IKN #238Premium

The IKN Weekly
Week 238, November 24th 2013
Contents
This Week: It all depends on gold, The difference between the blog and the Weekly, Slight
OT: The Panic/Euphoria Model.
Fundamental Analysis: Why I’m short Pretium (PVG) (PVG.to)
Stocks to Follow: Overview, B2Gold (BTO.to) (BTG), Pretium (PVG) (PVG.to), Starcore
International (SAM.to), Dalradian Resources (DNA.to), Rio Alto Mining (RIO.to) (RIOM), Eco-
Oro Minerals (EOM.to), Tahoe Resources (TAHO) (THO.to), Minera IRL (IRL.to) (MIRL.L).
Copper Basket: Overview, Augusta Resources (AZC) (AZC.to), Lumina Copper (LCC.v), NGEx
Resources (NGQ.to), Panoro Minerals (PML.v), Reservoir Minerals (RMC.v).
The Lottery Ticket Basket: Overview, Netco (NEI.v), Bellhaven (BHV.v), AQM (AQM.v).
Regional Politics: Colombia’s Páramo decision: The never-ending story may end...soon?,
Chile: Legal challenges to mining, Chile: Collahuasi delays expansion plans, Mexico: Miners to
fight the (suddenly less scary) royalty, Argentina: Big changes.
Market Watching: The proposed “bigger caps basket” or “low cost producer” basket, Three
Cs: Colombia Cordoba (CDB.v) & Continental (CNL.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
It all depends on gold
Last week was a difficult one, in market terms at least, and came as yet another reminder that
all the fundamentals analysis, stock filtering or value-oriented stockpicking of mining companies
doesn’t matter a jot if gold decides to move down (or up for that matter, but that’s for another
day...hopefully). One of the many results of gold’s move down into the lower end of the 12-
handle is to see another 10% skimmed from the share prices of Rio Alto and B2Gold (to name
but two) and on a personal note, that new addition to the RIO downmove coming just days
after I called RIO a screaming buy at anything under $2 (and by the way, it’d still be an obvious
stock to buy once it moves above that price...according to the calculator at least).
I freely admit that last week’s action was rather depressing at a personal level, as I’m as
vulnerable as the next person to the downers that markets can throw at the human psyche. So
here, fellow junior mining company followers, is the bottom line, bullet pointed for your easy
reference:
• Without false modesty and despite plenty of evidence to the contrary this year, I
happen to think I’m a pretty good judge of a junior miner these days and can pick a
stock quite well (because if I didn’t think that I would have stopped pretending many
years ago). However and this is the main point, the best will (or company analysis) in
the world does not prevent the whole of the sector from dropping, your stock and my
stock included, if gold drops.
• Equally, the other side of the coin is in play, particularly at this moment. If gold rises
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they’ll all rise, including that dog of a stock that you believe has no right to be taken
seriously, or even trading on a public exchange or operating as a going concern
company.
• I can’t tell you where gold’s going to be next week, next month or next year. I have my
opinions and can make my guesses, but without the benefit of hindsight they’re no
better or no worse than anyone else’s.
• Therefore, you must question whether you really need to be subscribed to a junior
mining stockpicker service such as this. Without gold’s direction, junior mining
stockpicking at the moment seems to me to be of limited use at best (you might be
able to pick one out that rises 10% faster than the pack), or completely useless at
worst. If gold re-takes $1,400/oz they all go up, from Aurcana to Gold Resource Corp to
B2Gold to Rio Alto and all points in between.
• The bottom line is that you’re almost certainly paying for something you don’t need.
Now, maybe that’s a fashionable thing to do round your neck of the woods and if so,
then carry on because I’m going to keep writing these weekly missives. But seriously,
how much do you waste on bullshit from the junior mining chattersphere? Wouldn’t you
be better off without it all? Not just The IKN Weekly, but all of them.
Until gold stabilizes and (with fortune) begins to rise again, it’s going to be a tough trawl
through the whacky world of juniors and the deadwood is already cluttering up the sector.
The difference between the blog and the Weekly
We’ve been over this before, but it was a long time ago and as the whole issue of Pretium has
put things in the spotlight, a few words today might come in useful.
When it comes to script on mining and junior mining, there’s a difference between the way that
I approach the writing on the open, public blog and the writing here at the. It can be put in
several ways, such as how the blog is mainly negative and spends a lot of the time pointing to
weaknesses and failure, the Weekly tries to find positive, proactive things to write about and
highlight. Or the blog is me goofing off, the Weekly is where the serious work gets done. Or the
blog’s an advert for what I do, and here’s where I do it. Or the blog helps me focus and keep in
touch during the week, as a preparation aid for the things that people pay me to write. Or even
that the blog is an anti-advert and it takes a decent leap of faith by any of you to read that
blather and then start paying me cash to read more opinions. We all have our methods of
keeping the pain of public authorship as low as possible, you see.
Moving gears slightly, it’s not about the things you decide to spout off about, because talk is
cheap. Or as they say in the region where I was brought up, “Opinions are like arseholes;
everybody’s got one”. It’s about the fights you decide to join and that’s when the market
observer truly becomes the market activist, not before. In the case of Pretium I’ve thrown the
odd “ha ha” post out on the blog as it sunk from $5 thru $4, then $3 and even showed a $2-
handle for a while (and I’ll say now, I was surprised to see it under $3) but all the way down,
there was no decision to actually trade the equity, neither long nor short. That’s because I
couldn’t see the value of either direction and/or didn’t understand the situation well enough for
my own satisfaction. This by the way, is the situation I find with Gold Resource Corp (GORO)
today, as after recently covering the short and watching it bounce between (roughly) $5 and
(roughly) $5.50 I’ve considered the stock in No-Man’s-Land and I haven’t been able to commit
myself, long or short. (Sidebar: Be clear that although I’m no fan of the company, its
management or the way in which it has attracted its band of true-believer shareholders I’d go
long if I saw a reasonable trading opportunity which checked my boxes of potential value).
It’s about identifying value (or what you believe to be value), the type that stands out from the
rest of the prices on offer at any given moment. In the case of Pretium I didn’t go short as it
dropped because I didn’t have enough conviction about it as a future riser or future faller. For
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sure and as the Blog bears ample witness, I can blow words out of my mouth like the rest of
them, give it the swagger and let my ego off its leash (and that brute needs no second
invitation), but when it comes to real showtime, not fake showtime, trades are better served by
humility and calm. Therefore, I take the “Oh, so tell me again why PVG is going to the
woodshed?” mails from blog readers and I take them on the chin. I accept the “Hahaa, GORO
just paid another dividend stupid!” mails received from time to time from that company’s
special set of hardcore fans. I read an acknowledge the “Hey moron, you forgot to sell your RIO
at the top!! See you in the soup kitchen line!!” missives of delight and joy that anyone who has
stuck his head over the mining speculator parapet and made a wrong call will always receive.
Nothing undeserved there either, because on the blog I will occasionally (cough cough) take the
annoying asshole stance (and when it comes to being an asshole I can cover my corner well
enough) and confront others, be that a company, analyst, shareholder, executive, regulator,
etc. Assholery begets assholery.
But the Weekly is different; there’s real money in play, mine and yours, and I worry much more
about the effect my words might have on your cash than my actions do to mine, even though
they always come by necessity with the caveats that you need to take what I do with my cash
and adapt them to suit your own needs, preferences, tastes, whatever. For sure I’ll often opine
that “Company X is starting to look cheap” or “Company Y is now on my radar” down in the
Market Watching section, but there’s a difference between sticking something on an active
watchlist and sticking your hard-earned cash on its future. Pretium recently got to the surprising
cheap level, though I couldn’t bring myself to go long on the stock. Now that it’s bounced, I
believe it’s bounced too hard, too fast and there’s a great chance of more down than up, so this
is where I take my next position in the stock, short as from U$5.38. Good value has gone, great
value has appeared, money now where mouth is (and as a result, my mouth will stop its
cheaptalk on the blog for the duration).
Somewhere, buried in those words, is the difference between the two things I write.
Slight OT: The Panic/Euphoria Model
Haver Analytics and Citi Reserach runs this chart, not me, and although covering broad market
sentiment is slightly out of context to the Weekly I thought it interesting enough to share here:
3

