IKN #253Premium

The IKN Weekly
Week 253, March 16th 2014
Contents
This Week: Today’s main events, Eastern Ukraine, Mailbag, Fed Watch.
Fundamental Analysis: Focus Ventures (FCV.v) site visit and new valuation.
Stocks to Follow: Overview, B2Gold (BTO.to) (BTG), Pretium (PVG.to) (PVG), Gold Resource
Corp (GORO), Salazar Resources (SRL.v), Eco Oro (EOM.to), Santacruz Silver (SCZ.v), Dalradian
Resources (DNA.to), True Gold (TGM.v).
Copper Basket: Overview, Reservoir (RMC.v), Panoro (PML.v).
Low Cost Producer Basket: Overview, Barrick (ABX).
Regional Politics: Peru: Informal miners set to strike this week, Colombia: Latest presidential
election polls show Pres. Santos clear favourite.
Market Watching: Fortuna Silver (FVI.to) (FSM) 4q13 and annual headsup, The Venture
Exchange volume has a story to tell, Minera IRL (IRL.to) (MIRL.L) meeting, Rio Alto Mining
(RIO.to) (RIOM) meeting.
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
Today’s main events
Today’s main event is the Focus Ventures (FCV.v) site visit and the updated valuation on the
stock. Along with that, you have reports on Rio Alto Mining (RIO.to) (RIOM and Minera IRL
(MIRL.L) (IRL.to), thanks to the interesting and worthwhile face-to-face meetings I had last
week with those two.
As the bullish statement of intent should be clear enough by now, other matters (pressing or
otherwise) aren’t given as much coverage this week. The last couple of weeks have seen your
author via The IKN Weekly call bullish on this market, specifically in for the PM juniors and that
kind of call doesn’t change week over week (especially when main metal gold has performed
the way it has and the miners have reacted positively, too). Therefore, the main shout of
“whatever way you prefer, be long this market” is now in place and there’s no need to bang on
too much to a readership of intelligence and insight (that’s you, by the way).
And to make it clear, I’m adding to my FCV pile next week and it’s being moved to the main
recommends section of the Stocks to Follow list.
Eastern Ukraine
At time of writing Saturday (update, now confirmed), the hasty looking Crimea referendum
looks like one of the easiest plebiscites to call for the last few years and as indicated a couple of
weeks ago (largely due to the wife’s insight, your author continues in his general ignorance)
As also mentioned here a couple of weeks ago, the real trouble may turn out to be East
Ukraine. Signals are not particularly good right now, as the new news after protests and trouble
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in the large city of Donesk is that (1) “Russia will do “whatever is necessary to protect Russian
(speaker)s in Eastern Ukraine”.” To reiterate, the pragmatic line for Ukraine would be to allow
the Crimean Peninsula to go back to Russian sovereignty, but they’re much less likely to take a
gradual chipping away of its geography from the East. A diplomatic solution is needed on this
and fast.
The previous weeks’ mentions of Ukraine signed off with words along the line of “this is why we
hold gold”, which may have been misconstrued by some of you (judging by feedback) so a
quick word or three on previously covered ground is in order, by way of clarity. It’s one thing to
speculate on market moves and play the juniors (or even trade the day-to-day gold moves if
you want), quite another to hold gold. As in hold. That part is about covering geopolitical risk,
it’s about assuring your life’s baseline finances are in order, that if things do indeed go to pot
and we begin to live in actively interesting times you and yours will be in financial shape to ride
any period of rough weather. The act of owning bullion is a shield rather than a sword. it’s
assuring that you don’t go poor, not a desire to become rich. Play the market with dollars and
equities by all means, but that’s another thing.
Mailbag
Feedback from last week’s edition was most interesting. I enjoyed the exchange with reader
‘DL’, who sent this in his first mail:
But wait a minute there Mr. blog writer. All the wagging tongues at PDAC said hold off
there sonny - don't buy juniors yet. We're not out of the woods…. and credit to you
made mention of such goings on last week. I tend to believe what I see and judging by
the number of PP and bought deals popping each and every day you have to wonder...
is anyone other than a lonely old South American blog writer really in my court? Well
yes there are a few but they don't get the bully puppet on BNN or CNBC much.
You know every time I think I've had enough of this letter and begin to see it as an
contrarian indicator, you make a call that sees through the crap and you call them on it.
I don't know who "them" are, but I know they're are out there.
Also, here’s a comment from reader JCO who read me like a darned book (spooky when that
happens).
Mark,
Very useful this week. You read differently when you’re more interested, at least that’s
the impression I get. It’s not that you’re more bullish, it’s that you’re more focused, with
more adrenaline.
Agreed on that; the brain’s the same one, the interest level has increased and now I’m on the
prowl for a few serious financial wins, instead of dancing around at the edges. As mentioned to
a couple of others in exchanges, I think my renewed interest in this market is due to the way in
which I see a couple of years’ decent work ahead of us and at the end, retirement on the
proceeds. For me what we’re looking at in today’s juniors market is, quite literally, a golden
opportunity. Be long.
Fed Watch
We have FOMC this week, the Fed bulletin announcement at 2pm EST Wednesday and then at
2:30pm Janet Yellen offers her first presser as Fed head. The market fully expects another
$10Bn/month of taper to come off Fed asset purchases this month (i.e. from $65Bn to $55Bn)
and that would suit all participants, markets not liking surprises etc.
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Fundamental Analysis of Mining Stocks
Site visit to Focus Ventures (FCV.v) Bayovar 12 property
Last week your author got out the house, into a couple of planes and on a site trip so here we
go with the photoshow, commentary on what
you see and discussion of what FCV has going
for it at its new Bayovar 12 phosphate project in
North Peru. We then move to a discussion of
what this all might mean to FCV and even
though it’s early days, attempt to piece together
a new price target for the stock.
The trip
Your first photo is from the plane as we fly,
early Wednesday morning, into the Northern
Peru city of Piura, about 90 minutes flight time
from the capital Lima and 100km (62miles)
North of the FCV property. Piura is a big city; its
greater lying population is 430,000 which makes
it the 5th biggest in Peru, though its generally
low buildings and spread out nature makes it
feel smaller.
The nice driver man from FCV picked me up
from the airport and we were on our way out of
Piura, down the main Panamericana Highway
which around these parts runs very straight and
very flat.
About 15 minutes before getting to the rendez-
vous, we pass a main electricity relay station by
the side of the road. This is only a few clicks
from the Bayovar 12 property and is one of the
several strong infrastructure aspects of the
project.
We arrive and I’m met by FCV President David
Cass, who has been on-site for three weeks
(except for a sojourn to PDAC) in order to
oversee the drilling program currently underway
(those are his hands). Like any geol worth his
salt, the first thing we do is lay out the maps on
the flatbed of the 4x4 and he briefs me on the
tour.
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Here below is the same map with my scribbles on it to help comprehension. We were yards off
the Panamericana and right next door the one corner of the FCV Bayovar concession (by way of
reminder, they’re currently optioning into 70% of the property, with work plus $0.75m payment
in September + $3m payment in 2015 to earn in, then FCV has first right of refusal to buy the
other 30%). The concession is big at approx 16km by 7km and is outlined in red on the map.
I’ve circled that in blue again, because it got a bit messy and lost under the notes.
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We had three main stops on the project. 1) was in the North edge to see where some
phosphate (the top sequence, and not the layers that FCV is drilling and looking to make into a
resource) was exposed on surface. 2) was the first drill rig of the two that are currently drilling
in a regular rectagle grid pattern on the left hand portion of the property. Then 3) we moved
roughly 6km West to the other edge of the drilling grid to see what the other drill was up to.
From there we drove West and to the small private phosphate mine that’s being run by locals.
It’s squeezed between the FCV concession and the other larger mines and projects owned by
Vale and Hochschild. We drove past the Vale operation (we were’t allowed on site, Vale doesn’t
care for visitors) but we did get to see what Hochschild was doing at its Fospac project,
currently the site of a brickmaking factory, potentially a phosphate mine too. Finally we drove
to the cost and the location of Vale’s dedicated port for shipping out its phosphate product, as
well as the location of FCV’s base camp, core shack and living quarters. On with the photoshow
This shot (right) is included (it’s the 1st stop
above, at the phosphate outcrop) because I want
to give you a clear idea of what the region looks
like. It’s quite literally desert, flat as a pancake
and with no residents. This means it’s one of the
easiest places in Peru to get an environmental
impact permit approval because there’s nobody
and nothing green to upset. The surface rights are
owned by a community some 30km from the
desert area and they’ve already mutually
acceptable win-win done deals with Vale and
Hochschild, so no problems there either.
We take a look at the outcropping phosphate and
while we’re here, go hunting for sharks teeth that
often show up in these layers. As the phosphate is
little more than the remains of prehistoric undersea creatures from between 10m and 20m
years ago (miocene), finding these old teeth is only to be expected. In about 10 minutes of not-
too-rigorous searching Cass and I found about a dozen between us (my kids got them as
presents, received with a “Wow!” last Thursday evening).
Onwards and we arrive at the first drill rig, which was turning away merrily on its latest hole.
The team has hired a local specialist in the phosphate field with a rig chief who’s been working
the area for over 20 years. This means they’re 100% at home with the rock and are getting
optimum recovery levels (to 100%, helped by their own patented drill bit that’s specially
designed for this rock).
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Here’s some freshly cut core. It comes out pretty
damp, but not because there’s a water table in
play. That’s because the drill rigs’ water injection
is quickly soaked into this loose and crumbly rock.
This is also where your author photgraphed the
shark’s tooth in the core as seen on the blog last
week (2). So to the second rig (bottom right) and
again, the people were working away doing their
thing while I stood back and watched the activity,
then peered at a few core samples under the
guidance of the experts.
It’s time to tell you how well this drilling program
is going. On page nine of the company’s latest
corporate presentation dated January 2014 (3)
you get to see this cross-section schematic of the
expected geology at Bayovar 12 (see below). This
was published before FCV started drilling and laid
out how the company believed the underground
geology would be. The impressive thing is that
what they’ve found so far in the first ten holes
(now probably 16 or 18, as the rigs are running at
an impressive rate of one hole each per day)
almost exactly matches the theory. It’s a rare
thing indeed when the geological theory closely
matches the geological reality and underscores the
simplicity of the rock formation (basically
horizontal layers and the same ones being mined
by Vale many kilometres away) and the
predicatability of the model, the rigs are now at
the point where they can predict hitting the layers
to within one or two metres and know as soon as
they hit a layer of black sand at the bottom that
they’re out the other side of the system.
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Here you see more core (from roughly 68m to 70m downhole) which is again one of the
phosphate rich sequences.
Here’s FCV president David Cass on the left, with the rig crew on the right about to load
another length of core into the boxes.
This last photo (below) was taken by Cass, but as it came out well it gets included here. You
see the second rig in the foreground, but then over on the horizon you can (just, it didn’t PDF
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so very well) make out rig one, doing its thing 6km away. This gives you an idea of the scale of
the project and it also allows...
...reflection on how ALL the rigs, on ALL the grid, have hit the SAME sequence of rock and the
SAME phosphate layers that hold the SAME grades and the SAME widths at the SAME hole
depths over BIG distances. This really is the most predicable geology imaginable and in this
game predictable = good. It’s very good indeed.
We then drove on to our next stop, a vist a few kilometres away to a small, privately run
phosphate mining opertion on a small concession nearby. What these people do is a small-scale
version of what Vale do further South
and the eventual plan for the FCV
property nearby. Strip away the rock in
benches until the phosphate layer of
layers are exposed, shovel into a truck,
the approx 15% to 20% grading P2O5,
sort using basic machinery until the
P2O5 grades 30%, the industry standard
concentration for this product called
“phosrock” which can then be directly
applied to agricultural fields etc, bag it
up, ship it out and sell it. Cass told me
that recently the small co-operative
group of workers had shipped out a
consignment of 3,000 tonnes (which on
a quick guess at an average of 100
tonnes per day would mean perhaps
two months’ worth of work for the small
team, as the stripping part of the job is
quicker) and at a current market price
of between U$110 and U$120 per tonne, that’s a gross revenue of between $330k and
$360k...not bad for a small band of brothers and their fully legal small mine operation.
Here above we see president Cass (doing either Blue Steel or El Tigre) and his rock hammer
8

