IKN #256Premium

The IKN Weekly
Week 256, April 6th 2014
Contents
This Week: Adding to Focus Ventures, Gold went up, Rumours.
Fundamental Analysis: Gold Resource Corp (GORO) files its annuals.
Stocks to Follow: Overview, Focus Ventures (FCV.v), Eco Oro (EOM.to), Coro Mining
(COP.to), Rio Alto (RIO.to) (RIOM), Gold Resource Corp (GORO), Santacruz Silver (SCZ.v),
Dalradian Resources (DNA.to), Bear Creek (BCM.v), Minera IRL (IRL.to) (MIRL.L).
Copper Basket: Overview, Lumina (LCC.v).
Low Cost Producer Basket: Overview, Goldcorp (GG), First Majestic (AG).
Regional Politics: Costa Rica: Luis Solís is the new President, Argentina: Mining as a piece in
the bigger election game, Peru: Gregorio Santos “The October election will be a referendum
between Yanacocha and the people”, Guerrero Mexico and a more general point about
community risk.
Market Watching: Rio Alto Mining (RIO.to) (RIOM): Black coffee, Focus Ventures (FCV.v)
meeting.
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
Adding to Focus Ventures
I’ve made noises about adding at (roughly) current levels without doing much about it, but
after getting a few more facts straightened out about FCV on Thursday, this week coming I’m
going to add to my FCV holdings and add to the cost average on the position. I want to be
longer before the drill numbers appear. More in ‘Market Watching’ below, headsup complete.
Rumours
There shall, in that time, be rumours of things going
astray, erm, and there shall be a great confusion as
to where things really are, and nobody will really
know where lieth those little things wi-- with the s
ort of raffia work base that has an attachment. At
this time, a friend shall lose his friend's hammer
and the young shall not know where lieth the things
possessed by their fathers that their fathers put
there only just the night before, about eight o'clock.
Boring Prophet, Monty Python’s Life of Brian (1)
It’s always something of a dilemma to know what to do with the rumours, whispers and general
unsubstantiated intel that passes this desk on any given day, with the filter system being
something like:
1) Do I think there’s something there, or is it likely just some spec bullshit?
2) If there’s something, is it worth considering?
3) If so, is it worth passing on to others?
1

4) If so, it is worth trading on the intel?
Very but VERY few get to that fourth stage, but it’s not impossible if circumstances are right.
The source is probably the most important, followed by the risk/reward potential, then things
such as whether the unsubstantiated snippet is logical or reasonable under the circumstances,
and so on. However, there are a dribble of ideas that can get to stage 3), one for example
recently that places Chinese money as a potential JV partner for Barrick at Pascua Lama. After
considering where that came from and what it was about, I make a call of “yeah, i’ll stick a bit
of my own reputation on that one” and you get to hear about it. However, most of the time
rumours have to be discarded, or at best kept to yourself. More often than not they lead one
astray instead of to untold wealth and riches.
But with that said, I’ve included one in Market Watching today on BCM.v.
Gold went up
I like things simple.
• This is a bull market for junior mining companies, period.
• It’s not going to be a direct vertical ride up, it’s going to test your mettle if you buy now
and hold through.
• If you do that, your stocks are going to be worth more a year from now than they’re
worth today. Some of them a lot more.
• There are be people who disagree. They will be proven wrong.
• There are be people who ridicule the clear bullish calls on juniors today. They will
eventually become quiet, or more likely join the bullish side and then proclaim their
wisdom.
2

It hasn’t been fun watching gold drop from $1,380 to $1,280 per ounce and of course there are
the Monday Morning QBs who now see just how the Crimea crisis played into gold and how it
wouldn’t do this and would do that. Which is nice. But whatever Putin did or will do doesn’t
affect the baseline facts that the bottom in gold is in and being positioned in stocks that can
take advantage of $1,300/oz gold (and real advantage of $1,400/oz) is the right thing to do.
Fundamental Analysis of Mining Stocks
Gold Resource Corp (GORO) files its annuals
Our lone short position filed its overdue annual financials and 4q13 numbers on Tuesday
evening. Near-term reaction to the filing is covered in a short section in ‘Stocks to Follow’
below, here we’re going to look at the fundamentals, the way 4q stacked up against other
quarters, what to expect from GORO in the year ahead and make any necessary adjustments to
our investment call. The analysis breaks down into three parts:
• First we take a quick look at the 4q13 numbers because although that’s the new factual
change to the fundies, we’re more interested about what GORO is capable of in 2014
than what it did in a relatively lacklustre quarter that was largely priced in.
• Second we make some forecasts for the next four quarters, i.e. 2014, based on what
we know and what we expect GORO to do in the year.
• Thirdly and most importantly (for me anyway), we take the lot and synthesize it via the
balance sheet items of the company. With those in place we can call what to expect
from the share price in the year ahead.
Also, before we get into the numbers I want to state clearly that as I’m short this stock, I am
not interested in trying to nitpick, assume the worst or find more fault than necessary in its
financials and numbers. In the same way as I pitch conservatively when putting together a long
case, in the following GORO gets plenty of benefit of the doubt in many aspects of its financials.
I could have been a lot stricter and meaner with my assumptions, come up with some horrid
forward guidance and shouted “obvious short” at the end, but that doesn’t help anyone. Much
better to be reasonably accommodating to a short position’s future and then, if the thing still
looks mediocre, the trade is on a safer footing. Bottom line being that I’ve been rather nice to
GORO today.
Finally, in the case of GORO everything that follows is in US Dollars unless otherwise stated. So
to business:
4q13 results
This is a quick look at the main points, because a lot of the data from the 4q13 numbers has
been incorporated and used in the 2014 guidance
GORO: baseline mine financials, 2012 and 2013
section you’ll see below (at this point, we should U$m
care a great deal more about GORO’s future than 50 revenues
COGS
its past). So what you get are the main stuff, plus a
40 Gross profit
few items that caught my eye as potentially useful
for the quarters to come. 30
20
We start with the way in which the mine did
financially, represented in this chart. Revenues 10
came in at $27.408m and COGS $16.55m (both of
0
which close to our guesstimates for the quarter, but
1q12 2q12 3q12 4q12 1q13 2q13 3q13 4q13
that was helped by the previous production
source: GORO data
disclosure) which gave us a gross profit of
3

$10.858m. As you can see, those numbers are very similar to the type of performance laid
down by GORO in previous quarters and no surprises
were forthcoming.
GORO: Evolution of profits
14
When it came to further down the P+L, GORO 12
10 managed to return a slim operating profit of $0.635m
8
this quarter and there was also a slightly strange pre- 6
tax adjustment that made things look better than 4
2
they were. But come the final net result, GORO hit a
0
big roadbump and registered a net loss of $4.099m. -2
There was a big tax provision included in that (which -4
-6
according to the company CFO in the CC is mostly a
one-time thing), but it quickly reminded your author
of the way in which GORO was late filing its annuals
and the reasons it gave, namely that it had found
weaknesses in its internal financial controls and how the auditors, KPMG, refused to sign off
giving GORO a clean bill (2).
However, let’s leave the auditor’s issues with a “?” next to them until the moment that
something concrete comes of them and assume the best for GORO.
Next a word on what we got at the GORO conference call, hosted by CEO Jason Reid. There
was the usual, long, more-heat-than-light presentation and spin from the company which you
can read here (3) (once again, it’s worth having an account at Seeking Alpha just for the
ConfCall transcript service) and as is so often the case with sketchy companies, the Q&A
session was more interesting. As for the main part of the CC, feel free to read it all but this bit
at the end where CEO Jason Reid summed things up covers most of the bases that the
company wanted to highlight:
To summarize 2013 into six bullet points; one, successfully achieved our 2013
stated production goal while overcoming various challenges a credit to our
team. Two, our mill expansion to a nominal process rate of 1,500 tonnes per
day capability was delivered on time using our cash flow. Three, Arista mine
development of the now 20 plus veins and splays continues to focus on
multiple working faces with a goal of delivering increased tonnages for 2014
production and beyond. Four, we continued to distribute a meaningful
monthly dividend during a very difficult year in 2013 with CapEx demand on
our cash and tighter margins demonstrating management’s commitment to
shareholders and shareholder returns. Five, the Switchback discovery was
made 500 meters northeast of our Arista deposit which may provide the
company with its next economic deposit. And six, we continue to try to
position ourselves to be leaner, more efficient, more profitable growth
company that not only remains standing when the metals market does settle
but are able to take advantage of the opportunity the correction provides.
Which is fair enough, companies should put as positive an aspect on what they do. As for the
Q&A, there was only one insto analyst on but he (one Josh Elving, I’ve never met the guy but
he clearly has a sharp eye on this company and asked the right things without being too
aggressive) did a nice job of getting the company on record with a couple things for 2014.
We got from that section:
• GORO would commit to whether it would build cash treasury in 2014
• GORO wouldn’t commit to whether it would be a cash generator in 2014
• GORO said that average throughput tonnage would be 1,200tpd to 1,300tpd in 2014
• GORO is trying not to be too aggressive in guidance this year.
4
21q2 21q3 21q4 31q1 31q2 31q3 31q4
source: company filings, IKN ests
srallod
fo
snoillim
op profit
pre-tax profit
Net Income