To the right, we now have the indicator back over the Euphoria threshold, the last time we
were there was before the 2008 crisis and previous to that, the Nasdaq dot com bubble.
Fundamental Analysis of Mining Stocks
Why I’m short Pretium (PVG) (PVG.to)
Friday’s junior headlines were captured by Pretium (PVG) (PVG.to) and for most of the day it
seemed like the only game in town. The catalyst was the pre-open NR (1) which reported
higher than expected recoveries from its bulk sample taken out of the key Valley of the Kings
(VOK) deposit at its Brucejack project. The table published in the NR gives as good a view as
anything else of the results so here it is reproduced for your information:
Tonnes Gold Gold Gold Total Total
Milled Ounces Ounces Ounces Contained Contained
(Dry) Gravity Flotation Tailings Gold Silver
Concentrate Concentrate Ounces Ounces
8,090 2,542 1,588 85 4,215 3,593
We note that with ~80% of the rock now processed, the VOK sample is already North of the
4,000 oz target and by simple extrapolation we can point to final recovery of perhaps 5,300 oz
to 5,500 oz. In fact that might turn out to be a low call on the final number, because the last
~2,000 tonnes to be processed was originally scheduled at least to come from a part of the
deposit known for its high-grading thin veins and may have a lot more...we’ll see about that.
It’s also worth noting that about 60% of the gold is recovered in straight gravity concentrate,
which points us towards a cheap and efficient extraction process. On that score, it’s fair to say
that the market had always assumed the VOK deposit would be amenable to gravity recovery,
what with its very high grading vein system the backbone of the system (and cause of all the
excitement), but there’s no doubt that what we got from the Friday NR was a whole bunch of
strong numbers and a share price pop was always going to come of them (said as much on the
blog pre-open, too (2)).
But despite all that, despite and big positive market reaction for the results (check the
percentage move and the elevated volume at your own leisure) I took the opportunity to go
short on PVG Friday. What follows is why and there are three main reasons:
1) The first reason was mentioned in the Flash update of Friday morning (see appendix 2), as
the reception given to the PVG numbers changed from approval to hype to outright euphoria in
the space of around 30 minutes and after the initial push, stayed high all day. I’d agree that
some upmove were logically in order but 81.57% is too much, too high and too fast, which
makes it a shortable target. What’s more some feedback from larger trading desks (the type of
thing I normally don’t care much about, but on this occasion reading very-near-term intraday
sentiment is reasonably important) noted that there wasn’t much in the way of insto buying
going on, but there was plenty of evidence of short-covering. That’s the type of mix which
makes for spikes and overbuying, so it wouldn’t com as much of a shock to anyone to see some
consolidation set in (e.g. if seen Monday/Tuesday next week, PVG bulls will have their logical
and understandable conclusions ready and waiting)
2) Second, the near-term financial future of Pretium is part of the equation, so let’s check that
out. Here’s a chart of what the PVG working capital chart looks like to 3q13 and what it will look
like at the end of the year, assuming the company doesn’t raise cash in the current quarter:
4

100 PVG: Working Capital per qtr
90
80
70
60
50
40
30
20
10
0
5
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 tse31q4
source company filings, IKN ests
srallod
fo
snoillim
At a burn rate of around $9m or $10m per month ($27m to $30m per quarter) the $35.84m as
at September 30th isn’t going to last long.
Here’s how the burn rate breaks down and PVG: Approximate cash burn rate, per quarter
as you can make out, that VOK deposit is
one high maintenance spouse. PVG may be 40
able to sell the ounces of gold retrieved from 35
30
the bulk sample, though even those aren’t 25
likely to make more than $8m gross and 20
15
that’s not going to last long in this high-burn 10
exploreco. 5
0
And to labour the point, the below right chart
notes that there have only been two quarters
in the last nine when PVG hasn’t gone to
market in some way and added to its cash
treasury.
Put simply, you can fully expect PVG to run a
financing on the back of last week’s share
price pop. My best guess is 10m shares at $5
for $50m in gross proceeds that should be
good until end 2q14, which might turn out to
be high or might turn out to be low, but the
basic point is that PVG needs new cash fuel
for its ops and needs it sooner rather than
later. It wouldn’t be at all surprising to find a
bought deal NR released as early as tomorrow Monday morning, in fact; striking while that iron
is hot.
3) Now for reason number three, which is I believe the most important. If we cast our minds
back to the NR on October 9th which announced the resignation of Strathcona from the project
(3) and then the NR of October 22nd 8th which caused more share price deterioration to PVG
(4) and then compare the dates with a price chart (below) it’s not difficult to deduce that the
damage was caused by the (ex)third party consultant’s resignation from the project. So let’s
revisit the reason for Strathcona’s withdrawal from the project and the key phrase of the
October 22nd NR, the one that caused all the fuss and was subsequently quoted by all the
ambulance chaser legal firms who’ve ganged up in the class action against PVG (a suit which in
itself is a minor reason to be short PVG, as that one isn’t going to go away, but it’s debatable as
to whether it’s a material reason to be short and it shouldn’t be a main reason for anyone) is
the following:
“...Strathcona advised Pretivm that "…there are no valid gold mineral
resources for the VOK Zone, and without mineral resources there can be no
mineral reserves, and without mineral reserves there can be no basis for a
11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 tse31q4
$m Expenditures on mineral interests operating loss
Source: company filings, IKN ests for 4q13
PVG: Mining activity expenditures vs Net cash
80
from financing
70
60
50
40
30
20
10
0
11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 tse31q4
$m
Expenditure on mineral interests
net cash from financing
source: company filings, IKN ests

Feasibility Study." They also advised that "…statements included in all recent
press releases [by Pretivm] about probable mineral reserves and future gold
production [from the Valley of the Kings zone] over a 22-year mine life are
erroneous and misleading."
Now, there was a LOT more in that (in)famous October 22nd NR (5) and I strongly recommend
you read it all and reflect on the two sides’ (Strathcona vs PVG/Snowden) opinions yourself.
However, the general thrust of those bullish on PVG today and ready to discard Strathcona’s
misgivings about the project, i.e. the people who won a round in the fight on Friday, have
interpreted that statement as saying “Strathcona doesn’t think there’s any gold in VOK and
Friday’s results show conclusively that there is gold (and a lot of it), so we can now discard the
Strathcona position and trust PVG/Snowden more...and party on, Garth”.
Here’s an example of the bullish position, the one I’m counterparty to since going short PVG on
Friday. It comes from a highly respected investment professional who runs large money (and
shall remained un-named) with whom I exchanged several times on Friday. This A.N. Other
bought at least some shares Friday (I’m not sure how many or what sort of addition it was to
previous positions) and I’m pretty sure will be accumulating PVG in the days and weeks ahead.
Here’s an excerpt of one of his mails to me, by way of explanation of the rationale (published
with permission):
I think the presence of gold in the bulk sample is more important at this
juncture than the academic discussion of its distribution. The debate
engendered by Strathcona is healthy for the industry, and importantly will
drive discussions in classrooms, bar rooms and board rooms for months. The
share price escalations we have seen today will likely give way to massive
volatility as uninformed punters express opinions in the market.
That’s fair enough and this is what makes a market, after all. The above also mentioned during
the course of the conversation that he believes both he and I may turn out to be right on our
trades, first me in the near-term and them him in the long term. And that’s something I can live
with too, which reminds me to get back to the short thesis, because it all fits in.
I wrote a piece on PVG in IKN224, dated August 18th when I was still long PVG but expressing
my doubts and second thoughts about the sagacity of that position. The second thoughts were
6

broken down into four points and the one that really matter now is point two, because it sure
looks as though it’s in play today. Here’s that point reprinted:
Point Two: The second thing to come from last week’s info is to look at the
maps PVG kindly offered and note exactly where they’re taking the 10,000
tonne bulk sample from inside the VOK deposit. The idea was to offer up a
representative sample of the whole of the deposit, which sounded like smart
idea to me, but we now have to factor in a new discovery from PVG, the
recently announced Cleopatra Vein and its location. If you consider this map
(16) that shows the area from which PVG is taking its sample, it seems pretty
clear that a decent proportion of this bulk sample is coming from an area right
at and running parallel to the Cleopatra vein system. Now I don’t know about
you, but when you consider that Cleopatra has returned samples of up to
27,000 g/t Au over 0.5m widths (17) and the whole idea of the bulk sample
was to be representative of the whole of the rock in order to determine
whether VOK stands up as an underground bulk mining plan, a big fat
question mark appears above my head to wonder just how “representative”
the material being extracted for this 10,000mt program really is. Second
conclusion drawn: The bulk sample may well pass muster on first look when
it’s eventually published, but I wonder whether the big mining companies,
that’s to say the potential purchasers of PVG and/or VOK, will be as impressed
when they start getting granular and picky on the data provided.
The key word in all this is “representative”, which brings us back to Strathcona. The long and
the short of it is that I contend Strathcona did NOT resign because the company thought there
was no gold in VOK, something that’s obviously false because Strathcona itself makes several
references to the high-grading gold content of the deposit while talking about the potential
mine-ability of VOK (again, read that full NR and get it all); I contend that resigned because it
had deep reservations about the way in which the bulk sample was being taken as a
representative sample of the larger deposit. Strathcona wanted to use a different sampling
method, one that it believed gave a better model of the whole of the VOK deposit, not just the
whole of the bulk sample. That’s an important difference and that’s why that last sentence got
underlined.
And in fact, the results offered up by PVG for the bulk sample suggest that Strathcona’s position
is a totally valid one, rather than giving lie to it. Let’s take a closer look at what we’ve seen
from the bulk sample results so far via this quick table that registers the first results published
on October 22nd and the results from November 22nd as well (i.e. last week). We then put in a
third line of calc to show the difference between the two, which is by definition the rock
processed between the two announcements:
date tonnes processed gold recovered (oz) avg oz/t reported avg g/t
22-oct 2167 281 0.13 4.03
22-nov 8090 4215 0.52 16.20
diff between 5923 3934 0.66 20.66
Or put simply:
• To October 22nd PVG (via its contracted mill) processed 2,167 tonnes of rock to get 281
oz of gold. That comes out at 4.03 g/t of gold recovered.
• Then between October 23rd and November 22nd, PVG (via its contracted mill) processed
5,923 tonnes of rock to get 3,934 oz of gold. That comes out at 20.66 g/t of gold
recovered.
Which means that the results as published last week may well be impressive in recovery terms,
but they cannot possibly be representative of the grade of the larger resource, even under
7

