IKN #283Premium

The IKN Weekly
Week 283, October 12th 2014
Contents
This Week: Was that the bottom in gold?
Fundamental Analysis: Dalradian (DNA.to) update.
Stocks to Follow: Overview, Dalradian (DNA.to), Amerigo (ARG.to), Reservoir (RMC.v),
Timmins (TGD), First Majestic (FR.to) (AG), Rio Alto (RIOM) (RIO.to), Focus Ventures (FCV.v),
B2Gold (BTG) (BTO.to).
Copper Basket: Overview, Panoro (PML.v), Curis (CUV.to).
Low Cost Producer Basket: Overview, Franco Nevada (FNV).
Regional Politics: Regional risk review, revised edition, sixth update.
Market Watching: Fortuna Silver (FSM) (FVI.to): Priced to perfection, Bear Creek Mining
(BCM.v): Now at a tempting price, Trevali (TV.to): Strange production numbers means all bets
are off.
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
Was that the bottom in gold? (a Saturday morning rant)
Yes, most probably. I don’t have a good call on silver and the copper macro fundies are
worrying me a little more than they were a month ago, but in the case of our bottom-line
metal, the one that props them all up, the move we saw on the back of the dovish Fed minutes
seems to have set the bottom.
But that’s not because gold has suddenly become a
newly fashionable thing to have in your safety
deposit vault (which is merely the flipside of last
week’s message, that gold is never going to lose its
allure as long as it stays shiny and rare). It’s less a
bottom in gold, more a top in the Dollar. During the
course of the end of last week, once the Fed minutes
had washed through, I corresponded with a couple
of regular mailpals (who are also mining market
pros) and one of the subjects that came up was the
US dollar and what was happening. As is often the
case, the act of putting my nebulous feelings about the state of affairs in something helped
crystallize things in my own mind, so although I’m not at liberty to share the mails of my friends
(private correspondence etc) I don’t need to ask permission of myself and here’s my end of the
exchange (adjusted slightly to make it understandable):
Gold predicts little and affects nothing. It has no alpha.
1

With that said, oil's more interesting. The new energy space has one thing running it: US Shale
Oil. It's changing many things, including energy dependency, demand/supply equilibria and the
US trade deficit. That last one is affecting the dollar at least in the present, because people
haven't worked out that the US BoP spread isn't using the same signals as the last 20 years,
they're seeing the trade gap drop, the reaction is "stronger dollar" and that's the buying spree
we've seen in the USD. It's kinda kneejerk at the moment, but we're probably now at the point
when "real things" imports will be affected by the stronger dollar and it's my guess that the Fed's
dovishness as per the minutes this week are all about that.
Oil is a better signal than gold. And what it's saying is that the people running the USofA don't
want a strong dollar. They get what they want normally, and that means a better gold price in
dollar terms (as gold passively takes the new scenario). Not Doug Casey todamoonAlice, but
better. A dollar price with which the better operators can make a profit on a sustained level.
Oil is a thing right now and it’s something that’s not normally part of the agenda of The IKN
Weekly, aside from the knock-on effect of a cheaper fuel price that’s going to shave costs at
mining operations (especially those open pit heapleachers). But gold is, its price and how it
moves, so the way that gold doesn’t affect but is affected by the bigger financial tides is the
valid point in question. Speculation can occur in gold, as we saw when Wall St’s new fascination
with GLD pushed the bullion price to U$1,800/oz a couple of years ago (part of my own
learning curve was failing to recognize what was happening). Speculation can happen on the
downside too, which seems to be the reason why we had that violent rebound in gold-related
companies last week. Although hardly the short-covering panic of all time, we saw across the
board short covering action and particularly in the more actively traded stocks that are open to
the whims and fancies of the US markets.
[Sunday addition] Add to that, the semiconductors! Fact is that I know nothing about semis
(well, enough to be dangerous to myself I suppose) but after quickly scanning Gary Tanashian’s
NFTRH edition this Sunday morning (sorry Gary, no time for thorough reading today, I’ll get to
it tomorrow) apparently I need to pay attention to semiconductors, too. All part of the complex
nature of interconnecting market wheels I suppose, but at some point the mission creep
warning light starts flashing and I need to draw a line. In cases such as semis, it’s where
reading people such as Gary come in very useful for me, they take this whole thing I’m ignorant
about and manage to condense it into an easily digested message.
However, and I get to the proactive bit, one round of short covering on the back of a
gold move that was less about a renewed love of gold and more about the blowoff
top in the dollar does not make for a sustainable rally in metals, miners and suchlike
(highlighted because it’s about the only thing you need to take away from this rant so far).
We’ve kicked back from an oversold gold situation and, minor wobbles and adjustments aside,
I’d best-guess that the wider financial influences on gold have been neutralized and this
weekend the metal has found something in the way of calm.
Things were getting over-hyped to the downside, not just on gold. I find it of little coincidence
that:
• Nouriel Roubini decided to pipe up on his gold under $1k call. No matter what you
might think of him (my personal judgment is reserved) Roubini is in essence an
economist who follows and comments upon macroeconomic trends. When the ego-
massage part of his make-up comes to the fore and he feels confident enough to start
making specific, time-sensitive market calls, watch out folks. Mission creep can affect us
all (e.g. geologists famously make crappy stock-pickers) but when you’re a media
personality and a “financial rock star”, there’s the double danger that people actually
listen to you (the fools) and your opinions attract wide attention.
• Barry Ritholtz, who’s smart on things psycholo-market related but annoyingly self-
important and unaware of his own weaknesses, decided that early last week was the
perfect time to throw out one of his occasional series on the stupidity of goldbugs. Now
that might be true or false, but his timing of the fun-poking has always been triggered
by high stress moments in gold.
• Some other guys who have market followings (I forget who exactly, but Iwnattos over
2

at Market Narrative keeps track of the worst of them) wheeled out their “gold to
$660/oz” and “gold to $875/oz” calls, basing them on charts, of course. How else is the
truth revealed to us mortals, after all?
• And trend-chasers in general start piling on, the market is reported “very short gold”,
even the ardent supporters of the metal (mostly goldbugs) see their loyal support
wavering. Even a guy like me, who sees the long-term benefits of the metal but isn’t
married to shiny things*, gets to write his “called September badly, gonna tough it out,
get thru the pain” intro of IKN282.
• Also, related enough to warrant a mention is the way Paul Krugman decided to run a
“Hahahaha Bitcoins are stupid” piece on his NYT blog on the exact day BTC ticked its
bottom at under U$300. You don’t need to be a crypto fanboy to notice that Bitcoin has
recovered by around 30% in dollar terms since the Krugman note (and please don’t get
me wrong, this is all about the dollar and nothing about the relationship between
Bitcoin and Bullion).
I allow myself to ramble and rant on occasion in this opening section, rather than worry about
focussed narrative and tight prose. It’s ok up to a point, though I think I’m reaching the limit
here today. On re-reading the stream of consciousness above (and not going to edit it this
time) I come away with a sentiment reading. The events of last week can be quantified into
“reaction to dollar, not new bull in gold” on reading the financials only. But it’s more about the
market psychology and the signals that added up to an effective and violent snap-back rally
when the occasion arose. Such moments need a catalyst, else the pressure remains (or can
grow further) and the catalyst was supplied by Ms Yellen and her merry group of doves. It’s
difficult to time them (Semi-Black Swan? Grey Swan?) and although I’m happy that the break in
the downtrend in gold came sooner rather than later, it was very much part of my hunker-down
message of just last week. It may have gone on longer, in the end it didn’t.
We’re left with a new scenario this weekend: Gold
has shown us a bottom and that’s because the
dollar has shown us a top. The USD has been on a
relative tear recently but as this chart indicates, we’re
not back to the pre-Lehman days yet, not by a long
way.
I contend that until the days of cheap credit (for the
largest of the big boys, the multinationals and banks)
disappears, it’s going to be difficult to see the dollar
rally to real strength levels (e.g. parity with the Euro)
rather than the recent example of relative strength
levels, that’s going to be a function of the Fed’s
attitude towards interest rates. The US trade balance
has improved greatly in recent times and the breach is
dropping, but that’s about one specific line items
rather than the general health of its consumer
economy. Shale oil means less oil imported, that
doesn’t mean the USA is about to grow the amount of
avocados it requires, go self-sufficient in cocaine or farm enough shrimp for all the gumbo it
eats. Not to mention all those iPhones which may be US intellectual property but when it comes
to making the physical item is quite a different matter.
Now I’m really digressing, so I’ll shut it and get on with some real work. Bottom line: Gold
reacts to the dollar, the dollar won’t rally much further until the Fed changes course, the Fed
won’t change course soon. Thus the short in gold is now less attractive and gold’s downside is
likely limited at worst, or done with as per my most likely call. Yes, that was the bottom in gold,
but don’t expect it to go to $2k/oz in the next six weeks.
*That’s almost literal too, as my and my wife’s wedding rings are silver
3

