IKN #244Premium

The IKN Weekly
Week 244, January 5th 2014
Contents
This Week: A reminder of the IKN Weekly January schedule.
Fundamental Analysis: About last year, Coro Mining (COP.to): New member of The Copper
Basket and potentially a new buy.
Stocks to Follow: Overview, Fortuna Silver (FVI.to) (FSM), Rio Alto (RIO.to) (RIOM), Pretium
Resources (PVG.to) (PVG), Tahoe Resources (TAHO) (THO.to), Dalradian Resources (DNA.to),
Minera IRL (IRL.to) (MIRL.L), Network Exploration (NET.v), Darwin Resources (DAR.v).
Copper Basket: Overview, AQM Copper (AQM.v), Curis Resources (CUV.to), Cordoba Minerals
(CDB.v), Reservoir Minerals (RMC.v), Augusta Resources (AZC.to) (AZC).
Low Cost Producer Basket: Overview, short intro.
Regional Politics: The quiet season, Nicaragua’s top export is gold, Uruguay to sign
agreement on Aratiri iron ore mine by January 20th, Chile debates desalinated water for mines,
Peru: A measured article on Gregorio Santos and Cajamarca’s election year.
Market Watching: Animas Resources (ANI.v) provides a lesson, Gold Resource Corp (GORO):
Friday augurs well, Gran Colombia Gold (GCM.to) redux, Phoslock (PHK.ax): No trade.
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 reminder of the IKN Weekly January schedule
Your author is taking his summer break with family, visiting interesting places and getting bitten
by new sizes of mosquitoes during January, so as a reminder here’s how The IKN Weekly will
run this month:
• January 12th: Normal service next weekend
• January 19th: No Weekly (will be in remote location all week)
• January 26th: Reduced length Weekly (numbers/important developments covered)
• February 3rd onwards: Normal service (expected)
Also, between January 13th and January 28th the blog will have little or no new posts. Finally, by
demand I’ll send a photoshow through once the trip is done. Expect toucans and monkeys.
Fundamental Analysis of Mining Stocks
About last year
What follows may look at first like another installment of “author beats himself up”, it’s not.
This time the purpose is to review 2013, look at trades good and bad, look at things that helped
mitigate the overall bad year and even consider the things we got right on these pages, all with
1

a view to education and better decision-making in the year to come.
To this end, the main part of ‘Fundamentals...’ today takes a backwards look at the year just
gone in The IKN Weekly and picks over the debris of a very poor one for in mining stocks. To
do this and rather than dwell on the stocks we currently have open (and their awful
performance in 2013, Rio Alto step forward please) the vehicle used is the positions closed in
2013. Here’s that list which is now found in the appendices, along with other years:
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
Starcore Intl SAM.to nov'13 C$0.235 08-sep-13 C$0.17 -27.7% ST trade didn't work sm loss
B2Gold BTO.to dec'13 C$2.22 28-nov-12 C$2.16 -2.7% closed ST trade to raise cash
The idea was prompted by the process last week when I split off the closed positions from the
open ones as per the end of every year and stick them down at the bottom of the weekly with
all others for future reference purposes. The first thought when doing so was to count up the
closed positions (there are 26 of them) then count the green and the red ends to the trades
(for the record, 12 of the trades ended in percentage wins, 14 in percentage losses. The
problem there is that at first glance, or more pertinently somebody who turns up and reads the
results in the future, it would suggest that 2013 was a neutral, or slightly negative year for the
Weekly when that’s far from the case. Even aside from the amount of red ink still showing on
the open positions below (again, check RIO.to first as it’s the biggest weighted) the year was a
negative one in act and deed for both model portfolio and true financial results personally,
which means the green/red split you see above is not at all representative of the year gone.
So I spent a few hours thinking over the list, remembering each trade set-up (of which I could
give you a blow-by-blow commentary, and even started to write on out, but it would be tedious
to read I’m sure so no) and drawing a few conclusions. It soon became clear that the majority
of the ones that mattered turned out to be bad trades, which is why my overall portfolio value
went down in 2013, but there were a few good calls along the way as well and some of those
were as didactic as the bad ones. Meanwhile, even some of the unprofitable closed trades (i.e.
bad, sensu stricto) had mitigating factors which were good lessons learned as well. Others still
2

were either plain lucky (e.g. selling BCM in May and in September, both times just before it
dropped nastily), or unlucky (the incursion into SAM.to was taken with risks clearly understood
and through no fault of its own failed, so I count myself as unlucky on that small trade) or not
of any great importance, or ended up neutral with no great tale to tell. In the end I’ve boiled it
all down to six examples and without further ado, here’s the result and lessons that can be
drawn.
Bad trades
There were plenty and I’m not going to sugarcoat that. On the other hand you’re not going to
have to sit through a play-by-play on idiot-moves-what-I-did, because for one thing it’s boring
and for another today isn’t going to be another one of those pieces where I beat myself up in
public. But self-critique is indeed in the cards as long as it’s constructive, so I’ve picked out two
of the many negative closed trades above for closer consideration:
• Lupaka Gold (LPK.to). This was opened in late 2011 and I held it through the bad
2012 and into 2013, always waiting for a bit of upswing and decent news out of the
company. It became clear that I’d held onto a duffer of a stock and the main reason I’d
held badly is that I didn’t understand the metallurgical limitations of the project’s main
deposit, Crucero. The lesson I learned was not to take a company’’s word on matters
that are outside my field of speciality. The mistake could have been avoided, or at least
mitigated, either by being more industrious and boning up on the subject, or by getting
advice from people who I trust and are smarter than me about getting metal out of
rock.
My bottom line lesson: Don’t be lazy! There’s always things to know and new
information to learn; major weak points can be unearthed by investigating a minor
aspect to a project or company story.
• OceanaGold (OGC.to): This trade was opened in September 2012 and closed in June
2013. The mistake here was timing, both into the trade and out of it. On reflection and
using a dose of that 20/20 hindsight, I bought in to the chatter and speculation that
gold was going higher into the 4th quarter of 2012, which means I chased into the stock
and bought it for its momentum, not for its fundamentals (that were being weighed
down by its debt position and made it more leveraged than I cared to admit to myself
at the time). What made this one particularly bad was that I sold on the precise flipside
and very close to its lows in mid 2013. I can justify that call to myself somewhat by
noting that it was sold in order to raise general portfolio liquidity at a time when I
wanted more cash on hand, but in truth it’s a minor silver lining to a majorly bad round
trip.
My bottom line lesson: Timing matters. OGC is a decent enough company and has
executed pretty well over the last two years, but the stock market is about buying low
and selling high, not buying good companies and selling good companies.
Good trades
Yes, the bad trades outweighed the good, but along the way there were some good calls, too.
Therefore in the same style, here are two picked out and lessons to be considered (and
rammed into my own brain, more than anyone else’s):
• Most of the short trades: This includes the closed trades in Gold Resource Corp
(GORO), Tahoe Resources (TAHO), MAG Silver (MVG) and a couple of minor ones that
ran smaller money and/or nearer-term timescales (USGT, AG, FSM), though it should
be noted clearly that my latest and still open incursion into Tahoe Resources (TAHO) is
still underwater due to bad entry timing (see OGC comments above). The underlying
good call on these trades over the last year was the decision to make them. Once 2013
had shown its hand as a tough year in the making, I decided to stop talking about
shorts and start making them an active part of The IKN Weekly service. I’d been
tempted to do more short recos and trades previously but was stopping myself through
a general lack of...well, courage I suppose.
3