PVG/Snowden’s terms. They are, quite literally, too good to be true and point at the original
thesis of a bulk sample that’s been carefully collected from the better looking areas of the
sampling zone, particularly that of the Cleopatra vein and surrounding halo, to show better
grades and gold content than is the case. The “too good to be true” theory would get extra
backing if that last ~2kt to be processed adds a larger than expected amount of gold ounces to
the pile as well.
To sum up this section, what we know (and to expand slightly on a list first published on the
blog on October 10th (6)) is:
a) Snowden wanted to process all the 10,000 tonnes of bulk sample, Strathcona wanted to
select ten "towers" which is roughly 10% of the total as its representative sample.
b) The 10,000 tonnes were/are being processed as the representative sample.
c) Strathcona resigned because it doubted that method would be representative.
d) Instead of 10,000 tonnes of bulk sample giving us 4,000 ounces, as predicted by PVG, in the
last month just under 6,000 tonnes gave just under 4,000 ounces.
e) We note by the bulk sample maps that there seems to be a lot of material taken from the
thin, high-grading Cleopatra vein zone of VOK.
f) There is no doubt that there’s gold in VOK, which has been proven by the bulk sample
testing. But as I wrote on Friday (7):
The doubt has never been about the gold content of the sample. Today we find the
sample has gold (and perhaps a little more than expected) but so what?
The key word in the whole story is still "representative" and it doesn't matter whether
the 10kt bulk sample comes in with triple the amount of gold than expected, the
question of whether PVG's testing method represents the larger deposit has not gone
away.
And let’s repeat here; the exit strategy for PVG is not and will never be taking this deposit to
production itself. Its audience is not ultimately the market and its population that made the
stock move on Friday in such a sharp manner. PVG has to convince a big precious metals
mining company, with a whole bunch of hard-nosed geologists, engineers and experienced
mining executives who’ll need convincing. To borrow again from IKN224, “It’s becoming clear
that the potential viability of VOK depends a lot of real hard data geology and the conclusions it
spits out, which will then have to pass peer review before it gets some sort of industry thumbs-
up.” I contend that although PVG has shown there to be recoverable gold in VOK, it has not
moved us anywhere closer in terms of the trustworthiness of its sample program and the
serious doubts brought by Strathcona have not been addressed by last week’s results; in fact,
they’ve added more fuel to detractors’ fires by showing “unrepresentative” results for its
supposedly “representative” sample.
That’s why I’m now short.
And so to the trade
My new short is a near-term trade, rather than some long-term investment position that will
need nurturing and defending as time goes on. The essence is simple enough:
1) Friday saw a big spring-back rally in which PVG became acutely overbought, driven by
mostly short covering rather than new money entering. Once the covering is done, the
consolidation begins.
2) I fully expect PVG to run a financing deal in order to top up its treasury and supply the
high octane cash-burn exploration project at VOK. This financing will at the very least
8

put a cap on share price upside and may drive it lower quickly, depending on the terms
of the deal and how quickly it’s announced. I’d expect this financing to come sooner
rather than later, as any delay will see people catching on to the idea that PVG will
want to finance again.
3) The news on Friday does not address the basic questions surrounding the VOK testing
process and the reasons why Strathcona resigned from the project. It’s my continued
contention that PVG has a problem with trust regarding the method used to test its bulk
sampling and extrapolate those results to cover the whole deposit. The key words is
still “representative” and although the bulk sample testing has proven there’s gold
there, all bar the most extreme VOK detractors never had that as an issue. The
question is whether the 10,000 tonnes taken from the project is truly representative of
the 21.5 million tonnes of reserves and resources at VOK (all categories), i.e less than
0.5% of the total. Strathcona has said that it’s not, I say that it’s not, others say that
it’s not and now, by strange twist of fate, even the out-sized processing results that do
not fit the Snowden model say that it’s not. Without reliably in the sample method,
their results become little more than a wash, something that does little for PVG’s
chances of getting bought by a major.
Therefore, once the euphoria has worn off (a process that I expect will begin tomorrow
morning) people will still note that Strathcona resigned because of a dispute over the testing
method, that in Strathcona’s view the way in which the bulk sample is being tested is not
representative of the greater deposit, that Strathcona’s plan of taking ten towers of the 10,000
tonne sample in order to get a better idea of the whole was rejected and that same company
said on resigning that "…there are no valid gold mineral resources for the VOK Zone, and
without mineral resources there can be no mineral reserves, and without mineral reserves there
can be no basis for a Feasibility Study. The announcement of gold recovered from a gold-rich
zone does not change that in the slightest. They’re also about to see PVG cashing in on a single
NR and its overbought reaction by running a financing.
Bottom line: I’m short PVG and expect it will drop in the near-term, at which point I’ll take
profits. As for a downside target price, $4 is pencilled in but as this is going to be a sentiment-
charged issue for some time to come, that figure is used as a very rough guide only and may
easily change. I’ll leave the long-term destiny of this company and its assets to others. The end.
Stocks to Follow
There are now 14 open positions, as we added a trading long in B2Gold (BTO.to) (BTG) and a
short in Pretium (PVG) (PVG.to) in the course of last week. Of those, five made gains, two
remain unchanged as from last week (FCV.v, NET.v) and seven record losses (RIO.to, RIO.to
trading, BTO.to, BTO.to trading, IRL.to, EOM.to, DNA.to). Worst losses came in Minera IRL
(IRL.to down 23.8%), Dalradian Resources (DNA.to down 16.7%), Rio Alto (RIO.to down
10.7%) and B2Gold (BTO.to down 9.3%).
With the two added positions we now have 14 open positions on our ‘Stocks to Follow’ list, one
less than our self-imposed maximum. The new short in Pretium is green, the rest are red.
9

Company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
Top Picks
Rio Alto Mining RIO.to str buy C$2.30 07-apr-11 C$1.59 -30.9% best LT value
Minera IRL IRL.to str buy C$0.35 22-jul-12 C$0.16 -54.3% top pick called at 24c
Longs
B2Gold BTO.to hold C$3.07 28-nov-12 C$2.15 -30.0% sold 1/2, rest rides. Quality
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.69 -40.0% solid biz model, LT hold
Rio Alto Mining RIO.to str buy C$2.34 07-jun-13 C$1.59 -23.9% added Oct'13 avg down
Starcore Intl SAM.to selling C$0.235 08-sep-13 C$0.18 -23.4% selling, will take small loss
Eco Oro Min. EOM.to hold C$0.55 22-sep-13 C$0.40 -27.3% new trade, st pol risk play
Dalradian Res EOM.to buy C$0.66 27-oct-13 C$0.55 -16.7% Avg down again
B2Gold BTO.to hold C$2.22 28-nov-12 C$2.15 -3.2% new ST trade, separate
Shorts
Tahoe Resources TAHO short U$13.10 08-apr-13 U$18.36 -40.2% port hedge, easy2b short
Pretium Res PVG short U$5.38 22-nov-13 U$5.32 1.1% new short, news driven
Smaller/Riskier
Focus Ventures FCV.v spec buy C$0.175 01-jul-12 C$0.135 -22.9% revised tgt 25c
Darwin Res DAR.v hold C$0.10 14-jul-12 C$0.075 -25.0% drilling again soon
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% closed thru nerves on future
Pretium Res PVG.to aug'13 C$8.20 11-jun-13 C$10.14 23.7% closed to raise cash
Bear Creek BCM.v sep'13 C$2.06 30-may-13 C$2.20 6.8% sold on pol risk decision
MAG Silver MVG oct'13 U$7.00 12-sep-13 U$5.62 19.6% near-term short
Gold Res Corp GORO oct'13 U$9.52 03-may-13 U$4.98 47.7% short tgt made, covered
AQM Copper AQM.v oct'13 C$0.31 16-oct-11 C$0.125 -59.7% closed failed trade
First Majestic AG nov'13 U$11.51 07-nov-13 U$10.50 8.8% v near term short, closed
Fortuna Silver FSM nov'13 U$4.00 07-nov-13 U$3.68 8.0% v near term short, closed
Primero PPP nov'13 U$5.70 07-nov-13 U$5.75 -0.9% v near term short, closed
2009, 2010, 2011 and 2012 closed positions in appendices below
Now for some notes on a selection of the above stocks.
B2Gold (BTO.to): Trading position added. It got down to $2.22, I pulled the trigger on last
week’s thoughts via the Flash update Wednesday morning (see appendix 1) then gold dropped
even further and here we are. That’s 3.2% lost because I considered BTO “value at that price
and decided to catch a falling macro knife. Let’s see how this one continues in the days to
come, but any further fall and I’ll quickly throw in the towel on this sidebar trade. Line in the
sand $2.05 for the stop-loss, but there’s still plenty of reason to expect BTO to rebound from
10

