IKN #247Premium

The IKN Weekly
Week 247, February 2nd 2014
Contents
This Week: Changes to the Stocks to Follow list this week, The new trades start well.
Fundamental Analysis: NOBS report on Coro Mining (COP.to).
Stocks to Follow: Overview, Rio Alto (RIO.to) (RIOM), Santacruz Silver (SCZ.v), Coro Mining
(COP.to), Gold Resource Corp (GORO), Network Resources (NET.v), Pretium Resources
(PVG.to) (PVG), Focus Ventures (FCV.v), Darwin Resources (DAR.v), Lara Exploration (LRA.v),
Dalradian Resources (DNA.to), B2Gold (BTO.to) (BTG), Minera IRL (IRL.to) (MIRL.L).
Copper Basket: Overview, Augusta (AZC.to) (AZC), Curis (CUV.to), Reservoir (RMC.v).
Low Cost Producer Basket: Overview, Newmont (NEM).
Regional Politics: Argentina: The world piles on plus reaction from the country’s mining
sector, Uruguay: Mujica pressing home the pro-mining message, Peru: Santos to have
preliminary hearing on kidnapping charges March 31st, Colombia: A relocation precedent,
Peru/Chile/The Hague the big maritime border dispute update, Chile adds value to its moly.
Market Watching: Some near-term trade ideas, By subber demand the Radius/B2Gold ratio
revisited, A trading plan (and a specific buy) based on recent deal action in juniors.
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
Changes to the Stocks to Follow list this week
There are two changes coming this week:
1) I’m going to buy a few True Gold (TGM.v) shares as a near-term trade. The reasons are
set out in ‘Market Watching’ below. The position will be modest in size and the buy
decision, as you will read, is based more on market circumstances than deep DD of the
company’s project (though they’re good by all accounts. Please see ‘Market Watching’
for more.
2) Perhaps the most boring pick ever covered by The IKN Weekly, Network Exploration
(NET.v) is being removed from coverage as from next week. I’ll book the trade at its
50% loss (assuming it stays where it is by this time next week, highly likely) but as
noted below, I’m not going to sell my own shares because 1) the position is tinysmall
anyway, plus 2) liquidity is nigh on zero.
So now you know, thus ends the top-of-edition headsup.
The new trades start well
Reader G mailed in on Saturday morning with “...you picked three new stocks that all show a
profit and that`s good, but one of those is a short and that`s even better, so take a bow for
once...”. And on reading G’s words (thank you btw) I thought “Hell yeah, why not?” because it
doesn’t really mean that much anyway. So here’s a chart of the last five days in Santacruz
(SCZ.v), Coro (COP.to) and Gold Resource (GORO), with GLD and GDXJ thrown in for reference.
1

Reader G went short on GORO with me as well. Sadly, Rio Alto didn’t join in the fun and went
the wrong way over the week.
One hour later: I reacted to G’s mail in the way you see above because of my own thought
process, which was something along the lines of “Ok, let’s go with the idea, trumpet my new
picks’ performance the way he asked and write a chunk of self-congratulatory prose, then after
it’s written see how I feel about it”. It just doesn’t sit right with me to have had a rotten 2013,
handed out thoughts on the market and trading ideas to a list of people that would have been
much better served by “sell your shares and don’t come back for a while” in the first half of the
year (and virtually any point in the first half of the year) and then, as soon as something goes
right, strut and preen before you all with a couple of 5% or 10% moves that go my way in a
suitably cherrypicked timescale. For one thing, a single week’s worth of action rarely matters to
any selected company or pick and never matters if the move doesn’t even get close to any
eventual target. For another, it’s the thing that drives me most crazy about the snake-oil sellers
and parasites who populate the chattersphere of the junior markets.
Fundamental Analysis of Mining Stocks
This week we run an analysis on Coro Mining (COP.to):
NOBS fundamental report dated February 2nd 2014
Coro Mining Corp. (COP.to)
Company Overview
Coro Mining Corp. (Canada: COP.to, USA: CROJF, Frankfurt E2E.f) is an exploration stage
junior mining company operating in Chile. Its flagship properties are the Berta development
stage project and the El Desesperado project, both primarily copper targets. Current share
structure is as follows:
2

Shares out: 159.372m
Options: 8.667m
Warrants: 10.539m (all at 15c)
Fully diluted shares: 178.578m
Current share price: $0.14
Market Cap: $22.51m
Approx cash per S/O: $0.02
All prices are in Canadian dollars unless stated. Forex U$1=CAD$1
Today’s report
As I’ve been mulling over this report for several weeks, now the time comes to write it up and
the inevitable question “what do I want to say?” appears, because it’s far too easy to wax lyrical
on every aspect of a company and run it all into 47 pages that nobody in their right mind would
want to ingest (maybe you’d read that amount on AAPL or ABX, but a $22m tinycap
exploreco?).
Coro Mining (COP.to) has changed significantly in the last few months and because of this, has
become interesting to us once again. We traded the stock successfully in 2010 and left at the
right time, too, because in early 2011 it hit big permitting problems at its San Jorge project in
Mendoza Argentina and its stock price sunk as a result. Since then it has been weighed down
by the carriage of San Jorge and the inertia of the project, all the while having to maintain its
optioning payments on the property (previously to Lumina Copper, then to Franco Nevada when
Lumina flipped out a number of its assets). However, COP is back on our radar now because 1)
it has found a taker for San Jorge who will take over all payments, 2) it has formed an
interesting JV on its Berta project in Chile that is shaping to be a near-term source of cash flow
with very little capex outlay and 3) it’s moving forward on its other copper projects, one of which
look potentially big and may become interesting indeed. So the focus of today’s report will be
the following:
1) I need to show you how COP has changed and become a leaner and better
corporation. That gets done via a deeper-than-normal look at the company’s financial
charts
2) I need to show you the potential of the Berta JV. That gets done via a reasonably
simple financial model.
3) I need to show you the potential of its pure exploration plays. That gets done via a
chunk of mainly descriptive prose.
Wrapping up the intro (and to condense other matters which could go on for a few pages if left
to ramble), COP continues to enjoy institutional market support as evidenced by the recent near
100% successful successful placement of shares (all but 1.4m units shifted in two tranches,
while all around fail to raise cash) and long-term large shareholder support. Its team are very
good and peer-respected geologists, so now that they’ve finally stepped away from the political
quagmire of Argentina and are fully focussed on the much friendlier Chile they can play to their
strengths and avoid the corporate traps. COP has been re-booted as a pure exploration vehicle
and if the Berta project goes as planned, will
COP.to: Assets Breakdown per qtr
be a self-sustaining company cash-wise. The
45
bottom line is simple: This is the right time to
40
get back into this stock.
35
30
Financials overview 25
Some of today’s “usual suspects” charts go 20
back deeper into the company’s past than we 15
10
normally do. This is because one of the main
5
challenges is explaining just why I like COP
0
once again after years in which it inspired
little confidence. The key to the story is San
Jorge, which hopefully gets the necessary
illumination as we walk through the company
3
70q4 80q1 80q2 80q3 80q4 90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 tse31q4 tse41q1
source: company filings. IKN ests
srallod
fo
snoillim
fixed
other current
cash

numbers. Assets look like this (above). This story is a simple one, that of the capitalization of
the San Jorge asset, then things going askew there and afterwards COP spending its cash in
2011 and 2012 until the coffers got very threadbare. Today’s COP has a fakey $31m of fixed
assets that’s almost all San Jorge (better classes as a liability than an asset), plus a little cash.
The idea of going back as far as late 2007 with this table is to show the change in direction of
COP. Up to early 2011, the company was fully focussed on San Jorge and ploughed all its
energy and cash into that project. When
COP.to: Liabilities per qtr
that blew up it had to re-tool, but San Jorge
7
still weighed heavily on its cash burn (see 6.5
6
below). Now that it’s free of that burden, 5.5
5
things are changing. 4.5
4
3.5
Liabilities have rarely been a particularly big 3
2.5
issue at COP and what we see is smalltime 2
run-of-company flows. Today’s sums are 1.5
1
tiny and have been that way since 2011. 0.5
0
The bigger liability held by COP has always
been the payments it’s needed to make in
order to keep its San Jorge option in good
standing and we need to have a bit of a
look at that, because it’s a big part of the
changing story.
That’s summed up here: Up to mid-2013,
COP.to had kept the option in good
standing by paying the underlying owners
$12.18m. A September 2013 payment of
$313k was delayed by agreement (a clear
sign COP was feeling the weight of this
deal too heavily and wanted out) and in
the next four years, another $5m was due
($1.25m per year) and then another
eventual $5m in payments further out. If
the project were going somewhere it
wouldn’t be so bad, but Mendoza province
has stopped San Jorge from going forward
in any shape or form since its permit
rejection decision of 1q11 and with COP in tight financial straits, it makes eminent sense to
hand off the project to a third party. This COP has done via a deal with a partnership made up
of Aterra Investments (a financial firm) and Solway Industries (a metals company with
operations in four countries). The Solway/Aterra deal will likely mean that COP’s participation is
reduced to a 2.5% NSR, though there are other ways in which the cookie may crumble (see the
NR (1) for details). What’s most important about this is that it takes the San Jorge financial
obligations off COP’s hands and allows it to move on its Chilean projects.
This is wholly good news as far as I’m concerned, as no matter how much COP has spent on
San Jorge (the capitalized asset value is booked at $30.53m), the thing is a liability, not an
asset, thanks to the Mendoza politicos. It’s the one thing that has kept me steering clear of
COP, even with the development and progress seen at its Chile projects, so now that the hurdle
is cleared and San Jorge is controlled by people with deeper pockets who are in a better
position to wait out the intransigent Mendoza parliament
If things go well here and Solway/Aterra go the best way for COP in their binding heads of
agreement, San Jorge’s asset value will eventually be transferred to the partnership and leave
the COP books (it won’t be missed, even though it’s $30.5m of that green total bar in the assets
table; these days it’s an irrelevant figure and makes no difference to the company valuation).
Back to the usual suspects charts and here’s working capital.
4
70q4 80q1 80q2 80q3 80q4 90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 tse31q4 tse41q1
source: company filings, IKN ests
srallod
fo
snoillim
LT debt
current debt
COP.to: Payments made and due for San Jorge
6
5
4
3
2
1
0
8002-erp 9002 0102 1102 2102 diap
3102
eud
3102
4102 5102 6102 7102 neht
U$m
source: company filings