Next, believe me on this one; I’m wide awake to the plain and undeniable fact that the
shorts have only worked as well as they have because the market is a bear market. I’m
not trying to claim some mystical power and deep insight as to stock fundies, because
you could just as easily have shorted Rio Alto (RIOM in The USA) and made a big profit
while I was telling you to hold on to your long position and think about its great
fundies. Therefore the “good trade” here is less about the stock picking and more about
the decision to start shorting more often, make it an official part of the mix here at the
Weekly and offer a new dimension to the service.
Nowadays short plays as an established part of The IKN Weekly and importantly, I try
hard to make the ones that get to the ‘Stocks to Follow’ accessible to the retail player,
i.e. companies quoted on the easier to short US exchanges rather than the Canadian-
only market (e.g. South American Silver (SAC.to) a couple of editions ago was only a
headsup, not an open trade).
My bottom line lesson: Short trades on The IKN Weekly are here to stay. I like
offering them as part of the service and thankfully, they’ve managed to take the edge
off the losses that long trades have generally seen in the period. They also suit my
default cynical attitude towards the junior mining market, so now that I’m not scared of
making a public short call and putting my money on the table, expect them to continue
popping up.
• Selling half of B2Gold (BTO.to) in August: I remember this one because i
managed to sell at a peak moment when the whole market was rocking about this
company’s sector-beating virtues. The call to sell half and add a large wedge of cash to
the portfolio position was prompted by the desire to hunker down more and raise
defenses and was contrarian for that period in question. And even though I only sold
half my shares and they subsequently dropped, I still think I sold the right amount
considering the longer-term perspectives preferred
My bottom line lesson: Be contrarian! It’s easy to preach, it’s harder to do and
sometimes the main problem is working out what you need to be contrarian to. But it
pays to zig when others zag and at the very least be critical of accepted wisdom or
unanswered opinions held by all. IO am a contrarian by nature but it’s a skill I need to
develop and apply to other, perhaps wider areas of trading and the markets (for
example, the metals prices and sentiment there).
Mitigating decisions worthy of mention
The final two lessons to take away from my bad 2013 come from trades that in their entirety
fall somewhere between the bad and the good mentioned above. This time the trades were
ultimately bad and that’s not in any doubt, because the acid test of “sold for less than bought”
is evident and therefore, capitalism’s clear rules say fail. But what I’m more interested in is
learning lessons from my mistakes and actions in order to get just a little bit better at this
discipline, so these last two feature bad trades that ended not as badly as they might have
done:
• Lachlan Star (LSA.to): This trade started in September 2012 and finished early last
year, in February 2013, by which time it had made me a 36.7% loss. So fail is fail, plain
and clear.
When the trade was opened, via analysis and NOBS report, the idea behind owning LSA
was to have a smaller (than FVI, BTO, RIO etc) investment in a gold producer with a
high cash cost profile. The premise was to take a chunk of leverage into the portfolio
and enjoy a big bounce upwards if gold went higher and as a result, its mine went to
very profitable. At the time LSA was also a growth play as it promised the market better
production at a lower cash cost in 2013 compared to its 2012, which wasn’t much more
than a start-up/ramp-up year for the operation. However, when opening the trade I set
myself a limit on holding the stock if gold didn’t perform well. According to the model
4

the pinch point for LSA would be if gold dropped under U$1,500/oz as that was where
my breakeven was set even after factoring in the production growth expected.
As things turned out (and as you’re aware, gold started 2013 badly and got worse
quickly. When it dropped to U$1,500/oz I clearly remember it holding and wobbling
around that number for a few days and so a call had to be made; hold LSA and hope
for a rebound, or sell it for a loss. I sold and took the loss. As thigns turned out it was
the right decision, as this chart that compares LSA to the gold ETF (GLD) shows:
The sale happened right on the cusp of a big waterfall drop and I got out before a lot
more damage was done.
My bottom line lesson: Stick to the plan! You can’t always pick winners (unless you
live in the cloud cuckoo land that some newsletter writers seem to inhabit) and losers
will happen along the way. Hopefully less than the winners as was not the case in
2013, but even in the best of years you’re going to take a hit. If so, once the tolerance
limit is reached, hit the sell and take the loss. I know this is still a weak point in my
armoury despite the good showing in LSA this year, which is which this lesson gets an
airing today. I need to remember my own good examples and apply them more often
(for a recent example, I’m particularly guilty about not selling IRL.to when I should
have sold it).
• Aurcana Corp (AUN.v): My trade in AUN.v started in November 2012 and ended in
April 2013 with a near-50% loss, so yet again fail is fail.
AUN was opened in November with a relatively small position to take advantage of a
company that had disappointed the market with a lack of delivery on numerous
occasions in 2011 and 2012, but seemed to be on the cusp of real progress as it finally
brought its Shafter mine into commercial production. Vibes were good, it was
significantly undervalued compared to peers even if it only delivered partially on its
somewhat optimistic plans for 2013, the silver price was holding at a level which made
it at-least breakeven through its other operation, La Negra. Indeed December came
with the news we wanted, that Shafter was now at commercial production levels and
for a while, the trade went into the green.
The bad started in 1q13 when silver dumped and AUN was caught up in the massive
downdraft. By the time early April came I was 50% down on my position, but then on
April 11th the company published its 1q13 numbers and disclosed, for the first time that
year, that it had decided Shafter in fact was not in commercial production. At 5am on
April 12th I sent out a Flash update calling sell on AUN and that update finished with
5

these words:
“For what it's worth (very little) I personally feel downright stupid for
hanging on in this stock during the first part of 2013 and being fooled
this way by a management team with a previously marked patchy
track record for delivery.”
It’s safe to say that it’s better to feel stupid than to feel poor. This chart shows what
happened to AUN.v stock starting on April 12th and finishing last Friday, compared to
the silver ETF (SLV) as benchmark:
Put simply, although nearly 50% down on my trade, it was the right decision to bail
and bail immediately on the stock, because it’s now down another 85% from April 12th.
My bottom line lesson: If a story changes, get out! We could I suppose also go for
“do not trust any mining company management team”, or perhaps a little more
generously “don’t trust any company that hasn’t proved its worth already”, but the
lesson I want to remind myself about is how you buy a company for reason X, then
something happens and the company says “Yeah well, we have this cool reason Y now,
hold on, things are going to be great!”. Unless there’s very good reason to have faith in
a changing story (e.g. I cut Focus Ventures some slack and it’s paying off), a changed
story is a sold story. Any company you investigate, whether you end up buying into
their stock or not, should only get one chance of proving itself worthy of my trust. This
is one I’m usually quite good at applying, but I’m aware that I still let the error creep in
on occasion. This stark example of Aurcana and my good mitigating call to get out as
soon as they’d double-backed on their word, is one to run with more often.
And so ends our slightly meta yearly review. Now for some forward looking thoughts.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Coro Mining (COP.to): New member of The Copper Basket, potentially a new buy
As well as making its debut in The Copper Basket today, I’ve started to take a renewed interest
in the potential Coro Mining (COP.to) offers as a trade or investment vehicle in 2014. This stock
is one that brings back happy memories, as back in late 2010 (those heady days when juniors
were popular and liked) I bought and rode this up from under 60c to above $1.20 on the back
of its permitting schedule progress at its San Jorge mine in Mendoza State, Argentina, then also
(and for once correctly) sold at the right time and for the right reasons, warning that San Jorge
would probably not get its final permits granted (it didn’t and sunk as seen in this chart below).
6

Since that time it’s been through quite a lot and I’ve kept an eye on the stock without being
truly tempted back, mainly because of its legacy with the San Jorge project and its heavy
burden on the corporate structure. However, early last month the news (1) that COP was
getting rid of San Jorge on reasonable terms and would be able to get on and concentrate on
its Chilean asset development has seen my interest return, as well as it being at what looks like
a very accessible entry level pricewise.
To cut a long story short, I like where COP is going and on-and-off I’ve been working up a
model for the stock and considering it as a potential buy. I’m not ready to dive in yet for
reasons that include a lack of urgency vis-à-vis the market (these smallfry stocks don’t seem to
be in a hurry yet) and wanting to fill a few gaps in my personal DD before getting comfortable
enough. However, I don’t want to keep my positive thoughts about “new COP” (because it
really does look different, leaner meaner and more promising all of a sudden) to myself and
encourage those readers looking for a potentially interesting and throwaway cheap copper
exploration story to have a look. What’s most to like about COP today is that unless it has a
whole run of bad luck and/or copper prices fall to bits, downside looks very limited, reasonable
upside appreciation probable and there’s at least two shots at a real discovery and big sized win
if things go well.
Anyway, consider this a headsup on a stock that I now have high on my shopping list of
potential buys for 2014.
Stocks to Follow
Another good week for the list (hey, I could get used to this feeling) with nine of the thirteen
positions making weekly gains (RIO.to, IRL.to, BTO.to, LRA.v, RIO.to trading position, EOM.to,
DNA.to, FVI.to, DAR.v), two stocks unchanged (FCV.v, NET.v) and just the two short positions
showing small losses (TAHO short, PVG short). The biggest percentage moves were all
upmoves, including Darwin Resources (DAR.v up 55.6%), Eco Oro Minerals (EOM.to up 21.9%)
and Dalradian Resources (DNA.to up 13.1%), but your author’s pocket once again benefitted
most from the ongoing recovery in Rio Alto Mining (RIO.to up 6.1%).
Please note that as per the turn of every year, the 2013 closed positions are now found in the
appendices below, along with all other closed trades of the previous years.
We currently have 13 open positions on our ‘Stocks to Follow’ list, two less than our self-
7