next to one of the bench walls, with his hammer showing the next sequence of exposed
phosphates. He likes visiting here because he gets to see the same layers that Bayovar 12 has
and the same rocks that are showing up in his drilling program, but “All in 3D”.
This next photo is a shot of the mined area (very neat and tidy job for this type of small mine
operation), with the phosphate layers again clearly exposed.
Here are two of the co-operative at work in another part of the concession and it shows just
how straightforward this mining is, just scoop and dump. The rock crumbles easily and no
explosives are required.
We move on, and en route to the Hochschild Fospac property we get as close as possible to the
massive (no other word for it) Vale Bayovar mine, which is mining precisely the same stuff as
the FCV target. Vale keep the techincal details of its mine under wraps, but best estimate is that
it’s moving around 140,000 tonnes per day and that’s a lot of dirt. To the right of this shot (I
couldn’t get a clear photo, too far away) you could see the waste dump and it stretched off into
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the distance, very impressive.
Vale’s production technique is slightly more complicated than the small miners’, but not by
much as it uses gravity and then seawater to wash the mined rock and bring it up to the
required level of concrentration. Very much box standard and simple (i.e. cheap to use)
technology, then the result is loaded onto large
ships and taken away.
Onward, and this time to the neighbouring Fospac
property owned by Peru’s Hochschild. Here they
have a brick factory (which uses some of the top
layers of rock in the area) but they’ve recently dug
this test pit you see before you (right) to explore
the potential for phosphates and, sure enough, so
far they’ve found exactly the same sequences that
FCV has on its property, the small miners are
mining on their and Vale is digging out bigtime
over at theirs.
The last stop on the trip is at the coast, where
FCV has its local camp and coreshack but it’s also
where Vale has its dedicated port facility for its
Bayovar phosphate. The phosphates are trucked to around 5km from here, then put on a
conveyor belt, washed with seawater to get them to the right concentrate level, dried to 3%
humidity and then loaded on board. We were lucky enough to have a ship being loaded while i
was there, so here are two photo of many taken.
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It’s not obvious from this photo, but there was a lot of dust being kicked up by the loading
process on board ship.
About 2km away is the local port (small fishing
fleet, plus a dock for shipping gypsum) and this
hosts FCV’s camp, seen right:
Inside, here’s the team hard at work doing their
logging, cutting and sample prepping.
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Here the core had dried out and you could see more clearly the dark phosphate content in the
greener host material.
It’s not possible to call the grade on these core samples until the numbers come back from the
lab (those should start flowing in a couple of weeks) but considering previous results and
what0s known about the neighbour operations, something around 17% P2O5 isn’t going to be
far out from what you’re seeing there.
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Here’s another sample, which I’ve scribbled on to help direct your eyes. The truth is that it’s not
rock that gives great photo, but when seen up close and under a magnifying glass, it’s
economic content really jumps out at you. Again, this stuff in the photo grades 15% to 20%
P2O5, according to the team’s best guesses (we’ll find out the real numbers down the line).
Another shot, with coin for scale.
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Here’s a look at the company core shack, now filling up quickly thanks to the fast working rigs.
Another storage point is round the corner. From what I witnessed, QA/QC was in good shape
but that’s not anything news from FCV, these
guys are good at sample integrity.
And that rounded out the visit. We drove back
to Piura and our hotel for the night (Thursday
travel day) via the coastal route (that for what
it’s worth passed right by the site of Friday
evening’s 6.2mag earth tremor in the area) and
it took maybe 50km before signs of green
showed up. But when they did (a river close to
here) this is how the Northern Piura region
starts to look, very fertile and plenty of agro
business. It would be a far trickier thing to get
permitting for a mine in these areas than the
desert we’d just left and that’s an advantage
that needs to be stressed here; Bayovar 12 is
not under any sort of community, environmental
or political risk.
Discussion
This starts with a mail sent into me last week by reader JE, who knows his stuff about
phosphates and kindly set out three things to cover on the property. Here’s the body of his mail
1) Like all low value industrial minerals, transportation is the most important factor. It
has to be close to water transportation if there are no markets nearby.
2) Phosphate rock needs to be treated with sulphuric acid, so a readily available source
is important. Sour gas is good. Also, copper (or lead, zinc) smelters if they have any
kind of pollution controls. Less common are fraschable sulphur deposits, usually
associated with salt domes.
3) Uranium content can be problematic.
I put these to the company and here’s how president Cass answered:
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Phosrock not used as direct application fertilizer is treated with sulphuric acid to make
phosphoric acid, the feedstock for upgraded products ie SPA, animal feed and liquid
and solid fertilisers. In the case of the N American markets DAP and MAP suits their
soils, which is a solid granular fertiliser made by combining with ammonia. In Bayovar
the closeness of the port allows the concentrate to be delivered to fertiliser plants in
florida and vales' fertilizer plants in brasil. He's right if you are not on water and you
don't have direct application product sulphur is important or being to sell to the
fertiliser producers on your doorstep like in brasil.
Uranium can be high in sedimentary deposits, average 100ppm, bayovar it's around
50 ppm so below average. Cadmium is the main concern for most users not uranium.
Again the Bayovar stuff is average, not high. Uranium tends to hang around in the
gypsum by product after acid production.
I’ve shared this Q&A because it’s part of the core advantage I see in FCV at Bayovar 12. From
start to finish what we have here is a project that’s uncomplicated, straightforward, simple,
predictable. The theory is working to a tee, the economic potential is demonstrated not only by
the cheap and simple processes needed to turn it into a industry recognized end product but
the fact that a world-class mining company is doing just that with the same rock next door (and
making a heap of cash for itself in the process).
• The geological theory is working out almost exactly as planned, a vanishingly rare
situation for exploration geology.
• The phosphate mineral is easily and cheaply converted into a saleable product
• Local infrastructure (road, power, port, workforce) is optimum
• Zero community relations issues and environmentally simple to permit
• Neighbours already proving the business model works
• Growing world demand for the end product
In my mind and after witnessing the potential first-hand, I keep coming back to these
touchstone words “simple”, “predictable” etc. It’s such a straightforward mining proposal and
business operation that even I can understand it. Which brings us to what it might do to FCV
the company and its stock price, the thing that really matters to us capitalists on the outside
looking in.
Valuing Focus Ventures
Up to today we’ve had our previous 25c target price on the stock, which means we need to
either adjust the target or sell the shares. First the necessary on the stock and if we assume the
current placement round as announced last week (4) happens and that your author’s best
guess that it’s expanded to $1.5m is part of the final deal, here’s how things will look:
Shares out: 60.12m
Options & warrants: 28.8m
Fully diluted shares: 88.92m
Current share price: $0.28
Market Cap: $16.83m
Approx cash per S/O: $0.03
All prices are in Canadian dollars unless stated. Forex U$0.90=CAD$1
With the new cash in and the current drilling program finished, we estimate FCV’s treasury at
$1.9m. That’s enough to get it to the September option payment of $0.75m and pay at least
some of that, so we can expect a further small-ish raise around then.
As for newsflow, we can expect the results of the current drill program to be in during April.
From there work begins on the PEA (scoping study) and I’m told that the target is to get that
out around August/September. That makes sense due to 1) end of Northern summer/Labor Day
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and renewed market interest. It also makes sense because FCV will be looking for that small
raise by then to cover its optioning payment. From that point, work will then go on to expand
the resource and get more inferred into indicated by infill drilling. Which will bring us to 2015
and the main $3m payment roughly this time next year.
As for the size of the Bayovar resource, this is where the predictability of the model to reality
really works in our favour. FCV has done all the modelling and as the reality is hitting that
squarely, they’re beginning to be confident about just how much resource quantity there will be
in the first resource report. At this point, 80 million tonnes grading 17% P2O5 is probably a
decent benchmark and although it may turn out ot be lower or higher than that, it’s where the
model points us today. From there FCV is confident it will be able to expand the resource to
120mt by 2015 and then the potential to expand further if necessary (those big horizontal
layers of phosphate) to an arm-waving 200mt. However, for our purposes of valuation today,
we’re going to stick with 80mt at 17% P2O5.
To make a guess as to what that’s worth we could go in several directions. The way chosen is
to assume a few cost parameters and see what’s left for any operating company.
• If we assume a 50,000tpd earth moving operation and a 3:1 strip rate, that would give
us a thirteen year mine life on our 80mt resource. That’s a fair place to start, because
chances are very high that the resource and mine life eventually expands.
• If we then assume the marketable phosphate is sold at 30% concentrate, our 80mt at
17% P2O5 becomes ~45mt at 30%. That would mean the mine produces around 3.5mt
of saleable product over its 13 years.
• At a current market price of U$120/t, the mine grosses revenue of U$420m per year.
Yeah, not bad hey?
• Let’s assume operating costs take helf of that away (which sounds about right
considering unofficial whispers from Vale, but is a pure guesstimate so beware). So,
that gives us an MOI of $210m
• If the capex bill comes in at say $500m, the mine is paid for in three years.
Obviously, there’s a lot of room to pay for the deposit under those sort of numbers. I don’t
think any prospective buyer of Bayovar 12 would bat an eyelid at paying U$1 per metric tonne
of resource developed by the company, because the big hurdle is the plant build and the
buyout price would simply be part of original outlay. Once operational, this mine would be a
cash flow monster and with added resource upside, could go on long after the original mine
plan were done (or run a larger tonnage machine, of course).
So with our general “$1/mt buyout” price tag in mind, let’s go back to the company and to get
FCV to 70% ownership of the property, it will need to finance again in 2014 and afterwards
raise again to cover its $3m final option payment, all this without underlying burn. We’d expect
the company to concentrate its efforts on Bayovar 12 from here on (perhaps dropping other
large hectare properties?) and its would have to keep drilling in order to make the asset as
attractive as possible, so from here to the $3m payment, FCV will probabaly need to raise $8m
or $10m to be the 70% owner. It all depends on how the market reacts through the process of
course, but let’s guess it needs to emit another 25m shares (30c a pop average?) to get the
funds to reach 2q15. That would being the structure to 85m shares out (though some of those
may be exercised 25c warrants, so let’s stick with the S/O count).
At that point FCV would be 70% owners of 80mt of phosphate, i.e. 56m tonnes. If our buyout
assumption of a dollar per tonne is good that’s a 85m share company that owns U$56m worth
of rock which means (including the current CAD/USD forex) a 72c share price.
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That’s what my guess is for a FCV price in the eventual buyout situation, so pre-buyout I think
it’s reasonable to assume FCV can float to 50c per share without too much bother. And you’ll
note that this is based on 80mt resource, not the likely 120mt by then. It also assumes a
buyout price for Bayovar12 of a buck per tonne that could go higher without the purchaser
(likely a big world mining concern, because this would be big mining) feeling too much hurt. Or
put another way, seeing FCV at a buck per share wouldn’t surprise me in the least, but for the
moment I’m keeping the target aimed a little lower, conservatism demands. Final word before
wrapping up; you may have also noticed that this valuation calc section is done without tables
and comparative cash flow charts at different prices etc. That’s deliberate, because it’s early
days on fixing a price to these share based on this asset and if i came on too strongly with the
charts and tables, it might look a little more “official” and set than it is. The above calcs are
very much ballpark only material and although I’m happy enough with the handle it gives to me
on the stock potential, it’s way early and I know there’s a lot of wiggle room built in.
Conclusion
At last and after several near misses, minor wins and disappointing results, our Peru exploreco
tinycap FCV has hit on the project that’s going to make it a big win. Bayovar has so much going
for it, from unbeatable community profile to proven economics on the very same rock right next
door, to size to infrastructure in palce and all the rest. The only way that the stock price doesn’t
go up from here is if the bottom falls out of the phosphate market and from my limited
knowledge of that market, the bottom is already in (rather like the juniors in fact) and even if
its not, current prices would make any operation at Bayovar 12 very profitable anyway.
The IKN Weekly adjusts its 12 month price target on Focus Ventures to 50c,
representing a 78.6% upside to Friday’s close of 28c. I will also be adding to my position
in the days and weeks to come at or around the current 25c to 28c price range. The target is
based on what we can reasonably expect in 12 months from a valuation on 80mt at 17% P2O5
and does not take into account any buyout premium an acquirer might pay. Due to these two
factors, 50c may turn into a simple staging post on the way to FCV’s true market value further
down the line, but 50c is more than enough to start. FCV is a raging buy at current levels, so
buy some and then hold the shares into 2015 minimum.
End of Report
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Stocks to Follow
Of the 13 positions open this time last week, five made gains (BTO.to, DNA.to, TGM.v, SCZ.v,
FCV.v), three were unchanged (RIO.to, IRL.to, COP.to) and five showed losses (LRA.v, ROM.to,
PVG short, GORO short. SRL.v). The biggest move seen in the period was the 10.3% loss taken
by the Pretium Resources (PVG) short. Overall I was pleased with the way the port performed,
despite being hit by the shorts, because the spec PM exploreco plays (DNA, TGM, SCZ) did well
enough and notably, volumes looked good in all positions.
With the swap of Darwin for Salazar there are still 13 open positions on our ‘Stocks to Follow’
list, two less than our self-imposed maximum .Seven are in the green and five are in the red,
but keep an eye on the closed losers underneath, because they count as well.
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$2.60 13.0% best LT value
Minera IRL IRL.to hold C$0.30 22-jul-12 C$0.18 -40.0% top pick called at 24c, added
Longs
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$1.06 -7.8% solid biz model, LT hold
Eco Oro Min. EOM.to add C$0.48 22-sep-13 C$0.48 0.0% adding more, spec pol risk
Dalradian Res DNA.to hold C$0.65 27-oct-13 C$0.90 38.5% Holding on good run
Coro Mining COP.to buy C$0.125 26-jan-14 C$0.11 -12.0% Cu spec play, can add
True Gold TGM.v hold C$0.395 02-feb-14 C$0.435 10.1% Was flip, now LT hold
Santacruz Silver SCZ.v hold C$1.04 26-jan-14 C$1.07 2.9% added, now full position
Focus Ventures FCV.v add C$0.175 01-jul-12 C$0.28 60.0% new tgt 50c, risk/reward shot
Shorts
Pretium Res PVG closing U$5.38 22-nov-13 U$7.26 -35.3% $4 downside target
Gold Res Corp GORO short U$5.07 26-jan-14 U$5.91 -16.6% New re-short now full pos.
Smaller/Riskier
Salazar Res SRL.v spec buy C$0.28 02-mar-14 C$0.265 -5.4% small risky spec, vg rocks
Closed in 2014 closed close price
Fortuna Silver FVI.to jan'14 C$2.80 23-dec-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
Network Expl. NET.v feb'14 C$0.01 22-jul-12 C$0.005 -50.0% position closed, did nothing
Tahoe Resources TAHO feb'14 U$13.10 08-apr-13 U$21.72 -65.8% short closed due to reality
Darwin Res DAR.v mar'14 C$0.10 14-jul-12 C$0.045 -55.0% tiny risk play dropped
B2Gold BTO.to mar'14 C$3.07 28-nov-12 C$3.35 9.1% closed to free up capital
2009, 2010, 2011, 2012 and 2013 closed positions in appendices below
Now for some notes on a selection of the above stocks.
B2Gold (BTO.to): Position sold: As they didn’t go on Monday, I stuck them on an ask and
left to play in the the sands of Northern Peru. They went by the time I had got back to the
office Thursday evening, which turned out to be a day too soon and a price slightly to short,
because the news (5) on Wednesday evening that officialized the foot-dragging on Gramalote in
Colombia was greeted with enthusiasm by the market (less development drag on the treasury)
and rallied the stock.
So to Friday and the quarterly results came and despite the early move in gold, BTO popped at
the bell to an intraday high of $3.69 (darnit, THAT was the moment to dump my shares...called
it one week too soon) which
18