To be honest, I think CEO Reid is blowing the same smoke up the same set of rear ends as in
other quarters and years, but it was good in which the non-aggressive, softly framed questions
from the Elving guy put the company on record on a few key items.
That’s the quick overview of financial results and a word on the CC, now for a couple of things
before getting to 2014. As for the production mix in 4q13, just 30.81% of gross metals sales
came from gold while 44.86% came from silver. The interesting one is the byproduct credits, as
the combo of copper, lead and zince provided 24.33% of gross metals sales. That’s up sharply
from previous quarters and the highest percentage covered by the base metals in any quarter
at GORO.
GORO: Percentage breakdown of revenues by metal
100
90
80
70
60
50
40
30
20
10
0
5
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4
%Ag %Au %credits
source: GORO filings
Next we move to the difference between reported revenues for the quarter ($27.408m) and the
calculated revenues, which are done by doing the necessary math on the figures for sales and
received prices given by the company for the five payable metals. Do that and you see GORO
theoretical sales at $30.61m, some $3.2m higher than the actual result. Here’s the comparative
chart which shows the percentage difference between the two number sets for all quarters:
Percentage difference between calculated revenues
20 and reported revenues
18 16.98
16 14.23 14.11
14 12.92
12 10.51 10.45
10
7.94
8
6
4
2
-0.36
0
-2 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4
%
source: GORO filings, IKN calcs
As you see, that type of discrepancy is normal for the company, except for 3q13. Last time we
looked at the fundies was then, and we wondered whether it was the start of a cleaner
approach to revenues reporting from the company (the theory being that they were pre-
deducting the payments to middlemen such as smelters, transport etc). That theory now looks
wrong and we’re back to the normal gap between calc revs and reported revs. I’ve always
wondered exactly where that difference comes from, but it’s something that I’ll just let pass for
the time being (you see? Told you I’m nice today).
Revenues and earnings forecasts for 2014
To to the main point of today’s analysis. Predicting something at bitty as quarterly results for
GORO (as any junior in fact) is always difficult, because in this case it’s a small mine with plenty
of mining variables in the mix that can throw out any given quarter by a substantial amount. As
a result, what follows is best thought of as a guide to what GORO can reasonably achieve under
current circumstances, rather than an overly optimistic or pessimistic forecast.

In essence, we need to juggle production, sales, costs, revenues and finally get to a best guess
for the profit potential of the stock.
1) Higher throughput rates: GORO in its ConfCall said it would average between 1,200tpd
and 1,300tpd in 2014 in response to Elving’s question. That looks a bit high to me frankly,
based on 1) the logistics of upping throughput while going ever deeper at Arista with a reduced
workforce 2) the constant bullshit this company throws at people and 3) the inferences from
guidance in the MD&A. I’m sure throughputs will improve in 2014 (if not they’re in real trouble)
so as a result I have them exiting 2014 at 1,300tpd, rather than averaging that number.
Here are my best guesses for throughputs in the four quarters to come
• 1q14: 90,000 tonnes, or 978tpd
• 2q14: 95,000 tonnes, or 1,033tpd
• 3q14: 100,000 tonnes, or 1,087tpd
• 4q14: 120,000 tonnes, or 1,304tpd
That looks like this on the comparative chart:
GORO: Tonnage mined per quarter
140000
120000
100000
80000
60000
40000
20000
0
6
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
tonnes per qtr
source: GORO data
Which I think is reasonable and gives enough benefit to the company’s expansion plans,
without totally swallowing the words of people with a clear track record of overpromising and
under-delivering.
2) Production that comes within GORO’s guidance of between 85k oz AuEq and
100k oz AuEq: From what I can work out, GORO seems to have pitched its guidances frame
low, unless they’re about to have grade issues that they’re not telling us about. The three
variables are tonnage, grade and recovery so as the tonnages seen above are expected to rise,
it’s all about the other two parts to the equation. Here’s how grades for the main products of
gold and silver have been in the last quarters:
g/t Au GORO: Gold grades g/t Ag GORO: Silver grades
5 4.63 600
4.27 4.17 483
4 3.73 3.67 3.83 3.67 3.67 500
400 345 349
3 320 314 321
300 274 292
2
200
1
100
0
0
1q12 2q12 3q12 4q12 1q13 2q13 3q13 4q13
1q12 2q12 3q12 4q12 1q13 2q13 3q13 4q13
source: company filings source: company filings

You can see there’s been a bit of a tail-off, but it’s not too bad. As throughput rises there’s a
decent chance we’ll get more dilution on these numbers, but as I’m short I don’t want to
overplay the negative potentials too much and much rather give reasonable benefit of doubt.
Therefore for FY2014 projections I’m using a flat 3.67 g/t gold and 300 g/t silver for
calculations (again being GORO-friendly). As for recoveries, those are also a direct extrapolation
of 2013 numbers, the ones you see in the filings .
3) Sales. With those in place, we can take a stab at gold and silver sales (NB: not production,
but sales) for the four quarters to come and here are my best guesses
• 1q14: 8,284 oz gold, 763,987 oz silver
• 2q14: 8,744 oz gold, 806,431 oz silver
• 3q14: 9,205 oz gold, 848,875 oz silver
• 4q14: 11,045 oz gold, 1,018,650 oz silver
Those are to the unit guesses (they come straight from the math) and haven’t been rounded,
so take the prediction of “four hundred and thirty-one” for Ag in 2q14 with the necessary
giant’s pinch of salt, of course. I underscore that the numbers offers are a guide as to what
GORO could do in reasonable (not optimal, not awful) circumstances.
GORO: Gold sold, per quarter
12000 11045
10000 8953 8284 8744 9205
8000 6668 7119 7287 7297 7683 7629
5774
6000
4000
2000
0
For what it’s worth, if you use a flat 60:1 silver to gold ratio on those projections the total is
94.5k oz AuEq, which lies at the upper end of the GORO guidance range for the year. So that
fits, too.
4) Revenues to increase as the year goes on: Now we have our production guidance, we
do four things to get to our best guesses for 2014 quarterly revenues:
1) Apply $1,250/oz gold and $19/oz silver as received prices at GORO for 1q14, then
$1,300/oz gold and $20/oz silver in the following quarters (remember folks, we’re
bullish PMs and junior miners round here but at the same time, not expecting
immediate to da moon gold prices). Then factor in the expected sales totals for gold
and silver you see above.
2) Make a reasonable guess to the cash totals received for the byproducts per quarter
(Cu, Pb, Zn).
3) Add those all up, then assume that the calculated total for revenues is some 10%
higher than the reality (as seen in 4q13 above). This might be a higher or lower
percentage of course, but you have to start somewhere.
4) Stick a thumb in the air.
Here’s what we end up with in 2014, compared to revenues booked for the last eight quarters
for reference purposes:
7
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
Oz Au GORO: Silver sold, per quarter
1200000
1018650
1000000
800000
828376 863152
755746741757 68642 7 1
63987806438148875
603426599501
600000
417932
400000
200000
0
source: company filings, IKN ests for FY14
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
Oz Ag
source: company filings, IKN ests for FY14

