IKN #275Premium

The IKN Weekly
Week 275, August 17th 2014
Contents
This Week: High quality investor relations, Jackson Hole, The problem with silver is that I
don’t understand it very well, On gold mining costs.
Fundamental Analysis: First Majestic (FR.to) (AG) 2q14 financials, Rio Alto Mining (RIOM)
(RIO.to) 2q14 financials.
Stocks to Follow: Overview, Eco Oro (EOM.ro), First Majestic (FR.to) (AG), True Gold
(TGM.v), Rio Alto (RIOM) (RIO.to), Timmins (TMM.to) (TGD), GoldQuest Resources (GQC.v),
Reservoir Minerals (RMC.v), Minera IRL (MIRL.L) (IRL.to), Amerigo (ARG.to), NovaCopper
(NCQ.to), Coro Mining (COP.to).
Copper Basket: Overview, Augusta (AZC) (AZC,to), Hot Chili (HCH.ax), AQM Copper (AQM.v).
Low Cost Producer Basket: Overview, Franco Nevada (FNV) (FNV.to).
Regional Politics: Chile: The slowdown in the Northern copper producing region, Argentina:
Opinion poll for the 2015 election, Peru: New government initiative to encourage mining
investment, Peru: The Santa Ana/Bear Creek need to know, Nicaragua: Mining Conference and
anti-mining protests in Managua, Dominican Republic: Barrick Pueblo Viejo’s importance,
Mexico: Grupo Mexico (GMEXICOB.mx)/Southern Copper (SCCO) spills acid.
Market Watching: Insto desk headsup: Gran Colombia Gold (GCM.to) is a short, Pretium
(PVG) redux, Gold Resource Corp (GORO) redux.
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
High quality investor relations
In general terms I don’t have much sympathy for investor relations people at junior mining
companies. Maybe because I’ve been lied to once too often, or maybe it’s trying to get
information out of people who don’t have the first clue about the people who pay their monthly
salary, or maybe it’s because people like me ruin their World of Warcraft screentime and you
can hear it in the way they answer you. I don’t know, but what I do know is that when you find
a good IR person they’re worth their weight in gold. As it happens, one such excellent IR
professional has just been laid off from NovaCopper. His name is Patrick Donnelly, he doesn’t
know I’m writing this and he’s one of the best two or three pros in his field that I’ve ever had
the pleasure to come across. Rare indeed do I make such a reco in public, but Donnelly
deserves them because he’s that good.
I know he already has other irons in the fire when it comes to potential jobs, but he hasn’t
made any decision yet so it would be remiss of me not to offer up this unsolicited testimonial,
put his name in front of this esteemed audience and suggest him as an addition either to your
company, or to a company that you know well and could really benefit from a high quality IR
person. Top-end people don’t stay on the job market for very long, even in these somewhat
dreary times. If you want to get in touch with him directly on reading this fully deserved puff-
piece, his personal mail is pmdonnelly69 (AT) gmail.com.
1

Jackson Hole
By way of a headsup, Janet Yellen makes the Fed Head keynote speech at the Jackson Hole
gathering this Friday morning (yes, summer’s drawing long already). Sometimes it’s a bit of a
damp squib, other times it moves markets. Your move, ma’am.
The problem with silver is that I don’t understand it very well
...we should be careful
Of each other, we should be kind
While there is still time.
Philip Larkin, The Mower, 1979
That title needs qualifying of course, because I don’t pretend to be a great expert on what
makes gold click, or copper prices move, or zinc for that matter. But when it comes to silver it’s
worse because it’s so darned easy to make an assumption or three, only to have them blow up
in your face (my face). Today’s topical example, the way First Majestic traded last week.
Today’s article on FR.to and its 2q14 results goes into some detail about what’s in those
numbers and how in my considered opinion the company didn’t deserve to be whacked the way
it was whacked at market last week; it makes its case, does all the pretty numerical footwork,
lah de dah. But the plain fact is that we’re still very much in a sector where you can get the
micro call spot-on-correct and it still loses you money, because the macro effect of a drop in the
underlying metal will trump your
call and those of all the stocks in
the sector every single time.
Here’s a chart to illustrate the
idea, that shows the fate of the
last five days of Endeavour Silver
(EDR.to) (EXK), Fortuna Silver
(Fvi.to) (FSM) and First Majestic
Silver (AG) (FR.to). For what it’s
worth (and both got mentions on
the blog last week), in (more of)
my opinions both EDR and FVI
handed in very lacklustre 2q14
numbers last week. EDR’s came
Tuesday morning and caused its
sell-off that day, FVI’s came on
Wednesday and ditto. The thing
is, FR.to and it’s decent (once surface scratched, see below) quarter got exactly the same
treatment from the market last week and that’s mostly because silver went all weak on us and
caused a wholesale dumpage of the sector.
Or put another way and change gears to the trading aspect of the effects, I bore witness to this
conversation between two industry experts a few days ago. The first said;
“... if the market goes up they all go up. More often than not, the worst by the
most. Picking junior stocks in a bull market is a mugs game.”
The second replied with:
“I thought picking stocks in a bear market is a mugs game. We’re all heroes in
a bull market.”
And on reflection I think they’re both right. And wrong. Their conversation continued but it left
me thinking on how to solve the puzzle. The answer, for me at least, is to leave the
comparative performances to others and simply concentrate on your own gains or losses. Does
2

it really matter if somebody makes more money than you on any given trade, or in any given
week, or year for that matter? If yours is the pissing contest attitude towards the stock market,
then your never going to be happy with your lot, your glass will always be half-empty, because
there’s always going to be someone who’s done better than you and all you need to do to
confirm your inferiority is look hard enough. Hence the Larkin quote up there at the top.
On gold mining costs
My thanks to subber DC for forwarding an update report from Citi Research dated August 13th
and entitled Cost Curve Quarterly: Austerity Is Working, For Now. It makes these pages
because a couple of the charts found on page 4 of the report do a good job of quantifying the
trend seen this quarter in larger szied gold names and putting it into clear visuals.
The left-hand chart shows how overall costs have been dropping at the major mining
companies, but the savings are coming from deferred capex, not operating cost (which are still
rising). The right had chart gives detail on the rebound in average industry head grades for
gold, which are suddenly at their highest level since 2010. We see an industry that’s high-
grading its deposits to see it through a rough patch, but it’s the type of short-term quick-fix
remedy that does longer-term damage to mine reserves and resources.
The Citi analysts offer up this evidence and more to promote their bear case for the gold mining
sector. That’s ok, they’re allowed to do that of course, but the glaring omission is surely how
the future of lower resource levels in majors and eventual production would knock-on into
firstly the price of gold (compared to marginal cost of production, it’s set to rise) and the value
of replacement ounces owned in the ground by junior explorecos.
Fundamental Analysis of Mining Stocks
Rio Alto Mining (RIO.to) (RIOM) 2q14 financials
We follow our Top Pick closely, so space today on its 2q14 numbers (1) and for a change it’s
going to be both a pleasant and concise job. Rio Alto gave us a strong quarter from just about
every angle you can think of, with revenues higher than expected, costs lower than expected,
other financials that were relatively clean, plenty of cash flow making it to the bottom line.
Before the charts come lets point out that with the near-doubling in size of RIO due to the now
closed takeover of Sulliden, the influence of RIO’s operations on its overall market cap and
valuation is now diluted down and a lot of the future share price growth will now concentrate
on what RIO does with Shahuindo and how much value the market gives to its growth pipeline.
That’s just a long-winded way of saying that 2q14 is the last set of numbers that will show this
3

type of revenue and profits (be they gross, operating, net) per share until Shahuindo comes on
line. Just so we’re clear. So to some numbers and this isn’t going to cover every nook and
cranny, just the main points of a company we already know well. That’s also because bad news
needs more of our attention and there
really isn’t much to offer you here. RIO.to: Gold production per quarter
80000
70551
Production came in at 54,517 oz gold, 70000
with 50,830 of those ounces sold at 60000 55973 58081 56511 59157 54517
market for $1,276/oz and the rest 50000 48467 47932
sent to pay off the pre-payment 40000 36355
agreement. I’d budgeted a slightly 30548
30000
higher pre-pay which made the
20000
difference between the house
10000
estimate of $64.3m in revenues and
the result of $67.295m, but as RIO 0
also disclosed that the final small
tranche of the prepayment agreement
has already been paid off and there
will be no overhand into October and the 4q14
period, it’s basically give and take between last
and this quarter and a wash.
The company COGS number, at $31.18m, was
nearly $2m lower than the IKN model and a
really good result from the company.
This was offset slightly by higher G&A (that
comes after the gross profit bar you see on the
chart here) due to one-time expenses of 1) the severance payments for ex-CFO Hawkshaw and
2) legal beagles needed for the Sulliden takeover. G&A came in $1.5m higher than my model,
but that’s mainly because I forgot to add in those extra charges when I was last modelling.
Meanwhile, amortizations were lower because RIO has added ounces to the oxide
resource/reserve this year, which means depletion at a lower ratio rate.
RIO.to: Quarterly Earnings Overview
$m
revenues COGS amorts gross profit
90
80
70
60
50
40
30
20
10
0
1q13 2q13 3q13 4q13 1q14 2q14
source: company filings/IKN ests
The company NR (1) gave us lots ways to cut and slice the very good costs numbers in per
ounce ways. All are valid, but here at the Weekly we’ll stick to the preferred simple calc of
COGS divided by ounces of gold sold (not produced, this time those were higher). At $613/oz
that’s a good number and we’re expecting something in that range for 3q14 as well, with 4q14
even lower as the end of the prepayment obligations happens and the production facility is
rigged up to the cheap electricity from Peru’s national grid (which may happen in 3q14 and
provide savings there, too).
4
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2
Oz Au
RIO.to: COGS
source: com4p5any filings
40
35
30
25
20
15
10
5
0
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 tse41q3 tse41q4
U$m
Source: RIO filings, IKN ests