PS: Saturday’s speech by Fed Vice Chair Stanley Fischer (as an aside, a person who knows his
LatAm region intimately) draws some fascinating inferences as well. Here’s Calculated Risk
covering the speech in a post along with the conclusion excerpt (1)
To summarize and conclude, the Fed's statutory objectives are defined by its dual mandate to
pursue maximum sustainable employment and price stability in the U.S. economy. But the U.S.
economy and the economies of the rest of the world have important feedback effects on each
other. To make coherent policy choices, we have to take these feedback effects into account. The
most important contribution that U.S. policymakers can make to the health of the world economy
is to keep our own house in order--and the same goes for all countries. Because the dollar is the
primary international currency, we have, in the past, had to take action--particularly in times of
global economic crisis--to maintain order in international capital markets, such as the central bank
liquidity swap lines extended during the global financial crisis. In that case, we were acting in
accordance with our dual mandate, in the interest of the U.S. economy, by taking actions that also
benefit the world economy. Going forward, we will continue to be guided by those same
principles.
Shorter Fischer: We can’t serve deflation to the rest of the world via a strong dollar, because if
we do we’re deflating too. Yes Gary, it really is inflation all the way.
Fundamental Analysis of Mining Stocks
This week we take a new look at Dalradian Resources (DNA.to).
NOBS fundamental update report dated October 13th 2014
Dalradian Resources Inc. (DNA.to)
Company Overview
Dalradian Resources Inc. (Canada: DNA.to, US pinksheets DRLDF, Frankfurt DLR.f) is an
exploration stage junior mining company operating in Northern Ireland, UK. Its flagship property
is the Curraghinalt gold mine project in Northern Ireland. Current share structure is as follows:
Shares out: 140.035m
Options: 7.6m
Warrants: 28.226m
Restricted Share Units: 0.995m
Fully diluted shares: 176.886m
Current share price: $0.63
Market Cap: $88.22m
Approx cash per S/O: $0.26
All prices are in Canadian dollars unless stated. Forex U$0.90=CAD$1
Today’s report
It’s nearly a year since we ran our opening coverage on Dalradian (DNA), back in IKN234 on
October 27th. Since then we even had the temerity to raise the price target from its original
4

$1.45 to $1.70 in the update report of IKN258, dated April 20th 2104, but events of the last few
weeks have seen DNA, like all around, tumble back into the pit of exploreco hatred. This
weekend even finds DNA trading below our cost average of 65c, which I hardly thought would
be possible after it had run up over 50% at one point. Just goes to show what I know.
That’s the basic reason a behind today’s update; we see what’s changed, look at the
Curraghinalt model using altered model assumptions and see if there’s a trade left in the stock.
As noted yesterday in the short cover note I sent out instead of the Weekly, I’m been trying to
make up my mind on whether to add more DNA to my position at this point and what follows
tries to sort all that out.
Things that have changed
Let’s start with a quick list of altered circumstances between IKN258 and today, to help get to
the point of today’s article.
• The share count, now up to 140m after the latest round of equity financing (2) that
closed in July and raised $27m in gross proceeds.
• The treasury position, which is at an IKN estimated $36m as at end 3q14. It was
boosted by the equity raise and DNA has been careful with its cash in the first three
quarters too, which has helped, but the low burn quarters are now behind us as it
increases development work on underground ramp, drilling and resource definition
aimed at producing a pre-feas (PFS) in 2015.
• The permitting situation has changed for the better, as DNA has received all the major
permits it needs from the government of Northern Ireland in order to move forward and
develop Curraghinalt to PFS level. What’s more both government and company report
that local community support is strong, with supporters vastly outnumbering those
against the mine development.
• The gold price has changed, and not for the better. In IKN258 we used $1,300/oz as our
baseline for valuation and that’s now obviously too rich. Today we need to use
$1,200/oz.
• The market for junior mining stocks has remained awful and if anything has got worse.
However, last week’s events provide a reasonable shot at a change in fortunes and
that’s one fo the reasons DNA gets its analysis today.
• Another thing that’s changed since IKN234 but remains the same from IKN258 is the
greenback/loonie forex rate, which was 1 to 1 this time last year but we now use 0.9/1.
So there’s a potted list of things, probably not all-inclusive but enough to get the feel. For more
on the overview of the company and its project, you can either look back at IKN234 and
IKN258, or look forward to the latest corporate presentation over at the DNA website (3), which
is rose tinted (they always are) but also does a good job and is more fact than opinion. I’ll take
just one thing from it to put in front of your eyes, the current resource count at Curraghinalt by
way of reminder:
We now move straight on to the updated company financials review that takes in the numbers
to 2q14 and makes a few projections for the rest of the year, too.
5

Financials check-up
We start with balance sheet items and the assets chart.
DNA: Assets Breakdown per qtr
100
90
80
70
60
50
40
30
20
10
0
-10
6
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 tse41q3 tse41q4
source: company filings, IKN ests
srallod
fo
snoillim
fixed
other current
cash
This is looking strong, thanks to the small raising
during 1q14 and then the larger $27m gross
proceeds financing that DNA ran and closed in July
(at 90c, no dilution and that’s good). Although we
expect DNA to start spending that money as from
this quarter and keep spending it through most of
2015, the company now has enough to get ot PFS.
Liabilities are basically zero and optimum. They’ll
stay that way.
Which means working capital looks like this: that’s
an IKN estimated 26c per share in cash at bank,
which is a very nice cushion to have in tough times.
Shares out look like this and although that last
140m column is officially an estimate, it’s going to
be that when the 3q14 numbers are published in
November.
DNA’s share count has changed from the sub-100m
number we first dealt with in late 2013 when
opening coverage. It’s now 140m but as it has the
money it needs, it’s not likely to change again
during 2015.
160 DNA: Shares Out
140
120
100
80
60
40
20
0
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 tse41q3
source: company filings, IKN ests
serahs
fo
snoillim
DNA: Liabilities position
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 tse41q3 tse41q4
$m
LT debt
current debt
source: company filings
50 DNA: Working Capital per qtr
45
40
35
30
25
20
15
10
5
0
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 tse41q3 tse41q4
source company filings, IKN ests
srallod
fo
snoillim

Moving on to the P+L, things are pretty basic here as it’s an exploreco that spends cash, rather
than a producer than earns the stuff, but let’s check in and note the modest net loss numbers
here, as most of the cash burn goes via exploration.
2.2 DNA: Net Loss, per qtr
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
7
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 **31q3 31q4 41q1 41q2 tse41q3 tse41q4
source: DNA filings **= w/o $16.349m write down
srallod
fo
snoillim
This we can see when we cold in a data item from the statement of cash flows, with this chart
showing how “field expenses” (basically the money spent on/around the project) normally sit
larger than the corporate burn (the notable exception being 3q13, the quarter DNA wrote down
its Norway concessions).
DNA.to: "corporate vs field" expenses
9
8
7
6
5
4
3
2
1
0
21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 tse41q3 tse41q4
$m
corporate field
source: company filings
As those last two bars on the right indicate, we can expect burn to jack up as DNA gets busy at
Curraghinalt and starts to spend its raised capital.
Overall, the financials at DNA are in good shape. The main takeaway is “company has cash”
and that’s nothing to sniff at in these troubled times. There no debt, and though the share count
has risen the raising was non-dilutive (esp at Friday’s closing price) and we shouldn’t expect
another for at least four quarters, maybe not until 2016. These are good books.
We now move straight to the business end of this company and update our valuation model in
the light of the deterioration in the juniors market. It’s time to see whether this price offers value.
Updating our valuation on Dalradian Resources
First job is to update the earnings potential model and parameters used in IKN258. That’s done
via bullet points and here’s your list:
• As in IKN258, the assumption is that DNA.to takes the project into production, even
though that’s looking unlikely and it wants to sell itself to the highest bidder. We still
assume the its $192m capex bill assumption is correct. We continue to assume a
simple 50/50 debt/equity raising, but we err to the side of caution and now assume a
final S/O assumption of 250m, compared with the 220m of IKN258.
• As per the PEA, Curraghinalt gets 1,700tpd machine. It then runs it 365 days per year

• In the previous model we went for a gold head grade at 8.5 g/t, as it seems very likely
that Curraghinalt will be able to avoid the mine dilution assumptions and the 8 g/t Au
LoM average in the current PEA. This time I’m going to get seriously conservative and
go with the PEA’s 8g assumption, which is back down at the assumption originally
plugged into IKN234 and brings average annual production down almost 9k oz to just
under 147k oz (yes, that’s lower than the PEA assumption too, again we’re building in a
lot of cushion). Recoveries remain at 92%, as per the literature.
• Previously I guesstimated an operating cash cost of U$125/tonne. Now that the PEA
has been published that looks pretty close to the 43-101 assumption (CAD$130/t) and
as the forex now gives us leeway, that stays the same and gives us another
conservatively pitched assumption.
• Depreciation guesstimated at $8m/year, as per. I’ve cut the G&A estimate to $8m/year
from the previous $12m/year, as DNA now estimates G&A at $5m and bits and while I
want to build in buffers, there’s no need to more than double the office staff on this.
• As before, although there are no worker participation laws in Northern Ireland, we
assume the company treats its workers better than the average and offers them a
collective 3% bonus on operating profit.
• An exchange rate of U$0.90 0 CAD$1, as in IK258
• Then other minor line items remain the same as per the last update, including income
tax at the standard Northern Ireland corporation tax rate of 23%. The 2% NSR due to
Minco (see IKN234 for a bit more on that), the assumed 5% smelter/middleman
deduction on total production, and other really smallstuff.
Here’s how the model year income statement looks after those things are done:
DNA at Curraghinalt: Income items for model year
At 1,700tpd thruput $1000/oz Au $1,200/oz Au $1,300/oz Au $1,400/oz Au
Sales (U$m) 139.5 167.4 181.4 195.3
Cash COGS 77.6 77.6 77.6 77.6
Depreciation 8.0 8.0 8.0 8.0
SGA 8.0 8.0 8.0 8.0
Op income 43.2 70.5 84.2 97.8
Interest 15.0 15.0 15.0 15.0
Workers Part. 1.3 2.1 2.5 2.9
Tax 6.2 12.3 15.3 18.4
Net income 20.7 41.1 51.3 61.5
Shares out (m) 250 250 250 250
EPS 0.08 0.16 0.21 0.25
Capex -5 -5 -5 -5
FCF/sh 0.09 0.18 0.22 0.26
Source: DNA data, IKN ests
The other thing that’s changed is the gold price assumption for our eventual target, which was
U$1,300/oz and is now U$1,200/oz, due basically to the reality of today’s market. Hence the
shaded column has moved one to the left. And so to our target price box:
8