imposed maximum. Nine are in the red, four are in the green and 2014 has started better than
2013 ended.
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$1.75 -23.9% best LT value
Minera IRL IRL.to hold C$0.35 22-jul-12 C$0.195 -44.3% top pick called at 24c
Longs
B2Gold BTO.to buy C$3.07 28-nov-12 C$2.31 -24.8% sold 1/2, rest rides. Quality
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.95 -17.4% solid biz model, LT hold
Rio Alto Mining RIO.to str buy C$2.06 07-jun-13 C$1.75 -15.0% re-add Dec'13 avg downx2
Eco Oro Min. EOM.to hold C$0.50 22-sep-13 C$0.445 -11.0% st pol risk play, added
Dalradian Res DNA.to hold C$0.65 27-oct-13 C$0.69 6.2% Avg down again
Fortuna Silver FVI.to hold/sell C$2.80 23-dec-13 C$3.12 11.4% may close next week
Shorts
Tahoe Resources TAHO short U$13.10 08-apr-13 U$16.66 -27.2% port hedge, easy2b short
Pretium Res PVG short U$5.38 22-nov-13 U$5.29 1.7% new short, news driven
Smaller/Riskier
Focus Ventures FCV.v spec buy C$0.175 01-jul-12 C$0.215 22.9% revised tgt 25c
Darwin Res DAR.v spec buy C$0.10 14-jul-12 C$0.07 -30.0% drilling again soon
Network Expl. NET.v hold C$0.01 22-jul-12 C$0.005 -50.0% V. small spec, foothold
2009, 2010, 2011, 2012 and 2013 closed positions in appendices below
Now for some notes on a selection of the above stocks.
Fortuna Silver (FVI.to) (FSM): Possibly closing next week. It was designed as a very
near-term position and that’s what it’s going to be. I thought hard about sending a Flash
update out on Thursday morning and selling my FVI at around $3.16-$3.18, as the stocks had
started to look a little near-term toppy to my eye. In the end I decided to hold out for another
day and as it happened FVI and other leader juniors dropped, even though gold and silver had
a positive day.
So be it. As noted last week, I’d slated in perhaps $3.30 for my exit point on FVI and that
thought didn’t help my sell decision on Thursday either, but the target is not set in a any type
of stone and if there’s no more upside left I’ll take what’s on offer, no sweats. I’m keen to see
how Monday opens at the very least, but if you see a “Flash: Closing FVI” arrive in your inbox
next week don’t be surprised.
Assuming an out at (or perhaps above) today’s $3.12, this has been a successful flip-type trade
and although it’s not going to make any difference to my lifestyle, welcome as such.
Rio Alto Mining (RIO.to) (RIOM): RIO was the subject of the Flash update on Monday
midday (see Appendix 1) that told of the
RIO.to: Gold production and forecast for 4q13
word from the La Arena area that RIO has 70000
70000
put in a top quarter of production and looks 60000 55973 58081 56511 59157
like breaking 70k oz Au produced/sold for 48467
50000
the period. This chart (right) shows how I
40000 36355
now see the quarter coming in compared to 30548
30000
previous quarters and if that 70k oz number
20000
turns out to be correct (or even just a little
10000
hot), RIO is going to beat its 2013
production guidance of 190,000 oz – 210,000 0
oz gold upper end by 3k or 4k oz. Whatever
happens, it’s a cert that the company is
about to announce a record quarter.
8
21q1 21q2 21q3 21q4 31q1 31q2 31q3 tse31q4
Oz Au
source: company filings, IKN ests

As for the timing on those official numbers, we probably won’t have to wait long and may even
have news this week, as during the course of 2013 RIO.to came out with production numbers
between seven and eleven days after any quarter’s end. And yes, I’m expecting the reaction to
be positive.
Meanwhile over at the trading desk the stock had a good week, even after hitting selling
pressure on Friday as profit-taking seemed to be the flavour of the hour. That’s fair enough in
this current market atmosphere and nobody should take any blame for locking in a profit of any
type (I’m currently playing FVI for precisely the same reasons).
Pretium Resources (PVG) (PVG.to), Tahoe Resources (THO.to) (TAHO): The two short
positions rose with the general tide, but notably by a lower percentage than the average. Which
was nice. Not much to add here at the moment, as the likelihood is that both of these rise and
fall with the tides therefore they fulfill their role as short anchors to the net long of the
portfolio. The potential catalysts for the stocks are a financing in the case of PVG (fully
expected in 1q14) and in the case of TAHO, its first production report for the 4q13 period just
closed. I’d expect that one to be push quantities and steer clear of costs incurred, as Escobal
was still ramping and unlikely to be FCF+ in the quarter just gone.
Dalradian Resources (DNA.to): DNA made a move after the previous week’s interestingly
high volume and here we are with a new blob of green on the above open list (still rare, but
one more is welcome as a morale-booster if nothing else). DNA is going to start its now
permitted underground drilling program any day now and that might be the reason for the
anticipated pop on low-ish volumes. It’s welcome enough but until true volume starts to flow
through there’s no reason to get all excited here.
As for my personal position, I didn’t get any ‘last tranche’ sub-60c before it moved, but no
biggie as the slices I’ve been adding are small anyhow. From here I’ll wait, either for a drop
back to a price at which I can average down a tad more, or I’ll happily add if it starts to move
upwards on volume and show real life. But where it is today is strictly watch’n’wait.
Minera IRL (MIRL.L) (IRL.to): Half a cent up on the week, with modest volume sin both
Toronto and London. So little in the way of market action to report, but the vibes from
Argentina are good as the build-out of the Don Nicolas mine is now getting plenty of Spanish
language media coverage (with remarkably little pushback, it has to be said).
Network Exploration (NET.v): “Any reason why you’re still holding on to NET, other than
wanting to record a 50% loser?”, was the question in so many words from one reader over the
new year hump, part of a wider ranging mail that was fun to read (thanks, you know who you
are). Well for one thing I’m not worried about having a blob of nasty red on any closed list and
for another the amount of cash in play is very small, so neither of those matters are an
impediment. More to the point, as things stand today I don’t need the space it’s taking up on
the list and it’s doing nobody any harm, so it can stay for a while. But I totally agree it’s been a
zero trade so far and nary a wink of trading going through the position, either. So let’s leave it
there til I get back from the family break and then, end January be a little more proactive about
its fate on the list.
Darwin Resources (DAR.v): A very decent percentage move thanks to somebody paying up
for a mere 23k shares on Friday (and let’s have some crystalline context here, we’re talking
about a tiny $1,500 or so in trades), but yet again much more akin to a snap-back on low
volumes than any market tell.
We’re in the middle of the drilling campaign at Suriloma that was announced as a go on
December 5th. Most recent word from the project is that the drilling crews have just re-started
after the traditional Christmas break and although progress in December wasn’t quite as fast as
the company had hoped, things are still reasonably on track and we thanks to the complete lack
of backlog at assay labs at the moment, we should get the first two holes of the series reported
9

