IKN #255Premium

The IKN Weekly
Week 255, March 30th 2014
Contents
This Week: When to buy more, Travel plans, Fed Watch.
Fundamental Analysis: Rio Alto (RIO.to) (RIOM), annuals and 2014 guidance.
Stocks to Follow: Overview, Bear Creek (BCM.v), Eco Oro (EOM.to), Rio Alto (RIO.to)
(RIOM), Gold Resource Corp (GORO), Santacruz Silver (SCZ.v), Dalradian Resources (DNA.to),
Focus Ventures (FCV.v), True Gold (TGM.v), Coro Mining (COP.to), Salazar Resources (SRL.v).
Copper Basket: Overview, Reservoir (RMC.v), NGEx (NGQ.to), Western (WRN.to).
Low Cost Producer Basket: Overview, Barrick (ABX).
Regional Politics: Regional risk review, revised edition, fourth update.
Market Watching: Peru: Watching Cajamarca, More on Focus Ventures (FCV.v), Sandstorm
redux.
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
When to buy more
After my only trade of last week, picking up a few Bear Creek (BCM.v) shares at a surprisingly
competitive price (compared to last weekend, anyway), the rest of the screentime was about
watching gold touch and stay under $1,300/oz and the main thought arising was when to
commit the cash remaining on the sidelines. Well, that’s not totally true, the other was mentally
kicking myself for covering Pretium (PVG) too early but apart from that backwards-looking
thought my eyes are very much fixed towards the future and the opportunities that are offered
today.
I’ve also been treated to the thoughts on where gold is going by a wide range of mailers and
opinions from readers, which is greatly appreciated. From “we’re here now” to “Goldman Sachs
will make its $1,050/oz call a reality” to “$1,270-90 is my area to buy” and many stops in
between. The only common thread I see in the arguments is that they’re based on the analysis
of charts, which is fine. My reason to be long the mining companies (particularly those chosen)
is that they’re profitable companies getting short shrift. There’s a difference and as long as gold
doesn’t completely sink without trace (that’s what I’m betting on here, after all) $20/oz here or
there makes little difference to the underlying revenue potentials for most in the portfolio. The
issue for me is when to buy more, not if.
Travel plans
A quick trip next week. I’ll check in with Focus Ventures (FCV.v) at the company head office in
Lima and catch up on how the company now sees the Bayovar 12 project now that drilling and
logging is advanced, as well as meeting face to face with a company I’ve been checking out
recently (no names on that one yet, DD still in progress). All this means that blog posting will
be light on Thursday and Friday.
1

Fed Watch
Well, it’s not really Fed Watch this time, more like Fed Etc Watch. Yes, next Friday is BLS jobs
day so consider your position to the market compared with what’s expected. How quickly these
things come around. As usual, keep your eye on the superlative blog Calculated Risk (1) blog
for all the details and adjustments to forecasts (currently standing at +206k non farm payroll
consensus).
Fundamental Analysis of Mining Stocks
Rio Alto Mining (RIO.to) (RIOM) annual and 2014 guidance
Our Top Pick and your author’s biggest junior position announced its 2013 annual results on
Friday pre-bell (2). For those of you who don’t want to wade through the analysis to come, we
can sum it up in these terms:
• 4q13 was ok, without being great. Total costs at over $40m were higher than
expected (by about $3m) and there was a bit more noise between the operating
earnings and the bottom line figure, which dragged the headline EPS number down to
6c. Tax provisions look high, which may be doing a kitchen sink and setting up 2014 for
a cleaner bottom line and cash accrual year. I read two brokerage analysis reports on
RIO this weekend; Scotia’s which doesn’t seem to get what’s happening very well, and
GMP’s George Albino who does but hangs a rather rich-for-my-blood $4.90 price target
on the stock. Albino’s analysis did a good job of backing out the noise and came to a
13c adjusted EPS, with which I agree. I thank reader PR for sending in that note.
• The exploration at La Colorada (southern end of the La Arena concession zone) has
been written off, which means assets took a $7.9m hit and $2.6m in exploration costs
sunk into that zone have come up as being worth zero. That write down took the edge
off an otherwise continuously appreciating asset and the whole episode will have to be
put down to experience. RIO says it has other areas of La Arena to explore, but it’s fair
to assume that this time they won’t buy expensive surface rights before finding better
grades and volumes.
• The other balance sheet item that stuck out was a comparative lack of treasury
compared to my previous model forecasts. RIO finished the year at $27.077m treasury
which looked thin to me, though guidance from the company is that the report cut-off
date came at a treasury low ebb, cash is already North of $40m and we can expect the
company to start making and keeping very decent free cash flow this year and next
from its La Arena operations. On that subject...
• One of the stronger points was the guidance for 2014, which has now been
raised a notch to 200k-220k oz gold (was 10k lower than that on both ends) and all in
post-tax (i.e. everything everything) between $1k and 1.1K/oz. As RIO.to has shown
itself to be both a reliable operator and with a tendency for UPOD (under promise, over
deliver) those are pretty reliable guidelines for the year to come. Setting aside a
complete collapse in the gold price (by which I mean a true collapse, not the word
‘collapse’ as used at industry rags like Zerohedge or Business Insider) RIO will be a
profitable mining company in 2014 and beyond. That’s not something to dismiss lightly,
after seeing so many miners come in with poor 4q13 numbers that hardly broke even
or even made losses (before some heavy writedowns, too).
• The market reacted well enough to the numbers, as it should have because
although not a blowout sparkling quarter, it was good enough and more than supports
the current deeply discounted share price. The stock climbed 5.2% on a week in which
all around it had a hard time. RIO remains a strong buy.
2

So that’s the general takeaway, here come a few focus points that arise after a decent peer at
the financials, the MD&A and some limited exchanges with friend and foe alike. I will mention at
this point that I spotted an error in the filings (p34 of the financials...see if you can spot it) and
was annoyingly anal enough to have told the company, but it’s a minor matter and I highly
doubt they’ll need to re-file, YE or not.
Finally, as we’ve covered RIO in depth RIO.to: Sales overview
over the months and years, this isn’t a 100
90
fully comp report but it does cover the
80
main events and anything that caught 70
my eye. 60
50
40
We start with gold sales, which look like
30
this. Please note that in this and the 20
subsequent charts, we combine the 10
backward look at 4q13 numbers with the 0
forward look of what to expect in FY14,
for brevity’s sake more than anything
else.
At $85.452m for the quarter from sales of
67,142oz (the other ounces went to the
gold pre-payment facility, which is now paid
up until May, is due closed later this year
and is these days a minor concern) it was
the second best quarter ever, laying behind
only 1q12 which benefitted from early
bonanza grades. That’s a pretty decent
effort and it’s all about selling more ounces,
because prices are that much lower these
days.
Here’s the way in which
production has been going, plus
our forecasts for 2014.
RIO really put the pedal to the
metal in 4q13 by producing over
70k oz Au, but that’s going to
drop in 2014 as the fleet size is
reduced by ¼ which will improve
its costs profile. The company is
now guiding for between 200k
and 220k oz gold produced this
year and as January’s production
was published in the Peru Mining
Ministry database at 17.6k oz, that looks right on target in these early days. So for this quarter
we assume 53k oz gold and then slight improvement as the strip rate comes down and 55k oz
for the other three quarters. That little lot adds up to 218k oz Au and is at the upper range of
company guidance (they tend to pitch low and over-deliver).
One brokerage note on RIO’s number Friday last week that bemoaned the company for not
selling its gold at a higher average price (they wanted closer to $1.3k/oz during 4q13, while
RIO.to delivered U$1,237/oz), but that’s more of a case of the analyst not paying attention. The
chart above right documents the average published selling price attained by RIO to the London
Fix average for each quarter (please note the cut-down Y-axis, done to make the contrast
3
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
$m
source: company filings IKN ests for FY14
RIO.to: Gold production and forecast for 4q13
80000
70551
70000
60000 55973 58081 56511 59157 53000 55000 55000 55000
48467
50000
40000 36355 30548
30000
20000
10000
0
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
Oz Au
source: company filings, IKN ests
U$/oz Au Rio Alto: Average gold selling price vs London Fix Avg,
1800 last eight quarters
1700
1600 London Fix Avg
RIO gold avg
1500
1400
1300
1200
1100
1000
1q12 2q12 3q12 4q12 1q13 2q13 3q13 4q13 1q14
NB: Cut-down Y-Axis source: RIO filings, London Fix, Kitco