had me scratching mine noggin at the time because the quarter was worse than even my
modest expectations (as laid out last weekend in IKN252). But by the time Friday was done
BTO had dropped back and that was much less of a surprise.
So what about those numbers? This chart shows the biggest difference between our best
guesses of last week and the results, as although we already knew the revenues number of
$138m (exactly, $138.054m) thanks to BTO’s previous publication the costs came in much
hotter than expected, with our assumption of $89m blown away by the $102.106m of reality.
BTO: Revs, COGS, gross profit
180
160
140
120
100
80
60
40
20
0
-20
19
90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4
$m
revenues
COGS
Gross profit
source: company filings
This meant that gross profit came ~$13m shy of expectations at $36.038m and the knock-on
effect to the bottom line was duly felt. In the end
the balance sheet looks ok with equity per share BTO: Equity per share
3
at $2.477 (our previous estimate $2.781) so
there’s nothing wrong with BTO per se, but as 2.5
forecast last week this wasn’t a quarter that set 2
the world on fire and the sell-off was in order
1.5
Friday. The only difference between my plan and
1
reality was that BTO managed to put in a hike
before Friday came around and sold from a higher 0.5
level. Still on forward earnings it’s still running a
0
PE of at least 21X, which might not be enough to
cause a sell-off in this prime growth story, but I
vouch it will crimp any further significant upside
90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4
$/share
source: company filings

