using exactly the same type of subjective opinion on
things such as “majority of local support for project” statements without offering up any
evidence or statistical backing for its claims. We could nitpick with its claims of how it conducts
its business to the highest ethical standards when it’s already been proven (9) that its erstwhile
head of security told guards to “Kill those sons of bitches” while ordering his men to open fire
on protesters outside the mine this year, but hey....details. And the mining licence cannot have
been “attained” (sic) fraudulently because it was obtained from the country’s government, and
it’s the government who makes the rules.
I repeat, loudly and clearly, that it’s very easy to stay short THO as a portfolio hedging vehicle
to the other precious metals junior longs.
16

The Copper Basket
After thirty-six weeks of 2013 The Copper Basket is showing a 18.38% loss to level stakes.
company ticker price 1/1/13 Shares out Market Cap current pps gain/loss%
1 Augusta Res AZC.to 2.43 144.35 308.91 2.14 -11.9%
2 NGEx Resources NGQ.to 3.40 168.66 308.65 1.83 -46.2%
3 Copper Fox CUU.v 0.83 402.96 249.84 0.62 -25.3%
4 Lumina Copper LCC.v 9.43 43.61 184.03 4.22 -55.2%
5 Nevada Copper NCU.to 3.50 80.5 178.71 2.22 -36.6%
6 Reservoir Min. RMC.v 2.41 41.68 172.97 4.15 72.2%
7 Hot Chili Ltd HCH.ax 0.72 297.46 133.86 0.45 -37.5%
8 NovaCopper NCQ.to 1.80 53.02 108.16 2.04 13.3%
9 Panoro Minerals PML.v 0.62 204.71 87.00 0.425 -31.5%
10 Western Copper WRN.to 1.39 93.68 60.89 0.65 -53.2%
11 Curis Resources CUV.to 0.70 63.13 41.03 0.65 -7.1%
12 Candente Copper DNT.to 0.375 122.05 32.95 0.27 -28.0%
13 Oracle Mining OMN.to 0.80 49.03 19.61 0.40 -50.0%
14 Yellowhead Min. YMI.to 0.59 63.45 12.69 0.20 -66.1%
15 Strait Minerals SRD.v 0.08 57.26 6.01 0.105 31.3%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg -19.05%
Seven went up (LCC.v, HCH.ax, WRN.to, PML.v, NCQ.to, OMN.to, SRD.v) and eight went down
(NGQ.to, AZC.to, CUU.v, NCU.to, RMC.v,
DNT.to, YMI.to, CUV.to) so honours were Copper Basket 2013 average, weekly
12%
fairly even in this list too, though the
8%
overall lost a very thin 0.1% week-over- 4%
week, no big deal. The best win was seen 0%
-4%
in Panoro (PML.v up 18.1%) while the
-8%
worst loss came from Yellowhead Mining -12%
(YMI.to down 9.1%). -16%
-20%
-24%
As for copper price action last week, we -28%
ranged from higher to slightly lower, but -32%
the market ever really threatened to break
back down through $3.20/lb so there
wasn’t really that many signals to
comment upon. This metal looks like it’s in
a holding pattern as well, not just gold and
silver.
Inventories: On the week world stocks rose by a
small 0.8% overall to stand at 784,556mt, with
LME stocks rising by 2.1% to 600,275mt,
Shanghai Futures Exchange warehouses
dropping by 3.1% to 151,700mt and Comex
stocks dropping once again, down 2.7% to
32,581mt. In short, the concentration of
warehouse stocks to the LME bonded
warehouses continues. As for LME cancelled
warrants, they dropped a little to stand at 47.6%
of total stocks, the fourth week running that
we’ve seen a small drop from the heights..