DNA: Sales and earnings Target price & valuation data at various gold prices
Gold Price $1000 $1200 $1300 $1400 using four different gold prices
Sales ($m) 140 167 181 195 12-month target $1.09 (on 6x annual EPS using
Upside to target 72% gold at U$1200/oz)
EPS 0.08 0.16 0.21 0.25 Mkt cap ($m) $88 Enterprise value $53
Cash flow 0.11 0.20 0.24 0.28 P/sales ($1000) 0.53 EV/sales ($1000) 0.32
P/E ($1000) 7.6 EV/EBITDA ($1000) 1.0
P/E ($1200) 3.8 EV/EBITDA ($1200) 0.7
P/E ($1300) 3.1 EV/EBITDA ($1300) 0.6
cash flow defined simply as EPS + depreciation
I’m sticking with the very cautious 6X PE ratio that reflects the early stage of development,
though it’s worth noting once again that if Curraghinalt makes it to production day one under
DNA and these circumstances, a top-looking high grade project such as this would be able to
command a 10X number as absolute minimum.
Therefore, the target is now re-set downwards to $1.09 (from $1.70) and that might not look so
great to begin with, but let’s just run down the list of main comfort zones built into this model:
• Gold at 8 g/t, not 8.5 g
• Gold price at $1,200/oz, not $1.3k
• Share count at 250m, 110m higher than this evening
• Big leeways built into operating costs and G&A
• A low 6X PE ratio to target
All those are over and above a PEA that’s “serious” in nature, not trying to fool anyone into
believing the absolute best about Curraghinalt and ignores all the potential grade and resource
upside there is at the project. We’re also assuming a neutral pol risk scenario with that PE
number, when reality is that the project’s getting significant and welcome support at a national
and local level. And of course the other thing is that $1.09 is lower by a chunk than before, but
it’s still a very attractive number compared to this weekend’s 63c closing price and a 72%
upside isn’t to be sniffed at under any circumstances.
Finally and before moving to the decision point, here’s how the resource stacks up on an in-situ
basis, with price and share count as variables:
DNA.to Curraghinalt in-situ gold valuation
at 3.5m oz Au shares outstanding
PPS (S) 140m 160m 180m 200m
0.50 18.18 20.78 23.38 25.97
0.60 21.82 24.94 28.05 31.17
0.63 22.91 26.18 29.45 32.73
0.70 25.45 29.09 32.73 36.36
0.80 29.09 33.25 37.40 41.56
0.90 32.73 37.40 42.08 46.75
1.00 36.36 41.56 46.75 51.95
1.20 43.64 49.87 56.10 62.34
1.50 54.55 62.34 70.13 77.92
2.00 72.73 83.12 93.51 103.90
source: IKN calcs, U$0.90=CAD$1
Today’s situation is represented by the shaded box top left, as the 63c share price and 140m
shares out mean that the all-category 3.5m oz resource at Curraghinalt (M+I+I) is priced at
$22.91 per ounce. That’s cheap by most standards and very cheap for a high-grading property
9

that has already outlined its economic strength in a PEA. As you can see, I’ve shaded an area
in the $36/oz to $50/oz range which targets where I think DNA can go, even in the current poor
quality market. Those valuations for good in-situ ounces are wholly reasonable and also point
towards $1.00 to $1.20 as a price this stock can attain, given a level playing field in the macro.
Discussion and conclusion
This is the part I’ve left until Monday evening to write, because the basic question of “add or not”
is the one that’s been preying on my mind all weekend.
The project parameters still look fine to me, even under a whole bunch of extra conservative
house assumptions about Curraghinalt. That’s the type of leeway that a high grading deposit
allows you and underscores its main advantage as a project. In fact, you can boil all this
argument down to “eight gram gold won’t stay underground”, the mystery to solve is who digs it
up, who wins form the deal and whether people who buy and hold shares now today will be the
eventual profitmaking winners (or at least in the winning group of friends).
The books are in order and crucially, DNA has raised all it needs to do all it wants under the
permits that it now has. There’s nothing to stop this company from getting to its PFS publication
and unlike many other junior explorecos, it’s set itself a busy 2015.
Related to that point is another part of the equation, the company’s asset back-up, because at
~26c/share in cash and no debt if the worst does happen to this market sector and the
exploration world goes seriously tits up, DNA can hibernate well with that kind of cash and it will
prevent the downside from being too bad. I’m not saying that it can’t drop further from the
current 63c if things go badly, as I remember when decent producing companies saw shares
selling at less than working cap during the most dire moments of 2008. i am saying that at 63c,
there’s more downside protection baked into Dna than there is with most juniors out there, the
ones scrabbling around for 500k to pay the auditors and cut officers a salary cheque or two.
Finally (and personally important, though less for you) although I’m not made of money I do
have some cash on the sidelines that’s been on the lookout for a real bargain.
All that weighs against the negative, which is this awful market. The basic question is, therefore,
do I dare add to an exploreco, even an outstanding one with a solid project and a well-backed
plan of action, in this market. There were signs that things turned around last week and, as
posited in today’s intro, I think that the Fed’s words plus the dollar’s “that’s all you get” reaction
plus important changes in the macro scene such as the effect of oil (supply and price) has put a
floor under the gold price. The combo of seeing the Fed’s ripples affect gold, along with the
continued drop in the unloved end of the juniors (i.e. those that had no short covering rebound
to start them running) which included DNA, got me zeroing in on this stock almost immediately.
Yes juniors are out of favour and yes the big boys are selling assets rather than buying them,
but one of these days they’ll have to start replacing their depleted ounces and as sure as eggs
are eggs, they’ll snap up the highest quality ounce sin the best looking economic plans first.
That’s this one, people. Small but beautifully formed.
I waited until Monday evening because I wanted a hint, an extra clue from the gold and market
action if at all possible and the truth is that I got one; Gold did well today and US-listed goldies
also did well. By my own criteria for waiting it’s what i wanted to see and therefore, it’s time to
be a little more courageous (aka stupid) in the face of this 2014 market.
The IKN Weekly reaffirms its buy rating on Dalradian Resources (DNA.to) and considers
the current market price, or even one a few pennies higher at the open tomorrow morning, to be
an excellent opportunity to add or buy a quality exploration project at a substantial discount. The
new price target has been lowered to $1.09 due to the weak market circumstances of the last
few months, but even under today’s poor conditions a 72% upside to Friday’s close is fully
warranted by the strong company fundamentals. I will be adding to my position tomorrow
Tuesday morning.
End of Report
10

Stocks to Follow
It’s one of those weeks when I honestly don’t care that there were only four stocks that
returned weekly gains (RIO.to, TGD, BTO.to, FCV.v) and there were a full ten that showed
losses (IRL.to, RMC.v, AG, DNA.to, ARG.to, NCQ.to, GQC.v, LRA.v, COP.to, SRL.v) because the
multitude of sinful losers are more than covered by the minority of winners and as a result, my
back pocket is fatter than it was this time last week. The main reason for that is the big
reaction move in Rio Alto (RIO.to up 16.8%), but its was handsomely backed by the kick in
B2Gold (BTO.to up 10.0%). I find it of little surprise that the only other company that fits the
“gold/producer/larger sized market cap” bracket on the list, Timmins (TGD), was also one of the
weekly winners.
The smaller stocks show there’s still plenty of venom to wash out of the mining stocks. In
general terms, the small ones didn’t follow up the large ones because money rotated out of
them (sometimes at any price available) in order to concentrate in the larger, more liquid issues
that enjoyed the short covering rally. Somewhere between the tinycap junior losers and the
larger sized junior winners, the reality of our covered sector is located today.
There are currently 14 open positions on our ‘Stocks to Follow’ list, one less than our self-
imposed maximum. Just three of our fourteen are in the green now, fortunately I picked the
right one to be my Top Pick and biggest position.
11