RIO.to: COGS per ounce sold
1000
869
900 803
800 757 729
700 640 571 574 613 615 582
600 532
500 452
400
300
200
100
0
5
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 tse41q3 tse41q4
U$/oz
source: RIO data, IKN ests for 2014
Here’s the operating earnings number (which does subtract that higher than expected G&A
number, as well as $1.364m in exploration costs which was fairly normal). The net earnings
number of $15.15m captured a lot of attention
and yes, it was a good one. However we’ve RIO.to: Op. Earnings
65
always preferred running a ruler through RIO’s 60
55
numbers on op-earnings because is a less noisy 50
dataset so that isn’t changing today. The 45
40
$24.903m for 2q14 amounts to 14c/share and a 35
forward ratio of 5.3X to Friday’s closing share 30
25
price. In other words, RIO’s still cheap even after 20
15
the pop we’ve enjoyed in its PPS and even if you
10
factor in the new share count of 328m post- 5
0
merger, we’re running a ratio of 10.3X on a
straight line. That’s ok, even without all the
pipeline growth.
Bottom line: A good quarter from our favourite junior mining company. The $3.30 share price
target is still more than justified and remains in place. Back in IKN266 when The IKN Weekly
adjusted things to the current target, the stock stood at $2.17 and I received mails asking
whether I wasn’t aiming a little too high. I await your mails asking why I’m still aiming at a
price that’s a mere 11.1% higher than Friday’s close.
First Majestic Silver 2q14 numbers
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 tse41q3 tse41q4
source: company filings/IKN ests
srallod
fo
snoillim

The story above at RIO was a strong operational quarter, with lowered costs that brought fatter
operating margins. The market liked what it saw and up went the stock as a result (unlike many
other junior goldies producers that disappointed in Q2 and saw their shares sell off). As a result
I concentrated the brief analysis on the P+L items, ignoring the balance sheet. However, things
are different with the second financials review today, that of First Majestic (FR.to) (AG). We
know that it filed numbers (2) the market didn’t like and we know the stock sold off, we also
know it got an unpleasant double whammy when silver bullion dropped away and just about
every stock in the silver producer subsector was dropped like a dog with a bad case of fleas.
In last week’s NOBS report on FR.to, at the foot of the piece came this little checklist of what I
wanted from the 2q14 numbers on Wednesday:
“To recap, what I’m expecting from the 2q14 numbers are a) slight
improvement in balance sheet items b) lowered cash costs c) modest
net profit d) guidance for much better to come in the second half of
2014. On those four points I hang my hat.”
What I’m going to attempt to demonstrate in the next couple of pages is (roll on the drums):
• The operating results, though hit by higher than expected costs, weren’t that bad and
guide well for the period of the next two quarters (the timeframe we’re investing in).
Yes i got my modest net profit and although costs were higher than expected, on a per-
ounce basis FR.to did see its improvement
• The balance sheet numbers are better than I was looking for in the NOBS report of
IKN274 last week. The place to look, working capital.
• We have the right sort of guidance, with costs our main source of information. Perhaps
not “much better”, but better indeed
• Due to the win in the balance sheet, the net profit as required, then the acceptable
though not perfect results from cash costs and guidance, FR.to fulfilled enough of my
criteria to get a passing grade. Last week First Majestic was a good value buy at U$10.5
and above. This week coming it’s an excellent buy at under $10 due to the selling and
the likelihood that we’re now at the bottom of its price range (assuming silver bullion
doesn’t cave in on us, the necessary caveat).
Balance sheet
First thing is the easy thing, the balance sheet improvement that’s best shown by the way
working capital has popped from the somewhat worrying low it hit in 1q14. In IKN274 working
capital looked like this in our model:
FR.to: Working Capital per qtr
120
110
100
90
80
70
60
50
40
30
20
10
0
6
80q4 90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 tse41q2
source company filings
srallod
fo
snoillim
We wanted a modest improvement, to show FR.to had turned the corner. Here’s how 2q14
came out:

FR.to: Working Capital per qtr
120
110
100
90
80
70
60
50
40
30
20
10
0
7
80q4 90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2
source company filings
srallod
fo
snoillim
That result fits right in with what i wanted to see. We assumed working capital wouldn’t go any
lower, check. We wanted it to bounce a bit, it bounced a lot. Yes, part of that neat result was
FR.to getting to put the $14.1m in escrow from the favourable court ruling onto its active books
at last (see below) but that still leaves an improvement of $13.3m in working capital from 1q14
and that’s plain good. This is a far healthier situation for the company but nobody seemed to
care (except yours truly, mired in that old-school thinking of how balance sheet is more
important than any given quarter’s operating numbers...oh silly me) and tucked away well
under the headline EPS number, largely ignored by the knee-jerk quant brigade.
P+L
What struck me as I went through the financial filings wasn’t that my guesses were way out,
though a few such as costs did miss negatively and others such as financial gains missed
positively. The impression i came away with is that the market was expecting too much from
the FR.to quarter, even after it had posted its production numbers in mid-July.
Let’s begin with the operating numbers and revenues at $66.927m was very close to our $66m
assumption. However, COGS were around
90 FR.to: Quarterly Revs vs Cost of Mining
$8m higher than the IKN guess at
80
$42.727m and that’s a big difference. In
70
there was a $2.5m one-time charge, Del
60
Toro (see below) was still more expensive
50
than it should be (though it’s now due to
40
get cheaper in 3q14 and more so in
30
4q14), but still that costs number was
20
much hotter than expected by me (which
10
was my mistake). If we then add it to the
0
costs of depletion, depreciation,
amortization, share based payments and
“other” (eg forex) and make them into
“total expenses”, then sit that number
next to revenues, here’s what we see (above right). Indeed total revenues were just $1m and a
few dollars higher than “Total Expenses” and that means margins were cut to the bone.
However, FR.to did manage to return an EBIT of $9.675m and net earnings of $7.59m. That’s
mainly because of a court ruling in the long-running dispute it’s had with an ex-employee and
director about a previous business deal (check the quarterlies for the whole story, I’m not even
mentioning names here). It’s gone on for years and FR.to has basically won every court battle
but the loser hasn’t paid up on the multimillion dollar settlement. However, there was $14.1m
held in an escrow account due to the battle and that part at least has finally been awarded and
given to FR.to. This means it has managed to add said amount to its financial gains this quarter
and that came in handy, because otherwise it was looking at returning a net loss on Q2 and the
market really would have had a screaming fit (well, those market participants only look at the
headlines, which is maybe 90% of them).
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2
source: company filings
srallod
fo
snoillim
revenues
Total Expenses

Here’s how we estimated quarterly EPS for FR.to in last week’s report:
FR.to: Quarterly EPS
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
8
90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 tse41q2
source: company filings
erahs
rep
$
Here’s how the same chart looks now, with the official figure added
0.40 FR.to: Quarterly EPS
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2
source: company filings
erahs
rep
$
To underscore the point, here’s the 2q14 estimate target for the PE level as modelled in IKN274
last week:
FR.to: Share Price end Qtr vs Forward PE per quarter
50
45
40
35
30
25
20
15
10
5
0
01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 tse41q2
share price end qtr
fwd PE
Here’s how it looks now that we know the numbers:
FR.to: Share Price end Qtr vs Forward PE per quarter
50
45
40
35
30
25
20
15
10
5
0
01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2
share price end qtr
fwd PE