clearer). You see that RIO.to always gets a tad less for its gold than the quarterly average
which is probably the company, quite legally, shifting a little of the COGS burden off the P+L.
As the average shortfall is U$39.88 per ounce over the last eight quarters, the difference of
U$39 between the 4q13 London Fix average and the average selling price attained by RIO.to
during 4q13 was right on the average.
Looking to 1q14 and the quarter just closing, as the London Fix has averaged U$1,295/oz (with
just one day to go) we’re pitching our average sales this quarter at U$1,260/oz. As we expect
RIO.to to produce and sell 53,000 oz gold in 1q14, that means our expectation for 1q14 sales is
U$66.8m (as usual we ignore the minor silver by-product sales and assume them a cost credit,
rather than a revenue addition).
That brings us on to what we can expect by way of costs savings in 2014, because from there
we start start pitching at mine operation profitability. In 1q14 RIO there’s pros and contras to
the costs story, because RIO.to has told the world that it has a bit of extra waste stripping to
do during the current quarter (the last time the strip ratio has a programmed hump in the next
couple of years), so that will add to op-ex. However, the fleet is now reduced from four teams
to three and also the company will move less dirt in 1q14 than it did in the big volume period of
4q13, so those are savings expected.
Here’s how we expect RIO COGS to develop:
RIO.to: COGS
45
40
35
30
25
20
15
10
5
0
4
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
U$m
Source: RIO filings, IKN ests
At $40.405m, 4q13 was the most expensive operating quarter ever, but that’s what happens
when production hits records and grade
doesn’t move. With the extra stripping RIO.to: Average gold grade on pad
g/t Au
planned, we expect costs to scale down to
2.0
$36m in 1q14 and then costs savings
really start to kick in for 2q14 and beyond,
1.5 1.37
with our current forecast putting
1.09
operations at $33m for 2q14. Further out, 1.0
the new electricity connection is scheduled 0.59 0.63 0.65 0.58 0.59
0.51
to shave another $2m/qtr from the 0.5
operations costs (the gold recovery ops
won’t need to run on expensive diesel any 0.0
longer) so those are also shown by an 1q12 2q12 3q12 4q12 1q13 2q13 3q13 4q13
estimate of $31m for 3q and 4q14, but it’s soure: company filings
always tougher to guesstimate further out
(for one thing, main cost diesel may go sharply up or down) so take those with a pinch of salt
for the moment.
Here’s another way of slicing costs, via per-ounce sold. In 4q13 COGS/oz came to U$574
(slightly higher than the op cash cost noted in the company literature of $567/oz, because there
are sight and unimportant differences between the calc method) and we expect that number to
jump to $679/oz in the current quarter, before trending back down as 2014 continues.

RIO.to: COGS per ounce sold
1000
869
900 803
800 757
679
700 640
600 532 571 574 600 564 564
500 452
400
300
200
100
0
5
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
U$/oz
source: RIO data, IKN ests for 2014
So, put that little lot together, take into consideration an average for amorts/deprec and here’s
what we expect the mine to do revenues-wise in the four quarters to come, assuming a steady
gold price (of course, and on that subject
the simple math says that every $100/oz RIO.to: Quarterly Earnings overview
change in the gold price moves revenues 100
90
by about $5.5m per quarter at RIO in
80
2014).
70
60
We expect 1q14 to be the worst 50
40
performing quarter (the strip rate hump
30
being the issue) and mine operating profit
20
(aka gross profit) to come in at $22.8m. 10
From there and gold price permitting, 0
things get stronger with $31.6m in 2q14
and best guesses of $36m for 3q14 and
4q14. As we expect exploration costs to
be kept under tight control, we ‘re going to see more cash move to the bottom line and to
treasury than we did in 2013.
What I’m not going to do is forecast net profits. What I will do is keep my eye firmly on
operating profits numbers, because they’re a better straight lie guidance as to the company’s
operational well-being. In FY13 bottom line numbers were messed around by noisy numbers
and in 2014 that’s less likely, so if we just go with EPS you’ll all sya “hey wow! Look at RIO
improve this year!” when that would be something of a false impression. Here are a couple of
charts to illustrate:
Again, we see 1q14 will be the lacklustre financial quarter, but once things are running RIO.to
will generate strong cash flow compared to its beaten-down market cap. Those forecast bars
represent just over $110m in operating earnings, which is just 4X to market cap. You want your
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
$m
revenues COGS amorts gross profit
source: company filings IKN ests for FY14
RIO.to: operating earnings per share
0.24
0.22
0.20
0.18
0.16
0.14
0.12
0.10
0.08
0.06
0.04
0.02
0.00
21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
RIO.to: Op. Earnings
cents 65
60
55
50
45
40
35
30
25
20
15
10
5
0
source: company financials/IKN ests
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
source: company filings/
srallod
fo
snoillim

profitmaking gold miners cheap? This is cheap and it’ll still be able to claim the title cheap even
if the stock price jumps 50% from here.
However, I might not like bottom line net results as a good benchmark but cash banked will be
important,here’s how I expect treasury to improve this year.
RIO.to: Cash treasury per qtr
100
90
80
70
60
50
40
30
20
10
0
6
11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
source: company filings/IKN ests
srallod
fo
snoillim
Admittedly, I expected RIO.to to start going on this type of cash collection tear as of the last
quarter, rather than this one. That was my bad, it added to assets and spent cash...
...but the time when RIO goes into cash collection mode is now upon us. On the subject of
balance sheet, here’s the liabilities position which took a very slight upspike in 4q13, due mainly
to a pop in accounts payable (~$12m, which was evened out by a similar pop in a/cs receivable
and no big deal). As 2014 develops, debt is due to drop thanks to the gold pre-payment facility
being closed. So here’s how we expect working capital to develop now:
200 RIO.to: Working Capital per qtr
180
160
140
120
100
80
60
40
20
0
11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
source company filings/IKN ests
srallod
fo
snoillim
RIO.to: Assets
500
450
400
350
300
250
200
150
100
50
0
We expect RIO to start collecting cash because it’s going to need some to build its stage 2
11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
$m RIO.to: Debt Breakdown per qtr
140
fixed
other current 120 cash
100
80
60
40
20
0
source: RIO filings, IKN ests
11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
source: company filings/IKN ests
srallod
fo
snoillim
LT debt
current debt

copper/gold sulphide operation. Thanks to the control in costs we’re now expecting, there’s
every reason to suppose RIO can add $60m to
its treasury by year end. And do the same thing RIO.to: Shares Out
200
in 2015, of course. On the subject of Stage 2, 180
the annuals told of feasibility publication in 160
2q14 or perhaps 3q14, which is the previous 140
120
information handled through here. If (as
100
assumed) RIO decides to build and gets capex 80
down to its $200m threshold, it’s now looking 60
more likely that it can pay for the expansion 40
20
from treasury and avoid dilution. Also, as
0
mentioned last week the company is looking
into added a line of credit in order to have more
financial flexibility.
That means we expect shares out to do this, i.e. nothing. We’re now fractions under 177m
shares out and unless RIO.to does some kind of big deal that we’re not expecting it’ll stay that
way.
Conclusion
It wasn’t a great quarter, it wasn’t a bad quarter. RIO.to cleaned up its balance sheet and
wrote down Colorada without anyone (apparently) noticing, which means it hasn’t had a great
time in its early stage exploration adventures (add the $11m blown on La Colorada to the
shares bought in Santa Barbara SBR.v), the investment (term used loosely) in Duran Ventures
(DRV.v) and the failed expedition to Colombia (though that cost much less). Earnings were on
the low side for people who only look at bottom lines, but back out the noise and they were
good enough, without sparkling.
The thing to like about RIO.to today is its forward guidance, because it has a reliable operator
record, it’s profitable even at these low gold prices and its making sure costs are kept under
control (fleet reductions etc) which will maximize cash flow to the company this (and next)
year. RIO.to now needs to become a cash collection machine and improve its current assets
position, the arguable weak point in its financials. With expansion decisions starting to loom on
stage 2 (about time too) they’re going to need funds and the more they can self-generate, the
better.
As for the investment angle, mine is simple; buy, own, it’s going higher. For the rest of you,
you’ve probably noticed the 1q14 dip already and may feel like playing around the way in which
that’s set to be the worst quarter of 2014. For me that’s wya too cute (and I’m crappy at
trading round an investment, plenty of
proof on offer) so I’m not going there,
but I am not you and you are not me
(etc etc).
The bottom line here is to set aside the
relative valuations that may or may not
come into play around the 1q14 results
period and note the absolute value of a
company trading at 4X operating
earnings for 2014. It’s a reliable
operator that has delivered on its
numbers yet again in 2013 and is a
profitable mining company (a lot more
than can be said of some of its peers).
This thing is cheap by any fundy metric
you care to judge it by and continues to be the most obvious of top picks in the junior space. I’ll
7
11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
source: company filings/IKN ests
serahs
fo
snoillim