GORO: Revenues
45 42.311
40 36.665 36.49 38
3 3 0 5 30.7 27.939 26.66 29.405 27.408 29 31.4 32.64
25
20
15
10
5
0
8
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
U$m
source: company filings, IKN ests
In other words we’re expecting higher throughput to translate into higher gross revenues at the
company, as you’d expect. However costs are a factor too.
5) Higher costs due to higher throughput: What we can expect in broadstroke terms is is
costs per tonne to drop, while absolute costs rise.
Before we go on, a quick reminder of what we term “true costs” at GORO. That’s the calc we’ve
used for many an analysis now that does a much better job of working out what it costs GORO
to run its mine, basically because it’s a bullshitting company and hides things from the normal
COGS line item in other places in the financials. Therefore we add together production costs,
depreciation/amortization, accretion, G&A, stock-based compensation, exploration expenses
and construction & development.
GORO: Revs/tonne vs True Cost/tonne
400
380
360
340
320
300
280
260
240
220
200
31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
U$/tonne
revs per tonne
true cost per tonne
source: company data, IKN calcs
NB: please note cut-down Y-axis
Since the company went into true commercial production, GORO has seen only one quarter in
which true costs dipped under $300/tonne.
GORO: Costs breakdown
We’re expecting GORO to trend costs down to
40
that level by the end of the year as the 36
company benefits from economies of scale via 32
28 the larger throughput. Here’s how costs break
24
down for us (right). 20
16
12
6) Profits estimates: This next chart is one
8
of the ones that matters most, because it
4
compares revenues to true costs in absolute 0
terms and gives a clear idea of whether GORO
can run strong profits. You can see various
quarters in 2011 that had big differences
between revs and costs (thanks to the high gold price), but since then (and with the exception
of 1q13 revenues, which was high for one-time reasons) the trend has been lower revenues
and higher costs to the point where last year in 2q13 and 3q13, GORO was a loss-making entity
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
U$m
cons+dev
exploration
G&A + stock comp
COGS
source: company data, IKN ests

even before dividends paid, financial items deducted and taxes paid.
GORO: Revenues vs "true costs"
45 42.31
40.62
40 37.78 35.44 36.49 37 3 . 6 9 . 3 00
3 3 0 5 30.01 27.94 29.96 26.6 2 6 7.4329. 3 4 1 1 .29 27 2 .4 6 1 .7728.2977.90 31.4 2 0 9.50 32.6 3 4 1.00
25 20.66 20.51 22.52 22.93 21.53
20
13.94 15.91 15.27
15
11.28
9.13
10
5
0
9
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
U$m revenues
"true costs"
true costs = prod costs + deprec&amort+ accretion + G&A + stock based
compensation + expl expenses + construction & development
In 4q13 things were a little better. GORO has made an effort to cut its costs and now shows a
small (+$0.64m) positive. We expect that to continue into 2014, but even when it has upped
production to over 1,300tpd, there’s not much of a gap between expected revenues and true
costs.
Put simply, GORO is highly leveraged to the prices of silver gold and until those two move up,
today’s company isn’t going to do much more than tick over operationally. Don’t expect any sort
of net profit either because once those modest operating margins are used to pay even the
minor 1c/month dividend it’s set to pay in 2014, there’s nothing left. That’s before paying the
new extra burdened taxes in Mexico, too.
With every $100/oz to a gold equivalent ounce this year, GORO would theoretically benefit
around $3m to its top line (we assume silver
moves up more strongly then gold and as GORO: Quarterly Earnings overview
45
most of GORO’s revenue comes from silver,
40
the extra ~$600k or so appears). That 35
wouldn’t be bad, but it means that GORO still
30
would set any earnings houses on fire in
25
2014 at $1.4k/oz gold. 20
15
The simple truth of GORO is that with 10
$1,300/oz gold and $20/oz silver as received 5
prices (which means market would have to 0
be at least $1,350 and $21), the mine on its
own doesn’t make much money and the
company makes a loss, period. Here’s our
earnings overview chart, including the model
forecasts for FY14:
The notable thing here is that despite its
march to a larger throughput mine, our
model shows that GORO isn’0t going to
benefit much financially at current silver and
gold prices. Yes revenues go up, but so do
costs and the result is a gross profit column
that makes little ground.
Following on from that here right is the
evolution of operating profits and you’ll note
again there on the right, even after we get to 1,300tpd for our 4q14 assumptions, the mine
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
source: company filings, IKN ests
srallod
fo
snoillim
revenues
COGS
Gross profit
U$m GORO: operating profit
14 12.347
12
10
8
6
4
2 0.635 1.000 1.900 1.640 2.000
0
-2 -0.768
-1.884
-4
1q13 2q13 3q13 4q13 1q14est2q14est3q14est4q14est
source: company filings, IKN ests

makes just $2m. And the figures you see in this chart are pre fin items (forex adjustments etc),
pre tax and importantly pre-dividend. With GORO expected to pay out $1.6m per quarter in
cash dividends (1c/month and 54.1m S/O) those operating profits won’t make it to the
company treasury.
Which brings us to our dirty little secret
about GORO, because it tries its very hardest
to avoid the subject (this quarter it told us all
about how it managed to pay for the
1,500tpd capex upgrade out of treasury, but
that was booked for the whole of 2013 at
just $6.37m while divis for the same period
were over $25m), the plain truth is that for
two years it’s been draining its cash treasury
in order to pay cash dividends to
shareholders. Here’s the chart:
• In 2012, if GORO hadn’t paid a dividend its treasury would have risen by over $19m. In
fact, treasury decreased by over $16m
• In 2013, if GORO hadn’t paid a dividend its treasury would have risen by a little under
$5m. In fact, treasury decreased by just under $21m.
All this “one third from mine site cash flow” or whatever other pretzel math they’ve been using
is a true and clear crock of brown fecal matter. A more obvious case of asset drainage is
difficult to come by and although the dividend has now been cut to a potentially manageable
level, it’s still going to affect the 2014 treasury position by a net of $1m, even after those
modest operational profits noted above are taken into account. And that’s a nice little lead into
our final section, the balance sheet at GORO.
Balance sheet items
These are the things that really matter at a company like GORO, because over the near term it
can fool people with pretty talk and optimistic forecasts, in the long run the equation is
simplicity itself:
• A mine is an asset with a limited life
• You need to make a financial profit from your mine, in order to replace the depleting
asset with a growing cash treasury (or cash with which you buy other assets)
• If you can’t make a profit, your asset value drops towards its true, intrinsic long-term
value: Zero
• Which means your equity goes to zero (normally before your asset value, too)
• Which means your share price is at zero.
With that in mind, here’s the asset chart for GORO...
GORO: Assets Breakdown per qtr
150
125
100
75
50
25
0
10
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
source: company filings
srallod
fo
snoillim
GORO: Dividends paid versus decrease in
U$m cash&eq position, per year
40
Dividends paid
30 Net decrease in Cash&Eq
20
10
0
2012 2013 2014est
source: GORO filings, IKN est for FY14
Bullion
fixed
other current
cash&ST

...which matters more than any other. Yes, GORO can make a gross profit and it even gets to
post a modest operating profit once G&A, construction/development, exploration etc etc are
backed out. It might even be able o pay its silly dividend and break even on a quarter, but
when it comes to its asset value, it’s going downhill. Here’s the liabilities chart:
GORO: Liabilities Breakdown per qtr
40
35
30
25
20
15
10
5
0
11
01q4 11q1 11q2 11q3 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
This one’s a little more difficult to call, as the company can decide to pay down or let run up the
current liabilities in any one quarter, so I’ve gone for the flat line approach and will be happy to
be proven wrong on each given quarter at a later date. Working capital however tends to be a
more accurate gauge, it looks like this:
80 GORO: Working Capital per qtr
70
60
50
40
30
20
10
0
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
source company filings, IKN ests
srallod
fo
snoillim
The story here is of a company that will see slight drainage on 2014, not on the level of before
but it’s still in the same direction. And the key part to this working cap number is cash treasury,
which looks like this:
GORO: Cash and ST
60
50
40
30
20
10
0
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
source: company filings, IKN ests for 4q13
Anyone who thinks it will be able to pay for new capex project out of treasury needs (apart
form a very small one) their head examining. This company has frittered away its cash and is
now treading water, unable to make a profit and top up its dollar reserves with silver and gold
where they are. In passing, shares out for 2014 are assumed at current levels, 54.1m S/O.