by the end of this month, January 2014. By my reckoning that’s about two weeks later than the
optimum timeline and I can handle that.
We remind readers that DAR is aiming for a different target than the first set of drills that was
sunk in mid-2013 and came back with mixed results. In that program, the idea was to see
whether there was enough bulk oxide thickness to make a simple open pit operation. This time
the company is going deeper and aiming for a couple of specific targets to one side of the zone
that show promise as higher grading epithermal sulphide prospects. The ballgame is leverage to
market cap, as DAR’s share count is still tight and with a market cap of under $2m, anything
interesting from the truth machine can see this share price pop handily from the current low
levels. This is a pure, straight drill spec in a tinycap exploreco, with a small (not tiny, but small)
amount of cash in play which always has to be the type of money you can lose totally without
regret...well, without regretting for more than a day.
The Copper Basket
After one week of 2014 The Copper Basket is showing a 4.26% gain to level stakes.
company ticker price 1/1/14 Shares out Market Cap current pps gain/loss%
1 Lumina Copper LCC.v 6.29 43.81 276.00 6.30 0.2%
2 NGEx Resources NGQ.to 1.43 168.71 242.94 1.44 0.7%
3 Reservoir Min. RMC.v 4.97 41.76 218.40 5.23 5.2%
4 Augusta Res AZC.to 1.51 144.41 205.06 1.42 -6.0%
5 Copper Fox CUU.v 0.375 402.96 143.05 0.355 -5.3%
6 Hot Chili Ltd HCH.ax 0.425 333.11 141.57 0.425 0.0%
7 Nevada Copper NCU.to 1.35 80.5 105.46 1.31 -3.0%
8 NovaCopper NCQ.to 1.60 53.4 87.04 1.63 1.9%
9 Panoro Minerals PML.v 0.35 204.71 79.84 0.39 11.4%
10 Western Copper WRN.to 0.76 93.68 76.82 0.82 7.9%
11 Curis Resources CUV.to 0.57 74.79 47.12 0.63 10.5%
12 AQM Copper AQM.v 0.11 139.05 18.08 0.13 18.2%
13 Coro Mining COP.to 0.10 160.8 16.08 0.10 0.0%
14 Cordoba Min. CDB.v 0.45 31.88 15.94 0.50 11.1%
15 Oracle Mining OMN.to 0.27 49.03 14.71 0.300 11.1%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg 4.26%
Out with the old and in with the new.
The first thing to note is that there’s been a late change to the composition of The
Copper Basket. I’m not above hearing out lobbyists (though I don’t take ‘campaign donations’
of any sort), so I listened and acted on reader BV’s heartfelt plea (ok, not quite that bad, but it
was a decent argument) to keep Oracle Mining (OMN.to) and drop Strait Minerals
(SRD.v) from the list. In the end, even though I quite like SRD as a tinycap prospect and will
continue to watch its progress carefully, particularly when the first drill results come back from
the Alicia JV with Teck, BV argued that SRD is both too small market cap wise to be
representative and its traded volume history shows that it’s not a useful marker, either. After
consideration I agreed and as OMN has put in a bit of a spurt and shown some life in the last
four or five weeks, it’s saved from the chop with SRD excluded instead.
Next up, let’s remind all those who’ve read this far (maybe half of you) that The Copper Basket
is not a list of recommended sector buys, rather it’s a list that’s (at least envisaged to be)
representative of the sector, with good bad and ugly, with larger and smaller market caps, with
advanced stage projects and earlier stage exploration plays. To underscore this, here’s a
personal best guess as to the fate of the names in the year ahead, with five names I’m calling
10

as potential winners, five to remain neutral-ish (let’s say +/-10%) and five that I call as
underperformers:
IKN best guesses for the fate of Basket components
Positive in '14 Neutral in '14 Negative in '14
RMC.v NGQ.to LCC.v
HCH.ax AZC.to CUU.v
CUV.to NCU.to NCQ.to
COP.to WRN.to PML.v
CDB.v AQM.v OMN.to
By the way, apart from the warm feeling I’m developing for Coro Mining (see above, though no
decision yet) I wouldn’t put too much stock into that little table; There’s an awful long way to
go in 2014 and any of those companies’ situations can change greatly as the year progresses,
not even mentioning the way that the underlying metal is bound to influence things. My
guesses (and they’re not much more than that at this point) are are good as yours.
So to the start of the 2014 Copper Basket’s existence, and we’re marking Friday’s closing prices
against the closes of December 31st, which makes for a shortened week of course but also gives
us a clean benchmark for the rest of the year. Therefore in the two day week we saw a full and
handsome ten of our 15 charges make gains (LCC.v, NGQ.to, RMC.v, NCQ.to, PML.v, WRN.to,
CUV.to, AQM.v, CDB.v, OMN.to), two stay unchanged (HCH.ax, COP.to) and just three register
losses (AZC.to, CUU.v, NCU.to). Best of the moves in percentage terms were from AQM Copper
(AQM.v up 18.2%), Panoro (PML.v up 11.4%), Cordoba (CDB.v up 11.1%), Oracle (OMN.to up
11.1%), NovaCopper (NCQ.to up 11.1%) and Curis (CUV.to up 10.5%), all that means plenty of
bargain hunters showing up in the junior copper space in the first trading days of 2014.
Over in the copper pits, metals prices drew back from the end-year pop above recent resistance
levels (noted last week) and this weekend find
themselves resting at the upper $3.35/lb level
of the previous trading range. This follows on
from the arguments of lats week as to
whether what we saw was a breakout or not
and it’s fair to day that the jury’s still out on
this one. As you should be aware by now, I’m
mildly bearish on the price prospects for
copper at the moment (unlike the apparent
vast majority of market commentators, who’ve
been out in force with the turn of the year,
rah-rahing every metal out there including
copper) but it’s worth reiterating that one of
the reasons why I’m bearish is the exact same
one used by bulls to justify their call, that of
dropping inventories.
Let’s consider the inventory tracking chart
featured in IKN243 again and here it is,
showing that the big inventory build-up came
in the first six months of 2013 and it wasn’t
some sort of accident, either. Some of the world’s largest financial and metals operations (eg
Goldman Sachs, Glencore, JP Morgan, Trafigura) had cottoned on to the idea of taking control
of the world’s metal storage warehouses (not just copper, as Alu and Zn have been the poster
children for the most distorted markets), allowing normal inflow but blocking outflow and in this
way making big money on rental charges for the held copper. They also gamed the system by
inflating the cancelled warrants and re-cycling the inventory time and again (as we carefully
watched last year) as the bet also involved waiting for Chinese demand to pick up at the end of
2013 and beyond (if you can recall, this time last year it was all handwringing and sweaty
11

worries about the end of the Chinese economic expansion...seems a long time ago).
Copper inventories, per month 2012/2013
1000000
800000
600000
400000
200000
0
12
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj luj gua pes tco von ced
Mt Cu
LME Shanghai Comex
source: Cochilco
So part one of that plan worked, copper inventories ballooned and GS, Trafi and friends cashed
in on the rentals, but when the LME clamped down on its loopholes and introduced (or at least
threatened at first) to change the system, it was time for the warehouses to empty. However,
what we’ve seen is a distinct lack of upturn in copper prices while inventory levels drop, which
of course is normally a bullish signal but in the topsy-turvy world created by the financial guys
playing their games, has failed to materialize this time.
We’re now back at the roughly the levels of inventory seen before the shenanigans started and
as we’re now moving into the Chinese New Year shadow period, there are plenty of eyes on the
inventory numbers which, if theory holds, should start to give a clearer and more honest signal
about the state of true supply and demand in the metals world.
Rounding off with the weekly copper inventory changes and once again, more depletion to be
reported. Total world stock levels dropped by 17,364 metric tonnes (3.4%) to stand at
499,644mt, under the psychologically important 500kt level. Of that total most left the LME
warehouse inventories, down by 11,875t (3.2%) to finish the week at 359,075mt. Comex stocks
were down just 15mt to 14,915mt, while Shanghai Future Exchange warehouse numbers were
down by 4.1% (5,474mt) to 125,654mt. Time will tell whether the cycle of dropping inventory
is about to change; I think it is and if so, it wouldn’t be a bullish signal by any stretch of the
imagination.
Now for some updates on a few of our component stocks:

