IKN #268Premium

The IKN Weekly
Week 268, June 29th 2014
Contents
This Week: Short.
Stocks to Follow: Overview, Reservoir Minerals (RMC.v), NovaCopper (NCQ.to), Minera IRL
(IRL.to) (MIRL.L), Timmins Gold (TGD) (TMM.to), Rio Alto (RIO.to) (RIOM, GoldQuest (GQC.v),
Focus Ventures (FCV.v), Santacruz Silver (SCZ.v).
Copper Basket: Overview, Augusta (AZC.to), Panoro (PML.v), AQM Copper (AQM.v).
Low Cost Producer Basket: Overview.
Regional Politics: Gregorio Santos.
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
Short
Rarely for me I’ve not been feeling well for the last few days, with time spent on sofa and in
bed (which lazily includes extra sleep, watching the World Cup matches and pleasure fiction).
My concentration span has been short which is why this week’s edition is bare bones only; I
thought I’d be able to get away with writing a normal issue, but come Sunday midday it
became obvious that wasn’t going to happen. Please accept my apologies, I will accept your
valid complaints, I confidently expect to be back at full speed by next weekend.
Stocks to Follow
It was the consolidation week, with gold all-but unchanged and stocks finding new levels after
the modest over-buying of the week before last. Despite that the The IKN Weekly Stocks to
Follow portfolio held together reasonably well and still had five weekly winners (TGD, IRL.to,
DNA.to, NCQ.to, EOM.to) to call upon, along with one unchanged on the week (TGM.v). That
means eight stocks lost ground (RIO.to, GQC.v, RMC.v, FCV.v, SCZ.v, LRA.v, COP.to, SRL.v)
with the worst of those moves in percentage terms seen in GoldQuest (GQC.v down 17.6%)
and the very minor position in Salazar (SRL.v down 10.0%). To the plus side, very decent
percentage moves to report in Minera IRL (IRL.to up 16.7%), Eco Oro (EOM.to up 13.7%) and
NovaCopper (NCQ.to up 11.5%) and that IRL move was particularly pleasing, what with its
personal portfolio overweighting and the expectation of positive news to come regarding
Ollachea.
You may notice that I’ve shifted the order of preference in the list a little, as well as there being
more green ‘buy’ calls in the weekly sentiment column.
We current have 14 open positions on our ‘Stocks to Follow’ list, one less than our self-imposed
maximum. Seven are in the green, seven are still showing red ink. Evens.
1

Reco Current
Company Ticker this week Avg Price date PPS Gain/Loss% Notes
Top Picks
Rio Alto Mining RIO.to buy C$2.30 07-apr-11 C$2.41 4.8% Top pick, $3.30 tgt June 15
Recommended long positions (in current order of preference)
Timmins Gold TGD buy U$1.38 09-apr-14 U$1.66 20.3% adding 3rd time, $2 tgt
Minera IRL IRL.to hold/buy C$0.27 22-jul-12 C$0.21 -22.2% Added, ready for news
GoldQuest Min. GQC.v buy C$0.295 27-oct-13 C$0.305 3.4% drillplay spec, good vibes
Reservoir Min. RMC.v buy C$6.13 18-jun-14 C$6.09 -0.7% starter position, M&A play
Focus Ventures FCV.v buy C$0.23 01-jul-12 C$0.265 15.2% tgt 50c, added, avged up
Dalradian Res DNA.to hold C$0.65 27-oct-13 C$1.01 55.4% Going well, tgt up to $1.70
True Gold TGM.v hold C$0.395 02-feb-14 C$0.43 8.7% LT hold, takeover play
NovaCopper NCQ.to spec buy C$1.03 09-apr-12 C$1.16 12.6% small, adding slowly
Santacruz Silver SCZ.v hold C$1.04 26-jan-14 C$0.95 -8.7% silver/M&A spec, rel. small
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.73 -36.5% solid biz model, LT hold
Eco Oro Min. EOM.to hold C$0.48 22-sep-13 C$0.29 -39.6% paramo resolution missing
Recommended short positions
None at moment
Smaller/Riskier
Coro Mining COP.to spec buy C$0.125 26-jan-14 C$0.075 -40.0% Cu spec play, can add
Salazar Res SRL.v hold C$0.28 02-mar-14 C$0.18 -35.7% 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
Gold Res Corp GORO may'14 U$5.07 26-jan-14 U$4.12 16.7% Re-short now full position
Bear Creek Min BCM.v may'14 C$1.63 23-mar-14 C$2.05 25.8% Ag/pol risk trade, avged down
2009, 2010, 2011, 2012 and 2013 closed positions in appendices below
Now for some notes on a selection of the above stocks.
Reservoir Minerals (RMC.v): Added. As per the Flash update Thursday (see appendix 1) I
added a few more RMC, though not as many as I’d have liked (it was generally thin trading
Thursday and Friday in this one). The cost average is down a few pennies as a result.
RMC had a higher-to-lower sort of week and attracted little attention too; which is just the way
I like it, as I’m a buyer.