for the time being. As a result, the cash that was here this time last week will find a new home.
Pretium Resources (PVG) (PVG.to): May cover short. Fact is, the price is starting to run
away from me. It’s more than understandable considering the pop that gold put in last week
and the sharp rise in sector interest, but there does come a moment on a short when the stock-
specific reasons to bet on downmoves get trumped by macro considerations and then keep
getting trumped.
I’m not decided yet on this, the sharp nature of last week’s move doesn’t look particularly
sustainable in the near-term and there may be a better place to cover. Yes, that means I’m
trying to get cute with myself over a point in which to cover and that’s not such a good thing,
I’ll readily admit. However, that’s how I’m going to play it for the moment, directly from the
seat of the pants.
Gold Resource Corp (GORO): On the other hand, this short is most definitely staying open.
No word on its financials for the 4q13 and 2103 year period last week, which means we’re
almost certainly going to get the numbers this week (unless GORO makes a late filing
application in the meantime). Let’s be clear, I’m expecting crappy numbers from GORO this
quarter and however much they try to sugarcoat the 2014 guidance, they’re unlikely to meet
expectations.
Salazar Resources (SRL.v): The trading action in SRL shows just why this is a high-risk ( and
by definition small, for the time being at least) position. Here’s the chart which shows the light
volume and the breach between bid hitting
and ask hitting of at least 15% (oftentimes
more), so while on the subject it’s worth
repeating (til blue in the face) that SRL isn’t
ever going to be a popular pick in The IKN
Weekly, so those who decide to follow your
author in and pick up a few should go in with
eyes wide open about the risk of exposure to
Ecuador.
However I’m happy to report that according
to reliable information, a reader of these
pages was the person who picked up at least
some of those small chunks at 26.5c on
Friday. That to me looks like a decent entry price on this risk trade (I’d be loathe to buy more
at 31c or 32c for the moment and see no reason why you should either). This is all about
getting value.
Eco Oro Minerals (EOM.to): A reminder: In February (6) Colombia’s Environment Minister,
Luz Helena Sarmiento, said regarding the decisions on the páramo de Santurbán nature reserve
that, “The boundary is ready, but it will be published after the elections in March”. As those
went off without too many hitches on Sunday (the Santos government+allies saw its seat count
drop in congress, but they still maintain the important overall majority) we can now expect the
publication of the key documents. Indeed, last week Ms Sarmiento said (7) that the decision
would be made public “in the last week of March”, which means some time between Sunday
March 23rd and Monday March 31st, to give her all the leeway that’s possible.
Want it another way?: You have this next week to position yourself into this stock, which will
jump on the expected positive news for the company.
Let’s also update on the other idea we’ve floated in previous editions for a trade on this political
risk news event, Galway Gold (GLW.v). Here’s a chart that pits EOM.to against GLW.v for the
last three months and as is clear from the visuals, so far at least EOM has done better in 2014.
That makes sense as the bigger company with the more advanced project in the Vetas region
20

on the Santurbán boundary. Your author is sticking to the plan of playing EOM.to for the near-
term news and then taking the profit, but the
option to roll some case into GLW for the
leverage play afterwards is still on the table.
Lets see how all this plays out first and
whether, this time, the Colombian Enviro
ministry keeps to its announced timeline and
coughs up the necessary news this month.
Santacruz Silver (SCZ.v): On Tuesday SCZ
announced it had successfully closed its
$10.75m gross proceeds bought deal (8)
though no word on whether it has or will fill the
overallotment facility (the brokerages have a
maximum of 30 days from the closure to do
so). The stock improved as the week wore on
and started catching some real bids on Friday,
which was good to see.
Dalradian Resources (DNA.to): Particularly
strong jungledrums last week from more than
one place about how DNA is shopping itself to
the market and looking for a highest bidder to
buy the company out. If that’s the case (and in my opinion the talk from picked up is highly
unlikely to be duplicity, considering the difference in sources) then it’s probably time to consider
DNA’s Curraghinalt in in-situ valuation terms and as long as we throw the inferred into the pile,
on the one hand we have ~2.7m ounces of resource and on the other around U$89m in market
cap (110m shares, CAD$0.90 pps, USD0.90 = CAD1).
With an eye on our NOBS report for the stock (IKN234, Oct 27th 2013), as capex is set at
$192m as per the PEA, one you subtract the newly raised treasury any buyer of DNA would
need to spend around $270m at today’s share price to buy and build the mine, but that of
course doesn’t take into account much buyer’s premium for the shares. As my target is $1.45
for the stock, that’s my idea of a premium and it brings the final final ticket price to around
U$325m. So, does that work for a prospective buyer of Curraghinalt? Yes, probably does,
because at $1.3k/oz gold and some pretty conservative parameters (eg G&A at $12m/annum)
our model gives the mine running an operating profit of a little over $80m, which is four years
to payback on a 15 year mine operation.
Bottom line: With noises of several potential buyers kicking its tyres and a fundies pricing model
that easily allows for more upside in the event of M&A action, this is one to hold or add into the
bullish run.
True Gold (TGM.v): Another one that’s starting to pick up steam. However it hasn’t really
moved up yet and because of that, it’s on my shortlist to add now that I have a chunk of cash
in the account. Again, not rushing to a decision.
The Copper Basket
After eleven weeks of 2014 The Copper Basket is showing a 12.76% gain to level stakes.
21

company ticker price 1/1/14 Shares out Market Cap current pps gain/loss%
1 Augusta Res AZC.to 1.51 144.41 472.22 3.27 116.6%
2 Reservoir Min. RMC.v 4.97 47.5 352.93 7.43 49.5%
3 NGEx Resources NGQ.to 1.43 168.71 254.75 1.51 5.6%
4 Lumina Copper LCC.v 6.29 44.07 220.35 5.00 -20.5%
5 Hot Chili Ltd HCH.ax 0.425 333.11 144.90 0.435 2.4%
6 Nevada Copper NCU.to 1.35 80.5 117.53 1.46 8.1%
7 Copper Fox CUU.v 0.375 402.96 110.81 0.275 -26.7%
8 Western Copper WRN.to 0.76 93.68 80.56 0.86 13.2%
9 NovaCopper NCQ.to 1.60 53.4 75.83 1.42 -11.3%
10 Curis Resources CUV.to 0.57 74.79 65.07 0.87 52.6%
11 Panoro Minerals PML.v 0.35 204.71 57.32 0.28 -20.0%
12 Cordoba Min. CDB.v 0.45 31.88 19.77 0.62 37.8%
13 Coro Mining COP.to 0.10 159.37 17.53 0.11 10.0%
14 AQM Copper AQM.v 0.11 139.05 15.30 0.11 0.0%
15 Oracle Mining OMN.to 0.27 49.03 9.81 0.20 -25.9%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg 12.76%
The basket average dropped 5.97% overall, a big drop that reflects the weakness and
uncertainty in the copper metals pits. It
wasn’t all bad, as three of our stocks
The Copper basket 2014, weekly evolution
managed to show gains on the week 25%
(RMC.v, NCQ.to, CDB.v) and one was
20%
unchanged (COP.to), but that means
there were a big eleven losers (not 15%
listing them all), with the worst being the
10%
18.8% lost by NGEx Resources (NGQ.to),
its PDAC bounce lasting precisely one 5%
week. No other stock had a 10% move
0%
in either direction, though there were
plenty of 7% to 9% losers on show.
The source of the copper junior
weakness was of course the drop in
copper, which consolidated last week and
left the metal with a clean gap between it
and the $3/lb level.
We’ve already gone over the reasons (the
apparent ones anyway) for this drop,
though we can add a little more to the mix
thanks to the innumerable reports about
“Chinese credit market problems” (if I saw
that or variations thereof once, I saw it a
thousand times). There was also an
apparent deceleration in economic activity
in China buried in the figures last week, as
industrial production registered a +8.6%,
which was greeted by “only eight point
six??” and dismay by a market looking for
even more. So be it.
So to inventories which for me continue to
shed far more light than bizgossip about
the weak copper market. Total world stocks dropped 12.540 metric tonnes (mt), or 2.6%, to
22
ht5naj ht21 ht91 ht62 dn2bef ht9 ht61 dr32 dn2ram ht9 ht61
source: IKN calcs