here, even if gold does little else that trade flat. Fundamental value, y’see.
Pretium Resources (PVG) (PVG.to): Short position opened. As per the Flash update of
Friday morning (see appendix 2 below) we have a new short added to the list, that of PVG.
There’s plenty of words and things on the trade down in Fundies above, here we note that I
missed shorting at the peak of U$5.80 or so, but only by a few minutes and the U$5.38 price
turned out to be the place around which it traded for the rest of the day.
The call here isn’t for a short to hold until zero dollars and zero cents comes around; it’s a
specific opportunity trade (as mentioned in the Flash update, these are the reasons one should
have a cushion of cash on hand) that takes advantage of what looks for all the world like an
overbought rebound. Where the potential downside might take us is up for debate, but as I
pencilled in $4 to $4.30 as a reasonable place to which PVG could rebound on reading the NR
before Friday’s open, perhaps $4 is the place I’d eventually cover if PVG takes its expected
breather.
Starcore International (SAM.to): Still selling. And now time is running out, too. SAM
traded ok in its thin, tinycap way and it’s showing plenty of resistance to further downside at 17
and 18. However, I said I’d be out of this before the end of November and that’s what will
happen, so by the time IKN239 comes around this one will be closed and the loss (small
monetary, chunkier percentage) taken. Amen.
Dalradian Resources (DNA.to): The only one of the whole bunch (barring TAHO of course)
that I was happy to see lower). The average got cut to 59c thanks to a couple more buys and
average-downs, with Thursday and Friday providing ample opportunity and volume as well. I’m
going to keep nibbling at DNA if it goes any lower.
Rio Alto Mining (RIO.to) (RIOM): Really, quite depressing. One mail from a reader summed
it up better than I can by asking at what gold price point would RIO stop being profitable,
under my estimates. My answer was 1) $1,050/oz and 2) if you think gold’s going that low, you
shouldn’t be long RIO or any other mining stock in the first place. See today’s intro for more.
Eco Oro Minerals (EOM.to): As last week, please see ‘Regional Politics’ for an update on
where we are with the key Páramo decision,
that was expected last week and didn’t appear.
Perhaps as a result of that EOM.to had a soft
time of it at the markets, trading under 40c on
Thursday and much of Friday. However (and as
explained below) there’s reason to be slightly
more optimistic than we were this time last
week on this trade and it’s not getting to the
point where adding a few to the position and
averaging down wouldn’t be out of the
question. According to latest reports we should
get that decision “soon”, as well. Sigh.
Tahoe Resources (THO.to) (TAHO): It was so negative out there that even TAHO lost
ground.
Minera IRL (IRL.to): The action in IRL last week is a case in point of how bad optics can do
in a junior mining company. It’s also a model case of how the market, quite rightly, doesn’t give
a damn about good intentions. The IRL management team made a clear strategy error with its
Monday NR (8) which started like this
“LONDON, UNITED KINGDOM--(Marketwired - Nov 18, 2013) - Minera IRL
11

Limited ("Minera IRL" or the "Company") (IRL.TO) (MIRL.L) (MIRL.L), the
Latin American gold mining company, announces that on 15 November 2013
a total of 3,550,000 options over ordinary shares of nil par value in the
Company ("Options") were granted to Directors and Executives, pursuant to...”
And I’m pretty sure most people didn’t read any further than that. That’s a really hefty options
award for any company, never mind one that’s seen its share price drop from the 80c of
December 31st 2012 and over the course of the week have received several mails on the
matter. Here’s one from reader (and IRL shareholder, unless he’s dumped his stock in disgust
since we last exchanged) ‘RK’ which is a fair representation:
if you ask me, and u didnt, I'd say they (mgmt) has a set of balls issuing stock options
like nothing has changed in the gold mining market. Pretty incredible. Not that it would
make a difference to the share price in this environment.
Other mails were more diplomatic, other used stronger language, all were of the same thrust.
However, a few minutes after the news hit and before the Canadian market opened on Monday,
I got an unsolicited phone call from company head Courtney Chamberlain who wanted to talk
about the NR. He noted the big options award but also said that it was necessary by way on
incentive, because the company was cutting down on its G&A costs via some lay-offs and many
reduced salaries. The options were to off-set the lower pay and keep key members of the team
on board through this tough period.
In other words, the options award was part of a larger package that was set out to lower the
company burn rate. When I asked why they didn’t explain this in the NR, the answer came that
they didn’t think it appropriate though some mention was certain to be made in the 2013 year-
end filings. On this I agreed in part, for example i don’t think it justifies a separate NR to
announce the costs initiatives, but i think that context would have been very useful in Monday’s
NR to explain where the company is coming from. But of course, by then it was too late. And
this market proceeded to show us, by way of constant selling all week that pushed IRL’s price
down by a whopping 23.8% on heavy relative volume, that it needs just one excuse to dump
your junior mining stock, ask no questions and move on.
I despair of IRL today, a great asset, dealmaking done on Don Nicolas and a potential funding
or merger deal that, through no fault of the company, went wrong but showed the company
was being eyed up as a cheap M&A target. And just when you think things are turning round
the management shoots itself in the foot via some clumsy IR, which might have been done with
the best intentions but all the same, led the stock down the road to hell. What IRL needs is
some serious financial backing and with a quality project such as Ollachea on its books, that
shouldn’t be so difficult to reach. The question as always is just how much of the upside to the
future mine the company can keep for itself and how much it needs to mortgage in order to
satisfy the potential financiers’ desires.
To sign off, the last time we looked closely at IRL was in the fundies section of IKN226, dated
September 1st 2013. We’ll update on that when we have something material.
The Copper Basket
After forty-seven weeks of 2013 The Copper Basket is showing a 32.68% loss to level stakes.
12

company ticker price 1/1/13 Shares out Market Cap current pps gain/loss%
1 NGEx Resources NGQ.to 3.40 168.66 286.72 1.70 -50.0%
2 Lumina Copper LCC.v 9.43 43.61 224.59 5.15 -45.4%
3 Reservoir Min. RMC.v 2.41 41.68 182.56 4.38 81.7%
4 Augusta Res AZC.to 2.43 144.35 174.66 1.21 -50.2%
5 Copper Fox CUU.v 0.83 402.96 165.21 0.41 -50.6%
6 Hot Chili Ltd HCH.ax 0.72 297.46 130.88 0.44 -38.9%
7 Nevada Copper NCU.to 3.50 80.5 120.75 1.50 -57.1%
8 NovaCopper NCQ.to 1.80 53.02 106.04 2.00 11.1%
9 Panoro Minerals PML.v 0.62 204.71 69.60 0.34 -45.2%
10 Western Copper WRN.to 1.39 93.68 56.21 0.60 -56.8%
11 Curis Resources CUV.to 0.70 63.13 37.88 0.60 -14.3%
12 Candente Copper DNT.to 0.375 122.05 25.63 0.21 44.0%
13 Oracle Mining OMN.to 0.80 49.03 12.01 0.245 -69.4%
14 Yellowhead Min. YMI.to 0.59 63.45 9.83 0.155 -73.7%
15 Strait Minerals SRD.v 0.08 57.26 2.86 0.05 -37.5%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg -32.68%
A 5.1% loss for The Copper Basket average, hard hit all over its component parts, which means
the basket average hit its 2013 year low
Copper Basket 2013 average, weekly
this weekend. Nice, huh?
12%
8%
To the details and we had just one of our 4%
0%
famous fifteen make a gain on the week, -4%
so a warm round of applause to Curis -8%
-12%
Resources (CUV.to, up 3c). All other
-16%
dropped so they don’t get long listed, -20%
-24%
instead we note the biggest percentage
-28%
losers of Augusta Resources (AZC.to down -32%
-36%
33.5%), Strait Minerals (SRD.v down
23.1%), Candente Copper (DNT.to down
12.5%), Western Copper & Gold (WRN.to
down 11.7%) and Oracle Mining (OMN.to
down 9.3%).
Prices took a turn for the better on “upbeat China
data” (that old chestnut) and finished the week
touching $3.20/lb. It remains to be seen whether
copper can re-take its previously strong $3.20-
$3.35 trading range, however.
To Inventories and yet again, we report big drops
in world stocks. The total aggregate slid a big
5.1% (32,763mt) to stand at 609,775mt. Of that,
LME dropped by 2.8% (12,550mt) to 439,100mt
(the Malaysia warehouses accounting for 6,150mt,
nearly half), then Shanghai dropped a very big
11.0% to 151,801mt and Comex a further 7.0% to
18,874mt. The general feeling is that the new LME
rules have spooked the warehouse player enough
to start shipping copper out and avoiding
problems down the line. As for LME cancelled
warrants, they hit another all-time record of 64.0% as of Friday. The copper is leaving, but the
financial players are trying to keep theirs locked in. This strange game is backwards to the
normal method of price discovery and suggests that lower inventories will mean lower spot
13
ht6naj ht02 r3bef ht71 r3ram ht71 ts13 ht41 ht82 ht21 ht62 ht9 dr32 ht7luj ts12 ht4gua ht81 ts1pes ht51 ht92 ht31 ht72 ht01 ht42
source: IKN calcs, TSX data
31/1/1
morf
egnahc
%