finish with a year-to-date chart of RIO.to versus the gold bullion ETF (GLD), rather than a 12
month version, because I don’t want to break the good mood.
Stocks to Follow
We now have 12 open positions and of those, just two (RIO.to, GORO short) gave us gains last
week so it was good that RIO was one of them I suppose. There was one unchanged (TGM.v)
which means nine names saw losses including the biggest percentage drops from Coro mining
(COP.to down 16.0%), Dalradian (DNA.to down 13.4%) and Santacruz (SCZ.v down 12.7%).
With the addition of Bear Creek Mining (BCM.v) last week we now 12 open positions on our
‘Stocks to Follow’ list that’s now positioned as long as it’s been for at least a year, but still with
three fewers names than our self-imposed maximum and cash on the sidelines looking for a
home, as well. Three positions are in the green, one is unchanged and eight are in the red.
That will change as soon as the market has worked through its current round of nerves and I
like the way the portfolio is positioned these days.
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$2.24 -2.6% best LT value
Minera IRL IRL.to hold C$0.30 22-jul-12 C$0.16 -46.7% top pick called at 24c, added
Longs
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.91 -20.9% solid biz model, LT hold
Eco Oro Min. EOM.to add C$0.48 22-sep-13 C$0.48 0.0% ready for pol risk announce
Dalradian Res DNA.to hold C$0.65 27-oct-13 C$0.71 9.2% Holding on good run
Coro Mining COP.to buy C$0.125 26-jan-14 C$0.105 -16.0% Cu spec play, can add
True Gold TGM.v hold C$0.395 02-feb-14 C$0.39 -1.3% LT hold, takeover play
Santacruz Silver SCZ.v hold C$1.04 26-jan-14 C$0.89 -14.4% added, now full position
Focus Ventures FCV.v add C$0.175 01-jul-12 C$0.29 65.7% new tgt 50c, risk/reward shot
Bear Creek Min BCM.v buy C$1.88 23-mar-14 C$1.86 -1.1% trade on silver and pol risk
Shorts
Gold Res Corp GORO short U$5.07 26-jan-14 U$5.00 1.4% New re-short now full pos.
Smaller/Riskier
Salazar Res SRL.v spec buy C$0.28 02-mar-14 C$0.27 -3.6% 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.
Bear Creek Mining (BCM.v): Position opened. It’s still small and I’ve left room to add this
week coming (you might have noticed the market nerves, too). It’s also one that doesn’t have a
8

tight clock running on it as explained in the note last week, so the no rushing in rule is in play.
In local news, there was a small report (3) in the Puno regional press about Aymara regional
political players bickering over Santa Ana and one of them, who’s been a key anti-mine figure
over the last years, suggesting that the locals could take over the project and turn it into an
informal (i.e. illegal) mine operation if the government insists on its development. He was
quickly shouted down by other Aymara leaders (who still insist that the whole region remain
pastoral and no mine be developed of any sort) and it wasn’t a proposal that’s ever going to be
taken seriously (the whole backdrop to the meeting of Aymara leaders was slightly rarefied) but
it was an indication that the South Puno area is paying close attention to the current
negotiations between national government and company.
Eco Oro Minerals (EOM.to): May close: Tomorrow is the day, as Colombia’s government
(via Environment Minister Luz Helena Sarmiento) is finally keeps its word and will us the long-
overdue border location for the páramo nature reserve tomorrow Monday, according to the
minister and several news reports thereof (4). Our position may therefore close this week
coming, all depending on what happens. If the main part of the EOM project (i.e. the bit that
counts) gets to be outside the limitation as expected and 3) the stock rises as a result. This was
supposed to be a near-term trade (all those months ago) but the basic game-plan of playing
the jump on the news hasn’t altered and I’ll be happy enough to take the profit offered by any
spike up.
The Minister gave an interview in this report (5) in Colombia’s El Tiempo (a well-regarded,
serious daily) and although we need to wait until tomorrow for the presser, it does look good
for the company’s prospects based on what she says here (translated):
El Tiempo: Vetas, the (local) town dedicated to mining, is outside the protected
area?
Minister Sarmiento: The urban area of Vetas is outside the páramo.
El Tiempo: Are there mineral concessions inside the protected area?
Minister Sarmiento: The majority are outside. There are several mineral titles
(concessions) inside the páramo. Those that already have mining rights, that’s to say
those that have an environmental operating license, may continue until the concession
ends.
El Tiempo: What about in the case of Greystar?
Minister Sarmiento: Greystar, which is now Eco Oro, does not have an environmental
operating license.
El Tiempo: Therefore it can’t operate inside the páramo?
Minister Sarmiento: It has to work outside of the border line. But being outside
doesn’t mean that it already has its license guaranteed, it means that it has the right to
apply for an environmental operating license. Outside of the border they can continue
exploration, where today it does not need a license.
In other words, in all likelihood EOM is going to get the parts of its project that it needs outside
of the big important frontier to be able to get moving on its new project plan, the underground
development that will take advantage of the higher-grading material and be mined in a smaller
footprint manner than the original, open pit mine that caused all the fuss and was originally
rejected. It’s not going to get all its concessions approved and that’s something the press may
pick up on, but in practical terms the line is being drawn to suit EOM and unless there’s a nasty
surprise tomorrow that contradicts the lines of the Minister in the above interview, the share
price should rally.
But back and to cover all bases (in the event of that nasty surprise), here are the excerpts that
matter from an exchange with fellow EOM.to long, reader PB, that happened on Friday after the
blog post showed up
PB: “Do you have a particular price level in mind that this might get to or alternatively
9

at which you'll say 'sell, yes sir, her you go, thx a lot' or are you just gonna watch it how
far it runs?”
Your author: “Option 2, I think. You can see on the chart that it makes violent upspike
moves on good news, which (i think) is product of its promo marketing in New York
(the controlling $$ is NYC based fund). I'm very leery even about guessing, so will
watch. However, the general idea will be to sell into the spike, first days.”
PB: looking also at the downside here, what's your thoughts on what you're going to do
in case you turn out to be wrong and this thing lies inside the borders... Does this turn
into another CSI quickly?
Your author: To the downside, EOM has legal action it can take against Colombia
govt. Not a play I’d normally hold thru, but downside spike can be reverted by the NR
which would hit a couple of days after any negative result. The chances of a ruling
that's out-and-out bad for EOM are small, in my opinion. However, after a gut-wrench
ride it should spring back.
PB: I understand that the odds for a bad ruling may be small, but being prepared and
having a game plan for all scenarios helps one avoid making rash decisions
And quite right too PB, smart to have the bases covered. So yes, in effect and in the (in my
opinion unlikely) event that the páramo boundary decision goes fully against EOM.to, I’d expect
the stock to drop hard but it has a history of then emitting NRs that draw attention to its legal
position and how it would expect to make its money via the courtroom. The bottom line is that
I wouldn’t expect a drop on the news, but I definitely would not sell into any panic drop and
would wait out the rougher waters, for a few days at very least.
Bottom line here (and all you really need to know): In the likely event of good news, I’ll sell
after watching to see how far it runs. In the unlikely event of bad news, no need to sell into any
drop.
Rio Alto Mining (RIO.to): Plenty on RIO.to above. In market news, the stock did pretty well
all things considered, even managing to hold onto most of its late Thursday gains once its
annuals had been filed (typically a day on which juniors feel selling pressure). If I have time
next week between meetings I’ll swing by the RIO offices and see if there’s any new news and
give them a chance to tell me where the analysis above is stupid, in their opinion at least.
Gold Resource Corp (GORO): We’re past “should file” and next week GORO has to file its
annuals, else get into trouble with the SEC. There have been all sorts of rumours passing this
desk regarding the contents of the report to come and as part of that may be connected to the
way in which I’m publically short the stock, I think it wise to keep the lid on the contents of the
rumours. I will however state that I’m very happy about being short this stock into this set of
earnings and I’m looking forward to
taking a very close look at its
contents. Expect a full report next
weekend.
Santacruz Silver (SCZ.v): SCZ had
a bad week and continues to be the
open position I’m most fretting over.
Monday’s early morning rally met
with immediate selling that basically
continued all week (Thursday was
the only light volume day) which
didn’t make me feel comfortable
about this one’s chances of being
somebody else’s takeover
target...vibes here weren’t right here, SLV’s weakness or not.
10