finish at 487,712mt. Of that total, we first report that the these days near-insignificant Comex
warehouse stocks dropped again by 817mt (7.2%) to finish at 11,392mt. So to the LME, which
again dropped on the week, this time by by 17,700mt (6.6%) to finish at 251,300mt.
Meanwhile Shanghai Futures Exchange warehouse inventories again moved up, this time by
5,977mt (2.9%) to finish at 213,297mt. We’re getting towards the moment where Shanghai
(nearly 45% of world stocks and rising fast) overtakes LME (under 53% and dropping fast) as
the daddy in stocks, which if it were to happen would be a first and a historic moment for the
industrial metals market. It would also point again to the weakening of the LME’s position as
the world’s price discovery market and we already have plenty of evidence of that. In other
years, a sharp drop in the copper price while LME stocks were dropping so quickly would be
nearly unthinkable, this time around the market is taking the situation as some sort of normal.
This is the price being paid by the exchange for the loopholes that allowed the big firma to rig
the prices in 2013. Another datapoint is how over 50% of LME stocks are still under a dubious
looking cancelled warrants system (51.7% to be exact), which suggests the unwinding still has
some way to go.
Now for some updates on some component stocks
Reservoir Minerals (RMC.v): Can you take a hint? Wednesday post-bell saw RMC announce
(9) a new director, who’s a reasonably big wheel in the Rio Tinto machine RMC didn’t spare the
M&A background on new boy Stephen Scott either and here’s the paydirt section:
Mr. Scott is a senior mining and mineral exploration executive with almost 30 years international
industry experience. For the past 15 years Stephen has worked for Rio Tinto in a number of
international management and commercial executive roles. Prior to that, he held senior positions
in the international junior/mid-cap exploration and mining sector. Between 2002 and 2005
Stephen was President Director of Rio Tinto Indonesia responsible for Rio Tinto's Indonesian
business activities including management the company's interest in the Freeport Grasberg copper
mine. Notable projects and transactions Stephen either led or worked on in recent years include;
Oyu Tolgoi, La Granja, Pebble, Jadar (Serbia), Chinalco Exploration Joint Venture, Hathor
Exploration, DRC Iron Ore, Ashton Canada, Penisquito, IRC Royalty package, Wafi, Ambler,
Corani, Rossing South, Greens Creek, Pinto Valley, Sulawesi Nickel, Altynalmas Gold and Inova
Resources (formally Ivanhoe Australia).
Oh, and RMC announces a shareholder rights plan too! If you can’t see where RMC is trying to
take your thoughts with this news release, your author strongly recommends that you do not
take up poker as a hobby.
Panoro Minerals (PML.v): Post-bell Friday Hudbay (HBM) announced it had bought another
10,127,500 shares of Panoro at a price of 28c, which brings its total holding up to 22,907,500
shares, or 11.2% of shares out. PML closed the week down but may rally on this news Monday
as people speculate that HBM will make a move for this beaten down name. For my money they
should lave this one well alone and I won’t be chasing any trade here, too many community
issues for my taste.
The Low Cost Producer Basket
After 11 weeks, the Low Cost Producer Basket is showing a 23.80% gain to level stakes.
23

company ticker price 1/1/14 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Freeport FCX 37.74 1040 32.30 31.06 -17.7%
2 Goldcorp GG 21.67 812 23.30 28.69 32.4%
3 Barrick ABX 17.63 1000 20.91 20.91 18.6%
4 Newmont NEM 23.03 497.87 13.03 26.18 13.7%
5 Silver Wheaton SLW 20.19 357.39 9.55 26.72 32.3%
6 Franco Nevada FNV 40.74 147.01 7.74 52.63 29.2%
7 Agnico Eagle AEM 26.38 173.43 6.00 34.62 31.2%
8 Pan American PAAS 11.70 151.41 2.25 14.88 27.2%
9 B2Gold BTG 2.02 651.4 2.02 3.10 53.5%
10 First Majestic AG 9.80 117.02 1.35 11.53 17.7%
all prices in U$, using NYSE ticker prices Portfolio avg 23.80%
The basket average did well and jumped 5.02% on the week, though it lagged the benchmark
GDX again and the gap between the two is now a lusty 7.43%. For sure a lot of that gap is
Freeport (FCX) which continues to
lag and in fact last week was the
The Low Cost Producer Basket: Weekly performance and
only component to register a weekly comparative to GDX control
loss (all others went up), due to its 35%
hefty exposure to copper more than 30%
anything else. For what it’s worth, 25%
without FCX the basket average 20%
would be 28.42% and more in line 15%
with the market for precious metals 10%
producers. 5%
0%
The best moves last week came from
Agnico Eagle (AEM up 6.5%),
Newmont (NEM up 6.4% and
continuing to play catch-up), then
Goldcorp (GG up 6.1%) and Silver Wheaton (SLW up 6.1%). Those are eyecatching gains from
big cap metals names. In fact it’s notable that the bigger caps did better than the juniors last
week (for example, the GDXJ was up 4.99% while the GDX was up 5.92%) which is the kind of
thing that shows up on our basket radar this year. What that might mean is another and more
subjective story, but put a gun to my head and I’d say (again) it’s a sign of new money moving
into the sector via the biggest front door, that of the biggest and most liquid stocks. In theory
that’s a good thing of course, as if the bullish sentiment continues you’d expect at least some of
that new cash to filter and rotate into the juniors.
Barrick (ABX): These days ABX is about the most interesting large cap in the market, because
there’s a never ending swirl of rumours and hearsay around the stock. Down on this side of the
Equator that centres around the ongoing Pascua Lama saga and now that the new Bachelet
government has been sworn on we may get new movement on the story. Already we’ve had
Argentina’s government making noises, via minister of mining Jorge Mayoral who according to
reports last week (10) is keen on meeting with his new Chilean counterparts as soon as
possible in order to get agreement on what to do with the cross-border project from a political
point of view. Clearly, Argentina wants the project to get moving again (it has Presidential
kudos in play, aside from the jobs recently furloughed it would like to see back in position) and
the sticking point of the Chilean enviro investigation looks like it may be going away soon.
24
ts13ceD ht5naj ht21 ht91 ht62 dn2bef ht9 ht61 dr32 dn2ram ht9 ht61
basket
gdx control
source: Yahoo! Finance, IKN calcs

But ABX isn’t just Pascua Lama and as most people in the mining business now understand (if
they don’t it only takes a listen to ABX CEO Jamie Sokalsky’s latest utterings), ABX has put a
sign up on its door that says “all assets for sale” in order to pay down some of its financial debt
and improve the balance sheet position. Although around 50% of its total liabilities (4q13
balance above for reference purposes) isn’t due until after 2019, the Pascua Lama delays mean
it’s not generating the type of cash flow it needs to give bottom line numbers. Sokalsky hasn’t
been coy about wanting to do deals on its assets (the latest is the partial disposal of its African
Barrick position) and turning fixed into liquid assets. Also, his numbercruncher background as
well as his deals up to now strongly suggest that he has no sentimental or emotional
attachment to the mines (the “can’t sell MY mine” attitude happens in other places, be in no
doubt) and if the price were right, it’s for sale. This certainly fits into the well sourced rumour
your author picked up a couple of weeks ago about China’s Citic being in advanced stage talks
for a minority piece of Pascua Lama.
Regional politics
Peru: Informal miners set to strike this week
The strike action (11) is expected to begin tomorrow March 17th and includes mining workers
from many of the informal (artisanal-type, illegal) mining areas of Peru with a special emphasis
on the Madre De Dios and La Rinconada regions of Puno. Then on March 20th representatives of
the approx 70,000 informal miners in the Arequipa region will join the strike and plan to block
25

roads, as well as join a march in the country capital of Lima that day.
There’s little word on how effective this planned industrial action will be , or how big/disruptive
etc the march on Lima is expected to be. Presumably the government will call the strike action
a failure at some point, while the strikers (being headed by Ollanta Humala’s father, just to add
some spice to the occasion) will claim a great victory or other. The one thing that the Ollanta
government will want to avoid is any sort of violent clashes that could add fuel to smouldering
fires in other areas of the country and in other employment groups. My attitude is to sit back
and watch without any prejudice...and not to try travelling interregion on the roads in South
Peru this week. With luck both sides get to have their say and it all blows over, but we’ll see
about that.
Colombia: Latest presidential election polls show Pres. Santos clear favourite
This Sunday morning a new edition of the reasonably reliable opinion poll run by Colombian
pollster Datexco for media channels El Tiempo and W Radio came out (12), with voter intention
for the May 25th Presidential election the subject.
Leading the poll is incumbent President Juan Manuel Santos with 25.5% of voter intention,
which is up 1.3% from the similar poll taken in February. Second place is interesting though,
because , who is now followed by Enrique Peñalosa of centre-left Alianza Verde (AV) who polls
17.1%, which is up a big 10.8% from February. The jump is due to him winning his party
internal primaries in the meantime. Thirds place comes the right wing Óscar Zuluaga from ex-
Pres Álvaro Uribe’s party, who has 14.6% of voter intention. That’s up a big 8.3% from last
month and again, that’s largely due to his winning the party’s nomination for the big job.
Finally and quite importantly, the “vote in white2 (i.e. spoiled or blank ballot) intention this
month has slipped from 41.5% to 16.9%. For a while there was a “non of the above” type
protest brewing from a large section of Colombians unhappy with all their politicians, but now
we’re closer to the day and with defined candidates, that movement seems to be fading into
the background. What we’ve seen is a lot of those potential ballot spoilers going to the non
govt left and right candidates.
Overall there are three main conclusions from this poll:
• The chances of Santos winning in the first round are now very slim. We’re going to get
a second round run-off for the Presidency, which was expected but is now all-but
confirmed.
• Santos will roll into round two as expected. The fight will be between the leftist AV and
hard right “Uribista” candidates and that might cause real fireworks. Zuluaga in third
place will fight tooth and nail to get into round two and the potential that this election
goes very negative is strong due to that, because Peñalosa is no political neophyte
either and knows how the game is played. Those of you who like their politics of the
mudslinging variety, keep your eyes on Colombia for the next two months.
• In round two, Santos is still red hot favourite to be re-elected. Whoever loses their
place in round two will prefer Santos to the alternative (in least worse terms) due to
the polarity of the round one fight. Santos will pick up more than enough to become
President again, take that to the bank. The current poll says that Peñalosa gets more
2nd round intention voters than Santos (Santos beats all others on this metric) but this
is the same situation as when Santos faced Antanus Mockus in the last election. Come
the day and the AV intention will quickly fade when the current government plays its
“jobs + growth + peace” cards. Colombians like a decent protest position, but
underneath they’re pretty pragmatic.
Overall the news from this poll is good for Colombia, because the country should benefit from
the continuation of policies, with the FARC negotiations still number one in people’s minds.
26

