IKN #254Premium

The IKN Weekly
Week 254, March 23rd 2014
Contents
This Week: Buying some Bear Creek Mining (BCM.v), It’s easy to be bullish the miners when
gold’s going up.
Fundamental Analysis: Bear Creek Mining (BCM.v) news analysis and a trade.
Stocks to Follow: Overview, Pretium (PVG.to) (PVG), Rio Alto (RIO.to) (RIOM), Gold Resource
Corp (GORO), Eco Oro (EOM.to), Minera IRL (IRL.to) (MIRL.L), Santacruz Silver (SCZ.v),
Dalradian Resources (DNA.to), True Gold (TGM.v), Coro Mining (COP.to), Salazar Resources
(SRL.v).
Copper Basket: Overview, Reservoir Minerals (RMC.v), Panoro Minerals (PML.v), Western
Copper & Gold (WRN.to).
Low Cost Producer Basket: Overview, Goldcorp (GG).
Regional Politics: Regional risk roundup next week, Ecuador: Mirador Copper (ECSA) hits
delays and problems with local landholders, Dominican Republic: More calm planning for its
mining future, Peru: Informal miners strike, Argentina: Santa Cruz.
Market Watching: Sandstorm (SAND) (SSL.to) and Serra Pelada headwinds, Focus Ventures
(FCV.v) feedback and update, Osisko (OSK.to) is a trading short for the near-term, I bought
some Dogecoin last week.
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
Buying a few Bear Creek Mining (BCM.v)
After the comments made by Peru’s FinMin to the press last week, I’ve spent just about all my
time gathering information and thinking about the situation over at Bear Creek Mining (BCM.v).
The decision is to open a small foot-in-the-door position in the stock (not the first time) next
week, with a view to adding in the weeks to come. This adds to the extra cash deployed in
RIO.to last week (and the covering of the PVG short see appendix 1 for that Flash update),
though thanks to the BTO sale proceeds I have more than enough to fund these and further
future forays into the market in the days and weeks to come (and it’s quite nice to have timed
that BTO sale reasonably well in 20/20 hindsight too, but that’s another story). So ends the
headsup note, find out the details in ‘Fundamentals...’ below.
It’s easy to be bullish the miners when gold’s going up
Last week saw the gloss come off the recent rise in gold, which meant the most recent round of
speculative cash that had moved into the mining companies got burned. Overselling of PM
miners was rife (both large and small, as the Low Cost Producer Basket below will testify) as
the hotter end of the hot money ran away. Here’s a chart...
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...and as you can probably make out from the $1,280/oz point at which I became full bull the
miners and the short comment scribbled next to it, the downmove isn’t one that’s concerning
me too greatly because that’s how this sector is, we all know that by now. At the risk of
repeating myself here’s part of the open to IKN249, the edition just after that breakout from
U$1,280/oz gold in which I made my bullish sentiment towards the sector as clear as possible
Meta reasons to be cheerful
The view from this desk gets a portion of “inside the tracks” feel at all times, so I’d like to share a
few more signals of the clear change of sentiment:
1) I’m getting more feedback from you. Last week’s reaction mailbag was a full one and
not only was the quantity up, but the contents were noteworthy too. I’m getting “what
do you think of company XYZ?” or “Why haven’t you mentioned ABC, it’s great little
company?” and all sorts of ACTIVE thoughts opinions on stocks and companies, rather
than passive comments. I see people waking up from a long slumber and quite frankly
that’s exactly the feeling I have too.
2) A bunch of new subscribers to the service, which is the most direct and capitalist signal
possible (i.e. people willing to pay for information on mining stocks). A warm welcome
is given to the handful of new subbers reading these words and I hope you get value
from the service and stick around but please don’t expect a promo pump toutsheet, the
liberal use of exclamation marks, assertive predictions of gold at X+1 in Y+1 space of
time, diatrabes against the government and all similar baggage.
3) I’m getting more feedback from blog readers too, which tends to be more of the
“Hahaha dumbass you failed at [their preferred stick to beat me with] you’re stupid you
suck” variety, but hey when you’re a mouthy guy in a public sphere it comes with the
territory. More interesting is the sudden upspike in blog visitors, including people
signing onto the RSS and e-mail services which means they still read it all without
returning. In a few short weeks mining has become fashionable to follow and to talk
about, which is a big shift in attitude amongst those with money to deploy.
4) Company executives of explorecos and small juniors (who will not be mentioned by
name, nor will their companies be hinted upon) are complaining that the very same
broker/shareholders who were telling them to stop all spending and lie low are
bellowing at them to get out there and market/promo themselves.
5) I’m happy to report (and this time genuinely happy) that geologist friends who had
found themselves laid off have been offered work in the last few weeks (two this
week). Of the four, three have been taken on as part-time consultants so there’s still
slack to be taken up, but I still take that as anecdotal evidence that purse-strings are
being loosened in the right places.
6) Instos are looking at every opportunity for alpha in the gold market. On being passed a
Goldman note on Banro on Wednesday, my contact who (let’s say) watches activity
carefully at the Vampire Squid said, “The shocking thing is that it is on the "most read"
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part of the research interface...very rare in the last two years to see a gold note in that
section.” Just one anecdote of several.
Those and more. This time it’s not a false alarm people, this is the start of the recovery for the
mining sector. It won’t be a straight line to some sort of financial Nirvana (it never is) but the
change is clear and the signals are flashing in my face. That’s different from any time in the past
two years.
None of those have changed since then. They didn’t change between gold $1,300/oz (that
weekend) and gold $1,380, they haven’t changed between gold $1,380/oz and today’s
$1,330/oz or so. My friends still have their jobs (fwiw, another geol pal now living in the USA
has picked up some decent consultancy work with a major since then, too), people are still
swapping mail ideas with me, the “cautiously optimistic PDAC” came and went, and my stars of
course it still hasn’t changed into that immediate straight line to financial Nirvana.
To repeat: This is the start of a bull market for mining stocks. However, you have to be clear
that every single word in that sentence is chosen with care, not just “bull” and “mining”. The
start of this bull run is the same as any other nascent bull market, secular or sector-restricted,
which means is will be choppy and it will get your nerves jangling and it most certainly will be
accompanied by the hosts of naysayers who will not tire of passing snap judgements on your
lack of brainpower for being long these names.
Bottom line: We’ve seen a ~5% downmove in gold happen in the last couple of weeks and
before my stocks have tripled or quadrupled or however high they go, I expect that kind of
downdraft to hit me again. And again. What’s more, I don’t know when they’ll hit me or in what
order they’ll come between or around recovery and rebound moves. Five percent up or gold in
gold isn’t so much in itself (e.g. it didn’t have me checking any bullion account standings) but
the sentiment change hits the volatile miners hard, often too hard for “logic” to dictate. That’s
how this sector is, people, it’s volatile. Risk and reward, we haz it. Now for sure, it’d be the
greatest thing to predict and call a few of these downdrafts along the way and do some cute
buy-low-sell-high along the channel, maximizing gains and all that jazz. If you’re capable of
doing that I wish you the best of luck. I’m not, so I’ll just hold through the bull run.
Fundamental Analysis of Mining Stocks
Bear Creek Mining (BCM.v) news, analysis and a trade
Overview
In what follows, we give an overview of the Bear Creek Mining (BCM.v) state of play regarding
the Santa Ana project talks with the Peru government, look at the background to the case and
in the end, use the information and analysis to make a buy call on the stock. It’s important to
note that we assume the company’s main Corani project as its most important asset, but the
decision to buy BCM is about the variables and the new potential for value to be added by
Santa Ana (currently priced at zero in our model), rather than the eventual success or otherwise
of the main Corani mine.
A week is a long time in politics
For me at least, the most interesting piece of news from the South American mining scene last
week had nothing to do with informal miner protests in coastal Peru or the ongoing politics
surrounding Pascua Lama in Chile/Argentina. It was the news on Bear Creek (BCM.v) and the
government of Peru about Santa Ana. Last week, while leaving after his speech engagement at
a business event, Peru’s finance minister Luis Castillo was asked a question by the reporter
throng about the ongoing negotiations between the government and Bear Creek Mining
(BCM.v) over the Santa Ana dispute and he answered the question giving some details of how
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things are going. We did it via a quick post on the blog (1) more details came out in other
places, such as this (2) Reuters English language report:
LIMA, March 19 (Reuters) - Peru said on Wednesday that it is working with Bear Creek
Mining to avoid being sued by the Canadian miner under free trade protections over its
suspended silver project.
Finance Minister Luis Miguel Castilla said he is optimistic direct talks between the
company and his ministry would defuse a dispute in coming months and avoid
international arbitration.
"There is complete willingness by the government and the company to overcome this
problem and resolve it as soon as possible and not have to resort to arbitration,"
Castilla said on the sidelines of a conference late on Wednesday.
The company was not available for immediate comment after normal working hours on
Wednesday.
In February Bear Creek published a notice of its intent to sue Peru in six months
unless the government allowed it to move forward with its proposed Santa Ana silver
mine in southern Peru.
Bear Creek was nearing construction on Santa Ana in 2011 when deadly protests
against the project led outgoing President Alan Garcia to nix the company's rights to
operate in the area.
The company has said it suffered "significant damage" from the suspension of Santa
Ana, which it wants to use to finance its more expensive $700 million silver project,
Corani.
Negotiations with the company have moved from the energy and mines ministry last
year to the economy ministry.
It is unclear if local residents, who once staged large protests against Santa Ana
because of fears the project would pollute water supplies, are now supportive of the
project.
Bear Creek expects Santa Ana to produce some 5 million ounces of silver per year and
Corani to produce about 13 million.
Canada and Peru signed a free trade agreement in 2008.
So that’s the background but our job here is more capitalist than politician; it’s to try and make
author and readers a bit of money if possible, so here comes the analysis. The latest chapter in
this long-running saga started on February 7th, when BCM officially notified the government of
its intention (3) to go to international arbitration via the ICSID/CIADI tribunal (run by the world
bank, which is the typical go-to body for this type of country versus company dispute and
usually takes years to come to a decision, but when it does the judgment is unappealable by
the loser). The formal move by BCM on Feb 7th means that according to the rules of
engagement on these things, the two sides have six months to come to an amicable and
negotiated settlement before the case is filed before ICSID/CIADI and the whole process begins
in earnest. This time period (Feb 7th to August 7th or thereabouts) is where we find ourselves
today and according to FinMin Castilla’s comment last week, the process is active.
Broadstrokes on where we see the negotiations going
There’s plenty of previous ground we’ve covered in this story and I don’t want to re-hash the
whole thing, so the history of how Santa Ana got cancelled by the outgoing Alan García
government due to serious social unrest and protests in 2011 (just before the current president
Humala was elected into office) is not happening here. What we care more about is today and
the next four or five months, so...
1) We can assume both sides would prefer a settlement before it goes to the world courts.
For Peru it would be embarrassing (to say the least) to bill itself as miner friendly and
have a conflict such as this go to the world’s highest beaks. As for BCM, it’s a business
and doesn’t want to be caught up in a legal wrangle that might take years to resolve, if
only for the lawyers’ fees but more importantly for the limbo it would place the
company.
2) BCM has entered into a high-risk strategy by stating since September last year that
without resolution on Santa Ana, its larger and more valuable Corani project doesn’t go
ahead. My views on this are already known (I think the company’s mad), but it’s the
way they’re playing it which means, ostensibly, that if this dispute goes to the world
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court they’d find it very difficult to move ahead with Corani or even sell it, as it would
dilute the company’s argument at the wrong time in front of the wrong people.
3) The most interesting part of last week’s declaration by FinMin Castilla is that the
settlement negotiations are now apparently under his jurisdiction in the Ministry of
Economy and Finance (MEF) and not being controlled by the Ministry of Energy and
Mines (MEM). This is not a sidebar matter (and yes, that’s in bold type and
underlined for a good reason, I want you to pay attention to this detail because it’s in
no way a detail). Up to the end of FY13, it was always the mining people in charge of
the talks with BCM over Santa Ana (evidence example here (4), from October 2013 in
which the mining minister comments on the talks) and for two and a half years, there
have been talks on many levels without any sort of progress. Suddenly BCM files its
formal “we’re now six months and counting” and the dealings are taken over by the
more politically (and financially) powerful MEF.
4) The way out, the line of least resistance is that of a financial settlement on the Santa
Ana concession and even though it’s not a politically easy call (it will leave the Humala
govt open to cries of caving in to anti-miners) it’s probably the lesser of all evils and to
emphasize, I’m pretty sure that its the final deal that BCM is aiming for, too. It all boils
down to “how much cash?”, because on the one hand you have a company that carried
perhaps $15m into the project if you include sunk costs and legal bills, while on the
other hand you have speculation (5) (which is probably way over-exaggerated, but it’s
out there and published) that BCM may demand compensation of up to $1,200m (yup,
that says one point two billion) from the State of Peru if it goes to international
arbitration.
But before going further with this “the way out is a cash settlement” line, we need to backtrack
a little and look in a little detail at other factors mixed up in this mess. In a semi-random order
(and with information which runs from one subject to another), what follows are thoughts on
negotiations to this point, the company’s own financial situation, Santa Ana project economics
and then perhaps the stickiest subject of all, community relations.
Negotiations to this point
Another issue is how things have gone until now. This this Bloomberg report (6) on the process
entitled “Bear Creek Expects Peru Project Rights Resolution by Year-End” is worthy of inclusion,
because a) it’s a window into how things have gone b) it shows a little of the BS offered by the
company to the market along the way and c) suggests that the thrust of the negotiations may
have changed. We begin with the quote from BCM’s CEO Andrew Swarthout included in the
report, which goes like this:
“There’s a strong willingness to resolve this problem,” he [BCM.v CEO Andrew
Swarthout] told analysts and investors at a presentation earlier today. “We’ve
had some very constructive discussions.”
Which is fine, except for the fact that report is dated May 2012 and here we are, nearly two
years later, so all that strong willingness was clearly more heat than light. Although just one
example, it’s the kind of thing that BCM has thrown by way of bones to the market and to
stakeholders when asked about the process during 2012 and 2013. It’s always been “positive
and constructive” and it’s always been with a view to a deal. It’s all been BS too, as 2014’s
decision to seek formal arbitration shows. Also in that report (and others), CEO Swarthout was
quoted as saying the company would be willing to give the local community around Santa Ana
2% to 3% of mine net profit in return for community agreement to build the mine. This
suggests that negotiations to that point were about restoring the concession status and the
right to mine Santa Ana, rather than financial compensation. With the shift away from talks with
the MEM and to talks with MEF (the finance ministry), the aimed-for target result may well have
changed (in fact, I’m going to bet money on that call next week).
Bear Creek corporate financial situation to date
We can start this section with our normal top-box style of presentation. The numbers are to
5