The longer-term take of the SCZ chart indicates that we’re at a baseline level here (those with
the memory for the original plan might remember your author’s analysis and buy call coming
at-or-around the current prices, but then the stock rallied and I eventually snatched at some
shares at the $1+ price point...hey ho).
If you’re the player with more patience than I, here looks the level to buy into this stock (unless
it all goes to hell). I’m resigned to the potential of adding and averaging down a little, if the
whim takes me.
Dalradian Resources (DNA.to): Don’t Panic. For whatever reason, DNA saw late Friday
selling that dragged it from the general 77c and 78c of the week all the way down to a well-
timed run through all bids of 71c at the close. In fact, a squint at the 5 day chart shows selling
at the close of the last three trading
days so we can assume that somebody
somewhere has a vested interest in
keeping the lid on this stock price at
the moment.
I’m not one of these people who
squeals “manipulation!!” at any old
move that goes against my personal
belief in how the universe should work,
but neither do I have ‘Stooopid’
tattooed on my forehead as regards the
subject. Here’s a clear case where a
stock price is being sat on artificially
and the obvious “cui bono” question
arises, especially as its common knowledge now that DNA is quietly but clearly shopping itself
to the highest bidder and wants to be bought out by somebody.
Focus Ventures (FCV.v): See ‘Market Watching’ below for more on FCV, as Clarus Securities
added to its sift coverage of the stock last week and the result is starting to attract more
attention to this developing story. Here we note the NR out of the company last Monday
morning (6) that updated on how things are going at the Bayovar 12 project and largely
confirmed the impressions received from the recent site trip.
11

As a result of the NR (and I believe the Clarus coverage, see below for more on that) the best
trading of the week came Monday morning and although 27c was hit on Thursday via minor
selling, the stock’s doing well and apparently consolidating around the 29c point. This is
important all of a sudden, as the clock is now ticking on the 10 consecutive days of 25c+ action
as of March 29th. To be precise on this, the close price of FCV.v or average of bid and ask (if
the stock doesn’t trade on any day) must exceed $0.25 (i.e. 25c precisely is not enough) for ten
consecutive days and if that happens, FCV can force the exercise of all those 25c warrants,
which would put around $3m of very useful working
capital into the company treasury and cover the
company’s outgoings until 1q15 minimum.
True Gold (TGM.v): A short comment on pure trade
action in TGM, because although the stock bumped down
to 37c last week, buyers immediately moved in on that
price and we saw above average trading on most days.
The stock finished unchanged at 39 (after the poor
showing of the previous week) which isn’t bad. Overall
not a winner yet, but the way it traded looked pretty
healthy.
Coro Mining (COP.to): Very patchy trading in COP once again, which along with my own very
small position has me thinking about dropping it into the official “smaller/riskier” section instead
of just assuming that you’ve all got the idea. The percentage moves are wilder than the reality
and it’s at current prices (10c to 11c) that I’d add. It’s the only direct copper exposure on the
list right now, so the slightly brighter looking macro future for the metal is the reason why I
might consider a cheap addition. Not in a rush, though (like most of these, who may have
gathered).
Salazar Resources (SRL.v): On SRL last week I sighed that special sigh reserved for
moments when a company does these things. It’s understandable that Fredy Salazar
wants/needs to raise some working capital and it’s also understandable that the company needs
to offer a discount to market in order to get an insto in. But still, the $1.98m financing (7) that
plans to sell 9m units at 22c (1 unit = share plus half warrant) is a steep discount and has
knocked out any minimal liquidity we may have seen on the open market. As it happens, SRL
didn’t sink on the news but that’s only because the stock couldn’t get a buyer and a seller
together. I fully expect this one to drop towards the placement price in the week to come, so
it’s going to take patience on this small trade.
Like I say, I understand that placements of this sort are part and parcel of taking punts at these
heavily beaten down tinycaps, it’s one of the risks that come long. But still, sigh.
12

The Copper Basket
After thirteen weeks of 2014 The Copper Basket is showing a 13.89% gain to level stakes.
company ticker price 1/1/14 Shares out Market Cap current pps gain/loss%
1 Augusta Res AZC.to 1.51 144.41 498.21 3.45 128.5%
2 Reservoir Min. RMC.v 4.97 47.5 322.05 6.78 36.4%
3 NGEx Resources NGQ.to 1.43 168.71 308.74 1.83 28.0%
4 Lumina Copper LCC.v 6.29 44.07 207.13 4.70 -25.3%
5 Nevada Copper NCU.to 1.35 80.5 139.27 1.73 28.1%
6 Hot Chili Ltd HCH.ax 0.425 333.11 126.58 0.38 -10.6%
7 Copper Fox CUU.v 0.375 402.96 108.80 0.270 -28.0%
8 Western Copper WRN.to 0.76 93.68 96.49 1.03 35.5%
9 NovaCopper NCQ.to 1.60 53.4 76.90 1.44 -10.0%
10 Panoro Minerals PML.v 0.35 204.71 59.37 0.29 -17.1%
11 Curis Resources CUV.to 0.57 74.79 56.84 0.76 33.3%
12 Cordoba Min. CDB.v 0.45 31.88 18.17 0.57 26.7%
13 Coro Mining COP.to 0.10 159.37 16.73 0.105 5.0%
14 AQM Copper AQM.v 0.11 139.05 15.30 0.11 0.0%
15 Oracle Mining OMN.to 0.27 49.03 10.30 0.21 -22.2%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg 13.89%
The overall basket went down, but by less
than a point to 13.89% average. As for the
The Copper basket 2014, weekly evolution
components, eight dropped (LCC.v, RMC.v,
25%
HCH.ax, NCQ.to, PML.v, CUV.to, COP.to,
20%
OMN.to), just one was unchanged (AQM.v)
and six showed gains (NGQ.to, AZC.to, CUU.v, 15%
NCU.to, WRN.to, CDB.v) with the best moves
10%
coming from Nevada Copper (NCU.to up
16.9%) and NGEx Resources (NGQ.to up 5%
10.9%), while the worst drops were suffered
0%
by Coro Mining (COP.to down 16.0%) and
Curis Resources (CUV.to down 10.6%).
The takeaway the feeling on the week
was of a sub-sector being pulled one
way by the recovery in copper prices,
but the other by the general weakness in
all junior miners.
We’re a quarter of the way through the
year (what already? Yes, already) so
here’s how our 15 basket components
stack up against one another so far. Top
of the tree is Augusta (AZC.to) thanks to
the buyout offer from Hudbay (HBM)
that’s looking evermore likely to succeed.
Then come a bunch of six stocks doing
pretty well over a uniform profit range
(RMC.v, WRN.to, CUV.to, NGQ.to,
NCU.to, CDB.v) with a couple more at or near breakeven. Which means we have five losers so
far this year, with the worst percentage performances so far from Lumina (LCC.v) and Copper
Fox (CUU.v).
13
ht5naj ht21 ht91 ht62 dn2bef ht9 ht61 dr32 dn2ram ht9 ht61 dr32 ht03
source: IKN calcs
Copper Basket Components after 13 weeks
140%
120%
100%
80%
60%
40%
20%
0%
-20%
-40%
ot.CZA v.CMR ot.NRW ot.VUC ot.UCN ot.QGN v.BDC ot.POC v.MQA ot.QCN xa.HCH v.LMP ot.NMO v.CCL v.UUC
source: IKN stats