Yes, that’s close. What those charts tell me (once again) is that the market was pitching too
high on its earnings forecasts for FR.to. I’d agree that FR.to could have had a better operational
quarter and the $14.1m it managed to add to its results from that court case payment release
helped paper over the costs rise, but 1) things like that happen to a stock with lots of moving
parts and 2) I wasn’t aiming for the moon in 2q14 anyway. The mistake I made was to buy in
before the Q2 numbers came out and then added to make my full position at U$10.35, instead
of waiting a day or two and getting all the sub-$10 I could have ever wanted. That mistake was
partly due to plain bad luck that silver decided to dump on the world, forcing all silver-exposed
issues lower. But it was also due to overly high expectations from the market about what FR.to
could achieve operationally in the quarter just gone. My personal error on that was really
simple, I didn’t go around reading all the analysis reports and taking in their estimates for the
Q2 and yes, that was my bad. It not that I don’t want to read other people’s work on a stock,
it’s that I really run away from it fast when I’m crunching my own numbers, because I don’t
want their assumptions influencing mine. Yes I read other analysis reports after publication but
didn’t on this occasion. I now regret now having made the effort.
Back to costs
Here’s a closer look at the operating costs at FR.to, with a chart that shows the cash cost per
ounce of silver produced at each of the five mines, plus the consolidated number as a thicker
black line (it’s a bit noisy as charts go, but it’s readable).
FR.to: Cash cost per ounce at each mine and consolidated cost
$/oz Au La Encantada
20 La Parrilla
18 San Martin
Del Toro
16
La Guitarra
14
consolidated
12
10
8
6
4
2
0
1q11 2q11 3q11 4q11 1q12 2q12 3q12 4q12 1q13 2q13 3q13 4q13 1q14 2q14
source: company filings
The red line shows that of the Del Toro mine, which still has plenty of slack to take in on costs.
This was one of the queries I had about the
FR.to: Del Toro quarterly production
2q14 numbers as I wasn’t sure (along with
most) just how much of the cost spike from the 1000000
Del Toro other AgEq prod
new cyanidation circuit had already washed 800000 Del Toro Ag
through the Del Toro numbers and how much
there was left to go. As it turns out 2q14 still 600000
came in expensively for the mine, but with
400000
production now moving towards its planned
capacity and the company guiding lower in the 200000
2q14 notes, that should now the worst of the
0
matter out the way.
1q13 2q13 3q13 4q13 1q14 2q14
source: company filings
So yes, we’re expecting costs to drop. Due to
the way in which Del Toro’s cash costs have stayed higher than expected to this point, FR.to
has changed its guidance for All In Sustaining Costs per ounce of silver (AISC) from the
previous $15.87-$16.69/oz to the new $16.66-$16.96/oz. So when it comes to the effect of
costs and prices expected in the next two quarters, due to that rise in annual average cash
9

costs I’ve now highlighted the “average $17/oz” column as one we should look to for annual
earnings potential. In fact the cost bump for 2014 has probably washed through already, as
even at the upper end of the new range
FR.to will need to average $15.48/oz AISC FR.to: AISC target for 3q14 and 4q14 if upper end
if it’s going to make its guidance for this of target guidance is achieved
year. 20 18.71 18.18
15.48
15
In other words, expect at least $2.70/oz
extra cash flow from each ounce of silver 10
produced in the next two quarters,
compared to those in the first two quarters. 5
That’s not an inconsequential amount of
extra margin, even if silver remains where 0
1q14 2q14 3q14 & $q14
it is. But if silver performs as expected and
source: FR.to filings, IKN calcs
rises along with gold as 2014 draws to a
close, the same price point advantage we
pointed to last week will push margins a lot higher in percentage terms at FR.to.
To our target valuation
So it’s up to you if if prefer to go with the $16/oz average or the more modest $17/oz average
for AISC forecasts, but by using the $17/oz level we’d be looking for 17c EPS quarters from
FR.to in the average of the two quarters to come if we get to the eminently gettable $22/oz Ag
price. By using the same sort of number assumptions as last week (FR.to gets a multiple
premium on earnings compared to peers when it started churning out the bottom line profits,
see IKN274 for more) and the 20X PE, that would point us at $13.60 for an interim target. Not
as wonderful as $16 for sure, but that’s 37.9% higher than Friday’s close and if that’s not good
enough as your potential return from a stock with very little in the way of downside risk left in
it, you need to read somebody else and not The IKN Weekly.
FR.to: Qtrly EPS spread forecast, assuming 4m oz AgEq, 117.5m S/O, range of costs and silver prices
AISC/ounce AgEq (U$)
Ag price (U$)
14 15 16 17 18 18.5 19 20
20 0.20 0.17 0.14 0.10 0.07 0.05 0.03 0.00
21 0.24 0.20 0.17 0.14 0.10 0.09 0.07 0.03
22 0.27 0.24 0.20 0.17 0.14 0.12 0.10 0.07
23 0.31 0.27 0.24 0.20 0.17 0.15 0.14 0.10
24 0.34 0.31 0.27 0.24 0.20 0.19 0.17 0.14
25 0.37 0.34 0.31 0.27 0.24 0.22 0.20 0.17
30 0.54 0.51 0.48 0.44 0.41 0.39 0.37 0.34
(I’ve added a $19/oz and $20/oz column for a little more context)
To sum up this quick revision of the FR.to numbers, for sure there were things I didn’t like:
• COGS at $42.7m is too high. There were reasons for the big jump and most of them
won’t repeat, but it was still too high, period.
• Guidance for costs is lower, but it’s now more about improvement through 3q14 and
where we should be in 4q14. This takes the edge off the PPS upside we can enjoy for
the rest of the year if silver makes its modest move higher (even $2/oz is enough for
me, you can wish for more if you want).
• Guidance for production will be affected by the company decision not to upgrade La
Encantada by 4q14 (first mention here, trying to be concise). The decision to defer
capex will help 3q14 and bottom lines, but I would have liked to see that extra Ag
production start flowing. Thanks to the other mines and their organic expansions, we
should make the 4m oz AgEq barrier this year on time, however.
• The dump in the share price. I’m clear about it being partly due to the action in the
price of silver last week and that’s beyond the control of the company. Still, it wasn’t
10
CSIA
gA
zo/$

pleasant to start a new position this way and at least part of the blame is on my
shoulders, having not read the climate around the stock well enough.
But there were things to like:
• Balance sheet moving in the right direction. Under the main headline of working cap,
FR.to has shifted some of its liability to the longer end of the curve in order to help
liquidity, plus that $14m out of escrow was a welcome cheque to cash. The big thing
here is that the company has indeed turned the corner, as expected and on time.
Things will only get better from here.
• Revenues were spot on, and though the net profit didn’t match some anal ysts’
expectations they suited me just fine. The real money will start flowing to the bottom
line as of this quarter and if silver gives us an upmove, the relative performance will
look very good.
• We’re still at the right price leverage point to buy FR.to, in fact even more so after the
selling we witnessed last week (my mind turns to reader JB, who taunted me with “I’ll
buy them at a fire sale price once you’ve finished”. Well J, you were right ☺ ). Thanks
to a) its asset value b) its improving costs profile and c) where silver is compared to its
costs, a small (10%?) move in silver gives a potential big (40%?) move in FR.to stock.
• The spin-out plans for the early stage projects, which we haven’t mentioned at all in
the last two weeks because it’s been all about the core business, but roughly this time
next month FR.to holders are due to receive a nice little bonus in the shape of free
shares of a new company. We’ll go into that nearer the time.
The bottom line is that some details around this trade have changed, not least of which being
the new potential entry point at under U$10, but the main story hasn’t changed at all. FR.to is
still the quality silver miner that it was last week, last month and last year. And the big thing
here is still the low downside risk compared to the high upside potential of these equities if
silver decides to be bullish and make an upmove in the weeks and months to come. FR.to is
well positioned pricewise and along with its quality, there lies the appeal of the trade.
Stocks to Follow
There are now 16 open positions on the list, because I’ve added First Majestic (AG) without
retiring any of the other names yet. It’s not the first time that I’ve temporarily gone over the 15
name self-imposed maximum for the ‘Stocks to Follow’ list and as it’s going to be a strictly
temporary measure this time, I’m giving myself a pass.
11