Reco Current
company Ticker this week Avg Price date PPS Gain/Loss% Notes
Top Picks
Rio Alto Mining RIO.to hold/buy C$2.30 07-apr-11 C$2.78 20.9% Top pick, $3.30 tgt June 15
Recommended long positions (in current order of preference)
Timmins Gold TGD hold U$1.38 09-apr-14 U$1.23 -10.9% $2 tgt, holding thru
Minera IRL IRL.to spec buy C$0.27 22-jul-12 C$0.115 -57.4% Waiting for financing
B2Gold BTO.to hold/buy C$2.32 12-sep-14 C$2.42 4.3% Top value entry point now
Focus Ventures FCV.v spec buy C$0.23 01-jul-12 C$0.24 2.2% tgt 50c, added, avged up
Reservoir Min. RMC.v ADDING C$6.05 18-jun-14 C$4.03 -30.9% Time to add, Cu play
First Majestic AG buy U$10.51 10-aug-14 U$7.22 -30.1% Main Ag pos., hit hard by dump
Dalradian Res DNA.to hold C$0.65 27-oct-13 C$0.63 -3.1% Poss add, tgt $1.70
Amerigo Res ARG.to spec buy C$0.405 20-jul-14 C$0.365 -9.9% Small Cu play, adding here
NovaCopper NCQ.to spec buy C$1.05 09-apr-14 C$0.94 -10.5% small Cu play started well
Goldquest Min. GQC.v hold C$0.26 27-oct-13 C$0.155 -40.4% looking for a reasonable out
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.53 -53.9% solid biz model, LT hold
Recommended short positions
None at moment
Smaller/Riskier
Coro Mining COP.to spec buy C$0.125 26-jan-14 C$0.05 -60.0% Cu spec play, can add
Salazar Res SRL.v hold C$0.28 02-mar-14 C$0.18 -35.7% small spec, new China JV
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% took profit
Bear Creek Min BCM.v may'14 C$1.63 23-mar-14 C$2.05 25.8% Took profit, sm near-term win
Eco Oro Min. EOM.to aug'14 C$0.48 22-sep-13 C$0.26 -45.8% sold small loser to make room
True Gold TGM.v sep'14 C$0.395 02-feb-14 C$0.41 3.8% M&A won't happen, sold
Santacruz Silver SCZ.v sep'14 C$1.04 26-jan-14 C$0.86 -17.3% silver/M&A spec, rel. small
2009, 2010, 2011, 2012 and 2013 closed positions in appendices below
Now for some notes on a selection of the above stocks.
Dalradian Resources (DNA.to): Adding. See above. It seems to me that I’m not going to get
many chances to average down on this stock in the near future. Whether it flies in days or stays
around the 60c 70c level is another question, but risk/reward is telling me that downside is
limited. Then again, I said that about First Majestic (AG).
Amerigo Resources (ARG.to): Position Added: As per last week’s call, I added and
averaged down on ARG via a couple of buys, both in the 30s. I was feeling pretty smart about
the addition come the day of the Fed minutes too, but ARG didn’t follow up some of its larger-
sized junior kin and indeed fell back as the week continued. Not that I’m particularly worried, as
the current copper price is enough to see it move back into the 40s if I’ve got this right. We
should get production numbers from ARG this week coming and that will set the tone for the
3q14 results, because Amerigo usually gives a detailed breakdown of what how the production
quarter went, with costs and all.
12

Reservoir Minerals (RMC.v): On the back of the analyst sit visit to Timok came a raft of
reports and anal yst notes on RMC from the usual suspect brokerages. I think I’ve read them all
and they all run roughly the same message of, “Good stock, beaten up recently, we like, buy,
it’ll go back up”. So why didn’t it? From what I’ve picked up on the underground wavelengths,
what analysts saw but didn’t mention in their pump pieces is that RMC may have ground issues
at its FCX JV, with the type of rock that won’t be able to support an underground or block
caving operation. This is one for the engineers to work out and there may be a (n easy)
solution, but more than one person mentioned it off-record. Beats me why the anal ysts calling
buy on the story invited there didn’t write up the potential issue...not.
Timmins Gold (TGD) (TMM.to): Here’s one that needs to bounce in order to join the
rebounders club (RIO.to and BTO.to very much members) and as we can expect production
news from TMM in the next few days there’s a catalyst in waiting too, given a reasonable set of
numbers. The market consensus (well, the brokerage anal ysts at least, if that band of glorious
warriors can count as our thought leaders) is for a more modest production than operations
that sold the 36.76k oz Au in 1q14 and sold 33k oz Au in 2q14, but costs that should trend
down. Those assumptions aren’t exactly rocket science, what with TMM guiding in the 2q14
MD&A that, “...The Company’s immediate strategy is to produce between 115,000 and 125,000
gold ounces annually and to achieve cash cost guidance of approximately $800 per gold
ounce”. To reach the top end of the 2014 guidance, TMM has to produce/sell 29k oz per
quarter in 3q14 and 4q14 and as the nature of the heap leach ops at San Francisco and its
production cycle also points us towards lower production, current production assumptions aren’t
exactly based on the deepest of DD, methinks. This leaves TMM in a fairly good position
newsflow wise for this quarter, as lower numbers are baked into those assumptions and the
chances of a surprise to the upside, particularly from the current low price, are good enough.
I’d venture to say that something with a 3-handle on gold production would garner applause.
First Majestic Silver (AG) (FR.to): I’m just being tough and holding. That’s all. Ignorant,
pig-headed and tough. Meanwhile, we can expect the 3q14 production results out of AG next
week and as the market seems to have baked in chapter 11 to the stock, anything above
mediocre should be enough to get it to rally. I’m expecting a better set of figures than in 2q14
as well, so this could be a place that the braver among you trade. The problem is that it’s silver,
not gold.
Rio Alto Mining (RIO.to) (RIOM): As the old saying goes, “Good news travels fast, bad
news travels slowly”. RIO came out very promptly with its production report last Monday
October 6th pre-open (4) and the 56,368oz produced in 3q14 was nearly 1k higher than even
my somewhat optimistic forecast of last Sunday.
RIO.to: Monthly gold production figures
27500
25000 24401 25256 24673
22500
1 2 7 0 5 0 0 0 0 0 2014 16 4 69 1 2 9560 1763 1 9 54216509 15 1 99 1 8 7039 1563 2 5 018 1 4 543 1 1 8109 209 2 5 3 1 426 1762717811276816748 1 8 875138190 1943 1 5 71 1 9 9 9 734
15000 1379133670
12887 12897
11871
12500 1071210114
10000
7500
5000
2500
0
13
21naJ bef ram rpa yam nuj luj gua pes tco von ced 31naJ bef ram rpa yam nuj luj gua pes tco von ced 41naJ bef ram rpa yam nuj luj gua pes
Ozt Au
source: MEM/IKN
In short, a strong 3q14 and a particularly good September, as if we combine the known figures
for July and August with the now known figure for 3q14, it indicates that RIO.to in September

produced 19,734oz, which is the best single month at the company in 2014.
As for costs, we got no firm figures from the company but the CEO Black quote was all about
how they, “...are expected to result in peer leading cash operating costs in Q3”, which is nice
enough. For what it’s worth, here’s
how the production figure affects our
house estimates for COGS per ounce
sold, in which we assume COGS of
$31m and ounces sold rounded to
55,000, what with the very last of the
forward gold sales facility being paid
off during 3q14. At U$564/oz it would
indeed be a very competitive mining
operation. What’s more, the cost is set
to drop even further in 4q14 assuming
that RIO gets its electricity grid
connection up and running on time;
no longer will it need diesel power at
the gold house on site, which is projected to save around $1m per month from fuel costs.
RIO.to: Op. Earnings
65
60
55
50
45
40
35
30
25
20
15
10
5
0
14
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 tse41q3 tse41q4
source: company filings/IKN ests
srallod
fo
snoillim
RIO.to: COGS per ounce sold
1000
869
900 803
800 757 729
700 640
600 532 571 574 572 564 527
500 452
400
300
200
100
0
As for the local part of the headline grabbing Cajamarca elections, the winner of the Cajabamba
election, the one that covers the Shahuindo project, as the candidate from the “Cajamarca
Siempre Verde” party that runs on a mainly agricultural agenda but is also connected to the
pro-mining Fujimori party. The result was benign for the Shahuindo project and even more so
when we consider that the Gregorio Santos candidate Shander Rodriguez (who i briefly met in
June during the fact-finding visit up there, see IKN265 for more) came in a distant fourth place.
Focus Ventures (FCV..v): FCV is up from this time last week and back with green ink too, but
volume was meagre and we shouldn’t read too much into its trading week, barring perhaps that
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 tse41q3 tse41q4
U$/oz
source: RIO data, IKN ests for 2014