17
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 ht8
source: IKN calcs, TSX data
31/1/1
morf
egnahc
%

Cancelled Warrants at LME, IKN157 to date
60%
50%
40%
30%
20%
10%
0%
18
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 722NKI
source: Cochilco, LME
rof
yrotnevni
EML
%
latot
yreviled
resu-dne
Now for updates on some of our basket stocks
Strait Minerals (SRD.v): We reported on the reduced pricing for the 3m warrants held by
Teck in IKN226 last week. This week on Thursday morning, SRD and Teck (10) reported that
the price change and the exercising of the warrants had gone through, leaving Teck as ~15%
owner of SRD and SRD with cash in its till to pay its bills, which is good. More importantly, SRD
announced that the drilling program for Alicia is now moving to begin, so at long last (with cash
and permits and community agreements in place) this JV can do the drilling it’s always wanted
to do.
With a market cap of ~$6.3m (60.4m shares out), about half a million in the treasury and now
operator of the Alicia program (thus drawing a operator’s fee from the JV which means cash
burn will be minimal) SRD from here is another one of those cheap exploreco plays, there are a
lot of them about. We’ll only know whether it’s a bargain when the drilling results come back
from Alicia, but it’s cheap enough if you want to throw some shekels at a straight ‘explorer’s
chance’ drill play from here. And while we’re on the subject, most of you know that I once had
SRD as a member of the ‘Stocks to Follow’ list and when closing that position, only sold some of
my personal holding (because the
volumes at the time were waferthin
and dumping out a chunk was
somewhere between difficult and
impossible). For the record I still
own a remnant of that position,
tucked away in a dusty corner of
the port, but I have no intention of
selling it or adding more for the
time being. It’ll just sit there, a
minor lottery ticket.
On the subject of volumes, the
news last week has generated
more interest in the stock. Not only
that, but I also got jungledrums out
of Lima about SRD; it’s suddenly
“being talked about”, which is a pretty way of saying that it’s getting some BS-rumour hyping
from the market chatterers. I received two unsolicited Spanish language mails from trader types
with whom I’m acquainted (not readers of the Weekly, as far as I’m aware) taking up SRD as
the next buyout target. Well yes, it might be, but you can guarantee that Teck won’t make a
move until the Alicia core has been through the labs.

Panoro Minerals (PML.v): It hasn’t escaped the attention of your author or at least of some
of the IKN Weekly readership that PML has put in a pretty decent relief rally in the last few
weeks, which we hear is due at least in part to a promo campaign that has the backing of a
couple of the larger-circulation junior mining newsletter writers on board.
The last time I wrote more than a single sentence about PML was in IKN220, dated July 21st,
which was the week that it put in its first spurt of the current rally. At the time I was “it may be
an opportunity, for me I’ll keep on the sidelines” which of course was a mistake from a trading
point of view (and is there any other view?) because the rally has seen it go from the 34c of
that day to the 42.5c of today. However, my views on the company and its main Cotabambas
project haven’t changed and it’s still one I’ll leave for others. I don’t really have anything
massively against it, aside from the weak-ish overall grade compared to its share price today. In
this respect, I see more potential trading upside to the similarly endowed AQM at Zafranal.
Anyway, here’s the main part of the argument from IKN220 again. I’m standing by this call until
information comes along to change my mind.
Leaving aside the potentially interesting but small Antillas project, also in Peru, and focussing on
its main gig, Cotabambas really isn’t that bad as a property with a 43-101 compliant inferred
resource of 404.1mt at 0.42% Cu (at a 0.2% cut-off) for 3.75Bn lbs Cu (plus reasonable Au and
Ag by-product credits) and the whisper from the camp is that it’s always been assumed that the
resource will get bigger through further exploration (I’ve heard off-record whispers about “double
the tonnage for Cotabambas” more times than I care to remember).
But (and there’s always a but, no?) the indications are that as the deposit and tonnage expands,
average grade is dropping. For sure Monday’s headline hole of 128.9m of 1.29% Cu, 0.96 g/t Au,
9.4 g/t Ag makes for eye-catching reading, but along with that one there were a lot of grades
reported in the whole drill series that are marginal at best. This isn’t the first porphyry to show this
problem (your author knows all too well how the AQM Copper (AQM.v) Zafranal has a good-
enough main central portion tonnage grade, but weaker grading rocks around it) and it’s not an
insurmountable problem either as Norsemont sold a similar type of situation to HudBay at
Constancia and that’s now being built (sidebar: HudBay have already showed their interest in
PML.v by buying into a minority position of around 6% of the company).