prices, at least in the near future.
Cancelled Warrants at LME, IKN157 to date
70%
60%
50%
40%
30%
20%
10%
0%
14
751NKI 061NKI 361NKI 661NKI 961NKI 271NKI 571NKI 871NKI 181NKI 481NKI 781NKI 091NKI 391NKI 691NKI 991NKI 202NKI 502NKI 802NKI 112NKI 412NKI 712NKI 022NKI 322NKI 622NKI 922NKI 232NKI 532NKI 832NKI
source: Cochilco, LME
rof
yrotnevni
EML
%
latot
yreviled
resu-dne
Now for updates on a few of our basket stocks.
Augusta Resources (AZC.to) (AZC): All sorts of fun and games at AZC last week, with
events centering around the NR emitted by opponents to the Rosemont Mine on Wednesday
afternoon (9) that hit the stock very hard. We featured the NR on the blog (10) that evening
and had a little snark-shot at it all (very glad to say that we didn’t stick it up while the market
was open, by the way) and the key phrase, along with other nasty sounding stuff, was that...
“...EPA concluded that Rosemont's proposals to mitigate the mine's severe
and permanent damage to area water supplies are "scientifically flawed"
and "grossly inadequate," and advised the Corps of Engineers that the
project "should not be permitted as proposed."
...with the EPA being the US Environmental Protection Agency and the Corps of Engineers being
the Army body in charge of eventual permission granting. And as a result, the share price
dropped from U$1.60 to a close of U$0.63 (with Wednesday’s high of U$1.73 and low of U$0.45
showing a top-bottom fluctuation of 74%: Impressive).
That evening the company fought back, calling bullshit on the anti-mine NR and explaining its
position (11) between company, EPA and Army Corps as an ongoing one in which all sides were
working to find a lasting solution. As a result, AZC stock rebounded sharply in Thursday but in
subsequent trading only managed to re-gain about half of the losses, which means serious
damage has been done and the company has not managed to address all the issues raised by
its detractors.
One interesting aspect is that in the midst of all the fuss (and announced post-close
Wednesday, just after the big drop) was that AZC announced it had arranged extra financing to
the tune of $26m with long-standing sponsor Red Kite (12). If as stated AZC had known of the
Army Corps concerns on November 7th, it seems very unlikely that they would have kept quiet
about them with Red Kite therefore that firm’s continued sponsorship is an indication of sorts
that the contents weren’t nearly as damning as the anti-mine brigade would have you believe.
For me, this one is an easy call: Avoid. The anti-mining people hit AZC with a mischievous NR
and did significant damage to the share price, but they’re unlikely to be guardians of the whole
and pure truth here. AZC explained its side well enough, but for one thing there’s clear residual
effect of last week and for another, AZC’s poor track record of disclosure of its problems plus its
endless timeline delays setbacks hardly makes it the type of corporation that’s easy to take at
its word, either. So on this one I’ll remain a sideline spectator.
Lumina Copper (LCC.v): It’s in Argentina.
NGEx Resources (NGQ.to): It’s half in Argentina.

Panoro Minerals (PML.v): Down 8.1%
and it would have been a lot worse
(21.6%) if there hadn’t been a late Friday
piece of tape painting that shot the stock
from 29c to its 34c close just before the
end of play. As you know, I’m not
surprised about this stock’s recent
weakness that comes from the lacklustre
43-101 resource update of October 29th
(13). In fact, the only thing that surprised
me about PML is how the stock managed
to trade up that day.
Reservoir Minerals (RMC.v): Still with half an eye on buying some of this, I’ve been
watching RMC trade more closely than others recently and it’s showing all the signs of a stock
that’s being gently worked down by some pretty skillful trading, all on the typical low volumes
we’ve been used to out of the stock. If you want my best guess, I’d say that somewhere FCX is
thinking about its 2014 exploration budget and thinking that picking RMC off for $6 a share is a
far more pleasant idea than picking it off at $8 or $9. Combined with the low volume, if the
drip-drip action continues it would only take one medium sized recent buyer to decide that
discretion is the greater part of valour and RMC could again drop below $4. The chances of
picking up a bargain aren’t quite dead yet, RMC is still very much front and centre on the radar.
The Lottery Ticket Basket
After 47 weeks of 2013 The Lottery Ticket Basket is showing a 43.17% 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 54.40 0.080 -20.0%
2 AQM Copper AQM.v 0.08 105.57 12.14 0.115 43.8%
3 Eagle Star Min. EGE.v 0.125 79.13 11.87 0.150 20.0%
4 Fancamp Expl. FNC.v 0.125 177 10.62 0.060 -52.0%
5 Bellhaven BHV.v 0.14 136.81 5.47 0.040 -71.4%
6 Tango Gold TGV.v 0.13 76.24 3.81 0.050 -61.5%
7 Inca One Res. IO.v 0.12 34.0 3.06 0.090 -25.0%
8 Copper North COL.v 0.10 58.7 2.64 0.045 -55.0%
9 Netco Silver NEI.v 0.125 9.4 1.97 0.210 68.0%
10 Darwin Resources DAR.v 0.20 26.16 1.96 0.075 -62.5%
11 Gryphon Gold GGN.to 0.085 194.64 1.95 0.010 -93.5%
12 Glass Earth GEL.v 0.155 105.67 1.59 0.015 -90.3%
13 Agave Silver AGV.v.v 0.30 21.55 1.40 0.065 -78.3%
14 Rio Cristal RCZ.v 0.025 17.259 0.60 0.035 -86.0%
15 Firestone Ventures FV.v 0.045 36.82 0.18 0.005 -88.9%
Portfolio avg -43.17%
The Lottery Ticket Basket average was whacked over 7% and also stands at year lows this
weekend, driven down by big losers Netco Silver (NEI.v down 33.3%), Bellhaven (BHV.v down
20.0%), Agave (AGV.v down 18.8%), Eagle Star (EGE.v down 16.7%), Tango (TGV.v down
16.7%) and Inca One (IO.v down 14.3%), among the total of seven losers. Five stocks stayed
unchanged and three went up, including the bigger wins in Glass Earth (GEL.v up 50.0%) and
AQM Copper (AQM.v), as well as Darwin (DAR.v).
15

25% Lottery Ticket Basket 2013 average, weekly
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
-30%
-35%
-40%
-45%
16
ht6naj ht31 ht02 ht72 dr3bef ht01 ht71 ht42 r3ram 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 ht51 dn22 ht92 ht6tco ht31 ht02 ht72 r3von ht01 ht71 ht42
source: IKN Weekly data, TSX
2102/1/1
morf
egnahc
%
Netco Silver (NEI.v): Unsurprisingly, the wind is coming out of this little balloon rather
quickly now. It’s still inexplicably up on the year and as such there’s plenty of room for more
drop and now we know more about the true plans here, the few stragglers left in are selling out
and leaving the soon-to-be tech junior to have its way.
Bellhaven Copper & Gold (BHV.v): BHV conveyed bad news to the market (that was picked
up on the blog (14)) which was all about the near-total lack of interest the market had in
funding its projects via the currently open financing round. After announcing on October 24th
that it was looking to raise $1.3m to further exploration work at La Mina, last week BHV
reported that it had “closed the initial tranche” of the placement for gross proceeds of
$127,500, in other words it had filed less than 10% of the book. What’s more, a check on
Canadian Insider (15) shows that at least $30k of that came from insider purchases.
It’s a tough market to raise capital for tiny explorecos, be in no doubt.
AQM Copper (AQM.v): As noted last week, that late Friday NR from AQM on November 15th
held good news and the stock reacted accordingly in trading last week. Volumes weren’t great
but the quick price move precluded your author’s semi-solid plan of buying a few AQM for a
trade and apart from a small sag midweek, the price stayed there. The scrappy volume really
put paid to any idea of a quick scalp win, though.
AQM isn’t dead and the next catalyst could be the Teck 2014 exploration budget, which should
set aside a few million for a new round of exploration here. Either that or the big company just
straight buys them out and has done.
Regional politics
Colombia’s Páramo decision: The never-ending story may end...soon?
So much for the confident forecasts of a decision on the Páramo de Santurban boundary by last
Monday, as now the latest form the Colombia Environment Ministry is that the decision will be
with us “during this month of November”. That might be true, but the road to hell is paved with
good intentions and EOM.to is another, yet another “punctual” trade idea that I shouldn’t have
got involved in. You can tell that just by the difference between my buy price (55c), the price I
reasonable expected the stock as a possible low before the decision were due (~50c) and
Friday’s close (40c). However, after following the issue this week it is fair to say that although
second guessing Colombian bureaucracy on timing has made me look a little stupid, the
decision is likely to pop out in the near future. I think that I¡ll leave the guesses on exactly
when to others from now, but it’s going to happen eventually and “in November” is logical
enough.