COP.to: Working Capital per qtr
22
20
18
16
14
12
10
8
6
4
2
0
-2
5
70q4 80q1 80q2 80q3 80q4 90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 tse31q4 tse41q1
source company filings
srallod
fo
snoillim
As you can see, working cap got big boosts in 4q10 and then 1q11. Some of that came from an
equity placement which popped the share count up by nearly 30m (Benton made its big
strategic purchase) but the cash boost was mainly due to COP liquidating its holdings of Valley
High Ventures at the time (when ex-VHV was bought out) and added something in the region of
$16m to its treasury as a result.
From there, things went downhill. The main culprit was the expense of maintaining San Jorge,
the legal costs of combatting the adverse decision by Mendoza’s parliament, as well as drilling
costs at its newly acquired Chilean properties. We also now know how the market atmosphere
deteriorated for juniors in late 2012 and 2013, leaving chances of raising via equity placement
etc rather thin. By end 2012 COP was running on those proverbial fumes, though managed to
get a boost in 2q13 when selling its Chacay property and adding $2m of much-needed cash to
the structure. Even so, COP version 2013 was very much in hibernation mode, cutting costs as
much as possible and its share price declined as a result (I again hark back to the importance of
removing the San Jorge burden from this company).
In 2013, the company also made a strategic decision to cut its costs by bringing in partners for
its deals. We’ve seen the deal at San Jorge already. Further down we’ll discuss how COP has
gone JV with Freeport (FCX) on Payen and JV with ProPipe on Berta. Along with the sale of
Chacay, COP has for all intents and purposes become a “project generator” model, along the
lines of Almaden, Riverside Resources, Lara Exploration and many others. However, note that
the three I’ve mentioned are all successful project generator model companies, because 2012
and 2013 are littered with juniors who ran out of cash and then said “Ok, let’s do this project
generator thing and get bigger companies in to cover our costs, in return for a percentage of the
deal”. Thing is, of those dozens of Zombie Explorecos, only a handful have been successful in
dong JV deals and the vast majority are still stuck firmly in Zombieland. It’s important to
separate the wheat from the chaff and by this metric, COP is clearly the wheat. The fact
that they’ve manage to do not just one deal but four deals during a very difficult business
environment, bring in larger player to fund development and keep moving forward during a
tighter than tight 2013 is testament to 1) the
management team’s strong reputation in
COP.to: Shares Out
the industry and 2) the quality of the
200
exploration projects it has on its books. So 180
many other concessions get passed over 160
by majors wanting to do cheap deals, but 140
COP gets four deals done. That means 120
something, ladies and gentlemen, and even 100
80
applies to the potential quality of San Jorge
60
that’s beyond my personal disdain for the
40
thing. 20
0
Let’s now move to shares out and the
recently closed placement, which added
just over 21m shares to the count. In fact
70q4 80q1 80q2 80q3 80q4 90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 tse31q4 tse41q1 tse41q2
source: company filings, IKN ests
serahs
fo
snoillim

the company has done pretty well to keep its share count tight over the years and since the
collapse of the San Jorge deal (which changed everything at the company, from plans to share
price) those are the only meaningful shares added in 14 quarters. Not bad
As for the biggest holders, top of the shop is Benton Capital (BTC.v) which owns 61m shares
(~41% of S/). After BTC, Sheldon Inwentash/Pinetree Capital owns 15m shares and Dundee
Capital owns 7.11m shares. The two main
COP.to: Expenses Breakdown
insider players Philpott and Stephens own nearly 4
7m shares between them, which includes a 600k
slug that Philpott added in the latest round of
3
financing. Between those main holders, 56.5% of
shares out are accounted which is a decent 2
amount of tight hands.
1
The last couple of charts I want to show here
0
break down the expenditures at COP in the post-
San Jorge permit refusal era. This one shows
-1
that COP spent on exploration during 2012 (at
Chacay and Berta via the drill rig, mainly) but did
-2
little more than limp through 2013. It also shows
a “negative expense” of $2m in 2q13 as the cash
from the sale of Chacay came through.
This one isolates the Net Exploration
Expenditures line item, because as you can see
above it’s the one big variable and the rest of the
COP structure is as tight as you can expect from
a smallcap junior that needs to run a head office
in Canada and ops abroad. It also projects more
into the year to come, as we’re not expecting big
expenditure numbers from COP in 4q13 and
1q14, but from roughly 2q14 onwards it’s going
to spend the cash it raised on drilling El
Desesperado.
Company assets
We’re going to ignore San Jorge from now on, as its net worth is (in my opinion) zero and now
that it’s being taken on by Solway/Aterra it’s not going to hurt COP any longer.
For our purposes, COP has three main assets:
• Berta: A small, development stage copper project that’s being funded by partner
ProPipe (a Chilean company of good standing and good reputation in the mining sector
there). If things go according to plan, COP will have a free ride to 50% of production
and as we’ll see below, the economics are very attractive.
• El Desesperado: A interesting and very prospective 100% owned copper porphyry
target very close to the world-class Chuquicamata copper mine in Northern Chile. This
is where COP plans to sink its cash in 2014 and in the style of many prospect
generators, the one it’s been keeping for itself.
• Payen: An early stage copper target with a good address (just next to Hot Chili’s
Frontera discovery. This has been optioned out to Freeport (FCX) and is now a free ride
while FCX earns in to up to 70% in pretty standard/classic style.
Of the three, the easiest to cover in brief terms is Payen. It’s in a until now little explored area of
chile (a bit of a rarity) which has had the spotlight thrown on it by HCH developing Frontera next
door. After baseline groundwork, COP has optioned it out to FCX who can earn up to 70% if
they like what they find (or hand back if not). If things go well and they find something of worth,
6
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 tse31q4 tse41q1
source: company filings, IKN ests
srallod
fo
snoillim
forex gain
other exp.
Stock Comp
Net expl expen
corp costs
COP.to: Net Exploration Expenses, per qtr
3
2.5
2
1.5
1
0.5
0
80q1 80q2 80q3 80q4 90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 tse31q4 tse41q1 tse41q2 tse41q3
$m
source: company filings

this could make a meaningful difference to COP today. However, this is dyed-in-the-wool
exploration work and so it’s best to expect nothing. Until further notice, COP has a free ride on
an interesting piece of land which may pay to own in the longer run, but for the moment I’m
putting a zero valuation on the project for today’s COP.
With that short paragraph out the way we get to the interesting stuff
El Desesperado
Located just 16km from Chuquicamata and inside what’s known as the “Toki Cluster” of neabry
large copper deposits, COP has 100% ownership subject to a 1.9% NSR and $13m in options
payments over the next four years (which will be very easy to fund if they find what they’re
looking for). The address is optimum and already in 2012 they’ve hit a discovery hole of 204m
of 0.55% Cu (decent in Chile), with that hole finishing in 0.99% Cu mineralization (even better).
The plan this year is to use the money just raised on a 10 hole drill program which was delayed
all through 2013 due to the poor market conditions (it would have been tough to raise and even
if they did, the market mood may well have ignored good results). We expect this program to
kick off in last 1q14/2q14 and results should flow in 2q14 onwards.
If they find what they’re looking for, and up to now the theory is based around a classic style
porphyry mineralization, shape and size unknown, the medium term plan according to COP is to
get Chuqui/Codelco interested in the project. That might mean another JV, or maybe an outright
sale (Codelco tends to be very possessive about the good rocks in this corner of Chile) but
either way (or even with a third party), good drilling results in 2014 will add immediate value to
the company. This is straight and pure exploration drill spec as well, but it’s not blind as El
Desesperado has already shown its porphyry potential and is now more about “how much
copper” rather than whether it’s there or not.
Berta
The disposal of San Jorge and the blue sky potential that El Desesperado offers have raised my
interest in COP again, but it has to be said that there are many explorecos out there with decent
targets. The new, leaner COP that can direct all its cash at real exploration of a decent prospect
is a good thing, but it’s hardly unique and it would be a toss-up with other companies on which
one to bet on for a drill result. What makes the difference in COP today is Berta and it’s the
combo of the above two developments and the financial backing that Berta promises which
makes COP better than the pack and my idea of a speculative copper investment in 2014.
Berta is a small open pit heap leach copper project. It was optioned out in 2013 by COP in a
smart deal with Chilean company ProPipe and although there are a few potential outcomes to
the eventual final option-in, the most likely ending (unofficially, I recently heard from a non-COP
source that it was now almost certain and the necessary financing deal would be in place soon)
is that ProPipe earns 50% of the project by bringing it to full production and COP gets the ride
on its 50% for no cash outlay (there’s also a $2.5m option payment COP needs to make in the
middle of this year, which will likely be covered by the financing package and not dig into COP’s
own treasury today). We’ll know more about the price tags involved this month as the JV is set
to publish its PEA on the project, but the way in which it’s set up is that it will be a low capex,
easily permitted (the EIA is already submitted), quickly built operation which could easily see
production as soon as 2015
There’s a lot of information in the September 2013 technical report (2) for Berta, along with the
type of assumptions we need to build a cash flows model. The report includes an updated
resource count and here’s one of the tables that sums things up most easily:
7