So to normal business and of 16 stocks on the list, ten made gains from their prices of a week
ago (not listing them all), one was unchanged (COP.to) and five lost ground (RMC.v, FCV.v, AG,
LRA.v, SRL.v). Therefore a good week for the overall portfolio that was led up by the decent
moves in our Top Pick Rio Alto (RIO.to) up 9.2%) and then the much smaller position in
NovaCopper (NCQ.to up 9.1%). Of the downers, the very small and very volatile Salazar
dumped hardest (SRL.v down 15.9%), then First Majestic (AG down 8.4% from this time last
week) followed.
With the addition of First Majestic (AG) to the line-up we now currently have 16 open positions
on our ‘Stocks to Follow’ list, one above our normal and self-imposed maximum but that won’t
be for long. Seven are green, nine are red.
Reco Current
company Ticker this week Avg Price date PPS Gain/Loss% Notes
Top Picks
Rio Alto Mining RIO.to str buy C$2.30 07-apr-11 C$2.97 29.1% 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$1.75 26.8% $2 tgt but holding in 3q14
Minera IRL IRL.to spec buy C$0.27 22-jul-12 C$0.165 -38.9% Ready for financing deal
Goldquest Min. GQC.v spec buy C$0.26 27-oct-13 C$0.225 -13.5% key drills results soon
Reservoir Min. RMC.v buy C$6.05 18-jun-14 C$6.01 -0.7% Big deposit, M&A, Cu play
Focus Ventures FCV.v hold C$0.23 01-jul-12 C$0.255 10.9% tgt 50c, added, avged up
First Majestic AG buy U$10.51 10-aug-14 U$9.86 -6.2% New trade, now main Ag play
Dalradian Res DNA.to hold C$0.65 27-oct-13 C$0.86 32.3% Poss add window, tgt $1.70
True Gold TGM.v sell soon C$0.395 02-feb-14 C$0.44 11.4% takeover won't happen
Amerigo Res ARG.to buy C$0.445 20-jul-14 C$0.46 3.4% new position, sm Cu play
NovaCopper NCQ.to spec buy C$1.05 09-apr-14 C$1.20 14.3% small, add slowly Cu play
Santacruz Silver SCZ.v hold C$1.04 26-jan-14 C$0.91 -12.5% silver/M&A spec, rel. small
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.74 -35.7% solid biz model, LT hold
Eco Oro Min. EOM.to selling C$0.48 22-sep-13 C$0.26 -45.8% sell to make room
Recommended short positions
None at moment
Smaller/Riskier
Coro Mining COP.to spec buy C$0.125 26-jan-14 C$0.06 -52.0% Cu spec play, can add
Salazar Res SRL.v hold C$0.28 02-mar-14 C$0.185 -33.9% 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.
Eco Oro Minerals (EOM.to): Selling. This one is being removed form the ‘Stocks to Follow’
list for simple reasons.
12

• I needed to make space
• It hasn’t performed at all
• It’s a smaller position
• There seems no end to its political/community risk woes
As you should be well aware by now, I’m no fan of Colombia exposure but I’ve maintained this
position in EOM, call it foothold, or pure stubborn, or what you will. But with the addition of
First Majestic last week some space needs to be made in order to keep list integrity* and it took
about a minute to decide on this one instead of the other potential candidates for a drop (SRL.v
and COP.to are smaller, but they have more spec chances in my opinion, then SCZ.v is showing
a pulse, then anything exposed to copper (COP.to, LRA.v, NCQ.to, ARG.to) isn’t leaving).
EOM.to has failed miserably as a trade and I’m also guilty of giving it too many chances to
redeem itself, none of which worked. So by this time next week it will be off the list and that
means we’ll be back at 15 maximum. That number may be 14 if TGM.v goes as well (see
below).
*To widen the focus and reiterate a subject for a moment, the 15 name maximum is a positive
and useful device, which brings necessary discipline to a publication such as the IKN Weekly. It
avoids having one of those sprawling lists of potential buys, it also cuts down on the chances
that your author can BS you with a sudden “hey look aren’t I wonderful I picked a winner!”
statement about one stock out of 120 which suddenly bounces on us (don’t believe that
newsletter hype, people)
First Majestic Silver (AG) (FR.to): Position opened. And not the most auspicious of starts,
either. Just for the record (it’s hardly important) I took a first chunk on Monday morning and
then as per the Flash update on Wednesday, filled what I consider my full position at U$10.35,
which gives the U$10.51 average yo see in the table. Yes it’s tempting to add more at the
current sub-$10 but I’m going to remain disciplined and not commit extra cash immediately; for
one thing I want to watch silver and its moves before making another stock specific call.
True Gold (TGM.v): On selling watch. It didn’t move up as much as I’d expected after the
streaming financing news on Monday evening (3) that we covered in the Flash update Tuesday
morning (see appendix 1), but it did move up and what’s more, the volume and brokerage
pump action fits right into our line of thinking about the near-term for TGM, as noted in
Tuesday morning’s update.
The bottom line to the $100m ($120m) streaming deal is that it’s a) taking away at least some
of the blue sky potential of the share price and putting it directly into the pocket of a third
party, never to be seen again and b) it greatly reduces the potential for this company to be
bought out or merged with by another producer, because somebody’s got there first. As it
13

happens the streaming deal isn’t that bad and not too onerous, I’ve certainly seen worse out
there (check what Primero has to pay, for one). But it’s not one I want to be a long-term part
of and the decision to sell was easy to take, this type of deal will always be dilutive to equity.
However, there still is no rush and although reaction was generally muted last week, it really
wouldn’t surprise me to see TGM.v taking off in the days to come and reaching 50c or more. If
it does I’m out, if not and if my patience wears thin, it’s still going to be a modest overall profit.
Rio Alto Mining (RIO.to) (RIOM): As we note in ‘Fundamentals...’ today, RIO.to filed a
strong set of 2q14 results and the good news in this section is that the stock price responded
well, rallying well and then largely ignoring the sector weakness when gold dropped late week.
We even saw a 3-handle for a few minutes on Thursday and although it didn’t last, it was a
pleasant sight after suffering all those weeks of sub-$2 prices in my largest holding and
strongest reco early year. Buy, own, add, hold, get ready for that 3-handle to become a
permanent feature.
Timmins Gold (TGD): The action was a little better in TGD this week and the stock posted a
gain, though it’s still unconvincing stuff overall and not the way I’d expect a clear takeover
target to be trading. As my mini-
obsession this week is comparative
charts here’s another one, which puts
TGD (US ticker) up against the juniors
ETF (GDXJ) and the gold bullion ETF
(GLD). It’s easy enough to see how
TGD started well but faded as the week
wore on so whatever the reasons were,
they weren’t company specific and
more to do with the way the sector as a
whole was acting.
I’ve given this trade until end 3q14, at
which point I’ll make a pro-active call.
Until then, stoic patience.
GoldQuest Mining (GQC.v): We had news from GQC last week that’s one of those
“intriguing, not market moving” messages. It announced (4) it had applied to increase its land
package area around the current focus of its activities, the Romero/Tireo property in Dom Rep.
Though further down the NR is the thing that caught my eye, a low-key line that, “GoldQuest's
2014 10,000 metre drill program is in progress on the granted 6,750 hectares, with 7 holes
completed, 3 with assays pending and 1 in progress at La Bestia.” That means we’re close to
getting results from the area North of the original Romero discovery that we want to hear from;
it’s basically why we bought this stock for the spec trade.
We’re likely to get resolution on this spec trade soon enough; it became a bigger position on
the way due to the overselling of a couple of weeks ago, but it’s still not a back-breakingly large
one. It deserves its drill hole chance here.
Reservoir Minerals (RMC.v): RMC continues to wander around the $6 level and dropped
back a few pennies once again. We hear that a deal between it and Freeport (FCX) on the
finalized next stages of exploration at Timok is now close at hand and we can expect an
announcement by the end of the current third quarter. That might put a little pzzazz back into
this stock.
Minera IRL (IRL.to) (MIRL.L): We had 2q14 results from IRL too and overall they were
pretty good, though the driver of this stock isn’t operations at the small Corihuarmi or the sale
of Don Nicolas, it’s still all about financing Ollachea so until that happens things such as IRL’s
2q14 numbers are a bit of a sideshow. I’m going to dedicate more room to the numbers in next
week’s edition, this one can wait a week.
14

Amerigo Resources (ARG.to): If I had a
dollar for every crazy rumour I heard about
every crazy stock...
ARG.to did better business, up on the week
(bucking the copper trend) and doing 100k
volume on three of the days too, not bad. It
didn’t give me my opening to add of course,
I’ll just have to live with that.
NovaCopper (NCQ.to): We had a Friday evening NR (5) with a lot of blahblah, but at the
bottom came real information about the company cutting costs by cutting staff. It’s one of
those things when you feel for the people involved but know it’s the right thing to do, because
what NCQ is for us is something akin to a call option on the copper market, a stock that’s going
to move on the activity in the underlying metal more than on anything it does for itself in the
next 12 months. We know its resource and its potential for exploration, we know that any mine
built there won’t happen until the 2020s so there’s a long timeline to fill. Cutting its running
costs to the bone would suit me fine, but cutting them some is better than cutting them none.
Coro Mining (COP.to): Two piece of news last week as COP apparently tries to get some
momentum going. First on Tuesday (6) as the company announced a deal to buy a small SX-
EW plant in Chile, with fairly easy entry terms. Second on Wednesday, with the company
announcing (7) its signing of a LOI to acquire a new copper oxide project near Antofagasta.
Neither piece of news moved the stock, though not for the want of trying from the company. I
need to do more work and find out what they’re up to here, but the obvious danger will be how
COP raises the funds and how much dilution any current holder is letting themselves in for.
Working on this one.
The Copper Basket
After thirty-three weeks of 2014 The Copper Basket is showing a 14.21% gain to level stakes.
company ticker price 1/1/14 Shares out Market Cap current pps gain/loss%
1 Augusta Res AZC.to 1.51 144.41 542.98 3.76 149.0%
2 Lumina Copper LCC.v 6.29 44.07 439.82 9.98 58.7%
3 NGEx Resources NGQ.to 1.43 168.71 344.17 2.04 42.7%
4 Reservoir Min. RMC.v 4.97 47.55 285.78 6.01 20.9%
5 Nevada Copper NCU.to 1.35 80.5 177.10 2.20 63.0%
6 Panoro Minerals PML.v 0.35 220.25 96.91 0.44 25.7%
7 Hot Chili Ltd HCH.ax 0.425 333.11 91.61 0.275 -35.3%
8 Copper Fox CUU.v 0.375 402.96 88.65 0.22 -41.3%
9 Western Copper WRN.to 0.76 93.68 79.63 0.85 11.8%
10 NovaCopper NCQ.to 1.60 60.15 72.18 1.20 -25.0%
11 Curis Resources CUV.to 0.57 74.79 66.56 0.89 56.1%
12 Cordoba Min. CDB.v 0.90 58.81 37.05 0.63 -30.0%
13 AQM Copper AQM.v 0.11 139.24 19.49 0.14 27.3%
14 Coro Mining* COP.to 0.10 159.37 9.56 0.06 -40.0%
15 Oracle Mining OMN.to 0.27 49.03 3.92 0.08 -70.4%
NB: HCH.ax priced in AUD$, rest CAD$ //CDB 2x1 split May'14 Portfolio avg 14.21%
15