Minera IRL (MIRL.L) (IRL.to): Although without news as yet, IRL had a strong week at the
marketplace and rose on volume in both London and Toronto trading. The five day chart looks
cool, but here I prefer to note the 2014 year to date version as Friday’s close was the best price
seen this year.
2

From feedback received, it seems news of the impending deal is now widespread on the
jungledrums and one of the things picked up is that Macquarie has been kicked into touch, with
a better terms deal now in place that would also pay off the $30m financial debt owed to
Macquarie and untie IRL from that house completely. These are but rumours, however.
To repeat: Devil will be in details, so until they’re known I’m loathe to change my current IRL
rating. I own a whole bunch and have added as well, that’s all for the moment. Real news
100% necessary here.
NovaCopper (NCQ.to): Added. A very few bought Monday (as per last week’s note), but still
a small position, not much net
worth at risk and plenty of room to
add more. After it had spiked I
didn’t bother chasing the price and
I’d expect it to come back towards
$1 once the financing is
announced.
Note the “high volume” day
Tuesday was but 31k shares and
the interest faded to near-naught
come the end of the week. NCQ
still has a long way to go to get its
mojo back but at least the moves in
June suggest that we’ve bought at
the bottom (famous last words).
Timmins Gold (TGD) (TMM.to): Although the stock rose in strict terms from last weekend, iit
gave up ground on the price before the late day drop of the previous Friday and as such it was
disappointing share price performance from TMM. This may point to the alternative proposals
from the current board of directors announced last week (1), that include naming four new
directors and moving on a strategic review of the company (implication being that TMM will be
more open to offers), as being enough to head off the Sentry-led proxy slate of directors and
allow current management to stay in place. I’d (perhaps somewhat optimistically) slated in
U$2.00 (for TGD, the US listing) as a price at which I’d sell my shares. We got as far as U$1.86,
which shows the thinking was on the right track but aiming a tad too high. So be it, easy to
hold these and we’re in at a good price.
3

Rio Alto Mining (RIO.to) (RIOM): We’ve done a whole bunch of fundies recently, here’s a
bit to chartology and here’s the 2014 YTD chart of the US listing RIO versus the US listed ETF
for junior mining companies, GDXJ:
The points to make are simple enough, so simple they will be:
1) RIOM and GDXJ have largely traded hand in hand.
2) The only big change was when uncertainty ruled in the early stages of the SUE.to
takeover development.
3) The trading parity is back now (whihc may also explain the spike and drop we saw
between Thursday June 18th and last Tuesday, June 24th, at least in the near-term).
4) However, if we argue the the whole of “New RIO” will be greater than the sum of its
parts and the new entity is in for a re-rating, then we’d expect the RIOM squiggly line
to break away from the GDXJ squiggly line in the second half of 2014.
5) As that’s what I’m now expecting, having been convinced of the positives in this deal
after initial strong doubts.
6) Bullish chart case complete.
GoldQuest Mining (GQC.v): Thanks to several readers who responded to the segments on
GQC last week by informing me the likely reason for the Thursday 19th / Friday June 20th spike
up was a buy recommendation made by one Chen Lin, who runs an apparently high-circulation
gold and mining newsletter (never heard of him personally, but that’s not surprising as for
4

personal hygiene reasons I steer as clear as possible from the whole scene these days). As it
happens I think Mr Lin is on the right track here (and so do others, such as Eric Coffin who i
have heard of) and the whole thesis is based on the drill assays, so it’s risk vs reward.
The move on Thursday looks justified, but
a dose of that 20/20 hindsight suggests
Friday and Monday were overcooked, so
the drop since then may be the flipside in
play (really, this is a classic case study of
why you should chase newsletter recos,
tried to make the point enough times and
in this current flaccid market the effects
are even briefer than normal)
All that’s a long-winded way of getting
round to point out that I’ve stuck “buy” on
the near-term sentiment column for GQC
this week, because I think something
around 34c before those key drill assays are returned is a fair spot for the stock. Afterwards let
us see, but holding stock at or (just) under 30c gives a good start to the game here, methinks.
Focus Ventures (FCV.v): More news from FCV and as planned by the company, the newsflow
from the drill program is now...well, it’s flowing. The third NR in as many (2) told us more right-
on-the-button assay results from Bayovar 12, as well as disclosing the warrants exercise had
raised $2.38m for treasury and that means the company is now set fair for cash through 2014
and to 1q15, when the main option payment on Bayovar 12 is due. This also puts total shares
out at 72.013m which means company market cap is now over CAD$19m (wasn’t so long ago
FCV was languishing at ~$5m mkt cap).
Between now and then we can fully expect an initial resource on the part currently being
drilled, we should expect a few exploratory holes outside the main grid that will tell us of the
resource’s expansion potential and the big holy grail would be getting in a JV partner to carry
FCV through the more expensive stages from 2015 onwards that will really add the asset value
to the project. I don’t know about you, but after looking and considering what’s been invested
by Vale (and will be by Hochschild) next door, I’ll take a 2%% free ride on a $500m asset no
problems at all. The current target price for FCV
is 50c but that’s as a stand-alone on Bayovar
12; if the magic JV partner deal gets done, $1
is an easily reachable number.