date and include recently disclosed share exercises and options awards, but if there’s a slight
error in the count up it’s purely my fault. We’ll get accurate figures once BCM reports its year,
probably in the first week of April:
Shares out: 92.6m
Options (no warrants): 8.8m
Fully diluted shares: 101.4m
Current share price: $2.08
Market Cap: $192.6m
Treasury position: $48m
Approx working cap per S/O: $0.50
All prices are in Canadian dollars unless stated. Forex U$0.90=CAD$1
Treasury was $52m as at the last quarter (3q13) so considering BCM’s normal burn rate and
relative lack of action in the months since then,
we estimate treasury today at $48m and working BCM.v: Working Capital per qtr
cap at $46m. Those are healthy cash numbers for 140
an exploreco in 2014 (we know the drill there) but 120
on the other hand $50m isn’t enough to get Santa
100
Ana up and running.
80
60 Delving a little deeper into the company’s
financials and keeping our focus firmly fixed on 40
Santa Ana, up to 2009 the Santa Ana project’s 20
exploration costs were capitalized and came to a 0
few dollars over $12m. In subsequent filings,
Santa Ana has been carried mainly in expenses
and along with a small ($0.9m write down), isn’t a
significant part of material assets on the books
any longer. Overall it’s probably realistic to say that BCM has put around $15m into the ground
and into legal fees there, which isn’t all that much compared to its potential and certainly isn’t
much compared to the amount the company is claiming from the government of Peru.
The economics of the Santa Ana project: a potted guide
Just one paragraph here to condense reams of information into something to act as a useful
guide under today’s analysis circumstances. Back in 2011 that capex bill was estimated at
$70.8m and though it’s anyone’s guess what it might be now, the type of cost inflation we’ve
seen in the last three years gets me marking the capex at around $90m (and $100m once it’s
all done and dusted wouldn’t come as much of a shock). Also, NAV (Base case NAV $106.9m)
and IRR criteria were set at different price and costs levels (e.g. the baseline economics use
$14.50/oz Ag), but what we do know is that the project plans to produce 47m oz of silver over
11 years from 63.2m of P+P silver ounces and with exploration potential on top of that (just to
start those thoughts, M+I+I resource is 101m oz, i.e 38m higher than the mine plan reserve).
Overall, it’s fair to say that although the projects precise economics are up for debate, thanks
mainly to the time passed between the feas and today, given a free run at construction and
production its simple design and relatively large size would make it an attractive project that’s
almost certainly robustly economic under today’s parameters of costs and market prices for
silver. The other thing that’s likeable about Santa Ana is the build-out calendar, which assumes
the mine can be up and running in little over 12 months from groundbreak.
Community relations
Here’s where things get sticky, because the above paragraph supposes the mine gets permitted
and is built and frankly, the first of those (permitting) is far more likely than the second
(building). We find ourselves again at the junction between what the national government of
Peru permits and what the local communities of Peru allow, the point that (amazingly, after all
these years and examples) that still gets missed by people on the outside looking in. The list of
6
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source company filings
srallod
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projects that have been “fully permitted” according to the government but have not moved
forward includes famous names such as Conga, Galena, Tia Maria, Rio Blanco/Majaz, Shahuindo
but there are plenty of others too, the common denominator being the disjoint between the
State and the community. For years, the plain fact has been, is and will continue to be that
without grassroots community acceptance and approval of your mining project in Peru, your
mine does not happen and it doesn’t matter what the national government says to the contrary,
period.
In the specific case of Santa Ana, we’ve been over the arguments too many times already so
instead of writing some new prose that says the same thing, here’s a quote from IKN230 dated
September 2013 which covers the situation well enough:
It doesn’t matter what the national government says or thinks about the subject. It’s not even
important what the regional governor of Puno, Mauricio Rodríguez says (his position last week
was to say that the Aymara people weren’t against mining projects and he was working with
some Aymara leaders in order to get the project back on track). What matters are the people in
the area and here are a few quotes from the Aymara leadership that really matters, reported last
week after the Corani ESIA was awarded and BCM made its Santa Ana plans clear.
On mining in general (7):
“If a concession is awarded in the South zone [of Puno region], the Aymara people will
rise up in protest”.
“The consequences of mining activity are negative”.
On Santa Ana (8) (9):
“It is a provocation. The Aymara people have a firm position of saying no to mining in
this area.”
On Regional president Mauricio Rodríguez and his declarations in favour of BCM (10):
“He’s working with fantasy Aymaras”
“His words are a provocation (to us)”.
“If the Aymara people re-start protests, the guilty party will be Mauricio Rodríguez”
I could continue, but if you want to get the situation into context, consider a scenario where a
Canadian First Nations people are dead set against a mining project, but then suddenly because
of combination of a piece of paper signed by PM Harper and the agreement of one First Nations
person in a hundred, they stop their protests and welcome the mining company in to do all the
business it wants. Do you get it now? Santa Ana is not going to happen, ever, because The
Aymara Nation refuses to host the mine or any mine owned by outsiders, a word that includes a
whole bunch of Peruvians next to foreign nationals. And there are 400,000 Aymara on the Peru
side of the border in that region and there are only two roads running in and out. And they’ve
never been conquered in battle, not even by the Incas (who incorporated the area into their
empire by negotiated settlement, the only tribe they didn’t manage to beat in combat). And
believe me, hand on heart, as most of you know already there’s your author’s personal
experience and long-standing respect in play here; you do not f___ with the Aymara.
IKN254 back (and for those of you new to these pages, the personal experience mentioned in
the above text is that I’ve been married to an Aymara for the last 11 years). The stated position
of the locals around Santa Ana isn’t going to change in less than a year. In fact, it won’t change
in ten years or a hundred years, this mine will not be allowed by the locals around it.
Summing all the above up
Therefore what we have in BCM at Santa Ana today is:
• An asset that we currently have priced at zero in our model (and as BCM is trading at
just over $2/share with 50c of that in cash it looks as though all the extra equity is
covered easily by a minority portion of Corani’s NAV and the market too assigns zero to
Santa Ana.
• However, it’s also a project with robust economics that would probably work well, given
the opportunity
• A community that won’t care what they say at national or regional government levels,
they will not allow the mine to happen.
• A company that has been wronged by the State of Peru according to the letter of the
7