Also (and this is the better bit) I’m a little more optimistic about the type of positive outcome
for Eco Oro (EOM.to) than I was this time last week. There’s now reason to believe (16) that
when it comes to EOM.to in particular, some sort of compromise is in the cards where the
current plans for underground mining are left untouched, but the concessions held above the
current altitude boundary limits and originally planned to be extracted in open pit operations
will go off-limits. EOM.to may decide to run a legal battle on that, but realpolitik may hold sway
and the company is satisfied by getting permits on its main and higher grading underground
ounces, currently estimated at around 2.9m Au. What seems to be going on (and what seems
to be causing the delay to the final decision) is lobbying by various sectors of government with
the Environment Ministry, including those who are pointing out that Colombia would open itself
up to legal actions if they deny the right to mine on concessions previously awarded to mining
companies such as EOM.to, as well as putting off new investment dollars for the “mining
locomotive” that President Santos dreams of in all parts of the country due to the bad optics on
jurisdiction. As such word is that the Enviro Ministry’s previous hardline and expanded limits are
being softened from inside the government and even though we’re still facing a decision that’s
going to fall short of expectations on the pro-mining or the anti-mining side (and very likely
both of them with find reasons to complain) there’s a classic compromise in the works here;
that’s good for our position.
Along with the decision delays, we also saw last week the town of Soto Norte that lies in or
next to the Páramo (depending where that famous line eventually gets drawn) resolving (17) to
go on strike as from December 3rd, but this time the protest is about retaining the rights to
mine and farm in the designated Páramo area, rather than stopping people from developing the
region. Soto Norte wants the Environment Ministry to allow them to continue with their
traditional activities in the region that include small-scale precious metals mining and agriculture
(their onions are regionally famous, for example). The public opinion pressure on tis decision
isn’t all one way and held exclusively by the environmental protection mob.
The bottom line is that:
• Yes we should have a decision “soon” (that horrid word that refers to to something and
nothing in LatAm)
• The Páramo’s designated borders are likely to be changed, but the chances of serious
encroachment on mining concessions is less than it was even a week ago.
• No side is going to be completely happy with the outcome and the eventual
government decision. That in itself is a signal of compromise and that’s mildly optimistic
for our trade.
Therefore, even with the nasty drop in EOM.to suffered so far, there’s every reason to hold out
and wait for the decision here because if it’s favourable to mining for EOM.to, this is a stock
that could still double, and do so easily. So hold is still the call and is made with more
confidence than this time last week, even after suffering the seemingly interminable delays and
moved goalposts. In fact, the new 40c entry point (which saw even lower numbers during the
week) might even offer a spot to average down if you’re of the risk-taking ilk. In fact, sitting
here today Saturday and mulling over my own position while writing I’m more tempted than I
thought I’d be, but due to the more prosaic fact that I’ve recently deployed cash to BTO (long)
and PVG (short) I think it best not to dip too far into my own reserves on this one, so I’ll stay
with the position I own.
Chile: Legal challenges to mining
In 2012 the 70% Goldcorp (GG) / 30% New Gold (NGD) El Morro gold/copper project was put
on ice by challenges to the mine by local communities. Last month the freeze was lifted but last
week the project was again halted by the communities, who took their case to the Chilean
Court of Appeals and won a temporary injunction (18). Interestingly, this freeze came just days
before President Sebastian Piñera signed into law a new “Indigenous Consultancy” law on
Friday (19), one that bears great similarity to the law passed in Peru in 2011 and has been
greeted with protest by the very indigenous communities that it’s supposed to protect. They say
17

that the new law has greatly reduced their rights as per the previous law and the whole new
law was created and passed behind their backs.
Chile: Collahuasi delays expansion plans
During an interview last week (20), Jorge Gómez, chief executive of the Collahuasi copper
mine, second largest privately owned mine in Chile after La Escondida (50% Glencore-Xstrata,
50% Anglo American) said that although production and cost efficiency had picked up in 2013
for the mine the company had decided to shelve its plans for a $6.5Bn capex growth that were
expected to happen in the near future. He also said that the plans would be revisited “at the
right moment.”
Mexico: Miners to fight the (suddenly less scary) royalty
According to a report in CNN’s Spanish language service Expansión last week (21) ten mining
companies working in Mexico, all of whom clients of consultancy group Baker MacKenzie, are
going to mount a legal challenge in order to block the payment of the new 7.5% +0.5% royalty
that was passed by Mexico’s parliament last month. In the (translated) words of Jorge Ruiz,
partner at the firm:
“In our opinion, [the royalty law] damages diverse constitutional taxation principles such as the
principles of legality, proportionality, equity and end use of public spending, as well as diverse
human rights of the contributors.”
However, after reading pre-law approval the silly estimates from people such as Mexico’s
Chamber of Mining (Camimex) that total State burden would move from 40% to 57% under the
new law, Baker MacKenzie now estimates that the total extra burden on mining companies will
be around 3%, thanks to offsets to the royalty such as capital investment breaks.
Argentina: Big changes
The region’s biggest political news was that of the Argentina ministerial re-shuffle, that came
just one day after President Cristina Fernández de Kirchner (CFK) had resumed work after the
month off following her head surgery. The first chapter on Wednesday was big enough, with
the main changes bringing Northern Chaco province governor (well, now ex-governor, as his
resignation from that post is part of the deal) and loyal Kirchnerite Jorge Capitanich in as
Cabinet Chief (a key role in the Argentine government system and a big internal promotion),
along with the decision to remove FinMin Hernán Lorenzino and replace him with rising star
(and CFK favourite) Axel Kicillof, who brands himself as a Keynesian but his detractors call
Marxist in thought and deed.
But then Thursday brought the big news, that of the resignation of long-time Kirchner loyalist
and hard-liner Guillermo Moreno as Commerce Secretary, who has been replaced by one of the
Kicillof team players, Augusto Costa. Moreno was a key part of the Kirchner governmental set-
up ever since Nestor (RIP) came to power and fulfilled the role as the hard-man, the fixer, the
guy who would go into direct battle against the government detractors. His putting out to grass
is a big, nay massive signal that things are about to change in the way the government is run.
The repercussions and details from last week’s big moves will only reveal themselves slowly and
in the days and weeks ahead, but there’s a mountain of conjecture out there now and among
the more relevant, likely and most pressing for our (the outsider) needs are the following:
• Up until last week, Buenos Aires governor and loyalist Kirchnerite Daniel Scioli was
considered a lay-up for the government Presidential candidate in the 2016 elections.
That’s now changed and Jorge Capitanich is now a serious alternative for the
candidacy.
• The exit of Guillermo Moreno is assumed to be closely connected with the arrival of
Kicillof as FinMin. Whether he fell or was pushed, the removal of Moreno from the
scene will make Kicillof’s life easier and allow him to implement the changes he prefers
18

more easily.
• Axel Kicillof has said that there will be no drastic changes that will affect the lifestyles of
Argentines. However, the move to install him into the FinMin office and work closely
with fellow CFK loyalist CFK Capitanich must mean that some changes are on the way.
Be he labelled Keynesian, Marxist or any other economics school, will almost certainly
take a line of more government intervention in the economy and that, in general terms,
isn’t a line that will attract foreign direct investment to Argentina again.
• As for those economics changes, top of the agenda has to be to try and halt the
devaluation of the Argentine Peso (now U$1 = Arg$6.09 official rate, or U$1 = Arg$10
at the unofficial, so-called “dollar blue” street rate). This will likely happen in
conjunction with a reversal of the Central Banks’s fracturing of international currency
reserves with are down to around U$30Bn from the 2011 level of over U$50Bn.
• This means a high chance of new taxes, and already Capitanich has said that luxury
goods will become more expensive (22). “Those that want to buy luxury goods will
have to know that they’re going to pay more”, the exact quote from a presser on
Friday. Along with that, other measures that largely affect the internal economy are
being considered (23), such as price controls on foodstuffs, public works initiatives
(power stations, roads etc). As for more generalized taxes, it’s unlikely that Argentina’s
new governmental team can or even wants to turn the screw too hard on its
population, so the most likely place to turn for extra dollars is exports. That includes
the country’s agro lifeblood of soybeans and other arable crops, but there’s a potential
extra on exports of mining products in the offing, too.
To conclude, there’s not that much to go on for the moment but we can get to three general
conclusions:
1) CFK has recognized the need to address the deterioration of Argentina’s
macroeconomic data. This is a good thing and if the new team can create a turnaround
on the reserves, forex and inflation problems (which are of course interrelated) we
could see some real improvement in the country’s economy. That’s good for all.
2) However, we’re not going to see some abrupt move towards the type of economic
policy the North would approve of; in fact any new policy might take the country
further to the left.
3) We have to wait and see how the reshuffle changes the playing field, for mining
companies and for all others. I’m not hopeful of anything particularly friendly for FDI
and the best we can reasonably expect in the near-term is that it doesn’t get any
worse for the mining sector there. In the intermediate term, if policies start to help
inflation, improve the national currency and provide more reserves backbone there’s a
chance that Argentina becomes more attractive to investment. There’s plenty of time to
see how that works out, though.
The bottom line is that Argentina is still an unattractive place for your (and my) investment
dollars, mining or otherwise, and for the time being the avoid call is unchanged. As policy
changes are rolled out, we’ll get a better idea of where the country is heading in the medium
term, but that’s most definitely for another day and we can leave things at a practical level right
now. Avoid exposure to Argentina.
Market Watching
The proposed “bigger caps basket” or “low cost producer” basket
Further to the thought floated last week in the intro section of IKN237, I’m happy (and
somewhat humbled) to report reaction from you people was impressive and I got plenty of
19