Santacruz Silver (SCZ.v): An interesting
rollercoaster ride for SCZ and I want to show
you the five day chart because there’s a really
good thing on display: Yes the stock sold off
nastily but once it had reached sub-90c
numbers, buyers stepping in and bought in
sizeable chunks. There’s now support for this
stock and that’s not a bad thing, considering
how low it went recently.
The Copper Basket
After twenty-six weeks of 2014 The Copper Basket is showing a 13.30% gain to level stakes.
5

company ticker price 1/1/14 Shares out Market Cap current pps gain/loss%
1 Augusta Res AZC.to 1.51 144.41 489.55 3.39 124.5%
2 Lumina Copper LCC.v 6.29 44.07 431.89 9.80 55.8%
3 NGEx Resources NGQ.to 1.43 168.71 376.22 2.23 55.9%
4 Reservoir Min. RMC.v 4.97 47.5 289.28 6.09 22.5%
5 Nevada Copper NCU.to 1.35 80.5 206.08 2.56 89.6%
6 Copper Fox CUU.v 0.375 402.96 94.70 0.235 -37.3%
7 Panoro Minerals PML.v 0.35 204.71 94.17 0.46 31.4%
8 Western Copper WRN.to 0.76 93.68 76.82 0.82 7.9%
9 NovaCopper NCQ.to 1.60 53.4 61.94 1.16 -27.5%
10 Hot Chili Ltd HCH.ax 0.425 333.11 61.63 0.185 -56.5%
11 Curis Resources CUV.to 0.57 74.79 53.10 0.71 24.6%
12 Cordoba Min. CDB.v 0.90 58.81 49.99 0.85 -5.6%
13 AQM Copper AQM.v 0.11 139.05 13.91 0.10 -9.1%
14 Coro Mining* COP.to 0.10 159.37 11.95 0.075 -25.0%
15 Oracle Mining OMN.to 0.27 49.03 6.37 0.13 -51.9%
NB: HCH.ax priced in AUD$, rest CAD$ //CDB 2x1 split May'14 Portfolio avg 13.30%
Last week our list saw just five risers (LCC.v, NGQ.to, AZC.to, NCQ.to, AQM.v) and two
unchanged stock prices (CUU.v, OMN.to),
which leaves eight weekly losers (RMC.v, The Copper basket 2014, weekly evolution
25%
HCH.ax, NCU.to, PML.v, WRN.to, CUV.to,
COP.to, CDB.v). The best moves in 20%
percentage terms were put in by AQM
15%
Copper (AQM.v up 17.6%) and NovaCopper
(NCQ.to up 11.5%), though the thing that 10%
catches my eye is that the bigger market cap
5%
copper juniors generally did better than the
smaller names, which is money flowing to 0%
money I suppose. Overall, the basket moved
up a thin 0.2% thanks to the larger up than
downmoves and this weekend sits at
+13.3% as the half year marker comes up.
I know that when you’re fishing in the junior sphere you’re playing with outsized risk and
looking for outsized returns
as your due reward, so
perhaps 13.3% in half a
year is that great. But it’s
not bad either and goes to
show the sector isn’t quite
as dead as its detractors
make out.
As we being the half year
up, let’s see on how the
component stocks are
doing in comparative
terms. Still elading is
Augusta Resource Corp
(AZC.to) thansk to the
now-successful Hudbay bid
for the company (see
below for more on that) and the move in Nevada Copper (NCU.to) suggests that the market
thinks that one will be next to go. Well I don’t think it will, its feas last year is as crappy as it
6
ht5naj ht21 ht91 ht62 dn2bef ht9 ht61 dr32 dn2ram ht9 ht61 dr32 ht03 ht6rpa ht31 ht02 ht72 ht4yam ht11 ht81 ht52 ts1nuj ht8 ht51 dn22 ht92
source: IKN calcs
Copper Basket Components after 26 weeks
140%
124.5%
120%
100% 89.6%
80%
55.9% 55.8%
60%
40% 31.4%
24.6% 22.5%
20% 7.9%
0%
-20% -5.6% -9.1%
-40% -25.0% -27.5%
-37.3%
-60% -51.9%
-80%
ot.CZA ot.UCN ot.QGN v.CCL v.LMP ot.VUC v.CMR ot.NRW v.BDC v.MQA ot.POC ot.QCN v.UUC ot.NMO
source: IKN stats

was back then so why should a third party pay upwards of $250m for the thing? But that’s me,
the guy that was wrong about Lumina (the other big winner of the quarter now closing).
As for the losers in 2q14, let’s name’n’shame Oracle, Cordoba, Western and Coro. Overall the
copper-o-sphere is in better shape in 2014 than it was in 2013 and I’m betting that it’s going to
get better all the time, as in-situ asset revaluation becomes fashionable again.