law, is protected by a Free Trade Agreement and one that’s now put a clock on
negotiations
• A company that would prefer a financial settlement than getting its poisoned chalice
back (if it has an sense), but would certainly prefer not to go to the international
tribunals and de-facto freeze its operations for years, including any eventual sale of
Corani
• A country that would prefer not to go to ICSID/CIADI and tarnish its pro-mine
reputation
• A country that wants to avoid another big social community protest over mining and
therefore would view a financial settlement as a practical solution
• A country that’s moved the negotiations from the Mining Ministry to the Finance
Ministry and is now talking with the view
This is why I believe last week’s comments are important; there’s a shift in both sides that’s
now less about whether compensation should be given and more about what sort. For me, if
BCM gets a negotiated settlement with the government of Peru that gives it cash compensation
for its lost concession, then the company can get something out of its losing situation, it really
would be something for nothing this time, because any asset value recovered from Santa Ana
at this point is better than zip. However, if the final deal is to hand back the concession to the
company and allow it to move forward again, once the fanfare is done with all you have is a
different administration handing back the same poisoned chalice. In my opinion, this is why the
negotiations between the Humala government and BCM the company have dragged on for so
long, because away from what it is obliged to say in public and to its backers I find it difficult to
believe that BCM could be collectively stupid enough not to see the writing on the wall as
regards Santa Ana. By the same token, it would be easy enough for Peru to avoid a potentially
embarrassing CIADI/ICSID international arbitration case brought against it by taking out a pen,
signing the papers and reactivating the concession in BCM’s name, but they too should be
aware by now that it’s opening the door to yet another political risk mess and high profile anti-
mine protest if it does so (frankly, they’ve been handed a large pail of excrement by the Alan
García government).
Potential compensation
It’s fair to say that BCM won’t receive $1.2Bn from Peru for the cancellation of Santa Ana. It’s
also fair to say that if Peru offers the ~$15m in sunk costs for BCM to walk away, they’ll laugh
and say now. The answer probably lies between the two and at the moment, I’d tend towards
BCM’s base case NAV of just under $107m as a decent an equitable benchmark. For what it’s
worth, that exact number of dollars banked by BCM would mean $1.15 per share and I’d expect
all of that cash would find itself quickly onto the company’s equity price, part of the “something
is better than nothing” principle.
What can go wrong?
Dozens of thngs can go wrong. This is a trade on a political risk decision in South America, after
all.
For one thing, silver drops again and the market decides that Corani is economically unworkable
as a result. That would put $1.50’s worth of stock price under immediate pressure so even if
the BCM compensation call turns out to be true, I end up being wrong for the right reasons
(which is just a cute way of saying “i was wrong”). However, there’s always the chance of being
right for the wrong reasons and enjoying a ride up on BCM just because silver puts in a good
spurt. Swings and roundabouts.
The company and government may decide to take the dispute to the world tribunal, in which
case it will probably be locked up for years. If that happens, I’d sell my BCM and find another
spec, rather than hang around. I suspect many others would do the same.
The company may accept the concession back, rather than cash. If so I’d expect the market to
give BCM a near-term pop anyway, at which point I’d sell my shares.
8

Conclusion and trade recommendation
We’re not yet two months into a maximum six month negotiation process between the State of
Peru and Bear Creek Mining (BCM.v), so even though the chance of an immediate resolution to
all this is alive, chances are we have at least a couple of months and maybe four before any
eventual deal is struck. Therefore I don’t fell i a big rush to take a position, but I do like the
way in which this story is now unfolding. FinMin Castilla’s comments last week were brief, but
they were very significant because now the finance ministry is in charge, the chances for a
financial compensation settlement are much higher and that’s just the sort of deal BCM would
like to see, for it and for its share price.
I¡’m going to buy some BCM next week and set a six month price target of $3.12 on the stock,
representing a 50% upside to Friday’s close and chosen slightly arbitrarily because it’s just a
straight 50% from where we are today. But it would also fit a ~$100m settlement for its Santa
Ana gig, which fits with company valuations and is (probably) an easy pill to swallow for the
government; after all they can always blame it on their political enemy Alan García. The initial
position will be small and it’s the type that I’d add to in the days and weeks ahead, especially is
any price weakness shows up. With a little luck, come August and a settlement that pops BCM’s
share price, I’ll have a decent sized retail speculative holding to my name.
Stocks to Follow
Of the 12 positions open this time last week, six went up (EOM.to, COP.to, PVG short, GORO
short, FCV.v, SRL.v) and six went down (RIO.to, IRL.to, DNA.to, LRA.v, TGM.v, SCZ.v) which
sound evens at first but it wasn’t, it was a bad week for the virtual holdings. That’s because the
hits to the losers were big, first and foremost in Rio Alto (RIO.to down 18.1%) and followed by
Lara Exploration (LRA.v down 13.2%), True Gold (TGM.v) down 10.3%) and Dalradian
Resources (DNA.to down 8.9%). To the upside were the moves in Coro Mining (COP.to) up
13.6%) and the shorts helped soften the blow too, with the still open Gold Resource Corp
(GORO short up 13.4%) and the now-closed Pretium (PVG short up 12.8%) providing the
9