When it comes to mining, we’ve seen a very poor showing from the Santos government so far
in industry promotion and it remains to be seen whether their apparent good intentions will be
transformed into long overdue action. The election to come isn’t a “buy the miners”
opportunity.
Mexico: Baja California Sur set to become politically hot for mining (again)
On the one side you have new movement from Mexico’s Environment Ministry on the key ‘Los
Cardones’ mine project in the region, currently owned by Vista Gold (VGZ) but being sold (with
a limit date of July 31st (13)) to a local group, basically because VGZ is sick of the thing. This is
the one that’s caused all the fuss between the national government (that along with the
company wants the mine to happen, obviously) and regional government (that along with many
locals doesn’t want it to happen). It’s also right next door to Argonaut Gold (AR.to) troubled
San Antonio mine that’s being going nowhere fast for year (I told them it wouldn’t fly, but did
they listen...? etc etc).
Anyway, last week we heard from Juan José Guerra Abud (14), the Enviro Minister and
confidante of President Enrique Peña Nieto, on the subject of Los Cardones. He said that the
project would be examined on a technical basis and that if it didn’t comply with the necessary
environment aspects it would be permitted. All fair so far and it’s worth noting that the same
Guerra Abud said the same thing about Alamos gold (AGI.to) white elephant purchase in
Morelos, the Esperanza Gold project, and then denied the development its permit (mainly on
question arising from water supply).
However, Guerra Abud went on with his discussion and it was soon pretty clear that he and his
team were looking favourably on the Los Cardones project and its chances of being permitted.
He went on to note that the water it would need was in closed circuit and would be supplied by
desalinated seawater from a dedicated plant and that any water table changes at the project
wouldn’t affect the local population anyway, because the locals were part of a different
underground system. He then went on to say that if the planned mine were “clean and had a
guarantee that it will not pollute” that there was much potential for jobs and that there were
only “a few small groups protesting against the project”, then chances were that it would be
permitted.
In other words, a whole boatload of signals that Los Cardones would get its environmental
impact permits delivered.
So to the other hand and the newly active permitting track at Los Cardones has raised the
hackles of the anti-mining groups in the region (that are not “a few small groups” as suggested,
but a sizeable and organized lot who are backed up by the regional government’s stated policy,
no less). They put on a march (15) and a show of strength, noted that the projects were in a
nature reserve (which is true) and gave all the soundbites we’re used to hearing from this side
of the argument, for example (translated), “Our demand is to say to all Environment Ministers,
as well as to the Mexican government, that in Baja California Sur we are not going to allow the
mega mining projects to enter.” As the resistance to the projects has been successful for at
least five years and counts on the backing of the regional elected government, this is no idle
threat either.
The bottom line is that we may have BCS as the showdown region of the month in LatAm
mining.
Market Watching
Fortuna Silver (FVI.to) (FSM) 4q13 and annual headsup
Just a quick line to note that FVI is due to report tomorrow, Monday March 17th, on its annual
numbers. FVI has been something of a market darling in this latest run-up, so it’ll be worth
noting its filings and the market response.
27

The Venture Exchange volume has a story to tell
This chart was put together by friend and ally in all things good, Steve Bodzin, better known to
the world as Setty, freelance investigative journalist, expert of LatAm O&G and owner of Setty’s
Notebook (16) among other things. He put the chart together using TSX available data (17) and
it shows the traded volume in shares and in Canadian Dollars for the TSX Venture Exchange
between the years 2000 and 2013:
TSXV Volumes, 2000 to 2013
Firstly, volumes show that we’re nowhere near any sort of top or peak in TSXV excitement (no
surprise there) and we’d only get that in play with spikes as per 2006/2007 or 2010. That’s
something of a given, but what really grabs me about the chart is the similarity in the pattern of
2008 and now. Around both bottoms (and let’s repeat, I’m sure we’ve bottomed out in early
2014 and we’re ready for the rise) the amount of cash moved dropped compared to the mount
of shares moved, then share volume recovered more quickly and cash volume eventually came
for the ride. That’s as expected of course, because decimated stock prices mean there’s less
money moving in shares for every 100 shares bought or sold. But what we have is the signal
for the type of lag we want to see and in that, the current upturn and “new money entering”
fits right into previous bull run scenarios.
Finally, a split between share volume and money volume of this sort is probably indicative of
another market phenomenon we’re looking for, that of “the dregs must die”. At some point the
good and the worthy stocks in the Canadian market need to decouple from all the moose
pasture vendors that have proliferated in the last few years and to do so, we need those
crummy stocks to stay crummy and get cheaper (towards the true intrinsic values of zero). That
in turn suggests an upturn in cheap paper trading.
Minera IRL (IRL.to) (MIRL.L) meeting
I met up with company President Diego Benavides on Tuesday and we covered plenty of bases.
Main points coming, starting with the lesser issues and then concentrating on the important
one, that of the financing package and development plans for Ollachea.
Corihuarmi: The small operation is going well and provide useful cash flow for the company.
There’s also exploration work going on on and around site with a view to adding to the now
limited mine life. If IRL can squeeze even another year out of the mine and bring it to 2017 or
2018, that would be very welcome.
Don Nicolas: Things are going to plan there, on time and in budget. We can expect a
construction update soon, but the company is pleased with progress and come the day of first
pour, a lot of people who are telling you it’s impossible to build a mine in Argentina will have to
eat their words. By way of a reminder, your author considers Don Nicolas as a self-contained
asset for the company that’s not going to be a source of funds in the near or middle term, as
28

it’ll probably plough back profits into expansion and exploration in order to grow organically as
a JV. In that way, it’s somewhat similar to the Minera Santa Cruz JV operated by
Hochschild/McEwen Mining. Today Don Nicolas is a developing valuable asset, not a developing
source for near-term cash flow for IRL. On the other hand it’s now a zero burden on IRL’s
balance sheet and in 2015 is likely to give the stock a re-rating due to its operating status.
Corporate: Treasury is in good shape. Due to the reduced corporate burn and the Corihuarmi
cash, IRL expects to be able to get though 2q14 easily enough and without having to touch the
$5m credit facility it has in place with Macquarie (which it doesn’t want to use because the
terms include and extra 0.5% NSR on Ollachea to go to the bankers). The strategy is to keep
burn low until the Ollachea deal is closed (see below) and then IRL will be able to go back to
operating like a normal mining company (with a hatful of work to do, as well).
Ollachea: Finally, the big subject and the obvious sticking point in today’s IRL. All the above is
rather minor and the one reason I wanted to meet up with IRL (and in particular the company
president Benavides, other than anyone else on the team) is to get as much information as
possible about the progress (or lack of) in doing a deal to build its flagship property. What I
heard was very positive and set my mind at rest on several subjects. Now for the details:
1) Contrary to a lot of badmouth rumours from Canadian brokerages that know enough to
be dangerous about the subject but are ultimately ignorant on IRL, the company
situation with main (past and future) lenders Macquarie is a good and healthy one, with
both sides working in good faith and none of the rumoured backstab screwing going on
(people are looking to the situation at Carpathian (CPN.to) and think the same thing is
happening here; not the case). The debt financing package is being put in place and we
can expect the bank to cover perhaps $120m of the total needed for the mine, which
we round up and assume at $200m. We understand the Macquarie term sheet for that
will be with us in the next few weeks (the devil may be in the details, so that will get
plenty of scrutiny come the day.
2) How IRL covers the rest of the financing package is under discussion (as is replacing
some of the $120m debt facility with a different source). One plan is to sell a minority
percentage of Ollachea to a third party and as long as it’s a minority (I’d be ok with up
to 30% other hands) it seems a logical way out. The company is also considering
streaming deals with the royalty players, forward gold sales and off-take agreements.
3) There’s not going to be a whole heap of dilution added to the share count, but there
will be some. We know that the early “first in” equity backers will want the chance to
be “last in” as well and enjoy the opportunity to pick up some cheap shares. At this
point I’m guesstimating that IRL would emit another $20m worth and add 100m shares
to the pile, bringing the count to around 350m S/O.
The devil will be in the details of this financing, so there’s a lot of model work to be done at this
end. However, the basic story is that the money is indeed coming into place for IRL to build
Ollachea and if so, we could have a construction decision as early as August this year.
Rio Alto Mining (RIO.to) (RIOM) meeting
The meet with Alex Black of RIO took place on Thursday and we had maybe an hour and a half
of back and forth, more than enough to get him thoroughly bored. Here we go with a round-up
of points covered and issues discussed.
He’s happy with 4q13 and 2013 numbers, which should be filed Wednesday evening/Thursday
morning of next week. No he didn’t tell me any of the specific contents (sadly he’s not like
that), though he was allowed as per the rules to tell me that RIO would report a treasury
position of around $31m as at 4q13 and currently has treasury of ~$41m today. As the 4q
number compares to a cash position of $29.57m as at 3q13 filing, it means that not so much
cash is getting added to the pile this time around (we’ll have to look carefully to see where it’s
being deployed or burned come numbers day). For what it’s worth, as usual I’m going to be
watching the operating margin more than the strict bottom line, as growth companies give a
29