However, the bottom line is that these type projects, low-grade bulk mining with low-looking cut-
off levels that trim margin to the bone and explorations programs that pointing to further dilution of
grade in order to add more tonnage, are wholly out of favour with the market. That to you might
mean opportunity, to me it means “stay away”, because I have enough dead money in my
portfolio already thanks.
Reservoir Minerals (RMC.v): A quick headsup and reminder that this week sees the much-
anticipated analysts site visit to the RMC/Freeport Timok JV, at which the people charged with
making wise decisions for their brokerages are expected to be wowed by the project and its
potential. The main question (aside from the now sidebar questions “why the hell didn’t I buy
this under $3 when I had about 45 squillion chances to do so?” and “Are you always this idiotic
with your own money, Mark?”) now is gauging how much of the good news upside is already
baked into this pie. RMC has seen a big upside push to over $4, but since getting here has
drifted around at this new level on volumes that have been unconvincing for a market darling
hotpot play. I’m still sad and annoyed with myself about missing this trade (in fact I think it’s
the worst trading decision I’ve made this year) but do feel that the train has now left the
station without me and it’s too late for a meaningful investment until more official information is
published on the project. FCX says “the next Grasberg”? Ok, good luck with that.
Candente Copper (DNT.to): If you think local attitudes towards the troubled Cañariaco
project are thawing, think again. This report (11) in Saturday’s La Republica has the president
of the community saying that locals will take “extreme measures” to stop any new moves to
explore and advance the project, that 95% of the community is anti-mine with a small minority
in support and that the community is taking its case to the Inter-American Court of Human
Rights, as well as other such niceties.
19

The Lottery Ticket Basket
After 36 weeks of 2013 The Lottery Ticket Basket is showing a 33.98% 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 61.20 0.090 -10.0%
2 Eagle Star Min. EGE.v 0.125 79.13 17.01 0.215 72.0%
3 Bellhaven BHV.v 0.14 136.81 14.37 0.105 -25.0%
4 AQM Copper AQM.v 0.08 105.57 12.67 0.120 50.0%
5 Fancamp Expl. FNC.v 0.125 177 9.74 0.055 -56.0%
6 Tango Gold TGV.v 0.13 76.24 8.39 0.110 -15.4%
7 Copper North COL.v 0.10 58.7 2.64 0.045 -55.0%
8 Inca One Res. IO.v 0.12 34.0 2.55 0.075 -37.5%
9 Darwin Resources DAR.v 0.20 26.16 2.35 0.090 -55.0%
10 Cream Minerals CMA.v 0.03 155.34 2.33 0.015 -50.0%
11 Glass Earth GEL.v 0.155 105.67 2.11 0.020 -87.1%
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 0.92 0.025 -44.4%
15 Netco Silver NEI.v 0.075 9.4 0.71 0.075 -40.0%
Portfolio avg -33.98%
The Lottery Ticket Basket saw four winners (MLN.v, FNC.v, EGE.v, FV.v), five losers (BHV.v,
GEL.v, AQM.v, COL.v, IO.v) and six
unchanged stocks (GGN.to, TGV.v, DAR.v, 25% Lottery Ticket Basket 2013 average, weekly
20%
CMA.v, RCZ.v, NEI.v) on the week and 15%
also managed to eke out a small overall 10%
5%
average win on the week, thanks mainly 0%
to the percentage moves in Marlin Gold -5%
-10%
(MLN.v up 28.6%) and Firestone Ventures -15%
(FV.v up 25.0%). The worst to the -20%
-25%
downside was the 20.0% lost in Glass -30%
-35%
Earth (GEL.v), which has well and truly
-40%
joined the listed of broken stocks now. -45%
But the real news here is that there’s no
news. Nanocaps are, by and large, still
being totally ignored by the wider market
and the slow drip death from apathy and near-nothing volumes continues. Even stocks with
reasonably decent volumes such as EGE, AQM and BHV saw thin trading last week
Marlin Gold (MLN.v): This was saw tape painting on Friday, which is neither a good nor a
bad thing, it’s just a thing. We also hear that
MLN along with brand-new-friends Cormark
are doing the marketing rounds in New York
on Monday and Toronto on Tuesday and you
never know, Friday’s late action and next
week’s pitching might just have something in
common. You think?