Copper metal market prices largely matched the mood in the precious metals cousins and
consolidated last week after the previous run up, as seen in this chart with takes in nearly all of
the last two weeks. We’re bouncing at the bottom of the previous $3.15/lb - $3.30Lb trading
channel now, time (maybe even next week) will tell whether it moves back in or falls away
again; I’m betting on the former.
As for our regular coverage of world copper inventories, here are the bullets:
• Total world stocks dropped by a tiny 90 metric tonnes (mt), to 256,187mt, which is the
tone of the week in a nutshell...nothing much happened.
• Shanghai Futures Exchange copper warehouse inventories rose for the first time in a
while, up 3,446mt, or 4.6%, to finish the week at 78,975mt.
• The LME copper warehouse dropped slightly to make up for that, down 4,275mt (2.6%)
to finish the week at 159,425mt.
• The Comex warehouses copper inventories moved by a small 739mtto 17,787mt.
So this week nothing much doing and no signal to report. The world’s still trying to show nerves
about the copper in China being double-sold in warehouses, but it hasn’t affected things to the
downside for the second week running and looks like another case of (near literal) Chinese
Whispers to me. Add that to the other thousand or so over the last ten years.
Now for some notes on three of our basket stocks
Augusta Resource Corp (AZC) (AZC.to): All it took was one extra push. Last week Hudbay
sweetened its offer for AZC and the deal fell into place, which is how it was supposed to
happen in the first place, no? Anyway, I wish HBM good luck, they’ll need it considering how
leveraged they are against in-place and projected financial debt just to build what they’ve
bought.
Panoro (PML.v): Count ‘em up, four NRs from PML last week on the back of a select number
7

of brokerages saying “We think PML is next after LCC” in the buyout stakes the week before
last.
First, one of those update “Hello we’re here” NRs on Monday (3) which told the world about
chip samples, potential for expansion to Cotabambas and drill target delineation, swiftly
followed the same day by a (much needed) 12m share, $5.0m bought deal at 42c (4), which
took the wind of of the sails of its share price rally (can’t have retail benefitting now, can we?).
Then came a nicely timed advanced notice for director nomination NR on Thursday (5) which
got people rumour-mongering about some deal in the offing and then on Friday afternoon PML
gave us news (6) that 11.2% owner Hudbay had decided to join in on the bought deal in order
to keep its percentage stake intact, as is its right according to previous deal terms.
The upshot to the last two is that PML managed to claw back most of the price dip due to the
early week bought deal, that on speculation that
something M&A is happening. Well yeah, OK, but
the doubts about grade away from the central
core remain, as do the political/community issues
of probably having to move a town to build this
mine. And now add the BS factor, because PML
went full-on promo last week and come the
Friday it was a case of how the lady doth protest
too much, methinks. Sorry, I remember this
company BSsing before (anyone for the Reuters
interview they got in January 2013 (7) which
shot the stock higher and was found to be fuill of
hot air just weeks later?), but as noted last week
I think it may be worth a Gonzo visit in order to find out the feeling of the locals towards the
thing.
AQM Copper (AQM.v): It needs a word, because this one is on my potential shopping list as
an addition to the new copper junior strategy. It might have risen 1.5c and therefore shown an
eyecatching percentage gain, but volumes were pitiful at under 10,000 shares for the whole
week (yup, under $1k in total value) so don’t read a thing into it.
The Low Cost Producer Basket
After 26 weeks, the Low Cost Producer Basket is showing a 22.11% gain to level stakes
company ticker price 1/1/14 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Freeport FCX 37.74 1040 37.51 36.07 -4.4%
2 Goldcorp GG 21.67 812 22.43 27.62 27.5%
3 Barrick ABX 17.63 1000 18.02 18.02 2.2%
4 Newmont NEM 23.03 497.87 12.54 25.19 9.4%
5 Silver Wheaton SLW 20.19 357.39 9.25 25.89 28.2%
6 Franco Nevada FNV 40.74 147.01 8.28 56.30 38.2%
7 Agnico Eagle AEM 26.38 173.43 6.53 37.63 42.6%
8 Pan American PAAS 11.70 151.41 2.27 15.01 28.3%
9 B2Gold BTG 2.02 651.4 1.86 2.86 41.6%
10 First Majestic AG 9.80 117.02 1.23 10.54 7.6%
all prices in U$, using NYSE ticker prices Portfolio avg 22.11%
Just one went down (BTG by a penny) and the other nine went up, with the best move seen in
8

Silver Wheaton (SLW up 4.2%). What’s remarkable about last week’s performancxe is the
consistency of performance, with most of the names going up by a few pennies. In other
words, the larger producer sector performed as one, cheking out the tide and rising slightly with
gold’s slight rise. Whether that’s good or bad is for you to decide, but I see a little calm as a
good thing overall.
As the track charts here show, it’s taken six full months but out basket has just about caught up
to the lag it’s been showing with our GDX (PM miner ETF) benchmark.