better straight line comparative that way. What I did hear is that the forward gold facility is now
paid back until May, which means they’ve paid down a bit of it since the last time (and that
means there’s now maybe $15m of debt provision left on the books, not much more than a
single signed cheque away from fully paid now). That’ll also have me looking more closely at
balance sheet development once the numbers are out.
We talked about the 2014 guidance and when I suggested that for me the official company
guidance for All-In costs looked pretty conservative up to U$1,100/oz, he readily agreed (NB:
not AISC, but all-in All-In, the bottom of the bottom line). This isn’t surprising because RIO has
always tended towards the more pleasing under-promise/over-deliver strategy, but it was good
to get a confirmation-of-sorts of my own crude thoughts on the subject straight from the
horse’s mouth. So for what it’s worth, I’ll be pitching my overall costs forecasts for the year at
~U$1,000/oz, though it must be stressed that 1q14 will probably come in higher than the year
average due to some specific areas of extra stripping that happen this quarter.
We talked about the reaction to the bigger resource count at La Arena and how the market
seems full of “Yes, but...” comebacks at any given moment. For example, when RIO was going
into operation it was “Yes but the resource and mine life is low”. That’s largely because RIO
went into production without doing any drilling, got cash flow positive and only now is drilling in
order to grow its resource. But now that the resource is growing and mine life is extending, it’s
“Yes but the grade is lower and some of that is transition (i.e. mix of oxide and sulphide)
material”. This is kind of exasperating for Black and on this point I fully agree with the guy;
after all, RIO has been commercial for two years now and they’ve learned a lot more about
their deposit than a miner which is in exploration/development stage only; you can be sure that
the grade and cut-off they use will make them a good margin and you can be sure that
transition material leaches just fine....because it’s already tested! In the end it comes down to
trusting the operator and on this score RIO has an exemplary record for delivery and keeping
its promises, so if they ask for my trust it’s one of the few companies that gets it without (too
many) questions asked. Let the miners mine, I say.
We talked again about the Stage 2 copper/gold sulphide project and the message hasn’t
changed from the last time around. The company is working hard on the eventual mine plan
and feas study for Stage 2 and the results are due end 2q14. But “or maybe 3q14” is on the
table for this, with Black again keen on underscoring that it’s about the result and the plan, not
necessarily sticking to an artificial timeline and delivering something they didn’t think were
ready. It’s worth remembering here that RIO isn’t producing a Feas for the ultimate
consumption of a new backer or project buyer; the final client for the feas is the company itself
which will then decide whether to spend the company’s money and as such, they’re not going
to try and BS anybody. As for the benchmark, that’s still about delivering a project that will cost
$200m (not the $250m+ of the previous feas, the capex will come down) and an IRR of at least
20%. From the way in which he frames these things, that IRR number is important to him, the
main hurdle if you like, and I’m guessing that number will decide whether RIO goes ahead with
Stage 2 or defers it. As for those economics, he told me that the baseline decision will be made
on $3/lb copper (the main payable metal) and a lot of conservatism will be built into their
model when it comes to operating costs, recoveries of gold etc (in theory, that Au recovery item
is one place the economics could improve significantly, balancing the cost of recovery to
percentages will be the trick). The impression is of a company that’s taking its time and wants
to do things right instead of trying to please the crowd (i.e. myself and those similar in the
peanut gallery), but one that’s likely to go ahead with its main growth plan. In the meantime,
they’re watching the evolution of the copper price very carefully and will want some sort of
market assurance about its $3/lb baseline scenario price before fully committing. In hindsight
and knowing what we know now, it’s probably a good thing that RIO has dragged its heels on
this project and not committed, because it hasn’t felt a jolt from the drop in copper in the last
few days; it surely would have been whacked hard if it was building its sulphide ops today.
We then spent a big chunk of time on the “what if” scenario of assuming Stage 2 is deferred by
the company. Let’s stress before going on that the La Arena Stage Two copper/gold sulphide
30

project is still RIO’s main thrust and plan, but alternatives have been bandied about already and
I got the result of those in-company thoughts. One was that RIO could be happy enough as a
cash collector company that could add very decent cash to treasury simply by operating its
oxide ops. By my reckoning, RIO should be able to add $60m per year to its accounts in 2014
and 2015 with gold where it is, that would put it in a strong cash position and may even
facilitate a dividend payment policy (if RIO can’t think of anything better to do with its cash).
Black has a focus on the company balance sheet and wants to see it strengthen (via liquid or
fixed asset growth, the mark of a company looking to the longer term. The other way is to go
on the acquisition hunt, considered separately in the next paragraph, but to wrap up here it’s
fair to say RIO has plans for the money its making in the medium-term but if all else fails, will
be content enough just to collect cash and make its balance sheet stronger that way.
When it came to M&A, CEO Black was obviously not in any sort of position to give away names
or even hints of names about what it was looking at, but it was mightily clear that the company
is on the hunt for an acquisition. That’s not particularly new news, however there was another
aspect to the back-and-forth that made it pretty clear RIO isn’t just a hunter now, but also the
hunted. How much of that is solid spec is up for debate, because it’s probably in the best
interests of a junior CEO to plant the seed of “we’re a target” in the head of the anal yst in
order to start a move in his stock. But the conversation was frank and open enough for me to
be able to take it at face value, even though (yet again, and it got boring trying to fish and fail)
no names were forthcoming.
Back to the “being the hunter” side and another aspect to the M&A subject was that the
company is considering (again, no decision) adding a bank credit facility to its set-up. When I
asked him what sort of thing and offered FVI’s so-far untouched $40m credit facility as an
example, it was “yes, something like that”. I suppose the idea is to have a arsenal with which to
go out looking for a purchase without the need to put pressure on the share count via all-paper
deals. RIO doesn’t need cash for its current operations or exploration projects, and although a
line of credit may come in handy if Stage 2 gets the green light, the desire to add a line now is,
logically at least, a signal the company wants to expand by M&A. Another thing that hinted at a
more aggressive M&A strategy was his thoughts on getting the share price up. Black isn’t the
guy that gets too het up about the company share price and market cap on any given day or
week (normally focussed on ops), but there was a bit of moaning from him about how RIO is
being given a lower market cap than other peers (P, AR, AGI, MUX etc) and more importantly a
lower relative market cap in terms of gold production and profitability. I think it’s a fair point he
makes (after all reserve life is growing, the mine makes good money even at these lower gold
prices and there are real growth plans baked in too, not just hopeful leverage type plans) but
it’s the first time he was really kvetching about the Rodney Dangerfield ‘can’t get no respect’
angle. That suggests to me that he wants a higher paper price to go out shopping (I’m all for
both of those, by the way, long may the share price fixation continue).
As for what it would buy, the clear impression is that RIO is after a gold acquisition, but it’s not
just going to limit itself to the most obvious type of target (e.g. a late stage open pit
development that’s close to shovel ready as possible) and is willing and able to think out the
box. There’s a preference for expanding inside Peru (they know and like the country for mining)
but it’s by no means a limitation and other jurisdictions are clearly in play. Examples of
“maybes” or “why nots” were Mexico and Chile, then North America, perhaps Africa or even
Europe; the basic rule of thumb is nothing that’s not politically or community risky is off limits.
On the other hand, don’t expect RIO to buy into Argentina, Ecuador, Colombia or other usual
suspect iffy areas. The bottom line here is that RIO obviously wants to grow via M&A, it’ll
happen in the gold space, it doesn’t want to add to its political risk profile by going somewhere
exotic. After that anything might happen (hunter or hunted), but I came away with the distinct
impression that something is going to happen in 2014... and it might just be a game-changer.
The bottom line: We had an hour talking over corporate strategy more than any specific issue
or event. Things are going well at the mine, the company wants to expand, it’s considering how
to do just that and is open to out-the-box ideas and solutions, too (let’s face it, right now is the
31

sweet spot for M&A deals before things start getting too expensive). For me, the line of least
resistance states that RIO will go about its work quietly for the next couple of quarters and then
its company direction will be determined by the eventual decision to go ahead with Stage 2. I’d
call that one as depending more on the price of copper than anything else, so if copper re-takes
$3 and goes back to $3.20/lb and above by 3q14, it’ll likely happen (put me down as saying it’s
an 80/20 chance). It’s also a company now looking to put down roots and build for the long-
term, which is the best message I received from the meeting.
Conclusion
IKN253 is done, we end with bullet points:
• When it comes to trades, the definite decision is to add to Focus Ventures (FCV.v) at
current price next week. Then I’m also considering covering the Pretium (PVG) short
before it ,gets too expensive in this newly bullish atmosphere. Thanks to the BTO sale I
still have cash to deploy and that’s going to go into equities, but no rushing in.
• Focus Ventures (FCV.v) has a slam dunk on its hands at Bayovar 12, I’m buying more
of this stock. It’s the first time for a long time that I’ve been truly excited about a
project I’ve visited. This one smells of money.
• Word from both Minera IRL and Rio Alto was solid, which made last week’s road trip
into a 3-for-3 deal. Happy to own both and a lot of my time next week will be deciding
whether to add to my IRL position at these low prices. Overall I think i have enough
RIO.to, it’s way overweight in my port already. Betcha its’ going higher, though.
• True Gold’s (TGM.v) beginning to get the right sort of momentum, and those who want
into the Eco Oro (EOM.to) government announcement trade have perhaps this week to
get positioned.
• This market won’t be directly up (they never are) but make no mistake, it’s a bull
market and will reward those who buy quality and hold it through.
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://www.today.com/video/today/54684123
(2) http://incakolanews.blogspot.com/2014/03/photo-taken-yesterday-wednesday.html
32