Defying the drop in copper market prices and the weakness in the copper producer sector, our
overall basket average put on nearly 2%
last week even though only five of its The Copper basket 2014, weekly evolution
25%
components (LCC.v, HCH.ax, NCQ.to,
WRN.to, AQM.v) showed weekly gains. 20%
There were three other stocks unchanged
15%
on the week (CUV.to, COP.to, OMN.to) and
therefore seven losers (NGQ.to, AZC.to, 10%
RMC.v, CUU.v, NCU.to, PML.v, CDB.v). The 5%
overall win was due to three of the winners
0%
posting strong percentage gains, namely
AQM Copper (AQM.v up 33.3%), Hot Chili
(HCH.ax up 17.0%) and NovaCopper
(NCQ.to up 9.1%), with no big losers as
counterbalances. As noted below, the only move
of real interest is that of Hot Chili.
Last week market prices for copper dropped
sharply, which flies in the face of your author’s
bull case for the metal and also broke down
through the ~$3.15/lb resistance level which
marked the previous trading channel and those
before it in 2013. In short, not a good week to be
a copper bull and this move causes your author
more worry than anything seen in gold or silver.
To understand the move, it’ll come as no surprise
to regulars of ‘The Copper Basket’ section to find
out the weekly review piece from Andy Home of
Reuters does a great job of summing up the story.
Read it here (8) (and a couple of good charts from
Homa on that link, too) but in essence, last week’s
drop is argued to have come from speculative
moves from copper bears in the financial world, who are betting on a combined effect of lower
copper import demand from China and higher supply in 3q14 and 4q14, that will drive down
prices. In other words, a pre-emptive speculation on softer fundamentals pushed copper lower.
On that very subject its time for the world copper inventories coverage, the bullet points as
follows:
• Overall world stocks dropped slightly, down 2,910 metric tonnes (mt) (-1.1%), to
266,218mt.
• The Shanghai Futures Exchange copper warehouse stocks remained unchanged on the
week at 100,946mt.
• The LME copper warehouse inventories dropped a little, down just under 4,000mt to
finish Friday at 142,275mt.
• The Comex warehouse stocks rose just over a thousand tonnes to 22,997mt.
In short, a quiet week for inventory data with a small drop in LME numbers and a small rise at
Comex. No signal on the week, but as Andy Home underscores it’s depressed levels for copper
inventories over the last few months that bears should worry about.
As for my personal take on this, I’m less worried about the cause of last weeks move, i.e.
finance houses’ calls on copper than I am about the effect, that strong downwards pressure on
prices. As mentioned on that link, the bears on this spec are being led by Goldman Sachs and
Macquarie and the market clout they and those behind them bring can distort market prices for
considerable time, even if the bear theory is eventually proven wrong by the fundies. What’s
16
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 ht6luj ht31 ht02 ht72 dr3gua ht01 ht71
source: IKN calcs

fair to say is that our focus dataset, that of warehouse inventories, is going to get a lot of close
attention in the next couple of months. That simple fact a) underscores the IKN Weekly thesis
about true underlying drivers of copper price and b) puts us at a slight advantage of experience
(and hopefully interpretation) of the dataset.
Now for some updates on a few of our basket stocks.
Augusta Resource Corp (AZC.to) (AZC): Although the HudBay (HBM) buyout is now done
and dusted there are still some remnant shares of AZC trading, so until things come to a
complete stop there’s going to be some minor price movement there. It’s unimportant.
In other news and although it concerns any investment you might have in HBM more than AZC
these days, an interesting report came this weekend (9) on that (in)famous jaguar/ocelot
habitat around Rosemont and the US Fish & Wildlife Service’s decision not to prohibit the
development of the mine last year. Those who care enough about the future of Rosemont need
to read that link because it smacks of another layer of potential controversy that could be used
again in the future by the anti-development groups in Arizona (of which there are many).
Hot Chili (HCH.ax): A very interesting move by this company, which apparently comes on the
back of a disposal of stock by Lundin that’s been the main drag on the stock price all this time.
We hear that the large lumps of stock have moved to new hands (the deals struck at or around
20c) and because of this, the head of HCH are now full of enthusiasm for the future and are
looking to get the company back on track.
This may now be a decent speculative option for the copper exploreco sector. I’ve been
scratching my head about the seemingly never-ending drop in the share price of HCH but as it
was all a bit of a mystery and the negotiations and games were at a higher. Insto level rather
than the open market, as well as being done “in an Australian way” that I’m not really used to,
I stayed out of the argument and all this time haven’t made much comment. However, the
reports of Lundin selling out its big participation shine a light on the mystery, makes sense of
the past six months or so, and as HCH has been beaten down very low there’s decent reason to
expect the pop to continue. It has good location, good projects, exploration upside as well as
decent people running the company, that last one according to trustworthy third parties. I’m
going to take a much closer look at HCH in the week to come, it may get added to my little
group of exploreco coppers.
AQM Copper (AQM.v): A big percentage jump last week, but it’s easily discountable because
it came on very thin volume as seen in this
five day chart.
I took a bit of extra time over AQM last week
because as luck would have it, company head
Bruce Turner was spotted hanging out in
Arequipa airport along with two other geol-
types on Monday evening. That means he’d
been on a visit to the nearby Zafranal project,
so any unusual or extra volume price
movements (perhaps somebody coming back
and liking what they saw so much they just
had to get in right then) would have been
interesting. So a slight intrigue over the end-
week price pop, but until volume comes it’s still easily ignored.
The Low Cost Producer Basket
After 33 weeks, the Low Cost Producer Basket is showing a 22.41% gain to level stakes
17

company ticker price 1/1/14 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Freeport FCX 37.74 1040 37.54 36.10 -4.3%
2 Goldcorp GG 21.67 812 23.22 28.60 32.0%
3 Barrick ABX 17.63 1000 18.95 18.95 7.5%
4 Newmont NEM 23.03 497.87 13.39 26.89 16.8%
5 Silver Wheaton SLW 20.19 357.39 9.15 25.61 26.8%
6 Franco Nevada FNV 40.74 147.01 8.56 58.21 42.9%
7 Agnico Eagle AEM 26.38 173.43 6.85 39.47 49.6%
8 Pan American PAAS 11.70 151.41 2.15 14.22 21.5%
9 B2Gold BTG 2.02 651.4 1.72 2.64 30.7%
10 First Majestic AG 9.80 117.02 1.15 9.86 0.6%
all prices in U$, using NYSE ticker prices Portfolio avg 22.41%
An interesting week for our basket and one that made me happy to have it as a tracking device
this year. Aside from the way it’s noted the decent upmove in the larger cap mining companies
this year (with exceptions), it’s also been useful to see changes and trends inside the larger
producers and one showed like a sore thumb last week, the silver vs gold split.
The Low Cost Producer Basket: Weekly performance and
comparative to GDX control
35%
30%
25%
20%
15%
10%
5%
0%
18
ts13ceD ht21 ht62 ht9 dr32 ht9 dr32 ht6rpa ht02 ht4yam ht81 ts1nuj ht51 ht92 ht31 ht72 ht01
basket
gdx control
source: Yahoo! Finance, IKN calcs
The baseline summary goes like this: Four of the components went up (ABX, GG, NEM, AEM)
and you might have noticed they’re all large gold producers. Then the other six went down
(FCX, SLW, FNV, PAAS, BTG, AG). Of those:
• Three are silver players: SLW, PAAS, AG
• One is a copper/gold/other player: FCX
• One is a streaming company that was going great guns until it announced a $500m
equity financing: FNV.
• One is a gold producer that announced disappointing financial results: BTG
In short, gold did better than silver (or “not gold” if you prefer to add in FCX as well). Franco
Nevada and B2Gold had some company-
Low Cost Basket: Percentage difference between
specific things happening that separated their
basket and GDX control, 2014
performance from the other goldies, but with 8%
those aside the market action was crystal clear 7%
6%
(and dovetails into today’s IKN275 intro
5%
section above). This shows neatly in our 4%
basket coverage today and also shows when 3%
2%
we compare the performance to our
1%
benchmark GDXJ, which is stacked with more 0%
gold and less silver exposure. That gap’s now
up to around 4.5%, moving again towards the
high points of March and April when,
coincidentally, silver was having a rough time.
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 ht6luj ht31 ht02 ht72 dr3gua ht01 ht71
source: ikn calcs, NYSE/Nasdaq data