cushion.
With the covering of the Pretium (PVG) short we now have 11 open positions on our ‘Stocks to
Follow’ list, four less than our self-imposed maximum. Four are in the green, one is unchanged
and six are in the red. Most of those losers not by much. Hope springs eternal.
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$2.13 -7.4% best LT value
Minera IRL IRL.to hold C$0.30 22-jul-12 C$0.175 -41.7% top pick called at 24c, added
Longs
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 add C$0.48 22-sep-13 C$0.50 4.2% adding more, spec pol risk
Dalradian Res DNA.to hold C$0.65 27-oct-13 C$0.82 38.5% Holding on good run
Coro Mining COP.to buy C$0.125 26-jan-14 C$0.125 0.0% Cu spec play, can add
True Gold TGM.v hold C$0.395 02-feb-14 C$0.39 -1.3% Was flip, now LT hold
Santacruz Silver SCZ.v hold C$1.04 26-jan-14 C$1.02 -1.9% added, now full position
Focus Ventures FCV.v add C$0.175 01-jul-12 C$0.295 68.6% new tgt 50c, risk/reward shot
Shorts
Gold Res Corp GORO short U$5.07 26-jan-14 U$5.12 -1.0% New re-short now full pos.
Smaller/Riskier
Salazar Res SRL.v spec buy C$0.28 02-mar-14 C$0.285 1.8% 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
Pretium Res PVG mar'14 U$5.38 22-nov-13 U$6.50 -20.8% short closed as port longer
2009, 2010, 2011, 2012 and 2013 closed positions in appendices below
Now for some notes on a selection of the above stocks.
Pretium Resources (PVG) (PVG.to): Short position covered. I mused on it last week and
pulled the trigger on the short covered as per the Flash update of last Wednesday (see
Appendix 1). In the end I got to cover at a more reasonable price and the hit wasn’t too great.
I console myself with the fact that BTO couldn’t have gone to its selling price without this one
(and others like it) following suit. It’s part of portfolio management life.
Rio Alto Mining (RIO.to): The price action was extremely grotty (which hardly needs
highlighting here), so it’s at this point when the perma-long promo rah-rah writer rallies the
troops, says things like “Even cheaper now!” or “Buy more!” or perhaps just stomping the feet
and muttering how it just isn’t fair under the breath. But today I think we’ll go for a quote from
Reg, leader of the PFJ in Monty Python’s Life of Brian:
“Siblings, let us not be down-hearted. One total catastrophe like this is just the beginning!”
The combination of a market sell-off and large selling due to an index rebalancing seems to
have done for RIO, but it didn’t help that its annuals were delayed from the expected filing time
(reliable word is that they’re out this week, this time no joke) and the overall 18% loss hurt. Of
course this time I did something about it, buying (too early) some more shares at a tad under
$2.30 (fwiw, so close to the main holding that I haven’t bothered changing the cost average) as
announced in the Flash update of Tuesday morning (see Appendix 1).
10

Anyway, RIO reports this week and you’ll have a detailed analysis of the number next weekend.
It may finish by competing for space with the GORO YE number analysis, though. Let’s see
what happens.
Gold Resource Corp (GORO): Another that didn’t file on time was GORO, but in this case the
company, being principle-listed in the USA, had to give reason for the delay and it’s a bit of an
eye-opener. Here’s the relevant passage from the filing (11) with your author adding the block
type and underlining:
The registrant is unable to file its Annual Report on Form 10-K within the prescribed
time period without unreasonable effort or expense due to its need for additional time
to review and finalize the income tax information received from its Mexican subsidiary
in order to properly prepare a complete and accurate report. In addition, the Company
has not completed its testing and assessment of the effectiveness of its internal control
over financial reporting due in part to identified control deficiencies related to
completeness and accuracy of underlying data used in the determination of its
income tax provision. These deficiencies, or combination of deficiencies, may result in
a material weakness. There is a possibility that upon completion of its testing and
assessment of the effectiveness of internal control over financial reporting, the
Company may determine that there are additional material weaknesses.
These matters required the registrant to perform additional procedures and analyses
that affected the timeliness of the its annual financial statement close process and
preparation of the Form 10-K. Management is in the process of completing its Form
10-K. These additional procedures and analysis are not expected to result in any
material change to previously reported financial statements.
On reading that I nearly added to my short position. It’s one thing to be late, another to say
that internal financial controls (in a company with an already poor track record for controls and
disclosures who had to re-state quarterlies only last year) are the weakness. We’ll see how this
pans out, as presumably at least we should get the annuals by the end of this month, but being
short this stock into this filing looks by far the smarter side of the trade.
Eco Oro Minerals (EOM.to): If the Colombian environment minister is as good as her word
(this time at least), we should have news on
the all-important boundary in the week to
come. As for trading, in between other jobs I
kept a close-ish eye on EOM last week and
saw light treading that trended slightly higher,
but also a marked tendency for somebody
somewhere to bid it up at the open then wait
(in vain) for others to follow up. What that
suggests is a continued lack of interest in this
story and a market that’s either not aware of
the good news about to come or not sure that
it’s going to be good. And what THAT means
to me is that when EOM gets its favourable
ruling it’s going higher on a pop, which is when I sell.
Minera IRL (IRL.to) (MIRL.L): Reader JH mailed in with the following last week:
Subject: Minera IRL Fence-sitting
I'm still confused as to how you can keep a 'Hold' (viz. IRL.T) as a 'Top Pick'.
How do you rationalize this?
To which I answered, but his follow-up mail was a little longer and as such I think the whole
subject requires a bit of airing for one and all in the letter, rather than in a private exchange.
Reader JH’s point is a fair one and ultimately it points to a weakness in the service offered by
The IKN Weekly, but it’s one that is going to continue (feel free to unsub at this point).
11

The basic issue is that, for better or worse, The IKN Weekly reflects what your author is doing
with his own money. According to the feedback received over the years that’s usually taken by
the readership (that’s you) as a good thing, because you seem to like the “skin in the game”
implication it brings, and that’s fair enough. Also, you’re OK with the implicit (and on occasion
explicit) message that I’m not your fund manager and never will be, so you need to take any/all
information provided on these pages and apply it to your own needs, portfolio make-up (which
nearly always includes investments in other arenas), risk profile and a whole host of et ceteras.
But I recognize that from this side of the looking glass, the set criteria of the Weekly’s Stocks to
Follow list can work against the service that it offers to readers and here with IRL is a case in
point. I currently have it on a near-term sentiment of hold because I want to see how the
financing works before committing any further. However, I’m not going to sell any of my
position (having added a few extra recently) and after thinking it through, I can’t justify
bringing it down a peg and taking it from Top Pick status without selling some of my shares.
This is the thing with the list, it’s what I’m doing with my money.
And let’s state, clear as you like, that I encourage disagreement with my assessment of
companies, stocks and shares so I’ve never had that sacred cow thing about the Top Pick
stocks. If you disagree with my call, that’s fine.
Santacruz Silver (SCZ.v): Two bits on news from SCZ. The first is the easy one, as the
company announced and then closed Thursday (12) the full uptake of its overallotment facility
on the recent placement, which means gross proceeds came to a touch over $12m. This was to
be expected.
The second came on Tuesday morning when SCZ provided an operations update (13) as a kind
of pre-announcement on its financials, due soon. The paydirt phrase in this NR is...
Based upon these accomplishments management expects the Rosario Mine to
achieve its full 500 tpd capacity during the second quarter of this year which will
provide a solid cornerstone for the Company's future growth."
...which translates as “give us one more quarter”. Which I will, because in the end I’m not long
SCZ for its cash flow potential in FY14, I’m here because its assets are undervalued. That’s a
longer-term matter
Dalradian Resources (DNA.to): Seven thousand shares just before the close on Friday made
DNA’s week look worse than it was
(85c is the price you need to pay to
own shares these days), but it was
still a higher-to-lower trending week
for the stock and in line with most
others. Tuesday saw decent volume,
the rest of the week quiet. Overall, a
neutral week that brought it down
from the recent 90c numbers, but
that’s no big deal for the moment.
True Gold (TGM.v): So much for that “starting to pick up steam” comment of last week, TGM
dumped hard and here we are again with red after its name on the list.
Coro Mining (COP.to): Yes is floated back up to 12.5c after that copper-induced dump of the
12