(3) http://www.focusventuresltd.com/i/pdf/FCV_Presentation.pdf
(4) http://www.focusventuresltd.com/s/NewsReleases.asp?ReportID=633828&_Type=News-Releases&_Title=Focus-
Ventures-Provides-Drill-Update-Arranges-Private-Placement
closes as per, here’s how FCV looks:
(5) http://finance.yahoo.com/news/b2gold-corp-announces-positive-results-004228537.html
(6) http://www.larepublica.co/economia/ministra-de-ambiente-aplaz%C3%B3-la-delimitaci%C3%B3n-del-
p%C3%A1ramo-de-santurb%C3%A1n-para-marzo_115361
(7) http://www.vanguardia.com/economia/local/250799-linea-de-paramo-regira-cuando-este-listo-el-pago-por-servicios-
ambientales
(8) http://online.wsj.com/article/PR-CO-20140311-907185.html
(9) http://finance.yahoo.com/news/reservoir-minerals-appoints-director-adopts-220536706.html
(10) http://www.mineriaaldia.com/argentina-quiere-dialogar-con-nuevo-gobierno-de-chile-sobre-mina-pascua-lama/
(11) http://diariocorreo.pe/ultimas/noticias/8836361/ciudad/mineros-artesanales-alistan-paro-indefinido
(12) http://www.eltiempo.com/elecciones-2014/presidencia/gran-encuesta-santos-y-pealosa-pasaran-a-segunda-
vuelta/13663115
(13) http://finance.yahoo.com/news/vista-gold-corp-grants-purchasers-233400134.html
(14) http://www.bcsnoticias.mx/proyecto-minero-los-cardones-debera-cumplir-con-cuidados-ambientales-semarnat/
(15) http://www.bcsnoticias.mx/se-manifiestan-contra-mineria-toxica-en-baja-california-sur/
(16) http://settysoutham.wordpress.com/
(17) http://www.tmx.com/en/listings/products_services/ir_data_solution/venture_market_information.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
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
33

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
U.S. Silver USA.v aug'11 C$0.52 26-jan-11 C$0.71 36.5% closed to make room
B2Gold Corp BTO.to sep'11 C$2.80 12-may-11 C$4.27 52.5% target made, trade closed
Bear Creek Min. BCM.v sep'11 C$3.80 27-may-11 C$4.17 9.7% macro sell call victim
Minefinders MFN sep'11 U$14.70 10-aug-11 U$15.15 3.1% macro sell call victim
Great Panther GPR.to sep'11 C$3.03 22-aug-11 C$2.64 -12.9% macro sell call victim
Fortuna Silver FVI.to sep'11 C$1.07 03-may-09 C$5.36 400.9% sold 20%, macro sell call
Focus Ventures FCV.v nov'11 C$0.40 20-apr-10 C$0.20 -50.0% cut losses, bad trade
Regulus Res. REG.v dec'11 C$1.17 14-aug-11 C$0.52 -55.6% cut on news of poor 43-101
2009 and 2010 closed positions in appendices below
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Stocks To Follow Closed Positions, 2010
Closed in 2010 closed close PPS
B2Gold Corp BTO.to Jan'10 C$0.88 08-nov-09 C$1.49 68.2% target made, trade closed
Radius Gold RDU.v Jan'10 C$0.18 23-aug-09 C$0.40 122.2% target made, trade closed
MAG Silver MVG mar'10 U$5.60 23-nov-09 U$7.28 30.0% closed in pdac week
Riverside Res RRI.v mar'10 C$0.435 20-sep-09 C$0.60 37.9% closed in pdac week
Amarillo Gold AGC.v mar'10 C$0.81 31-may-09 C$0.70 -13.6% closed in pdac week
B2Gold Corp BTO.to apr'10 C$1.24 18-feb-10 C$1.50 21.0% target made, trade closed
Lumina Copper LCC.v apr'10 C$0.84 14-jun-09 C$1.55 51.2% total position now sold
Troy Resources TRY.to may'10 C$1.10 03-may-09 C$2.25 104.5% sold on negative results
AuEx Ventures XAU.to may'10 C$2.51 24-may-09 C$3.38 34.7% trade closed
Nevada Copper NCU.to jun'10 C$3.27 14-mar-10 C$2.03 -37.9% need to lower Cu exposure
Carpathian Gold CPN.to jun'10 C$0.39 14-mar-10 C$0.35 -10.3% too exposed to cap raising
Amerix PM Corp APM.v jun'10 C$0.065 08-nov-09 C$0.05 -23.1% victim of macro bear
Antares Minerals ANM.v jun'10 C$1.42 06-dec-09 C$2.10 47.9% sold half
Vena Resources VEM.to jun'10 C$0.37 31-may-09 C$0.23 -37.8% sold half
Minera Andes MAI.to sep'10 C$0.75 28-jul-10 C$0.95 26.7% ST trade closed
Gold-Ore Res GOZ.to sep'10 C$0.52 01-aug-10 C$0.75 44.2% target made, trade closed
B2Gold Corp BTO.to sep'10 C$1.45 25-may-10 C$2.01 34.5% target made, trade closed
Blue Sky Uran BSK.v oct'10 C$0.41 19-may-10 C$0.22 -46.3% v small v bad trade closed
Dia Bras Expl DIB.v oct'10 C$0.14 30-aug-09 C$0.35 150.0% target made, trade closed
S. Amer. Silver SAC.to nov'10 C$1.38 24-oct-10 C$1.60 -15.9% loss on short, small fail
Ventana Gold VEN.to nov'10 C$7.92 27-jun-10 C$13.51 70.6% trade closed on buyout
Lumina Copper LCC.v nov'10 C$1.42 11-aug-10 C$3.65 157.0% trade closed
Antares Minerals ANM.v dec'10 C$1.42 06-dec-09 C$8.40 491.5% trade closed
Rio Alto Mining RIO.v dec'10 C$0.69 23-mar-10 C$2.16 213.0% trade closed
Coro Mining COP.to dec'10 C$0.585 03-oct-10 C$1.24 112.0% target made, trade closed
Stocks To Follow Closed Positions, 2009
Closed positions closed closing PPS
Cardero Res CDY/CDU.to May'09 U$1.20 03-May-09 U$0.87 -27.5% sold on negative news
Eastmain Res. ER.to May'09 C$1.04 06-May-09 C$1.315 26.4% trade closed
Radius Gold RDU.v May'09 C$0.165 03-May-09 C$0.235 42.4% trade closed
Latin Amer Min. LAT.v May'09 C$0.12 03-May-09 C$0.158 29.2% trade closed
Aquiline Res. AQI.to July'09 C$2.03 16-Jun-09 C$1.68 -17.2% took loss, bad timing
Chariot Resources CHD.to Aug'09 C$0.20 12-Jul-09 C$0.415 107.5% trade closed
Castle Gold CSG.v Sep'09 C$0.64 02-Aug-09 C$0.60 -6.3% ST trade didn't work out
Guyana Goldfields GUY.to Sep'09 C$2.30 12-May-09 C$4.50 95.7% profit taken
Los Andes Copper LA.v Sep'09 C$0.09 21-Jun-09 C$0.09 0% trade closed
Pediment Gold PEZ.to Oct'09 C$0.80 09-Aug-09 C$1.00 25.0% trade closed
Minera Andes MAI.to Oct'09 C$0.68 03-May-09 C$0.71 4.4% too much bad news
Dynasty Metals DMM.to Nov'09 C$4.18 03-May-09 C$6.01 43.8% half sold
Rusoro Mining RML.v Nov'09 C$0.55 03-May-09 C$0.57 3.6% underperformed
Important Disclosure
The information and opinions contained within this report reflect the personal views of the author and therefore all
material within should not be construed as accurate or reliable or be utilized as advice for investment or business
purposes. Independent due diligence and discussions with ones own investment and business advisor is strongly
recommended. Accordingly, nothing in this report should be construed as offering a guarantee of the accuracy or
completeness of the information contained herein, as an offer or solicitation with respect to the purchase or sale of any
security or as an endorsement of any product or service. All opinions and estimates included in this report are subject to
change without notice. It is prohibited to copy or redistribute this report to any type of third party without the express
permission of the author.
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