The resource is based on a 0.14% Copper cut off and a $3/lb selling price for copper and gives
us a measured and indicated (there has been over 22,000m of drilling done there, mostly by
COP) resource of 17.6m tonnes grading 0.37% Cu. That looks quite low grading at first sight,
but the low overall strip rate (0.49:1) counterbalances that. Plus the plan being moved forward
by the JV is a smart one, which is to keep costs low by using contract
workforce and then use a local third party SX-EW plant to treat its
pregnant leach solution, which cuts capex costs to the bone in return for a
slice of the revenues pie.
As for the economics, COP/ProPipe have already advised us on plenty of
parameters (e.g. metallurgical work done) in its September 43-101 gave
us a table that summed up reasonable assumptions. These may change
in the PEA but they all look well within the bounds of reason and there’s
enough to build a model here.
We consider Berta as a whole operation (recall, COP will likely end up with 50% of the JV) and
then use the above table, grades as published etc, resource size. We can then break it down on
a per tonne basis as follows:
• At grade, 80% recovery and $3/lb copper, the average tonne of Berta rock returns a
gross revenue of $20.
• On site mining and processing comes to $6.83/tonne.
• Off-site costs (as seen above) come to $3.30/tonne
That implies an operating income of $9.87/tonne, which is just under a 50% margin. From there
much will depend on the size of the operation to gauge its revenues potential. COP has always
been coy about this, both on and off record, only going as far as planning production of between
5,000 tonnes copper and 10,000 tonnes copper per year. That’s a big gap, but if we go with the
current resource size (17.604 million tonnes of rock), you could run that through at 6,000 tonnes
per day for an eight year mine life, or at 9,000 tpd for a 5.35 year mine life. I’m guessing that if
they can add to the resource, something closer to 9ktpd is more likely and if things stay as they
are they’d want something like eight years from the operation at most, so there are my
parameters (and the PEA may give us a better idea)
From all the above, here comes an condensed incomes statement for a typical year at Berta,
using four scenarios. Scenarios one and two assume a 6,000tpd throughput, with the first using
the baseline $3.00/lb copper price and the second $3.25/lb to give an idea of the upside
potential from market price bonuses. Scenarios three and four do the same, but assume the
throughput at 9,000tpd. We then assume grade, recoveries, costs etc as above, as well as a
nominal $1m/annum depreciation (that might be more, I’m guessing) and normal Chilean State
burdens:
Condensed incomes statement for Berta (100%), Average year
Scenario Sc.1 Sc.2 Sc.3 Sc.4
6k tpd, $3/lb Cu 6k tpd, $3.25/lb Cu 9k tpd, $3/lb Cu 9k tpd, $3.25/lb Cu
Total sales ($m) 44.0 47.7 66.0 71.6
on site COGS 23.0 23.0 34.5 34.5
Depreciation 1.0 1.0 1.0 1.0
off site costs (G&A, SX-EW etc) 4.8 4.8 7.3 7.3
Op income 15.2 18.9 23.3 28.8
Interest 0.0 0.0 0.0 0.0
Workers Part/royalty 1.2 1.5 1.9 2.3
Tax 2.4 3.0 3.6 4.5
Net income 11.6 14.4 17.8 22.0
Sources: IKN estimates
At our base case of 6k tpd and $3/lb copper, this operation on a 100% basis would return
U$11.6m net profit per year. As COP would be 50% owner, that implies a $5.8m to our
8

company. As you can see, other scenarios (none of which are particularly wild bluesky) gives us
up to $11m in 50% ownership annual profits.
Conclusion
As usual, I start with the best intentions to keep the report short and drag on for too many
pages, so for today at least I’m going to cut this one off here. As the details emerge, plans come
together and drilling results start to flow from COP we can revisit and get more granular about
its specific moving parts, but for today this report has just about covered the main points.
In Coro Mining (COP.to), you get a lot of exploration company for a 22m market cap tag. The
recent round of financing has brought in the cash it needs to drill its main exploration target and
FCX may surprise us to the upside with good news from its COP JV, but it’s the way in which it
has dropped the heavy burden of San Jorge and moved on Berta that makes COP a renewed
interest vehicle. Its days of fracturing cash on Argentina are now done and in Berta, COP and
ProPipe are developing a simple, economic and quick to build mine that while small, will be
enough to provide COP with a very handy revenues stream which will allow it to operate and
explore without the type of shareholder dilution that drags on so many other tinycap plays.
As you know, I started my personal long in COP last week and have already taken a small
position. I’m looking to grow it by buying slowly and quietly in the weeks ahead on any
weakness. Today I’m not setting any specific upside target to the stock, but on the other hand I
want to make it clear that unlike many other trades recently proposed on these pages, Coro
Mining (COP.to) is envisaged as a longer-term (12 months minimum) investment and not a
quick flipper. I’m also a little hesitant in today’s market to aim for the type of number it could
reach, especially if El Desesperado returns strong numbers, because we’d then be looking at a
multiple-bagger winner (e.g. a $100m market cap wouldn’t surprise me in the least). There will
be plenty of time along the way to refine the model and reach a reasonable target, but as things
stand today COP is my idea of the type of stock that can provide the type of big winner that’s
been sorely lacking on these pages in the last year or so.
End of Report
9

Stocks to Follow
There are now 14 listed open positions, of which four went up last week (COP.to, PVG short,
GORO short, SCZ.v), two remained unchanged (EOM.to, NET.v) and the other eight lost ground
(RIO.to, IRL.to, BTO.to, LRA.v, DNA.to, TAHO short, FCV.v, DAR.v). The biggest percentage
moves were to the downside and seen in Darwin Resources (DAR.v down 17.6%) and Dalradian
Resources (DNA.to down 15.6%). Santacruz Silver (SCZ.v launched by 15.5% on the week,
though your author’s purchase came after the lows were gone and got only about half that
gain.
With the addition of GORO short, COP.to long and SCZ.v long we now have 14 open positions
on our ‘Stocks to Follow’ list, one less than our self-imposed maximum. Nine are in the red and
five are in the green.
Company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
Top Picks
Rio Alto Mining RIO.to str buy C$2.30 07-apr-11 C$2.18 -3.9% best LT value
Minera IRL IRL.to hold C$0.35 22-jul-12 C$0.185 -47.1% top pick called at 24c
Longs
B2Gold BTO.to buy C$3.07 28-nov-12 C$2.63 -11.1% sold 1/2, rest rides. Quality
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.92 -20.0% solid biz model, LT hold
Eco Oro Min. EOM.to hold C$0.50 22-sep-13 C$0.40 -20.0% st pol risk play, added
Dalradian Res DNA.to hold/add C$0.65 27-oct-13 C$0.69 6.2% Window to re-add, may do
Coro Mining COP.to buy C$0.125 26-jan-13 C$0.14 12.0% the new spec Cu play
Shorts
Tahoe Resources TAHO short U$13.10 08-abr-13 U$17.80 -35.9% port hedge, easy2b short
Pretium Res PVG short U$5.38 22-nov-13 U$5.88 -9.3% $4 downside target
Gold Res Corp GORO short U$5.04 26-jan-14 U$4.63 8.1% New re-short
Smaller/Riskier
Focus Ventures FCV.v hold C$0.175 01-jul-12 C$0.23 31.4% revised tgt 25c
Darwin Res DAR.v spec buy C$0.10 14-jul-12 C$0.07 -30.0% drilling again soon
Santacruz Silver SCZ.v hold C$1.02 26-jan-12 C$1.11 8.8% new small position, may grow
Network Expl. NET.v closing C$0.01 22-jul-12 C$0.005 -50.0% time to say goodbye
Closed in 2014 closed close price
Fortuna Silver FVI.to jan'14 C$2.80 23-dic-13 C$3.19 13.9% small ST trade closed
Rio Alto Mining RIO.to jan'14 C$2.06 07-jun-13 C$2.30 11.7% trading position finally closed
2009, 2010, 2011, 2012 and 2013 closed positions in appendices below
Now for some notes on a selection of the above stocks.
Rio Alto Mining (RIO.to) (RIOM): Sold trading position. I took the $2.30 on Wednesday
(nearly-not-quite the same price as this time
last week, but good enough) and the deal was
done on the smaller and (supposedly at the
time) temporary part of your author’s largest
position. It’s still very large and it’s still the
Top Pick round these parts, but I wanted the
cash.
As for trading, it was a weaker RIO that
only,managed to get above last week’s closing
price for one fleeting moment on Wednesday
morning then hit on Friday (including a closing
bell dump-ette). The market seems to be “ok,
what now?” about the stock and still
10