it had gone too low on overselling. The thing needs news, it’s that simple.
B2Gold (BTG) (BTO.to): It did well. BTO is another due to report its 3q14 production
numbers soon, either this week or maybe next (it tends to report them at the tail end of the
queue). Remember that part of the buy theory here was that 2q14 was “kitchen sink” and has
sucked in all the junk, leaving the rest of 2014 to sparkle like a proverbial jewel.
The Copper Basket
After forty-one weeks of 2014 The Copper Basket is showing a 9.82% loss to level stakes.
company ticker price 1/1/14 Shares out Market Cap current pps gain/loss%
1 Augusta Res AZC.to 1.51 144.41 541.54 3.75 148.3%
2 Lumina Copper LCC.v 6.29 44.07 440.70 10.00 59.0%
3 NGEx Resources NGQ.to 1.43 168.71 281.75 1.67 16.8%
4 Reservoir Min. RMC.v 4.97 47.55 191.63 4.03 -18.9%
5 Nevada Copper NCU.to 1.35 80.5 118.34 1.47 8.9%
6 Panoro Minerals PML.v 0.35 220.25 77.09 0.35 0.0%
7 Hot Chili Ltd HCH.ax 0.425 333.11 76.62 0.23 -45.9%
8 Copper Fox CUU.v 0.375 402.96 68.50 0.17 -54.7%
9 Western Copper WRN.to 0.76 93.68 60.89 0.65 -14.5%
10 Curis Resources CUV.to 0.57 74.79 58.34 0.78 36.8%
11 NovaCopper NCQ.to 1.60 60.15 56.54 0.94 -41.3%
12 Cordoba Min. CDB.v 0.90 58.81 11.76 0.20 -77.8%
13 AQM Copper AQM.v 0.11 139.24 9.75 0.07 -36.4%
14 Coro Mining* COP.to 0.10 159.37 7.97 0.05 -50.0%
15 Oracle Mining OMN.to 0.27 49.03 2.94 0.06 -77.8%
NB: HCH.ax priced in AUD$, rest CAD$ //CDB 2x1 split May'14 Portfolio avg -9.82%
By no means are we out of the woods in
The Copper basket 2014, weekly evolution
the copper space. Of our fifteen Copper 25%
Basket components, just two showed 20%
weekly gains (HCH.ax, WRN.to) and then 15%
there two taken over stocks that are
10%
obviously UNCH (LCC.v, AZC.to). That
5%
leaves eleven weakly losers with the worst
0%
shows from NovaCopper (NCQ.to down
-5%
10.5%), NGEx Resources (NGQ.to down
-10%
9.2%) and Coro Mining (COP.to) down
-15%
9.1%), but there were other losers that
have kept on going down after losing
large in recent weeks, such as Curis, AQM,
Cordoba, Panoro and Nevada.
In price news, on Friday and during his three day visit to Germany, Chinese Premier Li Keqiang
said in a prepared speech and in front of assembled dignitaries including Chancellor Merkel that
China “can achieve economic growth of around 7.5% this year”, as well as stating that China
can keep its economic growth rate “within a reasonable range” (5). The speech was considered
influential due to timing, as China’s 3q14 GDP number is due released on October 21st and
forecast consensus (6) is for a 7.3% rate, after the 7.4% headline of 1q14 and the 7.5% of
2q14. Such statements from top-level voices in formal setting are a good guide (be the eventual
number cooked to within an inch of its own death or not, style beat substance every time in this
set of figures) and China has undoubtedly set the bar higher than the market expected.
15
ht5naj ht91 dn2bef ht61 dn2ram ht61 ht03 ht31 ht72 ht11 ht52 ht8 dn22 ht6luj ht02 dr3gua ht71 ts13guA ht41 ht82 ht21
source: IKN calcs

Now for the regular inventories section, here are the bullet points:
• Overall world stock levels went up by the merest sliver, up just 60 metric tonnes (mt)
to 263,087mt.
• Shanghai Futures Exchange copper warehouse stocks went up by just over 1kmt to
finish at 82,770mt.
• The LME copper warehouse inventories moved down a fraction to 149,625mt.
• Comex warehouses stocks dropped by a slight 300mt or so, finishing the week at
30,692mt.
As I’¡m sure you can gather from those very brief
bullets, there was very little happening in the copper
inventory world last week. We’re now moving into the
traditionally higher demand period of the fourth
quarter, so that’s likely to change one way or another. I
remain bullish the metal, though my bullish feelings
have been tempered somewhat.
Panoro Minerals (PML.v): On Monday PML dropped
from 37c to 33c on the back of preliminary results from
the Peru regional and municipal elections, because a
vociferously anti-mining politico was elected as regional
representative in the Andahuaylas area where PML has
its flagship Cotabambas project. That result is now
ratified and although PML rebounded slightly to finish
last week at 35c, the optics from the result are not
good at all for the stock.
It had me sighing a little when thinking that the world has just discovered the political risk for
the Cotabambas project, something it apparently had no idea existed before, because the fact
remains that Cotabambas has always been on shaky ground (no pun intended) due to the was
any eventual developer would have to re-locate (i.e. move) a whole provincial capital town of
around 6,000 people and then demolish what was left in order to build this open pit mine
project. Let’s be clear; this isn’t a few hundred people in one small village, such as at
Toromocho, but a much bigger and politically difficult situation. PML has done a good job in
keeping this dirty little secret away from the investment community to date, but with the new
anti-mine local government you get the feeling that it won’t be able to brush off the deep local
concerns and keep them from the North so easily in the 2015-2018 political cycle in Peru. In
sum, a more obvious avoid call on a exploreco junior is difficult to imagine.
Curis Resources (CUV.to): Now little more than a proxy for friendly suitor Taseko (TKO),
CUV was hit hard by the weakness in the larger copper play due to its poor 3q14 numbers and
provision for pit wall expenses at Gibraltar (7). All the takeover upside has now been sucked
16

away from CUV, which goes to show the potential for downside of friendly and somewhat
incestuous all-paper deals. It remains a very easy avoid.
The Low Cost Producer Basket
After 41 weeks, the Low Cost Producer Basket is showing a 3.81% loss to level stakes
company ticker price 1/1/14 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Freeport FCX 37.74 1040 31.89 30.66 -18.8%
2 Goldcorp GG 21.67 812 18.85 23.22 7.2%
3 Barrick ABX 17.63 1000 13.48 13.48 -23.5%
4 Newmont NEM 23.03 497.87 11.06 22.21 -3.6%
5 Franco Nevada FNV 40.74 155.39 7.97 51.26 25.8%
6 Silver Wheaton SLW 20.19 357.39 6.94 19.42 -3.8%
7 Agnico Eagle AEM 26.38 173.43 5.07 29.23 10.8%
8 B2Gold BTG 2.02 948.9 2.05 2.16 6.9%
9 Pan American PAAS 11.70 151.41 1.54 10.20 -12.8%
10 First Majestic AG 9.80 117.02 0.84 7.22 -26.3%
all prices in U$, using NYSE ticker prices Portfolio avg -3.81%
The overall basket improved 1.63% on the week and the component performance count was
split down the middle with five
winners and five losers. That’s a rarity The Low Cost Producer Basket: Weekly performance and
for this tracking basket, as they’ve comparative to GDX control
35%
tended to move as on, affected by the
30%
tide. 25%
20%
The five winners were Goldcorp (GG), 15%
10%
Silver Wheaton (SLW), Franco Nevada
5%
(FNV), Agnico Eagle (AEM) and
0%
B2Gold (BTG). Of those, the 9.6% -5%
wins from BTG and FNV stand out. -10%
The five losers were Freeport (FCX),
Barrick (ABX), Newmont (NEM), Pan
American (PAAS) and First Majestic
(AG). There were no big losers, hence to
improved overall basket score.
Overall, there’s no easy split to explain why
some of these stocks went down while others
saw violent relief rallies. If it weren’t for the
Silver Wheaton outperformance a case could be
made for silvers versus golds, particularly as the
expensive metal did that much better than the
cheaper one last week. But SLW did move up
and queers my pitch a little, so the only
explanation I have to offer is subjective, which
covers current market favourites and flavours of the month. We know Franco Nevada and
B2Gold have their legions of cheerleaders, we know Goldcorp is considered the best run of the
Tier 1 goldies, we know Barrick and Newmont are sorely out of favour. The fashionable stocks
got the pop, the ones out of favour didn’t.
17
ts13ceD ht21 ht62 ht9 dr32 ht9 dr32 ht6rpa ht02 ht4yam ht81 ts1nuj ht51 ht92 ht31 ht72 ht01 ht42 ht7peS ts12 ht5tco
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 ht21 ht62 ht9 dr32 ht9 dr32 ht6rpa ht02 ht4yam ht81 ts1nuj ht51 ht92 ht31 ht72 ht01 ht42 ht7peS ts12 ht5tco
source: ikn calcs, NYSE/Nasdaq data

Franco Nevada (FNV): It’s getting a little boring to see this stock featured nearly every week,
but there’s no getting away from the fact that FNV had the strongest newsflow of the week of
any of these stocks thanks to the deal struck between it and Lundin (LUN.to), in which FNV is
taking a stream on the LUN acquisition of Candelaria from Anglo (8). The terms of the deal are
a little too complex to sum up in a few words here, so go read that appendixed NR, but the
basic and incomplete story is that FNV will get between 60k and 70k of Gold Equivalent Ounces
(GEO) from the gold and silver
produced at Candelaria for perhaps 10
years, then a reduced amount in the
years after that, in return for paying
$648m up front and then $400/oz on
delivery of the metal. With Candelaria
being a working mine, that stream will
start to pay immediately and that’s
probably the thing that the market
liked the most, so what with the nice
timing vis-a-vis the Fed minutes, FNV
got a very decent pop last week
It’s the type of streaming deal that
shows size matters, too. FNV is now
the single biggest streaming company
out there by market cap and can put together the cash needed for this type of deal without
feeling balance sheet pressure (you’ll recall that most of the cash upfront was raised in that
recent equity financing
Regional politics
Regional risk review, revised edition, sixth update
It’s quarter-end and time for the regular review of regional political risk for junior mining. This
is the 6th edition of the revised format (as seen in IKN218, IKN230, IKN243, IKN255, IKN269),
and as a reminder, here’s how the scoring system works (for full details, IKN218). The 6
categories are:
a) National Government Miner Friendly: The country on its national stance towards
mining activity.
b) Community/Social Miner Friendly: The overall attitude of locals towards mining,
either in specific zones or in country regions.
c) Foreign Direct Investment (FDI) Friendly: The openness towards FDI and the
safeguards it gives to foreign capital looking for a home.
d) Mining Culture: Countries or regions with generational traditions in mining are easier
places in which to operate than those which have little previous exposure to formal
mining operations.
e) Geopolitical Optics: The way in which the outside world sees this country, an
important factor, no matter if the perception be right or wrong.
f) Internal/National Political Stability: A gauge of how stable the country in question
is politically.
We tend to concentrate on nine countries with the potential to host companies, rather than try
to offer a comprehensive LatAm-wide view that takes in countries with little or no appeal for
investment or speculation in juniors. Therefore we focus on Chile, Peru, Mexico, Brazil,
Colombia, Nicaragua, Dominican Republic, Argentina and Guatemala. A beady eye is kept on
Panama, Uruguay, Ecuador Guyana, others hold scant appeal to the junior mining company
18