mails, nearly all of them approving of the idea and many with smart and useful suggestions on
how to frame it
I’m going to wait until next week to advance this idea, as right now it’s a work in progress at
this desk and I’m trying to get to a point where I can offer you a decent and useful basket idea,
something that can help us all track what might turn out to be an important segment in the
2014 mining sector. What I will say now is that...
• Concentrating on low cost precious metals producers
• Featuring stocks with larger market caps than the normal IKN fare
• And importantly, not trying to be a HUI-tracker or mini-GDX
...are all priorities. Until next week on this one, thanks in advance and a big thank you for all
the encouragement and ideas sent in. If you have any others, feel free it’s not too late.
Three Cs: Colombia, Cordoba (CDB.v), Continental (CNL.to)
One of those “regional politics or Market Watching?” pieces, which goes here today because it’s
a little more specific about stocks than it is about the country scene (as opposed to the above
note on Argentina).
I get more questions on Colombia as a destination for mining investment cash than just about
any other country in South America, with perhaps Peru the only rival (but they tend to be about
specific local risk factors rather than national issues). It’s tough to answer the questions well,
because the issues involved are large and wide ranging therefore difficult to sum up in just a
few lines and as such, I’ve been meaning to write a longer piece on the subject of mining risk in
Colombia and how it’s been affecting the sector for a while, but without ever getting round to it
(kind of lazy as I am). However, last week saw a couple of things come together that
crystallized my thoughts on Colombia and this is why today’s extended note exists.
One of the better NRs out of exploreco world came last week from Cordoba Minerals (CDB.v), a
relatively new vehicle from the Simon Ridgway “Gold Group” stable (Fortuna Silver, Radius
Gold, Focus Ventures, others) that’s exploring the San Matias copper/gold property in the
Cordoba department (i.e. region or state) of Northern Colombia. The first four holes drilled by
CDB found very good assay returns, summed up in this way in the NR (24):
• 101.10 metres @ 1.0% Copper and 0.65 g/t Gold (2.37 g/t AuEq) in DDH-004
• 46.60 metres @ 1.31% Copper and 0.86 g/t Gold (3.11 g/t AuEq) in DDH-003
• 73.32 metres @ 0.84% Copper and 0.74 g/t Gold (2.19 g/t AuEq) in DDH-002
• 48.61 metres @ 1.0% Copper and 1.21 g/t Gold (2.93 g/t AuEq) in DDH-001
Not shabby. Not shabby in the slightest and all indications are that CDB is onto a large and
strongly grading porphyry deposit that will
be good to expand in size. The news went
down very well with Mister Market and CDB
jumped from a previous night’s close of 53c
to finish Wednesday at 63c, with volumes
that nearly made 1m traded on the day.
Encouragingly, volume stayed with the
stock on Thursday (388k traded) and Friday
(206k traded) and the stock finished the
week at 60c. That’s pretty good for the
week, though we do need to step back and
note that the prices at last week’s tops
weren’t out of the range we’ve seen since
CDB started trading, as this three month
chart shows.
20

It’s not a brand new discovery however, as it’s been in the hands of two private companies
(Sabre, connected closely to Continental Gold and the background Bullet Group that holds a lot
of concession land in Colombia) and Minatura Group, which also operates in the country. The
deal with Cordoba ostensibly entails CDB consolidating the properties held back to back by the
other companies and moving them forward a s a single project, but your author has also been
led to believe that once a round of financing is done by CDB (they’re looking to raise around
$10m, and fairly soon) there’s a strong possibility that Cordoba, Sabre and Minatura will merge
into one company. Because of the previous work done on San Matias, the drills reported last
week were always expected to show good results and although made for excellent and most
positive headlines, didn’t come as much of a surprise to those closely acquainted with the
project or the growing corporate set-up.
Or put another way, CDB is one that I’ve been watching with one eye in the last couple of
months and have conversed with people on the subject during the period, so I am interested
but I haven’t been a buyer. I’m not a buyer today, either.
The results last week were good, no question , no problem. But as noted above 1) they weren’t
unexpected 2) the vehicle on top of San Matias has some financial raising and probably some
corporate consolidation to do, which puts me off being an owner immediately and 3) most
importantly, it’s in Colombia.
Yes indeed kind reader, I’m still concerned enough by risk in Colombia, be it local or national, to
be leery about committing to the place too heavily and from what I’ve seen recently, that
concern is well-founded. We’ve heard a lot of positive talk from the national government of
Juan Manuel Santos about its desire to grow its hard rock mining industry but the reality is that
we’ve seen very slow legal improvement, time delays on reform, snail-like passage of promised
legislation through parliament. The country has not moved forward and as a result its “nascent
mining industry has more of a look of stillborn than growing and thriving here in late 2013.
We can add to the worries the upcoming Páramo decision, will be a verdict of sorts on wider
mining risk and is likely to be used as judgement on how the government really sees the
industry. We also have AngloGold Ashanti's Colosa, which has been stymied form development
by local anti-mining activists, as well as a lack of admin will, and this is an important case
because it’s supposedly the most advanced large-scale mining project in the country (or at least
it was until others caught up, due to the development blockages incurred). And finally we have
the ongoing FARC/Govt peace talks, which now find themselves at the same type of critical and
delicate phase they’ve been at before (when things fell apart). There’s a lot riding on these
talks, including the potential for a real and lasting peace in all of Colombia (not just selected or
de-militaraized parts) and perhaps more importantly the political capital of the current Santos
government, as failure would either leave Santos vulnerable at next year’s Presidential election
or if the failure comes after his re-election, would turn his mandate into the dead-duck variety.
There are plenty of people in Colombia (and for various reasons, some with good long-term
intentions and others less so) who want to see the talks fail, and if that were to occur, all bets
would be off, Colombia would step back into wider armed conflict and its political risk profile
would shoot skywards again. And that would affect us little mining investor people as well
because from there, any semi-exotic region of Colombia for mining (eg outside of safer part of
Middle Cauca or Santander) is again off limits: Remember Braeval.
Colombia has tremendous potential for exploration, discovery and development of hard rock
mining, particularly precious metals and copper. I'd like to buy the country in some way, shape
or form and be long, but until they get their act together, firm up the statute and show that
they're not just lip-service miner-friendly it’s difficult to get too enthusiastic about a specific
rock-only story such as Cordoba.
This brings me to Continental Gold (CNL.to), because its share price development is a clear
signal that it’s not just the minnows of the mining world such as your author who think this
21

way. This is the five year chart, as it shows where CNL came from, how high it got and where
we stand today:
CNL started life in early 2010, quickly caught fire and reached $10/share and then in the next
two years showed pretty strong volatility but still managed to bounce off a floor of $6 and this
time last year saw $10 again, though briefly. Then came this year of widespread sorrows and
CNL hasn’t escaped the carnage, now back from whence it came and Friday’s close of $2.78
gives it a market cap of $351m (one year ago today that was $1.14Bn), of which $120m is
covered by cash today (IKN estimate based on the last quarterly filing, dated Sept 30 2013.)
But it’s also an advanced underground vein mining project with a 43-101 compliant resource
that total 5.4m oz of high grading gold contained gold (M+I 1.64m oz Au at 13.6 g/t, Inferred
3.76m oz Au grading 8.8 g/t Au) as well as silver and zinc byproduct kickers.
The project may have its detractors and no mine is ever easy to build, but it’s advanced,
underground (less anti-mine enviro nonsense), in an established mining zone (ditto) and
furthermore has the type of exploration potential that gets CNL predicting a 10m oz in
resources come 2015, with production slated for 2017. The killer is that it’s currently selling at
U$43/oz Au in-situ EV which is a dirt cheap bargain for these type of ounces in size...or so it
might seem.
Why should that be? The best (only?) answer I can conjure, apart perhaps from the connection
this CNL team has to the almighty snafu that is Serra Pelada in Brazil, is that the obvious exit
strategy for CNL has always been to sell its mine to the highest bidder and see Buritica go into
production under Tier 1 ownership. And because Colombia has become increasingly unattractive
as a mining destination, due to the continued delays and problems in moving projects forward,
the zone has become a no-go for the big miners (who, incidentally, have enough problems of
their own on their plates right now, if you hadn’t noticed). CNL’s cash treasury is more than
enough to fund its ~$20m/quarter burn rate for the indefinite future but it’s nowhere near
enough to to build the mine and with the way this market is, there aren’t many players willing
to step up and fund in politically sketchy zones. Colombia has the makings of a politically safe
jurisdiction, indeed just a few scant years ago was marketed to the Nth degree in that way by
the newsletter charlatans and sellsider brokerage analysts with obvious agendas, but it hasn’t
lived up to the promise and unless things improve (see that little list above) the country will get
more on more and more no-go lists as time goes on.
Which brings me back to Cordoba Minerals (CDB.v). I see no reason to buy a pure rock story in
Colombia right now as after all, if I really wanted a Colombia-based raging bargain with great
rocks and excellent exploration potential, I could get all that and an advanced project from a
position in CNL, all at a share price 1/3rd of what it was just 12 short months ago. CDB.v
returned some great numbers last week, of that there no denying. Also, at ~$17m market cap
It’s a cheap exploreco with great leverage potential sat next to the 20X larger CNL.to. But,
22