Let’s move on to the copper macro market news because this week the bullish signals are
flashing again, which cannot be any bad thing. First the well-documented copper price relief
rally, the best of which seen on Thursday and Friday. Copper closed out the week over $3/lb
which is a psychologically important level for sure, but also one at which a lot of economic
studies are based so it’s a price that juniors care about.
Copper inventories, per month 2012-2014
1000000
900000
800000
700000
600000
500000
400000
300000
200000
100000
0
It’s also the end of the month so here are
the inventory tracking charts, which show a
levelling out on a monthly basis but don’t
inform so very well on the bump and drop
we’ve seen in the last week, especially in the
Shanghai numbers, so let’s move right on
and focus on the latest happenings.
In the latest of the weekly totals world
stocks dropped sharply by 17,411 metric
tonnes (mt) (3.5%) to finish the week at
474,536mt and that’s something to which we
need to pay attention.
14
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj luj gua pes tco von ced 41.naj bef ram
Mt Cu Copper inventories: percentage held per exchange
80
LME Shanghai Comex
70
60
50
40
30
20
10
0
source: Cochilco
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj luj gua pes tco von ced 41.naj bef ram
LME Shanghai Comex
source: Cochilco
Shanghai Futures Exchange Warehouse Stocks, 2014
220000
200000
180000
160000
140000
120000
100000
ts13ceD ht5naj ht21 ht91 ht62 dn2bef ht9 ht61 dr32 dn2ram ht9 ht61 dr32 ht03
Mt Cu
source: Cochilco

Even Comex has a part to play this week, as it rose by 2,790mt (22.6%) to 15,111mt, which is
a big re-adjustment for one so small and against the grain of the bigger players. Talking of
which, LME warehouse stocks dropped slightly by 4,025,t (1.5%) to 265,700mt, while the big
newsmaker is again Shanghai, but this time for a change of direction confirmed. That
exchange’s stocks dropped a full 16,176mt (7.7%) to finish the week at 193,725mt and that’s
real news, people. Arguably Shanghai has wrested the mantle of price discoverer from LME in
recent weeks and months, so seeing its inventory suddenly reverse and drop like you see in this
weekly chart indicates a new pick-up in demand in the key market of China. Don’t
underestimate the significance of this is we get confirmation of the change via next week’s
figures. Right now I’d call this possibly bullish for copper, this time next week that might be
probably bullish. This is, after all, why we bother tracking these datasets carefully.
Now for some updates on some component stocks
Reservoir Minerals (RMC.v): On Friday afternoon, news was delivered to the market by Jing
Bao (Asia) Ltd (8a) that started like this:
TORONTO , March 28, 2014 /CNW/ - Jing Bao ( Asia ) Limited (" Jing Bao ")
announced that it has acquired ownership of an aggregate of 4,750,000
common shares of Reservoir Minerals Inc. ("Reservoir Minerals") representing
approximately 10% of Reservoir Minerals' issued and outstanding common
shares, as known by Jing Bao.
In other words, Jing Bao has climbed over the 10% threshold and now needs to declare its
minority interest in RMC. For more on the connection between Jing Bao and RMC.v, check out
this (9) report from late January which put RMC CEO Simon Ingram in extended meetings with
the company at that time. They seem to have been fruitful.
Jing Bao (Asia), a Hong Kong-based company focused on investments in the commodity and
natural resources arena, announced that it met with Simon Ingram, the CEO of Reservoir
Minerals ("Reservoir"), the Toronto Venture Exchange-listed mineral exploration and development
company in which Jing Bao (Asia) has a significant investment, during a well publicised visit to
Beijing and Hong Kong. He had a series of meetings regarding Reservoir's JV with Freeport
McMoran in the Timok copper and gold project in Serbia. As a result of some of the best drilling
results in recent history, it appears that the target of building a high grade mine in the near term
will be both achievable and profitable. Although Freeport currently own 55% of the Timok project,
they are in a position to increase their ownership to 75% by covering all drilling and other
expenditures through to a pre-feasibility study. Reservoir's initial discussions regarding financing
for their portion of building a new mine was well received by companies visited in China and by
Jing Bao (Asia) in Hong Kong. Jingbao specializes in off-take transactions of metal or
concentrate. Structuring a transaction in this manner may prove to be the most attractive manner
of raising finance for the new mine for Reservoir.
However, it’s notable that Jing Bao is currently more interested in building an equity position in
RMC than directly sponsoring a financing via off-take or similar. Clearly, the Hong Kong
company sees more upside to the stock or even the expected FCX takeover offer, so perhaps
wants a bargaining chip on the eventual concentrate supply.
NGEx Resources (NGQ.to): This one had a good week, so it’ll be interesting to watch just
how it reacts after the late Friday evening double bill of news releases. The first NR (8) had the
BCSC rapping NGQ’s knuckles slightly about using and overly promoting the idea of “conceptual
studies” in its previous February NR and corporate presentation dated Feb 2014 (made for
PDAC), which NGQ has now retracted.
The second NR (10) announced the filing of its annuals and was more standard in nature, but it
still provided some insight into what we can expect from the company this year. The interesting
bit revolves around the combo of treasury and burn, because you put these three lines of
numbers together...
At December 31, 2013, the Company had cash and working capital of $21.3 million and
15

$14.2 million...
Net cash used in operating activities was $26.0 million for the year ended December
31, 2013 and consisted primarily of the loss from operations of $28.4 million, which
included exploration expenditures of $22.7 million...
(In 2013) Cash flow from financing activities was $33.4 million...
...and then throw in this part of the NR...
The Company anticipates that its current financial position will provide sufficient
working capital to fund its share of the remaining exploration expenditures in the
2013/2014 field season and corporate expenses.
...and it doesn’t take a quant program coder to work out that NGQ needs more cash to get
through this year. That’s because the 13/14 campaign is now wrapping up (the literal
translation of ‘Los Helados’ is “The Frozens’ and that high up in that section of the Andean
Cordillera isn’t such a great place to be over the winter period) and come 3q14 NGQ is going to
need more financing. That means a dilutive placement is in the works here, so even though
NGQ has great sponsorship from the Lundin group, there’s an obvious price cap on this stock
for a few months.
Western Copper & Gold (WRN.to): After spending a chunk of last weekend mulling over
WRN’s financials (and re-opening its 43-101’s on Casino), then saying generally pretty things
about the company for the first time ever (I think..certainly remember slamming into it as
overpriced at $2 and $3 a couple of years ago), I was interested in the price resilience it put in
last week Ok ok, it’s a bit Johnny-Come-Lately on my part, first to agree, but still it seems to be
getting some core support together.
It reminded me of a previous moment in the copper junior cycle when I ignored second-rate
deposits and the stocks/companies on top of them, just after doing well on the A-Graded
Antares Minerals. I couldn’t get myself to buy into the deposits or projects that seemed of a
lesser quality, which was a mistake on my part because for a while they all bubbled and things
such as WRN made very good trade vehicles. Another I missed trading at the time was
Candente (DNT.to), which rose from 41 to $2 like a rocket without me and even though I might
have been proved right in ignoring the thing in the longer term, it’s only ever a “right” in
qualified terms because I could have jumped on and ridden the enthusiasm, even if I didn’t
share it.
This is the type of crap that goes on in one’s head if you think too much about companies and
stocks. They’ll tell you to “find the fatal flaw”, but if you do and nobody else does (for a while at
least), the person who found the flaw misses out on the winning deal and can shake their fist at
the world all they like. In the case of WRN, the combo of low grade and remote location (i.e.
cost hurdle) is the fatal flaw for me, but that won’t stop it from going higher if the world
decides that Casino has a shot at being a big mine, or the economics are suitably massaged by
some influential third party, or copper goes higher and gives it leverage, or any number of
other variations on the theme.
The Low Cost Producer Basket
After 13 weeks, the Low Cost Producer Basket is showing a 15.59% gain to level stakes.
16