speculator for the moment. Here’s this quarter’s table, below as usual country-specific notes.
October 2014 Latin American Country Risk For Foreign Mining Companies
Nat. Govt Community/Social FDI Geopolitical Internal Nat.
Country Mining Culture Total
Friendly
Miner Friendly Miner Friendly Optics Political Stability
LatAm countries under active consideration for junior mining project location
Chile 9 7 8 10 9 9 52
Peru 9 7 9 9 6 7 47
Mexico 7 7 6 9 8 8 45
Brazil 7 5 8 8 7 9 44
Nicaragua 8 5 7 7 6 6 39
Dom Rep 8 5 7 5 5 8 38
Colombia 5 4 8 6 5 6 34
Argentina 8 6 4 6 4 6 34
Guatemala 7 2 5 4 4 6 28
Potentially relevant LatAm countries for junior mining
Panama 7 5 9 4 9 6 40
Guyana 8 6 6 6 5 4 35
Uruguay 5 5 7 3 6 8 34
Ecuador 6 4 5 4 6 8 33
Countries of little or no interest for junior mining exposure
Bolivia 3 6 2 9 6 8 34
Paraguay 7 5 6 3 4 6 31
Honduras 7 3 4 5 3 4 26
Costa Rica 1 1 5 1 6 7 21
Haiti 6 3 4 1 3 4 21
El Salvador 1 1 4 1 6 5 18
Venezuela 1 5 1 3 1 2 13
source: The IKN Weekly house estimates
Chile: FDI Friendly up 1 point
This line item was down one point last quarter, this quarter the point is regained. The reason
the point went in the last report was the end of the mining tax stability proposal sent to Chile’s
parliament by Michelle Bachelet’s newly installed executive, but even then it wasn’t such a big
thing and I admitted that (quote unquote), “...I may be making mountains out of molehills but
its more the image reflected from Chile that’s the problem here, rather than reality”. That’s held
true and with the continued downturn in the industry, Chile’s been its normal quick-reacting self
and has laid itself out as the welcoming and stable place to do mining in South America.
It hasn’t been totally plain sailing of course, as the Chilean Supreme Court ruling that went
against the Goldcorp (GG) New gold (NGD) El Morro gold/copper project shows. It would have
been easy to jump to a nationwide conclusion about that ruling and paint Chile with some sort
of anti-mining brush, but on closer consideration it does stand as a specific case with its own
criteria (in a nutshell, Goldcorp was stupid and the Chilean courts simply upheld the Chilean
statute book). Even Chuck Jeannes head honcho this week explained to his audience at an
Australian mining conference that (9) the adverse court ruling didn’t make him or his company
think badly of Chile as a mining destination, rather that they’d have to work about how to
implement the new rules of the game (though I’d bet dollars to donuts that GG will be changing
their lawyer’s buffet soon).
Peru: Geopolitical Optics down 1 point
The decision to cut Peru’s score is due to the regional election results, but as it’s style over
substance it’s the Optics section that takes the only cut. We’ve done more careful study of Peru
than just about any other jurisdiction this year, which is because it’s a good place to go mining
19

but a complicated political scene that’s (micro)regional dependent and needs to be considered
on a case-by-case basis.
When it’s all said and done, the regional elections have changed little in Peru for the vast
majority of people and its territory. Even the specific cases such as Santos in Cajamarca aren’t
much of a surprise, but if you read the international coverage you’d think there’s suddenly been
a sprouting of communism in seven parts of its rural area (eg I read a particularly stupid
Stratfor report only this morning, which was desperate to seek any sort of scandalous snippet
while stubbornly refusing to deal with the boring reality of “largely no change”). However,
international opinion counts for something which is why it’s part of our scoring system these
days, so one point is lost because you guys up there are swallowing the junk that’s being
written wholesale.
Mexico: Unchanged
Not an easy call and once again I’m somewhat hamstrung by the blanket country scoring
system, as in some parts of Mexico things have improved while in others they deteriorated.
Overall, the call is to stay pat on the country this quarter as the pros just about cancel out the
cons. Buenavista spill, parliamentary activism, the Guerrero troubles on the one side, while no
news is good news in many parts of the country. All in all and away from the in-country
moaning and grumbling about the fall in mining investment (that’s price related, not country
related) I found little reason to touch the Mexico score.
Brazil: Internal National Political Stability up 1 point, FDI friendly up 1 point
Brazil makes the best upmove of nay of our preferred mining countries this quarter, thanks
largely to a macro political/economic backdrop that’s going in favour of the industry. The
election is fairly tight (though Dilma will win) and the economy is now centre stage as issue
number one for the run-off. As a result there are positive changes coming no matter who wins
on October 26th. Dilma has promised to change her economics/finance team, Neves if elected
would come at the problem from a classic neoliberal angle. For more on the subject this note in
Forbes this weekend is as rare as it is good (10); a piece in the English language that explains
the appeal of Neves, but still manages to be reasonably even-handed about both finalists.
With losing round one candidate Marina Silva finally doing the obvious today (11) Sunday and
saying that she’ll vote for Aecio Neves in the round two vote, polls currently call the run-off as a
statistical dead heat and too close to call. Though the campaign playing field is more level in
this phase of the election than it was in round one, when the PT party could use its economic
power and influence more effectively, we’re still in a situation that skews polls towards to
opposition in the weeks before underestimates the PT support, a weaker version of round one,
if you like. But as I wrote this morning (12) Dilma will win this election, like it or not and once
the Bovespa sell-off is done, things will be normal again in Brazil. That’s not a perfect thing by
any stretch of the imagination, but it’s not a bad one.
Nicaragua: Mining culture up 1 point
Category four of our six point score is the one that changes the least, because cultural attitudes
towards any subject tend to be slow-moving undercurrents that are less affected by the simple
flow of money from A to B. Today we’re adding a point to Nica’s score on this point because the
country is getting used to the idea of creating wealth via mining. Though there are trouble
spots, such as the B2 Pavon project that’s hitting determined local opposition, countrywide the
mood is changing for the better.
Dominican Republic: Geopolitical Optics down 1 point, Internal National Political
Stability up 1 point
Unchanged overall, with Dom Rep making a negative splash due to local opposition to the
Falcondo nickel mine expansion project but positive due to the government’s insistence in not
backing down on being faced with the emotive type of eco-warrior attack that gives
environmentalism a bad name. The government has also sent its ministry people on a tour of
Canada recently, meeting and greeting people in the energy and mining spheres in order to
20

build relationships and show the country is open for mining business. The other part of this is
President Danilo Medina, who with a 89% approval rating is the most popular country president
in all The Americas at the moment. He’s pro-mining, cut a great deal with Barrick Pueblo Viejo
and is keen on promoting more mining in the country. All these are good things.
Colombia: National Government Mining Friendly down 1 point, Geopolitical Optics
down 1 point
The decadence in Colombia’s score continues unabated, with another two points dropped this
edition and the country now sits level with Argentina (oh my stars), though the executive
decision is to keep the background colour to warning orange instead of danger red. The
problem continues to be the impotent government and this quote (13) does a good job in
summing up the situation. It come from Beatriz Uribe, president of Colombia’s most successful
gold mining company Mineros S.A. (privately owned) and these days a sort of unofficial
spokesperson for the industry in the country:
“The biggest problem we have as mining executives is judicial instability. The
lack of clear rules that stop us from developing projects. There are no serious
specifications when they tell us how we need to have action plans, or how
long it will take to receive development permits”.
It’s not as if the problem is new or unforeseen either, it’s been this way for years but the poor
reaction and understanding of mining from the Santos government has stopped law reform and
brought the sector to a virtual standstill. Colombia has very recently contracted a Swedish firm
of consultants to help it unblock the quagmire of its own making and take advice on how to
improve its mining sector, both on the legal and the environmental front. It sounds positive, but
this country needs to show concrete results before anyone in their right mind believes them
again on mining matters.
Argentina: FDI Friendly up 1 point, Internal National Political Stability up 1 point
Yes, another two points added to the region’s most misunderstood country and the world is
indeed a strange place, dear reader. The point is added to FDI friendly because of the
pragmatic side to the way in which Argentina’s government works; the Griesa debt default
judgment is controversial and debatable (somewhere else than here) but on one count its
effects are solid and unquestionable; dollars are becoming more difficult to find in Argentina
and for your evidence, look no further than the unofficial ‘Dolar Blue’ rate that’s sprung from 10
to 15 in the quarter gone. The other problem now faced by Argentina is the drop in the price of
soybeans (and other cereals), quite literally the country’s main cash crop and source of dollars
that periodically top up the central bank reserves. It’s at times like this that Argentina will
continue its rhetoric but quietly drop insistence on political ideology when deals are needed to
be done (Peronism; it’s so flexible!), so if the country decides it needs to attract more FDI it will
change course to suit its needs. However, the main target this time around seems to be
country-scale China money, rather than northern private company cash, and the deal recently
ratified between China and Argentina that provides a U$11Bn currency swap is more than
enough to keep the country running until next year’s elections.
The other point gets added to the national political stability number, because the picture is
becoming clearer and Argentina looks less likely to give us surprises. As the market doesn’t like
surprises, we can add a point here. The 2015 election race is now firming up and it’s starting to
look like a three-cornered race between Daniel Scioli (who’ll be given the CFK government’s
blessing, though how much blessing is up for debate), Sergio Massa (renegade from the CFK
government and preferred candidate of those who consider themselves Peronist but against the
Peronist government of CFK...it’s complicated, ok?) and Mauricio Macri (as close to classic right
wing politics as you’re ever likely to see in Argentina). It’s virtually impossible to call a favourite
at the moment and there’s a lot to happen before we can, but at this very preliminary stage I’d
personally call chances at 45% Scioli, 35% Massa, 15% Macri, 5% an outsider coming from
nowhere. For the record, I put the chances of anyone from FA-UNEN (the cross party centre-
centreleft-left that includes people such as Binner, Cobos, Carrió) at 0%. As for the policies
21