unconvinced it can deliver profits to the bottom line. In fact, there are chances that we’ll see a
small write-down on in-situ assets with the 4q13 numbers if RIO changes its baseline
assumptions for gold down to, let’s say, $1,200/oz. But on the other hand, if the rumours about
an expanding gold oxide resource at La Arena are true any nominal price write-down could be
neutralized by a boost in resources and therefore total property value.
Santacruz Silver (SCZ.v): Position opened. In the end I took the smallest of starter
positions at just over a Loonie after refusing to
pay 98c earlier in the week, because volume
suddenly appeared from somewhere and rushed it
higher quickly. It’s the way with spec juniors I
suppose, but I won’t be in a hurry to add at $1+
prices. That’s because of this chart (SLV versus
GLD, January 2014), which (hopefully)
underscores the far weaker climate for silver than
gold (despite which the silver miners have been
performing roughly equal to the goldies, for some
reason). But be clear, last week’s opening position
was a very small foot in the door and I’ll be very
pleased to see this position go into the red,
because that’d mean I could buy the right amount
at the price I want. Next week the NOBS report
and it’s been a fun DD ride on this company as it has plenty of interesting moving parts.
Coro Mining (COP.to): Position opened. It took a while to get in (there was nothing doing
early week) and I still want some more, but it’s open and running. For the rest, see above.
Gold Resource Corp (GORO): Short position re-opened. This one was the easiest to
trigger last week, just had to sell the covering shares which happened very early Monday. That
worked out well too, because those were the best prices of the week and we soon saw GORO
sinking to the $4.60/$4.70 range where it stayed. We also had news relayed on the blog (3))
that Tocqueville Asset Management, previously the second largest insto holder of GORO, had
liquidated nearly 2.2m of its previous 3.4m share holding during 4q13. Along with the 2013
selling from biggest holder Hochschild (HOC.L) that we’ve already chewed over, the message is
clear enough.
Reader JS (thanks) mailed in Friday with a small but potentially interesting snippet, that IB was
ratcheting up the margin requirements on what it defines as ‘low cap stocks’ (i.e. U$250m or
less market cap). It’s currently at Reg T standard level of 50%, but that goes to 75% on Feb
12th and 100% on Feb 14th (happy Valentine’s, retail longs). The rule change applies to twelve
stocks according to IB and one of the twelve is GORO. Just to be clear, what that means is that
GORO will no longer be available to be bought on margin at IB and those people holding GORO
(long or short) in an IB account will have to cover 100% of the share cost from funds (sidebar:
not a problem for me in either direction, as I haven’t used margin for many years, always keep
cash in the a/c and advise others to do the same; it’s a discipline thing). This may or may not
cause some extra selling pressure on the stock, as people prefer to liquidate rather than stump
up extra cash. We shall see.
Network Exploration (NET.v): Closing coverage. It’s done nothing at all and for such a
tiny position, it’s not worth carrying it here any longer. I’m not going to sell my shares (it’s
literally a few hundred dollars’ worth anyway) but I am going to remove it from the list as from
next week and book the loss at 50% in the closed positions, assuming it doesn’t move between
now and next weekend.
Pretium Resources (PVG) (PVG.to): PVG may have peaked on the Vancouver Resource
chatter of the previous week marking it up, while Quartermain’s keynote speech at Round Up
didn’t have quite the same effect. Meanwhile, the company announced (4) on Tuesday that it’s
11

holding a technical session webcast on February 12th to explain its side of the story on the key
Brucejack VOK deposit. The session will be run by “...Pretivm's senior management and an
independent Qualified Person representing Snowden Mining Industry Consultants”, though no
word on whether Strathcona will be invited to talk as well. Yeah, that’s a joke. More seriously,
this webcast event is a must-attend for anyone with an interest in this story and that includes
me. The question that bubbled up for me is whether PVG will wait until after the presentation to
announce its bought deal financing, or whether it will feel obliged to put all cards on the table,
open the deal before the show and then use the event to attract buyer attention.
Focus Ventures (FCV.v): Last week FCV received the drill permits for its planned Bayovar 12
program, but there’s been no announcement on that because in Peru the permits only work
when the “Initiation of Activities” permit is released, and they’re still waiting on that one (it
takes up to 30 days after drill permits come out the system. All that’s a long way of saying that
the drill program is probably going to get set back slightly and start in March. I’m still slated to
go watch the drills turning, however. Trading was light and this week, no painting on Friday
meant that the stock finished lower. No biggie.
Darwin Resources (DAR.v): Still no results from the Suriloma drill program, which means
we’re running slightly over the (admittedly unofficial) timeline of “by the end of January” heard
previously form management. Trading thin again, the percentage loss was big but in the same
style as the week before and its big upmove, nothing much to read into that before real volume
starts flowing through the ticker.
Dalradian Resources (DNA.to): The news Monday brought a wistful sigh, but overall I don’t
think the bought deal is a bad thing for DNA. It certainly helps to have bought the stock at
cheaper prices, as my hit surely feels much less than anyone who added in 2014. See ‘Market
Watching’ below for a few more thoughts on the sudden spate of deals being run by juniors at
a discount to the most recent traded prices, at least.
Lara Exploration (LRA.v): Mouselike quiet in LRA, with very thin trading (three days of zero
volume, for example). In other news we hear company president André Gauthier is marketing
in Dubai (of all places), make of that what you will.
B2Gold (BTO.to) (BTG): The interesting one here is the volume, as we assume BTO to be a
“junior leader” and bellweather stock. On
Thursday, the Toronto BTO ticker had
traded volume of under 1m shares for the
first time since October 10th, with the
whole week down ~50% from its average
traded volumes.
History shows that BTO generally needs
volume and trader interest to put in (and
lock in) gains. The other thing that’s
emerged recently is that BTO is one of the
bellweathers for the larger sector. In sum,
as a long I’d like to see volume return to
BTO and not see another week like last
week’s, but the longer-term position now
kept on the list isn’t going to worry me a great deal though I’d be more worried as trader and
it’s not one you should be rushing into for flip to a higher price until the volume ticks back up.
I’m a little more concerned about the sector signal coming from BTO, though.
12

Minera IRL (IRL.to) (MIRL.L): I need to cover IRL closely and have been gathering some
information on the stock, but not enough yet. Please bear with me for another week. For the
moment nothing has changed, it’s still under the kosh and tight for cash (as the small shares
for debt deal last week (5)) indicated. We also had confirmation that the Rio Tinto share
payment was done (6) and after those two changes, IRL now has 228.9m shares out. That’s a
lot and it’s moving towards too many, so a deal to finance Ollachea needs to come sooner
rather than later in order to put this company’s finances on a steadier keel.
The Copper Basket
After five weeks of 2014 The Copper Basket is showing a 8.17% gain to level stakes.
company ticker price 1/1/14 Shares out Market Cap current pps gain/loss%
1 Augusta Res AZC.to 1.51 144.41 288.82 2.00 32.5%
2 NGEx Resources NGQ.to 1.43 168.71 261.50 1.55 8.4%
3 Reservoir Min. RMC.v 4.97 41.76 256.82 6.15 23.7%
4 Lumina Copper LCC.v 6.29 44.07 252.96 5.74 -8.7%
5 Copper Fox CUU.v 0.375 402.96 134.99 0.335 -10.7%
6 Hot Chili Ltd HCH.ax 0.425 333.11 129.91 0.39 -8.2%
7 Nevada Copper NCU.to 1.35 80.5 114.31 1.42 5.2%
8 NovaCopper NCQ.to 1.60 53.4 80.63 1.51 -5.6%
9 Panoro Minerals PML.v 0.35 204.71 66.53 0.325 -7.1%
10 Western Copper WRN.to 0.76 93.68 62.77 0.67 -11.8%
11 Curis Resources CUV.to 0.57 74.79 50.86 0.68 19.3%
12 Coro Mining COP.to 0.10 160.8 22.51 0.14 40.0%
13 AQM Copper AQM.v 0.11 139.05 19.47 0.14 27.3%
14 Cordoba Min. CDB.v 0.45 31.88 19.13 0.60 33.3%
15 Oracle Mining OMN.to 0.27 49.03 11.28 0.23 -14.8%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg 8.17%
The basket average rose by 1.5% from last week, which was a pretty decent performance in a
choppy market and lower copper prices. There were eight winners (NGQ.to. AZC.to, RMC.v,
NCU.to, PML.v, COP.to, AQM.v, CDB.v), one unchanged (CUU.v) and six losers (LCC.v, HCH.ax,
NCQ.to, WRN.to, CUV.to, OMN.to). The biggest winner came from Augusta Resources (AZC.to
up 14.3%) and the worst loser Western Copper & gold (WRN.to down 16.3%).
The copper market had a rotten week (for bulls at least), though we should immediately point
out the Chinese New Year and the way in which the country stops for the period (next week
likely to be quiet, too). Still, the bullish bravado of early January has now fizzled away and the
people your author commented upon in IKN244...
13