AQM Copper (AQM.v): As part of the list renewal this week, I checked over the current share
structure of all 15 components and when I got to AQM Copper (AQM.v) didn’t feel so very
proud of myself. That’s because I’d missed that (and to quote the company literature), “...on
November 15, 2013, the Company completed a non-brokered private placement consisting of
an aggregate of 33,477,727 common shares in the capital of the Company at a price of $0.11
per common share for total gross proceeds of $3,682,550.” That puts AQM on a S/O total of
139.05m and a market cap of just over $18m and it’s also useful treasury cash that will allow
AQM to cover its own G&A and office expenses while it’s carried along the exploration and
development track at Zafranal by the optioning-in companies.
Trading-wise, the percentage price move was strong but volumes were weak, so don’t read too
much into that one yet. Still, it wasn’t so very long ago that AQM was a $4m market cap
company (late June to be exact) so even if it jags back inside its trading range to 10c or 11c,
the recovery is in place.
Curis Resources (CUV.to): This is the only other stock with a significant change to its shares
outstanding figures (others added a few K here or there due to options/warrants exercises) as
its share count number now includes the placement with Taseko (TKO.to) that closed on Friday
evening (2) which added 11.667m shares after their sale at 60c a pop and also means CUV
added $7m in gross proceeds to treasury, which is useful cash for the company.
Over to the ongoing battle between CUV and the town of Florence, where last week was
marked by Curis (aka Florence Copper locally) handing over to the courts a large data dump of
results and testing information from previous work done by BHP on the property. This local
news report does it best justice (3) as those against say this...
A spokesman for the opponents said Monday they are in the process of studying the
data, and “based on our review, we believe the information is very harmful to their
position ... both on the commercial side as well as the safety side.”
He further said that Florence Copper “fought very hard” to keep from releasing all this
information. A hearing before a state administrative law judge is now set for March 18.
...while the company say this...
A company official denied the company fought to keep the information secret, although
she added it’s hard to see how the data helps to understand the facts and the law in
the present case.
...and more besides, such as how at least some of the information was from a well that’s not
part of the current mine plan (see the whole report for details).
In trading, CUV had a good week on limited volumes, which is only to be expected for the time
of year. In other news, you’ll notice that I have CUV down as one of the potential winners of
2014, though I also guess that the March 18th date with the judge will go a long way in
deciding whether that call is smart or dumb.
Cordoba Minerals (CDB.v): The new Gold Group entity that’s been built to develop a large
and interesting copper target in Colombia makes its official debut on these pages and before we
go any further, please note that I have decided for the time being to go with the company’s
current share count of 31.88m shares outstanding (as per the December 20th dated MD&A).
This number will almost certainly change because the deal pending between CDB and the two
companies fusing with it, namely Sabre and Minatura, is still in process. Once the deal is closed
we can expect CDB to have a shares outstanding figure of 81.94m and a market cap up around
$40m, rather than the ~$16m of today. After that, there’s a raising to do which will see things
higher still.
13

As for that pending deal, perhaps the best way of explaining things is to quote more extensively
from said MD&A because the outline is straightforward as per that report. Here you go:
Proposed Transaction
Pursuant to a binding agreement dated July 31, 2013 and amended September 17, 2013 (the
“Acquisition Agreement”), the Company has the right to acquire a 100% interest in the Cordoba
Property from Minatura, Minatura Gold and certain minority shareholders of CHC (collectively the
“Minatura Group”) and the adjacent San Matias Property from Sabre Metals Inc. (“Sabre”).
Pursuant to the Agreement, the Company will acquire (the “Transaction”) from the Minatura
Group the remaining 89% interest in CHC, and will also acquire all of the outstanding shares of
Sabre Metals Inc. (“Sabre”), a private company which has the right to acquire a 100% interest in
the San Matias Property. In consideration thereof, the Company has agreed to:
a) issue common shares in its capital stock to the Minatura Group and Sabre’s shareholders, so
that the Minatura Group will own 29,499,437 shares or 36% of the Company and the Sabre
shareholders will own 26,221,722 shares or 32% of the Company (such percentages based on
the issued capital of the Company as at the date of the Acquisition Agreement);
b) issue 2,117,647 warrants to the Minatura Group and 1,882,353 warrants to the Sabre
shareholders, each warrant exercisable at $0.30 for two years from closing of the Transaction;
c) make cash payments to the Minatura Group totaling US$5.0 million (US$1.0 million paid on
signing of the Agreement, and US$4.0 million due on closing of the Transaction); and
d) raise at least $3.0 million by way of an equity financing, the proceeds of which will be held in
escrow, to be released concurrently with the Transaction closing.
Upon completion of the Transaction, the Company will have seven directors, two of whom to be
nominated by the Minatura Group, two by Sabre, two by the Company, and the seventh by mutual
agreement of the parties. Mario Stifano, the CEO of Sabre, will be appointed President and CEO
of the Company. As well, the Option whereby the Company has the right to increase its ownership
of the Cordoba Property from 11% to 100% will no longer be in effect.
Each of the Minatura Group and Sabre is at arm’s length to the Company, and none of the
directors or officers of the Company are directors, officers or shareholders of the Minatura Group
or Sabre, other than Tod Turley who is Chief Operating Officer of Minatura and a director of the
Company.
In other words, once this is all done CDB is going to be larger and with new management
running the shop that know the zone and know what to do in order to develop the property.
Also, as we’ve already seen via its November 20th NR (4) these guys know just where to place a
drill hole in order to hit eye-catching mineralization and widths such as...
• 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
... so the chances of this getting the full Ridgway promo treatment are high (by which I mean
aggressive but no BS, as opposed to other companies that go straight for the bullshit). For
more background, the corporate presentation dated November 2013 is pretty good in the
typical corporate rose-tinted way. You can find that here (5).
Reservoir Minerals (RMC.v): For your information, this stock was recommended last week
by Louis James of Casey Research in his International Speculator monthly. As you are probably
aware of my opinion on the quality of work done by that person, I’ll leave it to you to decide
whether this snippet is a positive or negative development for the stock. What I can say is that
since his reco was published the stock did around 31,000 shares of volume, which isn’t much of
a reaction for a publication with a claimed circulation of 10,000 readers and a claimed positive
track record. RMC is up on our 2014 table but finished 7c lower than the previous weekend and
also made its first dip under $5 since the last set of drilling results were released on December
2nd, so some signs of fatigue in the air.
Augusta Resources (AZC) (AZC.to): Check out the Wall Street Journal’s op-ed on Rosemont
14

(6) dated Friday January 3rd (evening) which offers rousing support for the planned mine along
with sharp criticism for the Environmental Protection Agency (EPA) and all environmentalists
who oppose the mine. Written by one Daniel McGroarty, who is “president of American
Resources Policy Network, a nonprofit, nonpartisan education and public policy research
organization in Washington, D.C.”, it’s a straight no-holds barred pro-mine capitalist lobby and
lays out the “jobs over frogs and bureaucracy” line very well.
Worth noting that Mr. McGroarty had one previous excursion on the pages of the WSJ op-eds,
when writing in 2012 on the Pebble mine and its benefits (as well as pooh-poohing all
environmental objections to that project as well). That worked.
The Low Cost Producer Basket
After one week of 2013, the Low Cost Producer Basket is showing a 2.80% gain to level stakes.
company ticker price 1/1/14 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Freeport FCX 37.74 1040 38.81 37.32 -1.1%
2 Goldcorp GG 21.67 812 18.10 22.29 2.9%
3 Barrick ABX 17.63 1000 18.15 18.15 2.9%
4 Newmont NEM 23.03 497.87 11.91 23.92 3.9%
5 Silver Wheaton SLW 20.19 357.39 7.55 21.12 4.6%
6 Franco Nevada FNV 40.74 147.01 6.10 41.51 1.9%
7 Agnico Eagle AEM 26.38 173.43 4.70 27.11 2.8%
8 Pan American PAAS 11.70 151.41 1.79 11.84 1.2%
9 B2Gold BTG 2.02 651.4 1.39 2.14 5.9%
10 First Majestic AG 9.80 117.02 1.18 10.10 3.1%
all prices in U$, using NYSE ticker prices Portfolio avg 2.80%
It’s the first week of our new feature and I’m not going to read too much into the movements
over two days in the ten larger-cap, low cost producers selected for the experiment.
As you can see from a look to the right, just one stock (FCX) is lower tha its December 31st
closing price and the basket average is +2.8%, which is a reflection of the good cheer seen in
gold in 2014 so far.
I’d like to repeat here that we’re not trying to emulate the type of group trades already
available via the market, such as GDX, HUI etc. It’s not necessarily about keeping a close watch
on the fundies of these larger caps either, in the way of the Copper Basket, for example. These
stocks geta lot of coverage anyway. What this is about is picking out a bunch of stocks with
low or relatively low production costs for their precious metal (in the case of SLW and FNV, that
“production” cost is slightly artificial but they call it the same way, so it works) and seeing
whether our little list performs differently. To that end there are a couple of other metrics we
can play next to these stocks along the way:
1) Once we have a suitable sample (five or six weeks) for the weekly tracking chart, I’ll
measure the performance of this list against the large cap precious metals producer
ETF, GDX. In that way and as the year progresses, we’ll have an easy to gauge
performance guide and a tell on whether these lower cost players show an advantage.
2) Once quarterly results show up, we can check the relative performance of the
components compared to their individual cash cost parameters, which should show
whether the lowest of the low give a share price performance advantage. More on that
when the occasion arises.
But that’s for the future. In the meantime the idea is to see how a bunch of producers that
15