Setting aside my personal concerns and ignorance about the way in which the silver bullion
market moves compared to that of gold, the contrarian in me is straining at the leash about
silver’s strong chances in the weeks ahead. There can and will be fluctuations inside a trading
range, but I think we’re close to a limit for the downside of silver unless of course gold
collapses on us and they all go down more. The potential of a snap-back rally in silver look high
to me and the equities that are most affected by the metal too.
Franco Nevada (FNV): You couldn’t ask for a bigger indication of the new trend in the world
of mine financing than the news out of FNV last week. The stock pings U$60 (just shy of its all-
time record back in late 2012, back in the days of high gold and silver) and Mr Lassonde
announces a bought deal to the tune of a cool U$500m with a consortium of houses. Here’s the
terms as quoted directly from the NR (10):
“...8,375,000 common shares of the Company at a price of US$59.75 per share, for
aggregate gross proceeds of approximately US$500 million (the "Offering"). The
underwriters will also have the option, exercisable in whole or in part at any time for a
period of 30 days following the closing of the Offering, to purchase up to an additional
1,256,250 common shares to cover over-allotments, if any. In the event that the option
is exercised in its entirety, the aggregate gross
proceeds of the offering will be approximately
US$575 million.”
New of the deal lopped a couple of dollars from
the stock which is unsurprising, but neither
should we be surprised when FNV announces in a
few days that the whole bought deal and the
overallotment is taken up for the $575m gross
proceeds total.
And for what does FNV need the new cash pile? Is
it a little strapped and needs to cover existing
obligations? Nope:
“The Company plans to use the net proceeds from the offering to fund additional
royalty and stream acquisitions and other general corporate purposes. The Company
expects to fund all of its existing royalty and stream commitments from existing cash
and a portion of future cash flows.”
This is FNV saying to the world “we can provide alpha for your capital” and the world saying
“yes we agree”, happy to come on board again for another five hundred large. The deal FNV
(plus SAND) did with True Gold (TGM.v, see above) this week is a perfect example of the gap
they’re filling; a market populated by shell-shocked majors too afraid to snap up cheap
companies, a corporate financial market too nervous to finance a gold project directly, but
backers willing to give their money to a streaming company which will then provide their buffer
and fund the junior company, taking its own cut along the way. The people who lose out are
the junior mining equity holders (i.e. me in TGM.v) and those that gain are sitting pretty inside
the streamer, using OPM and passing the cash onto third parties, keeping enough for
themselves for that extra Ferrari. Nice work.
But you know it can’t last. Mr Lassonde knows that too, and he sees the current market
advantage (streamers will fund you at a price, alternatives zero) as one that needs to be acted
upon immediately else the window will pass. Hence the $500m raising and the newly filled war
chest. The question isn’t whether the more traditional ways of funding gold mines (debt, equity,
takeover), but when.
19

Regional politics
Chile: The slowdown in the Northern copper producing region
Figures from the government stats people ProChile last week, picked up by regional newspaper
El Mercurio de Antofagasta (11), state that for the first six months of 2014, copper exports from
the port of Antofagasta (which carried 88.45% of all Chile’s copper exports) were down 12.3%
in dollar value while the market price for copper in the same period is down 12.3%. The report
provides other stats, but those are the ones that tell us that Chile, responsible for 1/3 of world
copper and world’s biggest copper producer by a long way, hasn’t upped its export rhythm (in
fact it’s dropped a tiny bit) while prices have dropped.
If you’d like more on the state of business in the North Chile region, this report (12) from
Chile’s national paper La Tercera is suitably sobering reading. Pointing the root cause directly at
the deceleration in the large-scale mining industry, it notes economic inertia, layoffs at big
mines and their knock-on effects, rise in regional unemployment levels, slower sales of big
ticket items such as private ownership cars, lots more besides.
Argentina: Opinion poll for the 2015 election
As mentioned, we’re going to keep a close eye on this race because for one thing it’s going to
be tight, for another the political and macroeconomic direction of Argentina for the next five
years minimum will depend on who wins. There’s still over a year to go before the big vote to
replace Cristina Fernández de Kirchner (CFK), but the jockeying has already begun in earnest.
This still comes from an opinion poll published by reasonable and reliable house ‘Julio Aurelio
Aresco’ last week, with results from a poll taken late July. I’ve put read boxes around the most
important information, notes below:
• Sergio Massa of the Frente Renovador heads the field at 18.2%. He can be quickly and
over-simply be described as the “Dissident Kirchnerist” candidate, having fallen out with
CFK and set up a more centre (even centre-right) stance with the backing of powerful
anti-CFK people inside the Peronist Party (PJ) circles.
• Mauricio Macri of PRO is second at 17.7%. He’s the mayor of Buenos Aires City (the
centre of the big conurbation and perhaps 3m people, not to be confused with the
~14m population greater Buenos Aires Behemoth) and plain straight right wing neo-
20

liberal.
• Third comes Daniel Scioli of the Frente para la Victoria (FpV) party, with 16.6%. This is
the CFK party, the current government, the “Kirchnerists”. Scioli is governor of Buenos
Aires region and a CFK favourite (fwiw, he’s also my tip as the eventual winner).
• Then comes Florencio Randazzo, also of FpV. He’ll be fighting for the party nomination
versus Scioli (and a couple of less likely winners) and he’s also liked well enough by
potential kingmaker CFK.
You’ll note that only one of the two FpV aspirants will make it to the big day. You’ll also note
that none of the contenders, not even the very-little-chance FA-UNEN coalition (who have
members now floating the idea of teaming up with Macri, others calling that mad) are
anywhere near the finishing line in terms of voter intention.
Peru: New government initiative to encourage mining investment
You may be like me and cringe when you read “new government initiative”, but on this one I
can’t fault the government of Peru for at least recognizing it has hit a bottleneck (better late
than never, i.e. the case in Colombia) and trying to do something about it. In Peru’s official
gazette ‘El Peruano’ on Saturday (the place where actions by the government need to be
published in order to take active effect), came news (13) that a government commission is
being set up in order to “evaluate, identify, propose and follow up on measures to boost and
facilitate investment” in the country’s mining sector. The commission will begin its work within
ten days and has a maximum of six months to report its findings and propose measures.
Peru: The Santa Ana/Bear Creek need to know
Last week Bear Creek Mining (BCM.v) announced that the formal arbitration suit against the
government of Peru over the Santa Ana project concession cancelling (a move made by Alan
García at tail end of his administration) had begun (14) and as a result, the airwaves in Peru
and the mining sector have been full of chatter. Points to make:
What BCM did last week was rather automatic, following on from the start of formal
negotiations with the Government of Peru (GoP) and a step that had to be taken once the first
six month period had culminated.
As quickly noted on the blog last week, the eyes of the GoP are on the regional elections on
October 5th. The main political seats at regional and provincial level are up for grabs in the Puno
region as part of this process, so when the dust has settled and the new people installed, the
national government will be able to make a more informed decision on its best course of action.
Until then expect stalling or simple radio silence.
In a press conference last week, Peru’s minister of energy and mining, Eleodoro Mayorga, was
asked about the Santa Ana case. Here’s a snippet from the Reuters report (15):
Mayorga said he thinks the dispute can be resolved soon.
"I see it with a certain optimism," Mayorga said in an interview. "If we manage to
resolve the social license in time, we will be on our way to developing" the deposit.
But without strong local support, Mayorga said the project will not go forward, and
"Peru would be subject to paying the company."
Local residents in southern Peru's Puno region once staged large protests against
Santa Ana because of fears the project would pollute water supplies.
Swarthout said the situation has changed.
"The communities have voiced their desire to at least hear our proposed project and
outside radical influence has diminished," he said.
21