“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.”
...are much thinner on the ground. The ‘inventories are rigged and the normal signal therefore
inversed’ argument is one we’ve chewed over several
times and I’m not going to repeat myself here. For
what it’s worth, I still think it valid and remain mildly
bearish in the medium term, but on the other hand
there’s no real reason to expect a full scale dump from
the copper price. We have a trading range (~$3.15 or
$3.20 to $3.35) so let’s stick with it, though for the
current inventories signal to play out correctly we’d
want to see inventories starting to rise again once the
Chinese New Year is done. Regarding that, the
Chinese New Year festivals and holiday period officially
ends Wednesday, but nobody is expecting anything of
great importance in the days after and next week will
surely be quiet in China. The action there returns on
Monday 10th Feb.
Speaking of inventories, here are the world stocks
numbers including as usual the end-of-month comparative tables. World stocks dropped by a
fairly big 18,566mt (3.78%) to stand at 472,919mt and handily below the psychological 500kt
barrier. The big change came from the LME stocks, down 21,250mt (6.3%) to 314,525mt, a big
move for the world’s biggest warehouse system. Comex stocks rose sharply, in percentage
terms at least, by 2,684mt (18.1%) to 17,481mt. Shanghai was unchanged at 140,913mt, due
to the holiday closure.
So to the monthly tables and what those show in the bigger picture is that LME stocks have
dipped under 70% of world totals for the first time since April last year (now 66.51%) and that
Shanghai, back at 30% (bar a couple of tenths) registered its first monthly net inflow of copper
since June.
Copper inventories: percentage held per exchange
80
70
60
50
40
30
20
10
0
With world stocks now back under 500kt, we’re now back to the stock levels we saw in 2013
and before the financial jocks started gaming the LME warehouses for their own ends.
Now for thoughts on some of our component stocks:
Augusta Resources (AZC) (AZC.to): Another big week for AZC sees the stock put a 2-
handle back on its price. Volumes were strong too, averaging 200k over the five days of trading
14
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 41.naj
Copper inventories, per month 2012/2013
1000000
LME Shanghai Comex 900000
800000
700000
600000
500000
400000
300000
200000
100000
0
source: Cochilco
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj luj gua pes tco von ced 41.naj
Mt Cu
LME Shanghai Comex
source: Cochilco

in Canada and 400k on its US ticker. The
move in 2014 has all the hallmarks of
speculators deciding that AZC is going to
get the permitting decisions it wants
from the Army Corps of Engineers and
now that the clock is ticking on the
process (we’re 32 days into the 120 day
permitting process that should bring a
Record of Decision and then permits),
the market is warming to this story once
again. That’s fine but as discussed in
previous editions, this is one that I’m
going to sit out as there are still potential
traps and problems for Rosemont, even
if the Army guys give them the green
light.
For what it’s worth, my call is that for those of you looking to bet on a political/community
outcome the odds are starting to look better for our next commented stock, Curis.
Curis Resources (CUV.to): This one is becoming interesting and those of who you high
risk/high reward set-up should take note. We know that the CUV (via its local subsidiary
Florence Copper) has been at loggerheads with the local town of Florence for a long time and
we know the politicking has several layers. We also know that in a couple of months we have a
key court date for the project and the fate of the argument. Nothing new (or particularly
detailed) so far, but what we heard last week from Florence Town manager Charles Montoya
was what looked like a clear softening of the town’s position and a willingness to do some sort
of deal. In this interview (7) the man responsible for town planning in the locality was asked
about Florence Copper in 2014 and gave this response
Reporter: What’s going to happen with Florence Copper in 2014? Are you feeling
good about the town’s eminent domain case?
Charles Montoya: It is one of those things. It’s hard to … whatever side of the
equation you’re on it’s difficult to make a clean argument that this is the right thing, or
point at the other side of the spectrum and say ‘You guys are wrong.’ But what council
is trying to do is take into consideration the feedback they’ve gotten from the
community … to ensure that their voices are being heard. … The residents have asked
them to do this, and this is where it’s at.
Will it change? I don’t know. There’s always that opportunity that both sides can figure
something out, ok? But at this point in time we’re not there yet. I think the door is
always open to discuss things; we’ve always left our door open. We communicate with
individuals from Florence Copper, I don’t want to say regularly but often enough. So
that they know if there’s an opportunity that both sides can sit down and resolve this
issue, we want to make sure that opportunity is out there and the door is open. But
right now the council has made a decision based on what the community has told
them.
Now maybe, just maybe I’ve got too used to the direct and head-on-conflict way that problems
are aired in Latin America and there’s a cultural interpretation missing from my analysis, but
that doesn’t look to me to be anything close to an intransigent position on the part of the
Florence local government. Yes they’re doing what they’ve been asked to do by their citizenry,
but phrases such as “..difficult to make a clean argument that this is the right thing, or point at
the other side of the spectrum and say ‘You guys are wrong’...”, “we’ve always left our door
open” or “resolve this issue” say to me that the locals are at least willing to do a deal in good
faith as long as conditions are right.
If things start going the way of CUV, we should expect the 12 month pilot plant to begin
production and that would start fairly quickly. There may be a safer (i.e. less risk/less reward)
15

window once the company has kicked off its smaller-scale production, but those looking for the
potential double and are willing to take the risk that the town is moving towards a deal (please
note the repeated use of the word ‘risk’, it’s there for a reason) would be those moving in now.
I’m in two minds, personally. Not against a bet on a favourable political risk decision, but I’ve
already made the type of “this’ll be wrapped up in six weeks” error on buying things like Eco
Oro and I don’t want to fill my portfolio with too many small scale longs (too easy to end up
with 55 positions and not remember why you bought half of them in the first place). I’m
tending towards waiting out the first bloom and potentially picking up a smaller win on lower
risk later in the year, but the story is now well worth close coverage in the immediate future for
signs of a deal that will allow CUV to operate.
Reservoir Minerals (RMC.v): The week started with RMC delivering an initial resource for its
Timok property (the JV with FCX) and the numbers were hotter than July. It’s still in the
inferred category (drilling tends to be deep, it’s still fairly early stage and there’s a lot more
work that needs to be done on the property) but all the same, the inferred resource was an
eye-popper of 65.3 million tonnes (mt) grading 3.5% CuEq (2.6% pure copper, the rest made
up of the 1.5 g/t gold kicker) which gives a total resource of 3.75 Bn Lbs Cu and 3.1m oz Au, all
at a 1.0% CuEq cut-off. Details and opinions already abound on the project, I’d like to mention
but four things and in bullet point style:
1) This is an initial resource and the likelihood of more resource discoveries at or around
Timok (or Cukaru Peki, as it’s now being named) are high.
2) The style and shape of the deposit suggests that it can be accessed and mined from
one side with reasonably straightforward logistics, which would then allow access to the
deeper and mineralization further down the line. It’s way too early to make definitive
engineering plans of course, but in theory at least this could start as a smaller, high
grading operation and expand as access to the main deeper parts becomes easier. This
inference here is of a mine that could run for decades.
3) The grade is exceptionally good and what’s more, contains a very high grading area
(13.1% CuEq!!). This is flat out economic, the only question is “how good?” on the final
plans.
Meanwhile, next Tuesday sees RMC give a technical presentation on its Timok property (8)
entitled “Copper-Gold Exploration and Discovery in the Timok Magmatic Complex, Serbia” which
is bound to be closely watched and widely
commented upon by the Canadian
exploreco community. In the meantime the
stock continues to rise in fine style and this
time the $6 handle looks like sticking
(volumes being much higher than before). I
therefore take yet another opportunity to
kick myself hard for not buying when I
should have bought last year. RMC has
momentum and has bucked the copper
juniors’ downtrend for well over a year
(currently remembering the photos of a
happy and celebrating Miles Thompson at
PDAC last year, while all around him was
gloom and doom). Good for them, but this
story is now wide out in the open and not one for these pages.
The Low Cost Producer Basket
After 5 weeks of 2013, the Low Cost Producer Basket is showing a 7.77% gain to level stakes.
16