The Low Cost Producer Basket: Weekly performance and
comparative to GDX control
35%
30%
25%
20%
15%
10%
5%
0%
9
ts13ceD ht21 ht62 ht9 dr32 ht9 dr32 ht6rpa ht02 ht4yam ht81 ts1nuj ht51 ht92
basket
gdx control
source: Yahoo! Finance, IKN calcs
Low Cost Basket: Percentage difference between
basket and GDX control, 2014
8%
7%
6%
5%
4%
3%
2%
1%
0%
ts13ceD ht5naj ht21 ht91 ht62 dn2bef ht9 ht61 dr32 dn2ram ht9 ht61 dr32 ht03 ht6rpa ht31 ht02 ht72 ht4yam ht11 ht81 ht52 ts1nuj ht8 ht51 dn22 ht92
source: ikn calcs, NYSE/Nasdaq data
Regional politics
Regional Risk update next week
Our regular quarterly regional country risk review is up next weekend.
Peru: Gregorio Santos is remanded into prison
Last Wednesday’s hearing and decision to remand
Cajamarca governor Gregorio Santos in jail on
corruption charges (8) saw the Conga JV company
Buenaventura (BVN with far more leverage to overall
market cap than senior JV partner NEM) rally on
Thursday in the way you see here (around 5% on
the week) and as implied has been assumed by
those watching to be good news for the region’s
mining prospects, but we may be facing a “be careful
what you wish for” scenario.

Here’s a little list of datapoints to consider:
Santos has been remanded on charges of corruption and is now a guest at one of the main lima
prisons. This situation will continue until either a) the charges are dropped b) he is found guilty
or c) his remand period of 14 months is up.
He has been jailed on charges that date back a couple of years, but the ase has come to a head
just four months before the next election for governor in Cajamarca, a job for which he’s
running again and hopes to be re-elected.
His imprisonment does not stop him from being a candidate, according to Peruvian law.
However, in the event of him winning his second in command would deputise for him until he is
freed. He is listed as candidate and he’ll be one of the people that Cajamarquinos can vote for
come October 5th.
The crimes for which he stands accused are ostensibly corruption charges and separate from
any anti-Conga activity, but his allies are making the case that he’s been jailed for political
reasons (i.e. here (9) he’s being framed as “Humala’s first political prisoner”). From where I
stand, on the outside looking in and basically neutral (well, to be exact from the cynical but
weary viewpoint that nearly all Peruvian politicos are corrupt, the regional politicos are even
worse, it’s a case of finding their crime, Santos is no worse or better than the rest of them) he’s
almost certainly got valid charges to answer to but the timing looks very, but very convenient to
his political enemies and therefore highly suspicous. For one thing, there’s no reason why this
case shouldn’t have been heard post-election. For another, jailing him instead of granting bail
seems very severe in this case where no crimes of violent nature are in play (unlike, for
examplem governor Alvarez of Ancash).
As for his chances, it’s up for debate whether his being in jail will help or hinder his eventual
candidacy. Already his political party are pushing the political prisoner angle hard and it’s not
without substance, either. Also, the loose alliance of groups and political parties around his
main MAS Party, with whom Santos had been fighting with publicly recently, have pulled
together and as of yesterday have agreed to back him as the single candidate for governor
instead of running their own people and potentially splitting the vote (10). That’s the kind of
reaction that the pro-mine/Anti-Santos camps didn’t want to happen and it also means that
come the day, there will only be one candidate on the ballot that’s actively anti-Conga. As the
voting system is “most votes wins, one round only, absolute majority needed” this plays to his
advantage because there may not be a majority of people in favour of Conga in Cajamarca, but
there’s a sizeable chunk and that may be enough to win it. Add in the persecution angle and
the way “Goyo” is “one of their own, particularly for the rural-dwelling communities, and this
candidacy is by no means dead.
The bottom line is that people buying BVN last week on this news are probably being too hasty,
but as the move was minor (5% or 7%), it’s not one that’s going to stand out in the great
scheme of things. The need to know things are that 1) Gregorio Santos will still run for re-
election for governor of Cajamarca 2) he’s still one of the three main candidates for the job
even while sitting inside the jail and 3) his supporters are rallying around him and using the
jailing for their own purposes and avdantages.
Canada’s Supreme Court ruling on indigenous rights
Although not LatAm, this needs mentioning here. I’ve seen a lot in Canadian media about the
Canadian Sureme Court ruling on aboriginal land rights on Friday and over this weekend and
quite a lot of the editorical lines have been of the shock “OMG! Indigenous own everything!
Miners lose!” variety.
Therefore it will pay you well to do as I did and find a smart. Informed, level-headed report on
the case, the ruling and what it all really means and that’s this one (11). It’s long and goes
through the whole thing step-by-step and I strongly recommend that you read it all because of
10

its high quality. But here’s the discussion (i.e. bottom line) section of the article re-printed to
get the general idea.