previous week, but all you really need to know is that volumes in COP are waferthin and we’re
back to no interest in the stock. This is the list’s only direct exposure to copper and it’s not a big
position by any means, so what with cash on the sidelines ready to burn I am looking to pick up
a few more COP if possible, but it’s going to be pretty selective buying and I don’t see why I
should pay more than the current price average for any new shares. 11c would be an ok entry
point, 10c better.
Salazar Resources (SRL.v): Same story as COP, pitiful volumes on the week (less than 10k
shares traded over the five days) and a lack of interest. The difference here is that unlike COP
I’m not looking to add any unless it dumps really hard. Is tiny, will remain so until further
notice. Needs news.
The Copper Basket
After twelve weeks of 2014 The Copper Basket is showing a 14.66% gain to level stakes.
company ticker price 1/1/14 Shares out Market Cap current pps gain/loss%
1 Augusta Res AZC.to 1.51 144.41 478.00 3.31 119.2%
2 Reservoir Min. RMC.v 4.97 47.5 323.00 6.80 36.8%
3 NGEx Resources NGQ.to 1.43 168.71 278.37 1.65 15.4%
4 Lumina Copper LCC.v 6.29 44.07 220.35 5.00 -20.5%
5 Hot Chili Ltd HCH.ax 0.425 333.11 129.91 0.39 -8.2%
6 Nevada Copper NCU.to 1.35 80.5 119.14 1.48 9.6%
7 Copper Fox CUU.v 0.375 402.96 106.78 0.265 -29.3%
8 Western Copper WRN.to 0.76 93.68 89.93 0.96 26.3%
9 NovaCopper NCQ.to 1.60 53.4 81.17 1.52 -5.0%
10 Panoro Minerals PML.v 0.35 204.71 64.48 0.315 -10.0%
11 Curis Resources CUV.to 0.57 74.79 63.57 0.85 49.1%
12 Coro Mining COP.to 0.10 159.37 19.92 0.125 25.0%
13 Cordoba Min. CDB.v 0.45 31.88 17.85 0.56 24.4%
14 AQM Copper AQM.v 0.11 139.05 15.30 0.11 0.0%
15 Oracle Mining OMN.to 0.27 49.03 11.52 0.235 -13.0%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg 14.66%
There were eight winners (NGQ.to, AZC.to, NCU.to, NCQ.to, PML.v, WRN.to, COP.to, OMN.to),
two unchanged stocks (LCC.v, AQM.v) and
five losers (RMC.v, CUU.v, HCH.ax, CUV.to,
The Copper basket 2014, weekly evolution
CDB.v) on the week for The Copper Basket 25%
and the overall average rose by 1.9%, The
20%
best percentage-terms winners were Oracle
(OMN.to up 17.5%), Coro (COP.to up 15%
13.6%), Panoro (PML.v up 12.5%),
10%
Western (WRN.to up 11.6%) and NGEx
(NGQ.to up 9.3%), while the worst losers 5%
came from Hot Chili (HCH.ax down 10.3%),
0%
Cordoba (CDB.v down 9.8%) and Reservoir
(RMC.v down 8.5%).
The week was marked by copper the metal
putting in a bottom and attempting something of a recovery, but never really threatening to go
back above $3/lb. China rumours abound, but I agree in broad terms at least with those
analysts (14) that are calling copper back above $3/lb in the near-term. Added to that, the head
of Vale made bullish remarks (15) about the key market of China and said that bearish fears
were being overstated at this point. With other company leaders I’d suspect them of talking
their book, but VALE’s Murilo Ferreira isn’t afraid of calling things plainly (bullish or bearish, a
decent track record of straight talk) and last week said, “The biggest enemy to our share price
13
ht5naj ht21 ht91 ht62 dn2bef ht9 ht61 dr32 dn2ram ht9 ht61 dr32
source: IKN calcs

is a certain belief that China will be over....[t]hey are once more betting against China as they
did in 2004, 2005, 2006 and beyond and I think that people are going to fail again with their
projections.”
We move to the regular coverage of copper inventories. Total world stocks put in a slight rise,
up 4,235 metric tonnes (mt), or 0.9%, to finish at 491,947mt. The small Comex warehouse
stocks rose by 929mt (8.2%) to stand this weekend at 12,321mt. That aside, the news is of a
change in the recent trend as the LME number rose (+18,425mt (6.6%) to 269,725mt) while
the Shanghai Futures Exchange warehouse inventories dropped for the first time since the
Chinese New Year, down 3,396mt (1.6%) to finish at 209,901. LME cancelled warrants
dropped by over 6% too, to 45.1%. A change in any trend in copper inventories is way too
early to call after just one week’s worth of data, so no further comment until next week. I’ll be
keeping my eye on the daily data in the days to come, though.
One third of the world’s copper inventories (166,625mt to be exact) are still locked up in the
notoriously difficult to access LME New Orleans warehouses.
Now for some updates on some component stocks
Reservoir Minerals (RMC.v): It had to have a week off eventually, so around the point
where it closed its $23m placement is as logical place as any.
Panoro Minerals (PML.v): After the HBM announcement of last weekend (and a little prompt
from PML on Monday morning (16) when the ball didn’t start rolling quickly) PML made the
type of gain you’d expect when a larger holder adds.
Western Copper & Gold (WRN.to): WRN reported its annuals on Friday evening and I found
myself opening them for an expected cursory glance and staying amongst the numbers for
much longer than expected. The news here is good rather than bad, because its a company
that’s shuttered through the crappy 2013 and kept its cash position strong. Current assets stood
at $23.92m as at December 31st, which means the company burned just under $10m during the
year (nearly all of which capitalized as exploration assets). Liabilities are minimal (just $1.49m
in “run of company” stuff) which means WRN could do the same thing again in FY14 and
weather any continued storm if necessary (though I personally hope and expect things will get
better this yea, of course).
The Achilles’ Heel of WRN and it massive Casino copper (plus kickers) project in the GWN is the
copper grade, as at 0.33% or abouts on a 0.2% cut-off, it relies heavily on the by-product
credits to make the project work (it claims a 20% IRR, though that looks like a dated number to
me and the price parameters are “optimized” somewhat).
Overall, I like the way the company has been prudent over the year and in the event that
copper takes off, this may become a cheap way of playing the metal’s optionality. If $4/lb
copper ever comes around again, the absolute size of Casino would make it more attractive
14

than its ~$75m market cap by at least a couple of multiples and it’s common knowledge that
companies such as Teck are looking towards these big low-graders as some sort of long-term
future for the industry. The bottom line is that I feel I’ve been a little too dismissive of this
company and its project in the last couple of years and at least see a trade thesis in it today,
even thought that low grade rock puts me off from even thinking about ownership before any
real bullish recovery in copper.
The Low Cost Producer Basket
After 12 weeks, the Low Cost Producer Basket is showing a 15.59% gain to level stakes.
company ticker price 1/1/14 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Freeport FCX 37.74 1040 33.60 32.31 -14.4%
2 Goldcorp GG 21.67 812 21.65 26.66 23.0%
3 Barrick ABX 17.63 1000 19.40 19.40 10.0%
4 Newmont NEM 23.03 497.87 12.22 24.55 6.6%
5 Silver Wheaton SLW 20.19 357.39 8.95 25.04 24.0%
6 Franco Nevada FNV 40.74 147.01 6.90 46.93 15.2%
7 Agnico Eagle AEM 26.38 173.43 5.61 32.36 22.7%
8 Pan American PAAS 11.70 151.41 2.12 13.99 19.6%
9 B2Gold BTG 2.02 651.4 1.80 2.76 36.6%
10 First Majestic AG 9.80 117.02 1.29 11.03 12.6%
all prices in U$, using NYSE ticker prices Portfolio avg 15.59%
The lo0w cost producers dumped badly, with our basket average down a very hefty 8.21% and
just one of the component stocks, the
The Low Cost Producer Basket: Weekly performance and
somewhat contrarian Freeport (FCX),
comparative to GDX control
registering a gain. All the other lost 35%
ground and most came in a 6% to 30%
7.5% loss band, with the worst losers 25%
being B2Gold (BTG down 11.0%) and
20%
Franco Nevada (FNV down 10.8%,
15%
that’s a big deal for a big cap mining
10%
stock). However, our GDX control
5%
fared even worse than the basket and
0%
dropped 10.45%, witness to a real
dumpage for a sector in a week. The
gap between our line and GDX is
down to 5.19% from 7.43% of last
week (FCX’s copper helped).
Does this mean miners are again out of fashion with the hit money set? That would be the
silver lining to it all, fair to suppose. To repeat, the idea here is to have a tracker and an idea of
how the bigger end of the PM producer list is getting on, which allows us more perspective on
our focus group of the juniors.
Goldcorp (GG) and Osisko (OSK.to)
GG dropped 7.1% from last week, which is a big drop of course but pretty much in line with
peers (ABX down 7.2%, NEM down 6.2%). GG gets an airing this weekend because of the now
multiple chapter takeover attempt of Osisko (OSK.to) and the events of last week which for me
at least, have the air of a seasoned high-stakes poker player trampling all over the dreams of
the rookie. There are several aspects to this hostile takeover and a lot of back story even before
it began in January, as it’s been common knowledge that Chuck Jeannes, CEO of GG, has had
his eye on OSK for years rather than months. Also, as things stand today (ABX disposing rather
than adding, NEM with enough on its plate already, other smaller players biding their time in
general) the more aggressive and nicely cashed-up Goldcorp, along with its penchant for low-
15
ts13ceD ht5naj ht21 ht91 ht62 dn2bef ht9 ht61 dr32 dn2ram ht9 ht61 dr32
basket
gdx control
source: Yahoo! Finance, IKN calcs