should remain profitable at their work as long as gold/silver/etc don’t go into total freefall,
compare against our preferred junior sector of smaller cap companies (BTO being roughly the
meeting point) and to help you people out there decide. More anon.
Regional politics
The quiet season
It can be different in Central America, but in South America we’re now into the summer
vacation period and a time when political noisemaking typically drops, particularly in January
and February when political and ruling classes leave the capital cities and camp out in their
favoured resort towns along the coastlines. As such, important political developments
concerning the mining industry are likely to be few and far between until country parliaments
reconvene in March.
Nicaragua’s top export is gold
The projections previously mentioned have become reality (7) and in 2013, the single biggest
export in dollar value out of Nicaragua was gold. These charts should help illustrate the
situation and we’re making note of the
Nicaragua: Gold exports by year
other main country exports because U$ FOB
context is important here. First up gold 500
431.87 435.87
on its own, which showed a rise of $4m
in overall exports despite the market 400 364.11
price drop of which this audience needs
300
no reminding. Main producers of gold in 222.16
Nica are our very own B2Gold (BTO.to) 200
(BTG) via its mines at Limon and 83.64 96.9
100 64.7
Libertad, along with Hemco, the mine
recently taken over by Colombian 0
company Mineros S.A.
2007 2008 2009 2010 2011 2012 2013
source: Centrex
This second chart below shows the
seven main export products in Nicaragua over the last seven years (all those that go over
U$100m/annum FOB, after these seven the items drop to $50m maximum). As you can
probably see at first glance, coffee and beef have been the country’s mainstay exports for many
years and it’s only very recently that gold has caught those leader products up. The sharp rise
in gold revenues between 2009 and 2011 coincided with the re-opening of Libertad by BTO and
the rise in world prices for the metal, of course.
U$ FOB Nicaragua: Main export products, by year
600 gold
beef
coffee
500
sugar
dairy
400 farmed shrimp
peanuts
300
200
100
0
2007 2008 2009 2010 2011 2012 2013
source: Centrex
But further peering shows that the edge has definitely come off Nica’s two main traditional
exports. The drop in coffee revenues has been a combo of a leaf disease (la roya) that’s been
16

hitting crops all over LatAm this year (e.g. bad in Brazil, Peru and C.Am, though Colombia has
largely missed the bullet) as well as a sharp drop in market prices for the bean. Meanwhile beef
exports have consolidated due to a plateau in national production as farmers begin dedicating
land to other uses (word is that soybeans are a future growth item to watch in Nica).
This third chart points out the growing role of gold in the overall exports mix. President Daniel
Ortega is proud (and hey, with some justification) of the economic growth seen in his country
and even if he weren’t a big proponent of the gold mining industry, he’d only need to take one
look at this chart to know that keeping growth going in this new sector is vitally important for
him and his government.
other Nicaragua: Annual exports by product
peanuts
U$ FOB farmed shrimp
3000
dairy
sugar
2500
coffee
beef
2000 gold
1500
1000
500
0
2007 2008 2009 2010 2011 2012 2013
source: Centrex
While coffee and beef have dropped, gold has risen and in 2013 accounted for 16.98% of all
exports by dollar value (that was 5.21% in 2007 and 6.69% in 2009). Gold has shored up the
total exports mix in a difficult year for the country, all in spite of that gold price drop, so you
can bet large amounts of money that Nicaragua will be very keen on seeing further grow in the
precious metals mining industry.
And that’s the main takeaway from this piece today: Nica has become a mining success story
over the last few years and by stepping out and taking a wider view of its exports (important
for balance of payments, currency valuations and ultimately inflation, something that wins or
loses elections) gold’s increasing importance to Nicaragua and its acceptance by its Caudillo
President strongly suggests that Nicaragua is set to stay as one of the better places to go gold
hunting in the medium-term future.
Uruguay to sign agreement on Aratiri iron ore mine by January 20th
That’s the latest news (8) out of the which has placed Aratiri at the head of its policy goals for
2014 and is using the mine project as a test case for other projects. The government and the
owners of Aratiri, Zamin Ferrous (Brazil) are due to sign the investment agreement that will
guarantee a timeline and financial commitment from the company, in return for political stability
from the country.
Chile considering default desalination
An interesting news story out of Chile last week that got a lot of coverage. Here’s how the
Bloomberg EngLang version (9) starts:
Chilean lawmakers have presented a bill that would force mining companies including
Anglo American Plc and BHP Billiton Plc to run all of their copper mines in Chile using
desalinated water from the Pacific Ocean.
The lower chamber of deputies’ measure that was introduced last month would require
mines using more than 150 liters (40 gallons) of water a second to incorporate
17

seawater in their operations, according to a statement on the Congress website. A third
of the world’s copper supply comes from Chilean mines.
It’s still only in parliamentary bill stage and there’s a long way between this idea nd law, but it
indicates just how seriously the question of water supply is taken in Chile these days. It also
points towards built-in higher capex for just about any project (particularly the large copper
mine type, mainstay of Chile) in the country which is an item that’s going to have to be
swallowed and duly digested by the industry.
Peru: A measured article on Gregorio Santos and Cajamarca’s election year
Those of you wanting to consider the fate of Cajamarca in 2014, what with its regional
governor election later in the year (currently slated for the “end of 2014” with no precise fixed
date but October 5th is being talked of as a likely one) and how the re-election or ousting of
current governor Gregorio Santos may affect mining matters, would do well to avoid the Peru
mainstream media that does little more than parrot a “he has no chance” message (e.g. here
(10), a typical example) to anyone that’s listening (apparently if you say the same thing enough
times it becomes true, or something similar once proposed by a chap named Goebbels) and
more to the analysts taking a measured and sober look at the subject. The best article I’ve read
on the subject so far this year was published in Noticias Ser (11), which is normally lefty in its
editorial line but in this case has taken a politically neutral stance via the op-ed from Ronald
Ordóñez. It’s Spanish language and long, so not for full translation here (Spanish speakers
advised to click through and I’d expect Google Translator would do a reasonably good job on
the text for those who prefer English) but the short top paragraph gives a decent overview of
the piece and its tone, so here’s that:
Gregorio Santos has finished his third year as governor (of Cajamarca region) in a
very different scenario to that of 2012, with doubts over his chances of re-election
which previously seemed assured. What his team can achieve in the next few months
could be decisive to his administration and political future.
The piece considers the strong and weak areas of the Santos government, which is very
different from the normal fare out of Lima-based journalism which only talks about his
unpopularity in the city and district of Cajamarca. The region of Cajamarca which he governs is
much larger than the eponymous city and district, a fact that often passes over the heads of
people with a pre-conceived line to promote. Ordóñez also notes the relative unpopularity of
Santos in the urban areas, due to unfulfilled pledges such as road works, sidewalks torn up and
never improved and other matters. On the other hand we also get to hear about the
improvements seen in rural Cajamarca with emphasis placed on the education programs now in
operation (which fits pattern, as Santos himself was a teacher who covered the rural Cajamarca
areas, very much his power base today). Some thought is given to his election opposition and
that alone is a subject rarely tackled by national press, because the established political parties
have either little traction or a very patchy track record of success and acceptance in the region
(often due to their own crass mistakes). The potential that Santos gets the “least worst” or
better the Devil you know” votes is by no means out of the question, something that will
crystallize as the vote gets closer and the main challenger(s) emerge.
We can expect Anti-Conga to be his flagship policy in the election campaign to come, which is
again a polarizing issue that separates the city (often pro-Conga or neutral) from the rural areas
(often Anti-Conga and under direct control of the countryside self-governing “Ronda” groups
which have been loyal to Santos to date). And as suggested by the opening paragraph, the
conclusion is that although Santos has moved from being a near-certainty for re-election to
merely possible, there’s a lot in play and much will depend on what he manages to get done in
the months before the election. Social programs, city improvements and delayed rural
electrification plans will likely mean as much to the voting public as whether mining’s big
blockage continues or is removed.
The bottom line is that Santos has more of the chance than is given by the lapdog press (both
in Peru and internationally) that has a vested interest in toeing the national government line,
18