This decision represents an important step in the development of Aboriginal
rights litigation in Canada. While the decision is a significant victory for
Aboriginal groups, it does not fundamentally alter the law in Canada. Since
the 1973 decision of the SCC in Calder, the law has recognized the possibility
of Aboriginal title. It has long been a question of when, not if, an Aboriginal
group would be successful in proving Aboriginal title.
It is important to note that there remains a high threshold to meet the test to
establish Aboriginal title. Moreover, once Aboriginal title is established, it does
not create a blanket prohibition on the government from using the land,
provided that the government can justify the incursion. The SCC’s adoption of
Lamer C.J.’s observations in Delgamuukw regarding the types of uses that
may be justified should be a positive sign for industry proponents.
From a practical perspective, proponents of resource projects can expect an
increased focus by governments on the strength of an Aboriginal claim to title
as part of the consultation process. For projects on lands subject to a strong
case for Aboriginal title, governments are likely to seek to further insulate their
decisions by carrying out more extensive consultation and accommodation
discussions with Aboriginal groups. There will almost certainly be increased
pressure on both governments and proponents to reach agreements on
resource projects that may infringe on Aboriginal title. Where an agreement
cannot be reached, proponents can expect governments to engage in a much
more deliberate balancing of the public policy rationale for pursuing resource
development.
While questions remain, this decision provides additional clarity in a critical
area of law. It affirms the scope of provincial jurisdiction and resolves a long-
standing question about the circumstances in which government can
justifiably infringe Aboriginal title. Finally, the decision provides further
guidance to government, Aboriginal groups and proponents at an important
time for the development of natural resources in Canada.
Conclusion
IKN268 is done, we end with bullet points:
• Not much has changed in a week. Be long the copper miners.
• Again, be long Rio Alto (RIOM) (RIO.to), no better value out there.
• Minera IRL (IRL.to) has eyecathcing market action last week, it looks due.
The top long-term pick is Rio Alto Mining (RIO.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
11

Footnotes, appendices, references, disclaimer
(1) http://finance.yahoo.com/news/timmins-gold-files-management-information-103000639.html
(2) http://finance.yahoo.com/news/focus-reports-more-phosphate-drill-123000197.html
(3) http://www.panoro.com/s/NewsReleases.asp?ReportID=660719&_Type=News-Releases&_Title=New-Porphyry-
Mineralization-at-Panoro-Minerals-Cotabambas-CuAuAg-Project-Pe...
(4) http://www.panoro.com/s/NewsReleases.asp?ReportID=660733&_Type=News-Releases&_Title=Panoro-Minerals-
Announces-C5.0-Million-Bought-Deal-Public-Equity-Offering
(5) http://www.panoro.com/s/NewsReleases.asp?ReportID=661862&_Type=News-Releases&_Title=Panoro-Minerals-
Adopts-Advance-Notice-Provision
(6) http://www.newswire.ca/en/story/1380607/panoro-minerals-announces-concurrent-private-placement-with-hudbay
(7) http://lta.reuters.com/article/idLTASIE90905Q20130110
(8) http://www.incakolanews.blogspot.com/2014/06/gregorio-santos-jailed.html
(9) http://www.larepublica.pe/29-06-2014/chero-santos-es-el-primer-preso-politico-del-gobierno-de-humala
(10) http://www.larepublica.pe/29-06-2014/rondas-campesinas-y-frente-amplio-ratifican-su-apoyo-a-candidatura-de-
gregorio-santos
(11) http://mccarthy.ca/article_detail.aspx?id=6822
Appendix 1: Flash update dated Thursday June 26th
Good Thursday morning, just before 8am local time, cold and sunny outside (well, what passes for cold here, it never
even gets to 0ºc in this town):
Reservoir Minerals (RMC.v)
Because I wanted to write the Copper Comment below and because timing works, a quick note on RMC. At last night's
close of $6.10 it's again at the right price for addition and I'll be able to do so and average down slightly, therefore I'm
looking to add today and start building this position into a correct size.
Copper comment
I've taken plenty of mails suggesting other copper names from you people, for which I thank you. There have been a
variety, from the minnows such as SGC.v to larger plays such as CS.to, with many stops in between such as Mawson
West (MWE.to), Panoro (PML.v), Cordoba (CDB.v) just to name a few (NB: I'm personally neutral on all those
mentioned, at least for the time being).
I'd like to underscore that my latest chosen vehicles for playing the upside to copper at this point, namely Reservoir
(RMC.v) and NovaCopper (NCQ.to) suit my circumstances nicely, but it's the macro call of "be longer copper", even "be
longer copper junmiors" that's the most important takeaway (it's also why I kept things largely to a thinkpiece/strategy
note last weekend, instead of picking over the two companies...that's something we'll do as the weeks progress though).
It's good to see copper going well these last two weeks and signs are positive for the future as well (I can't help but
notice more bullish sentiment for the sub-sector, with brokerages pushing the copper space and looking favourably on
the metal price dynamics), so being long the metal is the main call; join me in RMC.v and NCQ.to (and COP.to of
course) if you want, you'll be very welcome, but getting exposure to copper via your preferred junior is the main call and
the thing I want to get across.