GORO: Shares Out
60
55
50
45
40
35
30
25
20
15
10
5
0
12
01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
source: company filings
serahs
fo
snoillim
The final chart is about those decaying asset values. If 2014 turns out to be a flat year for silver
and gold prices from here (let’s say we average $20 and $1.3k per ounce, respectively) GORO
will tread water earnings-wise. It’ll pay its penny to shareholders, and may or may not break
even on the year, despite that throughput upgrade.
GORO: Equity per share
2.00
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 tse41q1 tse41q2 tse41q3 tse41q4
source: company filings, IKN ests
However, its net worth will degrade as the inevitable depreciation sets in. Without cash moving
to treasury, GORO is set to fade, even in our benign model and reasonably optimistic settings
for company financials (yup, could be a lot worse). Today’s $5 share price is backed up by
$1.39 in net equity per share, which is set to drop to $1.22 if the silver and gold prices don’t
come to GORO’s rescue.
Conclusion
By the looks of things and assuming GORO can deliver on its modest-looking production targets
for 2014 (without going wild on costs at the same time), GORO has managed to steady its boat
and won’t be the cash-fracturing entity we saw in 2012 and 2013. That’s a positive for the
company of sorts, but it doesn’t mean that it’s suddenly become a cash generating monster,
either. The same basic problems apply at GORO as before:
• It’s not a gold miner, it’s a silver miner pretending to be a gold miner.
• Its share price is overvalued compared to what it is and what it has.
• Part of the overvaluation comes from its heavy promotion aspect, those are the ones
that revert to the mean.
• It’s not making any money this year. It won’t be the heavy net losses of 2013 and
that’s due to the company cutting its much vaunted dividend to a minimum level, but at
its current ~2.2% yield it’s not even a bargain compared to real established mining
companies that pay dividends.
The IKN Weekly remains a happy shorter of GORO. Even in our reasonably optimistic scenario
for 2014 operations, it’s much more dependent on an upmove in silver and gold than on
anything it can do itself and at current metals prices, and even higher, it’s a breakeven entity at

best. If silver went to $25/oz then the cuts we’ve seen in its costs profile will make a difference
and it would be able to return a meaningful profit, but other companies would already be doing
so much better than GORO if that were the case. This is a laggard of the sector and at
$5/share, it’s still overvalued despite its fall from much higher prices in the last couple of years.
Stocks to Follow
Last week five of our 12 open positions went up (IRL.to, LRA.v, DNA.to, SCZ.v, BCM.v), one
was unchanged (COP.to) and six went down (RIO.to, EOM.to, TGM.v, FCV.v, GORO short,
SRL.v) and the impression once the dust had settled was one of neutrality. The bets move
came from Dalradian Resources (DNA.to up 16.9%), with honourable mention going to Lara
Exploration (LRA.v up 9.9%), while by far the worst performance was logged by Eco Oro
(EOM.to down 24.0%) on all that páramo uncertainty.
Most of the other moves, up or down, were modest ones. A penny here, a penny there. It was
a week that saw gold stick a decent floor in the market, but it’s not ready to spring back
immediately (good for people with cash to spend).
We currently have 12 open positions on our ‘Stocks to Follow’ list three fewers names than our
self-imposed maximum Three positions are green, one is unchanged and eight are red.
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$2.22 -3.5% best LT value
Minera IRL IRL.to hold C$0.30 22-jul-12 C$0.17 -43.3% top pick called at 24c, added
Longs
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$1.00 -13.0% solid biz model, LT hold
Eco Oro Min. EOM.to hold C$0.48 22-sep-13 C$0.365 -24.0% ready for pol risk announce
Dalradian Res DNA.to hold C$0.65 27-oct-13 C$0.83 27.7% 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$0.385 -2.5% LT hold, takeover play
Santacruz Silver SCZ.v hold C$1.04 26-jan-14 C$0.92 -11.5% added, now full position
Focus Ventures FCV.v str buy C$0.175 01-jul-12 C$0.285 62.9% new tgt 50c, adding
Bear Creek Min BCM.v buy C$1.88 23-mar-14 C$1.88 0.0% trade on silver and pol risk
Shorts
Gold Res Corp GORO short U$5.07 26-jan-14 U$5.02 1.0% New re-short now full pos.
Smaller/Riskier
Salazar Res SRL.v spec buy C$0.28 02-mar-14 C$0.25 -10.7% 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
13

Now for some notes on a selection of the above stocks.
Focus Ventures (FCV.v): Adding next week. See ‘Market Watching’ for more, but the
general idea after hearing how things are going at Bayovar 12, then trying and failing to pick
holes in the project during a face-to-face with FCV pres Cass last week, is to jump off the
proverbial fence on which I was sitting and add to my position in the next few days. I want to
own some more before the drilling results start flowing from the labs.
Eco Oro Minerals (EOM.to): Holding. Last week’s comings and goings were first covered in
the two Flash updates of early week (see appendices 1 and 2 below), in which the call was not
to sell into the uncertainty. Then later in the week came more information via a NR on
Wednesday evening (4) which contained a link to the outline map at Colombia’s Environment
ministry, and then further comments in a separate NR on Friday (5). First things first and after
studying the Wednesday map closely and stocking it next to the concession area outline for
Angostura, the clear impression (though once again, we cannot say for 100% certain for the
same reasons covered in the Flash updates of last week) is that it fits with what’s been said so
far about the line as pertains to EOM.to, which is also the result we expected; that some of the
concessions have been lost, others can be used (and the ones that can be used are the ones
needed for the underground project). In one comment, Minister Sarmiento was quoted as
saying EOM had “lost” 19 of its 29 concessions, leaving it with ten. That looks right compared
to that map.
Then on Friday, somewhat better news. During the Flash updates, we reported the reference to
“three to six months” before having exact coordinates and therefore a long wait. According to
the latest, that’s not going to be so long and we could (should? Would? Hard to tell with
Colombian politicos) have a solid scientific division of parts in the next few days. From there
both EOM and we will know where we stand and what’s to do.
I remain confident about this trade; the whole point of taking it our was to play a company that
would lose rights to its polemic open pit project area, but would be able to move forward on its
smaller, higher grade and less environmentally controversial underground project. By the looks
of things (and that map) it’s the scenario unfolding now so when the hard facts are known, I
expect EOM to come out with a bullish NR.
Coro Mining (COP.to): Again light, but it was the only stock I put a bid in for last week
(failed to fill at 10c and 10.5c, even though somebody else got some at ten and a half). With
copper flashing signals of being on the way back, this current price level looks decent value for
my little copper exposure. However I will do no price chasing at all and if I get to add, it will be
under 11c.
Rio Alto Mining (RIO.to): Find a report on my semi-businessy (dat a word?) hour with Alex
Black last week in ‘Market Watching’ below. In trading, RIO was steady on the week bar the
end of Friday, when the news of CFO Hawkshaw’s retirement took a couple of pennies and the
shine from the PPS that day (though on consideration I don’t think it’s a biggie, and a minor 3c
or 4c move on low volumes isn’t exactly the world throwing in its hand on a junior goldie).
Next news from RIO should be the 1q14 production numbers, which if we go by precedent will
be with us either this week or the week after. Slightly refined guesses on what we can expect
from those below, but suffice to say that all seems in decent shape at the company and reports
gathered from up the hill are of smooth operations.
Gold Resource Corp (GORO): Plenty above, here we note that the reaction to the posting of
the company’s annuals post-close Tuesday (6) was positive, as while helped along by a small
rally in gold that morning the sell-off of the previous day was fully recouped.
14