What that tells me is that Mayorga doesn’t know much about this case (understandably, as he’s
still fairly new in MEM and he’s an oil guy, not a hardrock guy). The error in his declaration
above is that it’s not up to the government to obtain the so-called social licence, as that’s a job
for the mining company (overseen by the government). What the GoP could do in theory is sign
the concession back to Bear Creek and say “go sort it out”, which would cause all sorts of
kerfuffle and the government wouldn’t have to pay a dime in compensation (by the way and
semi-OT, the guesses at compensation figures in the local press range from $71m to $1.2Bn
(billion with a B) and we won’t even know what BCM is fishing for until the case is accepted by
the CIADI tribunal).
Now, Mayorga may or may not know that, but it’s clear the GoP isn’t going to hand back the
concession before a round of quite important and regionally sensitive political elections is done.
So, radio silence it will be.
Meanwhile, during a visit to Peru last week Canada’s Minister of International Trade, Ed Fast,
was asked about the case. He said (16) that the bringing the case before the international
tribunal would in no way affect the good relations between Peru and Canada. So that’s the
diplomatic angle covered, just in case you were wondering.
The bottom line to all this is that there’s still a lot of water to run under this particular bridge
before we get any sort of resolution. Despite all you may read from the company in its
declarations, I’m quite sure BCM and CEO Swarthout do not want the Santa Ana concession
returned to the company without the sort of lock tight social agreement they’d need in order to
move it forward. I’m also sure that they might get agreement from the very closest local
villagers, but the larger Aymara region isn’t going to let the project move forward (on this I’m
already blue in the face due to repetitions, so no more needed today). Meanwhile, it’s shaping
as though Peru will give them back the concession at a less politically sensitive moment, which
means no cash reparation but will also mean Santa Ana goes nowhere once again when back in
BCM hands (quote me on that one in the year 2020 when there’s still nothing happening on the
project). The reasons or otherwise to own BCM.v are wholly connected to Corani and on that
one, I’d like to be more positive but at the moment I’m roughly neutral on its chances and it
doesn’t appeal (certainly not as strongly as First Majestic for a silver play). Today’s BCM share
price looks expensive because I think the market has started to build value for Santa Ana back
into the price (which reminds me of my mistake of selling it too early and taking a reasonable
profit instead of a great one).
Nicaragua: Mining Conference and anti-mining protests in Managua
August 12th, to 14th saw Nicaragua’s inaugural International Mining Congress (17) happen in
Managua. It went off reasonably smoothly at the conference centre, with the country’s Minister
of Energy and Mines Emilio Rappaccioli the central figure and although the attendance was
modest (20 exhibitors, 300 registered attendees) the event got plenty of press time.
It also attracted protests, with the main one a march through the capital city by people against
the B2Gold development at El Pavon on Wednesday. Interestingly, the organizers stated that
the march would have been counted in the thousands, but many people had been stopped by
the country’s police force from travelling to the capital city. The technique used was to threaten
the bus drivers and owners with rescinding of drivers’ licences if they insisted on using their
vehicles to transport protesters, so the net effect was a lot of people who started on their trips
but were left at police checkpoints along the way.
At the end of the congress, delegates and journalists were invited by B2Gold to the company’s
La Libertad mine for a tour of the property. There were more protests set up around the mine
by both anti-mine protesters and artisanal miners who live locally and have been in an ongoing
and rumbling dispute with the company for a number of years. However, the protests mostly
dispersed before the tour party arrived because, according to the protesters at least (18) , “The
security personnel at B2Gold made serious threats to the citizenry, by saying they would be
22

shot if they went past the security gates, in open violation of human rights”. That’s a local
paper putting a heavy anti-mine spin on what sounds like standard practice to me (try climbing
over a wire “keep out” fence of any operating gold mine anywhere and see what happens to
you...they don’t tend to ask questions first and quite right too), but the reports from both
Managua and the environs of La Libertad do show that there are unhappy people about the
mining people in Nicaragua and that security forces, both State and private, aren’t above the
base sort of tactics to stop their voices from being heard.
Dominican Republic: Barrick Pueblo Viejo’s importance
In Dom Rep last week a bit of noise was kicked up by a congressional opposition politico, who
warned that the royalties that had been paid so far by the Barrick Pueblo Viejo mine (a JV, with
majority partner ABX and minority partner GG) needed to be carefully audited because he
claimed that government corruption was syphoning off some of the money and it was ending
up in ministerial pockets instead of public coffers.
Which is all as maybe and nothing directly to do with the mine, but the ensuing investigations
and government disclosures (19) give an idea of how important Pueblo Viejo now is to the
country’s finances. The mine paid U$815m to the State in royalties in 2013, which represents
55.5% of the country’s GDP growth in the year. Gold exports were worth U$1.214Bn, which is
an eighth of all exports last year (and that’s grown from basically zero) and accounts for 2/3rds
of the 17% annual growth in exports from the country. Under this context, it’s easier to see
why Dominican Republic is keen to see more gold mines come online in the country and
explains the government’s strongly pro-mining policies.
Mexico: Grupo Mexico (GMEXICOB.mx)/Southern Copper (SCCO) spills acid
Last week’s mining enviro news was still dominated by the III.to Mount Polley tailings failure
(and rightly so) but the news out of Mexico that the Buenaventura copper mine in Sonora State
had spilled a large quantity of sulphuric acid that had made its way into the local water supply
also got plenty of coverage.
In fact, the pollution caused turned out to be either minor or easily fixable, according to what
side of the news media you preferred to read, but the thing that caught most attention was the
way in which owners Grupo Mexico (GMEXICOB.mx)/Southern Copper (SCCO) tried to keep the
spill quiet and away from public attention, only making a statement after the spill news had
made it to local media, who of course played up the drama for their own ends. Even after the
whole polemic had blown up in their faces, the company’s IR department’s attitude was to
pooh-pooh local concerns (20) and use a high-handed “well, there was no danger in the first
place which is why we didn’t announce anything” line that beggars belief.
This isn’t the first time that GMEX/SCCO has been caught with their proverbial pants down on
community/environment matters and it’s close to unbelievable how this company’s attitude
hasn’t managed to work out that the mining public relations in 2014 doesn’t have the right of
arrogance that it had 20 years ago. I speak to you as a long-term shareholder of SCCO (who
are better in their Peru PR dealings) and say that this company needs to fire its IR department
now and get people with some common sense in before they screw up their company bigtime.
This is, of course, the very same company that wants to assure locals around the new Tia Maria
copper project in South Peru that the new mine won’t cause pollution, or problems and won’t
affect the critical and sensitive local water supply. Even if their argument is a sound one, it’s
being promoted by idiots who are asking for trouble.
Market Watching
Insto desk headsup: Gran Colombia Gold (GCM.to) is a short
Here’s a message that goes out to the insto desks about a potential short play in the Canadian
23

markets. It’s one of those situations where it’s not easy to short for us retail grunts, but houses
and desks may be interested in looking closely at this opportunity so a simple headsup is given,
no deep DD, you all know where you can find the filings.
It looks like Gran Colombia Gold (GCM.to) is in serious financial trouble. Check the 2q14
financials published last week and start with the balance sheet (working cap negative $48m,
which includes $7.6m in restricted cash on the asset side and a very liabilitity-heavy accounts
receivable/payable pair), then go to horribly unprofitable operations and to make matters worse
the accompanying notes, which will tell you about the first tranche of repayment liabilities on its
so called “gold backed” loan that start (on demand) in November. Its share price says that the
market cap is nearly $35m, I suggest that’s being overvalued by roughly $35m unless it’s bailed
out by somebody with more cash than common sense (the company chair may fit, as there’s an
ego issue in play here). Truly horrid books, truly shortable, that equity value could be yours in
cash in the bank.
Pretium (PVG) redux
As if to underscore the dilution factor that we looked at last week, Pretium Resources (PVG.to)
(PVG) added a little over 1.7m extra shares to its shares out total by closing the overallotment
on its recent financing and also closing a concurrent right-of-participation deal with major
holder Liberty Metals (21), which added $10.9m in gross proceeds to treasury. This puts the
new IKN estimated shares out total at 117.1m and means PVG has roughly an extra half
quarter’s worth of cash burn now covered. Assuming its historical rate of burn, PVG now has
enough to get it to the end of 2q15 before it will need to refi.
120 PVG: Shares Out
100
80
60
40
20
0
Gold Resource Corp (GORO) redux
Last week the statement was clear; GORO isn’t a short. With hindsight (that old rascal) it could
even have been a trading long position, as this chart shows.
GORO went up a further 6.8% last week, with plenty of buying on Monday and sustained
24
21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 tse41q3 tse41q4
source: company filings, IKN ests
serahs
fo
snoillim
100 PVG: Working Capital per qtr
90
80
70
60
50
40
30
20
10
0
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 tse41q3 tse41q4 tse51q1 tse51q2
source company filings, IKN ests
srallod
fo
snoillim

support as the week went on. I’m keeping this short today, but will point out that a couple of
things
1) As most of GORO’s fate is tied to silver (43% of gross revenues) and gold is a minor
revenue source (~32%), last week’s action should have been bearish for GORO the
same way as it was for the silver producer complex (see above). It wouldn’t be the first
time the GORO is “saved by marketing”, but such influences tend to wash through
eventually.
2) As this 12 month timescale chart shows, GORO hit stiff resistance at-or-around this
current share price earlier this year, which was right at the time it announced better
than expected quarterly numbers for 1q14.
Conclusion
IKN275 is done, we end with bullet points:
• First Majestic (AG) (FR.to) was oversold last week. Given a fair crack from silver, it’s at
an excellent buy price today. Hold it six months, take the profit.
• Rio Alto (RIOM) (RIO.to) is starting to shine. Top Pick, you know it.
• I take my chops on Eco Oro (EOM.to) next week, and I’m looking for the moment to
dispose of my True Gold (TGM.v) too, but that’s going to bring a profit or some size.
• The drums are rolling on GoldQuest (GQC.v). The drill results coming up will decide on
this trade.
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
25