but his re-election is by no means assured at this point and that’s a big change from this time
last year. In order to be successful he has most of this year to move crowd-pleasing projects
forward and it will be interesting to note whether he’s keen on appeasing the city folk or will
concentrate his efforts on his rural voter powerbase. But one thing is certain, Conga (yea or
nay) is going to become a loud subject in Peru in 2014 and the line taken by all candidates,
Santos and opposition, will be a key point in the election to come.
Market Watching
Animas Resources (ANI.v) provides a lesson
There are few better things in the world, I think,
Than to recognize what crops are coming up
At a stage when that is a mystery to the unskilled eye
Hugh MacDiarmid, My Heart Always Goes Back to the North, 1948
As mentioned on these pages a couple of weekends ago Animas Resources (ANI.v), a company
with 71.63m shares outstanding, has been subject to a small bidding war recently. We’ve had a
couple of developments since then, so lets go through a snapshot of the whole story and after
that, consider lessons learned:
On November 25th, ANI announced (12) a friendly bid on the company’s main Santa Gertrudis
property to GoGold (GGD.to). The terms of the deal included a funding pledge to bring the
project into operation and an NSR that ANI could sell to its shareholders, but the
announcement didn’t move the stock price at all.
Immediately after that, Marlin Gold (MLN.v) made a better offer to ANI, but away from the
public realm. As GoGold had a right to match that offer, it did just that and on December 4th the
new deal was announced (13). Yet again it failed to light anyone’s fire in the market or move
the share price.
At this point, MLN went hostile and announced publically (14) its intention to but out ANI
wholesale for 10c/share. That same day ANI share basically doubled.
On news of the hostile bid, that was clearly upsetting the cozy plans GGD and ANI had put
together, ANI management made no firm decision but again implied (15) that a “funding + 3%
NSR deal” on Santa Gertrudis alone (which hadn’t moved the stock) was better than a buyout
deal which would leave them out of the
picture but had managed to double the
stock price.
Then we had news of the official MLN bid
on December 23rd and after that a week or
so of quiet until December 30th, when GGD
came up with a new offer that was
substantially better than its previous deals
and also the MLN deal (16), a roughly
50/50 cash-plus-shares deal with a ticket
price of 15c to buy out ANI that shot the
stock up again to its current 13c price level.
Or in other words, GGD’s plan to buy out
the main (nigh on only) asset of ANI that
valued the company at $2.86m has, by way of a few rounds of hostile bidding, changed into a
deal where the whole of ANI (which really isn’t that much different from the original deal
target) is valued at $10.74m...and GGD is buying out the warrants outstanding instead of
19

letting them die worthless.
To sum up, the ticket price of this deal went up 3.75X thanks to a bit of competition on the deal
from a third party that knew a raging bargain when it saw one. It remains to be seen whether
MLN will up its hostile third party bid again (I doubt it, knockdown value seems to have gone)
but all the same, just by getting involved in what looked like a very cozy deal between the
friendly bidders, shareholders of ANI have been given a much better deal than the one
originally agreed to by ANI management.
What we can learn from this: As the chances are that this latest deal is going to be the done
one, there’s little in the way of spec value left for us outsiders looking in (though you may be
interested in that arbitrage of 13c cash for 15c cash/shares on offer today, but it’s not for me).
However there are two things we can take away from the episode:
1) Exploration-stage companies that are asset rich are being severely undervalued by the
market. We’ve mentioned this before, we mention it again. Here we have hard
evidence of a deal that valued a company at 4c turn into a deal that valued a company
at 15c, no subjectivity or flim-flam. It therefore points to a whole range of other junior
explorecos that aren’t being given the market value they deserve for their assets. And
yes, at this point I again mention Minera IRL as a screaming example of its genre.
Now we know that there are a lot of moose pasture companies out there with projects
that aren’t worth a bean; they’re less assets, more liabilities and as such, aren’t going
to be touched by the real mining companies that want to buy real projects and then
turn them into real mines down the line. Then along with rock prospectivity there are
logistics of any eventual mine to consider, country and community risk, capex price
tags for the build-out and all number of the things which we’re used to addressing that
come between project and mine. It’s not so easy to filter through the thousands
(literally) of deposits and projects to find the ones that are going to be snapped up next
by the bigger fish (could be the understatement of 2014 there) and t’s where experts in
rocks, politics and financials have their edge (particularly geologists and the rocks, I’d
venture) hence the MacDiarmid quote at the top of this piece. Fortunately there is a far
more practical and simple plan we can follow, which is the second conclusion drawn
from the ANI/GGD/MLN affair, which is 2) below.
2) If you see another, similar friendly deal announced on one of these distressed stocks in
which the buyer wants the asset of the seller (via full-out M&A or specific asset
purchase), then buy the seller’s stock. The reasoning is that if small, distressed
company ABC announces a friendly deal with larger asset hungry company XYZ, then a)
XYZ has identified just the type of bargain basement project it wants and b) has cut a
deal with the management of ABC that will suit them far more than it will ABC’s
shareholders (see above and if you tell me Animas management was looking out for
the people who own the company more than their own back pockets, my answer will
include plenty of laughter). However, it also means that third party companies such as
MLN would be alerted to a deal and if there’s the type of deep discount bargain we
suppose, then there will be plenty of room for a counter that will send the share price
higher (and in our example’s case, higher and then higher still).
If (repeat if, underscore caps and bold type IF) we are in a recovery moment for the junior
sector, rather than a mere relief rally before the next episode of gold plunge, then the bravest
among you could consider a scattergun approach, buy a whole bunch of beaten down shares
and then see them appreciate as in-ground assets slowly and then more quickly come back into
fashion. It’s also possible that you can make money by buying real live dyed in the wool dog
stocks that hold assets which will never become mines (eg ITH.to, XRC.to) because they rise on
macro speculation and “oh, they have lots of ounces in the ground” talk as the rube end of the
market buys into the sharks’ spiel (once again). However, smarter money will avoid those
projects that have been greeted with peer disapproval (start with the large bulk low grade big
20