company ticker price 1/1/14 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Freeport FCX 37.74 1040 33.71 32.41 -14.1%
2 Goldcorp GG 21.67 812 20.21 24.89 14.9%
3 Barrick ABX 17.63 1000 19.28 19.28 9.4%
4 Newmont NEM 23.03 497.87 10.75 21.60 -6.2%
5 Silver Wheaton SLW 20.19 357.39 7.76 21.71 7.5%
6 Franco Nevada FNV 40.74 147.01 7.12 48.45 18.9%
7 Agnico Eagle AEM 26.38 173.43 5.39 31.08 17.8%
8 Pan American PAAS 11.70 151.41 1.91 12.60 7.7%
9 B2Gold BTG 2.02 651.4 1.52 2.33 15.3%
10 First Majestic AG 9.80 117.02 1.22 10.44 6.5%
all prices in U$, using NYSE ticker prices Portfolio avg 7.77%
A drop for our basket and there are now two components weighing heavily on its comparative
performance to our benchmark (the GDX, which is up 11.12% YTD). Four stocks went up (ABX,
GG, FNV, AEM) and six went down (FCX, NEM, SLW, PAAS, BTG, AG) with the biggest move
being the 13.2% lost on the week by Newmont. The culprit was news and the market’s reaction
thereof. Newmont (NEM) provided 2014 guidance on Thursday evening (9) and disappointed
the market, which proceeded to whack the stock by over 10% on Friday. Along with guidance
that it would take a write-down charge on gold reserves resources (which was expected and
won’t be not so bad, with NEM going for $1.3k for the reserve baseline and $1.4k for
resources), it forecast FY14 production of between 5m and 5.3m oz Au. That compares with
5.1m oz in 2013 and fell short of most analysts’ expectations (a typical marker was 5.5m oz.
NEM guided down costs by 20% and that’s probably the reason why production will be shy (call
it highgrading if you must).
So this weekend NEM finds its stock at the lowest level since the height of the financial crisis in
November 2008 and for my money, it’s been overly castigated for its guidance. We’ll know
more on February 19th when NEM reports its 4q13 earnings but this level looks like a bargain to
me and with the write-down out the way and costs scheduled to drop, earnings should prop up
this share price level pretty easily in the year to come. As at 3q13 working cap was still over
$2Bn and there’s plenty in straight cash treasury in that, too.
Regional politics
Argentina: The world piles on, plus reaction from the country’s mining sector
Unsurprisingly, the world’s economic experts (and not so experts, with Argentina’s opposition
paper La Nacion giving a local TV star front page page to state that the forex rate should be
10:1 with the dollar at one point last week) took it in turns to lambast Argentina for its
devaluation move, as well as its other measures that are designed to free up at least some of
the very heavy restrictions on forex trading. Much of the attention is taken up by Argentina’s
International Reserves position (as although a mere symptom and not the cause it’s an easy
one to follow, while the real baseline problem of the government’s fiscal deficit requires a
working knowledge of the country and its day-to-day economy) and the thrust of all arguments
against the country (do we have to suffer “Don’t Cry For...” headlines every time?) went along
the lines of “it gets to zero and the place implodes”, or some such.
Well ok, fair enough, but on further examination behind the screaming headlines and news of
bonds dropping like stones (traders like a panic) we should at least recognize that 1) last week
the Peso stayed firm and closed at ArgP$8.03 (8.01 this time last week) and the “Dolar Blue”
(black market rate) closed at ArgP$12.65, up from the $12 of last week but hardly a massive
slippage. And indeed, if we compare the numbers from before the deval of two weeks ago to
now, things are more under control than they were (though you’d hardly believe that from the
media coverage).
17

Example 1: On December 31st, the Dolar Blue stood at 10:1. The day of the main deval
move, it stood at 11.70 to 1 dollar, i.e. it lost ArgP$1.70 in the space of three weeks. In
the 10 days since the Central Bank deval/government policy change move, it’s lost
ArgP$0.95.
Example 2: The media is this weekend very keen on telling you how Argentina’s
international reserves dropped by U$2.5Bn in January alone (U$2.499Bn to be exact).
However, only $156m of that drop came last week, the large majority of the outflow
happened in the first three weeks (yet again, before the government deval move).
I’m not out here defending this government with gusto, sword and shield. I am saying that the
coverage has been twisted out of all proportion in the last few days and has the look of a world
trying desperately to cause a crisis, rather than report on one. I don’t think Argentina is in great
shape but it’s not that bad, either. If I were a bonds trader I’d be very interested in picking up
some of those Argentine BODEN15 dollar bonds, which ended Friday paying 19% on paper that
matures next year. On the other hand, those who wait for blood in the streets before buying
are going to be disappointed in Argentina 2014 vintage; this country isn’t anywhere near its
2001 state of despair yet and isn’t going to collapse in the year ahead, no matter how much
The Economist would wish otherwise. Meanwhile, if the rumourmill only has a quarter of its
facts right (10) (11) (both Spanish language links and only really useful for people who know
their Argentine politicos) we’re likely to see measures from the CFK government to counteract
last week’s negativity. There are still plenty of tools at the country’s disposal today, which again
marks the current situation as very different from the ordeals of 2001/2002.
As for our main interest in the whole affair, that of mining in Argentina, some sector bigwigs
are already making hesitant but mildly positive noises about the change in the macro backdrop
(12). Julio Ríos Gómez is president of the Exploration Mining Company Group of Argentina
(Grupo de Empresas Mineras Exploradoras de la República Argentina, aka GEMERA)), the main
chamber group for explorecos there. He said that, “...it could be an interesting measure that
can bring competitiveness back to the country’s mining industry, which is mostly funded by
foreign capital, as this will generate a larger quantity of pesos (in cashflows etc)”. He went on
to say, “The devaluation was necessary, the question is until when it will be effective. The dollar
has to be worth what it’s worth, and the same for everybody (a reference to the 35% breach
between the official and Dolar Blue rate). It’s wrong to say that it’s worth 8 pesos, things are
what they are; as they’ve printed so much money, it’s logical that there is inflation and
devaluation because they don’t generate a strong (monetary) base. Devaluation will improve
the provincial/regional economies but it’s not the solution; the solution is to have an exchange
rate that’s attractive for investors.”
We also heard from Jaime Bergé, president of the San Juan Chamber of Mining (the pro-
Kirchner, pro-mining western province), who said that the devaluation (translation), “...will give
us breathing space, because production (up to this moment) was being sold at the 6.5/1 rate
(minus 5% retentions), but internal costs of production will rise so in five months things will be
roughly the same.”. He went on to say that things would get better and this is a break for the
industry, but the country still needs more fundamental changes to its model in the style that
Nestor Kirchner brought in when elected President. That was a time when the Peso moved from
the official post-crisis ArgP$1.40 to ArgP$4, hastening inflation but bringing liquidity and cheap
prices for foreign investors.
Uruguay: Mujica pressing home the pro-mining message
Last week during a cabinet meeting (and after the largely successful though policy-thin CELAC
regional heads of state meeting in Cuba) President José Mujica once again underscored his
support for the growth of large scale mining industry in Uruguay. Yet again the focus was the
test case Aratiri iron ore project (Brazilian capital company) and as reported (13) in the
country’s paper of record, El Pais (translated), “...he made it clear that he had made his
decision not to stop the iron ore mine project, which is opposed in some provincial localities by
18

several environmental organizations.” He then told his ministers to prepare the government’s
pro-mining case with a range of arguments, with particular emphasis on the key Aratiri mine
project.
Peru: Santos to have preliminary hearing on kidnapping charges March 31st
A potentially key date coming up in Peru, one that I personally expected would happen during
last year (bureaucratic delays in Peru, wow what a shocker) but had to wait until 2014. On
March 31st, regional governor of Cajamarca Gregorio Santos is set to appear (14) before a pre-
trial/preliminary hearing of a criminal case brought against him. I’ll save the details, but in
broadstroke terms a woman claims Santos kidnapped her and held her against her will for 72
hours in October 2005. The events happened when Santos was head of a local “ronda
campesina” (a rural self-government group, typical in the Cajamarca and Andean high country
regions) after the death of another local. Santos accused the woman of having killed the man
or having taken part in his murder, which she denies.
Santos has recently admitted that his candidacy for re-election to governor will depend on what
happens at the pre-trial and/or eventual trial. There’s clearly a political element to the timing of
the court case and there are plenty of people (particularly in the national government offices in
Lima) who would like Santos out of the picture so that a governor more friendly to national
political line, which applies particularly to mining, can have an easier run at the local governor
post. However there is a case to answer here and nobody ever said politics would be a clean
cut game, so it’s all fair enough from where I stand.
However, we the mining speculator should keep a close eye on events, because it’s not just the
big, headline projects like Conga that may be affected. Along with others such as Galeno
(China), La Granja (Rio Tinto) and other large projects, there are juniors which may benefit
from a scenario sans Santos such as Sulliden Gold (SUE.to) or Southern Legacy (LCY.v). So we
have two months’ notice on the slated date of the hearing and we’re in an election year, too.
Watch this space.
Colombia: A relocation precedent
It’s a story from the Colombia coal industry, rather than hard rock or PM mining, but it’s still
one we should care about because precedent may have been set in Colombian mining which
helps future negotiations and deals between companies and locals. Last week a deal (15) was
reached after a three year period between three mining companies operating in the
Northeastern corner of the country (one each owned by Drummond, a local subsidiary of
Goldman Sachs and Glencore/Xstrata) to relocate 173 families from an area close to where strip
coal mines operate. The families have complained of health issues such as respiratory diseases,
as well as their agricultural lands becoming infertile since the coal operations began. The deal,
which will cost the three companies a total of around U$1.5m, means that the locals get new
land and houses away from the immediate area.
Peru, Chile, The Hague, the big maritime border dispute update
The decision came through and for most analysts and commentators (your author included) the
decision made by The Hague courts was generally equitable but favoured Peru more than Chile.
Neither side got what they wanted and both sides were given some benefits (details available in
a plethora of reports), but the important message is that both sides firmly intend to stick to the
deal as handed down. This is good and it makes it a non-issue for us, as expected.
Chile adds value to its moly
Chile’s State-run miner Codelco announced last week (16) a U$400m investment in a moly
processing plant that is due to open in 2015 and will be able to process 16,000 tonnes of the
country’s current 20,000 tonnes average annual output, adding value to the metal before it
leaves the country (the main destination is Japan) as well as benefitting from byproduct credits
from copper rhenium and sulphuric acid production (and as we know, there’s a ready market
for H2SO4 in Chile)
19