promoted by the main candidates, it’s fair to say that the outside world will most like the
message of Macri, then will find the Massa position relatively acceptable, then have the most
issues with the Scioli position (which isn’t going to be very different from the current
government’s). On that score I’d say that you should be careful what you wish for, world.
Potentially relevant countries
Panama: Community/Social Miner Friendly down 1 point
The community/social acceptance score for mining went down the previous quarter and has
been put back up again, mainly because I think I read things wrong last time. Overall it’s an
uneasy peace between Panama and miners, but peaceful it is in the larger part and the one
project that really matters, First Quantum’s (FM.to) massive Panama Cobre, has seen steady
and on-track development this year (minor labor disputes aside). We’re now past the logical
point of no return on this project and barring some massively upsetting news it’s going to
become a reality.
Uruguay: National Government Mining Friendly down 2 points
We’re now just two weeks away from the Presidential elections in Uruguay as well, with the
latest opinion polls from earlier this week (14) predicting that no candidate will make it to the
50%+1 vote needed for a round one win and that the second round run-off will be between ex-
President Tabaré Vázquez of the ruling Frente Amplio (FA) party who’s currently polling 42%
and the main opposition Partido Nacional (PN) candidate Lacalle Pou on 32%. As it happens,
the election campaign period has been pretty smooth and unruffled, with domestic policy
dominating the debate (Uruguayans are famous in South America as the most politically
engaged populace of any country, the level of debate is more sophisticated than the norm) so
no big surprises being kicked up. Whichever party wins, foreign policy isn’t likely to change
much so I’m calling its effect an overall neutral.
Meanwhile, the profile of mining in the country has been knocked back, with the current
government’s refusal to move forward on what it deems to be the controversial Aratiri iron ore
mine project. We’ve covered this issue in some detail over the weeks and months so there’s
nothing particularly new to say, barring that the project’s permitting has been kicked into 2015
and I’d expect it to be kicked further, delayed and obfuscated by whoever runs the next
administration.
Ecuador: National Government Mining Friendly up 1 point, FDI Friendly up 1 point,
Geopolitical Optics up 1 point
Three points added to Ecuador and although I’m not rushing to be there (despite my minor
exposure through Salazar (SRL.v) that I can hold without fret), things are definitely moving in a
more positive way for the mining industry there. Correa seems to be winning the rhetoric war,
at least with some of his population, and although some regions are going to be vehemently
opposed to mining others are looking more likely to accept the industry. It’s not over yet, not
by a long way and I’m not adding a bean to the small sliver of exposure I have to Ecuador yet.
But it’s worth watching because if things really do thaw, there are plenty of ways to play this
country through the Canadian markets and most of them are dirt cheap.
Other countries
Bolivia: Geopolitical Optics up 1 point
That’s because Evo Morales will win re-election today, October 12th 2014, and it’s mostly for
what the North considers “the right reasons”. Little mention is made these days of the way the
media scoffed at Morales and told the world his Socialist agenda could never work, as Bolivia
continues to tack on region-leading growth, year after year. When it comes to junior mining
speculation the place is not for us, but that just goes to show that South America can do well
22

without having to attract FDI.
Paraguay: National Government Mining Friendly up 1 point, Internal National
Political Stability up 1 point
Paraguay gets a hike in two areas because it’s rejoined Mercosur and Latin American Mineral
(LAT.v) has managed to start some limited formal mining at its concession there. Not a place
i’m running to, though.
Haiti: National Government Mining Friendly down 1 point, Internal National Political
Stability up 1 point
One down and one up, a final score that remains unchanged and a minor, unloved jurisdiction
all add up to a short section without much direct effect on your life or mine, dear reader. Still, a
quick explanation is in order and the point that’s lost is due to the inertia of Haiti and its
government in getting any sort of pro-mining policy into operation, despite the country’s dire
need for wealth creation and jobs. Meanwhile, the political stability number notches up a point
basically due to death, more specifically the passing due to heart attack of Jean Claude Duvalier
(15), aka Baby Doc, who was 63 years old and had started his defence against corruption and
human rights charges while resident in Haiti last but is now dead and will never see justice
served one way or the other. Although largely unpopular on the island he was still an important
figure with some political following, so his death makes an extremely complicated political mess
slightly less complicated for the incumbent government. Hence a point added to the score, but
it doesn’t change from the bottom line call that this isn’t the place to go for rock diggers.
Market Watching
Fortuna Silver (FSM) (FVI.to): Priced to perfection
The late Friday rally in Fortuna Silver (FSM) (FVI.to) deserves a little comment from these
pages.
FVI’s 3q14 production numbers form FVI were strong (here are the production charts repeated
from the post over at the blog on Thursday morning (16)) and they were duly received when
pomp and fanfare by the brokerage investment community as well.
Fortuna Silver (FVI.to) (FSM): Ag production by qtr
2000000
1800000
1600000
1400000
1200000 1215100
1000000
9176689970351101411
800000
100790
377377468865486296502835491181492773580570536191
600000
400000
200000
559959536426484226509897524906519549499445493438568722542457539824529011588727
0
23
11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3
source: company filings
rtq/gA
secnuo
San José Silver prod (oz)
Caylloma Silver prod (oz)

Fortuna Silver (FVI.to) (FSM): Au production by qtr
12000
10000
8000
6000
4000
2000
0
1q12 2q12 3q12 4q12 1q13 2q13 3q13 4q13 1q14 2q14 3q14
source: company filings
24
rtq/uA
secnuo
Caylloma Gold prod (oz)
San José Gold prod(oz)
The problem is that according to the financial model and plugging in average prices for metals
during the 3q14 period, the bump in production isn’t going to do much more than cancel out
the drop in market prices for silver and gold, which means this is what the forecast for
revenues, costs and mine operating income (MOI) at FVI looks like at the moment.
FVI.to: Quarterly Earnings overview
60
50
40
30
20
10
0
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 tse41q3 tse41q4
source: company filings
srallod
fo
snoillim
revenues
COGS
Mine Op. Inc
Now for sure you never know exactly and part of the job is necessarily missing on line items to
one side or another, but we can say that the MOI is going to be around and about the same as
it was in 1q14 and 2q14. Also, if
things stay the way they are, 4q14 is
going to come in low, with a MOI of
around $10m.
I therefore make my statement as
clear as possible: FVI is a good
operator, but at its current market cap
of U$567m it has every ounce of that
good will already baked into the price.
It looks expensive and it wouldn’t
surprise me in the least to see its
price drop again after last week’s
spurt when the reality of its financials
is revealed. I’m officially calling
neutral on the stock, but those of you
who look for shorts in order to hedge
other positions could do a lot worse than to consider FVI, it could break under CAD$4 easily
before this year is through and even if it doesn’t thanks to a rally in silver, a long position held
in a reasonable peer paired with FVI would be odds on to perform better from here.

Bear Creek Mining (BCM.v): Now at a tempting price
What we know from last week’s election result in Puno region:
• Juan Luque Mamani of the PICO party came first, with 29.7% of the vote
• Walter Aduviri of the Democracia Directa party came second, with around 21% of the
vote.
• As 30% was the barrier required by any winner to avoid a second round, Luque cam up
just short and now those two go to a second round run-off to decide who becomes
regional president.
After studying the voter breakdown on the ONPE Peru election site, what’s noticeable is the
split of votes between Luque in the North Quechua and Aduviri in the South Aymara region of
Puno, but also that the town up for grabs that sits on the rough border between the two, Puno
city, went for Luque and against Aduviri. That’s a key point for political watchers in the area. As
written this time last week with the preliminary reports just coming in, “...we can fully expect
Juan Luque Mamani to become the next regional president of Puno.” That’s now triple true, it
would take an enormous turnaround between now and the November run-off vote to see
Aduviri win. Bottom line is that Luque, the pro-mine candidate, wins Puno and the anti-mine
(and very anti-Bear Creek) Aduviri isn’t going to make it. To wrap up the political section and as
a slight aside, we can also add to the mix that the winner of the Corani province local mayorial
race is one Remigio Bernardo Mamani Leon, who’s from the same PICO party as regional
candidate Luque. In other words, Santa Ana is always going to be a harder nut to crack but at
least at BCM’s flagship property
the local and regional politicos are
going to see eye to eye; that’s a
positive for BCM, be in no doubt.
Second, let’s check in on the price
chart and the last ten days of
action in BCM, compared to the
silver bullion ETF (SLV). The stock
spiked up on Monday (to $1.80)
on the apparently favourable
political result but it didn’t take
long before the rot set in again,
even with SLV coming off its lows
(thanks to Janet Yellen and her
friends).
Third up, here’s a longer-term 12
month price chart of BCM, which
shows the precipitous drop since
the end of August, as well as the
way in which the price now
reflects something along the lines
of a higher low compared to the
two other low points of the last 12
months, December 2013 and
April/May 2014.
Now I’m not the biggest fan of
charting in the world, but I’m not
stubborn enough about the
subject to ignore that pattern, if
only for bias confirmation’s sake
☺.
25