Anyway cynicism aside, I do have something
more useful to say about MLN. We know that
vast majority holder Wexford will be keen to
protect their price and we note with interest
the way in which MLN popped to 9c on Friday.
It occurs to me that if Wexford is keen to
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 ht4gua ht11 ht81 ht52 ts1pes ht8
source: IKN Weekly data, TSX
2102/1/1
morf
egnahc
%

protect/pretty up the MLN share price for a weekend, then it must be keen to see MLN finish
well at the end of the 3q13 period, i.e. September 30th. Therefore, I’d venture the thought that
if we see 7.5c between now and Monday Sep 30th (if you ask me, that’s likely) it may well be a
smart little trade, as the chances of flipping any 7.5c shares back at the market for 9c or so and
a near 20% pre commish win are good. If you care for that kind of thing, at least (and watch
the commission percentage charges on these smallfry stocks, as there are plenty of examples
when discount brokerages are suddenly much less discount than before when you try to
bottomfeed).
Regional politics
Mexico: The royalty debate is back
Once passed the lower house vote earlier this year, Mexico’s plans to introduce a 5% royalty on
mining revenues went quiet over the summer recess, but the debate is now heating up again
as the autumn legislative session gets into gear and the debate moves to the second necessary
passage of the Senate. The mining sector is now lobbying hard on the subject and using the
“Mexico mining is taxed enough already” and “new burdens would be a catastrophe” strategies
to make their case.
Part of the lobbying effort out of the Mining Chamber of Commerce, Camimex, involves
cherrypicking comparative data from other countries in order to make out that Mexico is already
an expensive place to to mining business (plain fact: it’s not). This below is my translation of a
table I’ve seen in several places over the last two weeks (for example, this pro-mining lobby
piece in CNN Spanish language here (12))
Country Corp tax rate (%) worker subtotal Royalty
participation
Argentina 35 None 35 0% to 3% mine gate value
USA 35 None 35 1% to 12% mine gate value
Brazil 34 None 34 2% to 3% sales value
Colombia 33 None 33 12.5% to 18.6% if mined on federal property
Australia 30 None 30 0% to 10% according to metal and value
Mexico 30 10% 40 Payment of surface rights
Peru 30 8% 38 1% to 3% on gross sales
S.Africa 28 None 28 5% refined minerals, 3% unrefined
China 25 None 25 None
Chile 17 None 17 0% to 5%, depending on operating margin
Canada 18 nat, 10-16 state None 28-34 2.5% to 17.5%, according to region
source: Camimex
In fact, it’s generally agreed that mining business in the world pays at least 35% and normally
between 42% and 46% of gross revenues in State burdens, but by taking basic numbers,
ignoring things that doesn’t suit the argument (such as tax breaks on investments, royalty
payments, capital expenditures) and doing simpleton addition (e.g. making it sound as though
you’re taxed twice on the cash that goes to worker participation plans*) the table manages to
put Mexico up there with the highest taxed mining countries, screaming a 4-handle at the
reader while all others get a 3-handle or lower on their supposed tax rate.
It’s not going to work, people. The royalty is coming, the sector will squeal when it does and
then everyone will go back to work. In other words, we’ll go through the same process that
we’ve seen in every country where royalties on mining are either introduced or added to.