Market Watching
Some near-term trade ideas
On watching the market flow last week, several trade ideas came to mind. As is often the case,
some get dismissed quickly and others eventually become strong enough in my mind that they
become active trades for my own cash, but there are always those that pass first or second
viewing but I don’t act on them for my own reasons (too chicken, no available cash, don’t want
“that kind of stock” right now, a dozen other pathetic excuses). So with the scene set, here are
five names I’ve been thinking over which you can pick up and run with if you desire.
• Regulus Resources (REG.v): What I don’t like about this stock is its location (Argentina)
and the results of its exploration at Rio Grande so far, which have shown plenty of
promise but nothing particularly concrete or enough to build a mine around. The other
thing is that the exploration there means deep holes and is therefore expensive. But
what I like (or liked when I saw the news) is the company financials, because they’re
holding roughly 12c/share in cash and 13c/share in working cap, no debt and being
very parsimonious on the burn rate right now. On publication of its quarterly last week,
REG.v shares popped from 13.5c to 15c as people saw the amount of backbone and the
way it wasn’t going to disappear quickly due to the company being in near-hibernation
mode. The bottom line here is a company that’s not going to drop much in share price
and if Argentina starts getting a better reputation or spec cash moving its way, it could
see some upside that may be modest in cash terms compared to previous levels of
share price (it was $1 and above, recall) but very decent in percentage terms.
• Fortuna Silver (FVI.to) (FSM) has gone from overly cheap to overly expensive and is
shortable from here in very-near-term trade terms. Back in IKN236 when we ran our
latest NOBS report on the stock, its price ($3.75) looked neither cheap nor expensive,
but the way silver has been weaker than gold (there’s a 6% gap between SLV and GLD
for trading in the month of January) compared to the boost in FVI’s price (it’s
performed better than most gold stocks) suggests current overpricing. A lot of that was
due to the decent 4q13 production and 2014 guidance it posted, some of it looks
overbought due to momo. FVI is 10% to the good over (the normal) sector leader First
Majestic (FR.to) in the last two weeks alone, which ignores just about all of the upside
that came from the early January production pop. FVI.to closed $4.03 on Friday and
seeing $3.50 again if silver doesn’t improve wouldn’t surprise me in the slightest. Also
potentially the short side of a pair trade (FSM paired with with AG/FR.to perhaps?)
• Curis Resources (CUV.to) could be a buy. We’ve watched Augusta Resources (AZC.to)
(AZC) run well on positive speculation on political developments, so why can’t this
smaller entity working the same metal in the same general area catch a few bids too?
The signals from Florence (see above) are of a town that’s gently softening its position
in the run-up to some potentially important court hearings.
• Marlin Gold (MLN.v): I saw this drop back to 7c at one point last week (a price that
didn’t last, it popped back to 9.5c by Friday’s close) and on seeing the new low price
shot a mail to the company people asking whether I should be a buyer. The answer
was yes (fine surprise there) but they were kind enough to supply an upside of the
build-out at the Trinidad gold mine they’re building in Mexico (we covered this a little in
last year’s Lottery Ticket Basket). The thing I most liked about what I heard is that MLN
is close to providing a public NR update on progress and aside from a few minor
glitches, the project is advancing very well and should be pouring gold soon. Moments
such as first gold pours are great opportunities to get market radar and share price
movement and I’m quite sure that MLN won’t waste their opportunity. It has a lot of
shares out, but at under 10c could give an interesting little rise over the next couple of
months.
20

• Falco Pacific (FPC.v): I’ve never mentioned this stock before, either here or at the blog,
but it passes the type of smell test I want from an exploreco, has decent assets at a
time when assets may begin to see revaluation, is run by a peer-respected team with
decent market successes to their names and (perhaps the piece that makes a
difference) is due to come out with solid news on their main project in February. Its
share price has seen some very springy rebounding in the last few days, the type that
often signals news in the pipe.
So there you go, five ideas (four long, one short) that I’m not going to trade myself (well, not
until further notice) but I consider interesting enough as ideas to waste space in this week’s
Market Watching. As mentioned on countless other occasions, The IKN Weekly’s stock recos
(that normally sit in the Stocks to Follow section) show what I’m doing with my money, but you
out there will always have different needs, attitudes, whatevers. The five ideas above should by
no means be considered as actionable trades, but more ideas to start you off on a potential DD
path, that’s all.
By subber demand, the Radius/B2Gold ratio revisited
Subscriber D wrote in to ask for an updated table on the potential for arbitrage between B2Gold
(BTO.to) (BTG) and Radius Gold (RDU.v), what with RDU’s main asset being shares in BTO (as
explained in previous editions). So here we are, with a new price deck and different prices for
RDU reflecting the change in the arbitrage and potential now that BTO.to is trading significantly
higher (it closed Friday at $2.63).
Radius Gold (RDU.v): Arbitrage to B2Gold share price movements
BTO pps ($) other assets ($m) RDU "fair value" % arb to 12c % arb to 11.5c % arb to 11c % arb to 10.5c % arb to 10c
2.00 2.29 0.116 -3.38 0.83 5.41 10.43 17.72
2.10 2.29 0.120 0.35 4.72 9.48 14.69 22.69
2.20 2.29 0.125 4.08 8.61 13.55 18.95 27.67
2.30 2.29 0.129 7.82 12.50 17.62 23.22 32.64
2.40 2.29 0.134 11.55 16.40 21.69 27.48 37.62
2.50 2.29 0.138 15.28 20.29 25.76 31.74 42.59
2.60 2.29 0.143 19.01 24.18 29.83 36.01 47.56
2.70 2.29 0.147 22.74 28.07 33.89 40.27 52.54
2.80 2.29 0.152 26.47 31.97 37.96 44.53 57.51
2.90 2.29 0.156 30.20 35.86 42.03 48.80 62.49
3.00 2.29 0.161 33.93 39.75 46.10 53.06 67.46
source: RDU data, IKN calcs
We previously argued that aside from factoring in the future cash burn of RDU there’s no
reason why there should be a big gap between the two, but on consideration we need to set
some kind of chunky arb opportunity to be interesting enough to buy the smaller name and
eschew the bigger and safer one. That was previously set, for my tastes at least, as 30% which
is represented by the gold (light brown?) shared area on the table. Or in other words, with BTO
being where it is today the threshold for any buy looks to me to be 11c, while 10.5c or below
would definitely tempt me in. RDU closed 11.5c on Friday, which is a good price if you’re in
already (did you get in at 10c when I was fishing for 9c? If so well played) and promises
upside, but it’s not my idea of the deep value I want for the trade. Still watching, though.
A trading plan (and a specific buy) based on recent deal action in juniors
What follows is a plan to trade juniors that stems from the recent uptick in financing deals,
particularly the bought deal type of placement. First comes the background, then the strategy
to trade what has all the hallmarks of a new trend.
The background: As noted on the blog last week (17) (and in the DNA segment above), most
recent arrivals on the scene are Dalradian (DNA.to), Lydian (LYD.to) and True Gold (TGM.v),
but we can also include Torex Gold (TXG.to) and Timmins Gold (TMM.to) to the list of
21

significant bought deals in January.
The reason it gets mentioned here is that there are several similarities with the companies and
deals, so let’s start with a quick rundown of each one.
• Timmins Gold (TMM.to): TMM closed 2013 at $1.13, was rushed up to $1.73 on
January 21st and that evening announced a $1.50 bought deal to raise $25m. The next
day it closed down 12.7% at $1.51, we’re now back at $1.42.
• Torex Gold (TXG.to): A similar story here, as TXG was 94c at the turn of the year,
found people willing to pay, got the stock up to $1.37 three weeks later and on the
same January 21st announced its bought deal to raise a cool $125m at $1.20 a pop. It
closed down 23c (16.8%) the next day at $1.14.
• Lydian (LYD.to): After spending much of late 2013 well under a Loonie, LYD suddenly
found bidders and in the space of two weeks launched up to handily over $1. Then
came the 15m share bought deal, marked at $1, which knocked the stock back from
$1.12 to a close of $1.05 on the day.
• Dalradian (DNA.to) next, which happened early last week. Again the run up from
persistently sticky lower numbers, again a high, again a bot deal announced at a
significantly lower price than the market was paying the day before. DNA dumped
15.6% on the news and finished a penny under the bought deal price of 70c on Friday.
• Lastly True Gold (TGM.v) and again the same pattern of stock suddenly ramping, then
a bought deal plenty under the previous day’s price (this time TGM dropped over 15%
from 46c to finish the week at 39c, a penny under the bot deal’s 40c per unit ticket).
As we can see, each one has seen its price run up before the deal. I’d agree that in some cases
that might be due in part to renewed market interest in the sector, but others have been more
obviously gamed into the deal announcement (step forward True Gold and Dalradian). Putting it
crudely what we’ve seen, 20/20 hindsight and all that, are trading desks opening up on the
specific stocks in order to set the ground for the deal announcement.
Then comes the deal, always a bought deal, usually at a deep discount to the day’s close. One
way of looking at it is that the deal seems very competitively priced to the instos and accredited
investors who’ll get offered the new shares and most of them come with a temptingly priced
half warrant, too (TGM’s 47c half warrant is priced at the level the stock had just left behind
and looks a real juicy extra to my eyes, just to name one). Another way of looking at it is the
brokerages running these deals know the companies are in need of cash and when they say
“Hey guys! Bought deal! Guaranteed no-risk funding!” they can demand a deeper discount due
to the current macro sector circumstances...and frankly, none of these companies are in the
position to refuse a deal like these right now, heavy mark-down or not. This is a buyer’s market
and no doubt about that so let it be known here that although my personal port took a hit due
to the drop in DNA.to, I think the company has made the right decision and I’ll take my chops
on this one happily enough.
Ok, connections made, but there’s one more thing to add. With the possible exception of
Timmins Gold (TMM.to), which is a producer and has its own particular liquidity problems to
resolve right now, the others have the common thread of owning what the market considers to
be “quality gold projects”. This is arguable of course and there are other factors such as
political risk that make some less attractive than others (in my view), but at the very least, the
rocks and/or the potential economics behind the flagship properties of TXG, LYD, DNA and TGM
make them more highly regarded than the average exploreco out there. As it stands to reason
that the better projects will move forward more quickly and be more interesting to developers
and backs than the more marginal ones, it stands to reason that the “quality” (used explicitly
with inverted commas) companies will attract funding first. They’re also run by management
22