I don’t think it will last. Mind you, I’m short and that’s what you’d expect me to say.
Santacruz Silver (SCZ.v): Volumes were thin all week, but at least the rot was stopped and
SCZ bounced where it should have bounced (see IKN255 for more on that chart-related
thought). Do I want more of this one? No, not personally, enough silver on board already via
this and BCM. If there’s addition to do, it’s going to be with gold (or copper).
Dalradian Resources (DNA.to): Didn’t Panic. Last week’s false finish on Friday has been
totally reversed and although the percentage gain week-over-week is slightly overdone as a
result and the volumes were rather thin (bar Wednesday 164k traded which was ok), we’re
back to a more sensible consolidation level for DNA.
Bear Creek Mining (BCM.v): While in Lima last week, the only street jungledrum rumour of
any bearing or substance picked up was that Pan American Silver (PAAS) (PAA.to) is talking
once again to BCM (please see the piece in the intro for all the caveats on rumours that you’ll
ever need). The intel was of the type that’s reliable enough to pass on so after due
consideration that’s what I’m doing, and after thinking it through (plus bouncing it off a pal for
further thoughts) it’s most likely that the rumour came form inside PAAS, not from inside, but
as usual don’t trade any stock on any piece of unverified (and unverifiable) chatter.
More background on this hearsay is needed, as it’s common knowledge down this end of the
world that PAAS has been in pretty extensive talks with BCM previously (as in a couple of years
ago), but nothing solid ever came from them. That makes the latest chatter fit a little better,
but as my bounce-off pal noted, BCM at Corani (forget Santa Ana) implies committing a lot of
cash to a large but fairly low grade deposit and in today’s market, there has to be doubts about
that. It’s true and one thing BCM has to do in order to drum up a bit more interest is come out
with an updated document of some shape or other (43-101 compliant of course) that can show
the world Corani has robust economics in today’s cost environment and U$20/oz silver (or even
$19 or $18, if possible...the more backstopping the better). Overall, I’m ok about buying the
gossip that PAAS and BCM are talking again but I don’t think it’s the prelude to an immediate
deal. Holding.
Lara Exploration (LRA.v): Volumes remain thin in the stock (it hasn’t has a 100k+ trading
day since August last year), which goes some way to explain just why it vares so much week to
week (you want in, you pay for the privilege and you want out, same thing happens). But the
company isn’t going down the tubes and does have its long-term support, so I doubt it’s going
to break completely and therefore current levers of at or just under $1 look about right for
anyone considering this as an accumulation stock.
Minera IRL (IRL.to): IRL trended lower and then a bit of tape painting made things look
better than they were. This is really why I’m trying to stay away from the addition at the
moment, because 17c is cheap, 14.5 a whole lot cheaper. Come the day of the financing deal,
as long as the details are fine the fruit will be low hanging.
15

The Copper Basket
After fourteen weeks of 2014 The Copper Basket is showing a 13.71% gain to level stakes.
company ticker price 1/1/14 Shares out Market Cap current pps gain/loss%
1 Augusta Res AZC.to 1.51 144.41 499.66 3.46 129.1%
2 Reservoir Min. RMC.v 4.97 47.5 313.03 6.59 32.5%
3 NGEx Resources NGQ.to 1.43 168.71 293.56 1.74 21.7%
4 Lumina Copper LCC.v 6.29 44.07 230.49 5.23 -16.9%
5 Nevada Copper NCU.to 1.35 80.5 144.90 1.80 33.3%
6 Hot Chili Ltd HCH.ax 0.425 333.11 114.92 0.345 -18.8%
7 Copper Fox CUU.v 0.375 402.96 106.78 0.265 -29.3%
8 Western Copper WRN.to 0.76 93.68 96.49 1.03 35.5%
9 NovaCopper NCQ.to 1.60 53.4 76.36 1.43 -10.6%
10 Curis Resources CUV.to 0.57 74.79 63.57 0.85 49.1%
11 Panoro Minerals PML.v 0.35 204.71 61.41 0.30 -14.3%
12 Cordoba Min. CDB.v 0.45 31.88 16.90 0.53 17.8%
13 Coro Mining COP.to 0.10 159.37 16.73 0.105 5.0%
14 AQM Copper AQM.v 0.11 139.05 14.60 0.105 -4.5%
15 Oracle Mining OMN.to 0.27 49.03 10.05 0.205 -24.1%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg 13.71%
The overall basket went down, but but only by a smidge. There were five stocks that put in
gains (LCC.v, AZC.to, NCU.to, PML.v,
CUV.to), two that were UNCH on the week The Copper basket 2014, weekly evolution
25%
(WRN.to, COP.to) and eight that dropped
(NGQ.to, RMC.v, CUU.v, HCH.ax, NCQ.to, 20%
AQM.v, CDB.v, OMN.to) but most of the
15%
moves weren’t that large, a holding pattern
sort of week. The best performances came 10%
from Curis Resources (CUV.to up 11.8%) and
5%
Lumina Copper (LCC.v up 11.3%), while the
worst to the downside was Hot Chili (HCH.ax 0%
down 9.2%).
As for copper market prices, they tried on a
couple of occasions to rally on from the recent
recovery and although they fell back, the notable
is how the $3.00/lb level was never seriously
challenged during the week. If you want my call
on the future of copper (and even if you don’t
you’re going to get it), the worst is now behind
the metal for 2014, recovery looks on the way.
The reason for the newly rekindled bullish feeling
lies in the inventory stats, because a new trend is
now definitely forming and it’s going to be good
for copper. This week world total inventory levels
dropped again, this time by 23,782 metric tonnes
(mt) (-5.0%) to finish the week at 450,754mt.
That follows on from last week’s significant drop
of 17.4k mt and this now has the hallmarks of a
new trend, rather just the possible of last
weekend.
Inside the numbers things get even more bullish.
16
ht5naj ht21 ht91 ht62 dn2bef ht9 ht61 dr32 dn2ram ht9 ht61 dr32 ht03 ht6rpa
source: IKN calcs

Comex inventories rose again sharply in percentage terms and they’re climbing back from
whence they came. Last week ended at 18,234mt for Comex stocks, up a full 3,173mt
(+21.0%). Meanwhile LME warehouses dropped a little in percentage terms, down 5,600mt (-
2.1%) to 260,100. But it’s the move in those Shanghai Futures Exchange warehouses that
again takes centre stage, as they dropped another large 21,355mt (-11.0%) to finish at
172,370. If we add that latest figure to the dataset presented last week, it looks like this:
Shanghai Futures Exchange Warehouse Stocks, 2014
220000
200000
180000
160000
140000
120000
100000
17
ts13ceD ht5naj ht21 ht91 ht62 dn2bef ht9 ht61 dr32 dn2ram ht9 ht61 dr32 ht03 ht6rpa
Mt Cu
source: Cochilco
If that’s not a rolling over of stock, nothing is.
Be clear, this new trend of copper leaving SFeX warehouses is a bullish signal, whether or not
that’s a undeclared pool of unbonded stocks hanging around in China as most people comment.
The message here is simple:
• China is the world copper price driver
• Stocks are declining in China
• That means China has started buying copper again
• That’s bullish for copper prices
I like it simple.
I’ve been asked by a couple of you for thoughts on how to play a newly bullish copper market.
Aside from the junior explorecos we track and my own limited exposure to copper via COP.to
via these pages, I personally own Southern Copper (SCCO) and First Quantum (FM.to) in a
long-term portfolio that gets rare mention here. I’ve owned SCCO for donkey’s years, do so for
the dividend and use the Warren Buffett “preferred holding time forever” concept on that one. I
own FM.to after getting its paper from the Antares (ex-ANM) deal and have just let it sit there
(though I did shave a minor portion of it to raise cash a couple of years ago, it’s perhaps 90%
the same as it was...it pays a minor dividend too). In theory at least, copper producers should
benefit first from a rebound move in copper (it would need to re-take $3.20/lb or so for things
to get interesting for the equities)
I see nothing against either of those stocks, with preference for SCCO if you’re looking for pure
copper exposure. Those with a nearer-term alpha-centric viewpoint should be leery of its Tia
Maria exposure, because that project is way more complicated on community risk than any EIA
permit award will make it out to be.
Other copper producer stocks I’d consider today include:
• Freeport (FCX): We follow it in the low cost gold producer section below here, which
alludes to why it’s an interesting play. It gets a majority of revenues from Cu, though
has lots of exposure to Au and that combination into a bullish rebound for both (I’m
clearly bullish gold, you may have noticed) gives this equity a potential double whammy
upside. The risk is again political, with FCX having well-documented government-level

issues with pacific rim countries at the moment. Resolution on those matters would
help, further problems would hinder.
• Hudbay (HBM): This is riskier, because on a corporate strategy level HBM is making
some pretty big bets at the moment and raising cash in several ways in order to do so.
Constancia in Peru is nearing the end of construction and things are going reasonably
well there (timeline is being respected now), then its move to buy our Augusta (AZC.to)
(AZC) is a clear levered bull call on copper, because it might be able to win the asset
but it would need to take out even more debt financing (~$1Bn?) in order to build the
machine.
• Capstone (CS.to): Though only possibly on this one, because a) it looks pretty fully
valued to peers b) I don’t think its working assets are that great c) Santo Domingo in
Chile is taking a lot more time than expected to get off the ground, which usually
means problems. What CS beings to the table is a high beta to the sector, which means
it has the potential to give a decent trading gain on a sharp copper move.
Aside those, we shouldn’t forget that Rio Alto (RIO.to) (RIOM) is starting to feel a little more
gravitational pull towards copper this year. The “where’s the growth?” question is being raised
more often and as the stage 2 sulphide project is both the most obvious answer and with
revenues stacked approx 2/3 copper and 1/3 gold, a pop in the copper price should benefit our
top pick stock. It’s certainly one to watch with the copper price fluctuating around $3/lb,
because that’s right where the base case economics are calculated.
Now for an update on just one of our component stocks this week:
Lumina Copper (LCC.v): I’ve lost count of the times that LCC has looked on the ropes and
fading away, only for it to spike back up
in a rush. Most probably the mark of an
extended network protecting a share
price and it’s not as if the strong
percentage rebound came on increased
volume or market interest, either; the
whole of last week saw just 92,000
shares traded over the five days.
On short, LCC is out of favour, which is
because it’s a takeover play with nobody
who wants to take it over. And that’s
because there’s no mining company
stupid enough to want to commit several
billion dollars to a project in Argentina
today. Quite right too.
The Low Cost Producer Basket
After 14 weeks, the Low Cost Producer Basket is showing a 11.00% gain to level stakes
18