capex) and look for the good ones held by companies that don’t have the cash to move them
forward...not yet anyway.
Second-guessing M&A is fraught with traps and dangers no matter what sector of industry you
might cover and in the end, getting one on the nose is as much luck as judgement. But what I
see at the moment is an opportunity to wait out the first move, see where the big fish swim for
their meals and then buy in for a trade that’s at worst no-lose and at best a bidding war
elevator. Therefore the plan is:
1) Wait on the sidelines with cash available for immediate trading purposes (once again I
preach on “have a cash surplus in your account, have that cushion” etc etc)
2) Look for the apparently friendly deal where a cash-strapped tinycap announces an offer
that will bring its asset into production. What you then have on your side is a bunch of
economic geologists and political risk analysts in the bigger company giving the thumbs
up on a project and separating its wheat from all that chaff out there.
3) Buy the acquisition stock, with the expectation that a third party with a nose for a
bargain and treasury to match will come along and “ruin” the friendly offer.
4) Take profits on a bidding war
What could possibly go wrong? ☺. Well a lot of course, starting with a gold prices that goes
down by $100/oz the day after you buy your sure thing (you know the drill, risk is out there)
The second is that the counterbid never materializes, but chances are that you’ll still walk away
with a no-loss or very marginal loss trade at worst, while at best there’s arbitrage that should
play in your favour. Then barring all the obvious macro reasons, a third one that comes to mind
is that this is a new window of opportunity and they’ll eventually close, the law of diminishing
returns comes into play and the most likely result is that the qualty assets get priced upwards
before the M&A action begins, with the result that competing bids aren’t so much of a no-
brainer. This would bring us back to something close to square one (see that MacDiarmid quote
again) and means that the advantage is again with those who spot the best quality pieces of
land (and politics/people sitting on top of them) before the others. Which, once again, is why
I’m long stocks such as DNA.to and IRL.to.
However, for the time being the Animas events point to a nice little trading opportunity. It will
pay to keep fresh cash on the sidelines and wait for a first-move friendly deal to appear and
then, as long as circumstances look favourable, buy into the smaller fish.
Gold Resource Corp (GORO): Friday augurs well
The 4.3% rise put in by Gold Resource Corp (GORO) on Friday was welcome as it fits in nicely
with the plan to find a higher spot at which to short this issue. You may want to go long and
take advantage of any move above $5 on the type of promo newsflow I’m expecting from the
company, though that’s not going to be my own strategy here. On this one I wait, watch, see
and then decide later on the point at which I want to join the longer-term trend of GORO,
rather than second guess the up-spike. I’m long enough on other stocks.
Regarding that newsflow, we should get the 4q13 preliminary production numbers from GORO
in the third week of January (last year the NR hit on Jan 17th), which I’m expecting to be the
centrepiece of any promo pump from the company, along with some new higher guidance
figure of 2014 thanks to the plant expansion. Around that point is my pencilled-in “let’s see if
it’s a short now” moment, but as always these things will be fluid.
Gran Colombia Gold (GCM.to) redux
The quickest of additional lines. After last week’s piece I had a couple of mails along the lines of
“Huh? You’re reco’ing a company you hate?” (in fact, one of the mails was almost exactly that).
The answer given to the mailers and repeated here is that I’m not reco’ing GCM at this point,
but it is getting put nearer the centre of the radar. To repeat the bullets at the end of last
week’s piece:
21

• I’d want to see GCM close on its equity raising and get enough treasury on board to be
able to limp through the next couple of quarters at least.
• I’d want GCM to take any opportunity of rebutting negativity from the upcoming
documentary and raise awareness of its plans.
Notably we’ve heard nothing about that now delayed placement round in the last week.
Secondly, I’m far more interested in whether any debate arises from the ‘Marmato’ movie
towards the end of this month than I am in the content of the documentary or the initial
reaction it gets. As I was reminded by one mailer, Oscar Wilde’s “There is only one thing in the
world worse than being talked about, and that is not being talked about” works just as well in
this case as the PT Barnum quote of last week. Those are a couple of specific criteria and until
they’re both in place, GCM is watching brief only.
Phoslock (PHK.ax): No trade
I simply couldn’t get a bid in that was worth my time on PHK, so it’s one I’m going to let pass. I
still encourage Antipodean readers (or those with open and fluid trading accounts there) to take
their own look and perhaps follow up on the opportunity, but due to the cost and complexity of
trading through my own open channels, this one isn’t going to be for me.
Conclusion
IKN244 is done, we end with bullet points:
• Fortuna Silver (FVI.to) this time around has been a trade to the long side with a very-
near-term traders’ attitude placed on it. It’s worked quite well and has enjoyed the
upspring from the turn of the year improvement in PMs, so it may well get cashed in
over the next week. I’m keen to see how Monday opens before making any final sell
call though.
• I’m looking forward to the newsflow from Rio Alto this month, which should put a bit of
backbone into the stock’s recent recovery run. The sooner it puts on a 2-handle again,
the better.
• Nicaragua is turning into a happy hunting ground for miners, what I’m missing is the
junior that lights my fire working the country (BTO aside).
• It’s anyone’s guess where the next “Animas Type” M&A deal comes from, but when it
does I’ll be waiting and with cash in hand to buy into the deal. No-losers are my kind of
trade.
• Coro Mining (COP.to) is high on my shopping list for 2014, while copper’s mildly bearish
outlook (my opinion at least) dampens enthusiasm. Overall I don’t think there’s a rush
to get in at 10c, but consider this week as a headsup on the stock. As they used to say
in all the finest Saturday morning kids’ TV shows, “To Be Continued”.
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
22

Footnotes, appendices, references, disclaimer
(1) http://finance.yahoo.com/news/coro-signs-binding-heads-agreement-123000434.html
(2) http://www.newswire.ca/en/story/1285517/curis-closes-cad-7-million-private-placement-financing
(3) http://www.trivalleycentral.com/casa_grande_dispatch/area_news/florence-copper-reveals-mining-test-
data/article_72fa4fde-7569-11e3-8c51-0019bb2963f4.html
(4) http://www.marketwatch.com/story/cordoba-minerals-announces-the-discovery-of-a-new-high-grade-copper-and-
gold-porphyry-system-drilling-1011-metres-10-copper-and-065-gt-gold-2013-11-20-81733138
(5) http://www.cordobamineralscorp.com/i/pdf/Presentations/Cordoba-Sabre-Presentation-November-V9.pdf
(6) http://online.wsj.com/news/articles/SB10001424052702304367204579268771980972030
(7) http://www.elnuevodiario.com.ni/economia/306422-exportaciones-selladas-oro
(8)
http://www.americaeconomia.com/node/107984?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3
A+america-economia+(Am%C3%A9rica+Econom%C3%ADa)
(9) http://www.bloomberg.com/news/2014-01-02/chile-debates-bill-making-mines-use-desalinated-seawater.html
(10) http://www.bnamericas.com/news/mineria/candidatos-peruanos-contrarios-a-la-mineria-no-ganarian-elecciones-en-
cajamarca-el-2014
(11) http://noticiasser.pe/02/01/2014/cajamarca/santos-y-la-comezon-del-tercer-ano
(12) http://www.animasresources.com/s/NewsReleases.asp?ReportID=612461&_Type=News-
Releases&_Title=Animas-agrees-to-sell-Santa-Gertrudis-to-GoGold-Resources
(13) http://finance.yahoo.com/news/animas-signs-definitive-agreement-gogold-234641006.html
(14) http://finance.yahoo.com/news/marlin-gold-announces-intention-cash-160200480.html
(15) http://www.animasresources.com/s/NewsReleases.asp?ReportID=615306&_Type=News-
Releases&_Title=Animas-Responds-to-Marlin-News-and-sets-date-for-Special-Meeting
(16) http://finance.yahoo.com/news/gogold-announces-intention-offer-acquire-201600084.html
Appendix 1: Flash update dated Monday December 30th 2013
Good Monday afternoon, just before 1pm local time, a little extra to add to yesterday's talk on RIO in IKN243.
Rio Alto Mining (RIO.to) (RIOM) is doing well in a down gold market this morning, which may be because word coming
out from La Arena today (and I doubt I'm the only only to pick this up on the radar) is that RIO.to is on course to
produce/sell 70,000 oz gold in 4q13. Obviously this is unofficial and should be taken with a pinch of salt, but your
author's source has previously proved reliable.
If true, it beats out even your author's upper end 68k oz Au forecast for the quarter, beats official quarterly guidance by
nearly 2k oz and would mean RIO produces in the year something in the region 213,000 or 214,000 oz gold, beating its
own upper end guidance of 210k set at the start of the year.
Costs are also apparently coming in on schedule, so when put through the spreadsheet and assuming RIO sells its
wares at the 4q13 London Fix average price (U$1,272/oz), the model forecasts a post-tax EPS of 13c. On a straight line
basis, this would mean an approximate 3.3X P/E ratio at today's stock price. That's very cheap by anyone's standards
and means that even if my metrics are optimistic, there's still a lot more room for upside in this stock price.
Top Pick reiterated. Best, O
23

Stocks To Follow Closed Positions, 2013
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
Starcore Intl SAM.to nov'13 C$0.235 08-sep-13 C$0.17 -27.7% ST trade didn't work sm loss
B2Gold BTO.to dec'13 C$2.22 28-nov-12 C$2.16 -2.7% closed ST trade to raise cash
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
24

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
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
25

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.
26