end cost project in The Americas, is widely seen as the best fit for the OSK takeover.
What with the rise in OSK stock since the start of this bidding process and the cash-plus-paper
structure of GG’s offer, we’ve seen OSK’s share price move ahead of the GG deal offer by quite
a gap and that means the spec arb players have been moving in to buy up the stock, expecting
GG to sweeten the bid. With that in place and with a deadline of tomorrow Monday in place,
OSK CEI Sea Roosen early last week said to the world (17) that, “lots of parties” were
interested in buying OSK at, presumably, a better price. Here’s Bloomie snippet:
“There are many different formulas that are out there and a significant amount of larger
financial players that see value here as well,” Chief Executive Officer Sean Roosen
said today in a phone interview. The company has signed confidentiality agreements
with “lots” of interested parties for what is “a very robust process,” he said, declining to
provide further details.
So come Thursday, GG made its next move by deferring the offer process (detail in its NR)
which unsurprisingly became a source of debate in the metalsphere and for what it’s worth,
here (18) is how I reacted to the news, via a comment on PS Dave’s Vancouver Venture blog:
“This is surely more about OSK's "Hey, loads of others looking at us" comment of
earlier this week. With this GG plays a round of the poker game and says "Well OK, if
there's a White Knight then let's give him all the time he needs".
AKA shit or get off the pot. Maybe tedious, but GG is playing the right strategy here. If
nobody shows, it'll take just one (prob. moderate) sweetener for bigfish to eat littlefish.”
In other words, I think OSK’s Roosen overplayed his hand last week and GG has called his bluff
bigtime. What GG has done is say “OK, let’s see your white knight” because neither they (nor I)
think said knight exists. It’s now up to Roosen to find a better offer from all those interested
parties and if not, GG gets to dictate the price that it will pay for the eventual deal. Or as I put
it to a brokerage friend in an ensuing mail exchange, “It's all well and good [for CEO Roosen] to
say that GG's offer is inadequate, but it's the only thing that's truly supporting the price move
so even a hint of it going away weakens the structure. Mr Sean's argument until now has been
of the have cake and eat it variety, but his declaration earlier this week that others are looking
to buy OSK was probably an overstep, a strategic error. Mister Chuck has just snatched his cake
away.”
In other words, OSK has to show the world it’s counterbidder, or see its price drop towards the
price GG wants to pay for the deal because that will be the only price in town (well, that or
16

nothing, which means shareholders reject an inadequate offer and the floor is taken from under
the stock price, which also means damage). What that means in the real world is that with
plenty of spec players now underwater their arb positions, they’ll 1) want to lighten the load
quickly and 2) GG can become their very own white knight just by adding a reasonably modest
sweetener to the bid once OSK has dropped some.
That’s because my baseline point of departure is that GG isn’t going to walk away from this deal
after the first bid. For one thing the company’ is historically bullish gold by mentality, it’s
aggressive about its M&A, it has cash and quality paper to offer, even if it’s not the only real
buyer for OSK it’s certainly the best fit and probably most important of all, I find it very difficult
to swallow that GG would have gone into this hostile bid strategy back in January without
assuming it would need at least one sweetener to win the prize.
The bottom line to all this is that I expect OSK.to shares to drop next week and perhaps the
week after, after which GG will add its sweetener and get OSK board approval. That’s because
OSK Roosen has played his cards badly. It’s taking longer than people imagined but GG will win
its prize.
Regional politics
Regional risk roundup next week
Next weekend is the end of another quarter, so it’ll be time to catch up on the regional risk
outlook via our regular series.
Ecuador: Mirador Copper (ECSA) hits delays and problems with local landholders
The slightly better (still bad , but slightly better) eyes with which the world of mining is looking
at Ecuador in the last few months may be about to hit a new problem. The showpiece project in
the country is the Mirador, the big copper project (co)discovered by Davis Lowell way back
when, developed by Ecuacorriente (ECSA) and sold to Chinese capital for development a few
years ago. The project is now under construction, but according to last week’s news (which was
picked up by El Comercio, Ecuador’s newspaper of record, this weekend (19)) some 16 of the
local landholders who own key packets of land needed by ECSA haven’t reached agreement on
the price to sell their land (they say the Chinese are being way too cheap and have been trying
to deal with the holders individually in order to get a better price, rather than deal with them as
a group) and the dispute may now have to go to government arbitration and potentially be
forced under a compulsory purchase order. The potential for project delays and social unrest
should be pretty clear by now in the tinderbox-atmosphere that is Ecuador, so question marks
have to be raised about the Chinese capital company and how they’ve decided to do business in
their host country.
Dominican Republic: More calm planning for its mining future
I have to say that I like the generally constructive atmosphere that’s now building around the
subject of mining in Dom Rep. We’ve heard the positives from the Medina government in
previous weeks, this time it’s the country’s business sector talking via one Víctor Castro,
presidenty of a local industry chamber (20), who last week called on the government to provide
broadstroke outlines of where it wants to take the mining industry in the country. The speech
was a smart one, pro-mining and pro-biz (obviously) but also aware of the international
challenges to mining and what Dom Rep can learn from mining countries, as well as the specific
factors in the country that mean blacket, cookie-cutter laws and regulations imported wholesale
from other places cannot be used. A lot of emphasis was placed on clear and strcit
environmental laws, which is good to hear from the capitalist side of the argument. I’m
warming to the place as a potential location for junior mine investment.
Peru: Informal miners strike
There’s been stirke action in several parts of the country from informal/illegal miners, road
blocks in several spots including three separate blocks on the main Panamericana Highway and
17

some police versus protesters violence to report as well, mainly from the police action taken
Saturday morning when the highway at Chala was unblocked and both sides saw serious
injuries. The protest is basically about the way in which the government wants to formalize the
sector, which according to the informals brings way too much expense to their operations and
will put them out of a livelihood (which is of course part of the government’s longer-term plan).
This is evolving into the type of social unrest situation so typical in LatAm, with people wanting
to be left alone to make a lot of money with no consequences, while the government tries to
drag them into the 20th (not even 21st) century.
This one may drag on, sad to say. We’ve already had a meeting between ministers (21) and
representatives from the striking miners, which got nowhere when the government insisted that
all roads be unblocked before talks could start, while the reps refused. There has been a little
softening from the strikers this morning, as they let the trapped vehicles move through the
picket lines, but at 4pm this afternoon re-blocked the roads and called on the government to
take less strict line (i.e. boot into the neverland future) on its formalization plans. Meanwhile,
the government seems to be taking a harder line this time than in previous years (the pattern
of protest-then-more time given has been in place for years) and (22) isn’t going to back down
easily. As it’s already shown it’s not afraid of sending in the police to break up roadblocks, more
headline-grabbing violence may be with us in the days to come. Whatever happens, the
Panamericana isn’t like one of the local or provincial roads that can be blocked for days or
weeks on end and the government will feel obliged to act, blood spilled or not.
Argentina: Santa Cruz
Argentina’s mining minister Jorge Mayoral was in the Santa Cruz province for a mining
conference along with assorted (23) industry figures and bigwigs. Most of the declarations and
resolutions were of the style-not-substance political soundbite variety, but one positive came
from discussions regarding the province’s supposed (and contested by the mining companies)
1% annual tax on metals reserves in the country, the measure brought in last year by the
regional Santa Cruz government which tried to tap the miners for more local tax. From what
was said at the conference, it looks like the measure (that hasn’t been successfully levied
anywhere yet) will get quietly dropped. This is a good thing.
Market Watching
Sandstorm Gold (SAND) (SSL.to) may hit headwinds at the Serra Pelada gold project
Here’s one of those reports that could be in ‘Regional Politics’ or in ‘Market Watching’, because
a political event looks set to affect a widely traded stock. It’s also a potential for a short,
because Sandstorm (SAND) (SSL.to) has rallied recently after doing a great job of carving up
what’s left of Colossus Minerals (ex-CSI.to) (ex-COLUF) and keeping the lion's share for itself
18