21

*Example: Peru’s subtotal is 38%, so according to the Camimex argument for every $1,000,000 in earnings the
company would be left with $620,000. In fact, first the worker participation 8% is deducted and then corporate tax is
levied (assuming no other tax breaks). Therefore our example $1m first goes to $920,000 and then the 30% corporate
tax removes $276,000, a total burden of $356,000. Therefore the company is left with $644,000, rather than $620,000
and pays an effective rate of 35.6% on the combination of the two taxes, not 38%. If you’re bothered, the effective
rate for Mexico using the same calculation is 37%, not 40%.
Chile’s MEO wants a mining royalty
More royalty talk. We’re expecting Presidential candidate and red hot favourite for November’s
election, Michelle Bachelet, to make a policy announcement soon about raising royalties on the
country’s mining industry soon (she told reporters in mid-August (13) that the issue was being
studied and some sort of announcement would come after August was done). However, last
week the PRO/Liberal Party candidate Marco Enríquez-Ominami, known to the world as MEO
(sometimes hyphenated, sometimes not) tried to steal some of the frontrunner’s thunder by
announcing (14) that his party was committed to a policy that would raise royalties on mining
operations as well. He didn’t go into great detail on the plan, but the one number used was
51%, which would be the amount of total tax burden levied by the state on private (eg non-
Codelco or State-run) mining companies. Part of this 515 would involve raising the current
percentages of royalties paid by said companies.
Guatemala anti-mining indigenous peoples turn to International Courts
On Tuesday (15) representatives of the Xinca and Maya indigenous peoples of Guatemala made
formal recourse to the Inter-American Court of Human Rights (incidentally, the same court that
the Cañaris community around Candente Copper’s (DNT.to) Cañariaco project is using in its
fight against that company) in their protest against current and future mining activities (both
exploration and production) on lands that they claim as territorial. The suit brought is as much
against the government of Guatemala as the mining companies, as for example the Maya and
Xinca say that 80 local referenda that voted overwhelmingly against mining activity in specific
areas have been ignored by the government, contravening the OIT169 protocol to which
Guatemala is a signee.
Dominican Republic: Barrick Pueblo Viejo and the government reach agreement
Last week official agreement was reached (16) and the necessary papers signed between
Barrick Pueblo Viejo (60% Barrick, 40% Goldcorp) and the government of the Dominican
Republic on the revised tax burden deal that was reached in principle back in May (we followed
the story quite closely early year, see various IKNs passim). The deal looks pretty much along
the lines of the broad agreements of before, but also include a $36.4m retroactive tax on 2012
revenues and a agreement to pay U$73.1m in corporate tax for 2013. The main part of the
agreement is based on a life of mine $1,600/oz gold price (which makes me wonder whether
ABX has built in a loophole, but that’s to be discovered in another year if at all) and according
to the government, at that price and over the life of mine, The Dominican Republic will receive
51.3% of gross revenues instead of the 37.1% implied by the old agreement. Score one point
for resource nationalism.
Market Watching
Overview
There’s really not that much happening that has caught my eye in the “Market Watching” style,
so this section last week and this week are both a little thin on content. That’s the way it is
sometimes, but there are a couple of small observations and thoughts I’d like to pass on, do
with them what you will.
Santa Barbara Resources (SBL.v) due to start drilling
A small headsup on this company, as according to its last NR (17) we should get the drills
starting to turn on its
22

JV project with Rio Alto Mining (RIO.to) paying for the fun in order to option in on the deal. As
the chart here shows, SBL popped hard when news of the hook up with RIO was announced,
but since then it’s drifted back from whence it came. Now with a market cap of just $1.4m, if
the drills hit something interesting the nanocap valuation means that you’d get a helluva lot of
upside leverage if things go well (the flipside is that exploration drilling is risky, as we saw when
we used the same thinking on the DAR.v trade recently and are now letting the small loser drift
on the tide for a while).
If we get a NR saying that the drills are turning (as expected for “early September”) then this
one may be worth at least putting on your radar screen.