company ticker price 1/1/14 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Freeport FCX 37.74 1040 34.65 33.32 -11.7%
2 Goldcorp GG 21.67 812 20.22 24.90 14.9%
3 Barrick ABX 17.63 1000 18.30 18.30 3.8%
4 Newmont NEM 23.03 497.87 12.00 24.11 4.7%
5 Silver Wheaton SLW 20.19 357.39 8.14 22.78 12.8%
6 Franco Nevada FNV 40.74 147.01 6.90 46.93 15.2%
7 Agnico Eagle AEM 26.38 173.43 5.36 30.90 17.1%
8 Pan American PAAS 11.70 151.41 1.99 13.16 12.5%
9 B2Gold BTG 2.02 651.4 1.85 2.84 40.6%
10 First Majestic AG 9.80 117.02 1.15 9.81 0.1%
all prices in U$, using NYSE ticker prices Portfolio avg 11.00%
The overall basket average moved up a tiny fraction (0.11%) on the week, which means it
didn’t do as well as our GDX
control, or the underlying gold The Low Cost Producer Basket: Weekly performance and
price (GLD was up 0.81% on the comparative to GDX control
35%
week, for example). Six of our
30%
components made gains (FCX,
25%
ABX, NEM, FNV, PAAS, BTG) and
20%
four showed losses (GG, SLW,
15%
AEM, AG) but none of them made
10%
massive moves in either direction.
5%
The most active news-wise was
probably Goldcorp (GG), which 0%
has hit community relations
headwinds at Los Filos (see below
in ‘Regional Politics’) and is now
up against a competing bid for
Osisko (OSK.to) from Yamana (YRI.to). So on that subject...
Goldcorp (GG): Everyone has an opinion on the ongoing GG/OSK fight so rather than add to
the noise and directly give my reasons as to why I think GG will up its bid I’m going to keep
eyes on the trading action, a mere reflection of the issue:
The news that OSK had received a rather complicated White Knight bid from Yamana came pre-
bell Wednesday April 2nd (7) and as you can see, GG rallied on the news but once GG
announced Thursday (8) that it was doing more DD at OSK’s Malartic mine it dropped again, by
almost the same 2%. Come Friday and
the gold rally GG recovered and even
with a Friday afternoon profit-takers’ sell-
off, got back about half the losses. The
fluctuations indicate that the market
can’t seem to decide whether GG will try
to beat the friendly offer from YRI that is
indeed better on paper and finishes with
a type of JV situation between OSK and
YRI (the details are available on the
links, I’m not going into it here and if
you care enough you already know how
it works). And even if GG does up its bid,
the indications are that the daily
movements in the price of gold are just
as important, if not more so, than the buyout saga in play.
19
ts13ceD ht5naj ht21 ht91 ht62 dn2bef ht9 ht61 dr32 dn2ram ht9 ht61 dr32 ht03 ht6rpa
basket
gdx control
source: Yahoo! Finance, IKN calcs

First Majestic (AG) (FR.to): It’s interesting that AG is now just a penny higher than the end
of 2013. I started looking for a bit of chart inspiration and an image that could help explain its
relative underperformance, but nothing really jumped out at me except this comparative with
the silver bullion ETF (SLV) over a longer 24 months
I’m loathe even to read much into this chart, but at least it shows how First Majestics relative
leverage to silver has been pummelled out of the stock. It also suggests a relative low
compared to the metal and it might be time to buy a few, but if we’re going to get a rally (relief
or otherwise) in silver, I’m personally more content with holding SCZ and BCM at this point, as
they’ll give me more leverage bang for my buck. I’m comfortable with having some exposure to
silver at this point, but it’s still too early to make it a central focus of the portfolio, methinks.
Regional politics
Costa Rica: Luis Solís is the new President
Tonight, Luis Guillermo Solís of the social democratic (roughly centre to centre-left) Partido
Acción Ciudadana (citizen’s action party) was declared the winner of the Costa Rica Presidential
election after a near-walkover second round vote today. That also means that mining doesn’t
have a cat in hell’s chance of prospering in the country, as it was the PAC part ywho formed the
main opposition to the Crucitas Gold project back when that was still under debate.
Costa Rica was already off our map as a potential location for juniors. It remains that way.
Meanwhile I wish Solís luck in his new job.
Argentina: Mining as a piece in the bigger election game
We’re still a year and a half from the next election , but as it will decide who takes over from
Cristina it’s already being framed as a big moment for Argentina and there are now early subtle
moves coming from the potential candidates for the big job. Among those is one of the
favourites Daniel Scioli, governor of Buenos Aires province and one of CFK’s preferred
candidates (along with Jorge Capitanich) who is about to make his pro-mining credentials plain.
He’s booked as speaker of honour at Argentina’s Day of the Miner annual celebrations (May 7th)
and according to this insightful commentary (9) from San Juan newspaper Diario del Cuyo
(always good for mining issues in the country), he’s aligning himself as a close ally of San Juan
governor Gioja too. As San Juan has been the most progressive pro-mining province in the
country during the CFK reign (no other word will do) the inference is clear enough.
Bottom line: We mining investors should be reasonably happy if Scioli makes progress in the
candidature process during 2014.
Peru: Gregorio Santos “The October election will be a referendum between
Yanacocha and the people”
That’s the soundbite you need from the early election jockeying out of Cajamarca we saw last
week (10) and that’s also what’s known as setting your stall out early. Other players, both
nationally and in the Cajamarca region, would like it to be otherwise but Santos wants this
election to be Yanacocha-centric and has marked out the territory thereof. It’s probably a smart
political move by him, as we saw last week that his two main opponents are either clearly pro-
Conga or trying to hide the fact they’re pro-Conga.
Meanwhile, the carnival period is now over in Cajamarca and we can expect anti-Conga
marches and protests (all sponsored or with the approval of Santos) to start running again
soon. There are plans for a march this week coming, but we shouldn’t expect big
demonstrations until Lent and the Easter festivals are behind us. Easter Sunday falls on April
20th this year and after that, things are due to get politically hotter in Cajamarca.
Guerrero Mexico and a more general point about community risk
On many occasions, these pages have been used to call “danger” on the political and
20