(perhaps 50% when it’s all done and dusted) and winning few friends from the retail holders of
Colossus who have been diluted to virtually zero. However, they may just end up holding a
great big bag of nothing, because Brazil's parliamentarians have just presented a law bill to the
national congress that would strip Colossus Minerals (or what's left of it) of its concession rights
and hand the whole thing back to the local Coomigasp co-operative, due to bribes paid by ex-
Colossus to ex-Coomigasp leaders. Here’s the report (24) and here’s my best translation (by
the way, I’ve been working on my Portuguese and I’m fully happy on how this trad came out):
The Draft Legislative Decree 1407/13, pending before the House of Representatives,
would repeal the granting of the gold, palladium and platinum mining concession in
Serra Pelada in Curionópolis, Para State to the Serra Pelada Mineral Development
Company . The law bill would cancel Ordinance 514/10 of the Ministry of Mines and
Energy .
With the cancellation of this ordinance, according to the authors of the law bill, the
rights to the mine would return to the Cooperative Mining Prospectors of Serra Pelada
(Coomigasp) .
Members signing the bill include Domingos Dutra (SDD-MA), Arnaldo Jordy (PPS- PA),
Sebastian Bala Rock (SDD-AP), Zé Geraldo (PT-PA), Wandenkolk Gonçalves (SDB-
PA) and Giovanni Queiroz (PDT-PA).
According to the parliamentarians, in 2007 the National Department of Mineral
Production (ANP ) granted the license to Coomigasp to mine th concession.
Afterwards, as previously reported, a number of transactions by directors of the
cooperative with the Canadian company Colossus culminated in the loss of almost
complete control of the miners on Serra Pelada .
So, not only may the Serra Pelada concession be stripped from its current owners, but the
reason for the stripping is that Canadian executives have bribed local officials. That means the
old directorate of Colussus, Ari Sussman and friends, who are now happily working away and
promoting another large (and in my view overvalued) project, Buritica in Colombia under
Continental Gold (CNL.to).
Focus Ventures (FCV.v) update and feedback
The feedback regarding last week’s site visit and analysis of Focus Ventures (FCV.v) was some
of the most interesting received on any company recently and further underscored my belief
that there’s serious money watching this stock carefully.
There are two main things I want to cover in this short update and first up, let’s get a closer
share count figure now that FCV announced it was expanding the previous week’s placement to
$1.254m at 22c per unit (25) (with the half warrants now priced at 26.5c, not 25c). In last
week’s note I assumed the placement would balloon to $1.5m, which means I added 1.12m too
many to the plie. Therefore, as of this weekend and adjusting for the new share price, FCV’s
financial structure looks like this:
Shares out: 59.01m
Options & warrants: 28.24m
Fully diluted shares: 87.25m
Current share price: $0.295
Market Cap: $17.41m
Approx cash per S/O: $0.025
All prices are in Canadian dollars unless stated. Forex U$0.90=CAD$1
Just to repeat: FCV will need to raise more around 3q14 (a September raise on the back of the
initial PEA?) to cover general costs, any drilling and that $750k option payment due. It then
needs to raise at least $3m in early 2015 to cover its main option payment that takes it to clear-
pipe 70% ownership.
19

Second part of today is on feedback. Of all the communication, as usual the ones that were
critical of the bullish position were the ones that interested me most (though I’m vain enough
to have appreciated the positives comments about the pretty photos and the bullish call, thanks
to all of those) and the main pushback received was about the potential for too high an
operating cost due to the relative depth of the phosphate. The queries received can be summed
up crudely by “lots of overburden, that takes money to remove, costs too high won’t work” and
on first sight, there is a case to answer but as presumed by both your author and those running
this project, there’s plenty of evidence to suggest that it’s not a problem for the ultimate
success of a mining operation here.
The easiest way in is this one: During one of these exchanges, reader G offered up this link
(26) to a document I hadn’t previously seen, the feasibility study for the Hochschild (HOC.L)
owned FOSPAC phosphates project that’s located next to the Focus Bayovar 12 property (I’d
seen the Vale operation’s feas and adjusted feas studies, however), which if you remember
from last week was the site of the large test-pit dug and visited by your author It was
interesting to see the Hochschild assumptions and to cut a long story short, page 236 (like I
say, long story) had this to say about FOSPAC’s costs assumptions (translated):
“The cost of mining is U$1.02 per tonne of material (mineral and waste).
For the mineral, this represents U$7.35 per tonne of mineral. Meanwhile,
the operating cost of mining per tonne of (saleable) concentrate is
U$18.40 per tonne.”
The feas study then goes on to break down (in far better detail than your average Canadian 43-
101 feas, I might add) the cost line items for that assumption.
In other places in the feas, HOC at FOSPAC makes clear that it’s assuming a (slightly over) 6:1
waste/mineral ratio and that’s very much in line with the kind of assumptions both FCV and
your author are working with at this early stage. This explains the cost ratios in that above
quoted passage and also makes the operation margin look as solid as I’d previously expected.
Yes, of course there are other costs involved in this including transport (being close to a port is
vital, as noted last week) G&A, and the large capex hurdle such a mine needs to overcome (this
is big mining for big companies). Also, it needs to be made clear (because I didn’t do this last
week) that the phosphate mineral at the Vale operation is typically at a more shallow depth that
that of the Bayovar 12 project (it varied according to the exact spot, but between 10m and 35m
difference is on show), which means in global terms that Vale doesn’t have so much waste to
strip and therefore can be more cost efficient. BUT, the FOSPAC project isn’t just similar, it’s
VERY similar geography to that of FCV at Bayovar 12 and the feas in place there shows just the
type of big margin operation we’re expecting from our charge. It also tallies right in with the
visuals of last week, because the FOSPAC test pit showed the same phosphates at the same
depths (giving or taking a metre) that the drill program at FCV Bayovar 12 are indicating.
To sum up: This phosphate won’t be as cheap to mine at that of Vale, but that’s because Vale’s
deposit is extremely economic and not about Bayovar 12 being uneconomic.
Ultimately, the relatives to the Vale op are unimportant, because if we take the FOSPAC
neighbour feas and deposit as our baseline FCV at Bayovar 12 still shows very robust
economics, even at today’s relatively low phosphates market price.
It’s also worth noting that even if the operating strip ratio is higher than that of FOSPAC, the
cost of that waste removal at an eventual mine is a small portion of the overall cost per tonne
of phosphate. For example, if the strip moves up sharply to 10X (and it won’t, it’s just an
extreme example) and a miner needs to move an average of 11 tonnes of dirt to get one tonne
of phosphate, the total cost is U$11.22 per tonne of mineral and at the same FOSPAC ratio
(Bayovar 12 is probably less than this, but we’ll take the conservative road) the conc op cost is
$28.09/tonne. That’s an extra $10/tonne in costs but there’s a lot of margin to play with $110/t
and $120/t selling prices and remember, assuming a 10X strip is really at the edge of a worst
case and reality will almost certainly be less. Transport charges are more important than op
costs for high bulk mining and on this the whole Bayovar region holds a strong suit and will
20

keep costs low.
However, $10 extra on costs or not, the economics work at Bayovar 12 and they work on a
company that has control over 70% of the property and is priced at just over $17m this
weekend. That’s the rub here, it’s the price/value balance that tips way in favour of owning FCV
right now and why I expect our new 50c target to be taken out easily enough once the first drill
results in a few weeks’ time show the world what the company has.
Osisko (OSK.to) is a trading short for the near-term
For the reason behind that call, see the Goldcorp (GG) note above in the ‘Low Cost Producer’
section. It’s not a stock I’d short personally and with its ‘Canada Only’ ticker, in my opinion it’s
not one for the retail investor such as I. What’s more, going short on the stock as a simple
trade is probably not the way either. No, this one is more for the insto desk jocks among
readers and the most obvious trade would be a pair that goes long GG/short OSK. The chances
of OSK selling off while its potential acquirer doesn’t feel the same hit are high in the week (or
even two weeks) to come and the arbitrage looks a straightforward set-up. It would probably
also appeal to people holding OSK (the long-termers or the recent arb specs) who could short
their holding as downside protection. Either way and gold price the caveat, OSK looks like
hitting headwinds.
I bought some Dogecoin last week
That was this mystery chart posted on the blog Friday (27), which needs mention here because
it’s not a junior and therefore I’m not doing things behind your collective backs.
While on the subject, here are a few lines on why I’ve spent about U$300 (and plan to spend
another U$200 in the next week or two) on what’s little more than lines of computer code that
was started as a jokey alternative to the now-(in)famous Bitcoin less than four months ago.
The main point here, the one I want to make clear, is that I’m not buying Dogecoin as a near-
term speculation, in fact it’s not even a medium-term thing. The way I see this, the whole
cryptocurrency thing isn’t going to suddenly go away, which surprises me because up to a few
months ago, maybe even weeks ago, i considered the whole thing one large inflated BS fad.
However, I still remain very anti-Bitcoin in its current guise because the way in which the
technology had been bid up to the point where we’re now supposed to pay U$500 or $600 for
one of these things (which aren’t anything more or less than a line of code, when push comes
to shove) makes it clear that human greed has invaded on what is in other terms a pretty good
idea. Thing is, that’s a normal occurrence (and I’d bet that the person(s) who invented Bitcoin
didn’t recognize that limiting the number available and making the coin deflationary by nature
would cause greedy speculators such as the Winkelvii to move in.
However, the idea of a lubricating currency that works digitally looks smart to me and some
time in the dim distant future, I can imagine these things being the lubrication of computer
based transactions. There’s a lot going for the Bitcoin idea, but the price one is supposed to pay
21