A thought on Colossus Minerals (CSI.to)
I recently went long in a trading position, wanted 90c, didn’t like the way it was trading and so
dumped it for 79c. Since then it’s lost more ground and Friday saw the close at 71c.
What I want to say is that, recently traded
opened/closed (for a small profit) or not, the
way in which CSI has been moving in the last
few days is not healthy, not in the slightest. I
don’t have any special insight to offer, aside
from repeating that social issues around the
project with minority partner Coomigasp are
still rumbling and the project’s engineering has
always been under some doubt due to very
difficult ground conditions. But I will say that if
any of you are still long the stock on the
recent trade, I’d feel much better if you
departed, no matter if there’s a loss to take.
The trading action as witnessed last week has “not good news” written all over it, which may
turn out to be an incorrect interpretation, but discretion is the better part of valour on this one
methinks.
Conclusion
IKN226 is done, some final musings:
• I’m a buyer of Starcore (SAM.to) for another one of those near-term trades next week,
23

the only time I expect to be active at market unless one of my near-term trade targets
are hit and I get to do a bit of selling.
• Mexico’s royalty issue will start picking up headlines again, now that the project is with
the upper house of congress (Senate). However, if you’re long Mexico (as I am) there’s
no need to react to the stupid end of the commentary sphere and consider Mexico as
newly unfavourable to mining activity. This is Mexico playing catch-up to the rest of the
world, not becoming some overly expensive place to go mining.
• I’m happy in the way Minera IRL traded last week. Volumes are up and for the time
being, that’s more important than an immediate surge in price.
• For other minor trade suggestions perhaps look to Marlin (MLN.v) or Santa Barbara
(SBL.v), but for the moment I’m sticking firmly with “no new investment positions” until
we get some definition on gold and its friends. It may go up next week, it may go
down, but for what it’s worth keep me firmly in the “at-or-about-$1400” camp.
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
Footnotes, appendices, references, disclaimer
(1) http://finance.yahoo.com/news/correction-source-starcore-posts-record-155652093.html
(2) http://finance.yahoo.com/news/starcore-pays-final-3-68-130000506.html
(3) http://finance.yahoo.com/news/correction-source-starcore-posts-record-155652093.html
(4) http://www.minem.gob.pe/descripcion.php?idSector=1&idTitular=5654
(5) http://www.losandes.com.pe/Regional/20130906/74517.html
(6) http://noticias.terra.com.ar/minera-peruana-anuncio-inversiones-por-560-millones-para-proyecto-de-oro-y-plata-en-
santa-cru,19196d91670e0410VgnCLD2000000ec6eb0aRCRD.html
(7) http://finance.yahoo.com/news/cristina-fernandez-kirchner-president-republic-060000423.html
(8) http://www.tahoecsr.com/dispelling-myths-about-tahoes-escobal-project/
(9) http://incakolanews.blogspot.com/2013/05/tahoe-resources-thoto-taho-security.html
(10) http://finance.yahoo.com/news/strait-issues-shares-warrant-exercise-131500287.html
(11) http://www.larepublica.pe/07-09-2013/barrios-llevaremos-el-caso-a-la-corte-interamericana
(12) http://www.cnnexpansion.com/negocios/2013/09/02/mineras-temen-perder-mina-dorada
(13) http://www.latercera.com/noticia/negocios/2013/08/655-537659-9-bachelet-entregara-propuesta-sobre-royalty-
minero-y-capitalizacion-de-codelco-en.shtml
24

(14) http://www.puranoticia.cl/front/contenido/2013/09/05/noticia-78815.php
(15) http://noticias.terra.com.pe/internacional/pueblos-maya-y-xinca-denuncian-a-estado-de-guatemala-ante-la-cidh-por-
mineria,da206d91670e0410VgnCLD2000000ec6eb0aRCRD.html
(16) http://diariodigital.com.do/articulo.php?id=29674
(17) http://finance.yahoo.com/news/santa-barbara-announces-signficant-drill-110000275.html
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
25

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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