Best, O
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Stocks To Follow Closed Positions, 2012
Closed in 2012 closed close PPS
Soltoro SOL.v jan'12 C$0.87 07-nov-11 C$0.94 8.0% cash moved to BCM.v
Gold-Ore Res GOZ.to feb'12 C$0.84 13-oct-10 C$0.98 16.7% trade closed on ELG.v offer
Minefinders MFN feb'12 U$11.68 17-nov-11 U$14.80 26.7% target made, trade closed
Iron Creek IRN.v mar'12 C$0.58 26-sep-10 C$0.31 -46.6% time up on small bad trade
U.S. Silver USA.to apr'12 C$2.18 15-mar-12 C$1.86 -14.7% ST trade no good, cut loss
Augusta Res. AZC.to may'12 C$3.10 29-jan-12 C$2.07 -33.2% bad mkt, bad trade cut loss
Bellhaven BHV.v may'12 C$0.50 22-sep-10 C$0.28 -44.0% new mgmt not impressive
Zincore Metals ZNC.to may'12 C$0.325 29-jul-11 C$0.17 -47.7% bad mkt, bad trade cut loss
Soltoro SOL.v may'12 C$0.70 18-mar-11 C$0.41 -41.4% bad mkt, bad trade cut loss
U.S. Silver USA.to aug'12 C$1.78 27-jul-12 C$1.36 -23.6% fail ST trade close pre split
Estrella Gold EST.v aug'12 C$0.91 27-mar-11 C$0.14 -84.6% Closed on port realignment
Fortuna Silver FVI.to sep'12 C$1.07 03-may-09 C$5.32 397.2% sell call $6.17/ Mar25
Strait Minerals SRD.v oct'12 C$0.125 09-dec-11 C$0.12 -4.0% closing coverage til FY13
Sunward Res SWD.to oct'12 C$1.47 13-mar-11 C$1.21 -17.7% sold, took loss
Gold Res Corp GORO oct'12 U$21.47 09-sep-12 U$17.40 19.0% Short trade closed
Yellowhead Min. YMI.to nov'12 C$1.00 01-apr-12 C$0.63 -37.0% sold, took loss
Primero Mining PPP nov'12 U$7.26 07-oct-12 U$6.73 7.3% Short trade closed
Bear Creek Min. BCM.v nov'12 C$3.38 07-nov-11 C$3.72 10.1% Took small profit
Vena Resources VEM.to dec'12 C$0.70 31-may-09 C$0.18 -74.3% Failed trade (caps F)
Galway Res GWY.v dec'12 C$2.19 24-nov-12 C$2.30 5.0% closed good ST arb trade
Stocks To Follow Closed Positions, 2011
Closed in 2011 closed close PPS
Sunward Res SWD.v jan'11 C$1.05 21-nov-10 C$1.63 55.2% target made, trade closed
Serengeti Res SIR.v mar'11 C$0.245 05-dec-10 C$0.285 16.3% sold pre-tgt, ST trade fail
Fronteer Gold FRG apr'11 U$2.37 03-may-09 U$15.24 543.0% buyout, trade closed
Minefinders MFN apr'11 U$9.09 07-nov-10 U$16.89 85.8% target made, trade closed
Metalline Min. MMG may'11 U$1.04 26-jan-11 U$0.89 -14.4% exit, resource disappointed
Peregrine Met PGM.to jul'11 C$0.87 06-mar-11 C$2.60 198.9% buyout offer, closed
Dynasty Metals DMM.to jul'11 C$4.20 03-may-09 C$2.85 -32.1% Sold. Fail. Move on.