for these “coins” (or whatever they are) just smacks as gouging, especially as the basic concept
of Bitcoin is easy enough to reproduce.
Which is where Dogecoin comes in. There are other differences between the two systems (not
least of which being the attitude behind one being serious, the other relaxed and jokey up to
this point), but the main one is that Dogecoin is inflationary. This year some 100 billion
Dogecoins are to be released and then another 5+ billion every year after that. There are going
to be a lot of these coins around, which means they’re never going to have a massive valuation.
And that’s a good thing. However, it wouldn’t surprise me in the least to find out in a year, or
three years or whenever year, that they’d appreciated a little from their current level as new
uses and applications are found for all e-coins (not just Dogecoin or Bitcoin). In other words,
right now I can buy a whole bunch of these Dogecoin things and put them aside for a year. If
they get priced down to nothing in the meantime I haven’t lost much (perhaps U$500, which in
the great scheme of things is very little indeed) but if they start to become truly and actively
useful, I’ll have a big stack of Doges to make my online life easier. In short, I’m stocking up on
a bit of ammo.
The other side to Dogecoin is that it’s grown around a caring a social online community that
helps people and tips others for their good deeds, ideas or whatever, in Dogecoin. I like the
way in which they don’t take themselves very seriously and look to Dogecoin as a thing of the
future, rather than a speculative commodity or asset of today. In short, if you’ve been thinking
about Bitcoin but see the same kind of barriers that I do, maybe Dogecoin is worth a little of
your DD time (though I stress, it’s not my idea of a speculative investment, this is for other
(greater?) purposes than flipping a few bucks for a win.
Conclusion
IKN254 is done, we end with bullet points:
• BTO was sold well (for a change), but RIO.to made a misery of your author’s portfolio
last week, the drop way overstated in my view. As RIO reports this week, I’d expect a
few solid facts and good numbers to come to its aid.
• Thanks to those Castilla comments last week, the Bear Creek (BCM.v) situation has now
moved to actively interesting. Over time I’ve done ok trading this stock (four times in
and only one modest loss from those to report) and hopefully this will make four from
five. Adding silver exposure probably makes sense too, as it’s still very limited o the
portfolio and being bullish as I am, more leverage to the crazier metal is in order.
• Watch that Colossus/Sandstorm situation, and watch for any weakness in Osisko next
week, too.
• After hearing the feedback (positive and negative) on the Focus Ventures (FCV.v)
Bayovar 12 project and fielding the issues, I’m even more convinced that this one is a
winner in the making.
The top long-term picks are Rio Alto Mining (RIO.to) and Minera IRL (IRL.to). I thank
you in advance for any feedback. Flash updates will be sent promptly if required by events.
I wish you good trading fortune, ladies and gentlemen.
Otto
22

Footnotes, appendices, references, disclaimer
(1) http://incakolanews.blogspot.com/2014/03/bear-creek-bcmv-and-peru-government.html
(2) http://money.msn.com/business-news/article.aspx?feed=OBR&date=20140319&id=17450144
(3) http://www.newswire.ca/en/story/1302029/bear-creek-files-notice-of-intent-to-arbitrate-with-peruvian-government-in-
connection-with-the-santa-ana-project-six-month-consultation-period-begins
(4) http://www.reuters.com/article/2013/10/03/peru-mining-bearcreek-idUSL1N0HT1OV20131003
(5) http://elcomercio.pe/economia/peru/demanda-bear-creek-le-costaria-us1200-millones-al-peru-noticia-1708056
(6) http://www.bloomberg.com/news/2012-05-01/bear-creek-expects-peru-project-rights-resolution-by-year-end.html
(7) http://www.pachamamaradio.org/04-07-2013/dirigente-aymara-amenaza-con-levantamiento-de-darse-concesion-
minera-al-sur-de-la-region.html
(8) http://www.pachamamaradio.org/10-08-2012/puno-pueblo-aymara-vive-de-los-recursos-naturales-y-no-del-
extractivismo.html
(9) http://www.rpp.com.pe/2013-09-26-consideran-como-provocacion-pretension-de-recuperar-minera-santa-ana-
noticia_634502.html
(10) http://www.pachamamaradio.org/27-09-2013/hermes-cauna-pueblo-aymara-no-permitira-la-mineria-al-sur-de-la-
region.html
(11) http://www.sec.gov/Archives/edgar/data/1160791/000119312514104118/d694183dnt10k.htm
(12) http://www.santacruzsilver.com/s/news_releases.asp?ReportID=643290
(13) http://finance.yahoo.com/news/santacruz-silver-provides-q4-2013-120000216.html
(14) http://www.entornointeligente.com/articulo/2242762/CHILE-Es-factible-que-el-cobre-vuelva-sobre-US$-3-la-libra-
en-el-corto-plazo-22032014
(15) http://www.bloomberg.com/news/2014-03-19/china-doomsayers-misguided-in-vale-rout-ceo-says.html
(16) http://finance.yahoo.com/news/panoro-minerals-notes-acquisition-shares-132000347.html
(17) http://www.businessweek.com/news/2014-03-20/osisko-sees-lots-of-interest-as-it-seeks-goldcorp-alternatives
(18) http://vancouverventure.blogspot.com/2014/03/goldcorp-punts-ball-further.html#comment-form
(19) http://www.elcomercio.com/negocios/Mirador-mineria-Pangui-Ecsa-Tundayme-conflicto-tierras-
cobre_0_1106889311.html
(20) http://www.noticiassin.com/2014/03/industriales-piden-definir-politica-minera/
(21) http://elcomercio.pe/peru/lima/dirigentes-mineros-se-reunen-nuevamente-pcm-noticia-1717623
(22) http://www.larepublica.pe/21-03-2014/rene-cornejo-demanda-a-los-mineros-que-desbloqueen-la-panamericana-sur
(23) http://www.tiemposur.com.ar/nota/66685-la-miner%C3%ADa-puede-ayudar-al-desarrollo-social-y-
econ%C3%B3mico-de-toda-la-provincia---
(24) http://surgiu.com.br/noticia/143962/projeto-revoga-concessao-de-garimpo-em-serra-pelada.html
(25) http://finance.yahoo.com/news/focus-ventures-increases-private-placement-124500239.html
(26) http://siar.regionpiura.gob.pe/admDocumento.php?accion=bajar&docadjunto=1742
(27) http://www.incakolanews.blogspot.com/2014/03/question-for-chartists-would-you-buy.html
23

Appendix 1: Flash update dated Tuesday March 18th 2004
Good Tuesday morning, just gone 10am local time and the juniors market is off to a rocky start today.
I'm going to make the following trades:
1) Covering Pretium (PVG) short: I could get cute and see if it went down any further, but I'm not a cute person. Today
gives me a chance to cover this loss-making short at a more reasonable level and I'm going to take that opportunity.
The newly bullish market means that shorts are less attractive these days (however, I will be holding on to my larger
GORO short).
2) Buying Rio Alto Mining (RIO.to) (RIOM) for a separate, non-core near-term trade. I can resist anything expect
temptation and although heavily weighted on RIO already, the drop in the last two days can't be ignored any longer.
According to the model, at U$1,300/oz gold this stock is set to deliver a 6X PE at today's share price in 2014 and 2015,
which is far too cheap for a profitable miner. So the trade will be a buy on this dip which can be sold back for a quick
profit all beng well. This won't affect the large core holding of RIO.to in the slightest.
I'm aware that going longer on gold-related exposure has extra risk when just a day before the FOMC announcement.
Also RIO will report Weds/Thurs and that's another eyes-wide-open issue.
Enjoy your Tuesday.
Best, O
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
24

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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