teams that can at least point to previous successes in the exploration field of the type that
made shareholders money. Those people tend to have leverage at the time the next deal
happens.
So to recap, in the last few weeks we’ve seen a spate of bought deals for junior goldies that
have what are regarded as better quality projects on their books. They’re run by teams with
track records for success. They need to raise cash in order to move forward. The bought deals
came just after price run-ups that were at best convenient, with the more cynical amongst us
(count me in) saying that the market was rigged to set these deals up. And when they came,
they were all priced very competitively to the previous day(s) action and often with a temptingly
cheap half warrant, too (instos like clipping warrants). We therefore saw big drops in all these
share prices as the company traded the opportunity to get the financing it needs for the drop in
share price it needed to take in order to get the financial people to step up and fund them.
The trade strategy: What I’ve attempted to outline above is the way this new rash of deals
have plenty of similarities, i.e. it’s a trend (or at least a trend in the making) and trends, when
identified, tend to be our friends. From this point we’re going to take the point of view of the
investor and consider the attitude that brokerages might have at this point in the market cycle,
which goes something like this:
• We’ve been through a hellish year
• But things have started to get a little better, green shoots in the macro for miners
• This means there are spec players who are finally willing to start stepping up and
funding a few projects
• However, there are a whole lot of junior explorers out there, with a lot of them either
cash starved or plain desperate for money.
• This means that we, the people holding the purse-strings, can be very picky and choosy
about the projects we fund. We can go for (what we consider) the cream of projects
and favoured management teams and we can drive a hard bargain, too.
• This means the stock will be temporarily depressed price-wise as we get ourselves and
our favoured financial friends on board, but once the deals are done we can let the
stocks rise once more.
• And then make a profit and win. The end.
What these deals have in common is the way in which real money, i.e. the money of size that
isn’t lost in the swirl of the market but is new and goes to the companies in order that they do
things, normally has plenty of advantage against us the small retail player but at the moment
can demand even greater advantages from companies looking to finance. This is a buyer’s
market, they can be picky and choosy and then get a cheap price on anything they decide they
like. Therefore the essence of the plan is to coattail these people and buy the target
stocks while the deals are happening and the price is depressed. As long as gold
doesn’t cave on us completely (which is the obvious risk to 2014), chances are that the bigger
money now moving in will make their handsome profits at the expense of others. Meanwhile
money starts to flow again into the junior market and companies start doing what they’re
supposed to be doing. At least the better ones do because the crud of the pack aren’t going to
get offered this type of deal at all, heavily discounted units or not, the people with the money
want quality projects.
The process we use of buying on the coattails of the bigger money doesn’t have to be blind
buying, however. In the case of the above five, I’m not interested in buying TMM.to because I
don’t like its balance sheet. I’m not interested in Lydian (LYD.to) for the same reason that I’ve
never been interested about LYD; its political risk profile is too scary for my blood. Equally
Torex (TXG.to), which has done decent work on its community acceptance but is still located in
one of the highest pol risk ares of Mexico, Guerrero, and is simply not for me.
But that does leave Dalradian (DNA.to) and True Gold (TGM.v), both of which are interesting.
As it happens I already own DNA and as I’m reasonably happy with the size of the position right
23

now, I’m not adding. However True Gold (TGM.v) and its Karma project in Africa has been
talked highly of by enough of the people I trust in this business (eg Brent Cook likes it, as do
other smarter-end voices). It looked as though its price had skipped away from me, but thanks
to this bought deal there’s 39c stock available.
This is a punctual deal and if the trend holds, it’s not going to be the last one. The plan for
trading these stocks starts with the potential behind TGM.v (for me at least, you might like
LYD.to or another more) but if my suspicions hold, there will be more of these down the line.
Therefore the trade strategy requires you to have spare cash available in your portfolio in order
to take advantage of the deals and beaten-down prices as and when they occur. But for the
time being we’re going to start the ball rolling with one that’s already taken its hit on the
financing news and has the window of opportunity open and waiting for us.. True Gold
(TGM.v) will be a component of The IKN Weekly Stocks to Follow list as from next
week.
Conclusion
IKN247 is done, we end with bullet points:
• Coro Mining (COP.to) has managed to turn itself around. The return has been nearly
three years in the making, but to its great credit the company has managed to make
the transition without massive shareholder dilution. Now in Chile rather than Argentina
and with at least two smart projects to move forward, it’s the type of high potential
with low downside risk (thanks to that near term revenue stream) that I want for my
copper exposure this year. I’ve bought and will add as and when as 2014 unfolds.
• I’m also going to buy some True Gold (TGM.v), but this one is more near-term trading
and it’s for different reasons than the normal type of trade here. There’s a new trend
developing where big money wants into the better projects but wants its cushy deal,
too. If the theory holds, once this current TGM placement is done we should see it
return to recent highs (and perhaps go higher). Also true for DNA.to and others, but
TGM is the one on which I’m going to risk a few extra shekels in the weeks ahead.
• Curis Resources (CUV.to) is one that’s now worth a closer look.
• I’m not a buyer of Argentina-exposed mining company yet (there’s a long way to go
before the country gets its sector act together) but the message today is not to be
fooled by the screams of imminent collapse from those who’ve been against the CFK
government for years. Argentina is having a rocky ride right now, but it’s not going to
implode a la 2001. Apologies for being the bearer of good news.
24

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
Footnotes, appendices, references, disclaimer
(1) http://finance.yahoo.com/news/coro-signs-binding-heads-agreement-123000434.html
(2) http://www.coromining.com/i/pdf/130913-Berta_43-101.pdf
(3) http://incakolanews.blogspot.com/2014/01/tocqueville-dumping-gold-resource-corp.html
(4) http://finance.yahoo.com/news/pretium-resources-inc-brucejack-project-234758337.html
(5) http://finance.yahoo.com/news/minera-irl-announces-closing-share-150500339.html
(6) http://finance.yahoo.com/news/minera-irl-issues-shares-rio-181525395.html
(7) http://www.trivalleycentral.com/florence_reminder_blade_tribune/news/committee-to-attract-mentor-new-
businesses/article_48844736-891f-11e3-b87e-001a4bcf887a.html
(8) http://www.reservoirminerals.com/News/News-Release-Details/2014/Reservoir-Minerals-Inc-Conference-Call-Timok-
Magmatic-Complex-Presentation/default.aspx
(9) http://finance.yahoo.com/news/newmont-achieves-2013-production-target-221600209.html
(10) http://www.ambito.com/diario/noticia.asp?id=726714
(11) http://www.lanacion.com.ar/1660464-kicillof-pidio-ayuda-a-los-bancos-extranjeros-para-conseguir-dolares
(12)
http://www.laopinionaustral.com.ar/diario.asp?Modo=Noticia&NId=35116&texto=&A=2014&M=1&D=31&utm_content=b
uffer5ac75&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
(13) http://www.elpais.com.uy/informacion/mujica-no-frenara-proyectos-mineros.html
(14) http://peru21.pe/politica/gregorio-santos-citado-31-marzo-caso-petronila-vargas-2168014
(15) http://noticias.lainformacion.com/economia-negocios-y-finanzas/mineria/mineras-extranjeras-reubicaran-
comunidad-colombiana-contaminada-por-carbon_Jtmn3TtGAMG6vBNIODGdP4/
(16) http://www.equipo-minero.com/index.php/noticias/1249-codelco-inicia-construccion-de-planta-de-procesamiento-
de-molibdeno.html#UF0983
(17) http://incakolanews.blogspot.com/2014/01/dalradian-dnato-lydian-lydto-true-gold.html
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
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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-jan-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-dec-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-apr-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
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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
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
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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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