Aura Silver AUU.v aug'11 C$0.22 13-oct-10 C$0.16 -36.4% Bad pick. Take loss
U.S. Silver USA.v aug'11 C$0.52 26-jan-11 C$0.71 36.5% closed to make room
B2Gold Corp BTO.to sep'11 C$2.80 12-may-11 C$4.27 52.5% target made, trade closed
Bear Creek Min. BCM.v sep'11 C$3.80 27-may-11 C$4.17 9.7% macro sell call victim
Minefinders MFN sep'11 U$14.70 10-aug-11 U$15.15 3.1% macro sell call victim
Great Panther GPR.to sep'11 C$3.03 22-aug-11 C$2.64 -12.9% macro sell call victim
Fortuna Silver FVI.to sep'11 C$1.07 03-may-09 C$5.36 400.9% sold 20%, macro sell call
Focus Ventures FCV.v nov'11 C$0.40 20-apr-10 C$0.20 -50.0% cut losses, bad trade
Regulus Res. REG.v dec'11 C$1.17 14-aug-11 C$0.52 -55.6% cut on news of poor 43-101
2009 and 2010 closed positions in appendices below
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Stocks To Follow Closed Positions, 2010
Closed in 2010 closed close PPS
B2Gold Corp BTO.to Jan'10 C$0.88 08-nov-09 C$1.49 68.2% target made, trade closed
Radius Gold RDU.v Jan'10 C$0.18 23-aug-09 C$0.40 122.2% target made, trade closed
MAG Silver MVG mar'10 U$5.60 23-nov-09 U$7.28 30.0% closed in pdac week
Riverside Res RRI.v mar'10 C$0.435 20-sep-09 C$0.60 37.9% closed in pdac week
Amarillo Gold AGC.v mar'10 C$0.81 31-may-09 C$0.70 -13.6% closed in pdac week
B2Gold Corp BTO.to apr'10 C$1.24 18-feb-10 C$1.50 21.0% target made, trade closed
Lumina Copper LCC.v apr'10 C$0.84 14-jun-09 C$1.55 51.2% total position now sold
Troy Resources TRY.to may'10 C$1.10 03-may-09 C$2.25 104.5% sold on negative results
AuEx Ventures XAU.to may'10 C$2.51 24-may-09 C$3.38 34.7% trade closed
Nevada Copper NCU.to jun'10 C$3.27 14-mar-10 C$2.03 -37.9% need to lower Cu exposure
Carpathian Gold CPN.to jun'10 C$0.39 14-mar-10 C$0.35 -10.3% too exposed to cap raising
Amerix PM Corp APM.v jun'10 C$0.065 08-nov-09 C$0.05 -23.1% victim of macro bear
Antares Minerals ANM.v jun'10 C$1.42 06-dec-09 C$2.10 47.9% sold half
Vena Resources VEM.to jun'10 C$0.37 31-may-09 C$0.23 -37.8% sold half
Minera Andes MAI.to sep'10 C$0.75 28-jul-10 C$0.95 26.7% ST trade closed
Gold-Ore Res GOZ.to sep'10 C$0.52 01-aug-10 C$0.75 44.2% target made, trade closed
B2Gold Corp BTO.to sep'10 C$1.45 25-may-10 C$2.01 34.5% target made, trade closed
Blue Sky Uran BSK.v oct'10 C$0.41 19-may-10 C$0.22 -46.3% v small v bad trade closed
Dia Bras Expl DIB.v oct'10 C$0.14 30-aug-09 C$0.35 150.0% target made, trade closed
S. Amer. Silver SAC.to nov'10 C$1.38 24-oct-10 C$1.60 -15.9% loss on short, small fail
Ventana Gold VEN.to nov'10 C$7.92 27-jun-10 C$13.51 70.6% trade closed on buyout
Lumina Copper LCC.v nov'10 C$1.42 11-aug-10 C$3.65 157.0% trade closed
Antares Minerals ANM.v dec'10 C$1.42 06-dec-09 C$8.40 491.5% trade closed
Rio Alto Mining RIO.v dec'10 C$0.69 23-mar-10 C$2.16 213.0% trade closed
Coro Mining COP.to dec'10 C$0.585 03-oct-10 C$1.24 112.0% target made, trade closed
Stocks To Follow Closed Positions, 2009
Closed positions closed closing PPS
Cardero Res CDY/CDU.to May'09 U$1.20 03-May-09 U$0.87 -27.5% sold on negative news
Eastmain Res. ER.to May'09 C$1.04 06-May-09 C$1.315 26.4% trade closed
Radius Gold RDU.v May'09 C$0.165 03-May-09 C$0.235 42.4% trade closed
Latin Amer Min. LAT.v May'09 C$0.12 03-May-09 C$0.158 29.2% trade closed
Aquiline Res. AQI.to July'09 C$2.03 16-Jun-09 C$1.68 -17.2% took loss, bad timing
Chariot Resources CHD.to Aug'09 C$0.20 12-Jul-09 C$0.415 107.5% trade closed
Castle Gold CSG.v Sep'09 C$0.64 02-Aug-09 C$0.60 -6.3% ST trade didn't work out
Guyana Goldfields GUY.to Sep'09 C$2.30 12-May-09 C$4.50 95.7% profit taken
Los Andes Copper LA.v Sep'09 C$0.09 21-Jun-09 C$0.09 0% trade closed
Pediment Gold PEZ.to Oct'09 C$0.80 09-Aug-09 C$1.00 25.0% trade closed
Minera Andes MAI.to Oct'09 C$0.68 03-May-09 C$0.71 4.4% too much bad news
Dynasty Metals DMM.to Nov'09 C$4.18 03-May-09 C$6.01 43.8% half sold
Rusoro Mining RML.v Nov'09 C$0.55 03-May-09 C$0.57 3.6% underperformed
Important Disclosure
The information and opinions contained within this report reflect the personal views of the author and therefore all
material within should not be construed as accurate or reliable or be utilized as advice for investment or business
purposes. Independent due diligence and discussions with ones own investment and business advisor is strongly
recommended. Accordingly, nothing in this report should be construed as offering a guarantee of the accuracy or
completeness of the information contained herein, as an offer or solicitation with respect to the purchase or sale of any
security or as an endorsement of any product or service. All opinions and estimates included in this report are subject to
change without notice. It is prohibited to copy or redistribute this report to any type of third party without the express
permission of the author.
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