community risk levels for Guerrero State, Mexico. The precarious nature of risk there was
brought home to the mining world last week, when Goldcorp (GG)) announced (11) that its Los
Filos mine had been blocked by locals protesting against the company’s refusal to negotiate a
better deal with the landowners. This is one we did on the blog at the time last week (12) and
from that, this translated passage explained the community position quickly and neatly:
Since 2007, the 176 Ejidatarios (members of the "Ejido" landowner group) receive 2.5
ounces of gold for every hectare of the 1,200 hectares of land that Goldcorp rents,
although the rent was agreed two years after the start of formal operations.
On Sunday March 30th, an assembly of the Ejido Commission was called to discuss
renegotiation terms for the contract with the Canadian company, at which the corporate
representative Francisco Ballesteros Corrales was present.
Although the vote was not unanimous, the assembly authorized representatives to
seek an improved deal with an initial offer of 6 ounces.
On Monday morning the offer was lowered to 4.5oz with the intention to reach an deal,
however the proposal was rejected by company executives. Due to this, from 6am
today the inhabitants of Carrizalillo decided to block access to the large scale mine.
In other words, the locals want more from the company (the larger back story is that they’ve
apparently twigged on that the land they’ve rented is going to be useless afterwards and GG’s
pledges for community sponsorship have turned out to be more talk than action, so getting
more now is the only way they have of levelling the playing field...according to the locals at
least), the company doesn’t want to give more to the locals. As it happens, I don’t know who’s
in the right and in the wrong in this particular case, but I know for certain a couple of things:
• There’s no reason at all to believe the locals’ position and consider them the guardians
of absolute truth.
• There’s no reason at all to believe the mining company’s position and consider it the
guardian of absolute truth.
A lot of these political and community disputes get wrapped up in greater environmental
concerns, but scratch the surface and most (not all, but most) are driven by financial greed.
That works on both sides. This one looks a classic example to me so the NGO’s and the pro-
mining members of Congress can use this new one as their latest political football, but it will all
blow over when GG and the ejido owners reach a mutually acceptable deal (and they
will...eventually).
The larger issue, and one that underscores just how tough Guerrero is for a mining company, is
that there are always going to be problems, grievances and annoyances between mining
companies and locals. Always, every mine in the whole world. Most are minor, some are
legitimate complaints that get addressed, others are legit and get ignored, others still are
outright scandals that need the big world media spotlights shined upon them. Thing is, a mining
company’s specific geographical location makes a big, BIG difference to the political risk it
entertains. Take for example Goldcorp’s Marlin mine in Guatemala, which is hated by the locals
around it but carries on and produces regardless. That’s because it’s in a location and a country
that makes it difficult for locals to take direct action and block roads without getting into trouble
quickly. However, Guerrero is a tougher place altogether, one of those “self governing” (that’s
using as diplo a term as possible) regions which the national government and its police/army
hold little or no sway. In Guerrero, if you piss off the locals they can stage a very effective
roadblock and keep it in place until you’re forced into a deal. At Marlin, or San Luis Potosi
Mexico, or Central Peru, or Middle Cauca Colombia or just about all of Chile or plenty of other
places, less so. Good community relations starts with winning and earning the respect of locals,
but it doesn’t stop there. Keeping them onside is a constant task and if things go wrong, the
specific region’s characteristics play a big part, too.
I predict GG will give in to the local’s demands and give them 4.5oz/hectare soon. Meanwhile,
those of you long Torex, Cayden, Newstrike and other juniors developing in Guerrero State, the
events of last week should give you pause for thought. The person who told you “Buy it
because it’s in Mexico and Mexico is miner-friendly” needs to buy an atlas and a history book.
21

Market Watching
Rio Alto Mining (RIO.to) (RIOM): Black coffee
On Friday I met Alex Black for morning coffee and we spent an hour or so chatting. RIO.to and
its current state of affairs got less time than a wide-ranging conversation on the state of Peru
politics, which was interesting for because it’s not so often I get to hear views from an informed
gringo on Peru affairs, particularly as it pertains to the business and mining sectors (Alex Black
has been hanging around Peru for many years, is resident in the country, plenty of Peru ties
and contacts, and as his Spanish is strong it means he gets to converse and absorb directly too;
no newswire filter here).
The meeting also happened a couple of hours before RIO announced the resignation of Tony
Hawkshaw as CFO of the company and true to CEO black’s form, not a clue or a hint of the
material event disclosure came (which, after all, is how it should be). On that subject when
pressed after the Friday afternoon NR (13) that managed to knock a few pennies and the edge
off the week’s share price performance, Black said that it was “business as usual” at RIO,
Hawkshaw’s stepping down was done in the right way and the company won’t be affected. As
for my personal opinion, the CFO is a key aspect of the large multinational companies of this
world and rightly viewed as a critical part of company stability, but junior mining companies, be
they developers or producers, tend not to be as complicated. I’ve met Hawkshaw a couple of
times, found him to be a spot-on person and have no reason to doubt his credentials and I’ve
heard the same types of positives from other people too), but personal likes or dislikes are of
no consequence whatsoever. If a Chair, CEO or a key COO or VP Expl of any given junior
mining company left with sudden speed I’d be more concerned, but a CFO that’s retiring after
long service at a company with one producing unit is not one I’m going to lose sleep over. So
there you go on that.
Back to coffee with Black (black coffee?) and although he’s never one to give out material
information (the above as an example) once you know a person it is possible, via a little back
and forth and a few fishing expedition questions, to get a handle on how he sees things and
Black on Rio is no exception. Therefore and taking into consideration the note published last
week on RIO.to and guidance for the future, here are a few comments and potential to my
current model:
• After fishing a while, the feeling is that my best guess 53,000 oz for 1q14 isn’t going to
be far out. So that estimate stays as per.
• In IKN255 last week I estimated RIO would sell its gold at an average of U$1,260/oz in
1q14, compared to the London Fix average of U$1,295/oz (recall, RIO always sells at a
slight discount to London Fix). The impression got from fishing on this subject was that
I may be pitching too low, so I’m going to add $10/oz and go for U$1,270/oz now (not
a big adjust, but it’s still ~$0.5m to the gross revs).
• Combining the two above, our best guess for 1q14 revs is now ~$67.3m.
• As for costs, as per last week’s analysis I used U$679/oz for cash costs in 1q14 for RIO
(in this case to get an accurate straight line measurement I use COGS/oz, which is
slightly-but-not-that different from operating cash costs). This one isn’t so easy to
judge, but the impression is that I may have pitched that a little high so I’m going to
tentatively drop that to U$650/oz for q1 (recall, 1q14 is expected to be the most
expensive quarter for costs). That would mean COGS would come in at ~$34.5m ,
instead of the ~$36m in the IKN255 model.
• Put the slight better revenues and slightly cheaper costs together and the result is to
add about $2m to gross profit. Here’s the adjusted earnings overview chart...
22

RIO.to: Quarterly Earnings overview
100
90
80
70
60
50
40
30
20
10
0
23
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
...and if you squint hard enough you can see the better number for 1q14 gross profit
(aka mine operating profit) in visual form. We now pitch at $24.8m, which compares to
the $22.8m of last week. That extra $2m in profits, once run through the rest of the
model ceteris paribus, puts operating earnings per share estimated at 12c (up from 11c
last week).
One thing from last week produced a critique mail, from reader SH who noted this part...
Those forecast bars represent just over $110m in operating earnings, which is just 4X
to market cap.
...and pointed out that according to my own figures that the ratio should be substantially less
than even my projected 4X ratio. Indeed it should SH and others (it’s what comes from writing
numbers as part of the narrative flow and not checking back later) so to get this nailed down to
as accurate number as possible, my 2014 forecast for RIO now guides for operating earnings at
U$112.4m (as long as you’re ok with the pinch-o-salt stuff needed for later quarters that will
depend on gold’s price performance). Today’s market cap in US dollars is U$359.3m. Therefore
our 2014 forward price/operating earnings ratio (NB: op earnings is pre-other financial and pre-
tax, but we use it as our best straight line comparative in an otherwise noisy set of quarter on
quarter figures) is currently at 3.2X and that’s not cheap, that’s very cheap indeed.
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
cents
source: company financials/IKN ests
Focus Ventures (FCV.v) meeting
I sat down to lunch with FCV president David Cass and three other members of the team on
Thursday at the company HQ in Lima (we had delivery spit roast chicken followed by instant
coffee, it was great and what’s more I’ve come to appreciate explorecos that don’t try to
impress people by splashing out on expensive restaurants) and then cornered him in his office
for a couple of hours to talk about the Bayovar 12 project, as well as any other matters FCV.
Most of the talk was about conceptual mine economics and whether the strip rate for Bayovar