company ticker price 1/1/14 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Freeport FCX 37.74 1040 34.17 32.86 -12.9%
2 Goldcorp GG 21.67 812 20.39 25.11 15.9%
3 Barrick ABX 17.63 1000 18.30 18.30 3.8%
4 Newmont NEM 23.03 497.87 11.91 23.92 3.9%
5 Silver Wheaton SLW 20.19 357.39 8.27 23.15 14.7%
6 Franco Nevada FNV 40.74 147.01 6.89 46.90 15.1%
7 Agnico Eagle AEM 26.38 173.43 5.43 31.29 18.6%
8 Pan American PAAS 11.70 151.41 1.98 13.07 11.7%
9 B2Gold BTG 2.02 651.4 1.79 2.75 36.1%
10 First Majestic AG 9.80 117.02 1.17 10.00 2.0%
all prices in U$, using NYSE ticker prices Portfolio avg 10.89%
Another sharp leg down for the larger-cap producers last week, with our basket losing 4.7%
over the average of the ten stocks
(while our control GDX lost 6.72%). The Low Cost Producer Basket: Weekly performance and
Yet again Freeport (FCX) came to the comparative to GDX control
35%
rescue and was the lone winning stock
30%
last week, while the other nine all
25%
dropped. The worst showings came
20%
from First Majestic (AG down 9.3%),
15%
Silver Wheaton (SLW down 7.5%) and
10%
Pan American Silver (PAAS down
5%
6.6%), which states loud and clear
that silver did a lot worse than gold. 0%
We’re not arguing.
Barrick (ABX)
You think ABX doesn’t care too much
about Pascua Lama this year? Yesterday Saturday March 29th, ABX head honcho John Thornton
was in San Luis (11) to meet San Juan governor Luis Gioja (now happily recovering from his
near-fatal helicopter accident last October) as well as the region’s mining minister.
Accompanied by all the important ABX LatAm people, Thornton made public noises about
increased investment in the Veladero mine, told the politicos that company investment in the
San Juan province was guaranteed and said that environmental monitoring and maintenance
work on the Argentine ‘Lama’ side of Pascua Lama would continue and told assembled press
that Pascua Lama was still a high strategic priority project for the company, before talking
about its temporary suspension due to legal and regulatory grounds in Chile. However, the
meeting also agreed (12) that the current level of 3,500 workers on the Lama side would have
to be reduced to 1,600 while the suspension in Chile was maintained (they’re doing little more
than essential maintenance and environmental baseline studies), which looks like more pressure
to unblock the Pascua side from the company, this time using its reasonably good relations with
Argentina as the leverage point. The company is now waiting on the the reading and decision of
the new Chilean Congress on the parliamentary committee report (compiled during the Piñera
government) which recommended that Barrick wouldn’t need to completely re-do its
environmental impact study and permit application (because it had rectified enough things
already). If that reading passes and the committee report recommendations are upheld, it
would be a de facto green light for the project again and it’s then when your author expects
Chinese money to enter the arena and help fund the final stages of the project.
Regional politics
Regional risk review, revised edition, fourth update
It’s quarter-end and time for the regular review of regional political risk for junior mining. This
is the fourth time for the new format so we should be in the swing of it by now (as seen in
17
ts13ceD ht5naj ht21 ht91 ht62 dn2bef ht9 ht61 dr32 dn2ram ht9 ht61 dr32 ht03
basket
gdx control
source: Yahoo! Finance, IKN calcs

IKN218, IKN230 and IKN243).
Here again is the brief overview of the scoring system, (more detail in IKN218). The six
categories are:
a) National Government Miner Friendly: The country on its national stance towards
mining activity.
b) Community/Social Miner Friendly: The overall attitude of locals towards mining,
either in specific zones or in country regions.
c) Foreign Direct Investment (FDI) Friendly: The openness towards FDI and the
safeguards it gives to foreign capital looking for a home.
d) Mining Culture: Countries or regions with generational traditions in mining are easier
places in which to operate than those which have little previous exposure to formal
mining operations.
e) Geopolitical Optics: The way in which the outside world sees this country, an
important factor, no matter if the perception be right or wrong.
f) Internal/National Political Stability: A gauge of how stable the country in question
is politically.
Finally, we now concentrate on nine countries with the potential to host companies, rather than
try to offer a comprehensive LatAm-wide view that takes in countries with little or no appeal for
investment or speculation in juniors. Therefore we focus on Chile, Peru, Mexico, Brazil,
Colombia, Nicaragua, Dominican Republic, Argentina and Guatemala. We still keep an eye on
Panama, Uruguay and Guyana, but the others don’t appeal to us the junior speculator until
further notice. So to the updated table. Below come the country notes.
March 2014 Latin American Country Risk For Foreign Mining Companies
Nat. Govt Community/Social Geopolitical Internal Nat.
FDI
Country Miner Friendly Mining Culture Total
Friendly Miner Friendly Optics Political Stability
LatAm countries under active consideration for junior mining project location
Chile 9 7 8 10 9 9 52
Peru 9 7 8 9 6 7 46
Mexico 7 7 7 9 8 8 46
Brazil 7 5 7 8 7 7 41
Nicaragua 8 6 7 6 6 6 39
Colombia 6 4 8 6 6 5 35
Dom Rep 8 5 7 5 6 7 38
Argentina 8 6 4 6 3 6 33
Guatemala 7 2 5 4 4 6 28
Potentially relevant LatAm countries for junior mining
Panama 7 5 9 4 9 6 40
Uruguay 9 5 7 3 8 8 40
Guyana 8 6 6 5 4 3 32
Countries of little or no interest for junior mining exposure
Bolivia 3 6 2 9 4 8 32
Paraguay 5 5 6 3 3 6 28
Honduras 7 4 4 5 3 4 27
Ecuador 5 3 4 4 5 7 28
Costa Rica 1 1 5 1 6 7 21
Haiti 6 3 4 1 3 3 20
El Salvador 1 1 4 1 6 5 18
Venezuela 1 5 1 3 1 2 13
source: The IKN Weekly house estimates
18

Chile: FDI Friendly up 1 point
The handover of power has gone smoothly and the new mining ministry team put in place by
President Bachelet has the type of impeccable pro-industry credentials we saw the last time
Bachelet was in power (despite the left winger cracks you might have heard during the
election), so all’s well. We’re also seeing a new policy push to get key electrical generation
projects off the ground in the Northern regions, which has been a bottleneck for large mine
development for a number of years, hence the point added to FDI-friendly. Chile is the best
location for our type of operations.
Peru: Geopolitical Optics down 1 point
Overall Peru’s in good shape as a mining destination, so the loss of a point this quarter for
what’s basically national governmental reasons shouldn’t be something that has you panicking
about country exposure. It just s happens that I get more than my share of the politics here
and see the ebbs and flows on a daily basis. Add to that the conversations I have, in which I
gauge feeling from people outside the country looking in (eg explorecos with bosses who know
the place to a greater or lesser extent) and the result gets perhaps too granular for the
overview style we need here.
All the same, the problem emerging in Peru needs to be aired and it’s one of a weak
administration. President Ollanta Humala is starting to pay a heavy price for his political shift
from the centre-left (pre-election) to the right (here today), as he now finds the support he had
that got him to power has disappeared (and in some cases h0’s made full-on enemies of
previous friends) while his right-wing stance is now just one of many others in the political
space that’s now looking towards 2016 and the next Presidential vote. He’s being sniped at
from all sides (and frankly, I think he deserves that) but doesn’t have much to fight back with;
policies are borrowed from other parties and the press has turned against him and typically
towards the candidate(s) it prefers for the next election.
In short, we have two years of lame duck presidency to limp through here. On the plus side,
we’re not going to get a sudden shift back left (too late for that) and the next government is
almost certainly going to be miner-friendly (at this stage, it looks between Keiko Fujimori (may
the lord forbid it) Pedro Pablo Kuczynski (bit of a clown, but neolib right wing that business will
love) or Alan García (though the APRA chief may be disqualified from running, but that
complicated story is for another day), though an outsider is always possible. The bottom line is
that Peru is still one of the best places for LatAm junior risk, as long as the rules are followed,
the micro-regional risk understood and your mining company has experience there. In other
words, no change.
Mexico: Internal National Political Stability up 1 point
Not an easy one to call, because the Peña Nieto government has embarked on a policy of
capturing the top narcofamily people (dead or alive) and has had some high-profile successes
too, but the most serious questions are being raised by those who see systemic flaws in the
policy (the hydro-like “cut off the head and two grow back” theory) and we won’t know if this
government is making a long term difference until later.
Brazil: Geopolitical optics down 1 point
Brazil sees a point knocked off this category for the second quarter running, due mainly to the
now-approaching presidential elections but also because the country has taken legal and
political action against juniors such as Carpathian (CPN.to) and Colossus (CSI.to). Be that
attention deserved or now, from the outside in it doesn’t lend itself to a happy hunting ground
ambiance.
Nicaragua: Unchanged
The recent rising star in the mining world, Nicaragua is also coming up to a new round of
elections but this time there’s a stink in the air, as Daniel Ortega changed the rules in January
(with strong cries of the whole episode being anti-constitutional) to allow him to run again for
the top job (and he’ll probably get it, too). In the near term this is a positive for mining in the
19