Footnotes, appendices, references, disclaimer
(1) http://finance.yahoo.com/news/rio-alto-announces-net-income-110000278.html
(2) http://finance.yahoo.com/news/first-majestic-reports-second-quarter-110000592.html
(3) http://finance.yahoo.com/news/true-gold-secures-us-120-212511399.html
(4) http://finance.yahoo.com/news/goldquest-increases-land-package-21-103000098.html
(5) http://www.newswire.ca/en/story/1398848/novacopper-advances-2014-summer-program-activities
(6) http://finance.yahoo.com/news/coro-signs-letter-intent-acquire-190214161.html
(7) http://finance.yahoo.com/news/coro-signs-letter-intent-acquire-175607796.html
(8) http://uk.reuters.com/article/2014/08/15/copper-lme-home-idUKL6N0QL1YR20140815
(9) http://m.tucson.com/news/science/environment/biologists-who-warned-of-harm-to-jaguar-were-
overruled/article_ec21be6d-57ef-533f-b1ba-b3f35ffc3346.html?mobile_touch=true
(10) http://www.marketwired.com/press-release/franco-nevada-announces-us500-million-bought-deal-financing-tsx-fnv-
1938160.htm
(11) http://www.mercurioantofagasta.cl/impresa/2014/08/15/full/7/
(12) http://www.latercera.com/noticia/negocios/2014/08/655-591540-9-el-norte-de-chile-deja-atras-su-boom-
economico.shtml
(13) http://gestion.pe/economia/gobierno-crea-comision-sectorial-impulsar-inversiones-energia-y-minas-2105851
(14) http://finance.yahoo.com/news/bear-creek-announces-intent-commence-120000603.html
(15) http://finance.yahoo.com/news/peru-hopes-revive-bear-creek-022051535.html
(16) http://gestion.pe/economia/arbitraje-bear-creek-no-afecta-relaciones-entre-peru-y-canada-afirma-ministro-fast-
2105840
(17) http://m.s21.com.gt/pulso/2014/08/12/nicaragua-inaugura-congreso-internacional-mineria
(18) http://ondalocal.com.ni/produccion-radiofonica/117-policia-impide-protesta-ciudadana-contra-mineria/
(19) http://www.diariohorizonte.com/noticia/21946/advierten-vigilar-fondos-dinero-al-gobierno-central-de-rd-de-la
(20) http://verde.latam.msn.com/minera-de-m%C3%A9xico-asegura-que-%C3%A1cido-sulf%C3%BArico-derramado-
en-r%C3%ADo-no-es-t%C3%B3xico
(21) http://finance.yahoo.com/news/pretivm-closes-over-allotment-option-135600413.html
Appendix 1: Flash update dated Tuesday August 12th
Good Tuesday morning, just before 07:30am here local time, an hour and bits before the opening bell.
True Gold (TGM.v)
The news came out yesterday after the close...
http://finance.yahoo.com/news/true-gold-secures-us-120-212511399.html
26

...that True Gold (TGM.v) had secured up to $120m in project financing for its Karma project from streaming companies
Franco Nevada (FNV) (75%) and Sandstorm (SAND) (25%). When the news hit yesterday I got to work, plugged the
new information into the model and played around, but decided to sleep on the results before sending this Flash update.
Here this morning and with a couple extra opinions gleaned from trusted voices in the mining world, my opinions haven't
changed so here's the mail in front of you that summarizes things.
The main terms of the deal are fairly straightforward:
1) The streamers pay the first $100m and get 20k oz Au per year for the first five years at 20% of spot price (e.g at
U$1,300/oz they pay $260/oz, making just over $1k/oz on their gold).
2) For the extra $20m if drawn by TGM, they get another 30k oz gold at the 20% terms.
3) The streamers then hold onto a 6.5% life of mine stream on the whole land package at Karma.
From the streamers' point of view, they're funding $100m or $120m and as long as gold doesn't drop below $1,200/oz
they are getting their money back after five years (if gold goes up they make a decent interest return on the first part,
too). Therefore it's clear that their real benefit is the right to 6.5% of life of mine production, that's why they're doing this
one.
From True Gold's point of view, they've just managed to fully fund their mine project (unless cost overruns come along,
but that's clearly the pitch now) in a difficult market to secure financing and as they have all main permits in place, will
be able to build out their operation. The plan is for first pour in 4q15 and a full year of production in 2016 and beyond.
But what about us, the investor/trader? For sure I see the deal as logical and smart from both sides; that of the
streamers who'll pay once and get cash flow for years, that of the company who'll go mining and have a clear field to do
just that. It looks like a win/win from the outside, but in the end we shouldn't care a jot about either of those because our
only true concern is the retail investor's point of view.
It's not so often one can say this but I think there's a distinct advantage on this deal for people like me, those small
voices in the sector with unimportant opinions that get lost quickly in the corporate noise. I think we're about to see a big
promo push on this deal from the brokerage houses and mining industry that will extol the virtues of TGM and push the
stock higher. For sure there are real fundamental reasons to like the deal, it's greatly de-risked the critical mine building
period in one fell swoop and that means better NAV multiples, realistic reasons to set higher target prices, etc etc whole
nine yards. However (and here's the crunch), according to my modelling it has lowered the company's blue sky target
price potential considerably (today's mail isn't the place, but as a ballpark call targets at different gold prices get
chopped by perhaps 16% typically) and also it's greatly diminished the chances of my own thesis for owning TGM as
working out, i.e. it gets taken over by a larger mining company.
So to the trade decision: I don't have a clue about the timing, but I think TGM is going to move sharply higher in the
hours or days or perhaps next couple of weeks to come. A big promo push to move the stock higher suits everybody in
the Canadian junior mining business; Streamers and their supporters, TGM and its supporters, mining industry people
and their desire to see mines built and business models successful, sales desks, IR departments, etc etc. Everybody
concerned ,except perhaps the buyers in the days to come. Therefore I am not selling TGM.v today, but at some point in
the next few days and assuming higher prices than the 40c close last night I will sell my position. The deal works for the
company, it's less attractive for people looking to benefit from the gold sector because when it comes down to it, a
significant portion of the blue sky is now taken from euqity holders and put into the pockets of the streaming companies,
it's that simple. Shareholders such as I would have benefitted more from a buyout deal and as that's now a lessened
possibility, I'll find somewhere else for my risk capital.
As for a selling price, I'd take something above 50c in the next few days without much thought and I think there's a
decent chance we see TGM move there if the promo we're about to witness gets traction. But I honestly don't know how
the near-term dynamics will play out or it may not get that far (e.g. there's a warrants overhang at 47c), so patience for a
few sessions is the order of the day and I'll let the trading pattern play out before picking my selling point. I repeat, I will
not sell today and it's very unlikely I'll sell tomorrow either. So no second-guessing on near-term momentum dynamics,
though of course you'll know about the sell decision when I make it and before I do it via another Flash update.
Bottom line: A good deal for TGM, a good deal for FNV/SAND, a reasonable deal for investors but it's one that takes
away too much upside for me, the minnow retail investor. The hype to come will likely give me a good exit point and
allow me to bow out with a profit on the trade, I'm going to take that exit (but no idea on the exact timing yet).
Enjoy your Tuesday. Robin Williams RIP.
Best, O
Appendix 2: Flash update dated Wednesday August 13th
Good Wednesday morning, 09:15am, market opened less than an hour ago, a very pleasant sunny day here (thanks for
asking).
First Majestic (FR.to) (AG): Adding
After the report and reco in IKN274 on Sunday I opened my position on Monday with a slightly less than half position.
Today I'm adding to make that what I consider a full position in FR.to on the back of its 2q14 financials, reported this
morning pre-bell, that have had my full attention until now.
I'm aware of the need to avoid bias confirmation and have tried to keep that in mind today. However, there's more than
enough to like in these figures (even though the market considers them a miss and the stock has sold off today) and
although some parts of reality came up short of my model (e.g. costs, eg2 forward AISC for 2014, eg3 La Encantada
throughput upgrade is now deferred) they're mostly understandable in context. Also, the bottom line earnings miss is
affected by a one-time provision.
The overriding factor in a long position in FR.to today is that it offers great leverage to silver, not that its costs came in
some $8m higher than my model on (what turns out to be) understandable factors in this single quarter. This makes
today's sell-off a most tempting entry point.
I'm adding to my position before today's conference call (2pm EDT). You'll get a full rundown of the numbers as I see
them in IKN 275 this weekend.
Enjoy your Wednesday.
Best, O
27

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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