12 would be too prohibitive for an economically robust mine plan. The upshot of the
conversation is that it’s of course way too early to second-guess the contents of even a scoping
study (PEA), but on what we know and can extrapolate from known data at neighbouring
mines, particularly the Fospac mine project owned by Hochschild (HOC.L), is that there seems
to be no serious theoretical barrier to a very decent a economically robust mine. My meeting
came just after the news (14) that the Peru government had awarded the key environmental
impact permit approvals to the Fospac project just six months after the permit application had
been submitted, which is a very short period of time. The reasons for the speed of approval are
always many and varied, but major factors must have been 1) the previous permitting process
for Vale’s big mine next door 2) and the relative simplicity of the mine project in the area,
which benefit from their very remote location, lack of communities and sparse flora and fauna.
Like Bayovar 12, Fospac’s plan is as simple as mining gets in the 21st century and more about
the logistics of moving large quantities of material (waste and ore) than anything else.
I asked about timing for publication of the first drilling results from Bayovar 12 and those are
expected to start in a couple of weeks time and will then be ongoing as hole results come back
from the labs. I also asked (as much as I could) about how the team thought of the upcoming
assay results would come out after logging the cores, and they seem to be quietly confident of
getting good numbers from the labs, at least with mineralized width, though they weren’t
tempted to start playing the guessing on potential grade content.
Overall, It was a very positive meeting, that allayed any small worries I had about the potential
economics of Bayovar 12. It’s clear that the better model for the deposit is what HOC via its
Fospac subsidiary plan to do at Bayovar 9, rather than what Vale is doing over at its Miski Mayo
operation. As Fospac will run their mine on a ~6.2/1 waste strip ratio and produce a marketable
product at (my best guess) 50% margin to current market prices, that works for me just fine.
I’ve mulled over adding a few to my FCV pile and to now procrastinated, but it’s now at the
point where the argument seems compelling. I’ll be adding to my FCV position next week,
so expect the cost average to move up by the time IKN257 comes around.
Conclusion
IKN256 is done, we end with bullet points:
• Gold Resource Corp (GORO) might have dropped a long way, but at $220m market cap
it’s still overvalued to peers. If you’re into companies that use paid-for promo and
faddish dividends then be my guest, but this company has little in the way of true
fundies to back up its hype. It’s a short and the 4q13 numbers (along with its 2014
prospects even i things go reasonably well) underscore that.
• I’m going to add to my FCV.v next week.
• We’re still in a market looking to every $5 move (up or down) as some sort of key
indication to the general well-being of a whole industry. Time to phase out the noise,
this is the time to accumulate while things are still cheap. You’ll remember me this time
next year.
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
24

Footnotes, appendices, references, disclaimer
(1) https://www.savetubevideo.com/?v=QqaQ_Bhgmrc
(2) http://incakolanews.blogspot.com/2014/04/gold-resource-corp-goro-files-its.html
(3) http://seekingalpha.com/article/2122553-gold-resources-ceo-discusses-q4-2013-results-earnings-call-
transcript?part=single
(4) http://finance.yahoo.com/news/map-boundaries-p-ramo-santurb-210000351.html
(5) http://finance.yahoo.com/news/colombian-authorities-respond-eco-oros-050900038.html
(6) http://finance.yahoo.com/news/gold-corporation-reports-2013-annual-213000974.html
(7) http://finance.yahoo.com/news/osisko-mining-corporation-yamana-gold-132859336.html
(8) http://finance.yahoo.com/news/goldcorp-announces-due-diligence-underway-125100085.html
(9) http://www.diariodecuyo.com.ar/home/new_noticia.php?noticia_id=616863
(10) http://www.gatoencerrado.net/store/noticias/83/83274/detalle.htm
(11) http://www.goldcorp.com/English/Investor-Resources/News/News-Details/2014/Goldcorp-suspends-operations-at-
Los-Filos-mine-pending-renewal-of-land-occupancy-agreement/default.aspx
(12) http://incakolanews.blogspot.com/2014/04/goldcorp-gg-and-its-halted-operations.html
(13) http://finance.yahoo.com/news/rio-alto-mining-announces-management-184512586.html
(14) http://www.horizonteminero.com/noticias/mineria/3885-aprueban-eia-de-tres-empresas.html
Appendix 1: First flash update dated Tuesday April 1st
Good Tuesday morning, around 45 minutes before the opening bell.
Eco Oro Minerals (EOM.to): No sell decision yet, holding current position
Yesterday the Colombia government press conference happened and was led as expected by Minister Luz Helena
Sarmiento, but impressively (ironically speaking at least) she and her team managed to spend over an hour giving only
general background to the project and no hard details. We'll concentrate on the mining aspect and how it affects Eco
Oro (EOM.to) and its Angostura gold project. The main things announced were:
Eco Oro is affected by the boundary limitation in the way we expected. Here...
http://www.caracol.com.co/noticias/ecologia/gobierno-le-cierra-el-paso-a-mineria-a-gran-escala-al-delimitar-
santurban/20140331/nota/2155052.aspx
...is the money quote, in which Minister Luz Helena Sarmiento says, "The Angostura gold project, the largest of the
region, is located partly inside and partly outside the protested area."
That's how we expected things to be, as EOM will have both access and development rightsto its adjusted underground
project, while having no right of development for its original open-pit project (the cause of the fuss these last few years
and the development that was originally thrown out).
Reports of the the press conference inside Colombia have been of a disparate quality. Some of the more widely read
reports (and reporters) have seemingly not understood that the partial prohibition of the Eco Oro concession was
expected, and have drawn the conclusion that the company has been de facto thrown out of the region. This is not true;
what we saw yesterday is almost certainly the scenario which fits our investment thesis.
However, please note the "almost certainly" in the above section, because this is where the frustration sets in. We were
not given hard data or the exact coordinates of the boundary of the new Páramo reserve, but only the general outline.
We were not told exactly what lies inside and outside the zone, but simply the anecdotal-type of commentary that
doesn't bring precise resolution. In fact, the committee stated...
http://www.portafolio.co/economia/paramo-santurban-actividad-minera
...that the new limits would be ready for review "in three to six months". This is very frustrating, as it's obvious Minister
Sarmiento is kicknig this political hot potato into the future (and beyond the Presidential election period.
25

The fact that parts of Angostura are said to lie inside the páramo boundary and are therefore excluded from
development gives, in theory at least, the company grounds for legal action. It may look for financial compensation on
those parts of Angostura it cannot use, but this should not take away form the fact that its alternative underground
project plan can now go ahead.
Conclusion: The main takeaway is one of frustration. We are within touching distance of getting the correct decision for
our investment in EOM.to from Colombia, but the government has decided to delay the final final results and has
become annoying in the extreme. I'd expect EOM to rally on the results (it dropped on what was apparently people
picking up on first unreliable report rumours yesterday before being halted at 12:27), but the lack of hard evidence will
keep the company in limbo on any development decision and due to that, i'd expect the rally to be limited for the
moment. EOM is due to release news and I'd expect them to offer their own take on the presser when that happens.
Until then, I'm taking no action on the current long position in EOM.to.
Best, O
Appendix 2: Second flash update dated Tuesday April 1st
Good Tuesday morning, approaching midday local time, three hours of market to run.
I've had plenty of feedback and questions about EOM.to this morning, so a second mailer is in order. Points to make:
1) The bad reporting of yesterday's press conference has continued into today, with most channels not understanding
the difference between the larger Angostura project concession and the smaller underground mine plans that have been
in place for quite some time and are almost certainly unaffected by the border ruling (though again and to underscore,
the lack of resolution from the Colombian government on exactly where the line is drawn is frustrating). The main
difference today is that the lack of understanding is showing up in English language reports, rather than the swathe of
Colombian media Spanish language reports of yesterday.
You can in fact argue that the way in which EOM has apparently lost some of its concessions and apparently kept the
rights of others works as a double benefit for the company. It will be able to move forward on its smaller U/G mine plan
and also try to get financial compensation from its lost concessions through the courtroom. However and to repeat, the
lack of solid data is the problem as it symies both immediate renewal of exploration on its apparently confirmed
concession areas and also any action it might take against the State on the lost concessions.
2) Yes, Minister Sarmiento is a bit of an idiot, I fully agree. However, it comes as little surprise to learn that an
environment minister of any country doesn't have much of a clue about the mining industry, these things are not
confined to Colombia.
3) EOM.to released its NR...
http://finance.yahoo.com/news/boundaries-p-ramo-santurb-n-124700455.html
...which basically reiterated your author's view of the lack of resolution from yesterday's conference. It's worth a read but
the company is obviously being very careful with its wording at the moment.
4) Yes, in theory at least the current price (fluctuating between 37c and 40c) is a buy, due to the general lack of insight
on the story and its resulting opportunity. BUT liquidity is thin and the market would need to show more interest to make
this a specific buying opportunity that's quickly tradeable (both entry and eventual exit). Higher volumes would make this
story far more interesting, but they have no appeared.
5) No, I'm personally not buying any more, but that's a portfolio management thing more than anything else. I have
enough for my taste already and prefer to keep powder dry for the moment. However, I do see EOM.to rising once
people have worked out the nuances of the story and what yesterday's announcements are likely to mean. The sell-off
over the last two days is only justified by market ignorance.
Best, O
26

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
27

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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