ladies and gentlemen, it’s a pure rock story in a country that nobody wants to buy right now,
and for good reason.
To wrap this piece that tries to take three threads and tie them together up, a personal
retrospective can hopefully add a bit of light and help explain where I’m coming from. Over the
years I haven’t been against playing Colombia and its exploration stocks, as the following list of
trades (most closed, one still open) shows, but I have been at least wary and at times very
leery of exposing myself to its vagaries.
As far as I can remember and by checking the closed lists of trade, these are the Colombia
exposed positions your author has taken during The IKN Weekly years (NB: this list doesn’t
include stocks with minor exposure to Colombia, such as B2Gold (BTO.to) (BTG) via its 49% of
Gramalote)
• 2010 made 70% on Ventana (VEN.to) (a decent win)
• 2011 made 50% on Sunward (SWD.to) (a decent win)
• 2012 made 5% on Galway (GWY.v) (an arb trade that eventually made somewhat
more, but was booked at 5%)
• 2012 lost 18% on Sunward (BHV.v) (which got sold just in time, before the rot set in)
• 2012 lost 44% on Bellhaven (which was a bad loss)
• 2013 made 85% on Bellhaven (though this was a small trade on near-term newsflow)
• 2013 currently losing 27% on Eco Oro (EOM.to) (though the night is young)
Notes:
• There have only been seven trades made, and even then only on just five companies.
That’s a low number in my opinion (it surprised myself when I checked back, frankly)
and underscores my reticence towards the place.
• I haven’t always been dead set against trading Colombia explorecos. For example in
2010 and 2011 when bullish sentiment was at its loudest I jumped on a couple of
trades that were popular and the two wins were (even if I say so myself) pretty decent.
Those kind of returns seem a distant memory nowadays, though.
• However, apart from a very specific arbitrage trade on Galway that I bought after it
was put under friendly offer (it looked cheap, it was) and a small & specific newsflow-
based trade in Bellhaven (BHV.v) earlier this year that worked out well, Colombia hasn’t
been such a happy hunting ground.
• That’s a visual testament to my growing re-dislike of Colombia as a place for my
money. Now I’d agree that during my time avoiding Colombia I’ve also been making a
pig’s ear of trades in Peru, Mexico, Nicaragua, others. But all the same, setting aside
this zone has saved at least some heartache and overall, the call on the rising risking
and lowered attraction of the country for FDI in precious metals mining has been the
right one. If you don’t believe me, ask Eike Batista.
The bottom line: Colombia, in theory at least, is a better place to go minehunting than
Argentina. That’s a case of being damned by faint praise at the moment, however, as the
government inertia towards mining policy and the rise of anti-mine movements have stopped a
lot of the promising growth of two or three years ago in its tracks (with investors’ fingers
suitably burned as a result). The most worrying aspect is seeing the big mining companies
moving, walking, or even running away from projects that they supported until recently, which
is a combination of the rise in political risk perception in Colombia and the drop in world metals
prices. It’s natural enough for mining companies to batten down the hatches during the rough
times, but when your country has failed to crystallize its welcoming attitude, it makes it one of
the easiest to drop.
23

Colombia is by no means a dead duck, but it needs to get itself into shape sooner rather than
later. I’d be more interested in picking up some cheap CNL.to than some cheap CDB.v (or
several other names) right now, but don’t feel greatly tempted even by the newly cheap
Continental right now, either. Until the country makes itself pretty for the big mining company,
the big mining company is not going to buy CNL. Simple.
Conclusion
IKN238 is done, we end with bullet points:
• I went long for a trade in B2Gold (BTO.to) (BTG), which now depends on gold not
sinking further to be a winner. Itwill be cut if it goes too low in the days ahead. On the
other hand, Starcore’s (SAM.to) time is now up and will be gone this time next week.
• I’m now short Pretium Resources for all the reasons mentioned above. As for the
Snowden/PVG “representative models” compared to results, you might want to reflect
that 2+2=5 is no better than 2+2=3. This short is a near-term trade, however, as
there’s no reason to expect a full-scale price collapse. $4 will do.
• Argentina has seen big changes in its administration over the last seven days, but is still
a basket case until further notice and should be avoided. Colombia is becoming
unattractive as a mining FDI destination, as witnessed by the share price drop in once-
upon-a-time buyout target CNL.to. It’s not a lost cause, but needs to get its act
together.
• Minera IRL (MIRL.L) (IRL.to) didn’t do anything evil with its options award last week, it
simply shot itself in the foot by not explaining the whole story. A management error
and a bit too late to take it back, what with the market using the event as a great
excuse to dump a heap of shares. I shook my head a lot about IRL last week and am
shaking it still. Smart miners, crappy promoters.
• For those in the USA, enjoy your Thanksgiving Holiday (one of the nicest ideas for a
break there is, anywhere in the world). For the rest of us, remember that the US
markets are closed Thursday and then close early on Friday. As usual, traded volumes
will drop hard in Canada on those days too.
The top long-term picks are Rio Alto Mining (RIO.to) and Minera IRL (IRL.to). I thank
you in advance for any feedback. 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://finance.yahoo.com/news/pretium-resources-inc-bulk-sample-100000727.html
(2) http://incakolanews.blogspot.fr/2013/11/pretium-pvg-pvgto-is-subject-of-day-in.html
(3) http://www.pretivm.com/news/news-details/2013/Pretium-Resources-Inc-Bulk-Sample-Update/default.aspx
(4) http://www.pretivm.com/news/news-details/2013/Pretium-Resources-Inc-First-Bulk-Sample-Cross-Cut-Processing-
Results/default.aspx
(5) http://www.pretivm.com/news/news-details/2013/Pretium-Resources-Inc-First-Bulk-Sample-Cross-Cut-Processing-
Results/default.aspx
(6) http://incakolanews.blogspot.com/2013/10/trying-to-piece-together-pretium-pvg.html
(7) http://www.incakolanews.blogspot.com/2013/11/pretium-pvg-pvgto-is-subject-of-day-in.html
(8) http://finance.yahoo.com/news/minera-irl-ltd-announces-grant-130000224.html
(9) http://www.4-traders.com/news/SSSR-EPA-Recommends-Against-Federal-Water-Permit-for-Rosemont-Mine--
17482436/
(10) http://www.incakolanews.blogspot.com/2013/11/augusta-resources-azc-azcto.html
(11) http://finance.yahoo.com/news/augusta-comments-save-scenic-santa-233100320.html
(12) http://finance.yahoo.com/news/augusta-arranges-us-26-million-211500275.html
(13) http://finance.yahoo.com/news/panoro-increases-copper-gold-resources-210600947.html
(14) http://www.incakolanews.blogspot.com/2013/11/tough-market-for-explorecos.html
(15) http://www.canadianinsider.com/node/7?menu_tickersearch=BHV+%7C+Bellhaven+Copper+%26+Gold
(16) www.portafolio.co/economia/paramo-santurban-debate-limites
(17) http://www.vanguardia.com/economia/local/234755-comunidad-de-soto-norte-entrarian-a-paro-el-proximo-3-de-
diciembre
(18) http://noticias.terra.com.pe/internacional/latinoamerica/corte-apelaciones-chilena-paraliza-polemico-proyecto-el-
morro-de-goldcorp,b18b5b49c4082410VgnCLD2000000ec6eb0aRCRD.html
(19) http://www.aminera.com/index.php/mineria-nacional/item/1102-comunidades-critican-firma-del-reglamento-de-
consulta-ind%C3%ADgena-%E2%80%9Ces-un-acto-de-mala-fe%E2%80%9D.html
(20) http://www.aminera.com/index.php/categorias/item/1073-presidente-de-collahuasi-millonaria-expansi%C3%B3n-
de-la-mina-no-est%C3%A1-en-el-foco-inmediato.html
(21) http://www.cnnexpansion.com/negocios/2013/11/12/las-regalias-solo-rasparan-a-mineras
(22) http://www.s21.com.gt/pulso/2013/11/23/argentina-prepara-alzas-impuestos-bienes-lujo
(23) http://www.lanacion.com.ar/1641594-capitanich-analiza-contra-reloj-nuevas-medidas-economicas
(24) http://finance.yahoo.com/news/cordoba-minerals-announces-discovery-high-133000622.html
Appendix 1: Flash update dated Wednesday, November 20th
Good Wednesday morning, just gone 8:30am local time, a little under an hour before the open.
A quick note to say that as per IKN237 last Sunday and due to the weakness we see in gold this morning, I'm going to
look for an opportunity to buy some cheap B2Gold (BTO.to) (BTG) today as a near-term trade. This position will be kept
separate from the core position BTO.to already held and is with a near-term, quick trading outlook. Basically I'm going to
try and scalp a few percentage points for a quick trade win, nothing spectacular.
In other news, a sincere thank you for the impressive amount (really inbox-bulging) of feedback received regarding a
larger-cap tracker for 2014 (IKN237 intro). You've offered a range of opinions and some very good ideas as well. More
on the thoughts arising in IKN238 next week, I just wanted to acknowledge and thank here.
Appendix 2: Flash update dated Friday, November 22nd
Good morning, 10:15am local time.
Shorting Pretium Resources (PVG) (PVG.to)
A brief note: These are the reasons that I can keep cash on the sidelines. The market is piling into Pretium this morning
and my own line in the sand for overbought hype, that I set at U$5 when reading and digesting this morning's news...
25

http://finance.yahoo.com/news/pretium-resources-inc-bulk-sample-100000727.html
...was busted a few minutes ago. I'll be shorting PVG on the US ticker today. More on the thinking behind this new short
position in IKN238, this Sunday.
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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