country, as Ortega has been a strong supporter of projects such as B2Gold. In the longer run,
institutional weakness is showing through.
Colombia: Geopolitical optics down 1 point
This time last quarter we took the axe to Colombia’s score and finished by saying that,
“Colombia has all the look of a country taking one step forward and then two steps back on
mining.” That’s still the case and with the country on the cusp of elections, the inefficient way
in which the Santos government has gone about developing the mining industry is doing him
and his re-election plans no favours. One the one side you have those Colombians against
mining who oppose his pro-mine stance (and because of the lack of progress, no money has
flowed into government which would have allowed spending and projects to counter these anti-
mine arguments), while on the other you have his right wing opposition saying that they could
have done a whole lot better in moving the sector forward (and they’re probably right, but the
environmental cost might have been high).
So, here we are in election season and although Santos is still favourite to win, he’s not a dead
cert either and the process is almost certain to go to a second round. Hence, a point dropped
Dominican Republic: National Government Miner Friendly up 1 point, FDI Friendly
up 1 point
More progress from Dom Rep and it’s all deserved, as it’s the country which has made the most
and clearest pro-mining noises this quarter. Danilo Medina sees the industry as a vote-winner
thanks to the deal done with Barrick Pueblo Viejo (ABX and GG) and is keen to get more
projects moving forward. There is environmental pushback from organizations and groups
(including the church), but the “responsible modern mining” message is winning over more
people and enviro groups are now focussing on the bad mining operations that pollute, rather
than trying to stop formal miners from setting up.
Argentina: FDI Friendly up 1 point, Internal National Political Stability up 1 point
Heaven help me, but Argentina is starting to look interesting again. In any other country, the
start of the jostling for positions in the next Presidential election (due held October 2015) would
cause political and economic uncertainty, but in the topsy-turvy world of Argentine politics, it’s
more of a steadying influence, particularly the government politicos who are now looking to
steady the economy and do the right things in order to create jobs and growth (so the growth
spurt coincides with the election day...cynical enough for you?). We’re seeing a new push
towards the acceptance of mining as well, with the government finally (finally!!) working out
that it’s smarter to promote projects in areas that like mining (eg San Juan, Santa Cruz Jujuy)
instead of trying to force it down anti-mine regions (eg Mendoza, Rio Negro, Chubut etc) and
suffer the consequences of the bad publicity.
On the economic front, the CFK admin has started to tackle some of the baseline problems
under new FinMin Kicillof. We’ve seen a much needed currency deval and in the last week the
team has started trimming some of the government subsidies to utilities and public transport
systems that have weighed heavily on the sectors and discouraged investment. CFK is doing the
tough stuff now and down the line, we can expect inflation to come slightly more under control
(not under control, but less likely to run away and do a Venezuela), which will make FDI
immediately more attractive (as in dollar terms, Argentine assets are starting to look very cheap
to foreign eyes).
Meanwhile and to consider the effect of inflation on costs in the country, the main AOMA union
has just completed its 2014 pay deal with Barrick (ABX) at Veladero (13), which is considered a
benchmark pay deal for the rest of the country. Workers there will get a 32.5% pay rise in
Pesos as well as some minor fringe benefits, after around one month’s worth of negotiations
(which started with the union wanting 35% and the company offering 26%).
Guatemala: Mining Culture up 1 point, Internal National Political Stability up 1 point
Again, grudging applause given to President Otto Perez for the job he’s doing. It’s not a pretty
20

or particularly democratic way of running a country, but his hardline policy has managed (so
far) to keep the worst of civil disorder problems from getting too bad and showing the country
as a cheap alternative for FDI. His government is not popular but it has stabilized and people
now see him as a certainty to get to the end of his mandate (never take that for granted in
LatAm). Mining has its community and social problems in the country, but on the official level
it’s more than welcome and the State burdens applied are very competitive.
Potentially relevant countries
Panama: Unchanged
Apart from getting into a political spat with Venezuela, the national political side to Panama
hasn’t changed or made any waves. Internally, delays that had already been telegraphed
regarding the First Quantum Panama Cobre project became quasi-official and there’s a rumbling
dispute between the bigger company and the frankly awful Petaquilla Minerals (PTQ.to) (14) as
well, but that’s a minor matter and not one that’s affecting the country’s make-up.
Uruguay: Community/Social Miner Friendly up 1 point, Internal National Political
Stability down 1 point
We’ve been documenting quite closely the generally positive news towards mining that’s come
out of Uruguay in 2014 so far and for that, a point gets added to the “community/social miner
friendly” score. It would get more in other places, but the practical problem is that Uruguay
currently doesn’t have much in the way of juniors with interesting projects to offer us, it’s more
about Zamin’s pathfinding efforts at its very large iron ore project than something we retailers
can invest in.
On the other hand, the national politics score has been cut by one, as we’re now entering the
Presidential election campaign period and things can get polemic, even in the relatively serious
atmosphere of Uruguay. That dropped point is more a case of prevention.
Other countries
Bolivia: Community/Social Miner Friendly up 1 point, Geopolitical optics up 1 point
The new (or newly refurbished) Karachipampa smelter in Bolivia has started operations. Owned
by the State after being nationalized from a small Canadian company that didn’t do much with
the project for years, it will initially be supplied mostly by Sumitomo’s San Cristobal mine
(zinc/silver conc). Meanwhile in macroeconomy news, Bolivia’s again gained grudging plaudits
for its growth and relative control of inflation in 2013 (those that said the YPFB hydrocarbons
nationalization would never work are now strangely quiet). Bolivia is a case example of how a
small emerging market doesn’t need us capitalist seeders to make progress.
Ecuador: Community/Social Miner Friendly up 1 point, Geopolitical optics up 1 point
It gets to that weird moment when you start considering Ecuador as a real alternative for cheap
exposure to junior mining. As you all know by now, even I’ve taken a bit of a chance on the
country by buying a slice of Salazar (SRL.v), but because the country has such a poor
reputation it’s not oging to get any bigger. The score moves up two points due to the new
medium-scale mining laws currently going through parliament that makes the rules much
simpler and clearer for the size of mine SRL wants to put on top of El Domo. Along with that,
the good GDP growth, low country inflation and undoubted popularity of President Correa (who
is of course a big “responsible mining” proponent) put Ecuador in a somewhat better light.
However, many rural areas still have fervent anti-mine sentiment and you have to know exactly
where you are and what the local feel is towards your exploreco, else leave well alone.
El Salvador: Internal National Political Stability down 2 points
The Presidential election was much tighter than just about anyone outside of the ARENA party
faithful expected, but in the end Salvador Sánchez Céren of the ruling FMLN party won (by a
tiny tenth of one percent, 50.11% of the vote to be precise) and has been declared the official
winner. The problem facing El Salvador now is that the whole election and post-election process
21

was antagonistic in the extreme and now the two parties which split the country down the
middle have to find a way to repair damage done by bad blood and particularly venomous
accusations (and both sides are guilty).
A watching brief here on a national political scale, but as El Salvador’s mining policy is unlikely
to change come June 1st when Céren gets the big job, not one we have to worry about too
deeply on these pages.
Venezuela: Internal National Political Stability down 3 points
Before stating the obvious, here’s a little positive news about Venezuela’s economy. The
government has taken the inflation/devaluation bull by the horns and via a somewhat limited
financial channel known as SICAD 2, in the last few days has allowed the Bolivar Fuerte to
devalue in officially sanctioned operations to between 50 and 51 to the dollar. That’s a long
drop (~80%) from where the government had pegged the currency, but it has to be pointed
out that it’s now much better than the unofficial black market rates that were as high as 85 to
the dollar in recent weeks. Also, the way in which Venezuela economy works (or perhaps
“works?”) means the daily dollar rate is of minor import to the person on the street, except for
the sudden shortages of any given product at any given time, so the deval won’t become an
automatic inflation booster.
However and be clear, that’s one minor chink of light in a totally fubar economic situation.
We’ve downgraded Venezuela’s total by three points but even that’s hardly worth mentioning,
because it has been for many years and will continue to be a complete no-go area for any
investment the indefinite future.
Market Watching
Peru: Watching Cajamarca
This section would normally go in ‘Regional Politics’, but I’m sticking it here to separate it from
the regional review round-up thingy. A voter intention poll for the Cajamarca governor’s
election in October was published last week (15) by a regional pollster via a local media channel
and it showed a pretty tight race forming between Osías Ramírez (19.2%) of the Fuerza
Popular Party (aka the Fujimori party), current governor and bete noir of mining companies
Gregorio Santos (15.4%) and the right wing candidate Absalón Vásquez (15.1%) of the Perú
Mas party (leader Pedro Pablo Kuczynski). The fourth place candidate in the poll stood at 6.6%,
so it looks like it’s going to be between these three. Conga will be a hot subject in the election
and of the top three, only Santos opposes the project while Ramírez hasn’t made strong
declarations yet but will certainly support the mine development if elected regional leader. The
most open supporter is Vásquez, whose leader says clearly, “Conga will happen when Absalón
Vásquez is elected governor of Cajamarca, he’s a great leader”.
The problem with the voter intention so far, for those pro-mining in Cajamarca at least, is that
Santos is polling much higher than expected by many. My problem is even worse, because it’s
very unlikely that the Santos stronghold support in rural areas of Cajamarca is proportionally
represented in the opinion poll and because of that, the chances of him making up the ground
and winning re-election are pretty high (it’s a straight “biggest % wins” election with no second
rounds, so even 20% of the popular vote may be enough to get the job if the overall vote is
fractured enough). The fear of him being re-elected is underscored by voter opinion of his
current government, of which 39.5% consider bad, 31.6% consider good and the rest neutral
or no opinion. If he can transfer that 31.6% of approval into new votes, he’s a likely winner.
Focus Ventures (FCV.v) gets a positive coverage from Clarus Securities
Focus (FCV.v) had its best market day last week on Monday, which was probably due to Clarus
Securities publishing a positive note on progress at Bayovar 12 pre-open. I managed to purloin
a copy and here’s the main body of the article, written by analyst Mike Bandrowski. A few
personal thoughts below:
22