Discussion: The problem with BCM is of course the price of silver. Its flagship Corani is big,
low grade and remote, probably needs at least U$20/oz silver in order to work at a reasonable
return on investment., so its doubtful that even with the most radical of re-works it’s going to
be a viable option at $17/oz or $18/oz silver. However, if silver picks up again and rallies (and
let’s face it, there’s more optimism in the air on that score than there was just seven days ago)
BCM could become a decent option due to its size. The other part that BCM has in play is Santa
Ana and we may get a resolution on that arbitration between BCM and Peru’s government, now
that the elections are over. I’m expecting Peru’s government to want to hand back the project
to BCM (white elephant time all over again, because Santa Ana isn’t going to happen and for
the same reasons as before) but on the off-chance the final deal is a cash (or quasi-cash, such
as tax break on Corani production) recompense that could make BCM more attractive still.
This time last week my call was “not buying” and there were three reasons offered to you:
1) bounce in the silver price may happen but it’s not a certainty
2) the best prices are likely to evaporate at the open
3) it’s not really attractive as a risk/reward play any more, certainly much less than it was at the
time of IKN280.
Here and now, a week later, things do look better for the company and the potential trade.
Silver has bounced, which is the main positive but we’re still a way from a “useful” price for the
Corani project. I was wrong about the best prices early week, it was quite the opposite in fact
and my semi-mooted $2 was never threatened. The risk/reward now does look more attractive,
what with the virtual lock of Luque as regional president, the improvement in silver (though it’s
early days) and the potential wild card bonus of something from Santa Ana. So it’s better, and
I’m more tempted now than I was last week thanks to that lower price for BCM and a better
one for silver, but the bottom line is that I still prefer to wait it out and see whether silver can
rally any further. BCM could turn out to be an excellent way to play a silver rebound, coming as
it would from a little/badly-understood political risk scenario that’s getting better quickly and its
low price.
Until silver shows real improvement, I’m going to sit out and leave Fist Majestic (AG) as my only
direct exposure to Ag. But be clear, that could change and if silver becomes more positive,
BCM.v is at the top of my potential shopping list now.
Trevali (TV.to): Strange production numbers means all bets are off
We got the anticipated Trevali (TV.to) 3q14 production number on Wednesday morning (17)
and I was quick to crunch it into the numbers already known from TV.to and explained in the
last couple of weeks. The idea here was that we had a sneak preview of the company’s 3q14
production numbers because TV.to has already filed its obligatory production figures for July
and August to the Peru government’s Ministry of Energy and Mining (MEM), which means we
had 2/3rds of the quarter already revealed.
However, once our database was updated, by taking the TV.to 3q14 quarterly production
numbers (12,59m Lbs Zn, 6.31m Lbs Pb, 217,648oz Ag) and comparing them to the numbers
the same company had previously given to the Peru government, something rather strange
showed up. At first I wondered if I’d got my conversions wrong, because the Peru MEM filings
are in kilos and tonnes, while the TV.to NR figures are in pounds and ounces, but after checking
and checking again the problem isn’t at this end of the pipe. So without further ado, here’s the
charts that shows the monthly numbers for 2014 and importantly we assume the September
2014 figure by taking the sum of July and August and subtracting it from the 3q14 production
figures announced by TV.to in its October 8th news release:
Here’s silver, which is a little light for September perhaps but these things happen:
26

TV.to: Silver monthly production Oz
Ozt Ag
160000
140000
120000
100000
80000
60000
40000
20000
0
jan14 feb mar apr may jun jul aug sep
source: MEM filings, TV NR Oct 8
Here’s lead, which sees its September look normal:
M Lbs Pb TV.to: Lead (Pb) monthly production Lbs
3.00
2.50
2.00
1.50
1.00
0.50
0.00
jan14 feb mar apr may jun jul aug sep
source: MEM filings, TV NR Oct 8
And here’s the problem, TV.to’s main metal product zinc.
TV.to: Zinc (Zn) monthly production Lbs
M Lbs Zn
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
jan14 feb mar apr may jun jul aug sep
source: MEM filings, TV NR Oct 8
That September number, which to repeat is calculated in the following way...
• The July 2014 MEM filing of 2,532 metric tonnes (mt), which is 5.58m lbs
• The August 2014 MEM filing of 2,494 metric tonnes (mt), which is 5.50m lbs
• The 3q14 Trevali news release production number of 12,589,624 lbs Zn
27

...means that by inference of the officially posted numbers in two different places, TV.to at
Santander only produced 1.51 M lbs Zn during September. This is obviously a strange result,
which could be explained in several ways.
• The MEM figures posted are preliminary
• MEM monthly filings don’t always use exact cut-off dates
• TV.to made a genuine mistake in its filings at some point (for me the most likely)
• Zinc production really way low in September
However, two things for me are clear
1) That’s about 4m lbs of zinc less than I’d modelled, which is a lot of money. Just on the
rough count it’s $4m at $1/lb Zn, to which we can add the light Ag production and
slightly light Pb production to round at perhaps $4.5m less revenues that my model had
guesstimated.
2) It’s weird, and I don’t like weird. Not at the best of times with the most trustworthy
mining team running an operation, but it’s even more suspicious from a Cardero Group
company such as TV.to.
Therefore, the reasons behind the much lighter than expected September number for Zn
production at TV.to Santander may eventually come to light (e.g. I’ll be watching carefully when
the September MEM numbers are published, which should be at the end of this month at some
point), but the practical side is that TV.to isn’t going to get close to my previous revenues
guesstimate of ~$29m for 3q14. Now that’s been dropped to around $24.5m and the Mine
Operating Income forecast now looks like this:
Trevali: Operations Revenues, Costs and MOI
$m
30 total report revs ($m)
total costs
Mine Op Income
25
20
15
10
5
0
1q14 2q14 3q14est
source: TV.to filings, MEM Peru data, IKN calcs
We now expect a $6m MOI from Santander, which is still a free cash flow profit but nothing
that’s going to light a fire under the stock. If only for that reason the potential near-term trade
mooted in the last couple of editions is now called off.
Conclusion
IKN283 is done, we end with bullet points:
• I’m adding to Dalradian (DNA.to).
• If silver improves Bear Creek (BCM.v) would be a cracking buy at this price. But until
silver makes a meaningful move towards $20/oz again it’s just too risky for my blood.
• Trevali (TV.to) gave us lower production numbers than expected for zinc, which in itself
calls off the potential trade. But the way in which those numbers came smacks of
28

weird, and when it comes to mining companies I really don’t like weird.
• Fortuna’s (FVI.to) (FSM) nearly a short and won’t offer the financials to support this
production-based bounce.
• Peru’s still good for mining, just pick your spot and ignore the screamers.
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
Footnotes, appendices, references, disclaimer
(1) http://www.calculatedriskblog.com/2014/10/fed-vice-chairman-fischer-federal.html
(2) http://finance.yahoo.com/news/dalradian-closes-c-27-million-125000818.html
(3) http://www.dalradian.com/files/doc_presentations/2014/Dalradian-Presentation-Sep5-2014-final.pdf
(4) http://finance.yahoo.com/news/rio-alto-produces-56-368-113000229.html
(5) https://www.youtube.com/watch?v=Ac89jieJSqk&index=8&list=UUgrNz-aDmcr2uuto8_DL2jg
(6) http://www.reuters.com/article/2014/10/10/us-china-economy-gdp-idUSKCN0HZ0GE20141010
(7) http://finance.yahoo.com/news/taseko-announces-third-quarter-production-130000972.html
(8) http://finance.yahoo.com/news/franco-nevada-acquire-gold-silver-200900711.html
(9) http://www.portalminero.com/pages/viewpage.action?pageId=94320575
(10) http://www.forbes.com/sites/kenrapoza/2014/10/10/the-key-proposals-of-brazil-presidential-hopeful-aecio-neves/
(11) http://www.prensalibre.com/internacional/Marina-Silva-respalda-oposicion-Brasil_0_1228677184.html
(12) http://incakolanews.blogspot.com/2014/10/what-happens-in-brazil-second-round-run.html
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(13) http://www.larepublica.co/la-ca%C3%ADda-de-los-precios-y-las-reglas-confusas-frenan-
%E2%80%98boom%E2%80%99-minero_179661
(14) http://www.ntn24.com/noticia/sondeo-en-uruguay-otorga-preferencia-de-voto-al-exmandatario-tabare-vazquez-a-
tres-semanas-de-las-27653
(15) http://incakolanews.blogspot.com/2014/10/jean-claude-baby-doc-duvalier.html
(16) http://incakolanews.blogspot.com/2014/10/fortuna-silver-fsm-fvito-3q14-production.html
(17) http://finance.yahoo.com/news/trevali-reports-q3-2014-santander-123828029.html
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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