Phase I Drill Program – 100% Hit Rate at Bayovar 12
Focus Ventures is a Canadian based exploration company advancing several high
quality phosphate resources in Peru and Colombia. FCV recently commenced a 2,000
metre (20 holes) drill program at its Flagship Bayovar 12 project, located in northern
Peru. We anticipate drill results in late March followed by an initial resource estimate
in late 2014. NOT RATED.
1. Bayovar 12 - 100% Hit Rate
FCV has two rigs on site currently drilling the western part of the 12,575 hectare
property. Drilling is being conducted on an initial 800 metre x 800 metre grid
covering approximately 14 square kilometers. Core logging has confirmed the
presence of phosphate beds in all holes drilled to date demonstrating continuity 4
kilometers east to west and 3 kilometers north to south.
2. Initial Results Look Compelling
Logging of the first four holes show multiple beds of visible phosphate with between
13 to 15 individual horizons measuring equal to or greater than 0.4 metres in thickness
with individual widths up to 3.55 metres. We believe the company is well on its way
to exceeding the low end of its goal of an initial resource of between 100 million
tonnes and 150 million tonnes phosphate rock grading 12% to 18% P2O5.
3. 2014 Exploration Program
The 2014 exploration budget is $2.5MM to complete 2,000 metres of diamond drilling
(20 holes). We expect an initial resource estimate by year-end.
4. Take-out Potential – Plenty of Upside
Mosaic & Mitsui acquired 60% of Bayovar in Q1 2010 for $660MM ($4.60/t) while
Mitsubishi acquired 30% of Fosfatos for $45MM ($1.10/t) in Q4 2011. These two
projects are contiguous to Bayovar 12. We see potential multiples to the current $16
million valuation should the company reach its initial resource goal of between 100
million and 150 million tonnes phosphate rock grading 12% to 18% P2O5.
IKN255 back, here are a few thoughts arising from the Clarus coverage:
A) Clarus currently had FCV on its watchlist, which explains the bullish coverage without
any formal recommendation on the stock.
B) The brokerage is one of the very few to have picked up on the story so far. Overall
that’s a good thing, as it means there’s plenty of eyeballs left to reach if things go as
planned at Bayovar 12 and as seen so far on these pages, things are indeed going well.
C) Vale’s reserve/resource grade averages 15% P2O5. That’s where I’m pitching my own
current estimates (after all, its the same sequences of rock) and that sits smack in the
middle of the wider 12% to 18% estimates being used by Clarus. This makes sense.
D) Regarding the comments in point 2 of the above, I’m expecting FCV to pitch at around
80m tonnes in the initial resource and then expand to a rough target of 120m tonnes
by early 2015. That’s a different set of stepping stones than the ones indicated above,
but the end result is likely the same or thereabouts. Looking further out, there may be
200m tonnes at Bayovar 12 on an arm-waving estimate but FCV isn’t likely to drill them
all out, as leaving bluesky for any potential buyer is a good selling point.
E) Overall this is very useful coverage of a developing exploration story. It’s normally
enough to get just one house onside for a story to develop good traction, as long as
the company’s project delivers the goods, of course.
More on FCV next weekend, after getting right up to date with the company team in a face-to-
face. I’m still looking to add shares at a price that suits me though as the Monday pop and
subsequent drop clearly shows, no need to pay too high for the moment.
Sandstorm Gold (SAND) (SSL.to) redux
23

It’s difficult to gauge how much Sandstorm (SAND) (SSL.to) was hit by the news about the
potential for Colossus to be stripped of its Serra Pelada rights due to corruption and bribery
allegations, but the 10 day chart shows a clear extra jag down against peers on Monday
morning and you can be quite sure that The IKN Weekly wasn’t the only place that picked up
on the news from Brazil’s parliament.
Conclusion
IKN255 is done, we end with bullet points:
• Eco Oro Minerals (EOM.to) has its long-awaited day tomorrow. I won’t be sitting here
with an itchy trigger finger and I do expect the news to need a bit of time to sink
through before its fully appreciated, but there’s a decent chance that the stock is sold
by this time next weekend.
• The more information I can glean from Focus Ventures (FCV.v) this week, the better.
I’m really beginning to like the look of this project so lets see just how many ducks are
in line. Light posting Thursday and Friday on the blog, but a full IKN Weekly next
weekend as usual (with GORO likely to feature, we need to keep a close eye on that
one now).
• Rio Alto has laid out its stall for a strong operational 2014 and the disjoint between its
earnings potential and stock price, especially compared with peer group, continues to
hit me between the eyes.
• I nearly edited out the rambling prose stuck under WRN.to’s name above, but in the
end it made the cut. I’ll add here that Socrates and his, “As for me, all I know is that I
know nothing” makes more and more sense to me as the years roll by.
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.calculatedriskblog.com/2014/03/schedule-for-week-of-march-30th.html
(2) http://finance.yahoo.com/news/rio-alto-announces-net-income-124500256.html
24

(3) http://www.pachamamaradio.org/28-03-2014/exdirigentes-enfrentados-por-propuesta-de-convertir-a-santa-ana-en-
minera-ilegal.html
(4) https://news.google.com/news?ncl=d-yjdATNqukGvgMmvZuwhgtZu-
KdM&q=paramo&lr=Spanish&hl=es&sa=X&ei=6GQ4U8DrJ4qysQSFj4CIDg&ved=0CDAQqgIwAA
(5) http://www.eltiempo.com/vida-de-hoy/ecologia/ARTICULO-WEB-NEW_NOTA_INTERIOR-13751258.html
(6) http://finance.yahoo.com/news/focus-provides-bayovar-12-drill-125125668.html
(7) http://finance.yahoo.com/news/salazar-announces-1-98-million-130000135.html
(8) http://finance.yahoo.com/news/ngex-clarifies-technical-disclosure-224541255.html
(8a) http://finance.yahoo.com/news/investment-jing-bao-asia-ltd-180200270.html
(9) http://www.hispanicbusiness.com/2014/1/29/ceo_of_reservoir_minerals_completes_asia.htm
(10) http://finance.yahoo.com/news/ngex-2013-financial-operational-highlights-033625896.html
(11) http://www.tiempodesanjuan.com/notas/2014/3/29/barrick-confirmo-gioja-fuerte-inversion-veladero-53400.asp
(12) http://www.lanacion.com.ar/1676693-directivos-de-barrick-gold-anunciaron-que-despediran-a-1900-trabajadores-
en-san-juan
(13) http://www.diariodecuyo.com.ar/home/new_noticia.php?noticia_id=615723
(14) http://www.bananamarepublic.com/2014/03/28/is-petaquilla-finally-over/
(15) http://www.larepublica.pe/28-03-2014/sillon-regional-de-cajamarca-seria-disputado-entre-osias-ramirez-y-gregorio-
santos
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
25

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
26

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.
27